Making Money

It is important to keep in mind that fiscal management is not just a function of government authority. Our economy, for the most part, is fiscally managed from the private sector by a technical elite recruited from our most prominent business schools where they learn to "make money."

Innovative, risk-transfer products, for example, were introduced to make markets more efficient, but were really designed to more efficiently "make" markets. When applied in conformity with "efficient-markets theory," in conjunction with the Commodity Futures Trade Modernization Act (the government authority needed to make the consequences of "making markets" legitimate and non-retributive), the economy predictably took a nose dive toward a K-wave, depressionary distribution of the risk. All the commercial paper created on demand to support the marginal profit was transformed into a fiscal crisis.

The demand created by CDS's, CDO's, MBS's, and various other RTV's (which are essentially debt instruments) did not take the form of Federal Reserve Notes until the destruction occurred.

Demand for monetary expansion (the central bank buying treasury notes, or swapping risk for government debt) did not occur until the value a free market otherwise efficiently retributes in short order (without the need for government intervention) presented as risk-detriment in late order. Government was supplied "on demand" to responsibly save us from our "selves." Consequently, the debt that could not be paid (remember that want-to-be kings always irresponsibly overextend the rent to satisfy themselves) was monetized--it became a liability of the Federal Reserve System where, in the light of day (in the form of massive budget deficits), it is subsequently being vilified as "too much government." (Notice how the risk of responsibility was "made" to "transfer" and make money that is now being used to bid up commodities, or swapped for risk, "on demand" in dark markets.)

The value to be retributed was turned into public debt, which is financed through the tax code and, by no coincidence, should not be paid by the primary beneficiaries of the detriment. Supposedly, retributing the value (the capacity for consumers to finance the profit, or pay the rent, on demand) is a "moral" hazard because it bankrupts the efficiency of markets (it reduces the supply of capital and causes shortages). This, you see, is what the so-called "efficient-markets theory" really is by technical objective--it "makes money."

Money is not made by adding supply, however, but by reducing demand, or the capacity for each and every one of us to self-determine "on demand." Without the retributive value inherent to demand economics, the theory of efficient markets is transformed into an ideological proposition rather than an empirical measure of well being.

When destruction derives from demand created from the top down, we are all, nevertheless, individually responsible for our fate from the bottom up. Self-determination is transformed into "personal responsibility."

We are all responsible for complying with the self-determination of the "job creators" or suffer the ill effects of non-compliance, which is essentially to work more and more for less and less to a fault (specifically, default, which is the opportunity to consolidate assets into private equity) "on demand." When we then show up at an ER to treat an illness because we do not have the income (the demand) necessary to be well, we are freeloaders.

Since freeloading is irresponsible, we are mandated to buy health insurance that becomes less and less affordable (and more and more monetized without adding supply) on command. We are then stuck with an even more robust price-support system instead of a system that would otherwise control the price by virtue of efficient markets (with adequate income that comes with added supply) on demand.

If we do not properly position ourselves to avoid it, the detriment we suffer is our own fault. That is, if we do not subordinate to the risk and fully assume the position the gods of misfortune intend us to be in, then we will always be entangled in conflict. We will always be consumed, to hear reactionaries tell it, with "class warfare," bemoaning a fate that is easily determined by delivering the "self" to the objective reality of the money makers (whether on the left or the right) who create the jobs we need to deliver us from angst and suffering otherwise expected.

Money is technically "made" by determining an outcome (position of the entangled risk, or the conflict that consumes us) that is easily predicted (expected) by the practical philosophy (the objective identity) of the risk proportion (like the utility of supporting profits without adding supply and employment). It is important to understand that the added money supply does not chase too few goods and cause inflation, as Milton Friedman argues. Quite the contrary, the result is classic overproduction--a lack of demand, which accumulates supply and cures the prospect of shortages.

