Archive for November, 2011

Correlated trades

One major weakness of quantitative trading is that it’s based on the concept of how correlated various instruments and instrument classes are. Today I’m planning to rant about this, thanks to a reader who suggested I should. By the way, I do not suggest that anything in today’s post is new- I’m just providing a public service by explaining this stuff to people who may not know about it.

Correlation between two things indicates how related they are. The maximum is 1 and the minimum is -1; in other words, correlation ignores the scale of the two things and concentrates only on the de-scaled relationship. Uncorrelated things have correlation 0.

All of the major financial models (for example Modern Portfolio Theory) depend crucially on the concept of correlation, and although it’s known that, at a point in time, correlation can be measured in many different ways, and even given a choice, the statistic itself is noisy, most of the the models assume it’s an exact answer and never bother to compute the sensitivity to error. Similar complaints can just as well be made to the statistic “beta”, for example in the CAPM model.

To compute the correlation between two instruments X and Y, we list their returns, defined in a certain way, for a certain amount of time for a given horizon, and then throw those two series into the sample correlation formula. For example we could choose log or percent returns, or even difference returns, and we could look back at 3 months or 30 years, or have an exponential downweighting scheme with a choice of decay (explained in this post), and we could be talking about hourly, daily, or weekly return horizons (or “secondly” if you are a high frequency trader).

All of those choices matter, and you’ll end up with a different answer depending on what you decide. This is essentially never mentioned in basic quantitative modeling texts but (obviously) does matter when you put cash money on the line.

But in some sense the biggest problem is the opposite one. Namely, that people in finance all make the same choices when they compute correlation, which leads to crowded trades.

Think about it. Everyone shares the same information about what the daily closes are on the various things they trade on. Correlation is often computed using log returns, at a daily return horizon, with an exponential decay weighting typically 0.94 or 0.97. People in the industry thus usually agree more or less on the correlation of, say, the S&P and crude.

[I’m going to put aside the issue that, in fact, most people don’t go to the trouble of figuring out time zone problems, which is to say that even though the Asian markets close earlier in the day than the European or U.S. markets, that fact is ignored in computing correlations, say between country indices, and this leads to a systematic miscalculation of that correlation, which I’m sure sufficiently many quantitative traders are busy arbing.]

Why is this general agreement a problem? Because the models, which are widely used, tell you how to diversify, or what have you, based on their presumably perfect correlations. In fact they are especially widely used by money managers, so those guys who move around pension funds (so have $6 trillion to play with in this country and $20 trillion worldwide), with enough money involved that bad assumptions really matter.

It comes down to a herd mentality thing, as well as cascading consequences. This system breaks down at exactly the wrong time, because after everyone has piled into essentially the same trades in the name of diversification, if there is a jolt on the market, those guys will pull back at the same time, liquidating their portfolios, and cause other managers to lose money, which results in that second tier of managers to pull back and liquidate, and it keeps going. In other words, the movements among various instruments become perfectly aligned in these moments of panic, which means their correlation approaches 1 (or perfectly unaligned, so their correlations approach -1).

The same is true of hedge funds. They don’t rely on the CAPM models, because they are by mandate trying to be market neutral, but they certainly rely on a factor-model based risk model, in equities but also in other instrument classes, and that translates into the fact that they tend to think certain trades will offset others because the correlation matrix tells them so.

These hedge fund quants move around from firm to firm, sharing their correlation matrix expertise, which means they all have basically the same model, and since it’s considered to be in the realm of risk management rather than prop trading, and thus unsexy, nobody really spends too much time trying to make it better.

But the end result is the same: just when there’s a huge market jolt, the correlations, which everyone happily computed to be protecting their trades, turn out to be unreliable.

One especially tricky thing about this is that, since correlations are long-term statistics, and can’t be estimated in short order (unless you look at very very small horizons but then you can’t assume those correlations generalize to daily returns), even if “the market is completely correlated” on one day doesn’t mean people abandon their models. Everyone has been trained to believe that correlations need time to bear themselves out.

In this time of enormous political risk, with the Eurozone at risk of toppling daily, I am not sure how anyone can be using the old models which depend on correlations and sleep well at night. I’m pretty sure they still are though.

