Reviewing last year's events toward the precipitous liquidity crisis there is a tendency to identify the sub-prime lending market as the primary cause.
Sub-prime debt was securitized so that it all looked triple A in the aggregate, but that did not cause the crisis. The crisis was caused at the fundament: a lack of income to support the value of the debt instruments, thus called "sub prime."
Buying and selling the sub-prime debt was predicated on a theory of economic investment and growth that fails, or nulls, its hypothesis in every case.
Trickle-down economics always nulls its hypothesis. It accumulates and consolidates the value, the income, needed to cause the growth and distribution of income to pay the debt. Pretty simple!
Rejection of making permanent a public policy plagued with a continuously nulled hypothesis was definitely worth voting for in the last election cycle.
In retrospect it is time to confirm what the truth is by very simply rejecting what it clearly is not. This is a function of critique: testing the hypotheses of theoretical models, and this particular model of trickle-down economics has been thoroughly tested negative for the results it promises. It caused the sub-prime liquidity crisis because it does not work.
The solution is very easily, very simply, induced from the evidence: if you want to prevent liquidity crises, do not use trickle-down economics.
Making sub-prime loans did not cause the crisis. The accumulation of wealth to trickle down to pay the debt caused the crisis because "accumulation" and "trickle down" (distribution) are antithetical. Remove the contradiction--what conservatives say requires a secret knowledge to understand why it really works--and the problem is actually solved rather than continuously reinvented in the guise of empirical improvement.
It is no secret that the trickle-down hypothesis is continuously nulled.
Slow growth plagued the Bush administration despite record budget deficits that will continue well beyond its eight years. During that time, growth was most robust when tax policy favored the middle class. When those middle-class tax cuts expired, so did the more robust growth.
Growth--expanding the pie--supports the dollar and a "fundamentally" low interest rate. Instead, the rate was "technically" low to support the trickle-down theory with positive confirmation.
Of course, truth kicked out the front door just comes in the back.
The funds provided by the "technical" rate, instead of adding liquidity to be trickled down, were retained at the top. The funds remain there, in a steady state of accumulation, which is why the economy is on a slow slope to recovery.
The funds to support the trickle-down hypothesis (an extra-large buget deficit AND a low interest rate) were technically provided but used to finance the over-leveraging, and consolidation of the wealth, to a larger-than-usual crisis proportion.
(Hedge fund managers called the over-leveraging "the magnifier effect" which technically indicated the deviation from the normal distribution would not be a random event.)
All the indicators were technically there to prevent the magnitude and precipitousness of the crisis, but that does not allow for the gratitude the little people should have for the technical elits that saved us from the folly of their own devices.
The wealth, even with a record budget deficit, did not trickle down to cause growth. Instead, it accumulated and caused the most severe deflationary trend since The Great Depression.
More disturbing is that the crisis was so easily predictable, indicating how entrenched a lack of empirical methodology is for the development of public policy. It is like living in the Middle Ages when the earth was flat and at the center of the universe.
Even after the crisis and an election cycle with a clear mandate to make application of the truth permanent instead of the Bush tax cuts, we persist with a failed model of political economy that is methodologically no less akin to what Galileo faced with his observations.
Secular economic reality is the remaining legacy of the empirical heresy.
Wednesday, September 30, 2009
Tuesday, September 29, 2009
Limitations of the Data
The first thing any empirical analyst should learn is to identify the limitation of the data for predictive utility.
Recognizing the limits is not just for the data itself but also for the analytical modeling.
A mathematical model, for example, that allows for leveraging assests with little-to-no-risk because the "system" is "self-correcting" incurs a risk of ignorance of a monumental proportion.
The most recent example of invoking a pluralist legitimacy, and low risk, of the outcome through consolidated means very clearly demonstrates the moral hazard of trying to hard boil an egg with dry ice. It is "hard" alright, but not legitimately boiled.
The frozen liquidity of the easily predictable crisis of most recent record operated with a free-market (democratic) legitimacy through non-free-market (undemocratic) means. The crisis was inevitable and the correction (the recession) is anything but a beneficial exercise in empiricism (the philosophy of inductive, continuous improvement in which pure modeling has a continuously verified limitation).
If modeling the economy into crisis over and over again is not considered a mistake, then it is considered the intended outcome. The analyst is able to fully and accurately predict the outcome based on the public policy designed to manage the gamma risk.
A single-payer system for health care is a good example.
If government provides the pluralistic check to private-sector enterprise (the gamma risk), when government becomes the provider, or the payer, where is the check and balance? The "risk" to the pluralistic process is so high to warrant a clear demand, a confirmation, of pluralistic processes over singular (consolidated) forces of legitimacy.
The polarity has not just been reversed with a single-payer system because government is an entity of ultimate authority--it presents the "gamma" risk that cannot be avoided or checked.
Government should be there to ensure the plurality of the marketplace in priority, not absorb it to check the accumulated power of private sector entities. Solving the problem with the problem is an illusion suffered by the perfect abstractions of mathematical modeling intentionally masqueraded as the ontology of an empirical truth.
Recognizing the limits is not just for the data itself but also for the analytical modeling.
A mathematical model, for example, that allows for leveraging assests with little-to-no-risk because the "system" is "self-correcting" incurs a risk of ignorance of a monumental proportion.
The most recent example of invoking a pluralist legitimacy, and low risk, of the outcome through consolidated means very clearly demonstrates the moral hazard of trying to hard boil an egg with dry ice. It is "hard" alright, but not legitimately boiled.
The frozen liquidity of the easily predictable crisis of most recent record operated with a free-market (democratic) legitimacy through non-free-market (undemocratic) means. The crisis was inevitable and the correction (the recession) is anything but a beneficial exercise in empiricism (the philosophy of inductive, continuous improvement in which pure modeling has a continuously verified limitation).
If modeling the economy into crisis over and over again is not considered a mistake, then it is considered the intended outcome. The analyst is able to fully and accurately predict the outcome based on the public policy designed to manage the gamma risk.
A single-payer system for health care is a good example.
If government provides the pluralistic check to private-sector enterprise (the gamma risk), when government becomes the provider, or the payer, where is the check and balance? The "risk" to the pluralistic process is so high to warrant a clear demand, a confirmation, of pluralistic processes over singular (consolidated) forces of legitimacy.
The polarity has not just been reversed with a single-payer system because government is an entity of ultimate authority--it presents the "gamma" risk that cannot be avoided or checked.
Government should be there to ensure the plurality of the marketplace in priority, not absorb it to check the accumulated power of private sector entities. Solving the problem with the problem is an illusion suffered by the perfect abstractions of mathematical modeling intentionally masqueraded as the ontology of an empirical truth.
Risk Factors and the Short Wave
The increasing gamma risk should have affected the short wave indicators significantly.
Iran can very significantly disrupt the supply of oil by intimidation in the Persian Gulf region. The increasing gamma risk with a very high probability will keep fuel prices under support pressure. The support does not have to be anything but an aggravation and intimidation factor, and that will affect the short-term trend, keeping the economy in a deflationary tendency.
Deflationary risk in high probability supports a continued accumulation phase of the business cycle. The cash accumulated from cost reduction revenues (unemployment) will be used for mergers and acquisitions, providing some support for equities. The short-term trend will not reflect the gamma risk and will be susceptible to unexpected reversal of investor sentiment from the big market movers.
The geo-political gamma risk conveniently provides an excuse for continuing the accumulation phase of the business cycle while the government engages in expansionist, distribution-phase politics. The value being provided by government will be consolidated by the big financials engaged in activity that is emblematic of "too big to fail." That will increase the earnings of financials while depreciating the fundamental value of the distribution--economic growth, which supports the value of the dollar and reduces the incentive for gamma-risk support of oil prices.
The antinomy of inflationary/deflationary pressure creates havoc for short-wave analytics with the predictors being squarely determined by the big commanders of market movements. The big movers rely on the short-wave indicators to falsely signal a trend to be commanded in reversal, but with the good reason, the excuse, of the gamma risk.
Not including the gamma risk is a critical error that keeps small investors following rather than predicting probable trends. Rather than predicting sentiment, the indicators cause it. Keeping the accumulation phase of the cycle alive functions, then, as a means of consolidating the plurality of value that makes for free-market economics and "cures" the problem of "too big to fail."
