Organizational size is a broad indicator.
There are other indicators more specific to a particular time and organizational or policy space.
Prior to the most recent liquidity crisis, the subprime rate fell below the prime rate, for example. The rate inversion was a very clear signal of crisis within the specific time and organizational space.
The space in which capital was organized for application was both consolidating and unregulated. Combined with the timing of the rate inversion, it was easy to see a big crisis of liquidity coming. For the policy makers and analysts in control, however, the inversion was being considered a positive signal, inferring confirmation of the tax-cut hypothesis. Inferring a negative signal did not fit the hypothetical effect in time and organizational/policy space.
Financing the Bush tax cuts with a surplus of Chinese dollars was a neo-conservative policy product that did not fit America at the time given the organizational/policy space. America was primed for strong economic growth.
A budget surplus and a strong dollar, however, resists China's growth and support for the price of commodities which were key to precipitating The Great Recession and development of a financially interdependant global economy that is too big to fail.
Instead of achieving a high rate of growth, the Bush tax cuts achieved an economic contraction of monumental proportion. Consolidated corporates can now consolidate even more, gaining even more command and control over capital investment. The cyclical consolidation is a specific signal in the space of capital investment. The Chinese economy is not threatended by the possibility of a more pluralistic American economy that includes increased manufacturing jobs.
The best-and-brightest Ivy League elite were, and still are, in control of this policy space, not the American people--a highly specific indicator of crisis in political-economic time and policy space.
At the time of the Bush administration, Alan Greenspan, Chairman of the Federal Reserve, considered the budget surpluses to be too high. The policy space was then fashioned to fit what, at that time, was touted to be a mandate for neo-conservative economic policy and programs. It was a very specific indicator of crisis.
Keep in mind that the Chinese dollar surplus was the direct result of an economy-of-scale model of efficiency. Specifically, the Wal-Mart model combined with consolidation and deregulation of the financial sector. The net effect has been to drive commodity prices up (exporting our raw materials) and labor costs down (importing finished products), organizing a "global economy." The result is a high margin of profit and capital formation without growth.
The time, however, is now for a distribution on that accumulation that benefits the American people. It is an undubious benefit that goes well beyond "always the lowest prices" that supports the lowest possible wages and the highest Wall Street salaries.
Presently, as we move forward with a very clearly disconfirmed neo-conservative economic hypothesis, having been very clearly and specifically indicated with a massive liquidity crisis and unemployment, consideration of financial reform occupies the organizational/policy space toward full liquidity and full employment, not just a means of keeping Wall Street safely rich without economic growth.
Showing posts with label economic growth. Show all posts
Showing posts with label economic growth. Show all posts
Thursday, April 29, 2010
Tuesday, April 27, 2010
Crisis Indicators: Reducing Risk Without Reducing Growth
We all want to reduce risk. It ensures the probability of marginal benefit over time, but it can also mean ensuring the margin itself in zero-sum with an increased risk of liability-to-the-sum accumulated (increased gamma risk that will likely result in application of government authority).
Increased liability-to-the-sum accumulated (increased probability individuals and organizations can be held liable to a retributive value) is a cumulative risk that indicates crisis. The probable risk that Goldman Sachs would incur a liability to its cumulative benefit, for example, had been steadily accumulating, presenting in the form of high profit with slow growth.
Goldman Sachs is an investment bank. Its job is to form capital ("make markets") to produce growth. Most of what investment banks do, however, in league with hedge funds, is to consolidate industry and markets into economy-of-scale efficiencies touted to increase productivity at lower cost.
What investment banks and hedge funds really do, as was again confirmed with a recessionary trend rivaled only by The Great Depression, is organize the economy to reduce the alpha risk, ensuring the margin of firms in zero-sum. As the economy-of-scale efficiency reduces the alpha risk, the risk of liability increases, along with beta-risk volatility, indicating crisis.
Ensuring the margin in zero-sum virtually eliminates the risk of loss in the form of a constant accumulation of gain over time. It always leads to crisis because expanding the margin does not depend on expanding the pie for distribution, but consolidating it for consumption. The result is both inflation AND unemployment, two attributes that are not supposed to occupy the same space, but are supposed to trade off into inflation OR unemployment.
According to conventional wisdom, business-cycle analysts say recovery from an investment-driven recession takes about five years. The value of the capital formed within that period (inflation and unemployment), and prior, will be cumulatively retributive and liable to the slow growth (the value accumulated). Without a shorter term on the cycle, the liability will be difficult to avoid and, of course, the argument will be made that growth will not occur without increased risk that can only be had by consolidation into an economy of scale.