The current situation with gasoline prices, for example. Now that the "risk mentions" indicate sentiment for price controls--since the oil market is so consolidated that it can support, or control, the price by commanding it to the up side despite declining demand--pop analysts are preoccupied with explaining why supply-demand fundamentals don't always behave as fundamentally expected.

(Analytically, it is important to understand that a price support encourages added supply. Since the supply added resists the support, the price is being paid on command, not demand. Commanding the price is a demonstration--a confirmation--of power that in a free market is limited by demand.

The quantity in command--the retributive value--is the quantity of governance--the tyranny--that the Tea Party, for example, expects to be limited. It is the "limited government" that technically indicates our freedom to prosper by controlling the price to be paid. It is the empirical value--the relative price expected to be paid proportionate to the risk taken--that measures the power of self-determination and thus the limit of personal responsibility.

Price supports can always be expected to be out of control, allowing the producer to sell an accumulating supply at a price that is rising against declining demand. As the supply rises, employment and consumer income falls, due to overproduction, increasing the price we can expect to pay.

We can always expect tyrants to tax more than subjects can pay, and in a market economy the money to be made has to come from somewhere, so we make it to support the price.

As the price commanded increases, the price demanded decreases, resulting in classic overproduction. Pop analysts are trained to ignore overproduction because the value produced is the holy grail of success--pricing power, which requires making money to pay the price and control the risk.)

Trying to control the price of oil on the supply side does not make sense because the price is being commanded, not demanded. Efforts to control the price by increasing supply has failed because there is ample supply.

Rather than too much money chasing too few goods, there is too much fuel at a price consumers can't afford to pay. Instead of inflation as Milton Friedman describes it, we have the classic phenomenon of overproduction.

Pop analysts reluct to mention overproduction because the logical cure is to either command (mandate) the price on the down side, or deconsolidate the command structure. Deconsolidation is to be avoided at all cost because the economy-of-scale, too-big-to-fail proportion is what empowers the corporate with self-determination--the power to command the outcome.

Deconsolidation structures the risk proportion so that price can be controlled on demand. When consumers are empowered with self-determination at the expense of producers, everybody, including the corporate body, tends to behave more responsibly on demand. Producers are more apt to add supply (a marginal product and a distribution of income) to make a profit (rather than inflating the price to reduce demand and add a marginal profit) because, as long as there is an alternative (supply pluralistically added to occupy the same space), a command posture is impolitic if not impossible without a price support. A government mandate, for example, is supposed to ensure we all behave responsibly, like mandating farmers not grow wheat for their own use because it does not support the price, or buy health insurance because it is unaffordable.

In the case of health insurance, the mandate is not considered a price support, but a means of resistance without sacrificing consumption. In other words, the support is provided to add the supply of insureds without adding the supply of insurers. It is structured into an economy-of-scale proportion, which in all probability will be used to support the price of health care to infinity and beyond. The marginal profit will be monetized (the profit will be "made") without adding a marginal product, which is inflationary.

No, this is not a problem of too much money chasing too few goods. This is an organizational problem that health care analysts fail to recognize because it consolidates power and structures it to distribute on command, by mandate, from the top down, not on demand from the bottom up. Instead of being self-determined, we are turned into animals in a Skinner box, operantly conditioned to responsibly (i.e., responsively) act in the image of our masters.

Consolidated capitalism much prefers a mandate because it conserves the command structure. What can be mandated on the down side can be mandated to control price on the up side, which is why Republicans originated the health-insurance mandate they now oppose. Republican opposition is based on free-market principles and ensuring a level of personal responsibility they can somehow self-determine as long as a command structure legitimately occupies the policy space over time.

Maintaining the utility of an economy-of-scale efficiency maintains the command structure and the crises of overproduction that plagues us. It is the disease, not the cure.

