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.
Showing posts with label economic stability. Show all posts
Showing posts with label economic stability. Show all posts
Monday, May 3, 2010
Friday, October 24, 2008
Selling the Greed
"Buy the greed, sell the fear," so the saying goes, but as we emerge from a period of our economic history in which this philosophy has been practiced to the nines, and the result has been to cultivate a culture of corruption and crisis, the small number of beneficiaries and their huksters now need to sell the greed and persuade The People to buy the fear.
"Greed is good," so the argument goes, and we must now manage the crisis component of this practical, utilitarian philosophy with the neo-conservative element, like the McCain camp, arguing that The People must buy into the fear of socialism in order to preserve what motivates the creation of wealth and, therefore, the privilege of determining its distribution.
Wealth shared is wealth squandered by not making the scarifice necessary to create it, so they argue, but The People are not seeing an empirical verification of that hypothesis. The utility is not verified, but disconfirmed by the clearly observable evidence.
Yet, we still have the aspiring non-elits that cling to the absurd belief that if we share the wealth, the wealthy will no longer be wealthy and the poor will still be poor. The result is a Non-Pareto Optimal, dead-weight loss in which everyone loses.
The argument is irrational because it is the product of greed, an emotion accepted, bought, as a practical philosophy instead of an indicator for behavior modification that avoids an impending crisis of a few that have too much at the expense of everyone else having too little--what we have now.
Conservatives argue that the criticism of the utility of greed is overly academic. We are thinking about it too much. That a sacrifice has to be made for the production of wealth, savings, is obvious, and the elite, they argue, are best suited to own and manage that sacrifice, the savings, so that we can have more savings by it being deprived of The People. It is, of course, illogical to claim the deprivation of value adds value. No, it redistributes the value to cause an easily avoidable crisis--a cyclical liquidity crisis characteristic of a debtor economy.
Since the elite are best suited for managing the capital (the savings, the sacrifice), they must be rewarded with the "privilege" of not having to share in that sacrifice, conservatives argue, because they will not, then, take the risk to organize the production of wealth we all enjoy. The privilege is the reward for successfully providing The People with what they want, and that is motivated by the emotion of greed with the result being an accumulation of wealth that indicates the value added in the form of the capital.
The problem with the conservative argument is that the value was not added, it was accumulated. The result is a debtor economy (a leverage economy in which more value is added than produced) that is always being managed, organized, to buy the greed and sell the fear even when it is illogical and empirically not beneficial for The People that give it both the value and the legitimacy of its power.
Conservatives argue recognition of the problem as socialism. The logic required to solve the problem is reduced to the fear, the emotion of it, which otherwise serves to indicate danger to protect and promote the welfare of the species. Conservatives are utilizing this primordial survival instinct to destroy its utility for The People. Reversing that would be to, as they say, think about it too much. Providing for their welfare, I dare say, is what The People want, and providing for recurrent crisis does not, then, fit the reward of privilege.
The privilege of accumulating value by leveraging it into an artificially added value is supported by the innovation of productive capacity. The more per-unit production added per dollar invested, the more value can be added, or accumulated, to be greedily reinvested for more accumulation through innovation. The problem is that the accumulation does not allow for a competitive reinvestment based on the profit margin. The result is to greedily innovate ways to add value without growth, which leads to the crisis of overproduction in which demand is overburdened with debt, like we have now.
The growth that occurred was largely in the real estate development sector, where you can get rich quick, but because the wealth is greedily accumulated, instruments of finance were innovated to allow the demand to be driven by debt that could not be paid. The result is the crisis of overproduction, or the inability to pay--the foreclosure crisis.
According to conservatives, the capital is greedily invested to innovate production which adds wealth. If the reward of greed is denied by sharing the wealth, it will not create it. If we do not allow the reward to be fully enjoyed by the risk taker, the risk will not be taken, and the reward will not be had to be unduly redistributed with a socialist model, or reinvested to cause competition and disinflation with full employment and maximum consumer choice provided by a free-market model.
Greed drives the incentive to risk the capital. Without it, risk, or innovation, will not occur. This equates risk of loss with productivity and innovation. If you are not productive and innovative--greedy, you lose.