Iran can very significantly disrupt the supply of oil by intimidation in the Persian Gulf region. The increasing gamma risk with a very high probability will keep fuel prices under support pressure. The support does not have to be anything but an aggravation and intimidation factor, and that will affect the short-term trend, keeping the economy in a deflationary tendency.
Deflationary risk in high probability supports a continued accumulation phase of the business cycle. The cash accumulated from cost reduction revenues (unemployment) will be used for mergers and acquisitions, providing some support for equities. The short-term trend will not reflect the gamma risk and will be susceptible to unexpected reversal of investor sentiment from the big market movers.
The geo-political gamma risk conveniently provides an excuse for continuing the accumulation phase of the business cycle while the government engages in expansionist, distribution-phase politics. The value being provided by government will be consolidated by the big financials engaged in activity that is emblematic of "too big to fail." That will increase the earnings of financials while depreciating the fundamental value of the distribution--economic growth, which supports the value of the dollar and reduces the incentive for gamma-risk support of oil prices.
The antinomy of inflationary/deflationary pressure creates havoc for short-wave analytics with the predictors being squarely determined by the big commanders of market movements. The big movers rely on the short-wave indicators to falsely signal a trend to be commanded in reversal, but with the good reason, the excuse, of the gamma risk.
Not including the gamma risk is a critical error that keeps small investors following rather than predicting probable trends. Rather than predicting sentiment, the indicators cause it. Keeping the accumulation phase of the cycle alive functions, then, as a means of consolidating the plurality of value that makes for free-market economics and "cures" the problem of "too big to fail."
Sunday, September 27, 2009
The Gambler's Fallacy
When the Dow broke 8000, it was a question of why, which begs the question.
When things do not make good sense and there is the variable of human caprice involved, the question becomes, "why not?"
There is only one good reason for the Dow to retrace to nearly 10k and technically suggest a secular bull market without fundamental support: because the money was there to drive it.
The money available to drive equities into a technical-looking bull market is largely money consolidated by the recessionary (deflationary) trend. This is net worth literally lost and gained in zero-sum from a plurality of small investors (including the unemployed who invested their labor at a net loss) to a few big financial players.
(For the unemployed with a lot of debt and no savings, the negative equity was reversed positive with the sudden macro reversal into liquidity crisis. Their credit score is ruined, but that is largely a measure of insufficient income. It is a detriment suffered all along and is to be included in the total amount of money that was "irrationally?" leveraged into crisis.)
Leveraging into a bull market trend with recessionary tendencies is not an irrational exuberance (nor was the previous round of overleveraging into a general liquidity crisis). It is a rational, technically measured means to ends.
Small investors riding the current upward trend are gambling, and because the technicals call for a continued bullish trend, the sentiment is established for a likely buy after a dip. They are being set up for continued consolidation.
Sentiment can be made a function of technical indicators, assumed inherently rational and true, to produce an outcome that is deemed irrational--"surprisingly"exuberant, or emotional--in retrospect. It all seems so technically rational at the time the regression is unfolding.
The technicals are too easily manipulated to be reliable unless you are the manipulator, and that is a function of allowing consolidation of value to win over pluralism. For the plurality, investing becomes a game to be played rather than a vehicle for preservation of value and growth, and the game is rigged so that the house always wins.
Since the technical measures assume the probability to be a function of random variables, and the technique of manipulation--of surprises--fits the property of random reversals, it would seem the technical indicators would be the only way to go. That plays right into the manipulator's game.
The tendency to rely on the law of averages is very strong because the short direction of the trend is largely dependant on how the retail investor is positioned. If the big players cannot manipulate the trend and the technicals that indicate it, then they will not play the game and "risk" a deconsolidation of the capital. The empowering determinant that wins the game would be at risk. (The outcome, keep in mind, cannot legitimately be considered winning if it is rigged, so rigging the market entails a legal liability--a gamma risk that must be politically managed).
For the technical analyst in a constant bemusement of unindicated reversals, or surprises, in a consolidated (unpluralistic) market in which the fundamentals do not much matter, the law of averages is a reliable constant of last resort. The market is "due for a correction" defines the gambler's fallacy. It is not a matter of if, but when, and the long wave is the most reliable technical indicator to avoid the allure of the fallacy.
Analytically, the best technical indicator is to recognize that it is not a free market. Reversals are easily induced from the consolidation of capital.
The different assessments offered by different members of the Federal Reserve board recently indicates why the short-wave technicals are unreliable.
The non-fundamental bull market will be reliably reversed in the longer trend with a re-inflated dollar which, while improving the macro fundamentals, will cause a reversal in equities because it is being driven with money not being borrowed for economic growth, but the accumulation of the capital.
The distribution phase of the long trend will force interest rates up, causing a fundamental reversal (correction) of equities prices, and the law of averages will be at that time the reliable constant.
The surprising reversals that consolidate value, both micro and macro, are the result of deceptive practices that the concentration of value makes possible. The correction is the emergence of the truth. Thus, we have the saying, "the technicals do not lie."
Technical corrections do more than suggest the truth in a retrospective regression. It projects the future and a responsibility of knowing what the proper course of action is.
The technical analyst has a responsibility that goes well beyond individual profit. The reversal of fortune that causes massive unemployment and untold suffering is the resonsibility of the knowing to prevent, not to just predict and capitalize on.
When things do not make good sense and there is the variable of human caprice involved, the question becomes, "why not?"
There is only one good reason for the Dow to retrace to nearly 10k and technically suggest a secular bull market without fundamental support: because the money was there to drive it.
The money available to drive equities into a technical-looking bull market is largely money consolidated by the recessionary (deflationary) trend. This is net worth literally lost and gained in zero-sum from a plurality of small investors (including the unemployed who invested their labor at a net loss) to a few big financial players.
(For the unemployed with a lot of debt and no savings, the negative equity was reversed positive with the sudden macro reversal into liquidity crisis. Their credit score is ruined, but that is largely a measure of insufficient income. It is a detriment suffered all along and is to be included in the total amount of money that was "irrationally?" leveraged into crisis.)
Leveraging into a bull market trend with recessionary tendencies is not an irrational exuberance (nor was the previous round of overleveraging into a general liquidity crisis). It is a rational, technically measured means to ends.
Small investors riding the current upward trend are gambling, and because the technicals call for a continued bullish trend, the sentiment is established for a likely buy after a dip. They are being set up for continued consolidation.
Sentiment can be made a function of technical indicators, assumed inherently rational and true, to produce an outcome that is deemed irrational--"surprisingly"exuberant, or emotional--in retrospect. It all seems so technically rational at the time the regression is unfolding.
The technicals are too easily manipulated to be reliable unless you are the manipulator, and that is a function of allowing consolidation of value to win over pluralism. For the plurality, investing becomes a game to be played rather than a vehicle for preservation of value and growth, and the game is rigged so that the house always wins.
Since the technical measures assume the probability to be a function of random variables, and the technique of manipulation--of surprises--fits the property of random reversals, it would seem the technical indicators would be the only way to go. That plays right into the manipulator's game.
The tendency to rely on the law of averages is very strong because the short direction of the trend is largely dependant on how the retail investor is positioned. If the big players cannot manipulate the trend and the technicals that indicate it, then they will not play the game and "risk" a deconsolidation of the capital. The empowering determinant that wins the game would be at risk. (The outcome, keep in mind, cannot legitimately be considered winning if it is rigged, so rigging the market entails a legal liability--a gamma risk that must be politically managed).
For the technical analyst in a constant bemusement of unindicated reversals, or surprises, in a consolidated (unpluralistic) market in which the fundamentals do not much matter, the law of averages is a reliable constant of last resort. The market is "due for a correction" defines the gambler's fallacy. It is not a matter of if, but when, and the long wave is the most reliable technical indicator to avoid the allure of the fallacy.
Analytically, the best technical indicator is to recognize that it is not a free market. Reversals are easily induced from the consolidation of capital.
The different assessments offered by different members of the Federal Reserve board recently indicates why the short-wave technicals are unreliable.
The non-fundamental bull market will be reliably reversed in the longer trend with a re-inflated dollar which, while improving the macro fundamentals, will cause a reversal in equities because it is being driven with money not being borrowed for economic growth, but the accumulation of the capital.
The distribution phase of the long trend will force interest rates up, causing a fundamental reversal (correction) of equities prices, and the law of averages will be at that time the reliable constant.
The surprising reversals that consolidate value, both micro and macro, are the result of deceptive practices that the concentration of value makes possible. The correction is the emergence of the truth. Thus, we have the saying, "the technicals do not lie."
