The increasing gamma risk should have affected the short wave indicators significantly.
Iran can very significantly disrupt the supply of oil by intimidation in the Persian Gulf region. The increasing gamma risk with a very high probability will keep fuel prices under support pressure. The support does not have to be anything but an aggravation and intimidation factor, and that will affect the short-term trend, keeping the economy in a deflationary tendency.
Deflationary risk in high probability supports a continued accumulation phase of the business cycle. The cash accumulated from cost reduction revenues (unemployment) will be used for mergers and acquisitions, providing some support for equities. The short-term trend will not reflect the gamma risk and will be susceptible to unexpected reversal of investor sentiment from the big market movers.
The geo-political gamma risk conveniently provides an excuse for continuing the accumulation phase of the business cycle while the government engages in expansionist, distribution-phase politics. The value being provided by government will be consolidated by the big financials engaged in activity that is emblematic of "too big to fail." That will increase the earnings of financials while depreciating the fundamental value of the distribution--economic growth, which supports the value of the dollar and reduces the incentive for gamma-risk support of oil prices.
The antinomy of inflationary/deflationary pressure creates havoc for short-wave analytics with the predictors being squarely determined by the big commanders of market movements. The big movers rely on the short-wave indicators to falsely signal a trend to be commanded in reversal, but with the good reason, the excuse, of the gamma risk.
Not including the gamma risk is a critical error that keeps small investors following rather than predicting probable trends. Rather than predicting sentiment, the indicators cause it. Keeping the accumulation phase of the cycle alive functions, then, as a means of consolidating the plurality of value that makes for free-market economics and "cures" the problem of "too big to fail."
Showing posts with label small investors. Show all posts
Showing posts with label small investors. Show all posts
Tuesday, September 29, 2009
Tuesday, October 28, 2008
It's Only Money
The Perception of Value and Money
If you have been following the analytics on the current economic crisis, what most analysts agree on is that it is easy to overvalue assets and leverage into a crisis.
We need to operate with a predictive utility that allows for policies and programs that avoid crisis.
I am forever hearing that the candidates and the pundits did not foresee the current economic crisis. Punditry requires an understanding that fundamentally makes the pundit aware of the effects of overvalued assets and the leveraging of value that is empirically measured by the value of the currency--money.
Rather than the complexity, a willingness to ignore the indicators of crisis, or at least not account for it, explains the lack of predictive utility, and reflects a generally conservative bias.
Biased control over policy is something to be marginalized for a People's Pragmatism in which a predictive utility is operationalized to provide policies and programs that are devised, implemented and evaluated with an empirical methodology of verification. The best verification is an easy verification of The People, with the true consent of the governed.
So what is your house really worth? What's your 401k really worth? What's the value of your labor really worth? The empirical measure is the value of the money supply--a Keynesian measure of supply and demand--being determined by financial elits that consider themselves to be better than the mere sovereignty of The People, and should be rewarded with value that they determine to be more for them and less for The People.
That added, elite value must be, through a market system, leveraged from The People through the invisible, inscrutible, gnostic mysticism of monetary mechanics. The legitimacy is, however, easily verifiable: does it result in a crisis of technical re-pricing of risk and valuation of assets that just results in the wealthy elit having more and The People having less? If yes, then the process is verifiably illegitimate and does not have the legal consent of the governed. Throw it out! and test another hypothesis. Don't just keep making the same mistake over and over. That's idiocy! The People are not idiots! They are the trusting victims of elits that rig the system to violate the public trust without accountability.
A system is needed, therefore, that allows for the necessary ease of direct accountability, an ease of verification and a ready sanction. That mechanism is a free and unconsoolidated marketplace. Without it, there is just an eternal sea of arbitrary valuations that require technical correction with punctuated crisis events.
For example, the samll investor never knows what an equity is really worth because the people that manage the assets are apt to commit a fraud on that value and, often can get away with it at a huge profit. The real value is only known on the inside. When the truth is revealed, the value is lost to the outsider and results in a zer-sum gain for the fraud.
A free market that allows for a more equitable bid and a quick and sure replevin of ill-gotten gain will assuredly minimize the fraud and effect a verifiable valuation in priority.
Insurance companies and auto manufacturers are now in line to receive public-financed bail out funding. They are organized to be too big to fail. Their valuation, therefore, is determined by the organizational model. That model can be easily reversed to produce a testable, verifiable, easily measureable result that is likely to be the reverse of the failed alternative.
Instead of publicly financing to merge them up into inefficient behemoths prone to fraud and all manner of abuse, finance them into an organized technology that requires a clearly accountable efficiency, responsibility, in order to survive. The way the market is being financed now, in crisis to crisis, is to reward fraud, abuse and inefficiency. The bigger and, therefore, more apt to be overvalued with corruption and inefficiencies, the more likely to survive.
