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.
Showing posts with label extension of risk. Show all posts
Showing posts with label extension of risk. Show all posts
Wednesday, September 21, 2011
Saturday, January 8, 2011
Assuming a Proprietary Position
For small investors looking to not rely on social security for retirement, investing has resulted in reduction of net worth; and at this point, of course, average-income Americans are being told they must work longer and for less money. Let's just say that small investors are expected to assume their natural position, and like it.
According to conventional economic theory, the loss of net worth (and thus the increased need for welfare) is a legitimate function of freely taking a position in the marketplace and taking on the risk "posed" by assuming the position. If we didn't want to take the risk, then we should not have posed in that position.
Even after having been thoroughly violated, the risk seems to be permanently posed in, you know, that position.
Without being too risque, but to offer an apt description, let's just say that average-income Americans have been royally turned. According to conventional wisdom, however, average Americans knowingly and willingly assumed the position.
Of course, the exculpatory assumption of the risk is false. Much of the risk was assumed in the dark. Victims were not fully aware of the extent of the risk until it had been fully assumed, and the public is still not fully aware of the extent. There is much more risk that remains to be assumed (dark marketed). At this point, the public is being politically prepared for the extended application of the risk which is modeled to be fully assumed but not necessarily assigned by visible means of tax and subsidy.
Who will be assigned the fullest extent of the risk is to be decided in the current political process, and it is no coincidence that the process is currently being defined as having a right-wing bias. The compromises that occur will be political mitigation of economic risk (i.e., mitigation of the risk in the gamma proportion).
Elite theory postulates that The People naturally assume the proprietary position they are in. It is foolish to assume the position of risk and expect not to have to take it. Although small investors didn't see what was coming, they should have known that by putting their net worth out there, they were likely to be stuck with the risk (and size, especially when it comes to investing, does matter).
So, with the risk of loss fully assumed, The People are fully expected to assume the proprietary position...but not without all the good taste, civility and propriety of due process, of course.
According to conventional economic theory, the loss of net worth (and thus the increased need for welfare) is a legitimate function of freely taking a position in the marketplace and taking on the risk "posed" by assuming the position. If we didn't want to take the risk, then we should not have posed in that position.
Even after having been thoroughly violated, the risk seems to be permanently posed in, you know, that position.
Without being too risque, but to offer an apt description, let's just say that average-income Americans have been royally turned. According to conventional wisdom, however, average Americans knowingly and willingly assumed the position.
Of course, the exculpatory assumption of the risk is false. Much of the risk was assumed in the dark. Victims were not fully aware of the extent of the risk until it had been fully assumed, and the public is still not fully aware of the extent. There is much more risk that remains to be assumed (dark marketed). At this point, the public is being politically prepared for the extended application of the risk which is modeled to be fully assumed but not necessarily assigned by visible means of tax and subsidy.
Who will be assigned the fullest extent of the risk is to be decided in the current political process, and it is no coincidence that the process is currently being defined as having a right-wing bias. The compromises that occur will be political mitigation of economic risk (i.e., mitigation of the risk in the gamma proportion).
Elite theory postulates that The People naturally assume the proprietary position they are in. It is foolish to assume the position of risk and expect not to have to take it. Although small investors didn't see what was coming, they should have known that by putting their net worth out there, they were likely to be stuck with the risk (and size, especially when it comes to investing, does matter).
So, with the risk of loss fully assumed, The People are fully expected to assume the proprietary position...but not without all the good taste, civility and propriety of due process, of course.
Thursday, December 30, 2010
Proprietary Position
We tend to keep risk confined to a Cartesian geometric. There is, however, risk in a third dimension to time and pitch. It is the proprietary risk.
Proprietary risk is essentially who owns what when--or the extent of your proprietary position within the binary space of time and pitch. Within this space, your risk is either on or off (the risk of loss is fully assumed). The amount of risk owned (or assigned) appears to oscillate between 0 and 1 in two dimensions, but your proprietary position is correlatively constant. Proprietary risk, actually, is always either zero or one, which is why, for example, people that do not need credit are always able to get it (with the risk of loss to those that can't fully assumed, keeping the value in reserve).
With the business cycle, proprietary risk demonstrates its consolidation in the gamma proportion. So, when a distribution occurs from an accumulation, while the proportion of risk appears to change, it is actually conserved in the gamma proportion in the form of extended debt and the risk of default. Consolidation of the risk is reconfirmed in the accumulation phase of the cycle when the risk is off and the call is for debt reduction, like we have now.