Technical corrections do more than suggest the truth in a retrospective regression. It projects the future and a responsibility of knowing what the proper course of action is.
The technical analyst has a responsibility that goes well beyond individual profit. The reversal of fortune that causes massive unemployment and untold suffering is the resonsibility of the knowing to prevent, not to just predict and capitalize on.
Wednesday, September 23, 2009
The Re-Inflation Dollar and Short-Wave Analysis
Independent investors often see a direct relationship drawn between the value of the dollar and commodity prices, like oil.
Currencies are akin to a commodity, providing a safe haven for preservation of value that, for a concentrated capital, is mostly an evasion of the gamma risk.
Evasion of gamma risk is not a reflection of fundamental value--it does not measure a causal relationship between the dollar's value and the price of commodities, for example. What it does measure is the determining effect of capital consolidation in the current economy.
A few analysts in popular media do have occasion to recognize that the relationship between the dollar and commodities is not a fundament of value (not money seeking the best value, but the value is caused by seeking it). The value is an effect, meaning that the value is affected by the movement of the capital alone and not a reflection of a fundamental investment that effects economic growth and economic recovery. In other words, the value of the currency and commodities presents significant false indicators for the manipulation of prices and, therefore, the predictive capacity of technical trend analyses.
For short-wave analysts, the fundamental attribution error can be a critical failure. The latter part of the accumulation phase of the business cycle is where short-wave analysis tends to false indicators because the causal determinants are a function of a long-term over-accumulation that results in a short-term arbitrary valuation of risk that can be the dollar today, gold tomorrow, and oil the next. It appears as randomness, but it is not. Running short regressions to induce the evidence of a trend is just an exercise in randomness unless, of course, you are controlling, commanding, the capital that causes the trend.
Analysts generally agree that the technical indicators lose predictive capacity in the kind of economic, and political, environment we have now with volatile beta (mergers and acquisitions, for example), and gamma (possible policy alternative), risks.
The macro modeling indicates the probable short-term trends.
The re-inflation dollar is highly probable to minimize the gamma risk to the consolidation of the capital. Treasury secretary, Geithner said today, for example, that time should not be allowed to lure the system into a false sense of security.
The re-inflation dollar will buy the time to minimize the gamma risk to the high systemic risk/reward still in place. With interest rates to remain below 1 percent for an extended period, according to Bernanke today, not only will the dollar be poised for pro-growth to assist demand for goods and services but for the overleveraging that causes demand reduction (unemployment). It is the formula for stagflating into the next liquidity crisis and forgetting about the high systemic risk/reward that causes it.
Keynesian expansion of the economy out of the recessionary (demand deflation: unemployment) trend will inflate the value of the dollar. The re-inflation will fuel the "happy days are here again" sentiment that Geithner is warning us about (and that is a good piece of public service that speaks truth to power...I wonder how long he will be able to keep his job if he keeps doing that).
The re-inflation dollar will be the counter-measure for not allowing the high risk/reward ratio of the embedded systemic risk to be correlated with the high unemployment measure. Rather, the high risk ratio will be argued the cause of the "growth" that will not be growth at all, but simply a retrace of the cycle; the argument will be a material misrepresentation--a fraud--that is endemic to the corporate (bureaucratic) organization and management of the economy.
The short-wave analytic will be conflicted with the inflationary and deflationary tendencies working together. The dollar inflates and seeks value in commodities which will deflate demand by increasing costs. The economy is essentially right back where it started supporting the deflationary trend and a high risk/reward benefit that is largely financed with a high unemployment number (demand reduction that supports a low interest rate).
Rigging the market for a low interest rate keeps financials profitable despite the overleveraging that causes demand reduction with slow growth investment. Thus, profitability without employment...it is capitalist heaven!
Utopian plutocracy is with a false free-market legitimacy, however. It is a dystopic risk (the gamma risk) that runs ever higher. It is an accumualtion of risk that plutocrats must continuously manage politically in the name of what a free-market economic system would otherwise legitimately provide: The General Welfare.
Currencies are akin to a commodity, providing a safe haven for preservation of value that, for a concentrated capital, is mostly an evasion of the gamma risk.
Evasion of gamma risk is not a reflection of fundamental value--it does not measure a causal relationship between the dollar's value and the price of commodities, for example. What it does measure is the determining effect of capital consolidation in the current economy.
A few analysts in popular media do have occasion to recognize that the relationship between the dollar and commodities is not a fundament of value (not money seeking the best value, but the value is caused by seeking it). The value is an effect, meaning that the value is affected by the movement of the capital alone and not a reflection of a fundamental investment that effects economic growth and economic recovery. In other words, the value of the currency and commodities presents significant false indicators for the manipulation of prices and, therefore, the predictive capacity of technical trend analyses.
For short-wave analysts, the fundamental attribution error can be a critical failure. The latter part of the accumulation phase of the business cycle is where short-wave analysis tends to false indicators because the causal determinants are a function of a long-term over-accumulation that results in a short-term arbitrary valuation of risk that can be the dollar today, gold tomorrow, and oil the next. It appears as randomness, but it is not. Running short regressions to induce the evidence of a trend is just an exercise in randomness unless, of course, you are controlling, commanding, the capital that causes the trend.
Analysts generally agree that the technical indicators lose predictive capacity in the kind of economic, and political, environment we have now with volatile beta (mergers and acquisitions, for example), and gamma (possible policy alternative), risks.
The macro modeling indicates the probable short-term trends.
The re-inflation dollar is highly probable to minimize the gamma risk to the consolidation of the capital. Treasury secretary, Geithner said today, for example, that time should not be allowed to lure the system into a false sense of security.
The re-inflation dollar will buy the time to minimize the gamma risk to the high systemic risk/reward still in place. With interest rates to remain below 1 percent for an extended period, according to Bernanke today, not only will the dollar be poised for pro-growth to assist demand for goods and services but for the overleveraging that causes demand reduction (unemployment). It is the formula for stagflating into the next liquidity crisis and forgetting about the high systemic risk/reward that causes it.
Keynesian expansion of the economy out of the recessionary (demand deflation: unemployment) trend will inflate the value of the dollar. The re-inflation will fuel the "happy days are here again" sentiment that Geithner is warning us about (and that is a good piece of public service that speaks truth to power...I wonder how long he will be able to keep his job if he keeps doing that).
The re-inflation dollar will be the counter-measure for not allowing the high risk/reward ratio of the embedded systemic risk to be correlated with the high unemployment measure. Rather, the high risk ratio will be argued the cause of the "growth" that will not be growth at all, but simply a retrace of the cycle; the argument will be a material misrepresentation--a fraud--that is endemic to the corporate (bureaucratic) organization and management of the economy.
The short-wave analytic will be conflicted with the inflationary and deflationary tendencies working together. The dollar inflates and seeks value in commodities which will deflate demand by increasing costs. The economy is essentially right back where it started supporting the deflationary trend and a high risk/reward benefit that is largely financed with a high unemployment number (demand reduction that supports a low interest rate).
Rigging the market for a low interest rate keeps financials profitable despite the overleveraging that causes demand reduction with slow growth investment. Thus, profitability without employment...it is capitalist heaven!
Utopian plutocracy is with a false free-market legitimacy, however. It is a dystopic risk (the gamma risk) that runs ever higher. It is an accumualtion of risk that plutocrats must continuously manage politically in the name of what a free-market economic system would otherwise legitimately provide: The General Welfare.
Monday, September 21, 2009
Who is Buying the Dip?
Any analyst that sees the Dow at 11000 anticipates professionals moving funds out of commodities into equities. The retrace in commodities will give equities a fundamental support because it supports economic recovery over the deflationary trend.
The mass movement of this wholesale capital is short term, however. It creates a sucker's market at the retail level, then it will be time to massively move back into commodities and support the deflationary trend.
Key to predicting the trend and the timing is who owns what when.
Who is buying the dip is critical to predicting the movement of mass capital (capital that is consolidated into "too big to fail" and thus becomes the predictor of a trend's direction and timing).
For the professional, the retail money is whatever is added to the pot. The retail money is easily indicated and signals a buy or sell reversal to consolidate that money.
Predicting rather than following the trend is a winner for the small, independent investor and also indicates the efficiency of democratic, demand economics.
A free market system is not the consolidation we have now, and that concentration of power and wealth is falsely attributed to free market mechanics to justify the inequitable, and destabilizing, outcome.