That not allowing for multi-million dollar compensation of executives that drive our economy into crisis is considered to be a moral hazard because it discourages "the best and the brightest" from seeking the top positions of decisional power and administration of power is quite telling. That valuation is from the top down, not the bottom up valuation of a free-market accountability. The value is the arbitrary product of a command structure of power (elitism), not the consent of the governed (pluralism).
The Fed is poised to reduce the interest rate a half point, a top-down measure that will devalue the currency. It will not spur growth, it will, rather, give the banks an additional spread on the leverage which distorts valuations from the top down.
The effect of all this support for inefficiency accumulates in the value of the national debt which affects the value of the currency, and that serves to arbitrate the value of your home, your savings, the value of your labor, instead of your direct accountability in the marketplace. The system is so huge that it seems out of our control, and money is so readily handed out to reward corrupt inefficiencies that it is trivialized. "It's only money." The value of The People is trivialized right along with it. It's time for that to change!
It's time for change we need!
Obama/Biden 2008!
If you have been following the analytics on the current economic crisis, what most analysts agree on is that it is easy to overvalue assets and leverage into a crisis.
We need to operate with a predictive utility that allows for policies and programs that avoid crisis.
I am forever hearing that the candidates and the pundits did not foresee the current economic crisis. Punditry requires an understanding that fundamentally makes the pundit aware of the effects of overvalued assets and the leveraging of value that is empirically measured by the value of the currency--money.
Rather than the complexity, a willingness to ignore the indicators of crisis, or at least not account for it, explains the lack of predictive utility, and reflects a generally conservative bias.
Biased control over policy is something to be marginalized for a People's Pragmatism in which a predictive utility is operationalized to provide policies and programs that are devised, implemented and evaluated with an empirical methodology of verification. The best verification is an easy verification of The People, with the true consent of the governed.
So what is your house really worth? What's your 401k really worth? What's the value of your labor really worth? The empirical measure is the value of the money supply--a Keynesian measure of supply and demand--being determined by financial elits that consider themselves to be better than the mere sovereignty of The People, and should be rewarded with value that they determine to be more for them and less for The People.
That added, elite value must be, through a market system, leveraged from The People through the invisible, inscrutible, gnostic mysticism of monetary mechanics. The legitimacy is, however, easily verifiable: does it result in a crisis of technical re-pricing of risk and valuation of assets that just results in the wealthy elit having more and The People having less? If yes, then the process is verifiably illegitimate and does not have the legal consent of the governed. Throw it out! and test another hypothesis. Don't just keep making the same mistake over and over. That's idiocy! The People are not idiots! They are the trusting victims of elits that rig the system to violate the public trust without accountability.
A system is needed, therefore, that allows for the necessary ease of direct accountability, an ease of verification and a ready sanction. That mechanism is a free and unconsoolidated marketplace. Without it, there is just an eternal sea of arbitrary valuations that require technical correction with punctuated crisis events.
For example, the samll investor never knows what an equity is really worth because the people that manage the assets are apt to commit a fraud on that value and, often can get away with it at a huge profit. The real value is only known on the inside. When the truth is revealed, the value is lost to the outsider and results in a zer-sum gain for the fraud.
A free market that allows for a more equitable bid and a quick and sure replevin of ill-gotten gain will assuredly minimize the fraud and effect a verifiable valuation in priority.
Insurance companies and auto manufacturers are now in line to receive public-financed bail out funding. They are organized to be too big to fail. Their valuation, therefore, is determined by the organizational model. That model can be easily reversed to produce a testable, verifiable, easily measureable result that is likely to be the reverse of the failed alternative.
Instead of publicly financing to merge them up into inefficient behemoths prone to fraud and all manner of abuse, finance them into an organized technology that requires a clearly accountable efficiency, responsibility, in order to survive. The way the market is being financed now, in crisis to crisis, is to reward fraud, abuse and inefficiency. The bigger and, therefore, more apt to be overvalued with corruption and inefficiencies, the more likely to survive.
That not allowing for multi-million dollar compensation of executives that drive our economy into crisis is considered to be a moral hazard because it discourages "the best and the brightest" from seeking the top positions of decisional power and administration of power is quite telling. That valuation is from the top down, not the bottom up valuation of a free-market accountability. The value is the arbitrary product of a command structure of power (elitism), not the consent of the governed (pluralism).
The Fed is poised to reduce the interest rate a half point, a top-down measure that will devalue the currency. It will not spur growth, it will, rather, give the banks an additional spread on the leverage which distorts valuations from the top down.
The effect of all this support for inefficiency accumulates in the value of the national debt which affects the value of the currency, and that serves to arbitrate the value of your home, your savings, the value of your labor, instead of your direct accountability in the marketplace. The system is so huge that it seems out of our control, and money is so readily handed out to reward corrupt inefficiencies that it is trivialized. "It's only money." The value of The People is trivialized right along with it. It's time for that to change!
It's time for change we need!
Obama/Biden 2008!
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