The recession, then, according to economy-of-scale proponents, produces the means of taking the risk (the consolidation of capital) that effects growth. (The argument is, of course, post hoc because the risk taken by consolidation of capital markets caused The Great Recession.)
Is it possible to reduce risk without reducing growth?
By reducing the gamma risk, it is possible to reduce risk without reducing growth.
Reducing the zero-sum reduction of risk (reducing gamma risk accumulation) is a pro-growth measure. The two variables are coefficient: zero-sum reduction of risk equals the consumption of growth so that the rate of reducing the zero-sum reduction is coefficient to the rate of growth.
When alpha risk is in reduction, the benefit accumulated is slow growth, keeping both inflation and unemployment high. The result is a high-margin whipsaw effect. All but the highest income class is affected by the whipsaw, accumulating the gamma risk.
Health care reform, for example, will support medical costs so that a class of professionals can achieve a sustainable income of reduced alpha risk like insurance and pharmaceuticals operating with an organized economy of scale. Since this will produce a massive accumulation of wealth, and power, that will likely integrate industries and markets within the sector, the risk of general crisis is increased, not reduced, with an economy-of-scale efficiency touted to control the cost.
If the accumulation is by government authority, the liability-to-the-sum accumulated is reduced along with the alpha risk.
Having gained the force and legitimacy of ultimate, legal authority, government "reform" of the health care sector was the ultimate achievement of risk reduction. Replicating that success with financial reform is all but sure with a government authority that favors an economy-of-scale measure of efficiency across all jurisdictional boundaries, both public and private (the Hamiltonian model of political-economy in which power efficiently consolidates into the capable hands of a power elite and guides the wealth of nations toward the general welfare).
Reducing the zero-sum reduction of risk (contrary to the Hamiltonian model--deconsolidating rather than consolidating) reduces the unavoidable gamma risk by distributing it in the form of alpha risk.
Organizing to maximize, rather than minimize, the alpha risk, maximizes growth and reduces systemic risk, reversing the specific indicators of crisis.
Increased liability-to-the-sum accumulated (increased probability individuals and organizations can be held liable to a retributive value) is a cumulative risk that indicates crisis. The probable risk that Goldman Sachs would incur a liability to its cumulative benefit, for example, had been steadily accumulating, presenting in the form of high profit with slow growth.
Goldman Sachs is an investment bank. Its job is to form capital ("make markets") to produce growth. Most of what investment banks do, however, in league with hedge funds, is to consolidate industry and markets into economy-of-scale efficiencies touted to increase productivity at lower cost.
What investment banks and hedge funds really do, as was again confirmed with a recessionary trend rivaled only by The Great Depression, is organize the economy to reduce the alpha risk, ensuring the margin of firms in zero-sum. As the economy-of-scale efficiency reduces the alpha risk, the risk of liability increases, along with beta-risk volatility, indicating crisis.
Ensuring the margin in zero-sum virtually eliminates the risk of loss in the form of a constant accumulation of gain over time. It always leads to crisis because expanding the margin does not depend on expanding the pie for distribution, but consolidating it for consumption. The result is both inflation AND unemployment, two attributes that are not supposed to occupy the same space, but are supposed to trade off into inflation OR unemployment.
According to conventional wisdom, business-cycle analysts say recovery from an investment-driven recession takes about five years. The value of the capital formed within that period (inflation and unemployment), and prior, will be cumulatively retributive and liable to the slow growth (the value accumulated). Without a shorter term on the cycle, the liability will be difficult to avoid and, of course, the argument will be made that growth will not occur without increased risk that can only be had by consolidation into an economy of scale.
The recession, then, according to economy-of-scale proponents, produces the means of taking the risk (the consolidation of capital) that effects growth. (The argument is, of course, post hoc because the risk taken by consolidation of capital markets caused The Great Recession.)
Is it possible to reduce risk without reducing growth?
By reducing the gamma risk, it is possible to reduce risk without reducing growth.
Reducing the zero-sum reduction of risk (reducing gamma risk accumulation) is a pro-growth measure. The two variables are coefficient: zero-sum reduction of risk equals the consumption of growth so that the rate of reducing the zero-sum reduction is coefficient to the rate of growth.
When alpha risk is in reduction, the benefit accumulated is slow growth, keeping both inflation and unemployment high. The result is a high-margin whipsaw effect. All but the highest income class is affected by the whipsaw, accumulating the gamma risk.
Health care reform, for example, will support medical costs so that a class of professionals can achieve a sustainable income of reduced alpha risk like insurance and pharmaceuticals operating with an organized economy of scale. Since this will produce a massive accumulation of wealth, and power, that will likely integrate industries and markets within the sector, the risk of general crisis is increased, not reduced, with an economy-of-scale efficiency touted to control the cost.
