Creating Counter-Party Risk

While risk is coefficiently constant, parties can be created in which risk is assigned to cause a reward. Depending on the ability to make the market, market participants are put in a position of proprietary profit or loss.

The more consolidated industry and markets become, the more ability acquired to make the market and position a counter-party to take the risk (and thus the need for government regulation to control the extent of the risk, or the externalities). In order for the beneficiary to gain and secure the entire extent of the profit, management of the risk also includes avoiding the liability of gaining profit by causing loss (the retributive value of the risk--a counter-risk--that cannot be avoided, only accumulated and distributed in a gamma, or political, proportion).

The propraetors of who win and lose in the province of finance have to be careful not to look like tyrants, especially if the legitimacy of the outcome is dependant on the lack of tyranny. In order to drive a distraction, attributions are created to suggest a cause-effect relationship--like when congressman Issa puts out a call for CEO's to contact his oversight committee regarding regulations that prevent them from creating jobs (instead of financing headline inflation, which puts jobs at risk).

Instead of creating jobs, the capital accumulated from middle-class net worth is being used to cause headline inflation. While demand is being reduced, the ability to command the price (which also determines the quantity that can be consumed without debt) increases. It gives the appearance of general prosperity (inflation), but is really an indication of general crisis (deflation). The value of counter-party risk is created, driving up stock and bond prices, for example, but at the expense, rather than the benefit, of middle-class net worth. The result is a middle class deliberately positioned to own more debt than equity. The demand for government then increases to consolidate the risk of default into the form of public, or sovereign, debt, which overleverages the counter-party risk into the persistent value of unemployment while the call is for cutting the public budget.

While cutting the public budget and paying down the debt is good for demonstrating power and verifying class distinction, it is exceedingly bad for the middle class. In fact, it is catastrophic, reducing the difference between the middle class and poor in the worst possible way--not by providing, but by depriving the American dream. We will blast back to the past when Henry Ford consoled unemployed Americans with the hope of having nowhere to look but forward. What happened going forward was world war and unprecedented government regulation of the private sector, especially the financial sector to prevent the ability to extend counter-party risk into the current crisis proportion.

While regulation can affect employment levels, it is a hefty intellectual strain to suggest, as congressman Issa does, that government causes unemployment. It is even more of a strain to suggest that government regulation of industry and markets has caused our currently high rate when the latest financial crisis occurred in the wake of a massive deregulation that congressman Issa is sure to suggest we desperately need to achieve full employment with low inflation. This policy, as we well know, positions the middle class to take the risk; and as we have seen, public policy is not based on what we know, but on what can be politically compromised into the legitimate public authority of the outcome--reduction of middle-class net worth (creation of the counter-party risk and reward).

Middle-class incomes did not gain from financial empowerment. Small, proprietary accounts have been easily positioned to take the risk. According to Ivy-League economists, the massive loss of net worth just evaporated, but small investors are too sophisticated to buy that, fully realizing that their wealth was consolidated into the upper class.

The liability of such a massive conversion and consolidation of wealth would reasonably result in the value being promptly retributed in the gamma proportion. Instead, there was a binomial, politically organized conservation of the risk. Populist sentiment was easily channeled into a conservative, ideological rhetoric that denies empirical valuation of public policy and programs by substitution, allowing continued overextension of the risk into a gamma proportion. The result is political compromise substituting for empirical truth, limiting progress to the dimension of an historical dialectic.

The political system is binomially organized to limit the liability of the risk. The two parties are counter-parties to the risk, safely limiting the liability to the authority of a political resolution. Ensuring an economic resolution would essentially mean deconsolidation of the risk into a more directly democratic (a more genuinely proprietary) resolution of conflicting interests.

While democrats have traditionally expressed the sentiment that the voice of the people is the voice of God, according to republicans, such a sentiment is inimical to brokering the compromises that are necessary for a civil society. Compromise, however, is no substitute for the empirical value (the self-governance) of direct popular consent through the proprietary means of a free-market accountability. Such an accountability (the measure of legitimate governance) only comes with ensuring full deconsolidation of the risk. It is not a rhetoric of hope. It is a practical philosophy that we need now in the fullest practical measure.

Without ensuring deconsolidation of the risk in priority, the probability of a protracted recessionary trend with high unemployment and inflation is politically confirmed. The retributive value has been successfully retrenched and reinvested to conserve the accumulated value of the risk. It is a remarkable demonstration of real, raw power concentrated into the hands of an elite with the apparent popular consent of the governed. Given the obvious cause-effect relationship (the value of the benefit and the detriment being so obviously equivalent), it has to be an unprecedented exercise of power in both a quantitative and qualitative proportion.

The new normal is the natural extension of the Hamiltonian model that Jefferson warned We the People be especially wary of: knowingly and willingly consenting to the means of our exploitation. It used to be that The People were not altogether sure about the means, but now we are aware of being positioned for the counter-party risk. The iterative value of the means to ends confirms the legitimate value of the risk and its conservation as "the" expected value.

We must keep in mind, however, that nature, despite whatever delusion of power we may possess, will surely correct for such an egregious error in good judgment. The risk will be so overleveraged and out of proportion it will be catastrophic. It will implode into the gamma dimension and civility will once again become a thing of the past.

We should not allow ourselves to pass into the darkness of deliberate detriment. Whether dialectically determined or technically derived, We the People are, by Nature, the Sovereign.

Our fate, especially in the age of science, is evermore proprietary and, thereby, fully determined. We are but counter-parties to ourselves. To know thy self is to realize the risk of loss is always fully assumed: coefficiently constant, intellectually valued, and fatefully consumed with moral existence.