Independent investors need to determine the objective of current political-economic activity to protect their capital from the fully intended predations of classic economic modeling--to consolidate the capital (your savings and the value of your investments).
The intention to confirm practical application of the classical economic model well into the future is fully indicated by innovative political means that correlate directly with the innovations within the financial sector. Federal Reserve chairman, Bernanke recently refered to innovative financial instruments and practices as a healthy market efficiency that needs to be closely regulated to both prevent this deep recession from getting deeper and prevent innovation that is systemically destabilizing in the future.
Bernanke is confirming the intent to support the predatory results of allowing the capital to consolidate into innovative market mechanisms that are a function of massive money flows and momentum that CAUSE "bubbles" (extreme overbought conditions that lure investors into a false-positive with the valuation being speculative and not fundamental--like $135/bl for oil and eight years of false economic growth policies--only to burst the bubble and consolidate the monetized value). The next phase of the business cycle, neo-classically refered to as the "infusion" phase in which new capital is injected by monetary expansion (monetarism), is when the unconsolidated capital intended to restore liquidity with minimal redistribution from the consolidated value (the distribution phase of the cycle) is carefully regulated to that end and allowed to be innovatively consolidated later in the accumulation phase of the cycle. (Buy-and-hold is a good strategy at this point of the cycle when the Dow dips below 7500 which has become a false support beyond which the market is overvalued in the next six to twelve months).
Bernanke is applying the Hamiltonian model of ensuring the welfare of the rich in priority (what is too big to be allowed to fail) that CAUSES the systemic crisis, ensuring the organization and operation of the systemic risk in order to prevent it (?). Capital is allowed to consolidate, antithetical to the legitimate means of a free-market (pluralist) mechanics. Expert (elitist) adjustment of the negative externalities occurs at the end of the process since financials will innovate to avoid non-market regulation. The result is an ends-justifies-the-means legitimacy of a command economy with a false free-market legitimacy.
Causing crisis, and the systematic mechanism of predation, in the name of innovative technical management of the systemic risk by operation of careful regulatory authority (state capitalism) administered by a professional class of MBA's is a confidence game intended to conserve the consolidation of the capital and a defeat of the free-market mechanism it pledges to ensure. This is where the political economy becomes so complex, so difficult to understand and confirm, that the machinations of the elite easily achieve the consolidation of power with a false pluralistic legitimacy.
That the political economy is being reinvented (innovated) to ensure the fair and equitably legitimate outcome of a free-market economics by public regulatory authority just indicates one thing: the market is being rigged so that the small investor will always be at a systematic disadvantage with a free-market legitimacy by operation and declaration of public authority.
The practical philosophy that we must replace the free-market mechanism with the operation of a public authority is not paradoxical, it is a contradiction. It indicates a fraud, not the operation of a genuine civil service acting in the public trust, but a bureaucratic political economy of elits entrusted to conserve the distribution of wealth and power in a continuous crisis proportion that always demands its elite management and the "bonus" compensation of a sub-elite class of loyalists to administer it.
The bonus payments to retain the elite talent to administer state capitalism (to administer a non-free-market organizational technology with a free market legitimacy, or to perpetrate the fraud) buys the loyalty of what is otherwise a tendency to be free and fair, rewarding the most corrupt and morally incompetent. For the investor, this affects the bottom line. It is not just an ethological and ethical consideration. It indicates what the macro-economic model will look like despite the recent political changes, and I am sorry to say it is a faux political change that will not ensure the cure for what ails us: a regulatory authority that ensures a free and unconsolidated marketplace in priority (pluralism).
Recent political change is an innovation that conserves the consolidation of wealth and power by systematic predation and a means of managing the retributive value (the full value to be distributed to recover from, and prevent, liquidity crisis) shammed as technocratic management of systemic risk and punctuated crisis that will ensure the probability of its recurrent accumulative and distributional macro-economic value. The classical economic model of capitalism in which the measure of success is to defeat free-market mechanics as a function of organizational size is conserved with the pluralistic legitimacy neo-classically administered, and carefully measured in posteriori, rather than ensuring its legitimate means, and the probability of fair and equitable results, in priority.
Ensuring an organized deconsolidation, and the plurality of opportunistic investment that will naturally occur, is a pragmatic priority easily set to be accomplished in the first 100 days. The Democratic party executive and legislative leadership, however, do not understand the economics well enough to effect the needed change even if they could see beyond the self-satisified dictates of their ideology and the thrill of politically gaming for it despite the president's penchant for pragmatism.
The change we really need (pluralism) is highly improbable. So, load up and hold on to equities of companies that are too big to fail the liquidity crisis they are organized to cause both now and in the future with the very highest probability being very clearly indicated.
Thursday, April 30, 2009
Saturday, April 4, 2009
The Economic Stimulus Legislation
There has not been a lot of confidence in the congressional delegation, and the president's pragmatism seems to have devolved to a partisan deference to the congressional leadership. He will find that, despite what Emanuel tells him, to be a mistake, already showing up as a waning popular support.
If we can fully embrace pragmatism over partisanship, The People will be much better served. The economic stimulus legislation is a monument to old-school Keynesian economics and monetizing the debt. Nothing new about that except the size of it.
Without a more progressive tax code, and all we have seen is a penchant for regressive tax measures, the middle class will be hammered with the debtor assignment on this colossal debt. If this is intended to be anti-recessionary legislation, we have not seen anything yet!
The speaker of the house says Democrats did not gain a majority to compromise The People's business. That would be meaningful if there was confidence in the ability to recognize what that is. It does not appear to be a confirmation of pragmatism over partisanship that avoids outmoded, Keynesian technical measures. Rather, it appears as typical tax and spend legislation that will leave the least able to pay holding the big bag of debt.
Does anyone really believe the speaker of the house and the congressional delegation is really interested in change We The People need?
What I see is an old-school stimulus program that will be highly inflationary, setting up the realignment toggle switch to the Republican Party. Demand-reduction measures (a highly regressive tax code with a rising rate of interest--Reaganomics) will be used to then control the inflationary trend. We will just be churning the problem.
So much for building a pragmatic coalition for change we need.
You don't have to be a Republican to be part of the neo-conservative coalition.
If we can fully embrace pragmatism over partisanship, The People will be much better served. The economic stimulus legislation is a monument to old-school Keynesian economics and monetizing the debt. Nothing new about that except the size of it.
Without a more progressive tax code, and all we have seen is a penchant for regressive tax measures, the middle class will be hammered with the debtor assignment on this colossal debt. If this is intended to be anti-recessionary legislation, we have not seen anything yet!
The speaker of the house says Democrats did not gain a majority to compromise The People's business. That would be meaningful if there was confidence in the ability to recognize what that is. It does not appear to be a confirmation of pragmatism over partisanship that avoids outmoded, Keynesian technical measures. Rather, it appears as typical tax and spend legislation that will leave the least able to pay holding the big bag of debt.
Does anyone really believe the speaker of the house and the congressional delegation is really interested in change We The People need?
What I see is an old-school stimulus program that will be highly inflationary, setting up the realignment toggle switch to the Republican Party. Demand-reduction measures (a highly regressive tax code with a rising rate of interest--Reaganomics) will be used to then control the inflationary trend. We will just be churning the problem.
So much for building a pragmatic coalition for change we need.
You don't have to be a Republican to be part of the neo-conservative coalition.
The Tyranny of Liberty
The conservative element, busily remaining relevant to the dialectic of cyclical economic crisis and the demand for change in a post-industrial society, argues that correcting for the detriment experienced by the vast majority of Americans in the current crisis is a tyranny of liberty that must be reversed in order to preserve the fundamental principles that our nation was founded, has made us strong and will keep us strong.
The conservative principles refered to by the conservative element as fundamental are derived from pre-industrial society when making a profit was the entrepreneurial adventure on the wild frontier. Society has since progressed into a post-industrial productive capacity that is even beyond the classical economic problem of crisis of overproduction being just a lack of demand caused by surplusing value, but sheer productive capacity.
Post-industrial capacity is far beyond the conditions that produced the American Revolution. At that time, the tyrant was the king preventing the businessperson (the bourgeoise, the middle class) the full market value of their work in the marketplace to achieve economic growth and a peaceful prosperity--the profit. The middle class fully intended to replace the king's inherited right to rule with their inherited right to rule, or the natural right to liberty that the tyrant was preventing.
Once the king's power was supplanted by the bourgeoise, a private propertied ruling "class" emerged, no longer middle class. The productive capacity of neo-classical capitalism monetizes the retributive value and allows for the extension of credit for a burgeoning middle class now demanding the retribution of value (the revolution) Keynesian innovations are designed to prevent.
The demand for equitable distribution of economic value by government authority (the sovereign people) in opposition to the old liberty to accumulate it and cause general economic crisis must be rendered a threat to the post-industrial middle class by the conservative element. Fear and loathing is the agendae--liberty is being destroyed by the tyranny of the plenary and complete, absolute power of government (the legal, constitutional sovereign).
For the conservative element, the legal sovereignty of The People is self-rule. The fate of The People is thus self-determined and, therefore, retributing the economic value accumulated can only be ex-post-facto and by bill of attainder, or by illegal, tyrannical means that are the antithesis of freedom. Choosing to retribute the value is tantamount to choosing tyranny and the Hamiltonian (elitist) form of government is thus confirmed as necessary to conserve the liberty the Revolution has confered.
If The People are inherently incapable of ruling, self-rule is naturally the function of, it is to be "attributed" to, the power elite--the "old" liberty that resulted in the accumulation of wealth and power by what was once the middle class.
This conservation of liberty renders the conservative element relevant to the current dynamic of power to redefine, realign, and finally, restructure the elements of the power structure as the value is naturally "retributed" to the middle class. The change that will occur is not to be feared and loathed. It will be a tyranny of liberty that replaces the liberty of tyranny.
The conservative principles refered to by the conservative element as fundamental are derived from pre-industrial society when making a profit was the entrepreneurial adventure on the wild frontier. Society has since progressed into a post-industrial productive capacity that is even beyond the classical economic problem of crisis of overproduction being just a lack of demand caused by surplusing value, but sheer productive capacity.
Post-industrial capacity is far beyond the conditions that produced the American Revolution. At that time, the tyrant was the king preventing the businessperson (the bourgeoise, the middle class) the full market value of their work in the marketplace to achieve economic growth and a peaceful prosperity--the profit. The middle class fully intended to replace the king's inherited right to rule with their inherited right to rule, or the natural right to liberty that the tyrant was preventing.
Once the king's power was supplanted by the bourgeoise, a private propertied ruling "class" emerged, no longer middle class. The productive capacity of neo-classical capitalism monetizes the retributive value and allows for the extension of credit for a burgeoning middle class now demanding the retribution of value (the revolution) Keynesian innovations are designed to prevent.
The demand for equitable distribution of economic value by government authority (the sovereign people) in opposition to the old liberty to accumulate it and cause general economic crisis must be rendered a threat to the post-industrial middle class by the conservative element. Fear and loathing is the agendae--liberty is being destroyed by the tyranny of the plenary and complete, absolute power of government (the legal, constitutional sovereign).
