Doing the Double Dip

The top two-percent of income classes are doing the double dip.

Except for a few high-frequency debacles, it is not a deep dip to be seen from the start, but a long, slow scoop of the pie on the chart.

The dip's frequency will be long with short, sharp, impulsive and corrective waves (highly fractile sequences and degrees down to the minute, the second, the millisecond), reflecting the buy-long-go-short hedge fund strategy.

A noisy environment, economic and political, shrouds the double dip with a mysterious din, like so much cosmic noise of the electromagnetic spectrum. Much of the noise is interpreted as technical recovery--so many moves up, so many down, convergence here divergence there...hiss, crinkle, crackle, pop, you better log in to catch your stops; and if you're quick at the switch, you will be the hero, because in a flash it can crash to zero. Technically trapped you could be stuck when you thought for sure the other schmuck.

Don't be tricked and trapped by technical manipulations that can and will move against your position and acquire your book in a flash. Just beneath the din of volatility is a deflationary monster slowly devouring (selling short) the promise of prosperity for more and more people (hedging the risk), leaving nothing but crumbs to nourish the commonwealth.

Conflicting trends indicate the extent of this Keynesian monstrocity. While double dippers made sure there are plenty of houses to live in, for example, they also made sure they would be deprived for the extended value to be derived. They are to be bought and sold--arbitraged--like the people supposed to live in them.

Having a surplus of empty homes and a surplus of people needing housing is not free-market economics; and falling prices, because the buyers do not have the income to buy at any price, is not "disinflation," it is classic "deflation." Understand that this fundamental misattribution, this deliberate error, supports analytical models that too often produce technical projections that are "better" or "worse than expected" (the surprise-premium, or the arbitraged value of failed expectations).

To protect the arbitraged value (the surplus, which is the fundamental attribute of supply-side economics advanced by Republicans), the risk is attributed to the mortgagee (the debtor). Since the debtor is detrimentally dependent on the creditors for the income (economic growth) that was shorted to hedge the risk, the hedger (the creditor entrusted to reinvest the capital accumulated) has determined the fate of the mortgagee. In other words, creditors are responsible for causing and profiting from a detriment that is fully and improperly assigned to the debtor.

The ability to assign, or determine, the fate of The People is an opprobrium of power that our founders very deliberately intended to avoid, not encourage. We The People have the natural right, endowed by God, to self-determination. It is not up to Bank of America and Goldman Sachs to determine your fate or mine and then, with a royal sense of too-big-to-fail proportion, dismiss the detriment as the natural fate of the rabble.

The crude masses, as both Republicans and progressives maintain in both theory and practice, are too unsophisticated to know what their self-interest really is (the thesis of independence--the Aristotelian epistemology that reality exists independent of perception). The People are always happy to accede their natural rights to a ruling class by popular consent so that the republican form of government naturally supercedes the tendency to the democratic form.

It is a cruel amusement--the crudest means of confirming one's status (Democrat or Republican)--to watch The People, stirred about in a panic like an overpopulated pestilence, desperate for their economic security while it is managed to brim the bowls of their bogus benefactors. The Democratic, progressive faction of our national party system, for example, has done as much to support the current recessionary trend as to resist it in the interest of We the People (the general welfare).

Do progressives intend to do as much harms as good, or is it a function of an ontological accumulation of risk? In the case of the mortgage crisis, for example, progressives do little to match the supply of housing with the demand. Foreclosures increased at a record pace while progressives were preoccupied with a healthcare plan that will do as much to consolidate the wealth associated with it as to provide universal healthcare. The result of that priority will keep the critical variable for curing the mortgage crisis--income--the missing variable of self-determination conserved in the hands of The People's so-called benefactors.

Doing the double dip will keep progressives fully employed, but even worse than the so-called unintended malefactions of the progressive faction are those who shamelessly claim that the popular demand for equity and justice is but class envy. We can be reasonably sure The People distrust the good intentions of, but do not envy, their malefactors.

An accumulation of a crisis proportion is not enviously valued, it is retributively valued, and the detriment it causes (the value) despaired.

There is nothing more crude, with so little care, than to victimize The People with their own despair.

A power elite only flatters itself with the belief that the means to exploit the weaknesses of others is something to be envied.

Keep in mind that an economy-of-scale, too-big-to-fail, ruling class distinction can only exist in a gamma-risk proportion. Despair can be re-transformed into the value of non-disparity.