So, the argument goes, we were much better off before we started flirting with spreading the wealth around. That has made the capital not willing to take the risk of growth and innovation. It becomes illiquid. If we do not allow greed to operate, we will self-determine, choose by operation of our intellect, an extreme deprivation. We are all better off if we all embrace the reality of our greedy impulses and ignore the latest fashion of intellect.
Never mind that greed is likely to result in the indifferent deprivation of others, which brought us to the crisis of illiquidity. It was the greed--the overwhelming, irrational, fearless passion for risk and reward, the supreme confidence in its virtue without thinking about it too much, not the lack of it--that caused the illiquidity. If greed is the problem, how is it the solution?
Now that the greed has been overbought into a major crisis, the fear is now oversold. The People are not buying it. It is illogical. It is unreasonable to accpet the problem as the solution.
Where The People once accepted the business cycle as a naturally recurrent event of undirected determinism, like the weather, We now know it can be the directed product of our self-determination, not driven by greed and fear, but the virtue of our intellect.
Obama/Biden!
"Greed is good," so the argument goes, and we must now manage the crisis component of this practical, utilitarian philosophy with the neo-conservative element, like the McCain camp, arguing that The People must buy into the fear of socialism in order to preserve what motivates the creation of wealth and, therefore, the privilege of determining its distribution.
Wealth shared is wealth squandered by not making the scarifice necessary to create it, so they argue, but The People are not seeing an empirical verification of that hypothesis. The utility is not verified, but disconfirmed by the clearly observable evidence.
Yet, we still have the aspiring non-elits that cling to the absurd belief that if we share the wealth, the wealthy will no longer be wealthy and the poor will still be poor. The result is a Non-Pareto Optimal, dead-weight loss in which everyone loses.
The argument is irrational because it is the product of greed, an emotion accepted, bought, as a practical philosophy instead of an indicator for behavior modification that avoids an impending crisis of a few that have too much at the expense of everyone else having too little--what we have now.
Conservatives argue that the criticism of the utility of greed is overly academic. We are thinking about it too much. That a sacrifice has to be made for the production of wealth, savings, is obvious, and the elite, they argue, are best suited to own and manage that sacrifice, the savings, so that we can have more savings by it being deprived of The People. It is, of course, illogical to claim the deprivation of value adds value. No, it redistributes the value to cause an easily avoidable crisis--a cyclical liquidity crisis characteristic of a debtor economy.
Since the elite are best suited for managing the capital (the savings, the sacrifice), they must be rewarded with the "privilege" of not having to share in that sacrifice, conservatives argue, because they will not, then, take the risk to organize the production of wealth we all enjoy. The privilege is the reward for successfully providing The People with what they want, and that is motivated by the emotion of greed with the result being an accumulation of wealth that indicates the value added in the form of the capital.
The problem with the conservative argument is that the value was not added, it was accumulated. The result is a debtor economy (a leverage economy in which more value is added than produced) that is always being managed, organized, to buy the greed and sell the fear even when it is illogical and empirically not beneficial for The People that give it both the value and the legitimacy of its power.
Conservatives argue recognition of the problem as socialism. The logic required to solve the problem is reduced to the fear, the emotion of it, which otherwise serves to indicate danger to protect and promote the welfare of the species. Conservatives are utilizing this primordial survival instinct to destroy its utility for The People. Reversing that would be to, as they say, think about it too much. Providing for their welfare, I dare say, is what The People want, and providing for recurrent crisis does not, then, fit the reward of privilege.
The privilege of accumulating value by leveraging it into an artificially added value is supported by the innovation of productive capacity. The more per-unit production added per dollar invested, the more value can be added, or accumulated, to be greedily reinvested for more accumulation through innovation. The problem is that the accumulation does not allow for a competitive reinvestment based on the profit margin. The result is to greedily innovate ways to add value without growth, which leads to the crisis of overproduction in which demand is overburdened with debt, like we have now.
The growth that occurred was largely in the real estate development sector, where you can get rich quick, but because the wealth is greedily accumulated, instruments of finance were innovated to allow the demand to be driven by debt that could not be paid. The result is the crisis of overproduction, or the inability to pay--the foreclosure crisis.
According to conservatives, the capital is greedily invested to innovate production which adds wealth. If the reward of greed is denied by sharing the wealth, it will not create it. If we do not allow the reward to be fully enjoyed by the risk taker, the risk will not be taken, and the reward will not be had to be unduly redistributed with a socialist model, or reinvested to cause competition and disinflation with full employment and maximum consumer choice provided by a free-market model.