Markets are not made more efficient by means of consolidation. Supply, as in the case of oil and gasoline, keeps rising since the market cannot demand it even with more and more money being monetarily added, which instead of reducing inventory supports the price and thus the money to be "made" on command. Since the added supply does not, as we reasonably expect, reduce the price (because futures markets have "determined" it is too risky), the risk being mentioned outside futures markets, in the light of day, is an increasing probability for government price controls, which could possibly include deconsolidation.

Deconsolidation includes alternative sources, and the economic growth that results will not be inflationary, contrary to popular analysis. The growth will fiscally manage the demand destruction (the deflation) that occurs when supply accumulates to be sold at higher and higher prices.

By increasing the distribution of income (by broadening the base, which is the way Paul Ryan refers to his tax increase on the majority of Americans to pay down debt), the crisis of overproduction, and the fiscal crisis, is cured with sufficient income to demand it, and pay it (but not if we broaden the tax base as Ryan suggests, which would be deflationary and add to the debt proportion).

Instead of reducing demand to control inflation, which obviously doesn't work, but broadening the income base (not the tax base), there is less need to make money by monetizing an increasing debt proportion to income. Instead of ensuring futures volatility, the contradiction (the dissonance) of rising prices (inflation) against rising supply (unemployment) resolves.

Preventing a structural correction that resolves the dissonance is what capitalism is organizationally designed to do. It is designed to profit from detriment (deprivation) in the guise of curing shortages. This is why during the Great Depression we were dumping grain in the ocean to support the price when people were starving, and despite the "Great Moderation" we still struggle with, for example, a glut of homes in the face of homelessness, bulldozing entire communities to support the price. The price, however, is the creative-destruction that capitalism claims is our natural condition and from which it derives value to support it in the name of continuous improvement.

The only reason the choice is either deflation and unemployment (overproduction with falling prices) or inflation and unemployment (overproduction with rising prices) is because the marketplace is too consolidated. The cure is to deconsolidate but is never mentioned until it reaches an overwhelming crisis proportion.

Letting the risk go critically gamma and burst before we consider the obvious is not the model of an Enlightened intellect. Quite the contrary. At this point in our history, letting economic risk gain a fully political dimension is to gain, once again, a declining rate of profit. Instead of a New Deal, perhaps at this point, following the Great Moderation, a persistent deflationary risk signals the opportunity for a more genuine free-market structure that provides with less need for government, rather than deprives with more.

We ignore the obvious cure because we have to "deal" with the "new," immediate crisis. We aptly avoid the cure, and conserve the class identity (the Hamiltonian virtue) of the value, by monetizing the accumulated risk proportion--by "making money."

It is no coincidence that Bernanke reiterates a Fed policy that will continue to be "accommodative" for the foreseeable future. Equity prices (and bond prices) get support (which tends to push small, retail investors in to take the risk). There will be plenty of money being made despite the persistent, deflationary risk...for now, anyway.

Accommodative monetary policy indicates an accumulating fiscal crisis--the inability to pay the economic rent because money is being made on command (what Goldman Sachs and Bank of America do by pre-dicting, or self-determining, prices in the future, positioning 99.9 percent of payers to take the risk because most of us are trying to cope here and now--being personally responsible as pre-dicted). Paying the rent on command (rather than on demand, like in a free market) pushes prices up in the face of rising supply, which supports the profit margin by resisting the demand needed to pay it.

When the king overextends the rent, as "We the People" know very well, the price, historically, will be paid. Fortunately, we have the means to deconsolidate the risk without catastrophic consequences, on demand.

Secret Sovereigns

The risk is anything but uncertain from the inside. It is what "makes the market." Arbitrage (manipulation of the risk, which is what hedge funds essentially do), is dependant on what you know and when you know it.

Liability, by no coincidence, is also dependant on what you know and when you know it, as well as what you do and when you did it.

Long-short funds (hedge funds) intend to cause risk and profit from it. Their defense to having benefited by causing a detriment is that they did not create the risk, which is true. Risk cannot be created because it is constant. Risk accumulates and distributes (increases and reduces--i.e., the long and short of it).