The instability we have now, whether banking, energy, health care, is attributable to the lack of a free-market mechanics in operation. The proponents of consolidation argue the value of minimizing risk when, empirically, the risk was systemically maximized. Technically correcting for the high risk probability of 100 percent required a $15 trillion government investment to "save" the system the way it is; that is, supporting the risk into the future and clearly indicating the long-term trend.
Who is buying the dip? The question begs to ask, who is in control? Without ensuring a democratic plurality in the marketplace, the economy fails the free market legitimacy. The failure is empirically indicated by the cost (benefit) figure of controlling the externalities, the largest of which is the systemic risk, and the most beneficial dimension of incurring that risk to the consolidation of the capital is high unemployment.
What would trillions of dollars to directly bail out the millions of unemployed rather than assist the consolidation of the financial sector do for economic recovery? The reason it does not happen that way is not because it MUST come down from on high, but because unemployment provides for the consolidation of the wealth. This is where the accumulation is paid for and, subsequently, the employed pay for the distribution--the cost of the recovery--as well.
Wages and salaries finance the retrace of the macro cycle (the crises) of accumulation and distribution that consolidates the wealth, and political power. The People finance, empower, the secular gods who decree "the way things are," or the natural order of things, from on high with the force and legitimacy of public authority. Questioning that authority is tantamount to a secular heresy worthy of a popular inquisition of fundamental values in which righteousness is decidedly conservative.
Just because the benefit, the payoff, of the risk taken is not analytically recognized to be connected in a causal relationship does not absolve the analyst, or society, from the truth. The truth persists in spite of its perception and a false sense of pluralism will assuredly, empirically, result in crises.
Identifying the trend is everything to do with recognition of the truth. Who is buying the dip and supporting the bullish trend in equities? If it is a consolidated capital looking to further consolidate the wealth, it is not a bullish trend at all but an extension of the accumulation phase of the business cycle.
Small, technically shrewd investors that have avoided consolidation of net worth, the time is nigh. False technical indicators will be the small investors' undoing unless they are willing to recognize that pluralism, not consolidation, ensures the profit of their long-lived prosperity and the production of wealth.
The mass movement of this wholesale capital is short term, however. It creates a sucker's market at the retail level, then it will be time to massively move back into commodities and support the deflationary trend.
Key to predicting the trend and the timing is who owns what when.
Who is buying the dip is critical to predicting the movement of mass capital (capital that is consolidated into "too big to fail" and thus becomes the predictor of a trend's direction and timing).
For the professional, the retail money is whatever is added to the pot. The retail money is easily indicated and signals a buy or sell reversal to consolidate that money.
Predicting rather than following the trend is a winner for the small, independent investor and also indicates the efficiency of democratic, demand economics.
A free market system is not the consolidation we have now, and that concentration of power and wealth is falsely attributed to free market mechanics to justify the inequitable, and destabilizing, outcome.
The instability we have now, whether banking, energy, health care, is attributable to the lack of a free-market mechanics in operation. The proponents of consolidation argue the value of minimizing risk when, empirically, the risk was systemically maximized. Technically correcting for the high risk probability of 100 percent required a $15 trillion government investment to "save" the system the way it is; that is, supporting the risk into the future and clearly indicating the long-term trend.
Who is buying the dip? The question begs to ask, who is in control? Without ensuring a democratic plurality in the marketplace, the economy fails the free market legitimacy. The failure is empirically indicated by the cost (benefit) figure of controlling the externalities, the largest of which is the systemic risk, and the most beneficial dimension of incurring that risk to the consolidation of the capital is high unemployment.
What would trillions of dollars to directly bail out the millions of unemployed rather than assist the consolidation of the financial sector do for economic recovery? The reason it does not happen that way is not because it MUST come down from on high, but because unemployment provides for the consolidation of the wealth. This is where the accumulation is paid for and, subsequently, the employed pay for the distribution--the cost of the recovery--as well.
Wages and salaries finance the retrace of the macro cycle (the crises) of accumulation and distribution that consolidates the wealth, and political power. The People finance, empower, the secular gods who decree "the way things are," or the natural order of things, from on high with the force and legitimacy of public authority. Questioning that authority is tantamount to a secular heresy worthy of a popular inquisition of fundamental values in which righteousness is decidedly conservative.
Just because the benefit, the payoff, of the risk taken is not analytically recognized to be connected in a causal relationship does not absolve the analyst, or society, from the truth. The truth persists in spite of its perception and a false sense of pluralism will assuredly, empirically, result in crises.
Identifying the trend is everything to do with recognition of the truth. Who is buying the dip and supporting the bullish trend in equities? If it is a consolidated capital looking to further consolidate the wealth, it is not a bullish trend at all but an extension of the accumulation phase of the business cycle.
Small, technically shrewd investors that have avoided consolidation of net worth, the time is nigh. False technical indicators will be the small investors' undoing unless they are willing to recognize that pluralism, not consolidation, ensures the profit of their long-lived prosperity and the production of wealth.
Sunday, September 20, 2009
The Tobin Tax
Discussion of the Tobin tax gets little discussion in U.S. pop media because, first of all, pop media outlets are controlled by a consolidated capital which proponents of the tax argue needs to be controlled.
The tax has a progressive, proportional quality because it is targeted at high finance. However, the tax also has a regressive quality because many income classes do engage in the transactions the Tobin levy proposes to tax in order to control the perils of speculative demand (the classic peril of causing liquidity crises and a deflationary trend that consolidates the capital and benefits the primary "class" of the tax's target--those who largely own the capital and apply the peril/benefit).
The tax will not solve the cause of the problem. The income necessary to demand the markets remains consolidated to command it. It is just another Keynesian-like symptomatic treatment. The revenue will be used to fund the welfare state, empowering the bureaucratic model and the elitist technocrats that run it for the power elite in the name of democracy.
The income policy necessary to actually solve the problem of algorythmic, recurrent liquidity crisis is a purely progressive tax: the higher the income, whatever the source, the higher the tax. The retributed revenue puts the "demand" back in the market quickly and easily, defeating the classic benefit of the deflationary trend to keep the capital, and power, consolidated.
The Tobin tax will be falsely sold as a progressive tax measure to falsely satisfy the need, the demand, for that measure. The tax is only "progressive" because it conforms to policies and programs of the progressive era of politics.
The progressive era represents the emergence of a new middle class of elits that aspire to the ruling class, legislating all manner of limits to liberty and raising huge tax revenues that supports their sense of an upper-class status. This cohort largely disguises themselves as "liberals."
The liberal description of progressivism is false. It is an endeavor to tyrannize society with the always-better-judgement of elite authority. It is a tendency that is inimical to a free and civil society and gives credence to the consolidation of wealth and power. It is the problem, not the solution.
The tax has a progressive, proportional quality because it is targeted at high finance. However, the tax also has a regressive quality because many income classes do engage in the transactions the Tobin levy proposes to tax in order to control the perils of speculative demand (the classic peril of causing liquidity crises and a deflationary trend that consolidates the capital and benefits the primary "class" of the tax's target--those who largely own the capital and apply the peril/benefit).
The tax will not solve the cause of the problem. The income necessary to demand the markets remains consolidated to command it. It is just another Keynesian-like symptomatic treatment. The revenue will be used to fund the welfare state, empowering the bureaucratic model and the elitist technocrats that run it for the power elite in the name of democracy.
The income policy necessary to actually solve the problem of algorythmic, recurrent liquidity crisis is a purely progressive tax: the higher the income, whatever the source, the higher the tax. The retributed revenue puts the "demand" back in the market quickly and easily, defeating the classic benefit of the deflationary trend to keep the capital, and power, consolidated.
The Tobin tax will be falsely sold as a progressive tax measure to falsely satisfy the need, the demand, for that measure. The tax is only "progressive" because it conforms to policies and programs of the progressive era of politics.
The progressive era represents the emergence of a new middle class of elits that aspire to the ruling class, legislating all manner of limits to liberty and raising huge tax revenues that supports their sense of an upper-class status. This cohort largely disguises themselves as "liberals."
The liberal description of progressivism is false. It is an endeavor to tyrannize society with the always-better-judgement of elite authority. It is a tendency that is inimical to a free and civil society and gives credence to the consolidation of wealth and power. It is the problem, not the solution.
Friday, September 18, 2009
"Resolving" the Crisis
Popular media outlets report that the experts agree the recession is over.
