The Heritage Foundation, for example, says the consequences for not passing the Wall Street bail-out legislation will be quick and sure.
If you own and operate a small business and experiencing the crunch on cash flow and need to borrow to continue operations, you will be sanctioned quick and sure.
Notice how the risk, the sanction, is a function of a firm's size. The bigger the firm--the more cash (solvency) you have to leverage in a credit economy--the more this Hamiltonian sanction is positive and not negative.
Understanding the mathematics of leverage finance is key to understanding the operation of the Hamiltonian model of political economy, identifying the problem and applying a fitting solution (see the article at griffithlighton.blogspot,com}.
The argument is being made that not passing the bail-out plan is causing negative market sentiment. That is a fraud and is indicative of what is wrong with the analytics.
Market sentiment was negative going into the legislative process with low confidence that the proposed plan could reverse the deflationary trend. The continued negative sentiment is just a confirmed lack of confidence of a legislative measure that is not characteristically Hamiltonian and the model of what does not work!
Showing posts with label market sentiment. Show all posts
Showing posts with label market sentiment. Show all posts
Tuesday, September 30, 2008
Re-Capitalizing the Benefit
The no-confidence market sentiment for a top-down (disconfirmed trickle-down theory) bail out plan will quickly go strong positive with its antithesis: a bottom-up bail out that would be a re-capitalization of the benefit.
Recapitalizing the benefit will restore the liquidity not lost, but being withheld from the market waiting to be rewarded for its inefficiencies, and the narrow benefit it incurs to be trickled down if the right incentive is provided.
Lowering the capital-gains tax to lure liquidity back in just exacerbates the problem because, it is the problem. Rewarding the perverse incentive with the means to be perverse, I dare say, is more perverse!
Our economy--the credit economy (needing to borrow to make ends meet)--is being held hostage to a practical solution that causes the problem.
Regressive tax policy and deregulation of the financial markets without ensuring a self-correcting, free-market mechanism has produced an enormous benefit and detriment. The way to quickly and surely reduce the cost, and the risk, of re-capitalizing is to redistribute the benefit to the cost side of the equation. That is, by recapitalizing the benefit.
There is the very clear risk, given the failure of trickle-down economic measures, that top-down measures to fix it will not work, throwing away good money after bad. The sentiments of Republicans for instilling the bail-out bill with free-market "principles" by, for example, reducing the capital gains tax on the consolidated capital is one of those disconfirmed principles they love to validate with legislative authority that does more to cause the problem than effect a solution.
Interesting how bi-partisanship cannot produce an empirical solution to this problem. The only solution available is Hamiltonian, which is the problem.
While Obama and Biden will likely apply a more empirically verifiable, and Jeffersonian, approach to this problem, and McCain/Palin, so full of their conservative "principles" (for change?), most assuredly will not, the choice, both politically and economically, is all too clear if a genuine solution is what you want.
The Hamiltonian tenet that it is a representative's responsibility to give the governed what they need, rather than what they want, in better judgement is not well supported here, if not generally just a whole lot of Hamiltonian hooey designed to redefine and misapply The People's self-interest and the General Welfare.
Confine the principles of conservative economics to the dustbin of miserable failures, empirically verified.
Choose the way of an effectively pro-growth, low risk, investment strategy now!
Recapitalize the benefit from the bottom up.
Vote for Obama/Biden to sustain it.
Recapitalizing the benefit will restore the liquidity not lost, but being withheld from the market waiting to be rewarded for its inefficiencies, and the narrow benefit it incurs to be trickled down if the right incentive is provided.
Lowering the capital-gains tax to lure liquidity back in just exacerbates the problem because, it is the problem. Rewarding the perverse incentive with the means to be perverse, I dare say, is more perverse!
Our economy--the credit economy (needing to borrow to make ends meet)--is being held hostage to a practical solution that causes the problem.
Regressive tax policy and deregulation of the financial markets without ensuring a self-correcting, free-market mechanism has produced an enormous benefit and detriment. The way to quickly and surely reduce the cost, and the risk, of re-capitalizing is to redistribute the benefit to the cost side of the equation. That is, by recapitalizing the benefit.
There is the very clear risk, given the failure of trickle-down economic measures, that top-down measures to fix it will not work, throwing away good money after bad. The sentiments of Republicans for instilling the bail-out bill with free-market "principles" by, for example, reducing the capital gains tax on the consolidated capital is one of those disconfirmed principles they love to validate with legislative authority that does more to cause the problem than effect a solution.
Interesting how bi-partisanship cannot produce an empirical solution to this problem. The only solution available is Hamiltonian, which is the problem.
While Obama and Biden will likely apply a more empirically verifiable, and Jeffersonian, approach to this problem, and McCain/Palin, so full of their conservative "principles" (for change?), most assuredly will not, the choice, both politically and economically, is all too clear if a genuine solution is what you want.
The Hamiltonian tenet that it is a representative's responsibility to give the governed what they need, rather than what they want, in better judgement is not well supported here, if not generally just a whole lot of Hamiltonian hooey designed to redefine and misapply The People's self-interest and the General Welfare.
Confine the principles of conservative economics to the dustbin of miserable failures, empirically verified.
Choose the way of an effectively pro-growth, low risk, investment strategy now!
Recapitalize the benefit from the bottom up.
Vote for Obama/Biden to sustain it.
Defeated Bail-Out Bill
The defeated bail-out bill indicates a bi-partisan lack of confidence to take the liquidity missing from the financial markets off the sidelines.
Remember that the lack of liquidity--the illiquidity that is our current liquidity crisis--is not money that has just evaporated, or lost, it is capital that has been comsolidated, accumulated, and that causes deflation (a recessionary trend). The crisis is technically indicated, and predicted, by data presented in the IRS bulletins on income distribution, which shows an accumulation in the upper income braket not seen since just before the Great Depression.
The most effective way to reverse the liquidity crisis is to deconsolidate the capital, what the bail out will not effectively do without being from the bottom up. That would be the quickest and most effective way to reverse the deflationary trend. The lack of confidence in a top-down (Hamiltonian-style) bailout was very clearly indicated by worldwide negative equity markets.
Bailing out Wall Street by buying the bad debt (the "over-accumulated" wealth) will do little to unfreeze the liquidity sitting in private equity and under the control of hedge fund managers waiting for a reduction in the capital gains tax that causes the perverse incentives that results in the "over-leveraging" of capital to produce profit without growth (without expanding the pie), which is the problem.
What we are experiencing is a return to classicism, moyenage, and worldwide markets are much more progressive, much more sophisticated, than that.
Remember that the lack of liquidity--the illiquidity that is our current liquidity crisis--is not money that has just evaporated, or lost, it is capital that has been comsolidated, accumulated, and that causes deflation (a recessionary trend). The crisis is technically indicated, and predicted, by data presented in the IRS bulletins on income distribution, which shows an accumulation in the upper income braket not seen since just before the Great Depression.
The most effective way to reverse the liquidity crisis is to deconsolidate the capital, what the bail out will not effectively do without being from the bottom up. That would be the quickest and most effective way to reverse the deflationary trend. The lack of confidence in a top-down (Hamiltonian-style) bailout was very clearly indicated by worldwide negative equity markets.
Bailing out Wall Street by buying the bad debt (the "over-accumulated" wealth) will do little to unfreeze the liquidity sitting in private equity and under the control of hedge fund managers waiting for a reduction in the capital gains tax that causes the perverse incentives that results in the "over-leveraging" of capital to produce profit without growth (without expanding the pie), which is the problem.
What we are experiencing is a return to classicism, moyenage, and worldwide markets are much more progressive, much more sophisticated, than that.
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