So, we see with S&P's downgrade that our economy is overweight with gamma risk. "The risk" is fully gamma--it is saturated with retributive (political) value (like I have been telling you for a very long time) and is at the top of the list of factors S&P identifies as putting our debt at risk of default.
Look at what supports S&P's gamma-risk hypothesis.
We have an increasing debt burden both public and private that consumers cannot pay, and if they are demanded to pay it they will be consuming even less. Thus, the outlook is extremely negative (i.e., the risk proportion is fully gamma).
Improbable as it may be, because the risk has been largely unaccounted for in the gamma dimension--hidden away (avoided) and accumulated into a crisis proportion, the probability of default (deflation) is nearly perfect. We have boxed ourselves into the devil's deal. We are "sandwiched" in detriment. If anything deserves a downgrade, this does!
Suddenly we are accounting for all the risk, which results in a significant risk premium. Having to pay more for the debt increases the negative outlook--it accumulates even more risk. The system is overloaded with Reaganomic detriment, and considering the Budget Control Act supports the trickle-down hypothesis of Reaganonomics the outlook is even more negative (like I've been telling you for quite some time).
Ironically, this is where the extended scheme of magnified detriment blows up in the face of conservatives. Eventually there is no one left to pay the debt but the very rich (the trickle-down hypothesis), and combined with a balanced budget amendment, either they pay it or we default. Since the conservative faction refuses to pay the debt no matter what because it is a "job killer," we have boxed ourselves into another downgrade and a higher debt premium which means the payer (the rich) will have to pay even more. (Like I said...we are officially stupid if not crazy!)
Maybe it's time we start thinking outside the box!
Like I have been telling you for a very long time, the binomial political structure we have only appears to be a stable form of government. While it conserves the stakes over time without much civil disorder, it does not eliminate risk, it accumulates it into an unavoidable, gamma-risk proportion. It boxes us into catastrophic detriment.
It's time to think and act outside the box of operant conditioning that consolidation of power provides and experience real freedom--doing things not because we have to, but because we want to.
Showing posts with label sovereign-debt crisis. Show all posts
Showing posts with label sovereign-debt crisis. Show all posts
Sunday, August 7, 2011
Friday, July 29, 2011
Artificial Risk?
A common assessment of the current sovereign-debt crisis is that it is artificially constructed. What this analysis is essentially saying is that the risk does not present as ontological.
If we thought philosophical analyses are not important or irrelevant, we were wrong.
We detect a lack of apparent ontology because the analytical space is packed with artifice. Just because we tend to nurture nature toward specific performance does not in any way mean that these artifices are unnatural. In fact, this concept of "natural" is completely wrong and analysts that rely on this false valuation of probable risk will get burned by unexpected, trend reversals.
Manipulating nature (risk, for example) does not make the outcome any less ontological, and this is where analysts are presented with the angst-principle and the gamma-risk dimension.
Since angst is a feeling (which tends to be politically accumulated and expressed in the gamma dimension), empirical analysts tend to ignore it as unmeasurable (and, wrongly, unreasonable). Market analysts use the VIX indicator, but it is largely post-hoc data with limited predictive value. Ignoring the angst-principle, however, is like trying to land on the moon by ignoring the effects of gravity. The probability you will be successful is nearly zero, but successfully landing would not be in any way unnatural whether it is by chance alone or not.
The debt-limit debate (the sovereign-debt crisis) is no different. Just because the ceiling can be raised with a routine stroke of the pen does not mean that this is a false crisis. Yes, it may be artificial (a political artifice) but it is not false. The crisis it presents is real and easily predictable in the gamma dimension.
Understand, for example, that the political artifice is packed with retributive value--it is saturated with angst. Not only was the angst (the motivated level of determination) the determining variable that predicts the crisis, but its support and resistance predicts the probable political-economic trend after it.
Without the necessary, conceptual tools, analysts, both political and economic, will quite naturally miss the target.
If we thought philosophical analyses are not important or irrelevant, we were wrong.
We detect a lack of apparent ontology because the analytical space is packed with artifice. Just because we tend to nurture nature toward specific performance does not in any way mean that these artifices are unnatural. In fact, this concept of "natural" is completely wrong and analysts that rely on this false valuation of probable risk will get burned by unexpected, trend reversals.
Manipulating nature (risk, for example) does not make the outcome any less ontological, and this is where analysts are presented with the angst-principle and the gamma-risk dimension.