Your position (how much economic rent you pay) is confirmed by cyclical oscillation, actuating the proprietary risk (the amount of risk you verifiably own) and the probability of default in the accumulation phase. Since the risk follows the reward, it actually consolidates with the wealth; and since the distribution occurs in the form of debt, not equity, the accumulation phase of the cycle leaves you with a debt you do not actually own. The risk was never proprietarily yours. It is consolidated, extended, and reclaimed with the reward--it is a liability that accumulates with the equity in a gamma-risk proportion to be politically distributed in the form of a public good.
According to Hamiltonians the power to distribute risk independent of reward is a public good because it provides productive incentive. It inspires a vibrant economy.
The non-elite aspire to elite power, which is the ability to extend proprietary risk without displacing the position of the reward and the power it assumes, managing the liability by renting it out. The rent puts the non-elite in the position they are in and the debt assumed is then called proprietary--it is their property, defining their status or class by extension of the risk, just like the king did.
Today, the extension of risk takes the form of positioning counter-party risk. Since we all have the equal right to pursue happiness like the king, it is assumed we all equally own the risk in priority like the king. It is a false assumption (with the risk of loss fully assumed).
Constitutionally, we are all equally empowered to manage the risk from a proprietary position. We all individually decide whether to take (assume) the risk extended to us or not. The Revolution ensures us all the right to take ownership of the risk, which means, just as it was with the king, the risk of loss is fully assumed.
According to the Hamiltonian model, the risk is what we are all entitled to. Hamiltonians make sure it is well extended, ensuring the risk of loss demonstrates and tests the extent of power (with the risk of loss fully assumed in the gamma proportion).
When Bank of America and Goldman Sachs leverage commodity prices from their proprietary desks at a 10-1 ratio--extending risk, demonstrating power--what position does that put you in?
Proprietary risk is essentially who owns what when--or the extent of your proprietary position within the binary space of time and pitch. Within this space, your risk is either on or off (the risk of loss is fully assumed). The amount of risk owned (or assigned) appears to oscillate between 0 and 1 in two dimensions, but your proprietary position is correlatively constant. Proprietary risk, actually, is always either zero or one, which is why, for example, people that do not need credit are always able to get it (with the risk of loss to those that can't fully assumed, keeping the value in reserve).
With the business cycle, proprietary risk demonstrates its consolidation in the gamma proportion. So, when a distribution occurs from an accumulation, while the proportion of risk appears to change, it is actually conserved in the gamma proportion in the form of extended debt and the risk of default. Consolidation of the risk is reconfirmed in the accumulation phase of the cycle when the risk is off and the call is for debt reduction, like we have now.
Your position (how much economic rent you pay) is confirmed by cyclical oscillation, actuating the proprietary risk (the amount of risk you verifiably own) and the probability of default in the accumulation phase. Since the risk follows the reward, it actually consolidates with the wealth; and since the distribution occurs in the form of debt, not equity, the accumulation phase of the cycle leaves you with a debt you do not actually own. The risk was never proprietarily yours. It is consolidated, extended, and reclaimed with the reward--it is a liability that accumulates with the equity in a gamma-risk proportion to be politically distributed in the form of a public good.
According to Hamiltonians the power to distribute risk independent of reward is a public good because it provides productive incentive. It inspires a vibrant economy.
The non-elite aspire to elite power, which is the ability to extend proprietary risk without displacing the position of the reward and the power it assumes, managing the liability by renting it out. The rent puts the non-elite in the position they are in and the debt assumed is then called proprietary--it is their property, defining their status or class by extension of the risk, just like the king did.
Today, the extension of risk takes the form of positioning counter-party risk. Since we all have the equal right to pursue happiness like the king, it is assumed we all equally own the risk in priority like the king. It is a false assumption (with the risk of loss fully assumed).
Constitutionally, we are all equally empowered to manage the risk from a proprietary position. We all individually decide whether to take (assume) the risk extended to us or not. The Revolution ensures us all the right to take ownership of the risk, which means, just as it was with the king, the risk of loss is fully assumed.
According to the Hamiltonian model, the risk is what we are all entitled to. Hamiltonians make sure it is well extended, ensuring the risk of loss demonstrates and tests the extent of power (with the risk of loss fully assumed in the gamma proportion).
When Bank of America and Goldman Sachs leverage commodity prices from their proprietary desks at a 10-1 ratio--extending risk, demonstrating power--what position does that put you in?
Monday, December 20, 2010
Being Well Fed
If Bank of America and Goldman Sachs showed up at your door and demanded 2% more for food and fuel so that their trading desks could make a profit, keep their reserves well fed, and provide you with the opportunity to get rich, you would likely be offended to be so brazenly played for a fool. A visibly direct accountability would be very impolitic, so we have the Fed to feed the appetite of bankers for exacting austerity (the economic rent) that keeps the rich well fed at your expense.
