Stochastic Indicators and Risk Proportion

Previously, we discussed the post-hoc fallacy of the risk proportion.

When risk is consolidated from its otherwise free-market (not too big to fail) proportion to maximize the profit margin, GDP (and eventually the rate of profit) declines. Massive debt results and risk gains an increasing political (gamma) dimension.

For big, consolidated corporates, gaining the gamma proportion is critical for the administration of power (extracting value by extension of the risk proportion--shipping jobs to China, for example, where labor is largely a function of state control). Austerity is exacted (redistributed, or extended) from the top down with the force and legitimacy of public authority. (Keep in mind, risk that gains a gamma dimension relies on popular consent, and unpopular measures to pay the debt are systemically risky. The large, economy-of-scale proportion is inherently volatile and predictive control of the risk requires hard power. Maintaining the consolidated, risk proportion, while attributed to being the result of free-market mechanics by both the left and the right, is dependent on the administration of the state.) At this point, while the economy appears to get profitable support, the positive indicators are really negative. While it appears to be going long, the economy is really accumulating a massive, short interest.

Debt reduction will not cause GDP. Arguing that it will is a temporal fallacy. Risk, then, instead of reducing, becomes more extended.

Extension of the risk proportion is touted by both the left and the right to be pro growth. It is not! It is stagflationary. It psychologically sets us up for accepting an intentionally structured, crisis proportion as "the law of unintended consequences." This so-called "law" falsely exculpates the risk proportion, falsely reducing it to an unpredictable, stochastic oscillation. It is a clever, temporal fraud that extends the risk with the appearance of a legitimately undirected, fair-and-equitable, diffused, ontological proportion.

It appears, for example, that the President's latest debt-reduction program is fair and equitable because it flattens the rate we all pay to reduce it. Yes, raising taxes on the rich cleverly flattens a rate that the right wing argues is too progressive.

A flat rate, however, is not fair, nor is it equitable. The burden is regressive, and a regressive tax burden not only results in insufficient demand to drive the economy but insufficient revenue to pay the debt it generates.

Temporally--over time--extending the risk proportion is psychologically anchored-in to be the solution that solves the problem of over-extended risk. Cleverly, we have then a masterful execution of the post-hoc fallacy.

Temporal fallacy of the risk proportion results in what appears to be a random walk. A stochastic storm of contrary indicators emerge and subside with no apparent reason. Market valuation is like predicting the weather which, by no coincidence, relies on complex, fractal modeling that is the realm of quantitative gnosticists who have the secret knowledge to divine the present value of the risk by determining its future value. Predictors appear random, but are really known quantities black-boxed to appear stochastic.

The result is an oxymoron: stochastic oscillation of predetermined risk. It is a fraud, but there is no law that directly prohibits this arcane manipulation of market value that gains a benefit by causing deliberate detriment.

Legal remedy and regulatory authority is indirect and post hoc at best, and congress is making sure that where regulation does not promote even more consolidation of risk in a too-big-to-fail proportion, it will act to reduce the authority to regulate. Being free of government regulation, according to conservatives, is what a free market is (argued post hoc) with an apparent random walk being the evidence that profiles "the risk" and justifies the reward.

Notice how "the risk" (i.e., the reward in the gamma-risk proportion) is being characterized as "class warfare." Before analytically dismissing this as meaningless, ideological rhetoric, consider that it indicates the classical model of capitalism is fully operational despite neo-classical means to give its intended consequences the appearance of a free-market, stochastic ontology.

The consequences are no random walk. As long as "We the People" are not self-determined, the politics of elite control will always be reduced to a game of innovatively creating the appearance of a legitimate, risk ontology.

Notice that innovating the appearance--the predictable presence--of the risk is largely a function of political authority. While that authority is structured to binomially oscillate between what we call "liberal" and "conservative," the stochastics are, regardless, structured to be risk prone (the risk of loss is fully assumed), which means risk analysts will be fully prepared to cover their shorts by going long. The result is a stochastic (but predictable) oscillation of a predetermined risk proportion that has the appearance of random variability.