I think the best argument I’ve heard for why we saw crude futures prices go so extremely high in the summer of 2008 is that, at the time, crude was believed to be uncorrelated to the market, and since the market was going to hell, everyone wanted “exposure” to crude as a hedge against market losses.

What’s a solution to this correlation problem?

One step towards a solution would be to stop trusting models that use greek letters to denote correlation. Seriously, I know that sounds ridiculous, but I’ve noticed a correlation between such models and blind faith (I haven’t computed the error on my internal estimate though).

Another step: anticipate how much overcrowding there is in the system. Assume everyone is relying on the same exact estimates of correlations and betas, take away 3% for good measure, and then anticipate how much reaction there will be the next time the Euroleaders announce a new economic solution and then promptly fail to deliver, causing correlations to spike.

I’m sure there are quants out there who have mastered this model, by the way. That’s what quants do.

At a higher perspective, I’m saying that we need to stop relying on correlations as fixed over time, and start treating them as volatile as prices. We already have markets in volatility; maybe we need markets in correlations. Or maybe they already exist formally and I just don’t know about them.

At an even higher perspective, we should just figure out a better system altogether which doesn’t put people’s pensions at risk.

Categories: finance, hedge funds

Two pieces of good news

I love this New York Times article, first because it shows how much the Occupy Wall Street movement has resonated with young people, and second because my friend Chris Wiggins is featured in it making witty remarks. It’s about the investment bank recruiting machine on college campuses (Yale, Harvard, Columbia, Dartmouth, etc.) being met with resistance from protesters. My favorite lines:

Ms. Brodsky added that she had recently begun openly questioning the career choices of her finance-minded friends, because “these are people who could be doing better things with their energy.”

Kate Orazem, a senior in the student group, added that Yale students often go into finance expecting to leave after several years, but end up staying for their entire careers.

“People are naïve about how addictive the money is going to be,” she said.

Amen to that, and wise for you to know that! There are still plenty of my grown-up friends in finance who won’t admit that it’s a plain old addiction to money keeping them in a crappy job where they are unhappy, and where they end up buying themselves expensive trips and toys to try to combat their unhappiness.

And here’s my friend Chris:

“Zero percent of people show up at the Ivy League saying they want to be an I-banker, but 25 and 30 percent leave thinking that it’s their calling,” he said. “The banks have really perfected, over the last three decades, these large recruitment machines.”

Another piece of really excellent new: Judge Rakoff has come through big time, and rejected the settlement between the SEC and Citigroup. Woohoo!! From this Bloomberg article:

In its complaint against Citigroup, the SEC said the bank misled investors in a $1 billion fund that included assets the bank had projected would lose money. At the same time it was selling the fund to investors, Citigroup took a short position in many of the underlying assets, according to the agency.

“If the allegations of the complaint are true, this is a very good deal for Citigroup,” Rakoff wrote in today’s opinion. “Even if they are untrue, it is a mild and modest cost of doing business.”

A revised settlement would probably have to include “an agreement as to what the actual facts were,” said Darrin Robbins, who represents investors in securities fraud suits. Robbins’s firm, San Diego-based Robbins Geller Rudman & Dowd LLP, was lead counsel in more settled securities class actions than any other firm in the past two years, according to Cornerstone Research, which tracks securities suits.

Investors could use any admissions by Citigroup against the bank in private litigation, he said.

This raises a few questions in my mind. First, do we really have to depend on a randomly chosen judge having balls to see any kind of justice around this kind of thing? Or am I allowed to be hopeful that Judge Rakoff has now set a precedent for other judges to follow, and will they?

Second, something that came up on Sunday’s Alt Banking group meeting. Namely, how many more cases are there that the SEC hasn’t even bothered with, even just with Citigroup? I’ve heard the SEC was only scratching the surface on this, since that’s their method.

Even if they only end up getting $285m, plus the admission that they did wrong by their clients, could the SEC go back and prosecute them for 30 other deals for 30x$285m = $8.55b? Would that give us enough leverage to break up Citigroup and start working on our “Too Big to Fail” problems? And how about the other banks? What would this litigation look like if the SEC were really trying to kick some ass?

