Microsoft stealth launches 'historic' programming language

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Hidden F# strikes right note

By Tim Anderson • Get more from this author

Launching a new language is easy - getting it used is hard. The combination of existing code and existing skills is a strong barrier to adoption, and even excellent languages like Ruby and Python have struggled to break out of their niches.

What hope is there for F#, the new language that Microsoft has sneaked into Visual Studio 2010, launched this month?

"I think it's an amazing moment," says its principal designer, Microsoft researcher Don Syme, an Australian now based in Cambridge. "It represents part of the history of programming language design and development here in the UK."

Perhaps it does. But you would not know it from most of Microsoft's marketing effort for the new Visual Studio. F# tends to get lost in the fuss about other new features. I downloaded Microsoft's Why upgrade to Visual Studio 2010? white paper and not only is F# missing from the "Top ten reasons to buy" - it's not actually mentioned at all.

That is a shame. F# is a functional programming language, and there are good reasons why functional programming deserves wider use, such as its suitability for the concurrent programming required for optimal performance on today's multi-core systems.

F# is also succinct. During a talk at the recent QCon London programming conference, Syme showed a series of slides, headed Pleasure and Pain, showing how F# code can be shorter and more expressive than its C# equivalent, sometimes to the extreme.

Following his QCon talk, I spoke to Syme about the new language. How did F# begin?

"I've been doing functional programming since 1992. I had been using the ML family of languages, including standard ML and OCaml, and wanted to see that paradigm being strong on the .NET platform. We started F# as a research project. We could experiment with the functional paradigm in practice, and understand where it was most beneficial and how it would fit in."

So how does F# differ from, say, OCaml?

According to Syme: "The core language of F# is heavily inspired by OCaml. If you look back at the ML languages, the core of these languages has been surprisingly stable, from the early seventies. It's a question of what you do around that. One of the major questions is about object-oriented programming. Another question is what you would historically have called module system design. F# differs on those design decisions from other ML languages because the aim is to build a language which integrates into the .NET component development model. That means we do embrace .NET object-oriented programming.

F# can be remarkably concise compared to C#

"Another major design difference is with regard to parallel programming, where we embrace the idea of lightweight threads and what we call lightweight agents in the language and in the core language. We use techniques that come from Haskell for that purpose."



Speaking to Syme, Microsoft's main motive for including F# in Visual Studio becomes clear. Functional programming is popular in the financial community, where it is used for quantitative analysis. Finance is an important market.

"We find F# is very attractive to financial analysts and quantitative experts," says Syme, the reason being that it excels in data, parallel and algorithmic programming. "F# is attractive in places where the object oriented paradigm isn't a good fit for the kind of work that's being done," he says.

If F# is mainly intended for a specific programming niche, that would explain why Microsoft is not putting much energy behind promoting it. That said, it deserves more attention because of its suitability for the concurrent programming that has become necessary in order to take advantage of today's multi-core systems.

The Hejlsberg factor

Perhaps surprisingly, C# designer Anders Hejlsberg is an F# enthusiast, though he also plans to introduce functional features into C#. In a recent talk on programming futures, Hejlsberg said a functional programming language is easier to parallelize.

"I'm not running around modifying the state, and it doesn't matter how many threads there are because the state is safe to observe, and if two functions are independent they can be executed sequentially or in parallel and it doesn't matter ... [F#] is the first time we've seen integration of a functional programming language with an industrial-strength framework and toolset," he said.

Syme also is convinced that F# has a future that goes beyond financial analysis. He sees it as ideal for web programming, thanks to its use of lightweight "agents" that sit waiting to react to an event such as a network communication.

"We have a huge opportunity with F# to see the functional programming paradigm break out of the data-oriented kind of work, through to the modern world of web programming," he says.

The question: how to get that message through to Microsoft's marketing department? ®


Source: http://newscri.be/link/1076015
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At last, a case to expose misdeeds?

Last Friday, US authorities charged the biggest investment bank with fraud in a sub-prime mortgage security scheme that led investors to a billion-dollar loss. 

NEW and potentially devastating evidence of financial manipulation by Wall Street firms has emerged, just as the United States Senate is preparing to consider a Bill this week to tighten the regulation of financial institutions.