Now that FDIC banks can legally operate as investment banks, taking deposits and making loans is only about 20% of a big bank's business. These banks are so big, like Bank of America, they command the marketplace. Don't be fooled by rhetoric that describes this consolidation as the means for feeding you and your family with an efficiency only possible by building economies of scale. No! This continued consolidation is intended to drive down your income and drive up the prices you pay to feed the greed; and all the evidence is there to support that hypothesis.
Continuous consolidation does not allow for more pluralism, it allows for more command and control structured into the Federal Reserve; and what is put in reserve is your income to support banking activity that causes inflation and unemployment, deflating your income, minimizing the probability you can get rich to nearly nothing despite being told otherwise. The result is dependancy on a consolidated business-government entity that commands and controls the risk and the distribution of reward with highly indirect and technocratic means.
The Fed is independent of government authority, managing the banking system independent of political influence while it indirectly exacts austerity (extends political risk) in the name of free-market economics.
With the result being anything but a free market, we have to wonder what exactly we are being fed....
A lot of baloney... and more than enough!
We're being well fed alright.
Now that FDIC banks can legally operate as investment banks, taking deposits and making loans is only about 20% of a big bank's business. These banks are so big, like Bank of America, they command the marketplace. Don't be fooled by rhetoric that describes this consolidation as the means for feeding you and your family with an efficiency only possible by building economies of scale. No! This continued consolidation is intended to drive down your income and drive up the prices you pay to feed the greed; and all the evidence is there to support that hypothesis.
Continuous consolidation does not allow for more pluralism, it allows for more command and control structured into the Federal Reserve; and what is put in reserve is your income to support banking activity that causes inflation and unemployment, deflating your income, minimizing the probability you can get rich to nearly nothing despite being told otherwise. The result is dependancy on a consolidated business-government entity that commands and controls the risk and the distribution of reward with highly indirect and technocratic means.
The Fed is independent of government authority, managing the banking system independent of political influence while it indirectly exacts austerity (extends political risk) in the name of free-market economics.
With the result being anything but a free market, we have to wonder what exactly we are being fed....
A lot of baloney... and more than enough!
We're being well fed alright.
Saturday, August 28, 2010
Extent of Risk
In a defensive mode (having value to protect from loss), analysts assess the extent of the risk. It is both a function of keeping accounts and retributing the value to its source (including the value of any liability to the risk).
The chairman of the Federal Reserve says, for example, he will extend the extended policy of monetary easing. Bernanke says resisting deflation is job one.
Deflation presents the highest degree of risk, extending to every aspect of the economy, especially the accumulation of gamma risk that is already over-accumulated.
Our concept of risk incunabulates from the accumulated wealth of royalty. They also accumulated risk with the reward, and it was necessary to measure the extent of the risk in order to keep the wealth accumulated without discouraging the incentive to produce it, much like we do today, trading reduced risk for distribution of the reward. The trick, of course, is to reduce the extent of the risk without a proportional distribution which, of course, as the king found out, does not happen without certain, inevitable, risk.
Gamma reduction of the risk (reducing the risk of losing the ability to command and control it) is job one. It has priority or the power will be lost to a lower class (like progressives) just like the king had to share power with the bourgeoisie--a process in which the king's wealth was transformed into capital, which was transformed into the wealth of nations, displacing the rights of the king with a ruling class empowered with the natural right of The People (its subjects) to sovereign power, effectively reducing the liability of the risk.
The volume of risk, however, remains the same irrespective of the shape of the vessel that contains it and manages it to a current value.
It is necessary, then, to evaluate and delimit the extent of the risk--to keep account of assets and probable liability of their accumulation, which is largely a statistical function.
Statistical learning is fundamental to cognition, and in the human species, measuring the probability of the risk--delimiting permanence, identifying the enduring elements of generalized risk--becomes an epistemic gestalt. The objective of "taking the risk" is more than just the sum of its parts. The gestalt has to be structured into a system of rules and boundaries to delimit the objective to the reward. It must fit the level of risk, which if consolidated, clearly defines the reward (class) for all to see (the empirical measure, and the current value, of the risk) in the midst of an otherwise infinite number of probable outcomes (the interpretive property of cognition).
When the needed distribution does not occur to reduce the risk, there is an extension of the risk, increasing the number of probable outcomes (interpretations of the risk). The amount and distributional proportion of risk remains the same. It is the interpretation of the risk that changes with a resulting volatility of its current value, referred to as market sentiment, falsely inferring a popular consent, accumulating value arbitrated from the risk when a distribution is what is needed.