For the conservative element, the legal sovereignty of The People is self-rule. The fate of The People is thus self-determined and, therefore, retributing the economic value accumulated can only be ex-post-facto and by bill of attainder, or by illegal, tyrannical means that are the antithesis of freedom. Choosing to retribute the value is tantamount to choosing tyranny and the Hamiltonian (elitist) form of government is thus confirmed as necessary to conserve the liberty the Revolution has confered.
If The People are inherently incapable of ruling, self-rule is naturally the function of, it is to be "attributed" to, the power elite--the "old" liberty that resulted in the accumulation of wealth and power by what was once the middle class.
This conservation of liberty renders the conservative element relevant to the current dynamic of power to redefine, realign, and finally, restructure the elements of the power structure as the value is naturally "retributed" to the middle class. The change that will occur is not to be feared and loathed. It will be a tyranny of liberty that replaces the liberty of tyranny.
Resurgent Conservatism: Or How to Play Your Eight-Track Tapes with a CD Player
Proponents of conservative philosophy are frantically publishing to capitalize on the Keynesian stimulus program.
The program will be inflationary. Commodities will begin to retrace the valuations that caused the deflationary trend. The SEC and treasury will act to limit leveraging into options and futures, but $4 trillion of stimulus will be extra hard to control.
It is just a reinvention of the problem, and the leadership driving the Keynesian stimulus are setting up the resurgence of the conservative element, with the sum of all the parts being, neo-conservative.
Conservatism will not be rendered politically obsolete because the medium to play it back is being reinvented.
The program will be inflationary. Commodities will begin to retrace the valuations that caused the deflationary trend. The SEC and treasury will act to limit leveraging into options and futures, but $4 trillion of stimulus will be extra hard to control.
It is just a reinvention of the problem, and the leadership driving the Keynesian stimulus are setting up the resurgence of the conservative element, with the sum of all the parts being, neo-conservative.
Conservatism will not be rendered politically obsolete because the medium to play it back is being reinvented.
Case Study in the Efficiency of Not Being Too Big to Fail
Ford Motor Corporation, having divested itself of acquisitions has had the cash to avoid needing a government bail out.
The success is dubious considering that GMC, a company that was designed to be an automobile trust (the business model of "too big to fail"), will benefit from both the government funds (a huge line of credit no one else is likely to get) and the prospect of a structured bankruptcy settlement.
Nevertheless, becoming smaller has prevented Ford from needing government assistance, and as a general statement, a government that ensures firms do not become too big to fail first and foremost, rather than bailing them out with what the macro business model "too big to fail" refers to as the "infusion phase," is a partnership of efficiency that accrues both public and private.
Automobile manufacturers are victim of the financial sector. The leveraging that went on instead of investment in economic growth deflated our economy. Combine that with an outrageous inflation of the healthcare sector driven by gigantic pools of cash generated by a tobacco tax scheme, and we have one colossal recession with a strong deflationary trend.
Do not discount the deflationary value of rising healthcare costs by means of public finance for the economy generally, and the automobile sector in particular.
Despite the reduced number of smokers over many years, the cost of healthcare did not go down, but up. Way up! It was not the smokers that caused the high inflation, it was the tax. All the tax means to the healthcare sector is more money available for price increases (derived from a cohort that are addicted to a product with a tax hypocritically argued to be by volition on the one hand, and to be controlled as a highly addictive substance on the other). The result is an extreme accumulation of wealth that is a major cause of the depth and breadth of the current deflationary trend (and the highest level of cynicism that only the most self-satisfied and illiberal deserve).
It needs to be made perfectly clear that much of what ails us is the economics built into the healthcare sector operating with an inelastic demand curve and a huge pool of tax money to drive (push) the cost up.
The inelastic demand curve gives healthcare that too-big-to-fail quality of being indispensable, and the public financing will always push the cost up as long as it is made available without limitation. Again, that limitation should be by ensuring it is a free and unconsolidated marketplace first, then adjust for the externalities. Adjusting for the externality of having no income as the result of deflationary pressure (because of its accumulation into the hands of a few people) just increases the cost (an accumulation of income) and the deflationary pressure, like we are doing now despite controlling healthcare costs being a pillar of our plan for economic recovery and reinvestment.
With the accumulation of wealth, verifiably, comes the accumulation of power and the need, therefore, to deconsolidate it.
The divestiture that needs to occur with the healthcare sector is the tax subsidy.
The success is dubious considering that GMC, a company that was designed to be an automobile trust (the business model of "too big to fail"), will benefit from both the government funds (a huge line of credit no one else is likely to get) and the prospect of a structured bankruptcy settlement.
Nevertheless, becoming smaller has prevented Ford from needing government assistance, and as a general statement, a government that ensures firms do not become too big to fail first and foremost, rather than bailing them out with what the macro business model "too big to fail" refers to as the "infusion phase," is a partnership of efficiency that accrues both public and private.
Automobile manufacturers are victim of the financial sector. The leveraging that went on instead of investment in economic growth deflated our economy. Combine that with an outrageous inflation of the healthcare sector driven by gigantic pools of cash generated by a tobacco tax scheme, and we have one colossal recession with a strong deflationary trend.
Do not discount the deflationary value of rising healthcare costs by means of public finance for the economy generally, and the automobile sector in particular.
Despite the reduced number of smokers over many years, the cost of healthcare did not go down, but up. Way up! It was not the smokers that caused the high inflation, it was the tax. All the tax means to the healthcare sector is more money available for price increases (derived from a cohort that are addicted to a product with a tax hypocritically argued to be by volition on the one hand, and to be controlled as a highly addictive substance on the other). The result is an extreme accumulation of wealth that is a major cause of the depth and breadth of the current deflationary trend (and the highest level of cynicism that only the most self-satisfied and illiberal deserve).
It needs to be made perfectly clear that much of what ails us is the economics built into the healthcare sector operating with an inelastic demand curve and a huge pool of tax money to drive (push) the cost up.
The inelastic demand curve gives healthcare that too-big-to-fail quality of being indispensable, and the public financing will always push the cost up as long as it is made available without limitation. Again, that limitation should be by ensuring it is a free and unconsolidated marketplace first, then adjust for the externalities. Adjusting for the externality of having no income as the result of deflationary pressure (because of its accumulation into the hands of a few people) just increases the cost (an accumulation of income) and the deflationary pressure, like we are doing now despite controlling healthcare costs being a pillar of our plan for economic recovery and reinvestment.
With the accumulation of wealth, verifiably, comes the accumulation of power and the need, therefore, to deconsolidate it.
The divestiture that needs to occur with the healthcare sector is the tax subsidy.
Whose Money Is It?
If you are a bourgeois entrepreneur in the old days of an emerging capitalist eonomics, the new economics is in direct conflict with mercantilism--economic expansion financed by the king (the sovereign ruler, or government). Since you did all the work to expand the pie, you claim full ownership of the reward (the profit) that is value generated in the marketplace. The only value legitimately owned by the king is the initial investment, but the king claims the entire reward because he is the ruler.
By definition, it is the ruler that decides the distribution of rewards and deprivations. If the king allows the bourgeois class to keep the profits without it passing from the royal, ruling class, the bourgeoise is the defacto ruling class. In order to retain the status of ruler, the king must claim the wealth as public, sovereign property to be accumulated and distributed by the operaton of sovereign (government) authority--mercantilism. For the entrepreneur, the value, and the power it confers, is expropriated and is destined to be retributed to the private sector. The distinction between what is the public and private domains of power, and what is public and private property, is born.
The dialectic continues today with the private sector not wanting to relinquish ownership of the wealth to the sovereign which, after The Revolution, became The People. While it is illegal to be publicly confered the title of king, it is not illegal to behave like the sovereign ruler in the private sector--to become "successful." The best way to do that is to, like the king claiming public power, organize into being "too big to fail" which, as we have recently observed, commands a public sector investment that rivals a king's wildest dream of avarice and greed that the bourgeoise of old so strongly objected to.
Now that The People are claiming the value (the profit) produced in the marketplace, the bourgeoise are claiming, like the king, the value, and the power it confers, must pass from the private sector to The People (it must trickle down). So, we have the struggle of who is in control of the use of the "bailout money." Is it a public or a private function? Technocrats (the philosophes of old) have decided it needs to be legitimately both, with the value to be trickled down.
The stakes are high for the private-sector power elite. Either they capitulate to public power, or risk the entire value (what confers the power to rule) being retributed. Thus, we have the "public-private partnership," or what Marx called, anti-socialist socialism.
So, whose money is it?
The value has been historically retributed.
By definition, it is the ruler that decides the distribution of rewards and deprivations. If the king allows the bourgeois class to keep the profits without it passing from the royal, ruling class, the bourgeoise is the defacto ruling class. In order to retain the status of ruler, the king must claim the wealth as public, sovereign property to be accumulated and distributed by the operaton of sovereign (government) authority--mercantilism. For the entrepreneur, the value, and the power it confers, is expropriated and is destined to be retributed to the private sector. The distinction between what is the public and private domains of power, and what is public and private property, is born.
The dialectic continues today with the private sector not wanting to relinquish ownership of the wealth to the sovereign which, after The Revolution, became The People. While it is illegal to be publicly confered the title of king, it is not illegal to behave like the sovereign ruler in the private sector--to become "successful." The best way to do that is to, like the king claiming public power, organize into being "too big to fail" which, as we have recently observed, commands a public sector investment that rivals a king's wildest dream of avarice and greed that the bourgeoise of old so strongly objected to.
Now that The People are claiming the value (the profit) produced in the marketplace, the bourgeoise are claiming, like the king, the value, and the power it confers, must pass from the private sector to The People (it must trickle down). So, we have the struggle of who is in control of the use of the "bailout money." Is it a public or a private function? Technocrats (the philosophes of old) have decided it needs to be legitimately both, with the value to be trickled down.
The stakes are high for the private-sector power elite. Either they capitulate to public power, or risk the entire value (what confers the power to rule) being retributed. Thus, we have the "public-private partnership," or what Marx called, anti-socialist socialism.
So, whose money is it?
The value has been historically retributed.
Conservative Populist Rhetoric
The oxymoron of conservative populism is in full rhetorical swing as we assess the possible alternatives to a power structure that the vast majority are quite sure does not operate in their individual interest.
Conservative populism is to minimize the retributive value that accumulates with an accumulation of wealth and power, especially in a structured social environment that relies on a pluralistic legitimacy (like a free-market system) in which individuals collectively decide investment of the capital (what is produced) and at what price (the marginal utility, or the profit margin, that determines incomes for both consumers and producers).
An accumulation of power means that the majority of individuals have less power to determine their fate than a systematic pluralism is supposed to legitimately allow (that outcomes--distributions--are the result of "command" and not a legitimate "demand").
The demand for legitimacy by the populace is argued by conservatives as an assault on the primacy of individual liberty because it is a collective, a populist, demand. The argument is then this: if the elite (the accumulators of wealth and power) are not allowed to freely pursue life, liberty and happiness, the individual liberty being pursued by the populace will be lost. Of course, the very demand for populist action is the measure of individual liberty lost (commanded) in zero-sum to the elite (the retributive value). It is the plight of conservatives to "conserve" the illegitimate disequilibrium as the general will of the people, providing for (commanding) the general (collective) welfare instead of being defined as value misappropriated and to be retributed to the legitimate, the expected, outcome.