If the accumulation is by government authority, the liability-to-the-sum accumulated is reduced along with the alpha risk.
Having gained the force and legitimacy of ultimate, legal authority, government "reform" of the health care sector was the ultimate achievement of risk reduction. Replicating that success with financial reform is all but sure with a government authority that favors an economy-of-scale measure of efficiency across all jurisdictional boundaries, both public and private (the Hamiltonian model of political-economy in which power efficiently consolidates into the capable hands of a power elite and guides the wealth of nations toward the general welfare).
Reducing the zero-sum reduction of risk (contrary to the Hamiltonian model--deconsolidating rather than consolidating) reduces the unavoidable gamma risk by distributing it in the form of alpha risk.
Organizing to maximize, rather than minimize, the alpha risk, maximizes growth and reduces systemic risk, reversing the specific indicators of crisis.
Monday, March 15, 2010
Acquiring Market Share
Acquiring a share of a free-market, rather than mergers and buy-outs, requires replicating or improving the successful behavior that causes the empirical measure of success--the profit margin.
Replication and improvement means proliferation--expansion--of the marketplace, not the contraction of merging and acquiring markets which, for the most part, is the business of investment banks, private equity firms and hedge funds. These financial firms know very well their investment practices deflate the economy. They position with various kinds of instruments structured to gain value on the short side as the economy declines--the notorious credit default swap, for example.
The effect is an economy in command and control.
If the profit is margined on command, it is not free-market economics.
In a free market, an expanding profit margin is a measure of an expanding marketplace and demand (supply-side economics).
In a consolidated organizational environment, despite being touted as the best model for expanding supply, a contracting marketplace and a declining demand supports the profit margin (sustained capital accumulation) and resists the declining rate of profit (the distribution necessary to sustain demand and make a profit in an expanding free market). This intentional support and resistance occurs in both the short and long term. The result is a net gain for the commanders (the elite) and a net loss for the commanded (the non-elite).
While the gain is considered to be legitimately ontological by the operation of free-market economics, the gain is nevertheless retributively valued by the loss. A correction of the value is then always in demand and forms a gamma-risk ontology. Managing that risk, instead of the free marketplace, leads to a growing authoritarian regime that is equivalent to the lack of free-market legitimacy.
Mainstream economists who strongly supported the investment methods that led to the current liquidity crisis, known as the Great Recession, said these means, now the subject of heightened regulatory authority, would lead to optimal economic expansion and, therefore, no need for government. These economists explain the massive accumulation of errors as, not fully understanding how the economy equilibriates.
Notice how investments made in "dark markets" free of government regulation did not result in less need for government. Quite the contrary, too-big-to-fail firms rely on government intervention. Let's face it, the Ayn Rand philosophy is a lot of hocum if the organizational model is not there to support it.
Free markets do not operate in the dark, and the dark marketeers say they were operating with Rand's practical philosophy. They continue to advocate Rand's philosophy despite the practical failure.
Clearly, then, there is a practical effect to be achieved despite the free-market philosophy having been accepted by a controlling elite authority (and there is no reason that will change with a socialist legitimacy). We must consider that if the dark marketeers knew their methods would achieve the Great Recession, it would be necessary to operate in the dark.
Now that the free-market correction has come in the form of government authority, complaining that there is too much government intervention, which, like Ayn Rand says, causes the problem, is complete nonsense!
Government intervention does not cause itself, and if too-big-to-fail firms were really the model of free-market efficiency, it would not be necessary to operate them in the dark.
Not learning from the mistake here means that the Great Recession is no mistake. It is, as we now hear the conservative argument being delivered, the classical, free-market model of comparative advantage at work to re-adjust labor costs to third world levels where peasants just left the farm.
The problem here is not labor, it is capital. It is capital that needs the adjustment, allowing for economic expansion at the lowest possible price, rather than contraction of supply at the highest possible price with labor always trying to cause the distribution necessary to prevent crises of liquidity.
Increasing supply and controlling costs, whether forging steel or providing health care, is less about combining Ayn Rand with a too-big-to-fail efficiency than just simply accepting the model of pluralism.
Since the too-big-to-fail practice is, by definition, so obviously an organizational technology inimical to free markets, mainstream economists are now saying this "doctrine" should be abandoned to allow for failure. It is absurd, of course, because being so organized is too big for failure. The remedy is to allow for failure, not to disallow being too big.
The mainstream does not give up easily. They are apparently paid to persist in error which, of course, suggests there is no error, just fully intended consequences. The mainstream fully understands that the economy will not "equilibriate" with the investment vehicles being utilized, but "dis-equilibriate."