Categories: #OWS, finance, hedge funds

Regulation arbitrage, the Volcker Rule, and TBTF (#OWS)

Regulation arbitrage

We had a interesting, lively #OWS Alternative Banking group meeting yesterday, where we split into three groups: the Volcker Rule commenting group, the shadow banking system, and Too Big to Fail (TBTF). I was impressed by the number of people who could come even on Thanksgiving weekend.

These topics have lots of overlap, a fact which came through at the end when we got back together and disseminated our thoughts. Specifically, the question of “regulation arbitrage” came up repeatedly. This is the idea that, no matter what laws you pass on how the banks can behave, they will get around the spirit of the law with some clever sleight of hand. In other words, it’s really hard to avoid a bad outcome if you have to list all of the things that someone isn’t allowed to do- they can avoid a rule governing having repos of no longer than 7 days by inventing a new instrument, which they may call a “nepo,” which has an 8 day lifespan.

It’s frustrating, since real regulation is clearly needed right now, and it makes you want to depend more on standards than specific rules. However, the problem with standards is that they can be avoided as well, by the sheer fact that they are always open to interpretation. Moreover, both of these approaches run the risk of being essentially too complicated for regulators to understand, but the standards one is particularly open to that.

If anyone has a third option that I haven’t thought of, please tell. Oh wait, someone suggested one to me: jailtime. This is actually a good point, and also possibly the best idea I’ve heard of to give some balls back to the SEC and other regulators: give them handcuffs and the authority to use them.

It occurs to me that the software testing community may have an answer, or at least an approach. It may make sense to set up a series of exhaustive tests which evaluates the resulting portfolio of the bank for certain characteristics which would indicate whether the bank has been following the standards appropriately.

To some extent this is being done, using various risk measures, for example looking at the volatility of the PnL to determine if someone is really market making or not. But I’m not sure the super nerds have thought about this onetoo much. I’d be interested to talk to anyone who knows.

Volcker Rule

There are two articles I wanted to bring up today. First, we have this Huffington Post article about the Volcker Rule commenting group Occupy the SEC, which has been meeting with us on Sundays and whom I’ve blogged about here and here. Some key quotes:

A handful of protesters at Occupy Wall Street are doing what the authors of a complex piece of financial legislation may have hoped no one would do. They are reading it.

The Occupy Wall Street movement, now in its third month, has drawn fire from people who say its members are too vague in their criticism of the financial system. Occupy the SEC, which consists of between four and eight New York protesters, would seem immune to such charges. Its members are compiling a list of highly specific points, and their ultimate goal is to submit a letter to regulators detailing their concerns before the Jan. 13 deadline.

Anyone can send in comments on the draft of the Volcker rule — and regulators will review those submissions before producing a final version of the measure — but, as in most cases where draft rules are made available for public scrutiny, not everyone has the time or inclination to parse hundreds of pages of regulatory jargon. Goldstein noted that most of the comments on financial rules end up coming from the banks themselves, arguing for greater leniency.

Paul Volcker himself has expressed displeasure with the current proposal, which is 30 times as long as the version originally included in Dodd-Frank.

Go team!


Next, during the meeting yesterday where we were discussing Too Big to Fail (TBTF) and what can be done about it, Bloomberg published this article, which ranks among the best I’ve seen from them (up there with the Koch brothers article from a few weeks ago which I blogged about here).

The article describes the extent and amount of the secret Fed loans given to each bank for “liquidity” purposes during the credit crisis. Here’s a good quote:

While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.

Thank you! Why doesn’t everyone see that it makes no sense to say “we were paid back” when the underlying problem is still there (in fact worse) and we have given up our standards? On a related note:

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

Even if the $13 billion is arguable (I don’t have an opinion about that), I know it’s an underestimate because the alternative to this secret unlimited liquidity was bankruptcy, not less revenue.