Moneterism, Keynesian spending programs, and pulbic-private partnerships are bureaucratically designed and ministered to at least approximate the legitimately expected outcome without retributing the full value.
While the vast majority of citizens in a populist outrage do not expect the system to be perfect, massive foreclosures, unemployment, accumulation of wealth and power to the point of global economic collapse is not a reasonable approximation of what is to be expected, despite the conservative rhetoric.
It is equally unreasonable to expect reforming, or reinventing, the system we have now to produce a better approximation of a stable, equilibriating, structure of power without ensuring the fundamental organizational elements that allow for it.
It is unreasonable, for example, to expect pluralistic, unconsolidated, fair-and-equitable results, like compensation, when we reorganize "too big to fail" (what accumulates the wealth to pay the inequity) into a public-private partnership that allows conserving the organizational size to achieve the "synergistic" (the accumulated, non-pluralistic) efficiency of an "economy of scale."
The best way to control risk-prone executive compensation is to not allow for the large-scale corporates that can pay it. The risk associated with the reward of the compensation is the effect, not the cause of the problem. The problem is organizational. Since it causes the effect, the solution can only be reasonably expected to eliminate the cause, not just reform the effect to allow for continued consolidation of industry and markets. Treating the effect (symptomatic treatment) ensures non-pluralistic, command type of outcomes that deliver short-term reward with a long-term risk that really is not a "risk" at all, but a fully predictable benefit created by the "synergy" (the efficiency) of consolidating that comes with cyclical (recessionary) trends.
It should be perfectly clear, at this point, that allowing corporates (the private sector of power) to organize to be "too big to fail," or to be tyrannical, is inimical. It should be equally clear that allowing the corporates to partner with government (the public sector of the power structure which is by definition absolute in its power with the force and legitimacy of public authority) is equally inimical. That absolute power needs to be operationalized to prevent "too big to fail" and the tyranny, and the false efficiency, it empirically verifies.
Each and every individual has the power together to command the fate of freedom we all legitimately, pluralistically, expect. It is not impossible, it is just not being allowed to happen.
A government for and by The People does not allow for the inefficiency, the tyranny, of "too big to fail" in priority, but allows for the individual to succeed in priority without having to join the dictates of the too-big consolidation of the corporate collective.
The People want to fully exercise the freedom prescribed by the Constitution, not proscribed by economic dependancy on a large, extortionate, corporate collective. The People choose freedom over feudalism, in liege to the happy pursuit of a self-defined individualism that far exceeds the value of having to join the collective identity of an ever-larger and demonstrably corrupt and incompetent corporate culture in order to succeed.
A private drone made into a public drone, or a public-private drone, is still a drone, in liege to the corporate self from the top down.
Government that ensures a free and unconsolidated marketplace in priority allows for a collective defined by a pursuit of individual happiness that is allowed to become without the limitations of an organized determinism subservient to an elite class of would-be feudal lords with the false free-market legitimacy of a consolidated capital and the false individualism of a collective corporate consciousness.
Conservative populism is to minimize the retributive value that accumulates with an accumulation of wealth and power, especially in a structured social environment that relies on a pluralistic legitimacy (like a free-market system) in which individuals collectively decide investment of the capital (what is produced) and at what price (the marginal utility, or the profit margin, that determines incomes for both consumers and producers).
An accumulation of power means that the majority of individuals have less power to determine their fate than a systematic pluralism is supposed to legitimately allow (that outcomes--distributions--are the result of "command" and not a legitimate "demand").
The demand for legitimacy by the populace is argued by conservatives as an assault on the primacy of individual liberty because it is a collective, a populist, demand. The argument is then this: if the elite (the accumulators of wealth and power) are not allowed to freely pursue life, liberty and happiness, the individual liberty being pursued by the populace will be lost. Of course, the very demand for populist action is the measure of individual liberty lost (commanded) in zero-sum to the elite (the retributive value). It is the plight of conservatives to "conserve" the illegitimate disequilibrium as the general will of the people, providing for (commanding) the general (collective) welfare instead of being defined as value misappropriated and to be retributed to the legitimate, the expected, outcome.
Moneterism, Keynesian spending programs, and pulbic-private partnerships are bureaucratically designed and ministered to at least approximate the legitimately expected outcome without retributing the full value.
While the vast majority of citizens in a populist outrage do not expect the system to be perfect, massive foreclosures, unemployment, accumulation of wealth and power to the point of global economic collapse is not a reasonable approximation of what is to be expected, despite the conservative rhetoric.
It is equally unreasonable to expect reforming, or reinventing, the system we have now to produce a better approximation of a stable, equilibriating, structure of power without ensuring the fundamental organizational elements that allow for it.
It is unreasonable, for example, to expect pluralistic, unconsolidated, fair-and-equitable results, like compensation, when we reorganize "too big to fail" (what accumulates the wealth to pay the inequity) into a public-private partnership that allows conserving the organizational size to achieve the "synergistic" (the accumulated, non-pluralistic) efficiency of an "economy of scale."
The best way to control risk-prone executive compensation is to not allow for the large-scale corporates that can pay it. The risk associated with the reward of the compensation is the effect, not the cause of the problem. The problem is organizational. Since it causes the effect, the solution can only be reasonably expected to eliminate the cause, not just reform the effect to allow for continued consolidation of industry and markets. Treating the effect (symptomatic treatment) ensures non-pluralistic, command type of outcomes that deliver short-term reward with a long-term risk that really is not a "risk" at all, but a fully predictable benefit created by the "synergy" (the efficiency) of consolidating that comes with cyclical (recessionary) trends.
It should be perfectly clear, at this point, that allowing corporates (the private sector of power) to organize to be "too big to fail," or to be tyrannical, is inimical. It should be equally clear that allowing the corporates to partner with government (the public sector of the power structure which is by definition absolute in its power with the force and legitimacy of public authority) is equally inimical. That absolute power needs to be operationalized to prevent "too big to fail" and the tyranny, and the false efficiency, it empirically verifies.
Each and every individual has the power together to command the fate of freedom we all legitimately, pluralistically, expect. It is not impossible, it is just not being allowed to happen.
A government for and by The People does not allow for the inefficiency, the tyranny, of "too big to fail" in priority, but allows for the individual to succeed in priority without having to join the dictates of the too-big consolidation of the corporate collective.
The People want to fully exercise the freedom prescribed by the Constitution, not proscribed by economic dependancy on a large, extortionate, corporate collective. The People choose freedom over feudalism, in liege to the happy pursuit of a self-defined individualism that far exceeds the value of having to join the collective identity of an ever-larger and demonstrably corrupt and incompetent corporate culture in order to succeed.
A private drone made into a public drone, or a public-private drone, is still a drone, in liege to the corporate self from the top down.
Government that ensures a free and unconsolidated marketplace in priority allows for a collective defined by a pursuit of individual happiness that is allowed to become without the limitations of an organized determinism subservient to an elite class of would-be feudal lords with the false free-market legitimacy of a consolidated capital and the false individualism of a collective corporate consciousness.
April Fools
The huge federal tax increase on tobacco that takes effect April 1st is our first indication that toggling between Democrats and Republicans is a false pluralism. The first act of a so-called "new" congress and administration--a huge regressive tax increase triumphantly passing congress and signed by the president--appropriately takes effect on April Fool's Day.
The best way to ensure children get the healthcare they need is to control the cost and increase the income to pay for it. SCHIP does neither!
When the government tries to control rising prices the new pool of money the new tax provides, the medical profession will simply reluct the service to be rendered in a free market fashion. Without meeting the price, and increasing the need to tax, the newly insured will be faced with a shortage. Everybody loses to the non-market, cost-push distortion of the regressive, tax-funded insurance program. The free market mechanism, instead of an equitable efficiency, is then rendered to increase the income of the healthcare sector and reduce the income of the consumer--a deflationary whipsaw effect (a continued consolidation of wealth), just exactly what we do not need!
A progressive tax will be required to correct for the distorted distribution of income, rendering the distribution more equitable so that the free market mechanism will work to everyone's benefit and not just a few market tyrants armed with an elitist, self-satisfied sense of superiority, the will to power, and a tax authority.
Instead of controlling the cost and increasing the ability to pay for it, all healthcare consumers will be whipsawed; and the race is on to see how quick an economic sector can get rich at the public trough...not exactly the legitimate model of a free-market mechanics.
Rather than freedom, the entire scheme, from the regressive, inferior-lifestyle-targeted tax burden to the distribution of the economic benefit, induces the model of tyranny being the preferred model of a two-party, duopolistic system, and a false pluralism. It is a tyranny of false choices that raises its ugly head to gain a legitimacy of power characterized by a superiority of lifestyle that especially opportunes in a time of crisis, like The Great Depression. It is a tyranny that we have learned at great cost burgeons a philosophy of intolerance that will destroy freedom in order to save it only for a few that have the will to claim righteousness and the virtue of choice for themselves.
State capitalism is not socialism. Nor is it a free-market economy.
The hope of ensuring a more free-market mechanism to control costs and increase incomes--the sure cure for deflation--by toggle-switching to the Democratic Party...April Fool!
The best way to ensure children get the healthcare they need is to control the cost and increase the income to pay for it. SCHIP does neither!
When the government tries to control rising prices the new pool of money the new tax provides, the medical profession will simply reluct the service to be rendered in a free market fashion. Without meeting the price, and increasing the need to tax, the newly insured will be faced with a shortage. Everybody loses to the non-market, cost-push distortion of the regressive, tax-funded insurance program. The free market mechanism, instead of an equitable efficiency, is then rendered to increase the income of the healthcare sector and reduce the income of the consumer--a deflationary whipsaw effect (a continued consolidation of wealth), just exactly what we do not need!
A progressive tax will be required to correct for the distorted distribution of income, rendering the distribution more equitable so that the free market mechanism will work to everyone's benefit and not just a few market tyrants armed with an elitist, self-satisfied sense of superiority, the will to power, and a tax authority.
Instead of controlling the cost and increasing the ability to pay for it, all healthcare consumers will be whipsawed; and the race is on to see how quick an economic sector can get rich at the public trough...not exactly the legitimate model of a free-market mechanics.
Rather than freedom, the entire scheme, from the regressive, inferior-lifestyle-targeted tax burden to the distribution of the economic benefit, induces the model of tyranny being the preferred model of a two-party, duopolistic system, and a false pluralism. It is a tyranny of false choices that raises its ugly head to gain a legitimacy of power characterized by a superiority of lifestyle that especially opportunes in a time of crisis, like The Great Depression. It is a tyranny that we have learned at great cost burgeons a philosophy of intolerance that will destroy freedom in order to save it only for a few that have the will to claim righteousness and the virtue of choice for themselves.
State capitalism is not socialism. Nor is it a free-market economy.
The hope of ensuring a more free-market mechanism to control costs and increase incomes--the sure cure for deflation--by toggle-switching to the Democratic Party...April Fool!
An Organizational Hypothesis
Articles published to griffithlighton.blogspot.com argue that the probability for an increasing depth and frequency of economic instability worldwide is an organizational problem that is naturally dependant on an organizational solution.
If the hypothesis is that a more equitable distribution of the benefit produced by organizing to be "too big to fail" through public-private consolidation will result in pluralizing the marketplace and achieving economic recovery and sustainable growth, the evidence extant suggests a low probability of success.
