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.