Last Friday, the biggest US investment bank, Goldman Sachs, was charged by the US Securities and Exchange Commission (SEC) with committing fraud that led to investors losing over US$1bil (RM3.2bil).
The case involves the sale to investors in 2007 of securities linked to sub-prime house mortgages – the kind of financial products that triggered the global financial crisis.

In a 22-page lawsuit, the SEC charged Goldman Sachs and its Vice President Fabrice Tourre with failing to disclose that the hedge fund Paulson & Co had a major role in working with the bank to create a security backed by sub-prime mortgages, while Paulson at the same time took a “short position” on the same mortgages to bet that their value would go down.

The security, named Abacus 2007-AC1 and known technically as a collateralised debt obligation (CDO), was created and sold by Goldman Sachs in 2007 just before the start of the financial crisis.

Abacus did very badly for those who invested in it. Within nine months of its sale, 99% of the set of mortgages in the security had been downgraded. Investors lost more than US$1bil while Paulson, which made a bet against the mortgages, profited by also US$1bil.

A major loser is the Royal Bank of Scotland (now largely owned by the UK government). It had to pay US$841mil (RM2.7bil) to Goldman (which passed most of it to Paulson) in August 2008 because it had taken over Dutch bank ABN Amro which in turn had taken on the credit risk or insurance over a significant tranche of the security that turned sour. A German bank, IKB, lost US$150mil (RM479mil).

The SEC’s enforcement officer Robert Khuzami described the fraud as follows: “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio. The product was new and complex but the deception and conflicts are old and simple.”

The SEC accused Goldman of making statements and omissions when constructing a CDO, and failing to disclose that Paulson was involved in creating the CDO (including selecting the mortgages that went into its portfolio), that it was shorting.

Instead, Goldman informed investors that an independent firm, ACA Management, had selected the CDO portfolio, said the SEC.

It also alleged that Goldman Vice-President Tourre misled ACA Manage­­­­­ment to believe that Paul­son had invested US$200mil (RM639mil) in the equity of the Abacus CDO and had thus taken a “long” position and “accordingly that Paulson’s interests in the collateral section process were aligned with ACA’s when in reality Paulson’s interests were sharply conflicting”.

s arranged a transaction at Paulson’s request in which Paulson heavily influenced the selection of the portfolio to suit its economic interests, but failed to disclose to investors, as part of the description of the portfolio selection process contained in the marketing materials used to promote the transaction, Paulson’s role in the portfolio selection process or its adverse economic interests.”

The SEC court document quoted an email to a friend from Tourre, who had coordinated the Abacus product, as saying that “with more and more leverage in the system, the whole building is about to collapse” and the only potential survivor is the fabulous Fab (himself), “standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding the implications of all these monstrosities”.

This email has come back to haunt Goldman and Tourre and is destined to become one of the most cited quotations when the history of the financial crisis is written, as both a confession and a correct prophecy by a major player who helped to engender the crisis.

According to a Business Week article, the SEC’s accusations may fuel critics’ claims that Goldman put its own interests ahead of clients’ and profited from practices that led to the financial crisis.

It also quotes Christopher Whalen, an analyst at US-based Institutional Risk Analytics, as saying: “This litigation exposes the cynical, savage culture of Wall Street that allows a dealer to commit fraud on one customer to benefit another.”

Meanwhile, Goldman Sachs has denied the charges. It said it provided “extensive disclosure” to IKB and ACA about the risk of the underlying mortgage securities, and that ACA selected the portfolio. It also denied it told ACA that Paulson was going to be an investor in the CDO.

Paulson also said that it did not “sponsor or initiate” the Abacus programme and that ACA had sole authority over the selection of all collateral in the CDO.

The SEC case against Goldman will be important for exposing the mechanics of the financial institutions and instruments, speculation and manipulation that lay at the heart of the financial crisis. There is an expectation that this is only the first case and that more cases involving other banks may follow.

But as Financial Times columinist Gillian Tett points out, the subprime and CDO markets were so opaque it was often very unclear what was legal or not, and bankers were adept at “innovating” to get around the law.
In other words, what may be grossly unethical may actually not be illegal. It remains to be seen whether the SEC will succeed in this case or other cases.

Thus, given the weaknesses in the law, it is all the more important that the US Senate and administration devise and adopt new laws that reform the present extremely weak regulation of the financial markets and their instruments.