Efficiencies are dependant on organizational size. Maintaining that "bigger is better" is to validate, not verify, a nulled hypothesis.
Again, here we are, needlessly making the same mistakes over and over again, clinging to political-economic models designed to maximize monetary valuations into difficult to verify, abstract, evaluative absurdities at the expense of other measures of practical efficiency that minimize costs and maximize benefits.
If we think that consolidating into the public sector is going to deoperationalize class consciousness into a more equitable collective consciousness, that is not going to happen with a "bigger is better" organizational model.
Organized to be "too big to fail" with a collective, public-private legitimacy and authority does not ensure individuals will not act selfishly within the public trust. We will very probably learn to encourage small enterprises that operationalizes self-interest, and class consciousness, from the bottom up with a highly verifiable and close accountability, or a free-market economics in priority.
Where the market is allowed to act with full measure, without barrier and consolidaton, the distribution of costs and benefits achieves an efficiency that can be measured with a diminishing value of class consciousness which is otherwise a significant measure of a consolidated wealth and power, or what is the verifiable inefficiency of "too big to fail."
If the hypothesis is that a more equitable distribution of the benefit produced by organizing to be "too big to fail" through public-private consolidation will result in pluralizing the marketplace and achieving economic recovery and sustainable growth, the evidence extant suggests a low probability of success.
Efficiencies are dependant on organizational size. Maintaining that "bigger is better" is to validate, not verify, a nulled hypothesis.
Again, here we are, needlessly making the same mistakes over and over again, clinging to political-economic models designed to maximize monetary valuations into difficult to verify, abstract, evaluative absurdities at the expense of other measures of practical efficiency that minimize costs and maximize benefits.
If we think that consolidating into the public sector is going to deoperationalize class consciousness into a more equitable collective consciousness, that is not going to happen with a "bigger is better" organizational model.
Organized to be "too big to fail" with a collective, public-private legitimacy and authority does not ensure individuals will not act selfishly within the public trust. We will very probably learn to encourage small enterprises that operationalizes self-interest, and class consciousness, from the bottom up with a highly verifiable and close accountability, or a free-market economics in priority.
Where the market is allowed to act with full measure, without barrier and consolidaton, the distribution of costs and benefits achieves an efficiency that can be measured with a diminishing value of class consciousness which is otherwise a significant measure of a consolidated wealth and power, or what is the verifiable inefficiency of "too big to fail."
Public and Private
The model of a bifurcated power structure allows for a comparable pluralism that has evolved into managing both the positive and negative externalities of capitalism with a combined, practical organization of the two elements.
The convergence of public and private into a bureaucratic model of power evolves the power structure to produce results with a mixed legitimacy that is not clearly public or private. It allows for an analytical complexity, a plurality of opinions, that cultivates a technocratic power elite to "resolve" the complexity into the practical administration of power.
Bernanke refers to an improved "resolution process" as we look for the systematic means to ensure equitably legitimate measures to stabilize the financial market and organize to predict and avoid systemic risk originating from the private sector with what he calls the "resolution authority." He is a technician engaged in engineering and executing an organizational technology that renders, resolves, all the ideas for what is the greatest good into the fundament of monetary policy, merging the elements of the power structure into a manageable, predictable operational model that distributes value into what is considered to be the primacy of the private sector with the force and legitimacy of public authority (Hamiltonianism).
The means tends to innovate and evolve, the ends of power does not. The means has evolved with the changing perception of equitable distribution of power and wealth in post-industrial society. The conservative element of power must maintain its legitimacy with a practical administrative model that is no longer the sole command of the private sector and the captains of industry.
Where accumulated wealth in the private sector continues to largely determine the results of market mechanics by sheer size and momentum, and financial means innovate to circumvent each regulatory reform in response to accumulations allowed into a crisis proportion, we progressively defer the privacy of power to the technocrats who "resolve" in the public forum of legitimate, constitutional power.
The quest for what is manageable and predictable organized from the top down is a command economy that requires a critical measure of accountability that is best accomplished from the bottom up by ensuring a free-market mechanics, the evaluative wisdom of a collective legitimacy, in priority. Without the means to evaluate with the legitimacy of ensuring the priority, bureaucratic power becomes a tyranny of technocrats--a technocracy.
Political-economic technocrats claim the legitimacy of acting with the "public" trust. The implication is that the results of public-private organizational technique are public and the distribution of rewards and deprivations (the measure of exercised power) is the legitimate public good. Democratic (pluralistic) results are thereby ensured through autocratic (elitist) means. The means, despite being undemocratic, is argued to justify the ends in an organizational tautology that validates the elitist model as the best practice of the republic.
As we hear a lot of acrimonious rhetoric from the right wing that we are engaged in the move to socialism, analytically, they do not understand the political-economic dynamic in operation or are so blinded by ideological socialization they cannot accept divergence from the passe' pre-industrial model of bifurcated power that has built great wealth, but with an increasingly conflicted public-or-private legitimacy over the distribution of costs and benefits that has come to a point of reconciliation, or "resolution."
The right wing is losing, clinging to an absolute and obsolete theoretical legitimacy that does not square with the need for technocracy, leaving them with a diminishing credibility that is evermore reduced to the lunatic fringe of conservative talk show hosts and clownish intellectualism.
If treasury (a public bank) and the federal reserve (a private bank) do not separately or together act to produce the general welfare, then what does? The complex debate is not about a welfare--a distribution of costs and benefits--that is general, or fair and equitable, it is about producing an inequity with the legitimacy of the general welfare.
A legitimacy based on inequity requires the force of a public authority, and this is where the conservative argument resorts to all manner of fallacy and intellectual feats of funambulism because what is public authority (government, the sovereign) is historically corrupt if not incompetent, and according to The Constitution, The People are sovereign. Hence, the Hamiltonian argument that power must be exercised from the private sector by a power elite that have the ambition, the will, to power.
The ambition to power can only be by the accumulation of wealth. It is the real measure of power and is produced by the private sector with a legitimate self-determination to acquire it. Sharing the wealth is to share power. If a person wants to share in the power, a person must produce wealth, and that share is equivalent to the share produced determined by the market price in the marketplace (a private enterprise performed in public).
Since accumulating wealth can control the price, a person can accumulate shares disproportionate to the wealth produced by that person. The shares are attributed to the powerful (the elite) who must then engage a political process of preventing the value being retributed, or shared. If the value is not shared, a crisis ensues and forces political distribution of the value. It is the plight of the conservative element to minimize, or conserve, the retributive value as private property protected by constitutional right, or public authority.
We see, then, the contradiction of the conservative argument that must be "resolved." There is the accumulation of private power with the supremacy of public authority.
Co-opting the legitimacy of public power is absolutely essential for maintaining the primacy of the private sector. Hence, we have the conservative argument that if government is not limited to enforcing the right to private property and self-determination in priority, it is otherwise corrupt and incompetent. The problem here, again, is to prevent this legitimacy of public authority from becoming "public" beyond the mere force of the argument when the inequity becomes so disproportionate that retribution of the value is the only possible resolution. It then becomes the function of government to resolve BOTH public and private.
The arguments for the inefficiencies of government are nevertheless vestigial and iterates the ambition to power.
Even with a public-private resolve it is still possible to maintain, in true Hamiltonian fashion, the function of constitutional government is to provide The People with the illusion of a self-determination (sovereignty) that is self-enforced by operation of public authority--the sovereign. The elite do not claim to be the sovereign, like the technocrat, only the representative of the sovereign (the republican form of government), providing the competence and moral strength the sovereign lacks to rule in the interest of the general welfare.
Despite an ambitious technocracy programed for elitist ends, it is clear to the conservative element that the mission of a bureaucracy can be changed without an act of congress or amending a constitution. The actual administration of power, and the actual outcome, is essentially the practical discretion of the bureaucratic elite in any case. It is a sharing of power, an evolution, the ruling class of consolidated capitalism has absolutely no intention of occurring.
If technocrats take on the vestigial mantle of the ruling class, the current power elite are supplanted by means of their own device, and nothing is more humiliating for a power elite than being victim of one's own stupidity (which was what the philosophes were for--to enlighten the despots). In this case, it is nothing but the stupidity of greed and avarice to be tempered with the practical, pragmatic wisdom of a technocratic elite to resolve the nagging contradictions of legitimate power either public or private.
Evolution does not appear to be linear in any respect. Nature cycles up and down, back and forth. As elements merge, and ideas converge, change emerges indifferent to the determination of our self always decided by choices we make now with virtue (the strength of what is righteous) being the vision of destiny.
The convergence of public and private into a bureaucratic model of power evolves the power structure to produce results with a mixed legitimacy that is not clearly public or private. It allows for an analytical complexity, a plurality of opinions, that cultivates a technocratic power elite to "resolve" the complexity into the practical administration of power.
Bernanke refers to an improved "resolution process" as we look for the systematic means to ensure equitably legitimate measures to stabilize the financial market and organize to predict and avoid systemic risk originating from the private sector with what he calls the "resolution authority." He is a technician engaged in engineering and executing an organizational technology that renders, resolves, all the ideas for what is the greatest good into the fundament of monetary policy, merging the elements of the power structure into a manageable, predictable operational model that distributes value into what is considered to be the primacy of the private sector with the force and legitimacy of public authority (Hamiltonianism).
The means tends to innovate and evolve, the ends of power does not. The means has evolved with the changing perception of equitable distribution of power and wealth in post-industrial society. The conservative element of power must maintain its legitimacy with a practical administrative model that is no longer the sole command of the private sector and the captains of industry.
Where accumulated wealth in the private sector continues to largely determine the results of market mechanics by sheer size and momentum, and financial means innovate to circumvent each regulatory reform in response to accumulations allowed into a crisis proportion, we progressively defer the privacy of power to the technocrats who "resolve" in the public forum of legitimate, constitutional power.
The quest for what is manageable and predictable organized from the top down is a command economy that requires a critical measure of accountability that is best accomplished from the bottom up by ensuring a free-market mechanics, the evaluative wisdom of a collective legitimacy, in priority. Without the means to evaluate with the legitimacy of ensuring the priority, bureaucratic power becomes a tyranny of technocrats--a technocracy.
Political-economic technocrats claim the legitimacy of acting with the "public" trust. The implication is that the results of public-private organizational technique are public and the distribution of rewards and deprivations (the measure of exercised power) is the legitimate public good. Democratic (pluralistic) results are thereby ensured through autocratic (elitist) means. The means, despite being undemocratic, is argued to justify the ends in an organizational tautology that validates the elitist model as the best practice of the republic.
As we hear a lot of acrimonious rhetoric from the right wing that we are engaged in the move to socialism, analytically, they do not understand the political-economic dynamic in operation or are so blinded by ideological socialization they cannot accept divergence from the passe' pre-industrial model of bifurcated power that has built great wealth, but with an increasingly conflicted public-or-private legitimacy over the distribution of costs and benefits that has come to a point of reconciliation, or "resolution."
The right wing is losing, clinging to an absolute and obsolete theoretical legitimacy that does not square with the need for technocracy, leaving them with a diminishing credibility that is evermore reduced to the lunatic fringe of conservative talk show hosts and clownish intellectualism.
