Risk and Raising the Rent

Back in the day when tea was an indispensable consumer commodity, the crown decided it would increase the rent. It not only raised the tax on tea, but decreed that all economic activity had to go through the crown from the colonies. That meant, while the price of an indispensable commodity would go up, the income to buy it would go down as well. (Sound familiar?)

The crown was effectively (technically) increasing the economic rent (the cost of participating in economic activity). It was an accumulated extension of the risk that the American colonists were unwilling to bear, and so We the People had a Tea Party.

The economic risk was so high compared to the expected reward (to be accumulated into the sovereign authority of the crown) that the political risk to the colonists was extensively low while the risk to the crown was proportionately high. (Sound familiar?)

The crown, of course, perceived its power and authority to be so extensive (so consolidated), the Tea partiers posed no real risk because the crown distributed the risk at will (by fiat rather than market mechanics). The crown was not only the legal sovereign, but it demonstrates its sovereignty in a too-big-to-fail proportion--raising the rent on its subjects, literally subjecting them to the risk of default (like being subjected to the credit score).

The crown miscalculated the extent of the risk, which was fully gamma. Even if the crown decided to reduce the rent, at that point, just that it had the power to manipulate the rent and force markets at will was enough to warrant a revolution and secure Sovereignty of The People. The revolution was unavoidable.

(The rent was just too damn high!)

Fake 'N Bake

The speculative tape is overbought. Just about worn out. Capital is so consolidated, all big money managers can do is fake a trend and bake a sudden reversal like so much pop'n fresh dough yielding a baker's dozen.

Despite all the innovative ways cooked up to buy and sell, suggesting a healthy appetite for capital being prepared for economic growth, providing the fundamental fare a hungry tape needs, the low volumes, however, suggest a fare that smells like bull but tastes like bear.

Now, Americans are being told the bull they've been fed is really bear, (as if we didn't know the difference?), but bull is still on the menu.

The Fed downgrades the economy, but extends monetary easing. Bear is being served, but there's bull in the oven.


Though the waft of baking is in the air,
Bear is still the common fare;
And if even more
We should forbear--
To tax and spend the common fare,
Make no mistake,
It's no fake,
The People are happy
To just eat cake.


Over-levening provided by the master baker between 0-.25 percent will quickly make a cake. Over-leveraging, however, will put growth on a slow burn, yielding plenty of time to fake the bake and take the cake.


Quickened bread
Provided by the Fed
Is a famonous feast
Provided for the least.


Consolidation of the capital yields slow growth and the ambivalent flavor of the bitter with the sweet. Inflation and deflation tug of war, never fully resolved without a deconsolidation.

Unfortunately, deconsolidation is a side order, served-up on the table of finacial reform in only the smallest amounts.

Maintaining if not increasing the level of consolidation is the main course, indicating it gets worse before it gets better, as the FOMC has suggested.


Without our daily bread makes fat
Bank of America
And Goldman Sachs;
And though reform is cooked post haste
To cleanse away
The after taste,
The recipe change for common fare
Is like Blankfein with
A head of hair.


Pending financial reform is just more fake n' bake. The bad economic numbers indicating a floundering outlook that resembles the previous eight years is no mistake since the financial system's structure and incentives had not changed.

Lawmakers face mounting pressure to reform. The stimulus had largely been absorbed by the problem--it had been quickly consolidated. It has to "trickle down" and bake-in to be effective.

The reform will not avert impending crisis, but manage around the problem that causes it. The benefit, like consolidation of the stimulus, will be conserved, resulting in an accumulation, rather than a distribution.

More stimulus will be needed but exhausted. Budget-deficit exhaustion is the impending crisis--the austerity that bakes our daily bread by deprivation.


Unemployment benefits?
That's not kosher;
But extending tax cuts
Will give us cloture.


Job one, by unanimous consent, is being sure big financials have plenty of cake to bake, but the truth be told, more likely fake.


And as we kneed our daily bread,
We're sure to keep
Uncommons fed,
Who stand and fight
By natural right
To satisfy their appetites.

If, by chance of course, it all be fake,
There surely must be
Some mistake.
The truth is out there,
But it must be hide'n,
Can it be found,
Obama-Biden?

Averting crisis is a fake,
The best of promise is
Slow bake.
It will not give us
Less volatility,
With the promise of growth
A low probability.


Beta volatility indicates an overaccumulation in need of distribution, being withheld for favorable tax policy that conforms to the Hamiltonian model.

While the model does not expect government authority to cause a distribution without market distortion, Hamiltonians literally bank on it nevertheless.

Kneeding the dough for favorable tax policy bakes up the same old fare for public consumption.


After the bread and circuses
Of stimulus and reform,
A volatility
Is sure to take shape
That will give real meaning
To "let them eat cake."

The reform we need
Should not be like poetry,
Rich in concept
That works metaphorically.