Since angst is a feeling (which tends to be politically accumulated and expressed in the gamma dimension), empirical analysts tend to ignore it as unmeasurable (and, wrongly, unreasonable). Market analysts use the VIX indicator, but it is largely post-hoc data with limited predictive value. Ignoring the angst-principle, however, is like trying to land on the moon by ignoring the effects of gravity. The probability you will be successful is nearly zero, but successfully landing would not be in any way unnatural whether it is by chance alone or not.
The debt-limit debate (the sovereign-debt crisis) is no different. Just because the ceiling can be raised with a routine stroke of the pen does not mean that this is a false crisis. Yes, it may be artificial (a political artifice) but it is not false. The crisis it presents is real and easily predictable in the gamma dimension.
Understand, for example, that the political artifice is packed with retributive value--it is saturated with angst. Not only was the angst (the motivated level of determination) the determining variable that predicts the crisis, but its support and resistance predicts the probable political-economic trend after it.
Without the necessary, conceptual tools, analysts, both political and economic, will quite naturally miss the target.
Monday, July 11, 2011
Organizational Size and Pluralistic Tendencies
As the drama unfolds over preventing an improbable default of our sovereign debt, we can plainly see binomialism at work.
The drama is just that--political theater. Since the probable, binomially determined alternatives are obviously limited to the "dummy" variables, observing the determination of our fate is but a form of entertainment--an art form to make consolidation of power appear pluralistically legitimate in the republican form.
As we discussed in previous articles, binomialism is a large, consolidated, organized means of conserving the stakes over time by toggling between two variables. It is an organized tautology--a large, pre-determined, bureaucratic organization that delivers stable, routine results.
The result of consolidation--crises--is fully expected, and since the risk of loss is fully assumed, the risk is modeled in the republican form to safely vary within the limits of the routine (pre-determined) probability. The risk, you see, does not reduce, it is managed (consolidated) to yield a stable distribution of power (and wealth) over time at a highly predictable frequency, which is what we can clearly see happening now.
Although the risk is politically organized to be reduced by keeping it consolidated, it is actually being accumulated. Eventually, the value is so accumulated that a distribution occurs beyond the normally expected value. We have then, for example, the Tea-Party movement moving the realpolitique toward a more pluralistic distribution.
Our founders intended for power to never get so big and powerful that "We the People" have no authority to self-determine. We are assured a system of checks and balances (pluralism) by Constitutional authority. The natural tendency for power to collapse into crisis when it becomes so-called "too big to fail" is modeled as a fully assumed risk of loss in priority.
Since the pluralistic tendency is 100 percent, it is foolish to think you can be so powerful you cannot fail. It is practical, then, to systematically model the risk for cyclical consolidation and deconsolidation over time without loss of principal. Risk is proportioned to never be so diffused that the principal amount of power can be permanently lost. The proportion is effectively structured to conserve over time, conceived to ensure the general welfare (i.e., to legally, Constitutionally, ensure Pareto Optimality without instability). Federalists have been doing this for 235 years. It is the two-party system, and the Pareto-Optimal jurisprudence, we see in operation today.
Interjection of a third-party element destabilizes the binomial system of governance, and it is important not to characterize it as a duopoly. It is not a duopoly, it is a monopoly. The two variables operate together to monopolize power. The duality aspect is a psychological trick--it is a false pluralism that the Tea Party, for example, is Constitutionally empowered to check and balance.
To avoid more accountability, the third element must be co-opted--it must be organized, absorbed, into what is otherwise too-big to fail. As the organization gets bigger, more consolidated and more unaccountable, it is more likely to fail, collapse, under the weight of an accumulated, retributive value.
Yes, the bigger it is, the harder it falls. It is important to keep the system as deconsolidated as possible, but doing that is antithetical to the working model we have now. Conventional wisdom dictates: the bigger the better to control the risk.
Organizations that are are so big they can control the risk are largely unaccountable. They are intended to be unaccountable, by virtue of size, because accountability, or the lack of it, measures power--it measures who is in control and who is not.
The bigger, the more unaccountable, and the more unaccountable, the more risk accumulates unaccounted for. It gains a gamma-risk proportion with the benefit (and detriment) of being too big to fail. However, it really isn't too big to fail because the legitimate risk (pluralistic accountability) is falsely valued.
Legitimate value is missing and largely unaccounted for in the gamma, too-big-to-fail dimension. Legitimate risk is avoided (structured to accumulate, or transfer, to the future both politically and economically), which systemically, as we come to find out over and over again, is highly detrimental. It is detrimental even for a power elite who mistakenly assume they can completely self-determine without accountability (without risk) through ever-larger economies of scale.