If treasury (a public bank) and the federal reserve (a private bank) do not separately or together act to produce the general welfare, then what does? The complex debate is not about a welfare--a distribution of costs and benefits--that is general, or fair and equitable, it is about producing an inequity with the legitimacy of the general welfare.
A legitimacy based on inequity requires the force of a public authority, and this is where the conservative argument resorts to all manner of fallacy and intellectual feats of funambulism because what is public authority (government, the sovereign) is historically corrupt if not incompetent, and according to The Constitution, The People are sovereign. Hence, the Hamiltonian argument that power must be exercised from the private sector by a power elite that have the ambition, the will, to power.
The ambition to power can only be by the accumulation of wealth. It is the real measure of power and is produced by the private sector with a legitimate self-determination to acquire it. Sharing the wealth is to share power. If a person wants to share in the power, a person must produce wealth, and that share is equivalent to the share produced determined by the market price in the marketplace (a private enterprise performed in public).
Since accumulating wealth can control the price, a person can accumulate shares disproportionate to the wealth produced by that person. The shares are attributed to the powerful (the elite) who must then engage a political process of preventing the value being retributed, or shared. If the value is not shared, a crisis ensues and forces political distribution of the value. It is the plight of the conservative element to minimize, or conserve, the retributive value as private property protected by constitutional right, or public authority.
We see, then, the contradiction of the conservative argument that must be "resolved." There is the accumulation of private power with the supremacy of public authority.
Co-opting the legitimacy of public power is absolutely essential for maintaining the primacy of the private sector. Hence, we have the conservative argument that if government is not limited to enforcing the right to private property and self-determination in priority, it is otherwise corrupt and incompetent. The problem here, again, is to prevent this legitimacy of public authority from becoming "public" beyond the mere force of the argument when the inequity becomes so disproportionate that retribution of the value is the only possible resolution. It then becomes the function of government to resolve BOTH public and private.
The arguments for the inefficiencies of government are nevertheless vestigial and iterates the ambition to power.
Even with a public-private resolve it is still possible to maintain, in true Hamiltonian fashion, the function of constitutional government is to provide The People with the illusion of a self-determination (sovereignty) that is self-enforced by operation of public authority--the sovereign. The elite do not claim to be the sovereign, like the technocrat, only the representative of the sovereign (the republican form of government), providing the competence and moral strength the sovereign lacks to rule in the interest of the general welfare.
Despite an ambitious technocracy programed for elitist ends, it is clear to the conservative element that the mission of a bureaucracy can be changed without an act of congress or amending a constitution. The actual administration of power, and the actual outcome, is essentially the practical discretion of the bureaucratic elite in any case. It is a sharing of power, an evolution, the ruling class of consolidated capitalism has absolutely no intention of occurring.
If technocrats take on the vestigial mantle of the ruling class, the current power elite are supplanted by means of their own device, and nothing is more humiliating for a power elite than being victim of one's own stupidity (which was what the philosophes were for--to enlighten the despots). In this case, it is nothing but the stupidity of greed and avarice to be tempered with the practical, pragmatic wisdom of a technocratic elite to resolve the nagging contradictions of legitimate power either public or private.
Evolution does not appear to be linear in any respect. Nature cycles up and down, back and forth. As elements merge, and ideas converge, change emerges indifferent to the determination of our self always decided by choices we make now with virtue (the strength of what is righteous) being the vision of destiny.
Interdependence of Banking Firms and Systemic Risk
Treasury secretary, Geitner seeks to broaden his bureaucratic power to control systemic risk--the interdependent dimension of the financial sector that has been engineered to extort value by consolidating (leveraging) the capital under the guise of spreading the risk.
Interdependence is argued to be a way to spread the risk in order to be able to afford taking the "big" risk to promote economic growth that being "small" does not afford. As it turns out, of course, the argument is nothing but a fraud. The "big" risk is but a systemic risk generally imparted to The People disproportionate to their share of the reward. In other words, it is an unjust enrichment perpetrated by a fraud, and as long as the risk is to be bureaucratically managed to protect "the system" from failure, perpetration of the fraud is not a crime, and the expert, elite perpetrators do not go to jail for fraud.
The interdependence of bank firms, and other financial entities, is argued to be a necessary condition of the sector independant of organizing to be "too big to fail." The financial sector's interdependence is necessary to produce the risk/reward ratio necessary to turn wealth into capital. The "natural" result is being too big to fail. Buying into this argument results in the byzantine bureaucratic measures we see unfolding to control the inherent, the "natural," systemic risk of ensuring the survival of what needs to sytematically fail.
Since private wealth, personal or corporate, is not likely to become capital (money to be invested) until solicited with a favorable low-risk/high return ratio, the bureaucracy is busily organizing to lure private capital toward the public good--economic growth. The lure, the incentive, to not remain illiquid and produce the public good, private-sector wealth is turned into capital with a disproportionate reward-to-risk legitimized by being organized into a public-private partnership that is too big to fail. The disproportionate reward is the empirical value of the problem--the risk--to be resolved. Satisfying the value causes the problem, and like borrowing your way out of debt, the problem can appear to be the only solution.
Supposedly, the leveraged return of inter-bank finance is an innovative means of forming the capital (the liquidity) needed for economic growth with a return that is disproportionate to the risk. The "big" dimension of the capital is argued to be a way to create capital (money to be invested rather than just saved or horded) when it is really a way to consolidate it by being so big it cannot be allowed to fail, or to actually take the systemic risk it causes. The result is a big reward with no risk. The disproportion is empirically expressed as an economic crisis and refered to as management of the systemic risk.
Being too big to fail, so the argument goes, allows the firms to have the capital reserves necessary to survive the crisis, the inefficiency, organizing to be too big to fail causes. The crisis, then, necessitates the need for what causes it (the capital reserve of too big to fail).
The interdependence argument, in addition to being a tautological legitimacy of the most absurd proportion, is especially deceitful and pernicious because it relies on the argument that what ails us is a necessity beyond good and evil despite the invocation of "moral hazard" whenever solutions are most likely to put the public good before the primacy of private profit with the result always being the value judgement that what supports a private sector benefit is good and what provides a public benefit is always likely to be bad. To bring the value judgements into a practical "resolution" without jeopardizing the status-quo organizational tautology, there is a tendency to resolve with a public-private organizational technology designed and implemented with the best and brightest elitist, technocratic expertise.
It is time to quit listening to the "revolving door" experts of the public-private partnership of power and let The People rule. This is how We do it.
Organize this current crisis of the economy and the financial sector into the means to prevent it, not cause it!
A national bank is clearly needed to finance the priority of government: ensuring a free and unconsolidated marketplace that will not tolerate "too big to fail" and the extortionists it rewards and maintains.
The National Bank funds small banks. If a small bank fails, it ceases to exist without systemic risk. It is not consolidated because that causes the problem, the systemic risk, of "too big to fail." The depositors of the failed bank are insured and are free to redeposit among the alternatives. No one bank or syndicate is solicited to buy the bank. The customers (The People), the depositors, fund the success of the other banks instead of, as taxpayers, financing "too big to fail" and the means of their extortion, which not only increases the need and the expense for government with a typically regressive tax burden, but reduces the funding (their savings, the capital, the distribution of dollar votes) that rewards the success of NOT being "too big to fail" and the ability of the sovereign, The People, to rule.
The national banking system adds to the number of existing small banks by busting the large, too-big-to-fail banks into small banks with an equal number of equity shares. The banks lend to each other as a standard business practice, and so become interdependent for the purpose of pluralizing the marketplace, i.e., allowing capital to easily flow into profitable industries and markets, controlling inflation and unemployment without trading them off like we do now into a crisis dimension. Less capital is held in reserve and more is available for economic growth, making the capital optimally available to prevent the systemic risk.
The interdependency of the banks is profitable by being pro-growth which naturally hedges, or spreads, the risk so that failure of one WILL NOT cause the failure of others. Failure of a bank will be by the choice, the democratic legitimacy, of its customers, not the determination of a bureaucratic elite and political gaming. The People rule!
Hedging the risk becomes a function of promoting economic growth, not by just investing new markets, but by investing profitable existing markets as well. Without investing in growth, the bank cannot be profitable...that will most assuredly promote growth! The sheer number of businesses and possible profit opportunities is the incentive to hedge with growth rather than create a leveraged interdependence that will expose the firm to the probability of complete failure that will be allowed to occcur with the depositors, not the bankers, at no risk of loss with the full faith and credit of the national bank...and The People rule!
Where bank interdependence has been argued to spread the risk only to be used to extort The People into accepting terms it would not accept if it were a free market, instead of the tyranny of a consolidated (interconnected) capital, it can be a function of ensuring a free and unconsolidated marketplace as best can be had so that the risk is not the fear of detriment (systemic crisis) but the promise of always promoting a peaceful prosperity.
Instead of destruction of the American dream, we have the means to ensure it.
Interdependence is argued to be a way to spread the risk in order to be able to afford taking the "big" risk to promote economic growth that being "small" does not afford. As it turns out, of course, the argument is nothing but a fraud. The "big" risk is but a systemic risk generally imparted to The People disproportionate to their share of the reward. In other words, it is an unjust enrichment perpetrated by a fraud, and as long as the risk is to be bureaucratically managed to protect "the system" from failure, perpetration of the fraud is not a crime, and the expert, elite perpetrators do not go to jail for fraud.
The interdependence of bank firms, and other financial entities, is argued to be a necessary condition of the sector independant of organizing to be "too big to fail." The financial sector's interdependence is necessary to produce the risk/reward ratio necessary to turn wealth into capital. The "natural" result is being too big to fail. Buying into this argument results in the byzantine bureaucratic measures we see unfolding to control the inherent, the "natural," systemic risk of ensuring the survival of what needs to sytematically fail.
Since private wealth, personal or corporate, is not likely to become capital (money to be invested) until solicited with a favorable low-risk/high return ratio, the bureaucracy is busily organizing to lure private capital toward the public good--economic growth. The lure, the incentive, to not remain illiquid and produce the public good, private-sector wealth is turned into capital with a disproportionate reward-to-risk legitimized by being organized into a public-private partnership that is too big to fail. The disproportionate reward is the empirical value of the problem--the risk--to be resolved. Satisfying the value causes the problem, and like borrowing your way out of debt, the problem can appear to be the only solution.
Supposedly, the leveraged return of inter-bank finance is an innovative means of forming the capital (the liquidity) needed for economic growth with a return that is disproportionate to the risk. The "big" dimension of the capital is argued to be a way to create capital (money to be invested rather than just saved or horded) when it is really a way to consolidate it by being so big it cannot be allowed to fail, or to actually take the systemic risk it causes. The result is a big reward with no risk. The disproportion is empirically expressed as an economic crisis and refered to as management of the systemic risk.
Being too big to fail, so the argument goes, allows the firms to have the capital reserves necessary to survive the crisis, the inefficiency, organizing to be too big to fail causes. The crisis, then, necessitates the need for what causes it (the capital reserve of too big to fail).
The interdependence argument, in addition to being a tautological legitimacy of the most absurd proportion, is especially deceitful and pernicious because it relies on the argument that what ails us is a necessity beyond good and evil despite the invocation of "moral hazard" whenever solutions are most likely to put the public good before the primacy of private profit with the result always being the value judgement that what supports a private sector benefit is good and what provides a public benefit is always likely to be bad. To bring the value judgements into a practical "resolution" without jeopardizing the status-quo organizational tautology, there is a tendency to resolve with a public-private organizational technology designed and implemented with the best and brightest elitist, technocratic expertise.