Now that the crisis of disequilibriation has occured, mainstream economists now argue we can benefit from the correction of valuations. Specifically: we will now benefit from the readjustment of labor costs, or a deflationary reduction of demand that increases supply without expanding the marketplace (false supply-side economics).
Rather than contracting the available supply by growing the size of a fewer number of corporate bodies, supply is added by adding to the number of firms available to supply the "growing" demand and acquire market share. The rate of profit, rather than declining, gets pluralistic support--it is growing, economic growth is occurring--without inflation or unemployment.
It is possible, then, for capital formation to occur without either the inflation liberals prefer (flooding the market with demand without increasing supply), or the unemployment conservatives opt for (starving market demand with an accumulation of capital to grow the economy which, of course, is not growth at all). Both options, of course, as we observe over and over again, cycle to progressively consolidate power, politically and economically, into one big corporate body with an evermore complete command and control acting to manage "the systemic risk."
Deciding how market share can be acquired is to decide how we manage the risk.
Replication and improvement means proliferation--expansion--of the marketplace, not the contraction of merging and acquiring markets which, for the most part, is the business of investment banks, private equity firms and hedge funds. These financial firms know very well their investment practices deflate the economy. They position with various kinds of instruments structured to gain value on the short side as the economy declines--the notorious credit default swap, for example.
The effect is an economy in command and control.
If the profit is margined on command, it is not free-market economics.
In a free market, an expanding profit margin is a measure of an expanding marketplace and demand (supply-side economics).
In a consolidated organizational environment, despite being touted as the best model for expanding supply, a contracting marketplace and a declining demand supports the profit margin (sustained capital accumulation) and resists the declining rate of profit (the distribution necessary to sustain demand and make a profit in an expanding free market). This intentional support and resistance occurs in both the short and long term. The result is a net gain for the commanders (the elite) and a net loss for the commanded (the non-elite).
While the gain is considered to be legitimately ontological by the operation of free-market economics, the gain is nevertheless retributively valued by the loss. A correction of the value is then always in demand and forms a gamma-risk ontology. Managing that risk, instead of the free marketplace, leads to a growing authoritarian regime that is equivalent to the lack of free-market legitimacy.
Mainstream economists who strongly supported the investment methods that led to the current liquidity crisis, known as the Great Recession, said these means, now the subject of heightened regulatory authority, would lead to optimal economic expansion and, therefore, no need for government. These economists explain the massive accumulation of errors as, not fully understanding how the economy equilibriates.
Notice how investments made in "dark markets" free of government regulation did not result in less need for government. Quite the contrary, too-big-to-fail firms rely on government intervention. Let's face it, the Ayn Rand philosophy is a lot of hocum if the organizational model is not there to support it.
Free markets do not operate in the dark, and the dark marketeers say they were operating with Rand's practical philosophy. They continue to advocate Rand's philosophy despite the practical failure.
Clearly, then, there is a practical effect to be achieved despite the free-market philosophy having been accepted by a controlling elite authority (and there is no reason that will change with a socialist legitimacy). We must consider that if the dark marketeers knew their methods would achieve the Great Recession, it would be necessary to operate in the dark.
Now that the free-market correction has come in the form of government authority, complaining that there is too much government intervention, which, like Ayn Rand says, causes the problem, is complete nonsense!
Government intervention does not cause itself, and if too-big-to-fail firms were really the model of free-market efficiency, it would not be necessary to operate them in the dark.
Not learning from the mistake here means that the Great Recession is no mistake. It is, as we now hear the conservative argument being delivered, the classical, free-market model of comparative advantage at work to re-adjust labor costs to third world levels where peasants just left the farm.
The problem here is not labor, it is capital. It is capital that needs the adjustment, allowing for economic expansion at the lowest possible price, rather than contraction of supply at the highest possible price with labor always trying to cause the distribution necessary to prevent crises of liquidity.
Increasing supply and controlling costs, whether forging steel or providing health care, is less about combining Ayn Rand with a too-big-to-fail efficiency than just simply accepting the model of pluralism.
Since the too-big-to-fail practice is, by definition, so obviously an organizational technology inimical to free markets, mainstream economists are now saying this "doctrine" should be abandoned to allow for failure. It is absurd, of course, because being so organized is too big for failure. The remedy is to allow for failure, not to disallow being too big.
The mainstream does not give up easily. They are apparently paid to persist in error which, of course, suggests there is no error, just fully intended consequences. The mainstream fully understands that the economy will not "equilibriate" with the investment vehicles being utilized, but "dis-equilibriate."