An organization like the Tea Party is to prevent the risk from transferring to the future. It is demanding an immediate accounting of the risk, bringing us to the point of possible sovereign-debt default, improbable as that really is because the system is politically modeled (it is designed) for continuous debt accumulation, not default. The risk is always transferred to the future, by default, with the "full faith and credit" of the sovereign state (with the force and legitimacy of public authority).
Government is the ultimate entity of a truly too-big-to-fail proportion. It is the repository for all the accumulated risk, expressed as public debt. It is a place in which to dump our toxic assets and refinance the debt without fear of deconsolidation (default and political reorganization of the risk proportion). Risk can safely accumulate and reside there indefinitely...until, of course, its retributive value is demanded for redemption, which requires deconsolidation (a full, legitimate accounting) of the risk proportion, and is essentially what the Tea Party is doing.
Default on the national debt is exactly what we are politically organized to prevent on an ever-larger scale of too-big-to-fail. Deregulation, for example, demands a more deconsolidated marketplace by removing barriers, which means it will not happen; and sovereign default will demand a full accounting of the risk buried in that huge, infinitesimally larger number we call the national debt, which means it will not happen. It is political theater designed to make it look like government is the problem, and if you remove that appearance (that false valuation), a real, empirically verifiable accountability appears. If government is not the problem, then what is?
Neither party really wants to deregulate, and both parties want to raise the debt limit because that is where all the risk is stored to be managed without real, easily verifiable accountability (without deconsolidation). In the same way, we don't have a balanced budget amendment because it increases accountability. A clear accounting of the risk would gain current, present, empirical value. If government spending does not cause slow growth and recessionary trending, then what does?
Requiring a balanced budget is much more likely to require a more progressive tax code to balance it. The hypothesis that budget deficits cause inflation and unemployment rather than being the effect will be empirically tested (which is what "The Revolution," and The Enlightenment, was, and still is, all about...this is what the foundation of our political heritage really is).
To conserve the consolidation of power, an empirical test is a political risk to be avoided like the plague, and so we have a third-party element emerging to interpolate the missing value of risk unaccounted for because it is always being avoided and accumulated into an oversized, too-big-to-fail (gamma-risk) proportion. That proportion of unaccountability, hidden within the oversized dimensions of power to command and control the distribution of risk and the accumulation of reward without liability, is being tested by the natural emergence of a pluralistic, third-party element. It is a nascent occurrence of deconsolidated risk, currently being expressed as an otherwise improbable default on our sovereign debt.
The Tea Party is a precursor. It begins a larger movement--a natural tendency--toward a more empirically verifiable accountability. While risk is deliberately structured to accumulate, or transfer, to the future, both politically and economically, in a too-big-to-fail proportion, it is, at the same time, accouchering its antithetical form.
All is not lost. There is still a natural tendency to a more pluralistic proportion in which our problems will more easily resolve in the future.
The drama is just that--political theater. Since the probable, binomially determined alternatives are obviously limited to the "dummy" variables, observing the determination of our fate is but a form of entertainment--an art form to make consolidation of power appear pluralistically legitimate in the republican form.
As we discussed in previous articles, binomialism is a large, consolidated, organized means of conserving the stakes over time by toggling between two variables. It is an organized tautology--a large, pre-determined, bureaucratic organization that delivers stable, routine results.
The result of consolidation--crises--is fully expected, and since the risk of loss is fully assumed, the risk is modeled in the republican form to safely vary within the limits of the routine (pre-determined) probability. The risk, you see, does not reduce, it is managed (consolidated) to yield a stable distribution of power (and wealth) over time at a highly predictable frequency, which is what we can clearly see happening now.
Although the risk is politically organized to be reduced by keeping it consolidated, it is actually being accumulated. Eventually, the value is so accumulated that a distribution occurs beyond the normally expected value. We have then, for example, the Tea-Party movement moving the realpolitique toward a more pluralistic distribution.
Our founders intended for power to never get so big and powerful that "We the People" have no authority to self-determine. We are assured a system of checks and balances (pluralism) by Constitutional authority. The natural tendency for power to collapse into crisis when it becomes so-called "too big to fail" is modeled as a fully assumed risk of loss in priority.
Since the pluralistic tendency is 100 percent, it is foolish to think you can be so powerful you cannot fail. It is practical, then, to systematically model the risk for cyclical consolidation and deconsolidation over time without loss of principal. Risk is proportioned to never be so diffused that the principal amount of power can be permanently lost. The proportion is effectively structured to conserve over time, conceived to ensure the general welfare (i.e., to legally, Constitutionally, ensure Pareto Optimality without instability). Federalists have been doing this for 235 years. It is the two-party system, and the Pareto-Optimal jurisprudence, we see in operation today.