It is time to quit listening to the "revolving door" experts of the public-private partnership of power and let The People rule. This is how We do it.
Organize this current crisis of the economy and the financial sector into the means to prevent it, not cause it!
A national bank is clearly needed to finance the priority of government: ensuring a free and unconsolidated marketplace that will not tolerate "too big to fail" and the extortionists it rewards and maintains.
The National Bank funds small banks. If a small bank fails, it ceases to exist without systemic risk. It is not consolidated because that causes the problem, the systemic risk, of "too big to fail." The depositors of the failed bank are insured and are free to redeposit among the alternatives. No one bank or syndicate is solicited to buy the bank. The customers (The People), the depositors, fund the success of the other banks instead of, as taxpayers, financing "too big to fail" and the means of their extortion, which not only increases the need and the expense for government with a typically regressive tax burden, but reduces the funding (their savings, the capital, the distribution of dollar votes) that rewards the success of NOT being "too big to fail" and the ability of the sovereign, The People, to rule.
The national banking system adds to the number of existing small banks by busting the large, too-big-to-fail banks into small banks with an equal number of equity shares. The banks lend to each other as a standard business practice, and so become interdependent for the purpose of pluralizing the marketplace, i.e., allowing capital to easily flow into profitable industries and markets, controlling inflation and unemployment without trading them off like we do now into a crisis dimension. Less capital is held in reserve and more is available for economic growth, making the capital optimally available to prevent the systemic risk.
The interdependency of the banks is profitable by being pro-growth which naturally hedges, or spreads, the risk so that failure of one WILL NOT cause the failure of others. Failure of a bank will be by the choice, the democratic legitimacy, of its customers, not the determination of a bureaucratic elite and political gaming. The People rule!
Hedging the risk becomes a function of promoting economic growth, not by just investing new markets, but by investing profitable existing markets as well. Without investing in growth, the bank cannot be profitable...that will most assuredly promote growth! The sheer number of businesses and possible profit opportunities is the incentive to hedge with growth rather than create a leveraged interdependence that will expose the firm to the probability of complete failure that will be allowed to occcur with the depositors, not the bankers, at no risk of loss with the full faith and credit of the national bank...and The People rule!
Where bank interdependence has been argued to spread the risk only to be used to extort The People into accepting terms it would not accept if it were a free market, instead of the tyranny of a consolidated (interconnected) capital, it can be a function of ensuring a free and unconsolidated marketplace as best can be had so that the risk is not the fear of detriment (systemic crisis) but the promise of always promoting a peaceful prosperity.
Instead of destruction of the American dream, we have the means to ensure it.
The Competitive Global Economy
Objection to IBM's decision to move American jobs to India should not be dismissed as a lack of economic intelligence.
The economic cost detected by Americans is correctly determined to be a benefit to IBM's profit margin. The cost and benefit is clearly a zero-sum valuation.
The theory that the added margin to IBM's profit represents a marginal utility of a competitive, employment-cost advantage ignores the cost to the American economy, and IBM.
The probability that the competitive marginal utility on the labor cost will be reinvested to benefit Americans by ensuring a competitive cost efficiency as cheap imports return to the American consumer is a weak optimality at best. The benefit is washed to the consumer whose income is competitively reduced while the pricing power (the marginal profit) of IBM is not. IBM invested the employment cost in India to "gain" an advantage that will be invested to ensure an organizational size that minimizes the competitive advantage that benefits labor and the consumer.
The business model--being too big to fail--is fully in operation here and it is the model for economic crisis if the status of the global economy is any indication. The model is the classic model of capitalism that always results in crisis: assuring investment that uncompetitively consolidates capital by rendering labor costs competitive, and when the crisis of deflation results (a lack of purchasing power against high, uncompetitive marginal pricing), consolidated capital claims the market has decided and the "technical adjustment" of labor costs assures the efficiency of markets. What it assures is a sub-optimal distribution of income that always results in crisis that requires the elite bureaucratic management of political economy, like we have now.
The market efficiency claimed by organizing to be "too big to fail" is a false free-market efficiency that is not peculiar to the financial sector. Where small, competitive firms are encouraged, costs are minimized, purchasing power (employment) is maximized, and businesses are held to a close accountability that minimizes the need, and the cost, of government. It does not mean government is bad for business. Quite the contrary if government's function is to ensure the competitive multiplicity of the marketplace in priority. Being too big to fail is obviously what is bad for business!
Of course, government that functions to ensure a free-market pluralism in priority is inimical to the business model of "too big to fail" which, by definition, acts to eliminate market efficiency by accumulating and consolidating value to a crisis proportion that cannot be allowed to fail. Extortion is not characteristic of a free market where there is a plurality of choice and the extortionists, the criminal element, will most assuredly fail.
Does not eliminating the means of being "too big to fail" identify exactly what "change we need" really means? It is not change to be just believed in, but to be relied on to work with an easily verifiable legitimacy of what The People want by means of doing business--of being actively, directly, democratically involved in a free and uconsolidated marketplace, or what does not allow for "too big to fail." The businessperson's freedom, sovereignty, to pursue self-interest in the private sector is not compromised by ensuring the means for it by the public sector.
Where reconciling individual interest with the collective is otherwise confirmed improbable without conflict, a peaceful prosperity that we all agree to, the general welfare, is possible; and as long as government functions primarily to ensure it, being too big to fail--tyranny--is highly improbable.
The economic cost detected by Americans is correctly determined to be a benefit to IBM's profit margin. The cost and benefit is clearly a zero-sum valuation.
The theory that the added margin to IBM's profit represents a marginal utility of a competitive, employment-cost advantage ignores the cost to the American economy, and IBM.
The probability that the competitive marginal utility on the labor cost will be reinvested to benefit Americans by ensuring a competitive cost efficiency as cheap imports return to the American consumer is a weak optimality at best. The benefit is washed to the consumer whose income is competitively reduced while the pricing power (the marginal profit) of IBM is not. IBM invested the employment cost in India to "gain" an advantage that will be invested to ensure an organizational size that minimizes the competitive advantage that benefits labor and the consumer.
The business model--being too big to fail--is fully in operation here and it is the model for economic crisis if the status of the global economy is any indication. The model is the classic model of capitalism that always results in crisis: assuring investment that uncompetitively consolidates capital by rendering labor costs competitive, and when the crisis of deflation results (a lack of purchasing power against high, uncompetitive marginal pricing), consolidated capital claims the market has decided and the "technical adjustment" of labor costs assures the efficiency of markets. What it assures is a sub-optimal distribution of income that always results in crisis that requires the elite bureaucratic management of political economy, like we have now.
The market efficiency claimed by organizing to be "too big to fail" is a false free-market efficiency that is not peculiar to the financial sector. Where small, competitive firms are encouraged, costs are minimized, purchasing power (employment) is maximized, and businesses are held to a close accountability that minimizes the need, and the cost, of government. It does not mean government is bad for business. Quite the contrary if government's function is to ensure the competitive multiplicity of the marketplace in priority. Being too big to fail is obviously what is bad for business!
Of course, government that functions to ensure a free-market pluralism in priority is inimical to the business model of "too big to fail" which, by definition, acts to eliminate market efficiency by accumulating and consolidating value to a crisis proportion that cannot be allowed to fail. Extortion is not characteristic of a free market where there is a plurality of choice and the extortionists, the criminal element, will most assuredly fail.
Does not eliminating the means of being "too big to fail" identify exactly what "change we need" really means? It is not change to be just believed in, but to be relied on to work with an easily verifiable legitimacy of what The People want by means of doing business--of being actively, directly, democratically involved in a free and uconsolidated marketplace, or what does not allow for "too big to fail." The businessperson's freedom, sovereignty, to pursue self-interest in the private sector is not compromised by ensuring the means for it by the public sector.
Where reconciling individual interest with the collective is otherwise confirmed improbable without conflict, a peaceful prosperity that we all agree to, the general welfare, is possible; and as long as government functions primarily to ensure it, being too big to fail--tyranny--is highly improbable.
Indications of Recovery
While I made reference to indicators of recovery back in January '09 when commodity prices broke, with there no longer being a "fundamental" reason for the bubble except a consolidation of private capital pushing futures to an overbought condition and deflating the global economy, the latest indicators of recovery are lagging that eventuality. Recovery now faces the probability of the weak dollar being an excuse to inflate commodities again with Geitner, consequently, arguing for the needed authority to seize any firm threatening global economic health. That includes hedge funds that pump-and-dump through options and futures with large blocks of consolidated capital and momentum swings (rigging the market).
The treasury secretary's need to expand his authority indicates equities are overbought at current indices, and indicates recognition of causal factors that, as I have described and expalined in previous articles at griffithlighton.blogspot.com, will support the deflationary trend. Specifically, a highly consolidated capital can and will continue to control the bid on primary input factors in the marketplace and, consequently, demand for bureaucratic management to adjust for the negative externalities (the bureaucratic model of power and political economy), including the treasury flirting with a possible international currency to adjust for the depreciating affect on the dollar.
Instead of supporting the dollar at the fundament (economic recovery by a necessary distribution of the consolidated capital), the suggestion is for the dollar to be supported from the top down with a technocratic move for a supra-sovereign currency. It is a necessary move to profitably minimize the retributive value by strengthening the dollar without having to pay the maximum amount (the needed distribution of the capital to achieve recovery). The measure suggests a tendency to favor public policy that will support the deflationary trend and, thus, inflationary pressure on the value of the dollar, suggesting further leverage (investment) into commodity futures instead of economic expansion.
Continued leverage investment will increase demand on futures contracts while ensuring a "fundamental" reduction of commodity supply in a deflationary trend, securing huge profits with no risk and setting up a magnifier on the value of commodities, and their equity shares, with a low supply when recovery does occur. It is the speculative scheme that causes the crisis we are in and the need to manage the negative effects through corrective, bureaucratic technical measures that are not the indicators of pluralistic, free-market dynamics. The only risk to this speculative scheme is, at this point, the gamma (political) risk that will affect the retributive value (the amount of money needed to achieve recovery and maximize the unleveraged profit).
The leveraging schemes not only make for magnified profits, but very predictably make for magnified losses that directs the economy from the private sector with the detriment (the alpha and beta risks) to be managed by the public sector. For the trageur, the remaining primary risk to be indicated is the gamma risk, and that can be highly predictable, especially with access to the bureaucratic means of power filled with financial experts from the private sector.
Treasury's plan for a public-private partnership to technically correct our economy relies on private-sector rating agencies to value the financial instruments the Obama administration is touting as the fundament for economic recovery. Already, we hear these fiancials being refered to by the president himself as being "securitized." He hopes to finance the recovery (the distribution phase of the business cycle) with as little monetization (newly printed money) as possible with as much existing capital as possible. Securitizing, rather than monetizing, the debt is a way to lure the private sector into the partnership as long as they may create derivatives from the debt that will be rated by private-sector technocrats--a major causal factor of the Great Recession we are in. That these technically expert, private-sector arbiters of value will remain traditionally "hands off" to public regulatory authority in true Hamiltonian fashion of the elitist model is a gamma risk.