Now that the crisis of disequilibriation has occured, mainstream economists now argue we can benefit from the correction of valuations. Specifically: we will now benefit from the readjustment of labor costs, or a deflationary reduction of demand that increases supply without expanding the marketplace (false supply-side economics).
Rather than contracting the available supply by growing the size of a fewer number of corporate bodies, supply is added by adding to the number of firms available to supply the "growing" demand and acquire market share. The rate of profit, rather than declining, gets pluralistic support--it is growing, economic growth is occurring--without inflation or unemployment.
It is possible, then, for capital formation to occur without either the inflation liberals prefer (flooding the market with demand without increasing supply), or the unemployment conservatives opt for (starving market demand with an accumulation of capital to grow the economy which, of course, is not growth at all). Both options, of course, as we observe over and over again, cycle to progressively consolidate power, politically and economically, into one big corporate body with an evermore complete command and control acting to manage "the systemic risk."
Deciding how market share can be acquired is to decide how we manage the risk.
Thursday, August 28, 2008
Worldwide Stagflation
Worldwide stagflation will diminish the signs of a US weak-dollar recovery.
The unexpected rise in business investment has nothing to do with the economic stimulus package or anticipation of another package in 2009 as mainstream, bought-and-paid-for economists are professing.
The stimulus package was largely a profit subsidy for big integrated oil and gas conglomerates. They don't want to admit it, of course, but the stimulus mainstream economists are anticipating is likely to be in the form of a more progressive tax code. The result will be a distribution phase of the political-economic business cycle in which the consumer will lead the US economy, and the global economy, out of recession.
The lack of disposable income, and savings, for middle class Americans is over-surplused capital as the result of a highly regressive tax burden and an over-consolidation of industries and markets. The over-consolidation was allowed by both the Clinton and Bush administrations. Sixteen years of allowing an organized means of economics that is inimical to a free society is a cost we are living today with record foreclosures and a consolidation of wealth of Depression-era proportions.
When former president Clinton referred to the perils of the last eight years, we must be sure to recognize that his allowing for consolidation of industries and markets was a monumental misfeasance that neo-conservatives fully exploited into the malfeasance we are living with today--worldwide stagflation and a massive deprivation for the vast majority of Americans.
Obama has both the moral intelligence and technical understanding required to reverse the stagflationary trend with BOTH a more progressive tax code AND a deconsolidation of industry and markets. Big business is ramping up to capitalize on what is anticipated to be an unprecedented period of economic growth and prosperity. Deconsolidation of that capital will determine the sustainability of the trend.
Electing McCain will worsen the stagflationary trend. Obama would quickly reverse the trend and as long as his policies do not allow for continued consolidation of industry and markets, the trend is sustainable.
A vote for McCain will diminish the prospect for growing your business.
A vote for Obama maximizes the prospect for a peaceful prosperity and sustainable growth.
Obama 2008!
The unexpected rise in business investment has nothing to do with the economic stimulus package or anticipation of another package in 2009 as mainstream, bought-and-paid-for economists are professing.
The stimulus package was largely a profit subsidy for big integrated oil and gas conglomerates. They don't want to admit it, of course, but the stimulus mainstream economists are anticipating is likely to be in the form of a more progressive tax code. The result will be a distribution phase of the political-economic business cycle in which the consumer will lead the US economy, and the global economy, out of recession.
The lack of disposable income, and savings, for middle class Americans is over-surplused capital as the result of a highly regressive tax burden and an over-consolidation of industries and markets. The over-consolidation was allowed by both the Clinton and Bush administrations. Sixteen years of allowing an organized means of economics that is inimical to a free society is a cost we are living today with record foreclosures and a consolidation of wealth of Depression-era proportions.
When former president Clinton referred to the perils of the last eight years, we must be sure to recognize that his allowing for consolidation of industries and markets was a monumental misfeasance that neo-conservatives fully exploited into the malfeasance we are living with today--worldwide stagflation and a massive deprivation for the vast majority of Americans.
Obama has both the moral intelligence and technical understanding required to reverse the stagflationary trend with BOTH a more progressive tax code AND a deconsolidation of industry and markets. Big business is ramping up to capitalize on what is anticipated to be an unprecedented period of economic growth and prosperity. Deconsolidation of that capital will determine the sustainability of the trend.
Electing McCain will worsen the stagflationary trend. Obama would quickly reverse the trend and as long as his policies do not allow for continued consolidation of industry and markets, the trend is sustainable.
A vote for McCain will diminish the prospect for growing your business.
A vote for Obama maximizes the prospect for a peaceful prosperity and sustainable growth.
Obama 2008!
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