Both the Federal Reserve and the Treasury refer to their role in facilitating the recovery and preventing the double dip as "resolving" the causal determinants of the crisis.
To ensure the recovery is "V" shaped, the Fed and Treasury are assuring investors that the gamma risk will be surely applied. The organizational model of "too big to fail" will be resolved (deconsolidated) to prevent a "W" shaped recovery.
Acknowledging that a deconsolidation must occur to prevent stagflating into the next crisis (the "W" shape of the regression) is a significant reversal of policy (gamma risk) sentiment. The reversal will regain the confidence lost in financial markets that precipitated a perilous liquidity crisis, but will it prevent the same organized consolidation of capital that caused it?
A deconsolidation is a necessary condition for ensuring a free-market plurality of the system in which the consumer has sufficient income to demand the market over the ability of producers to command it.
A system that ensures more demand or more command is where the organized practical model is actually macro "resolved."
In the 1990's when employment was high enough for many employees to have enough control in the marketplace to make demands, neo-conservatives were motivated to revenge the classical model and re-establish a command and control. The revanche was validated by judicial review and ironically declared public policy by popular consent in the 2000 election.
The Clinton administration's more progressive tax burden allowed for a more substantial distribution on the accumulation than conservatives cared for, but his administration also allowed for the consolidation of financial entities that led to the worst liquidity crisis since the Great Depression.
On a macro scale, the political-economy is organized neo-conservatively, and this "jobless recovery" indicates just exactly what is actually being "resolved."
Allowing financials to consolidate increased the gamma risk, and political economists that identified the risk were told by both parties they were fringe-radical ideologues that did not know what they were talking about. That neo-conservative critique persists despite the acknowledgment that "too big to fail" may need to be "resolved."
The ambivalence suggests a probability: enough deconsolidation to pluralize the system into more of a demand economy is highly improbable, and resolving the system to maintain the classical model (reducing demand through unemployment) by neo-conservative means (Keynesian economics) is being ensured in priority.
The up-tick in net worth as assets appreciate with the gaining confidence in the stability of markets is more than offset by gaining unemployment. It is a deliberate and measured "resolution." It is the empiric that spites the revanchist rhetoric.
We should fully acknowledge the empirical resolve that transforms ideology from the subordination of belief into the freedom to gain the truth in which to truly profit.
Both the Federal Reserve and the Treasury refer to their role in facilitating the recovery and preventing the double dip as "resolving" the causal determinants of the crisis.
To ensure the recovery is "V" shaped, the Fed and Treasury are assuring investors that the gamma risk will be surely applied. The organizational model of "too big to fail" will be resolved (deconsolidated) to prevent a "W" shaped recovery.
Acknowledging that a deconsolidation must occur to prevent stagflating into the next crisis (the "W" shape of the regression) is a significant reversal of policy (gamma risk) sentiment. The reversal will regain the confidence lost in financial markets that precipitated a perilous liquidity crisis, but will it prevent the same organized consolidation of capital that caused it?
A deconsolidation is a necessary condition for ensuring a free-market plurality of the system in which the consumer has sufficient income to demand the market over the ability of producers to command it.
A system that ensures more demand or more command is where the organized practical model is actually macro "resolved."
In the 1990's when employment was high enough for many employees to have enough control in the marketplace to make demands, neo-conservatives were motivated to revenge the classical model and re-establish a command and control. The revanche was validated by judicial review and ironically declared public policy by popular consent in the 2000 election.
The Clinton administration's more progressive tax burden allowed for a more substantial distribution on the accumulation than conservatives cared for, but his administration also allowed for the consolidation of financial entities that led to the worst liquidity crisis since the Great Depression.
On a macro scale, the political-economy is organized neo-conservatively, and this "jobless recovery" indicates just exactly what is actually being "resolved."
Allowing financials to consolidate increased the gamma risk, and political economists that identified the risk were told by both parties they were fringe-radical ideologues that did not know what they were talking about. That neo-conservative critique persists despite the acknowledgment that "too big to fail" may need to be "resolved."
The ambivalence suggests a probability: enough deconsolidation to pluralize the system into more of a demand economy is highly improbable, and resolving the system to maintain the classical model (reducing demand through unemployment) by neo-conservative means (Keynesian economics) is being ensured in priority.
The up-tick in net worth as assets appreciate with the gaining confidence in the stability of markets is more than offset by gaining unemployment. It is a deliberate and measured "resolution." It is the empiric that spites the revanchist rhetoric.
We should fully acknowledge the empirical resolve that transforms ideology from the subordination of belief into the freedom to gain the truth in which to truly profit.
Friday, September 11, 2009
The "New Normal"
Treasury secretary, Geithner describes the "new normal" of the business environment after last year's liquidity crisis to indicate where we go from here. The implication is that the well-trodden path is to somehow be different.
With unemployment continuing to rise, more foreclosures in the offing, and continued consolidation of net worth, the "new normal" is the old Keynesian reinvention of the old classical model and dynamics of capitalism. Nor is the global economy anything all that new.
The type of modeling predicts future trends.
Capital, industries and markets will continue to consolidate into the business model of "too big to fail" which bodes well for earnings and explains the steep rise in equities despite the prospect for economic recovery being very bleak by the same measure.
It used to be, classically, that earnings will not improve unless there is a distribution on the accumulation, causing employment. The gamma risk was virtually non-existent. Now, however, neo-classically, the money supply is maintained to allow for profits to lead employment (refered to as "capital formation") in a stagflationary trend. It is largely the result of managing a burgeoning gamma risk that is the "demand" for government action, substituting for the lack of demand (a deflationary accumulation) in the marketplace.
Geithner is indicating that, despite the rhetoric for a high gamma risk, the classic macro model will be the predictor for micro trends.
Since the classic model calls for continued accumulation, a double dip is highly probable. The gain in equities will retrace by at least half.
A macro distribution will not occur and pull the economy out of recession until commodities reflect the fundamentals with another sharp dip that will sustain a disinflationary trend and bring the consumer's dollar back in to support a secular, macro recovery instead of supporting the accumulation phase of a classic cycle.
What is new, or neo-classical, is the size of the money supply. It is so large that its consolidation allows just a few large entities (too big to fail) to manipulate, if not command, critical global markets, like energy, and cause the length and breadth of trends (and if you can cause it, you can certainly predict it).
M&A activity will increase in the second dip, indicating the end of the accumulation phase of the business cycle and a secular bull market to give the mergers and acquisitions value.
When the retributive value on so much value accumulated gets so high that the gamma risk becomes critical to profitability, commodities will lose support and a macro distribution will occur. Maintenance of the organizational model, and the big earnings, of being too big to fail gets support. The support will be the "ethic" of the marketplace despite Geithner's call for a "new business ethic" to guide us forward.
Ethics is mere rhetorical legitimacy if the economy is organized for command manipulation. The ethical reality, the legitimacy, is just whatever the outcome is (a false ontological legitimacy of the ends justifies the means as opposed to a true free-market ontology in which the means justifies the ends). The outcome is mitigated by rhetorical artifice and lengthy political processes resulting in apathy and anomie, reducing the gamma risk without reducing the retributive, economic value, which would defeat the value--the purpose--of the practical (predictive) dynamic model.
A distribution phase that reduces the gamma without retributing the value puts tension in the system to be managed. The result will be stagflation into the next crisis as the Fed and Treasury manipulate the neo-classical, Keynesian money supply to accommodate (resolve) low inflation and high employment within a deflationary (accumulative) organizational model of too big to fail.
What ultimately fails, and is resolved, is employment, accumulating the retributive value, strengthening support for the gamma risk, bringing the preferred organizational model into question. The risk is not likely for at least the next four years, and the market trends will be very similar to the last four. Hardly a "new" normal, just new gamma-risk rhetoric to support the norm.
With unemployment continuing to rise, more foreclosures in the offing, and continued consolidation of net worth, the "new normal" is the old Keynesian reinvention of the old classical model and dynamics of capitalism. Nor is the global economy anything all that new.
The type of modeling predicts future trends.
Capital, industries and markets will continue to consolidate into the business model of "too big to fail" which bodes well for earnings and explains the steep rise in equities despite the prospect for economic recovery being very bleak by the same measure.