Since they do not create risk but manage it to an effect, hedgers assume no liability for loss that is fully assumed (there must be a counterparty to assume the risk of loss that effects the profit). Counterparties arguably assume the risk of loss, knowingly and willingly exposed to the risk presented. Counterparties are at fault if they do not properly detect signals that indicate the extent, or probable effect, of the risk.

Hedgers, however, are apt to create the illusion of risk or no risk (the long and the short of it). Counterparties are then left to distinguish true signals from false signals, which is nearly impossible without a whole lot of luck or being on the inside. This has an affinity for secret, or exclusive, channels and networks that manage the risk into classes of profitable intelligence. The more money you have, the higher your classification. In the upper class, you have the element of certain value while everyone else is guessing so that the question is not if you will lose, but when. The risk of loss is fully assumed by the practical model, and that model is characteristically Hamiltonian, culturally infused with the propriety of privilege and the savvy of secrecy on the inside.

As long as causal factors are proprietary, privileged information, the element of secrecy, and surprise, easily derives value from the extension of the risk with limited liability. While the liability is fully assumed by the perpetrator in the form of a measurable benefit, confirming it was deliberately caused by a detriment is a conjecture afforded by the element of secrecy, which is defensible as a right to personal and private property.

In America, the right to private property is culturally sacrosanct. It is the legal, and cultural, standard that measures success, failure, and the liability associated with it. While property is a measurable quantity and the causal factors of its acquisition can be plausibly inferred, the right to privacy limits extension of the liability with the risk. The difference accumulates more value (property) than distributes with the risk. Thus, the quantifiable over-extension of the risk and the crises (the accumulated liability) that predictably results (the risk fully assumed).

Since the risk is fully assumed, the accumulated value has an exculpatory expectation, culturally valued as legal and proper. The accumulated value and the accumulated risk is fully assumed by the Hamiltonian model which, as we have seen, relies on government to visibly manage with highly technical means of elite, bureaucratic authority.

The cultural extent of the risk and the limit to the liability is a legacy of the Hamiltonian model and the American Revolution. We expect the rich to be winners because they are the elite--they are just naturally suited to manage the risk for everybody. The risk of loss is fully assumed by the model for both the elite and non-elite: the non-elite expect to lose value to the elite who are entrusted to use that "austerity" value to the benefit of the Sovereign (The People). Of course, the long and the short of it is the elite continuously test the limit of "the trust."

The elite get more back long by giving back short. The risk of loss is fully assumed by the model because the elite fully intend to always push the limit of the risk coefficiency which overextends the value. Part of that surplused value is given back short to satisfy the liability (the loss of "trust") which accumulates the value, and the risk associated with it, long. The "trust" is then re-novated into "The Square Deal, The New Deal, The War On Poverty, The Contract With America, Change We Can Believe In, The Pledge to America...," just to name a few.

The long, consolidated accumulation of the risk (too big to fail, for example) always ensures the need to conserve the accumulative value against the illusion created that there is a catastrophic risk of loss. This risk is "too big" to allow. It is tantamount to being able to prevent a devastating cyclone or earthquake...it would be wrong not to prevent it.

Hedge funds and private equity argue they are managing the risk to maximize liquidity for us all, and the best return on their investments (and thus the measure of its social utility) is to merge industries and markets. Although this "inorganic" growth is largely responsible for a debt burden that grows in a too-big-to-fail proportion, it is rarely mentioned as a causal factor when debt reduction gains political priority. Instead, the middle class is commanded to work longer and cheaper to balance the budget.

Who is it that can command the Sovereign (We the People) what to do? Only the Creator can command the Sovereign, right?

The people that create jobs, or not, by risking their capital, or not, command the Sovereign. Since they consider themselves to be the creators, they argue they can--they should--legitimately command the fate of the Sovereign.

Sovereign power is legally applied by popular consent of the governed, so passing legislation, for example, in which The People know what is in it after it passes is patently illegal. Thus, the Tea Party.