English royalty utilized a device called a "writ of extent" which ordered an assessment of property in payment of debt to the crown. Vestige of that writ survives in the form of defaults and foreclosures, securitized debt, collateralized debt obligations and credit default swaps. Just today, for example, CDS's on treasury securities increased to thirty percent which, of course, is perfect nonsense. While the value of the securities is elastic, the probability of default, unlike the king, is zero. The measure is an interpretation of the extent of the risk that gives it valuable volatility--value arbitraged, or derived, from the interpretation of the risk. If it measures anything, it indicates the willingness of a consolidated capital to remain illiquid.
The illiquidity extends the real value of the risk, just as it did for the king--keeping the source of the value subjected to the current interpretation of its value.
Illiquidity is a crisis mode of capitalism. It is being deliberately extended to derive current value to the point of liability. The amount of accumulated liability is being regulated by the Fed which will continue to resist deflation with inflationary policy.
While a depression will not occur (avoiding a critique of social value--delimiting solutions to the generalized interpretation of the risk), the effect is extended to dissipate the risk of liability without deconsolidating the risk from the gamma proportion. It is the Fed's job to manage the proportion of this risk, "accommodating" an interpretation that produces value without risk of liability--a privilege enjoyed by the king, accounting for the extent of the risk.
The chairman of the Federal Reserve says, for example, he will extend the extended policy of monetary easing. Bernanke says resisting deflation is job one.
Deflation presents the highest degree of risk, extending to every aspect of the economy, especially the accumulation of gamma risk that is already over-accumulated.
Our concept of risk incunabulates from the accumulated wealth of royalty. They also accumulated risk with the reward, and it was necessary to measure the extent of the risk in order to keep the wealth accumulated without discouraging the incentive to produce it, much like we do today, trading reduced risk for distribution of the reward. The trick, of course, is to reduce the extent of the risk without a proportional distribution which, of course, as the king found out, does not happen without certain, inevitable, risk.
Gamma reduction of the risk (reducing the risk of losing the ability to command and control it) is job one. It has priority or the power will be lost to a lower class (like progressives) just like the king had to share power with the bourgeoisie--a process in which the king's wealth was transformed into capital, which was transformed into the wealth of nations, displacing the rights of the king with a ruling class empowered with the natural right of The People (its subjects) to sovereign power, effectively reducing the liability of the risk.
The volume of risk, however, remains the same irrespective of the shape of the vessel that contains it and manages it to a current value.
It is necessary, then, to evaluate and delimit the extent of the risk--to keep account of assets and probable liability of their accumulation, which is largely a statistical function.
Statistical learning is fundamental to cognition, and in the human species, measuring the probability of the risk--delimiting permanence, identifying the enduring elements of generalized risk--becomes an epistemic gestalt. The objective of "taking the risk" is more than just the sum of its parts. The gestalt has to be structured into a system of rules and boundaries to delimit the objective to the reward. It must fit the level of risk, which if consolidated, clearly defines the reward (class) for all to see (the empirical measure, and the current value, of the risk) in the midst of an otherwise infinite number of probable outcomes (the interpretive property of cognition).
When the needed distribution does not occur to reduce the risk, there is an extension of the risk, increasing the number of probable outcomes (interpretations of the risk). The amount and distributional proportion of risk remains the same. It is the interpretation of the risk that changes with a resulting volatility of its current value, referred to as market sentiment, falsely inferring a popular consent, accumulating value arbitrated from the risk when a distribution is what is needed.
English royalty utilized a device called a "writ of extent" which ordered an assessment of property in payment of debt to the crown. Vestige of that writ survives in the form of defaults and foreclosures, securitized debt, collateralized debt obligations and credit default swaps. Just today, for example, CDS's on treasury securities increased to thirty percent which, of course, is perfect nonsense. While the value of the securities is elastic, the probability of default, unlike the king, is zero. The measure is an interpretation of the extent of the risk that gives it valuable volatility--value arbitraged, or derived, from the interpretation of the risk. If it measures anything, it indicates the willingness of a consolidated capital to remain illiquid.
The illiquidity extends the real value of the risk, just as it did for the king--keeping the source of the value subjected to the current interpretation of its value.
Illiquidity is a crisis mode of capitalism. It is being deliberately extended to derive current value to the point of liability. The amount of accumulated liability is being regulated by the Fed which will continue to resist deflation with inflationary policy.
While a depression will not occur (avoiding a critique of social value--delimiting solutions to the generalized interpretation of the risk), the effect is extended to dissipate the risk of liability without deconsolidating the risk from the gamma proportion. It is the Fed's job to manage the proportion of this risk, "accommodating" an interpretation that produces value without risk of liability--a privilege enjoyed by the king, accounting for the extent of the risk.
Subscribe to:
Posts (Atom)