It used to be, classically, that earnings will not improve unless there is a distribution on the accumulation, causing employment. The gamma risk was virtually non-existent. Now, however, neo-classically, the money supply is maintained to allow for profits to lead employment (refered to as "capital formation") in a stagflationary trend. It is largely the result of managing a burgeoning gamma risk that is the "demand" for government action, substituting for the lack of demand (a deflationary accumulation) in the marketplace.
Geithner is indicating that, despite the rhetoric for a high gamma risk, the classic macro model will be the predictor for micro trends.
Since the classic model calls for continued accumulation, a double dip is highly probable. The gain in equities will retrace by at least half.
A macro distribution will not occur and pull the economy out of recession until commodities reflect the fundamentals with another sharp dip that will sustain a disinflationary trend and bring the consumer's dollar back in to support a secular, macro recovery instead of supporting the accumulation phase of a classic cycle.
What is new, or neo-classical, is the size of the money supply. It is so large that its consolidation allows just a few large entities (too big to fail) to manipulate, if not command, critical global markets, like energy, and cause the length and breadth of trends (and if you can cause it, you can certainly predict it).
M&A activity will increase in the second dip, indicating the end of the accumulation phase of the business cycle and a secular bull market to give the mergers and acquisitions value.
When the retributive value on so much value accumulated gets so high that the gamma risk becomes critical to profitability, commodities will lose support and a macro distribution will occur. Maintenance of the organizational model, and the big earnings, of being too big to fail gets support. The support will be the "ethic" of the marketplace despite Geithner's call for a "new business ethic" to guide us forward.
Ethics is mere rhetorical legitimacy if the economy is organized for command manipulation. The ethical reality, the legitimacy, is just whatever the outcome is (a false ontological legitimacy of the ends justifies the means as opposed to a true free-market ontology in which the means justifies the ends). The outcome is mitigated by rhetorical artifice and lengthy political processes resulting in apathy and anomie, reducing the gamma risk without reducing the retributive, economic value, which would defeat the value--the purpose--of the practical (predictive) dynamic model.
A distribution phase that reduces the gamma without retributing the value puts tension in the system to be managed. The result will be stagflation into the next crisis as the Fed and Treasury manipulate the neo-classical, Keynesian money supply to accommodate (resolve) low inflation and high employment within a deflationary (accumulative) organizational model of too big to fail.
What ultimately fails, and is resolved, is employment, accumulating the retributive value, strengthening support for the gamma risk, bringing the preferred organizational model into question. The risk is not likely for at least the next four years, and the market trends will be very similar to the last four. Hardly a "new" normal, just new gamma-risk rhetoric to support the norm.
Thursday, September 10, 2009
Market Demand and Collective Action
A dynamic logic occurs when market participants seek to control costs.
Mancur Olson describes "The Logic of Collective Action." When, for example, the cost of health care becomes unaffordable, due to inelasticity, and incomes are accumulated into the hands of the providers, the reduction of demand (the ability to pay) logically prompts providers to seek another source of income to achieve the moral imperative of providing health care for everyone. The imperative is categorical (universal) because the demand (the need) is relatively inelastic.
President Obama, acting on that categorical, moral imperative is set to provide universal insurance coverage (thus demonizing insurers) while providers of care are seeking to source the funds that increase the ability to pay without redistributing the accumulated income (the retributive value). That source is government, providing in the name of the moral imperative.
Objecting to this system of finance is characterized as being anti-imperative (illogical), despite that it perpetuates what is wrong with it--burgeoning costs--which is the call for the reform. The public very clearly detects the "illogic" of this action being made in the spirit of collective action toward the public good.
Offering the problem as the solution is illogical in spite of the logical imperative of providing liquidity (the ability to pay in the form of government mandate and public finance) as soon as possible.
While the "public option" may be a point of departure for actually achieving the distribution of income necessary for health care to be universally affordable, the very striking lack of measure to control the cost suggests a willingness to design policy that keeps the income in a mode of continued consolidation that does not fit the imperative.
The consumer's imperative is to control the cost; $900 billion to start does not exactly fit the imperative.
The consumer's logic is to co-op, or organize, to collectively bargain to trust bust the power of the AMA. A doctor or hospital will have to disclose prices and be subjected to a free-market legitimacy to be economically successful, as opposed to the government being co-opted to pay undisclosed prices on command, if not now, sometime in the future (perhaps after everyone goes to the public option--the Wal Mart model of doing business).
The logic of collective action to counter organized monopolistic entities, like the AMA, for a fair and equitable price is a market mechanism concommittant with the "freedom" to act. The public option defies this logic. Once the option makes collective economic sense, the incentive to merge it with the provider to command, and collect, the price that caused the option will be overwhelming.
The probability the public option will not be corrupted is very low. The logic will then be to pluralize the system for a more direct and easily verifiable democracy to control the cost. The demand, without any encumberances to the logic of this action, will then be for a free-market system.
Mancur Olson describes "The Logic of Collective Action." When, for example, the cost of health care becomes unaffordable, due to inelasticity, and incomes are accumulated into the hands of the providers, the reduction of demand (the ability to pay) logically prompts providers to seek another source of income to achieve the moral imperative of providing health care for everyone. The imperative is categorical (universal) because the demand (the need) is relatively inelastic.
President Obama, acting on that categorical, moral imperative is set to provide universal insurance coverage (thus demonizing insurers) while providers of care are seeking to source the funds that increase the ability to pay without redistributing the accumulated income (the retributive value). That source is government, providing in the name of the moral imperative.
Objecting to this system of finance is characterized as being anti-imperative (illogical), despite that it perpetuates what is wrong with it--burgeoning costs--which is the call for the reform. The public very clearly detects the "illogic" of this action being made in the spirit of collective action toward the public good.
Offering the problem as the solution is illogical in spite of the logical imperative of providing liquidity (the ability to pay in the form of government mandate and public finance) as soon as possible.
While the "public option" may be a point of departure for actually achieving the distribution of income necessary for health care to be universally affordable, the very striking lack of measure to control the cost suggests a willingness to design policy that keeps the income in a mode of continued consolidation that does not fit the imperative.
The consumer's imperative is to control the cost; $900 billion to start does not exactly fit the imperative.
The consumer's logic is to co-op, or organize, to collectively bargain to trust bust the power of the AMA. A doctor or hospital will have to disclose prices and be subjected to a free-market legitimacy to be economically successful, as opposed to the government being co-opted to pay undisclosed prices on command, if not now, sometime in the future (perhaps after everyone goes to the public option--the Wal Mart model of doing business).
The logic of collective action to counter organized monopolistic entities, like the AMA, for a fair and equitable price is a market mechanism concommittant with the "freedom" to act. The public option defies this logic. Once the option makes collective economic sense, the incentive to merge it with the provider to command, and collect, the price that caused the option will be overwhelming.
The probability the public option will not be corrupted is very low. The logic will then be to pluralize the system for a more direct and easily verifiable democracy to control the cost. The demand, without any encumberances to the logic of this action, will then be for a free-market system.
No Demand for the Moral Imperative
Forty-six million Americans are currently without health care insurance. They do not have the income to demand it, yet the cost continues to rise in a deflationary trend. Just exactly how is that?
The SCHIP, for example, provided funds for price increases. It pulls up the cost without providing the income necessary to demand the cost come down. Rather, the tax funding provides for unconditional payment of the price; that is, without any demands. The income that is being provided is to command the price up, and that distribution deprives the income necessary to demand the price come down.
A market demand of 46 million is surely enough to demand the price come down if they have the income to demand it. Government providing the income by tax and subsidy does not, very clearly, demand the cost control needed to reform the system.
Paying the price on command is being masqueraded as a moral imperative.
Every American deserves health care, and every American deserves the income necessary to demand it at a an affordable price determined by the logic of collective action in a free and unconsolidated, competitive marketplace.
Ensuring a free-market mechanism in priority includes the pricing and organized practices of health care professionals and the AMA, as well as insurers. That will be the reform that both controls costs and satisfies the moral imperative.
The SCHIP, for example, provided funds for price increases. It pulls up the cost without providing the income necessary to demand the cost come down. Rather, the tax funding provides for unconditional payment of the price; that is, without any demands. The income that is being provided is to command the price up, and that distribution deprives the income necessary to demand the price come down.
A market demand of 46 million is surely enough to demand the price come down if they have the income to demand it. Government providing the income by tax and subsidy does not, very clearly, demand the cost control needed to reform the system.
Paying the price on command is being masqueraded as a moral imperative.