Greed drives the incentive to risk the capital. Without it, risk, or innovation, will not occur. This equates risk of loss with productivity and innovation. If you are not productive and innovative--greedy, you lose.
So, the argument goes, we were much better off before we started flirting with spreading the wealth around. That has made the capital not willing to take the risk of growth and innovation. It becomes illiquid. If we do not allow greed to operate, we will self-determine, choose by operation of our intellect, an extreme deprivation. We are all better off if we all embrace the reality of our greedy impulses and ignore the latest fashion of intellect.
Never mind that greed is likely to result in the indifferent deprivation of others, which brought us to the crisis of illiquidity. It was the greed--the overwhelming, irrational, fearless passion for risk and reward, the supreme confidence in its virtue without thinking about it too much, not the lack of it--that caused the illiquidity. If greed is the problem, how is it the solution?
Now that the greed has been overbought into a major crisis, the fear is now oversold. The People are not buying it. It is illogical. It is unreasonable to accpet the problem as the solution.
Where The People once accepted the business cycle as a naturally recurrent event of undirected determinism, like the weather, We now know it can be the directed product of our self-determination, not driven by greed and fear, but the virtue of our intellect.
Obama/Biden!
Tuesday, October 14, 2008
Too Small to Survive
McCain, in a continued attempt to give a populist tone to neo-conservative policies and programs that ALWAYS lead to crisis, is now saying that his economic plan, despite that it will make the rich richer and the poor poorer (the formula for crisis economics and politics) will not be to merely support businesses too big to fail, but too small to survive.
This is to validate a classic elitist argument that can be found in the discipline of organization theory in the area of organizing to manage risk. McCain is using it to support a populist sentiment. Is he really that incompetent that he does not realize that it is a pro-elitist, not a pro-populist argument?
Elite-model organization theorists advocate that the bigger the firm, the more capable of surviving risk, like running the economy into the ground with the least capable to survive beimg, of course, the smaller firms.
The classic illustration of the argument is this: since a small firm is more likely to drown in shallow water, it is at a higher risk, and so it is also unlikely to take risk. The implication is that economic growth is more likely to occur if firms are more able to survive risk and, therefore, take it.
Adhering to the elitist model of risk managememt was applied by hiring quantum physicists to fashion imploding models of debt-structured finance (high return, no growth). The model is just the classic pyramid scheme where the first in, at the top, are highly profitable which lures others into the business model. The result, of course, is classic economic crisis--deflation--and the pyramid comes tumbling down threatening the entire economy if it is not bailed out; an outcome that has been verified, once again, in a very up close and personal way.
Understand, despite what the Ivy League experts tell us, that the model eventually imploding and collapsing, taking small firms down because they are too small to survive, is fully anticipated and intended. That eliminates the competition and consolidates power. Despite the neo-classical innovation of means (algorythms of quantum physics and computer programing), the result is entirely classic.
While it appears to be counter to the pro-elitist model and argument for hedging risk, the effect of McCain's plan is to keep the causal factors of the crisis intact to require the need for government in the future (to socialize the loss-=the risk--by preserving the element "too big to fail"). So much for his stance on limited need for government...very similar to Ronald Reagan's nonsense.
McCain's attempt to give the Hamiltonian (elitist) model of political economy a populist face is just another laughable attempt to put lipstick on the pig. It is just another deceit.
I prefer to go with a genuine intelligence and conscientiousness that can be trusted.
Obama and Biden for President, and David Boswell (D-KY) US House.
This is to validate a classic elitist argument that can be found in the discipline of organization theory in the area of organizing to manage risk. McCain is using it to support a populist sentiment. Is he really that incompetent that he does not realize that it is a pro-elitist, not a pro-populist argument?
Elite-model organization theorists advocate that the bigger the firm, the more capable of surviving risk, like running the economy into the ground with the least capable to survive beimg, of course, the smaller firms.
The classic illustration of the argument is this: since a small firm is more likely to drown in shallow water, it is at a higher risk, and so it is also unlikely to take risk. The implication is that economic growth is more likely to occur if firms are more able to survive risk and, therefore, take it.