In the same way, mandating austerity (applying a detriment) to the benefit of creditors (too-big-to-fail industries and markets) is an application of sovereign power. Applied from the top down, it has questionable legitimate value, but now the congress can claim a populist, Tea-Party participation, and the Tea Party members will be rewarded with elite membership that operates beyond sovereign power. They will operate with what Sarah Palin describes as "that secret knowledge" that only a few citizens are privileged to consume (privilege meaning it is like private property--it is proprietary).

The proprietary desks of large banks, for example, operate to exact the detriment through highly secretive means. It is a direct application of power over the Sovereign (easily accounted for by reduction, and expansion, of net worth in zero-sum). It is an application of power the crown would not tolerate (the sum legally belongs to the sovereign power and the risk/reward is extended as it sees fit). Thus, these supra-sovereigns had to operate in secret to avoid the sanction (the consent) of the legal sovereign which typically extended the risk beyond the reward. The extension of the risk exacted austerity, or sacrifice for the welfare of the sovereign which is now The People operating with popular consent.

By definition, these supra (secret) sovereigns are not of The People. They are the elite and are obligated, like the crown, to care for their subjects. Part and parcel of the noble (feudalistically middle-class) obligation is to give The People the appearance of self-determination to both keep the peace and limit the legal liability when the application of the detriment becomes too obvious to be kept a secret. According to middle-class values (rejecting sovereignty of the crown that does not really care about commoners except to exploit them against their will), it is your own fault if you are not upper class. Everyone has equal opportunity to pursue happiness (property) and the liberty to determine the fate (the lives) of others--life, liberty, and the pursuit of happiness, but not necessarily in that order.

The new nobility that see to the needs of The People is a middle class that aspires to the liberty enjoyed by the upper class. That liberty, just as Palin describes it (and Pelosi demonstrates), comes with a sense of being included in the inner sanctum (all be it in the outer circle) of power, and in many respects, just being ideologically conservative has an elitist self-concept by referencing to the group. Aspiring to status is a highly co-optative quality that the Tea Party delegation, for example, is likely to succumb (and that progressives tend to demonstrate as the ruling class, exercising "the liberty" to limit the liberty of the non-elite--in their self-interest, of course--in true Hamiltonian fashion).

Secret channels and networks were used during the American Revolution to identify who was a patriot or a loyalist. Not only were many of America's founding elite members of secret societies to operate against the sovereign, but to operate as scientists (empiricists) free of religious persecution. Not only did America inherit a covert culture of elite authority, but a secular authority as well.

Being secular has not dampened the puritanical spirit, however. The first thing the new Democratic congress did in '08 was increase taxes on tobacco use (a sin tax). It was a huge tax increase on lower incomes, in true Hamiltonian fashion, in the midst of a strong deflationary trend! Eating, drinking and smoking too much is not busting our economy and causing huge budget deficits. Bailing out what is too big to fail (greedy extortion) is...and that is what We the People got from so-called "liberals" in priority. That is so bad, so exceedingly hypocritical and inimical, that even Republicans look good.

Puritanically, prosperity is a measure of divine (or natural) providence (an exculpatory ontology of purpose), keep in mind, and the progressives of the previous congressional delegation were sure to provide for "too big to fail" while The People got the oversized gavel on a healthcare plan they are mandated to buy with their declining incomes. Isn't it ironic how the fate of the masses is determined by providence of a better judgment they cannot provide for themselves only because of the income elite policies and programs deprive.

A self-anointed ruling class in a democratic environment necessarily takes on the aspect of divine (natural) right. Since a mandate is not likely to be the product of a popular consent, thus the need for mandates, the legitimacy of imposing it has to come from somewhere. Public policy takes on the aspect of being divinely inspired (inherently virtuous and naturally gnostic) but secularly derived by means of public process.