Every American deserves health care, and every American deserves the income necessary to demand it at a an affordable price determined by the logic of collective action in a free and unconsolidated, competitive marketplace.
Ensuring a free-market mechanism in priority includes the pricing and organized practices of health care professionals and the AMA, as well as insurers. That will be the reform that both controls costs and satisfies the moral imperative.
Wednesday, September 9, 2009
Healthcare: Innovation or Reform?
In a free-market system, rising costs demands innovation, reversing the trend of declining incomes, minimizing the probable effect of liquidity crisis.
In a non-free-market system, the consolidation of liquidity is added on command (Keynesian economics). The declining income, consolidated by the rising cost, is leveraged with a budget deficit, spread out over time, to be paid by the tax burden, maintaining the command price and the increasing cost.
The proposed reform is really an innovation to maintain the rising cost (and the illiquid distribution of income) without depriving the population of healthcare, which has a relatively inelastic demand (we need to have enough health to serve up the consolidated wealth and demonstrate power, as well as verify the noble beneficence of its accumulation).
The lack of elasticity is reasoned to be the cause of the persistently rising cost. The free market is reasoned to be an ineffective means of controlling the cost, otherwise it would, which begs the question.
What is to be reformed is this: a professional class and a business sector increases the cost, the government pays whatever is commanded, and the taxpayer with the highest tax burden, after all the exemptions and deductions, pays most the cost. The result, of course, is liquidity crisis, and a persistently overleveraged system.
The innovation occurring here, government-provided healthcare, is the means of maintaining the rising cost. It is a reinvention of the problem offered as the solution; just exactly what Obama supporters "hoped" would be pragmatically passe'.
The first thing the Obama administration and the Democratic delegation did was pass a regressive tax burden to finance expansion of healthcare insurance (SCHIP). It is a not-too-bright deflationary tax policy in the midst of recession, supporting illiquidity. That support is likely to continue. The current congress and administration simply does not have the will, or the understanding, to deter, but to innovatively abet, rising costs.
In a non-free-market system, the consolidation of liquidity is added on command (Keynesian economics). The declining income, consolidated by the rising cost, is leveraged with a budget deficit, spread out over time, to be paid by the tax burden, maintaining the command price and the increasing cost.
The proposed reform is really an innovation to maintain the rising cost (and the illiquid distribution of income) without depriving the population of healthcare, which has a relatively inelastic demand (we need to have enough health to serve up the consolidated wealth and demonstrate power, as well as verify the noble beneficence of its accumulation).
The lack of elasticity is reasoned to be the cause of the persistently rising cost. The free market is reasoned to be an ineffective means of controlling the cost, otherwise it would, which begs the question.
What is to be reformed is this: a professional class and a business sector increases the cost, the government pays whatever is commanded, and the taxpayer with the highest tax burden, after all the exemptions and deductions, pays most the cost. The result, of course, is liquidity crisis, and a persistently overleveraged system.
The innovation occurring here, government-provided healthcare, is the means of maintaining the rising cost. It is a reinvention of the problem offered as the solution; just exactly what Obama supporters "hoped" would be pragmatically passe'.
The first thing the Obama administration and the Democratic delegation did was pass a regressive tax burden to finance expansion of healthcare insurance (SCHIP). It is a not-too-bright deflationary tax policy in the midst of recession, supporting illiquidity. That support is likely to continue. The current congress and administration simply does not have the will, or the understanding, to deter, but to innovatively abet, rising costs.
Tuesday, September 8, 2009
Mandating Healthcare Insurance
Don't be fooled by the drop in the health insurance sector.
I can see it coming. We're headed for a mandate. Both doctors and insurance companies are going to be able to command a person's income into oblivion on something you have to have. The inelasticity of demand will be chiseled in stone.
Let's say you go to Barf Burger and order a super-size infarction burger. "That'l be $2.50."
"$2.50! What do you mean. This thing is gonna kill me and you want me to pay too much for it too!"
Not buying the burger is to "demand" the price be lower.
Mandating is a way to rig, or command, the price; exactly what healthcare does not need if we are to control the cost.
Demand is more than what pulls the price up. It can also pull it down, but we are not apt to discuss that because it is disinflationary--it maximizes the ability to demand the price and minimizes the ability to command it.
Organizing for demand economics maximizes the consumer's income and minimizes the probability, if not the severity, of liquidity crises. Organizing for command maximizes accumulation and concentration of income and always causes liquidity crises.
Which should we choose to organize for in priority, choice or mandate?
Let's say the price of an infarction burger is disinflated or "demanded" lower. The cost of healthcare is included in the lower price. If buying two instead of one kills you twice as fast, the demand is rendered more elastic.
Dictating, or mandating, the marketplace is just a bad idea.
The choice here is whether we all have freedom or allow the means for a few want-to-be tyrants to accumulate the wealth and power to dictate it.
I can see it coming. We're headed for a mandate. Both doctors and insurance companies are going to be able to command a person's income into oblivion on something you have to have. The inelasticity of demand will be chiseled in stone.
Let's say you go to Barf Burger and order a super-size infarction burger. "That'l be $2.50."
"$2.50! What do you mean. This thing is gonna kill me and you want me to pay too much for it too!"
Not buying the burger is to "demand" the price be lower.
Mandating is a way to rig, or command, the price; exactly what healthcare does not need if we are to control the cost.
Demand is more than what pulls the price up. It can also pull it down, but we are not apt to discuss that because it is disinflationary--it maximizes the ability to demand the price and minimizes the ability to command it.
Organizing for demand economics maximizes the consumer's income and minimizes the probability, if not the severity, of liquidity crises. Organizing for command maximizes accumulation and concentration of income and always causes liquidity crises.
Which should we choose to organize for in priority, choice or mandate?
Let's say the price of an infarction burger is disinflated or "demanded" lower. The cost of healthcare is included in the lower price. If buying two instead of one kills you twice as fast, the demand is rendered more elastic.
Dictating, or mandating, the marketplace is just a bad idea.
The choice here is whether we all have freedom or allow the means for a few want-to-be tyrants to accumulate the wealth and power to dictate it.
Monday, September 7, 2009
Income and Capital Formation: Paying for Healthcare
The call for healthcare reform is a call for choice and affordability, and the objection to the proposed reform is the lack of it.
Americans are not clueless. Once healthcare is in the sector of public authority, where choice is "subjected" to the force and legitimacy of that authority, the supremacy of choice (democracy) is subordinated.
Voting with dollars in the marketplace is a direct and immediate democracy with direct and immediate authority that is directly and immediately verifiable. The choice is not "subjected" but objectively applied to fit the liberal taste and preferences of the individual. That is called freedom. That's why we want it!
The proposed consolidation to make healthcare universally accessible because it is fundamental to human existence is in fact a declaration that liberty and freedom must be diminished to attain the greatest good.
Soundly rejected!
The consumer knows that public sector consolidation of the system is as much to conserve the accumulation of wealth that makes healthcare unaffordable as to universally provide it.
Whether public, private, or public and private, organized consolidation rigs the price and concentrates income, which is argued to be the efficiency of capital formation for investment.
Does the cure for rising costs have to be the formation of concentrated capital (demand reduction)? We certainly have plenty of that (recession).
Controlling costs is a demand-side factor as well as a supply-side factor.
Cost control also comes in the form of ensuring adequate distribution of income (dollar votes) in order to demand it.
Public policy is needed that ensures adequacy of income to participate in the marketplace, not a system that ensures an accumulation of that income in the name of an efficient capital formation.
Consolidation of wealth and power is not a necessary condition for provision of the public good.
The current administration and congress seems to prefer, however, ensuring financial adequacy from the top down, a system that has failed "We The People," preventing the full and stable operation of democratic economic means, for over 200 years.
Conservatives argue that ensuring consolidation of wealth and power (low-to-no taxation for the wealthy--the regressive tax burden of the Hamiltonian model) is the stability we all want and need.
Is it?
If a lack of income prices Americans out of the healthcare market, how does ensuring the lack of income price them in?
The income that has been accumulated needs to be distributed to allow for participation in the marketplace. That will provide the demand that not only pushes the price up, but can be applied to "demand" the price come down.
Where healthcare does not rely on public finance in which the industry is paid whatever price it commands, consumers are more able to demand what is considered a fair price if they have the dollar votes to demand it.
In order for the healthcare industry to increase its income, it will be necessary to lower the price and allow for maximum participation (completely different from the budget-busting public option of assuring the highest participation at the highest possible price).