Interjection of a third-party element destabilizes the binomial system of governance, and it is important not to characterize it as a duopoly. It is not a duopoly, it is a monopoly. The two variables operate together to monopolize power. The duality aspect is a psychological trick--it is a false pluralism that the Tea Party, for example, is Constitutionally empowered to check and balance.
To avoid more accountability, the third element must be co-opted--it must be organized, absorbed, into what is otherwise too-big to fail. As the organization gets bigger, more consolidated and more unaccountable, it is more likely to fail, collapse, under the weight of an accumulated, retributive value.
Yes, the bigger it is, the harder it falls. It is important to keep the system as deconsolidated as possible, but doing that is antithetical to the working model we have now. Conventional wisdom dictates: the bigger the better to control the risk.
Organizations that are are so big they can control the risk are largely unaccountable. They are intended to be unaccountable, by virtue of size, because accountability, or the lack of it, measures power--it measures who is in control and who is not.
The bigger, the more unaccountable, and the more unaccountable, the more risk accumulates unaccounted for. It gains a gamma-risk proportion with the benefit (and detriment) of being too big to fail. However, it really isn't too big to fail because the legitimate risk (pluralistic accountability) is falsely valued.
Legitimate value is missing and largely unaccounted for in the gamma, too-big-to-fail dimension. Legitimate risk is avoided (structured to accumulate, or transfer, to the future both politically and economically), which systemically, as we come to find out over and over again, is highly detrimental. It is detrimental even for a power elite who mistakenly assume they can completely self-determine without accountability (without risk) through ever-larger economies of scale.
An organization like the Tea Party is to prevent the risk from transferring to the future. It is demanding an immediate accounting of the risk, bringing us to the point of possible sovereign-debt default, improbable as that really is because the system is politically modeled (it is designed) for continuous debt accumulation, not default. The risk is always transferred to the future, by default, with the "full faith and credit" of the sovereign state (with the force and legitimacy of public authority).
Government is the ultimate entity of a truly too-big-to-fail proportion. It is the repository for all the accumulated risk, expressed as public debt. It is a place in which to dump our toxic assets and refinance the debt without fear of deconsolidation (default and political reorganization of the risk proportion). Risk can safely accumulate and reside there indefinitely...until, of course, its retributive value is demanded for redemption, which requires deconsolidation (a full, legitimate accounting) of the risk proportion, and is essentially what the Tea Party is doing.
Default on the national debt is exactly what we are politically organized to prevent on an ever-larger scale of too-big-to-fail. Deregulation, for example, demands a more deconsolidated marketplace by removing barriers, which means it will not happen; and sovereign default will demand a full accounting of the risk buried in that huge, infinitesimally larger number we call the national debt, which means it will not happen. It is political theater designed to make it look like government is the problem, and if you remove that appearance (that false valuation), a real, empirically verifiable accountability appears. If government is not the problem, then what is?
Neither party really wants to deregulate, and both parties want to raise the debt limit because that is where all the risk is stored to be managed without real, easily verifiable accountability (without deconsolidation). In the same way, we don't have a balanced budget amendment because it increases accountability. A clear accounting of the risk would gain current, present, empirical value. If government spending does not cause slow growth and recessionary trending, then what does?
Requiring a balanced budget is much more likely to require a more progressive tax code to balance it. The hypothesis that budget deficits cause inflation and unemployment rather than being the effect will be empirically tested (which is what "The Revolution," and The Enlightenment, was, and still is, all about...this is what the foundation of our political heritage really is).
To conserve the consolidation of power, an empirical test is a political risk to be avoided like the plague, and so we have a third-party element emerging to interpolate the missing value of risk unaccounted for because it is always being avoided and accumulated into an oversized, too-big-to-fail (gamma-risk) proportion. That proportion of unaccountability, hidden within the oversized dimensions of power to command and control the distribution of risk and the accumulation of reward without liability, is being tested by the natural emergence of a pluralistic, third-party element. It is a nascent occurrence of deconsolidated risk, currently being expressed as an otherwise improbable default on our sovereign debt.
The Tea Party is a precursor. It begins a larger movement--a natural tendency--toward a more empirically verifiable accountability. While risk is deliberately structured to accumulate, or transfer, to the future, both politically and economically, in a too-big-to-fail proportion, it is, at the same time, accouchering its antithetical form.
All is not lost. There is still a natural tendency to a more pluralistic proportion in which our problems will more easily resolve in the future.
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