The article brings up lots of interesting issues, beyond the asstons of cash money that were thrown at the banks during that time. Among them:

  1. To what extent would Congress have blocked TARP if they had know the size of the Fed program? Remember they actually voted TARP down before coming back and changing their mind after the stock market dropped by 10%. My favorite quote for this question comes from Sherrod Brown, a Democratic Senator from Ohio: “This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.” I agree- this is a non-partisan issue.
  2. How much freaking power does the Fed have to do stuff behind closed doors? To what extent was this motivated by their feelings of shame that they’d let the housing bubble inflate for so long? Related quote from the article: “I believe that the Fed should have independence in conducting highly technical monetary policy, but when they are putting taxpayer resources at risk, we need transparency and accountability,” says Alabama Senator Richard Shelby, the top Republican on the Senate Banking Committee.
  3. Geithner seems to be against the idea of ending TBTF: “Geithner argued that the issue of limiting bank size was too complex for Congress and that people who know the markets should handle these decisions.” The article then goes on to say that Geithner suggested we just let the international economic community decide the new rules, i.e. Basel III. But as we know, that treaty has zero chance of being adopted by the U.S. at this point, so the end result is that Geithner put off the discussion by arguing that it would be dealt with internationally, but then it hasn’t been, at all. Moreover, the article mentions that the Dodd-Frank bill has a mechanism for closing down too-big-to-fail banks, decided by a committee of which Geithner is chair. I’m not holding my breath.

The most embarrassing part of the article is next, and deals again with the TBTF issue.

Lobbyists argued the virtues of bigger banks. They’re more stable, better able to serve large companies and more competitive internationally, and breaking them up would cost jobs and cause “long-term damage to the U.S. economy,” according to a Nov. 13, 2009, letter to members of Congress from the FSF. The group’s website cites Nobel Prize-winning economist Oliver E. Williamson, a professor emeritus at the University of California, Berkeley, for demonstrating the greater efficiency of large companies.

In an interview, Williamson says that the organization took his research out of context and that efficiency is only one factor in deciding whether to preserve too-big-to-fail banks. “The banks that were too big got even bigger, and the problems that we had to begin with are magnified in the process,” Williamson says. “The big banks have incentives to take risks they wouldn’t take if they didn’t have government support. It’s a serious burden on the rest of the economy.”

Nice! Hey FSF, you may want to find a new quote! Oh wait, that link no longer works, interestingly…

I’m planning a follow-up blog post to discuss what our group decided to do with respect to TBTF. Hint: it has something to do with a Republican presidential candidate.

Categories: #OWS, finance

No gifts, please

A few years ago my family was veering into dangerous gifting territory. It was the year my oldest son was almost 2, and everyone in the family, my parents, my brother, and my brother’s wife, was buying outrageous, huge presents for him. He was more into the boxes than the presents, of course, and we kept cajoling him to hurry up and get through the huge mound of presents. It was actually pretty unpleasant since he was a focused little nerd kid and didn’t see the point at all.

But it didn’t stop there. It was also the year that the wine opener which looks like a bunny and can remove corks in a single deft move was on the market, but it’s cheaper copycat version wasn’t. I spent an outrageous amount of money buying that for my wine-collecting father on ebay, but what’s even more outrageous is how much time it took.

At the end of the orgy of opening presents, I don’t even think we could fit all of the wrapping paper and packaging into one garbage bag. And that was with one kid, who was crying because the best stuff was thrown away. Since I was pregnant at the time, I could see where this was going.

I waited a few months, and then I made a motion: no presents for grownups. At least I wasn’t going to buy any presents for grownups. And moreover, nobody spends more than $50 ever. It was passed.  Since then we’ve been able to concentrate on how cute our kids are playing with their boxes. Really the presents we give to each other, to the other grownups, is the effort we make in showing up in the same town and dealing with how annoying we all are (read: they all are) for 2 full days (maybe 1 if I can pare it down to perfection).

I just don’t get the holiday gift giving thing. I mean, I think I’m actually a pretty generous person, but it doesn’t mean I need to go overboard at Christmas. I pretty much like to give people stuff all the time. I cook for them, I knit things, I immediately give away books that are awesome to people who would get something out of them. Why focus on Christmas? I say share a meal in March instead.

What really ticks me off are the commercials which indicate that you should give someone a new car for Christmas. What? Who does that? Who even buys new cars? Don’t they know how much money they’re throwing away? I’m seriously anti-that. Luckily our TV is gone (our 3-year-old, then 2, pulled it off the stand onto the floor – he’s fine) so I’m not seeing those commercials any more. Nor the diamonds-are-a-girls-best-friend commercials. I told my husband 10 years ago that if he ever buys me a diamond I’m divorcing him immediately. We shook on it.