Adhering to the elitist model of risk managememt was applied by hiring quantum physicists to fashion imploding models of debt-structured finance (high return, no growth). The model is just the classic pyramid scheme where the first in, at the top, are highly profitable which lures others into the business model. The result, of course, is classic economic crisis--deflation--and the pyramid comes tumbling down threatening the entire economy if it is not bailed out; an outcome that has been verified, once again, in a very up close and personal way.
Understand, despite what the Ivy League experts tell us, that the model eventually imploding and collapsing, taking small firms down because they are too small to survive, is fully anticipated and intended. That eliminates the competition and consolidates power. Despite the neo-classical innovation of means (algorythms of quantum physics and computer programing), the result is entirely classic.
While it appears to be counter to the pro-elitist model and argument for hedging risk, the effect of McCain's plan is to keep the causal factors of the crisis intact to require the need for government in the future (to socialize the loss-=the risk--by preserving the element "too big to fail"). So much for his stance on limited need for government...very similar to Ronald Reagan's nonsense.
McCain's attempt to give the Hamiltonian (elitist) model of political economy a populist face is just another laughable attempt to put lipstick on the pig. It is just another deceit.
I prefer to go with a genuine intelligence and conscientiousness that can be trusted.
Obama and Biden for President, and David Boswell (D-KY) US House.
Friday, October 10, 2008
Capitulation Manipulation
The technicals indicate considerable manipulation of market prices.
The SEC ban on short sales, for example, expired yesterday and the shorts (mostly institutional hedge-fund managers of private equity) went right in to distort the markets into a capitulatory sentiment.
A market with a 1000 point intra-day swing is hardly the model of stability that short interest is supposed to provide as a public service to us all.
Short speculators argue they do the market a public service by controlling volatility and overvaluations. Pure poppycock!
Short sellers are engaged in price manipulation, and understand that manipulation of prices and markets is a crime. It distorts the market valuations, causing confusion with false signals and sudden reversals to cause fear and encourage greed.
Both fear and greed are negative sentiments. It indicates a market full of malevolent players that pretend to be benevolent free marketeers. These are the people that will consolidate your savings through market manipulation, even if it means taking a loss, and claim it was in your best interest. The loss to the manipulator is temporary. More important is the consolidation, which adds to the power, the ability, to manipulate prices and markets that is, again, a criminal activity that has the intended effect of dispossessing you and subjecting you to the consolidated power.
Thinking that the solution to the corrupt forces of consolidated power is to socialize it, alleviating consolidation with confirmed consolidation, would be counter-intuitive.
For example, the Credit Default Swap is an improperly securitized insurance instrument. In other words, the financing needed to back the securities (the insured value) is a fraud to avoid regulatory authority (the government overseer which is composed largely of the overseen). Now that the fraud has been disclosed, the government is going to buy the fake value, essentially worthless, and the fakers, the frauds, trot off with the booty. Socializing it will just afford the process the full force and legitimacy of public authority, like what we see happening now with the bailout plan.
This is not free-market economics. It is gangster capitalism! Turning it into a reliance on the very same technocratic elite that created the problem, supposedly with a free enterprise in the public interest, to be entrusted to fix it in the public interest, is fundamentally flawed.
The efficiency of the elitist model, and its legitimacy to produce the General Welfare as the collective will of The People, is disconfirmed. In order to correct for it, the model MUST BE rejected, thrown out!
The illegitimate elitist model of confirmed inefficiency must be capitulated without being manipulated into a false legitimacy of the collective will and the public good.
Ensuring free markets in priority, not the welfare of elits, will produce an easily verifiable legitimacy that is The General Welfare.
The SEC ban on short sales, for example, expired yesterday and the shorts (mostly institutional hedge-fund managers of private equity) went right in to distort the markets into a capitulatory sentiment.
A market with a 1000 point intra-day swing is hardly the model of stability that short interest is supposed to provide as a public service to us all.
Short speculators argue they do the market a public service by controlling volatility and overvaluations. Pure poppycock!
Short sellers are engaged in price manipulation, and understand that manipulation of prices and markets is a crime. It distorts the market valuations, causing confusion with false signals and sudden reversals to cause fear and encourage greed.