While the American Revolution disestablished divine right to rule, the notion was not completely lost. It synthesized into a more secular aspect. The elite were chosen by divine providence to be the fittest to rule and it is a moral hazard to allow the sovereign (whether The People or the crown) to determine their fate. Thus the practical concept of "liberty" in the conservative sense.

In order to conserve the "natural" order of things, the elite must be at liberty to promote the general welfare; and because it must be derived from popular consent, it is necessary to operate as secret sovereigns. This political-economic modeling survives today as we come out of the Great Recession, for example, questioning the legitimacy of elite information channels and networks. To the elite, operating in secret if not with an inscrutable visibility is a patriotic duty--a legacy inherited from the spirit of the Revolution--despite the legal establishment of the natural right of The People to self-determination endowed by the Creator (natural law with the empirical confirmation of a popular consent). The contradiction of values is reconciled by a conservative philosophy that, for example, has resulted in a two-party system in which The People have a choice (confirmation) that conserves (validates) the stakes over time--of, by, and for The People.

Take quantitative easing, for example.

The Great Recession resulted in a massive consolidation of wealth. The detriment exacted is massive, and if that is not enough, The People are being told they must sacrifice even more (make the accumulative benefit even greater) in order to achieve the general welfare.

Of course, according to elite philosophy, The People lack the secret, exclusive knowledge necessary to understand what is really in their self-interest. Like in Plato's Republic, it is necessary for the elite to secretly and inscrutably apply what The People really need, but with the appearance of legitimate popular consent (to falsely confirm the rule of the legal sovereign). That the state must bear false witness to keep the peace is not exactly the pinnacle of virtue but does provide, nevertheless, a practical measure of strength. The ends justifies the means (what a free-market mechanism easily reconciles, keep in mind, without sacrificing liberty, mind you, but by maximizing it).

Bailing out too-big-to-fail, economy-of-scale financial firms was not accomplished with overwhelming popular consent. Quite the contrary, it just adds insult to injury. The People are not so incompetent they cannot see that big, abusive firms are being profitably supported while The People go bankrupt.

While using the funding to keep The People from going bankrupt would keep the system solvent, it appears that the bailout was designed to extend the risk to The People and the reward to the perpetrators, which extends the crisis--unemployment in particular--to an expected value. Unemployment compensation will be allowed to lapse with one job available for every five applicants because it is an expected "value."

Since keeping The People solvent is considered a moral hazard, the assumed value of popular consent inherent to the elitist model (the public trust) has reached the critical limit. It is necessary at this point to appeal to technical, bureaucratic authority to arbitrate (i.e., arbitrage) the value of the risk into the expected distributive value the model assumes. (Remember that the model operates with the null hypothesis: the risk of loss is fully assumed and is discounted, or disconfirmed, to the extent of the distributive value.)

With the extent of the risk fully assumed, its distributive value is technically determined to trickle down (the defining characteristic of the Hamiltonian model along with a regressive tax burden). The central bank adds liquidity that has been consolidated into wealth, quantitatively easing the risk that the wealth will actually have to trickle down.

If the wealth has to actually trickle down, there is not only the risk of loss, but a confirmed expectation to distribute the value to avoid a liquidity crisis. The accumulation of wealth loses its too-big-to-fail, extortionist value if it is expected to reverse a deflationary trend and distribute the value consolidated. The distribution would confirm the elite hypothesis of a general benefit that the elite intentionally fully discount, to the best of their secret-sovereign ability, with the risk of loss always fully assumed by the model. The risk of loss is supposed to be successfully disconfirmed (discounted by the model), not confirmed.

Instead of the accumulated benefit trickling down to pluralize the system, the central bank provides the liquidity, conserving the accumulated value to buy up the expansion which causes the liquidity crisis that bankrupts The People. Quantitative easing occurs to conserve what is too-big-to-fail in a crisis proportion, with the risk of loss fully assumed.