I’d like to say a word against “showers” as well, since I’m on a roll. I am proud to say that I’m married with three kids and I’ve never had any kind of shower, wedding or baby, nor did I have wedding presents (actually one of my relatives ignored my request not to give us anything but what can you do).

I think the idea of wedding presents is fine- it was created for the purpose of setting up a household for a young couple who has nothing. But in modern times, where I lived with my husband for months before we got married, it shouldn’t be a surprise that we already had a bed and dishes. If that’s not the purpose of wedding gifts, then what is?

Back to showers. The basic idea is, come to my house for the purpose of giving me presents. It’s like having a party where the guests do all the work. How about you just have a party? And if you have time to knit a cute little sweater for the new baby, bring it over one day and we can have coffee and talk about contractions and epidurals or something while we admire your handiwork.

I’ve gone to one good wedding shower; it took place in a karaoke bar in Koreatown, and there was a cake shaped like a penis and both men and women attended. So in other words it was just a raunchy party. That’s my kind of wedding shower.

Categories: rant

Two poems

Sometimes the night falls
and I fall with it, those
inner reefs no match
for the outer currents.

Sometimes the day comes
and I’m not ready, the
sunlight streaming, too
binding for a dip in the dark.

Sometimes the rain breaks,
pouring down, washing me
out down the street past storefronts
of fruit, where my boys linger.

This is how I interact with the world,
fully engaged, and a bit unable to
loosen the harness.

This is how I make peace with the world,
too, the personal battles played out against
the ebb and flow of greater forces.

For I am a force to be reckoned with. Know that.
But even gravity finds its match in

by Manya Raman Sundström
For Cathy O’Neil, whom I barely met
Umeå, Nov. 7, 2010


This Wind

This wind
is a woman
no doubt.

She’s soft as silk,
then bold and wild.
She scolds and sulks,

She’s the kind of wind
the palm trees bow down to:
regal, feral,

This wind
is a flamenco temptress
staccato tempest,
her temper

and subsides.
She rewards with a caress
neither tender
nor mild.

This wind
is an enraged mother,
a heart breaker,
a scorned lover, yes
but, Sister!

She’s a rabble rousing
trouble making
in a dress.

She’ll rattle the gates
drum at the door
flirt with the warden
if that’s what it takes.

Freedom! my child,
Freedom! she moans.
She’s howling for you:

Woman to woman.

By Becky Jaffe
Inspired by tonight’s blustery wind, and by the kick-ass women in my life (that’s you!)
Nov. 2, 2011

Categories: Uncategorized

Sing with me! (#OWS)

If there’s one thing we need right now in the Occupy movement, it’s a bit of inspiration, hope, and silliness. I was touched to hear that 300 people ate Thanksgiving dinner at Zuccotti Park yesterday (although the standoff with police over the drumming didn’t sound awesome) but let’s face it, it hurts that the park was cleared of tents.

It’s really easy to slide into a funk right about now: there’s bad press, the Eurozone is looking doomed, and politicians are frozen in conflict. I say don’t let it happen. Don’t take everything too seriously, because these things take a long time to work, and so much progress has already been made. Let’s look at winter as a time to hunker down and work on our projects so that in the Spring we can get together and be amazed by how far we’ve come.

I really like the idea of Occupying Black Friday- today will be the first time I actually participate at all, except for the time we drove all the way to Ithaca for Thanksgiving before realizing we forgot our suitcase and we ended up buying clothes and toothbrushes on Friday. That doesn’t really count though.

So I’m planning to be a consumer zombie today at the mall near Columbus Circle. That just means I’ll walk around like a zombie and wearing a sign that says “consumer”. I’m bringing my 3-year old; I’m thinking of putting a sign on his back saying “consumer in training” or something.

But here’s what I’m really into. Flash mob singing. Yeah, seriously, the inner musical performer in me is dying to get a group of people and come up with a seriously awesome song and associated line dance. In a mall or maybe a public space like Times Square. Something that makes people baffled and happy, that makes them think about how love works.

To see how I was thus inspired, see this wonderful Occupy Oakland protest. For those of you who don’t know me, I am the barefoot girl in the bright pink cocktail dress with a matching boa and backpack. I mean, not really since I haven’t gone to Oakland recently, but that’s who I am, if you can dig it.

So who’s in? I’m taking suggestions for song, dance, and venue. If you’re not local you can still participate by coming up with ideas! If you are local, grab your boa.