Both fear and greed are negative sentiments. It indicates a market full of malevolent players that pretend to be benevolent free marketeers. These are the people that will consolidate your savings through market manipulation, even if it means taking a loss, and claim it was in your best interest. The loss to the manipulator is temporary. More important is the consolidation, which adds to the power, the ability, to manipulate prices and markets that is, again, a criminal activity that has the intended effect of dispossessing you and subjecting you to the consolidated power.
Thinking that the solution to the corrupt forces of consolidated power is to socialize it, alleviating consolidation with confirmed consolidation, would be counter-intuitive.
For example, the Credit Default Swap is an improperly securitized insurance instrument. In other words, the financing needed to back the securities (the insured value) is a fraud to avoid regulatory authority (the government overseer which is composed largely of the overseen). Now that the fraud has been disclosed, the government is going to buy the fake value, essentially worthless, and the fakers, the frauds, trot off with the booty. Socializing it will just afford the process the full force and legitimacy of public authority, like what we see happening now with the bailout plan.
This is not free-market economics. It is gangster capitalism! Turning it into a reliance on the very same technocratic elite that created the problem, supposedly with a free enterprise in the public interest, to be entrusted to fix it in the public interest, is fundamentally flawed.
The efficiency of the elitist model, and its legitimacy to produce the General Welfare as the collective will of The People, is disconfirmed. In order to correct for it, the model MUST BE rejected, thrown out!
The illegitimate elitist model of confirmed inefficiency must be capitulated without being manipulated into a false legitimacy of the collective will and the public good.
Ensuring free markets in priority, not the welfare of elits, will produce an easily verifiable legitimacy that is The General Welfare.
Wednesday, July 2, 2008
Simulation of a Bear Market
Let's say you own a small trucking business. You add value to the economy with a competitive price, and a competitive quality of fast delivery on time--something businesses of any size want and highly value.
The cost of fuel forces you into bankruptcy. The value to the economy is lost having both an inflationary effect on prices, and a deflationary effect on economic activity. Businesses now have less pluralism in the marketplace and now have a higher price and lower quality. It is the model of lowest efficiency; it is the model of a conslidated capital. It is a model for consolidating the wealth and reducing pluralism of the marketplace that is real economic growth.
Eventually the trend reverses as capital cannot be further consolidated without a retribution of the value consolidated. The distribution causes a decompression--a recovery trend (a retrace), not a deconsolidation. It is not economic growth, but a range-bound support and resistance of a predictable model of consolidated capital.
As the recovery proceeds, the economy will support the value you add to the economy. The added value of your business was always in demand, it now has the command of a consolidated capital (the ruling class elite). You will now need to borrow back your assets consolidated. You will run your business without ownership of it. The profits will have to be shared with the source of consolidated capital. By the time you have equity enough in your business to claim ownership, the cycle will again trend into compression by any number of ad hoc means of a consolidated capital.
The process is repeated.
This is not doing business. It is a farce!
Having real economic growth with a sustainable stablity is entirely possible. We're just not doing it. It's time to start! It's time to substitute decompression with deconsolidation at the very highest rate.
Join the coalition for pragmatic change.
Join the coalition for Obama!
Very best wishes.
The cost of fuel forces you into bankruptcy. The value to the economy is lost having both an inflationary effect on prices, and a deflationary effect on economic activity. Businesses now have less pluralism in the marketplace and now have a higher price and lower quality. It is the model of lowest efficiency; it is the model of a conslidated capital. It is a model for consolidating the wealth and reducing pluralism of the marketplace that is real economic growth.
Eventually the trend reverses as capital cannot be further consolidated without a retribution of the value consolidated. The distribution causes a decompression--a recovery trend (a retrace), not a deconsolidation. It is not economic growth, but a range-bound support and resistance of a predictable model of consolidated capital.
As the recovery proceeds, the economy will support the value you add to the economy. The added value of your business was always in demand, it now has the command of a consolidated capital (the ruling class elite). You will now need to borrow back your assets consolidated. You will run your business without ownership of it. The profits will have to be shared with the source of consolidated capital. By the time you have equity enough in your business to claim ownership, the cycle will again trend into compression by any number of ad hoc means of a consolidated capital.
The process is repeated.
This is not doing business. It is a farce!
Having real economic growth with a sustainable stablity is entirely possible. We're just not doing it. It's time to start! It's time to substitute decompression with deconsolidation at the very highest rate.
Join the coalition for pragmatic change.
Join the coalition for Obama!
Very best wishes.
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