Despite being modeled to eliminate risk, too-big-to-fail organizations accumulate risk into a crisis proportion which our founding fathers deliberately intended to pluralize and diffuse into the peaceful and prosperous proportion of free-market self-determination. In the case of consumer finance protection, for example, it would be Elizabeth Warren's job to diffuse, or deconsolidate the risk into an alpha proportion.

If financial institutions are not too-big-to-fail, they will not be able to rule the marketplace. The marketplace would be controlled by consumer sentiment--the alpha risk an economy-of-scale is intended to avoid.

Ensuring the alpha risk dimension of power in maximum proportion reduces both the beta (the noise--the volatility) and the gamma risk (the need to consolidate the risk into a controlling authority). As the need for a controlling, central authority evolves, the empirical, pluralistic efficiency and legitimacy of popular consent is reduced. It is then necessary to "devolve" that accumulated power (the consolidation of the risk) to the stable and cost-efficient level we are all looking for.

Ensuring the alpha in priority (deconsolidating or "devolving" the risk) will stabilize our economy at both the micro and macro levels without sacrificing the efficiency, the productivity, of free markets.

With a productive incentive in full force, the distributive deficiencies of the free-market system abates. Systemic risk (despair) is transformed into the can-do innovative productivity of positively competitive forces. Instead of privation, there is provision. Instead of big government intruding into every aspect of our lives, we turn our attention to the latest and greatest thing that fuels economic growth--doing everything cleaner, greener, quicker, smarter, faster. Instead of relying on a controlling authority, we are free to innovate and continuously improve the quality of life for everyone through the empirically direct means of popular consent, transforming government into its more ideal, democratic form (government by consent).

Without maximizing alpha risk (deconsolidating economy-of-scale entities) Elizabeth Warren, for example, will just be spinning her wheels. While she recognizes the need to control the value of the risk being derived from the means (the power) to reassign it, which is why hedge funds and Wall Street so strongly object to her, she is, nevertheless, not likely to advance deconsolidating the risk.

Consumer financial protection is likely to be more a function of consolidating the risk into a regulatory authority, effectively treating the problem with the problem. Elizabeth Warren, for example, who will be overseeing development of the new protection agency knows all the "tricks and traps" of the trade, but her oversight and practical effect is likely to be Ivy League despite the resistance to her.

Treating the "tricks and traps" of consumer finance will do little to address the more fundamental mis-assignment of risk that occurs. It may help consumers reduce the cost of credit, but If the people who need to have buying power to prevent deflation are the highest credit risk, and therefore cannot get credit (and are likely then to get trapped, reducing buying power even more), the probability of deflation is nearly perfect.
The need for credit and the incentive for credit companies to find new ways to trick and trap on the existing extent of credit increases, despite the regulatory effort, to avoid the declining rate of profit.

The entire system is put at risk (including the power elite) in a gamma proportion by mis-assignment of the risk.

Mis-assigning and then over-leveraging the value of risk results in the fundamental attribution error that makes for faulty predictive modeling and creates the derivative value of arbitraged risk that Elizabeth Warren has stridently condemned. While the function of the Consumer Finance Protection Agency is to protect consumers, it will do more to protect the providers from themselves (the declining rate of profit which reduces credit scores while increasing the need for credit). The practical model progressively diverges form the ideal model of self-determination (consent of the governed), causing political dissonance.

Reducing the political dissonance (the noise of divergent ideals and practices) to a distributional problem inherent to capitalism may be an accurate assessment, but it is not enough. Keeping distributions (like the extension of credit) from consolidating into economic contraction is a different problem, something that Keynesian economics--substituting for free-market economics--fails to do, along with protecting consumer credit, in priority.

Monetarism is used to keep the capital consolidated (thus the demand for credit and its over-extension). A double dip is possible because the retributive value is continuously monetized into a redistribution. The problem with that, of course, is it accumulates debt (and the pressure to tax AND spend).

Value that needs to be retributed (the deflationary value--the double dip) is transformed into an extended risk--systemic risk redistributed (monetized) into a crisis proportion. In order to extend the proportion (to do the double dip), it is transformed into a high frequency (volatility) to maintain its current value (extending the retributive value into the future).

Value arbitraged with high frequency and mass momentum creates noise at high volume, masking an underlying, well-orchestrated score composed, performed and conducted for the crimson court of too-big-to-fail economy-of-scale. The noise is for common consumption; the music is for the discriminating ear on the inside.

Ponderous platitudes will not prevent the expansion of poverty, and although economic expansion will, it is the artful object of rhetorical ruse.

While preventing poverty is progressively hip, its an interpretive dance with a deep double dip.