Global Trends by MARTIN KHOR

Goldman Serves One Master Better Than the Others

As Wall Street bombshells go, the lawsuit that the Securities and Exchange Commission filed against Goldman Sachs Group Inc. is about as big as it gets.

Who knew the folks at the SEC still had it in them to accuse a major Wall Street bank of fraud? And who could have guessed that Goldman’s canned explanation for its behavior during the subprime mortgage bubble -- that it simply was serving clients’ needs -- could come so unglued so quickly?

To recap, the SEC’s complaint accuses Goldman and one of its vice presidents of selling subprime mortgage-backed securities to institutional investors, without disclosing that one of its clients, the giant hedge fund Paulson & Co., had paid Goldman to structure these securities so that they would be the world’s perfect short -- at least from Paulson’s point of view.

The securities, called Abacus 2007-AC1, became worthless within months, showing that Paulson had done its homework. The SEC said Paulson paid Goldman a $15 million fee.

The SEC said Goldman’s main infraction was telling investors who bought the securities that an independent company called ACA Management had chosen the assets that were backing them, when it was Paulson that played a major role in the process. The SEC said Goldman duped ACA into believing that Paulson was looking to take a bullish position, though the SEC’s complaint doesn’t try to explain why this somehow would excuse ACA’s decision to bow to Paulson’s influence.

Neither the fund, founded by John Paulson, nor its employees were named as defendants, because the SEC said it was Goldman that made the misstatements to investors.

Goldman Denial

 

The assets backing these securities, known as synthetic collateralized debt obligations, were themselves securities backed by subprime mortgages. Goldman issued a one-sentence statement denying the SEC’s allegations as “completely unfounded in law and fact.” Among the investors that the SEC says got suckered was a hapless Goldman client in Dusseldorf, Germany, called IKB Deutsche Industriebank AG.

It’s hard to imagine an allegation by the government that could be more damaging to Goldman’s reputation. This wasn’t the American public at large that Goldman supposedly ripped off, which might be forgivable or even praiseworthy from the view of Goldman’s shareholders. These were Goldman clients that Goldman allegedly ripped off, in an effort to please another Goldman client.

Throughout the aftermath of the financial crisis, Goldman and its chief executive officer, Lloyd Blankfein, have consistently stuck to the same story when asked why the bank had created and sold to its clients subprime mortgage-backed securities that quickly became worthless: The firm was merely giving those clients what they wanted.

What They Do

That’s what market makers do, Blankfein told the Financial Crisis Inquiry Commission last January. “What we did in that business was underwrite to, again, the most sophisticated investors who sought that exposure,” he testified.

That may have been true when it came to the Goldman client Paulson & Co., which made $1 billion shorting these allegedly custom-made CDOs by buying credit-default swaps on them. If we are to believe the SEC’s claims, though, it wasn’t true for the Goldman clients that lost $1 billion on the CDOs, including the chumps at IKB, which lost $150 million.

While those clients may have been seeking exposure to subprime mortgages, and may even have been unconscionably stupid for doing so, they surely weren’t seeking exposure to the other side of a cherry-picked trade created for the exclusive benefit of one of the world’s largest hedge funds. They probably aren’t happy, either, with Moody’s or Standard & Poor’s, which, you guessed it, slapped AAA ratings on the CDOs’ highest rungs.

Clear in Translation

Their eyes must have been burning, too, when they saw some of the e-mails that the SEC quoted in its suit, portions of which the SEC translated from French. (The spellings and punctuation are as they appear in the SEC’s complaint.)

“More and more leverage in the system. The whole building is about to collapse anytime now,” Fabrice Tourre, the Goldman Sachs vice president who was sued for his role in putting together the deal, wrote on Jan. 23, 2007.

“Only potential survivor, the fabulous Fab … standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!”

A few weeks later, Tourre, now 31, e-mailed a top Goldman trader: “the cdo biz is dead we don’t have a lot of time left.” Goldman closed the Abacus offering in April 2007.

Those statements bring to mind a well-known quote from Warren Buffett, who invested $5 billion in Goldman back in September 2008 near the peak of the financial crisis: “It takes 20 years to build a reputation and five minutes to ruin it.”

Can’t wait to see how Goldman tries to talk its way out of this one.

Commentary by Jonathan Weil, a Bloombery News columnist.