Categories: #OWS, rant

‘Move Your Money’ app (#OWS)

One of the most aggravating things about the credit crisis, and the (lack of) response to the credit crisis, is that the banks were found to be gambling with the money of normal people. They took outrageous risks, relying on the F.D.I.C. insurance of deposits. It is clearly not a good system and shouldn’t be allowed.

In fact, the Volcker Rule, part of the Dodd-Frank bill which is supposed to set in place new regulations and rules for the financial industry, is supposed to address this very issue, or risky trading on deposits. Unfortunately, it’s unlikely that the Volcker Rule itself goes far enough – or its implementation, which is another question altogether. I’ve posted about this recently, and I have serious concerns about whether the gambling will stop. I’m not holding my breath.

Instead of waiting around for the regulators to wade through the ridiculously complicated mess which is the financial system, there’s another approach that’s gaining traction, namely draining the resources of the big banks themselves by moving our money from big banks to credit unions.

I’ve got a few posts about credit unions from my guest poster FogOfWar. The basic selling points are as follows: credit unions are non-profit, they are owned by the depositors (and each person has an equal vote- it doesn’t depend on the size of your deposits), and their missions are to serve the communities in which they operate.

There are two pieces of bad news about credit unions. The first is that, because they don’t spend money on advertising and branches (which is a good thing- it means they aren’t slapping on fees to do so), they are sometimes less convenient in the sense of having a nearby ATM or doing online banking. However, this is somewhat alleviated by the fact that there are networks of credit union ATM’s (if you know where to look).

The second piece of bad news is that you can’t just walk into a credit union and sign up. You need to be eligible for that credit union, which is technically defined as being in its field of membership.

There are various ways to be eligible. The most common ones are:

  • where you live (for example, the Lower East Side People’s Federal Credit Union allows people from the Lower East Side and Harlem into the field of membership)
  • where you work
  • where you worship or volunteer
  • if you are a member of a union or various kinds of affiliated groups (like for example if you’re Polish)

This “field of membership” issue can be really confusing. The rules vary enormously by credit union, and since there are almost 100 credit unions in New York City alone, that’s a huge obstacle for someone to move their money. There’s no place where the rules are laid out efficiently right now (there are some websites where you can search for credit unions by your zipcode but they seem to just list nearby credit union regardless of whether you qualify for them; this doesn’t really solve the problem).

To address this, a few of us in the #OWS Alternative Banking group are getting together a team to form an app which will allow people to enter their information (address, workplace, etc.) and some filtering criteria (want an ATM within 5 blocks of home, for example) and get back:

  • a list of credit unions for which the user is eligible and which fit the filtering criteria
  • for each credit union, a map of its location as well as the associated ATM’s
  • link to the website of the credit union
  • information about the credit union: its history, its charter and mission, the products it offers, the fee structure, and its investing philosophy

It’s a really exciting project and we’ve got wonderful people working on it. Specifically, Elizabeth Friedrich, who has amazing knowledge about credit unions inside New York City (our plan is to start withing NYC but then scale up once we’ve got a good interface to add new credit unions), Robyn Caplan, who is a database expert and has worked on similar kinds of matching problems before, and Dahlia Bock, a developer from ThoughtWorks, a development consulting company which regularly sponsors social justice projects.

The end goal is to have an app, which is usable on any phone or any browser (this is an idea modeled after’s new look- it automatically adjusts the view depending on the size of your browser’s window) and which someone can use while they watch the Daily Show with Jon Stewart. In fact I’m hoping that once the app is ready to go, we go on the Daily Show and get Jon Stewart to sign up for a credit union on the show just to show people how easy it is.

We’re looking to recruit more developers to this project, which will probably be built in Ruby on Rails. It’s not an easy task: for example, the eligibility by location logic, for which we will probably use google maps, isn’t as easy as zipcodes. We will need to implement some more complicated logic, perhaps with an interface which allows people to choose specific streets and addresses. We are planning to keep this open source.

If you’re a Rails developer interested in helping, please send me your information by commenting below (I get to review comments before letting them be viewed publicly, so if you want to help, tell me and won’t ever make it a publicly viewable comment, I’ll just write back to your directly). And please tell your socially conscious nerd friends!