Tuesday, September 30, 2008

The Sanction

The Heritage Foundation, for example, says the consequences for not passing the Wall Street bail-out legislation will be quick and sure.

If you own and operate a small business and experiencing the crunch on cash flow and need to borrow to continue operations, you will be sanctioned quick and sure.

Notice how the risk, the sanction, is a function of a firm's size. The bigger the firm--the more cash (solvency) you have to leverage in a credit economy--the more this Hamiltonian sanction is positive and not negative.

Understanding the mathematics of leverage finance is key to understanding the operation of the Hamiltonian model of political economy, identifying the problem and applying a fitting solution (see the article at griffithlighton.blogspot,com}.

The argument is being made that not passing the bail-out plan is causing negative market sentiment. That is a fraud and is indicative of what is wrong with the analytics.

Market sentiment was negative going into the legislative process with low confidence that the proposed plan could reverse the deflationary trend. The continued negative sentiment is just a confirmed lack of confidence of a legislative measure that is not characteristically Hamiltonian and the model of what does not work!

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