Prophet and Lösch

by submission
May 26th, 2010

Author : Q. B. Fox

17th April 2002, a concrete room, off an unmarked tunnel on the Northern Line.

“How long were they down?”

Simon looked up from what he was doing, and even in the dim light of the rack mounted servers I recognise the pinched expression.

“12 days. A power supply shorted some circuits in Prophet a week last Friday. Without the proper predictive model Lösch became CPU bound by Saturday morning, so we shut it down before something else broke.”

Lösch, both the software and the specialist machine it ran on, was named after the 20th century economist Sir Richard Lösch, whose work on monetary systems was the underlying principle of the program.

But it became apparent when they started trying to run Lösch that this theoretical model wasn’t designed to incorporate real feedback efficiently. So the coders built predictive software to take real information from the markets, combine it with the theoretical model and feed its predictions back into Lösch. The pun was just too delicious for them not to call it Prophet.

“12 days?” I frowned. “The economy’s pretty stable now; surely leaving it to run itself for 12 days won’t have caused any problems.”

“Ask Dr. Rob,” Simon indicated the other corner of the room. Visible only by the light of green text reflected in his tiny spectacles, and from his pallid, sweaty skin, Dr. Rob chewed his tongue like cow and silently scanned his monitor. Who themed green text on a black background? Dr. Rob was old school.

“Imagine,” Simon explained, presumably as it had been explained to him, “walking on a tightrope. Lösch keeps its balance by a gentle nudge here, a small purchase there. I’d assumed that because Lösch was making more frequent smaller trades that the whole system was stabilising. Turns out I was wrong.”

I turned towards a grunt expelled from Dr. Rob; he was rolling his eyes in an exaggerated manner that would have been comical if he’d known he was doing it.

“It turns out,” Simon continued, “that we’ve been tightrope walking in high winds, and that Lösch was correcting and counter correcting the whole time. Now imagine our tightrope walker blacks out for a second.”

I imagined and gulped back a sudden rush of financial vertigo.

“The first forecast from Prophet this morning was showing hyper inflation in the near future, could be as bad as 65%. We set Lösch to work on it. The data came out about an hour ago. You can tell the prime minister that, as of today, Lösch can hold the inevitable off for about 5 years but eventually it will happen.”

“And we can’t stop it?” I was alarmed.

“Not without something beyond the scope of Lösch,” Simon explained, “not without a major human intervention. Dr. Rob’s working on it, but don’t expect an answer any time soon.”

Contrary as ever, Dr Rob’s deep bass filled the room for the first time. “We need a recession, a genuine, but planned, collapse of confidence.” He chewed. “And I think I have an idea. Have you ever heard of sub-prime mortgages?”

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