If The People don't understand how conserving the detriment (like losing your job or your home, or just struggling to make ends meet) benefits them, it's because it's a secret. The secret to financial success is embedded in technical complexity so that when The People question the legitimacy of secret information channels and networks to make the market, it is too technical for them to understand how it benefits them, not that it doesn't (with the risk of loss fully assumed).

Secret channels and networks are nothing new, but the perception of it is. The elite model has become more of a debatable proposition than a natural fact of life (fully assumed). Despite the recent electoral gains of Republicans, systematically rigging the risk, and the reward, within secret channels and networks has become the risk to be avoided.

What you know and when you know it is becoming more a measure of culpability and liability than an asset applied to the general will from the top down. This reversal of a cultural sentiment (that the elite have the special privilege--the propriety--to manipulate markets to a general social benefit) confirms that the risk of liability and loss from the top down is, in fact, fully (ontologically) assumed.

Conserving the Value of the Risk

Pending financial reform will conserve the present value of the risk in a fractile, chaotic oscillation.

In order to forge order from the chaos, fitting the assumptions of the Hamiltonian model, the fractile dynamic demands an economy-of-scale efficiency. Reform is designed to conserve a financial system with an efficiency for "making markets" to command the risk.

According to lawmakers and the executive, the reform provides protection for everybody. Main Street is protected from Wall Street, and Wall Street is protected from Main Street.

It is assumed that as long as the risk of systemic failure can be controlled, big financial firms will "make the market" so that the consolidation of risk has useful value other than generating profit without growth--the source of the risk.

The reform does not consider hedge-funds and private equity firms a source of systemic risk, but a source of disinflationary capital, providing financing for small businesses.

The assessement is entirely incorrect. Reform, however, protects tax breaks for hedge-funds and private equity, for example, that do most of their business with Goldman Sachs, and will surely cultivate the next crisis reformers correctly predict, but incorrectly support.

Since pro-growth capital is not likely, having no mandate because the risk of failure will supposedly prevent overleveraging, the reform provides a fail-safe mechanism to protect the public from overaccumulated amounts of leveraged risk. At the same time, the accumulated reward of the risk is protected from the accrued retributive value, conserving the value of the risk.

As financial reform nears reconciliation, support for financial equities supports the hypothesis of conserved risk value.

It was an easy call, clearly indicated by an unwillingness to disaggregate the risk. Instead, reform measures will consolidate financial markets further
in the event of an overleveraged crisis of fractile risk that the Senate Banking Committee chairman says will surely happen.

Despite reform that calls for the orderly resolution of fractile risk, the causal factors of accumulated risk are conserved and supported by the resolution authority, which is exacly what we do not need.

The reform buys-in to the use-value of conserving the risk and the too-big-to-fail organizations that both create the risk and value the presence of the risk into a fractile, chaotic volatility. As the risk compounds and accumulates into a crisis proportion, the technical expertise of big-bank executives and staff that get it there will then resolve the risk and consolidate it into a bigger, too-big-to-fail economy of scale. It is the problem offered as the solution and, again, an easy call.

Despite the authority reform will endow to resolve firms that overleverage the capital into crisis, the cost of unemployment, for example, and lost productivity is not included in the concept of not providing a bailout. These costs are just as much a bailout for too-big-to-fail firms because they benefit from it in addition to the big profits made causing them. The value of the "big risk" is every bit conserved.

Investors can expect the risk differentials to be essentially the same. The daily narrative of present value will set up sudden inversions that require a close monitor of massive accumulation and distribution of capital that manipulate future value with an aversive sentiment.

The reform is not risk averse. It is risk prone, which drives market sentiment into sudden and salient oscillations of greed and fear that support the profitability of too-big-to-fail financial firms, hedge-funds, and private equity adjuncts.

Unfortunately, financial reform will give the problem to be solved the legitimacy of deliberative public process toward securing the general welfare. It will force us into adverse choices that economies of scale bundle (oligopolize) into what only appear to be a bargain in the absence of a free-market, alpha-risk ontology.