Back to Controlling the Futures

Gaining Indicators of a Double Dip Recession

Gamma-Risk Asessment and Probable Market Trends


As gamma-risk gains, pop analysts see financial markets settling into more fundamental valuations with the level of support at previous resistance. It is a bearish sentiment fully supported by gamma-risk indicators.

In a short-term inverse wave, valuation wanes as gamma gains. Rather than reversing, however, gamma-risk trends (like non-fundamental price peaks), volatility and unemployment, continue to gain in support of the relative valuations. The values are varying directly rather than inversely with the gamma-risk accumulating to a crisis proportion.

Advent of a more populist sentiment with the new president and congress should increase the risk to large capital flows that distort the bid and command market trends. The risk should wane as the value of that risk is redeemed. Instead, it is still gaining along with an inversely waning alpha risk. In this period there is a short-term increase of beta-risk volatility both politically and economically, like we have now, not being exactly sure what the proper valuation is. Are we Democrat or Republican? Are we liberal or conservative? Are we capitalist or socialist?

Despite all the uncertainty there are reasonably accurate indicators outside the usual trend indicators, like the gamma-risk indicator which in any particular analysis can be given a relative value assignment to help indicate a probable trend. (An analyst can, for example, construct a stupidity-risk indicator based on known values that indicate stupidity, and so on....)

While there is more recognition by the Obama administraton, for example, that the ability to control energy prices effectively controls the macro trend, the probability the CFTC will act to allow more fundamental pricing of commodity futures to direct the macro trend is highly unlikely. It certainly would not be soon enough, or with enough reslove if it were, to prevent a double dip.

Controlling commodity futures activity was something to have been executed by the new administration in priority. Instead, congress and the administration focused on a regressive tax burden to finance health care for poor people, supporting the deflationary trend. Raising taxes and applying the revenue to drive up costs is disfuntional unless, of course, you are a health care provider.

Disfunctional progressivism is surely not the cure for command-and-control "market makers" that drive up costs for everyone without increasing supply (economic expansion). It just exacerbates the problem.

The risk of a double dip is vastly undervalued in this disfunctional public-policy environment.

We need administrative technicians that resist parboiled progressives that cause more problems than they solve and support the need for government. We cannot have less government and more freedom to choose without reducing the need.

Empirically, reducing the need for government is not what progressive public policy does as we could once again confirm with new health care legislation. The most significant failure is to expect public policy to reduce the cost by supporting the inelasticity of demand with a government mandate. Earmarking the funds for a specific purpose does not resist, but supports rising costs--just exactly what The People do not want.

The revenue accumulated from the SCHIP's tax did not expand supply, but did reduce discretionary income. Discretion is the key term here. It was removed with the income. Freedom to choose has been removed in the public interest?

Accumulated revenue, reduced discretonary spending and inelasticity of the funds causes both inflation and deflation at the same time (stagflation). The accumulated revenue becomes accumulated income that supports a deflationary trend and rising prices. The health care sector confirms the hypothesis.

The result will be runaway health care costs financed by the public till and runaway energy costs driven by an uninhibited consolidation of capital. If you want to make the double dip a sure thing, that's how you do it.

As the populist sentiment accumulates with significant failure of expectation, the Democratic congress and administration is moving to act on the gamma risk. That it is late in coming is a conservative measure that has allowed the Republican opposition to take a populist aspect that signals resistance to redemption of the relative value (the retributive value) associated with the risk.

While the political will to apply the gamma risk has gained strength and signals the probable timing of recovery, it is relatively weak in proportion to the accumulating risk. The disproportion indicates conservation of relative valuations and the macro distribution of costs and benefits.

Despite the populist rhetoric and policy proposals, the systemic risk, and the reward, will be conserved which, of course, takes us "back to controlling the futures."