The gamma risk appears low. Given the volatile political environment, however, the gama is really very high despite the traditional means of assessing value remaining with the private sector. The investor needs to look for indicators using the bureaucratic analytical model to gauge the risk and predict market trend.
Take careful note that Geitner is attentive to an expansion of public-sector bureaucratic power that does not include the arbitration of value assessment, suggesting it should be left to the "free market." Since his appeal for expanded bureaucratic power is to technically correct for the deficiency of a free-market mechanism (a lack of pluralism), reliance on the deficiency does not suggest a recovery that will not be a bust characteristic of an elitist model of macro-economic management. The excessive risk-taking inherent to an overconsolidated capital will be allowed, unchecked by a lack of free-market economics and relying on the public sector to absorb (monetize) the risk and survive as "too big to fail".
Obama looks to retribute some of the accumulative value through a more progressive tax code as it occurs, but allowing for the accumulation is itself deflationary. It is a wash, suggesting the trend will be sideways with a lot of volatility for the trage that will provide the revenue to finance the recovery without actually deconsolidating the capital. Not deconsolidating the capital is stagflationary (high prices with slow growth) with a large leverage in commodities determining (commanding) the macro trend.
Rather than a strong move to deconsolidate the capital to control the ability (the incentive) to engage in "go-go" economics by ensuring a free-market mechanism in which no one firm, or small collection of firms, can control the bid and the macro economic trend from the private sector in the name of free enterprise, like the economic crisis we are now experiencing, the administration is relying on the bureaucratic model to match tyranny with tyranny, to fight fire with fire.
We need to be sure and recognize here that the consolidation of the capital into a tyrannical condition soliciting the power that Geitner says he needs to manage it is illegitimate. The cause (consolidation of capital) is being used to legitimize the effect (the expansion of bureaucratic power) with the result being a unified tyrannical model of power (a public/private partenership) operating with the legitimacy of necessity. If you want to consolidate power and gain the legitimacy of tyranny, this is how you do it.
The want-to-be kings of the corporate have been crowned with the legitimacy of bureaucratic power and public authority. The model is complete.
Just because Geitner may have the authority to seize firms that are inimical to the general welfare, thus operating with Constitutional authority, does not mean the model will operate to achieve the pluralistic effect (the legitimacy) of a free market, anymore than there being a Bureau of Competitive Markets in the FTC ensures a free market.
If we have a free market, why do we "need" an elite, bureaucratic public authority to effect the efficiency and equitable legitimacy of it in posteriori? Now, my friends, this is where we have the legitimacy for "the switch" to socialism: where allowing the consolidation of the capital discredits the democratic legitimacy and economic efficiency of free-market economics, and bureaucratic authority operates to only adjust for the externalities to save the tyrannical corporate from itself rather than ensure a genuine free-market economics by deconsolidation of the capital in priority.
The move to socialism will keep the capital, and the means of power, consolidated, and expanding the authority of the bureaucratic elite beyond ensuring a free market will not prevent it, but facilitate it. Yes, we have The Constitution to protect us from tyranny. How is it, then, we are confronted with the prospect of an evolved model, and legitimacy, of consolidated power? It did not prevent tyranny from the private sector, why should we expect it to protect us from the public sector?
It will not! That is why the bureaucratic model needs to operate to ensure a free and unconsolidated marketplace in priority. We certainly do not have the indicators to suggest we have it now if our philosophe, public technocracy needs the elite authority to command a pluralistic effect; it is a flimsy legitimacy at best, and an easily manipulated and corruptible legitimacy at worst.
The treasury secretary's need to expand his authority indicates equities are overbought at current indices, and indicates recognition of causal factors that, as I have described and expalined in previous articles at griffithlighton.blogspot.com, will support the deflationary trend. Specifically, a highly consolidated capital can and will continue to control the bid on primary input factors in the marketplace and, consequently, demand for bureaucratic management to adjust for the negative externalities (the bureaucratic model of power and political economy), including the treasury flirting with a possible international currency to adjust for the depreciating affect on the dollar.
Instead of supporting the dollar at the fundament (economic recovery by a necessary distribution of the consolidated capital), the suggestion is for the dollar to be supported from the top down with a technocratic move for a supra-sovereign currency. It is a necessary move to profitably minimize the retributive value by strengthening the dollar without having to pay the maximum amount (the needed distribution of the capital to achieve recovery). The measure suggests a tendency to favor public policy that will support the deflationary trend and, thus, inflationary pressure on the value of the dollar, suggesting further leverage (investment) into commodity futures instead of economic expansion.
Continued leverage investment will increase demand on futures contracts while ensuring a "fundamental" reduction of commodity supply in a deflationary trend, securing huge profits with no risk and setting up a magnifier on the value of commodities, and their equity shares, with a low supply when recovery does occur. It is the speculative scheme that causes the crisis we are in and the need to manage the negative effects through corrective, bureaucratic technical measures that are not the indicators of pluralistic, free-market dynamics. The only risk to this speculative scheme is, at this point, the gamma (political) risk that will affect the retributive value (the amount of money needed to achieve recovery and maximize the unleveraged profit).
The leveraging schemes not only make for magnified profits, but very predictably make for magnified losses that directs the economy from the private sector with the detriment (the alpha and beta risks) to be managed by the public sector. For the trageur, the remaining primary risk to be indicated is the gamma risk, and that can be highly predictable, especially with access to the bureaucratic means of power filled with financial experts from the private sector.
Treasury's plan for a public-private partnership to technically correct our economy relies on private-sector rating agencies to value the financial instruments the Obama administration is touting as the fundament for economic recovery. Already, we hear these fiancials being refered to by the president himself as being "securitized." He hopes to finance the recovery (the distribution phase of the business cycle) with as little monetization (newly printed money) as possible with as much existing capital as possible. Securitizing, rather than monetizing, the debt is a way to lure the private sector into the partnership as long as they may create derivatives from the debt that will be rated by private-sector technocrats--a major causal factor of the Great Recession we are in. That these technically expert, private-sector arbiters of value will remain traditionally "hands off" to public regulatory authority in true Hamiltonian fashion of the elitist model is a gamma risk.
The gamma risk appears low. Given the volatile political environment, however, the gama is really very high despite the traditional means of assessing value remaining with the private sector. The investor needs to look for indicators using the bureaucratic analytical model to gauge the risk and predict market trend.
Take careful note that Geitner is attentive to an expansion of public-sector bureaucratic power that does not include the arbitration of value assessment, suggesting it should be left to the "free market." Since his appeal for expanded bureaucratic power is to technically correct for the deficiency of a free-market mechanism (a lack of pluralism), reliance on the deficiency does not suggest a recovery that will not be a bust characteristic of an elitist model of macro-economic management. The excessive risk-taking inherent to an overconsolidated capital will be allowed, unchecked by a lack of free-market economics and relying on the public sector to absorb (monetize) the risk and survive as "too big to fail".
Obama looks to retribute some of the accumulative value through a more progressive tax code as it occurs, but allowing for the accumulation is itself deflationary. It is a wash, suggesting the trend will be sideways with a lot of volatility for the trage that will provide the revenue to finance the recovery without actually deconsolidating the capital. Not deconsolidating the capital is stagflationary (high prices with slow growth) with a large leverage in commodities determining (commanding) the macro trend.
Rather than a strong move to deconsolidate the capital to control the ability (the incentive) to engage in "go-go" economics by ensuring a free-market mechanism in which no one firm, or small collection of firms, can control the bid and the macro economic trend from the private sector in the name of free enterprise, like the economic crisis we are now experiencing, the administration is relying on the bureaucratic model to match tyranny with tyranny, to fight fire with fire.
We need to be sure and recognize here that the consolidation of the capital into a tyrannical condition soliciting the power that Geitner says he needs to manage it is illegitimate. The cause (consolidation of capital) is being used to legitimize the effect (the expansion of bureaucratic power) with the result being a unified tyrannical model of power (a public/private partenership) operating with the legitimacy of necessity. If you want to consolidate power and gain the legitimacy of tyranny, this is how you do it.
The want-to-be kings of the corporate have been crowned with the legitimacy of bureaucratic power and public authority. The model is complete.
Just because Geitner may have the authority to seize firms that are inimical to the general welfare, thus operating with Constitutional authority, does not mean the model will operate to achieve the pluralistic effect (the legitimacy) of a free market, anymore than there being a Bureau of Competitive Markets in the FTC ensures a free market.
If we have a free market, why do we "need" an elite, bureaucratic public authority to effect the efficiency and equitable legitimacy of it in posteriori? Now, my friends, this is where we have the legitimacy for "the switch" to socialism: where allowing the consolidation of the capital discredits the democratic legitimacy and economic efficiency of free-market economics, and bureaucratic authority operates to only adjust for the externalities to save the tyrannical corporate from itself rather than ensure a genuine free-market economics by deconsolidation of the capital in priority.
The move to socialism will keep the capital, and the means of power, consolidated, and expanding the authority of the bureaucratic elite beyond ensuring a free market will not prevent it, but facilitate it. Yes, we have The Constitution to protect us from tyranny. How is it, then, we are confronted with the prospect of an evolved model, and legitimacy, of consolidated power? It did not prevent tyranny from the private sector, why should we expect it to protect us from the public sector?
It will not! That is why the bureaucratic model needs to operate to ensure a free and unconsolidated marketplace in priority. We certainly do not have the indicators to suggest we have it now if our philosophe, public technocracy needs the elite authority to command a pluralistic effect; it is a flimsy legitimacy at best, and an easily manipulated and corruptible legitimacy at worst.
Valuation of Assets
Asset valuation, critical for successful investing, requires identifying what determines "market" value.
What, then, is market value?
There is alpha, beta, and what I call "gamma" risk.
Political economists utilize analytical modeling to achieve predictive utility. If predictive accuracy is lacking, it is probably due to using the wrong analytical model. Error is likely reduced by changing the analytical model being applied. Actors in the marketplace are unlikely to switch practical models because modeling provides predictable results and also satisfies consistent philosophical considerations to achieve a normative legitimacy of the means and ends that also affects the outcome in some very unpredictable ways.
Actors in the marketplace are likely to have a consistent application of a practical model to reduce the probability of outcomes to what appear to be random variables that are usually a "gama" risk. The gama risk is reduced to a political gaming of economic variables to produce a predictable outcome that has a normative legitimacy. This does not mean that identifying the gama risk is not a technical function to be quantitatively ignored. That is a critical error. Rather, it is a technical function of properly applying an analytical model. Proper modeling renders what seems an inscrutable vectoring of willful actors and organized technologies into an easily predictable phenomenon at the micro or macro scale of analysis.
Much of the analysis at griffithlighton.blogspot.com, whether normative or technical, descriptive or prescriptive, proceeds from choosing an analytical model to not only accurately describe and explain valuations, whether moral or monetary, but to achieve a predictive utility.
It is a mistake to ignore moral valuations, for example. It is fundamental to practical modeling that is used to shape what "the market" determines to have value. The public and private sectors operate with different normative properties that largely determines organizational, size, shape and cultural attributes that if not accurately modeled, a predictive utility will be achieved only by accident (randomness).