Even in the case of a life-saving medical procedure (a relatively inelastic demand), being held hostage to the price is a function of spreading the risk which, again, is mitigated by exposure to the ability to demand affordable insurance premiums to spread that risk.
A lower price increases income. Increased income increases the capacity to participate, and the need for more providers (employment and a share of the income), which spreads the risk to demand an affordable price (on a limited supply of available funds) rather than just paying what a limited number of providers command (on an unlimited supply of public funds).
A budget deficit to finance whatever the provider commands concentrates an accumulation of wealth. The redistribution of income reduces the amount of money available to spread the risk and demand the price without progressive taxation.
We are being told the free-market model of "demand" economics is impossible. It is a rhetoric applied to rig the price--to command the price rather than demand it.
What is impossible is to continue allowing for an overaccumulation of income if we want a healthy economy, and affordable healthcare.
Americans are not clueless. Once healthcare is in the sector of public authority, where choice is "subjected" to the force and legitimacy of that authority, the supremacy of choice (democracy) is subordinated.
Voting with dollars in the marketplace is a direct and immediate democracy with direct and immediate authority that is directly and immediately verifiable. The choice is not "subjected" but objectively applied to fit the liberal taste and preferences of the individual. That is called freedom. That's why we want it!
The proposed consolidation to make healthcare universally accessible because it is fundamental to human existence is in fact a declaration that liberty and freedom must be diminished to attain the greatest good.
Soundly rejected!
The consumer knows that public sector consolidation of the system is as much to conserve the accumulation of wealth that makes healthcare unaffordable as to universally provide it.
Whether public, private, or public and private, organized consolidation rigs the price and concentrates income, which is argued to be the efficiency of capital formation for investment.
Does the cure for rising costs have to be the formation of concentrated capital (demand reduction)? We certainly have plenty of that (recession).
Controlling costs is a demand-side factor as well as a supply-side factor.
Cost control also comes in the form of ensuring adequate distribution of income (dollar votes) in order to demand it.
Public policy is needed that ensures adequacy of income to participate in the marketplace, not a system that ensures an accumulation of that income in the name of an efficient capital formation.
Consolidation of wealth and power is not a necessary condition for provision of the public good.
The current administration and congress seems to prefer, however, ensuring financial adequacy from the top down, a system that has failed "We The People," preventing the full and stable operation of democratic economic means, for over 200 years.
Conservatives argue that ensuring consolidation of wealth and power (low-to-no taxation for the wealthy--the regressive tax burden of the Hamiltonian model) is the stability we all want and need.
Is it?
If a lack of income prices Americans out of the healthcare market, how does ensuring the lack of income price them in?
The income that has been accumulated needs to be distributed to allow for participation in the marketplace. That will provide the demand that not only pushes the price up, but can be applied to "demand" the price come down.
Where healthcare does not rely on public finance in which the industry is paid whatever price it commands, consumers are more able to demand what is considered a fair price if they have the dollar votes to demand it.
In order for the healthcare industry to increase its income, it will be necessary to lower the price and allow for maximum participation (completely different from the budget-busting public option of assuring the highest participation at the highest possible price).
Even in the case of a life-saving medical procedure (a relatively inelastic demand), being held hostage to the price is a function of spreading the risk which, again, is mitigated by exposure to the ability to demand affordable insurance premiums to spread that risk.
A lower price increases income. Increased income increases the capacity to participate, and the need for more providers (employment and a share of the income), which spreads the risk to demand an affordable price (on a limited supply of available funds) rather than just paying what a limited number of providers command (on an unlimited supply of public funds).
A budget deficit to finance whatever the provider commands concentrates an accumulation of wealth. The redistribution of income reduces the amount of money available to spread the risk and demand the price without progressive taxation.
We are being told the free-market model of "demand" economics is impossible. It is a rhetoric applied to rig the price--to command the price rather than demand it.
What is impossible is to continue allowing for an overaccumulation of income if we want a healthy economy, and affordable healthcare.
Friday, September 4, 2009
Energy Markets: Gauging the Risk
Let's say you are a prince sitting on a giant pool of oil marketed by cartel. The accumulation of capital that resulted from manipulation of the commodity into an inflated, non-free-market price has deflated the demand, which also "puts" deflationary pressure on the price. What are you going to do to support the price and hedge the risk against the rate of subsitution?
The prince sees a whipsaw in the making: high prices, largely the result of speculative demand of a consolidated capital (the great recession), are reducing the fundamental demand with a concommittant deflationary trend that will not be fundamentally reversed without a deconsolidation of the capital--not likely to happen--and support of the rate of substitution at the same time.
The prince's predicament, the result of a non-free-market organizational technology, is the result of incurring (creating) a gamma risk.
The risk to be managed is rendered political. It is not the alpha and beta risk that occurs with the organization of economic fundamentals in a free-market system.
Organizing to command the price has externalities to be managed politically, so the prince is likely to say... political policies designed to support the long-term rate of substitution (despite the deflationary pressure on the price) is inimical to the short-term self-interest of consumers because it hacks me off.
The threat here, of course, is purely political (organizational), and the risk to both consumers and producers is gamma.
Ironically, the prince makes the case for organizing a free-market economy, and ensuring it, in priority, obviating the probability for gamma-risk distortions that make markets fundamentally unpredictable, resulting in maximum probability for conflict resolution instead of the peaceful, stabilizing process of a free-market legitimacy.
(more at griffithlighton.blogspot.com)
The gamma risk demands management of equal measure. (The type of risk-management is "demanded," as opposed to commanded, because there is still a "choice" that can be made.)
The cartel can be dismantled to operate without gamma risk (free market economics), but that requires a deconsolidation of the capital and giving up the ability to command the price despite economic fundamentals.
Since being in command not only controls the determinants of the fundamentals, but also makes you lots of money by command (by hedging, or magnifying the profit margin) within speculative, derivative markets, the detriment of organized deconsolidation would be equally magnified.
The only choice is to maintain the gamma risk. The alternative is to effectively pluralize the system and allow the price to increase on the fundamental demand (not on command). The rate of substitution (and the profit margin) will "freely" emerge as a measure of fundamental economic reality, not the unpredictable trends of arbitrary command and control that consolidates the capital into the hands of a few players that predict the trends, and profit, by causing them.
There is no better way to effectively gauge the risk to you if you are organized to cause it and, thereby, effectively manage it.
The prince sees a whipsaw in the making: high prices, largely the result of speculative demand of a consolidated capital (the great recession), are reducing the fundamental demand with a concommittant deflationary trend that will not be fundamentally reversed without a deconsolidation of the capital--not likely to happen--and support of the rate of substitution at the same time.
The prince's predicament, the result of a non-free-market organizational technology, is the result of incurring (creating) a gamma risk.
The risk to be managed is rendered political. It is not the alpha and beta risk that occurs with the organization of economic fundamentals in a free-market system.
Organizing to command the price has externalities to be managed politically, so the prince is likely to say... political policies designed to support the long-term rate of substitution (despite the deflationary pressure on the price) is inimical to the short-term self-interest of consumers because it hacks me off.
The threat here, of course, is purely political (organizational), and the risk to both consumers and producers is gamma.
Ironically, the prince makes the case for organizing a free-market economy, and ensuring it, in priority, obviating the probability for gamma-risk distortions that make markets fundamentally unpredictable, resulting in maximum probability for conflict resolution instead of the peaceful, stabilizing process of a free-market legitimacy.
(more at griffithlighton.blogspot.com)
The gamma risk demands management of equal measure. (The type of risk-management is "demanded," as opposed to commanded, because there is still a "choice" that can be made.)
The cartel can be dismantled to operate without gamma risk (free market economics), but that requires a deconsolidation of the capital and giving up the ability to command the price despite economic fundamentals.
Since being in command not only controls the determinants of the fundamentals, but also makes you lots of money by command (by hedging, or magnifying the profit margin) within speculative, derivative markets, the detriment of organized deconsolidation would be equally magnified.
The only choice is to maintain the gamma risk. The alternative is to effectively pluralize the system and allow the price to increase on the fundamental demand (not on command). The rate of substitution (and the profit margin) will "freely" emerge as a measure of fundamental economic reality, not the unpredictable trends of arbitrary command and control that consolidates the capital into the hands of a few players that predict the trends, and profit, by causing them.
There is no better way to effectively gauge the risk to you if you are organized to cause it and, thereby, effectively manage it.
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