Disaggregation of Risk

An economy of scale not only consolidates industry and markets, it consolidates risk.

Aggregation of risk affords the ability to bundle risk into market and asset bubbles. The aggregation of value, and risk, consolidates value by trapping it into the risk (like a too-big-to-fail organizational ontology that trapped us into a multi-trillion dollar bailout of the financial sector).

Being trapped into doing something is hardly the model of popular consent. Creating liquidity traps through the false efficiency of economies of scale, causing a zero-sum consolidation of wealth and power, is the problem. According to big-bank executives, however, it is the solution. The bigger the better to effect a free-trade global economy.

Free-trade, laissez-faire globalists disguise their economy-of-scale means to ends as free-market economics because they know it provides the legitimacy of a popular consent. The solution is to remove the diguise and disaggregate the risk.

If financial reform measures do not disaggregate the risk, liquidity will continue to be trapped into inflationary-deflationary cyclical trends that appear to be force-majeur ontologies that result in unavoidable crises.

While Senate Democrats appear to recognize that economies of scale provide a flawed if not false coefficiency since it clearly results in crisis, much of the suggested reform, like higher capital requirements and incentives to discourage overleveraging, would continue to aggregate risk.

Overleveraging, for example, occurs coefficiently with organizational size, and that size is coefficient with the ability to cause, and control, crises. It does not appear, then, that financial reform will adequately support disaggregation of risk by deconsolidation of industry and markets.

Reform will be dominated with highly specific language that suggests a complexity beyond the comprehension of the average citizen. (Popular consent has no utility if we do not know what we are consenting to...kind of like health care reform.) The problem, and the solution, is not so complex, however.

Language will have a highly utilitarian aspect to lend a sense of legitimacy to specific practices that have a low value of empirical confirmation, which is the simple essence of what is to be understood for a popular consent.