Where the public and private sectors intersect is where the gama risk essentially resides, and where the appropriate analytical modeling describes, explains and predicts what are normatively called "market distortions" that effect the outcome--what the value really is at any time. Recognizing the normative aspect of the gama risk technically reduces the error endemic to quantitative analysis and punctuated events of predictive failure.
Utilizing the appropriate practical, analytical model, for example, renders the current economic "crisis" not a crisis at all, but a fully expected, "normal" (normative) outcome. If it is expected, it could have been prevented, but that would require abandonment of the working practical model that determines the outcome. Not abandoning the model, and the expected outcome, is a normative consideration--because it would be the "wrong," the aberrant, thing to do; it would be impractical, and the normative consideration (the value it represents) is to be fully, analytically, expected with a technical value of about $4 trillion to date. The magnitude of this technical value, and the effects, like a public-private solution (the gama-risk valuation of assets), is too easily predictable as long as the analyst is willing to empirically apply the appropriate analytical model.
If the analyst considers the plans of Geitner and Bernanke a "market distortion" of valuation, it is a normative invocation of the pluralist model that does not predict the real (expected) value of the assets, but may very well suggest an expectation of value in the future based on the normative valuation (a retrace of the value). This suggests a mixed model in operation: an elitist and pluralist model in combination, rendering a bureaucratic analytical model of political economy. The analyst may hedge the gama risk utilizing this model (see the article, "Restructuring the Elements of Power" at griffithlighton.blogspot.com).
What, then, is market value?
There is alpha, beta, and what I call "gamma" risk.
Political economists utilize analytical modeling to achieve predictive utility. If predictive accuracy is lacking, it is probably due to using the wrong analytical model. Error is likely reduced by changing the analytical model being applied. Actors in the marketplace are unlikely to switch practical models because modeling provides predictable results and also satisfies consistent philosophical considerations to achieve a normative legitimacy of the means and ends that also affects the outcome in some very unpredictable ways.
Actors in the marketplace are likely to have a consistent application of a practical model to reduce the probability of outcomes to what appear to be random variables that are usually a "gama" risk. The gama risk is reduced to a political gaming of economic variables to produce a predictable outcome that has a normative legitimacy. This does not mean that identifying the gama risk is not a technical function to be quantitatively ignored. That is a critical error. Rather, it is a technical function of properly applying an analytical model. Proper modeling renders what seems an inscrutable vectoring of willful actors and organized technologies into an easily predictable phenomenon at the micro or macro scale of analysis.
Much of the analysis at griffithlighton.blogspot.com, whether normative or technical, descriptive or prescriptive, proceeds from choosing an analytical model to not only accurately describe and explain valuations, whether moral or monetary, but to achieve a predictive utility.
It is a mistake to ignore moral valuations, for example. It is fundamental to practical modeling that is used to shape what "the market" determines to have value. The public and private sectors operate with different normative properties that largely determines organizational, size, shape and cultural attributes that if not accurately modeled, a predictive utility will be achieved only by accident (randomness).
Where the public and private sectors intersect is where the gama risk essentially resides, and where the appropriate analytical modeling describes, explains and predicts what are normatively called "market distortions" that effect the outcome--what the value really is at any time. Recognizing the normative aspect of the gama risk technically reduces the error endemic to quantitative analysis and punctuated events of predictive failure.
Utilizing the appropriate practical, analytical model, for example, renders the current economic "crisis" not a crisis at all, but a fully expected, "normal" (normative) outcome. If it is expected, it could have been prevented, but that would require abandonment of the working practical model that determines the outcome. Not abandoning the model, and the expected outcome, is a normative consideration--because it would be the "wrong," the aberrant, thing to do; it would be impractical, and the normative consideration (the value it represents) is to be fully, analytically, expected with a technical value of about $4 trillion to date. The magnitude of this technical value, and the effects, like a public-private solution (the gama-risk valuation of assets), is too easily predictable as long as the analyst is willing to empirically apply the appropriate analytical model.
If the analyst considers the plans of Geitner and Bernanke a "market distortion" of valuation, it is a normative invocation of the pluralist model that does not predict the real (expected) value of the assets, but may very well suggest an expectation of value in the future based on the normative valuation (a retrace of the value). This suggests a mixed model in operation: an elitist and pluralist model in combination, rendering a bureaucratic analytical model of political economy. The analyst may hedge the gama risk utilizing this model (see the article, "Restructuring the Elements of Power" at griffithlighton.blogspot.com).
Substitution of the Value
Assessing the value of assets requires identifying the substitution of value derived from varying sources. For example, announcement of the Obama administration for a moratorium on mountaintop removal will, if enacted as administrative law (the bureaucratic model), reveals the subsidy (the substitution of value) that gives the profits of coal companies more value than the "actual" cost imparts to the benefit. The asset of coal reserves are thus overvalued, and the rate of substitution (Pareto Optimality) is diminished. The measure of cost/benefit efficiency is rendered an inaccurate technical valuation. The subsidy trades, or substitutes, the value of coal assets for the value of alternative energy assets.
The normative value of recognizing the "real" value of the subsitution effectively reassesses the value of the assets. The subsidy is then recognized as a "market distortion" that will be an incentive to innovate the technology to remove the coal asset to recapture the subsidy (the value-added benefit that had substituted the value-subtracted cost to produce a net inefficiency that was determined to be an asset and not a liability, determining the total assessment of the value). The result is a reassessment of market value and the "natural" incentive to minimize the cost and maximize the benefit, or to optimize the economic value to everyone's benefit. The benefit is rendered more indivisible and the marginal profit more accurately measures the marginal utility.
The subsidy is normatively "bad" because it does not allow for the incentive to attribute the value of the profit margin (the measure of marginal utility) to the value of the possible alternatives: it did not allow for a competitive multiplicity of the marketplace (a pluralistic model). Instead, the subsidy is aquired, and the substitution of value maintained, by access to political process (an elitist model), and the value ultimately retributed to its source--the value of possible free-market alternatives--by administrative law (a bureaucratic model). The value is assessed by operation of a bureaucratic model of power and political economy.
Looking at the Bernanke/Geitner plan for recapitalizing the banking system, Geitner's declaration of needing the authority to seize the assets of a failing company that is too big to fail, including non-bank firms, is a declaration of bureaucratic power that counters, or technically corrects for, the critique that the market has been rigged into a tyranny of corporate power. It is substituting for the positive effect (the optimal efficiency) that would obtain if bureaucratic power were applied to ensure in priority a free-market economics in which the economy is pluralistically not dependant on the success or failure of any one small firm, but instead is dependant on a few interlocked firms that are too big to fail and, thus, dependant on bureaucratic power to survive.
Combining the elements of elitism and pluralism, the Bernanke/Geitner plan operationalizes a legitimacy of outcome (of power) that combines the value of market efficiency (pluralism) with the absolute arbitrary value of government (elitism). The synthesis, while being an ad hoc organizational measure to allow what is a failure to succeed, is the organizational technology that can be utilized to effectively ensure free-market efficiencies and the fair and accurate valuation of assets and liabilities that is, in this case, clearly lacking and critically needed.
To incentivize, or optimize the marginal utility like a free-market would, the subsidy, the substitute, of the latest plan to lure private capital to support what is too big to fail but not too big to be government controlled (absolute arbitraty value) is, predictably, entirely at the expense (the risk) of public capital and is, predictably, consistent with the bureaucratic model of power and political economy (see the article, "Restructuring the Elements of Power" at griffithlighton.blogspot.com).
We see, then, the contradiction to be reconciled, or to be practically applied into what central bankers call "a process of resolution." While the public dollar is imparted less value than the private sector dollar, arbitration of the value is by public authority. The absolute value of public authority is substituted for the efficiency value of free-market economics, and the subsidy (and the sub-optimization) occurs.
The distribution, or retributing, of the accumulated value (the subsidy) is a necessary condition for economic recovery and growth. Without retributing the value, the means of accumulating the value (the subsidy) is not possible. It is a necessary condition of the capital, and the more value retributed without depreciating the value of the dollar (by recapitalizing from the accumulated benefit rather than monetizing the debt with a regressive tax burden--a subsidized valuation), the more profitable firms can be and the more economic expansion that can occur.
The normative value of recognizing the "real" value of the subsitution effectively reassesses the value of the assets. The subsidy is then recognized as a "market distortion" that will be an incentive to innovate the technology to remove the coal asset to recapture the subsidy (the value-added benefit that had substituted the value-subtracted cost to produce a net inefficiency that was determined to be an asset and not a liability, determining the total assessment of the value). The result is a reassessment of market value and the "natural" incentive to minimize the cost and maximize the benefit, or to optimize the economic value to everyone's benefit. The benefit is rendered more indivisible and the marginal profit more accurately measures the marginal utility.
The subsidy is normatively "bad" because it does not allow for the incentive to attribute the value of the profit margin (the measure of marginal utility) to the value of the possible alternatives: it did not allow for a competitive multiplicity of the marketplace (a pluralistic model). Instead, the subsidy is aquired, and the substitution of value maintained, by access to political process (an elitist model), and the value ultimately retributed to its source--the value of possible free-market alternatives--by administrative law (a bureaucratic model). The value is assessed by operation of a bureaucratic model of power and political economy.
Looking at the Bernanke/Geitner plan for recapitalizing the banking system, Geitner's declaration of needing the authority to seize the assets of a failing company that is too big to fail, including non-bank firms, is a declaration of bureaucratic power that counters, or technically corrects for, the critique that the market has been rigged into a tyranny of corporate power. It is substituting for the positive effect (the optimal efficiency) that would obtain if bureaucratic power were applied to ensure in priority a free-market economics in which the economy is pluralistically not dependant on the success or failure of any one small firm, but instead is dependant on a few interlocked firms that are too big to fail and, thus, dependant on bureaucratic power to survive.
Combining the elements of elitism and pluralism, the Bernanke/Geitner plan operationalizes a legitimacy of outcome (of power) that combines the value of market efficiency (pluralism) with the absolute arbitrary value of government (elitism). The synthesis, while being an ad hoc organizational measure to allow what is a failure to succeed, is the organizational technology that can be utilized to effectively ensure free-market efficiencies and the fair and accurate valuation of assets and liabilities that is, in this case, clearly lacking and critically needed.
To incentivize, or optimize the marginal utility like a free-market would, the subsidy, the substitute, of the latest plan to lure private capital to support what is too big to fail but not too big to be government controlled (absolute arbitraty value) is, predictably, entirely at the expense (the risk) of public capital and is, predictably, consistent with the bureaucratic model of power and political economy (see the article, "Restructuring the Elements of Power" at griffithlighton.blogspot.com).
We see, then, the contradiction to be reconciled, or to be practically applied into what central bankers call "a process of resolution." While the public dollar is imparted less value than the private sector dollar, arbitration of the value is by public authority. The absolute value of public authority is substituted for the efficiency value of free-market economics, and the subsidy (and the sub-optimization) occurs.
The distribution, or retributing, of the accumulated value (the subsidy) is a necessary condition for economic recovery and growth. Without retributing the value, the means of accumulating the value (the subsidy) is not possible. It is a necessary condition of the capital, and the more value retributed without depreciating the value of the dollar (by recapitalizing from the accumulated benefit rather than monetizing the debt with a regressive tax burden--a subsidized valuation), the more profitable firms can be and the more economic expansion that can occur.
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