Commerce reported an "unanticipated" 4% drop in housing starts.
That's all? Four percent!
Foreclosures are at a high not seen since The Great Depression. New homes were unaffordable when credit was available. Even more unaffordable now, if not prohibitive, even with a massive decline in value. So, what is so unanticipated about the decline except that the real estate cohort is so stupid with greed that they will keep building houses nobody but the very rich can afford to buy. They apparently are graduates of the Ivy-League Bush/McCain school of economics! They apparently believe in not spreading the wealth around!
It is the same with reports on the oil and gas inventory data.
We can have these extremely complex derivative instruments of finance, but we cannot figure out how much oil and gas we have on hand? Well, you had to buy it, didn't you? It's just a way to manipulate the price for a capital gain. It is a fraud in the marketplace. It is what is wrong with it. It is why we don't trust each other to lend the money we need to operate the economy without a big crisis, without a big risk, without the sure probability of failure with entities that are too big to be allowed to fail and continue to operate our economy in a crisis mode.
Ensuring a free and unconsolidated marketplace in priority sanctions the frauds in priority. If we are to be incredulous about it, so let's test it. What do we have to lose...fraud in the marketplace, a crisis of confidence?!
Invest the economy to produce innovative economic growth, not induce innovative forms of fraud!
If you believe in the General Welfare of protecting the concentration of capital, the results will be fully "unanticipated."
Obama/Biden...please!
Friday, October 17, 2008
Managing The Capital
Circunstances for the way The Capital is organized to be managed change, but the outcome is the same. Over the course of U.S. political-economic history, statesmen and entrepreneur-statesmen wrestled over whether the banking system should be public or private enterprise.
Where Jefferson wanted to keep the financial system small, private and parochial, Hamilton wanted to establish a national bank with regional branches under a central banking authority, much the way it is organized today, but our financial system is privately owned under private bureaucratic authority of the Federal Reserve Bank, allowing for a Jeffersonian legitimacy with Hamiltonian results.
For Jefferson, having a national bank was a sure way to consolidate power for exploitation of The People like the monarchs did. Hamilton knew that without a central bank with a common currency and coordinated action, economic development for nation building is severely restricted, and he was right, as Jeffersonian Republicans quickly realized.
After the War of 1812, a central means of finance was clearly needed and Jefferonian Republicans occupying the executive went to a national banking system to coordinate national production and build needed infrastructure. Western expansion beyond the Appalachians was financed by the central banking system. The financiers in the system leveraged the assets based on the appreciated value of the land (the labor being put into it to make it productive), so even land that was not productive became overvalued (a bubble).
Of course, that bubble burst and the leverage scheme, the pyramid scheme of borrowed money from the central banking system, collapsed, or as we call it today, unwound.
Banks could not repay the loans from the central bank and had to foreclose on the settlers. This was the panic of 1819. The workers lost everything and moved back to the cities in the East. Now, our Ivy League economists are telling us that the loss of value was just an imaginary value (the bubble). No, the value was collateralized by the labor value and was foreclosed on--it was consolidated, but we are not allowed to talk about that part of it without invoking the fear of socialism.
Instead of fear, and an apoplectic acceptance of the status quo, the virtue, the strength, of our intellect.
Management of The Capital needs to be decentralized for The People. This does not mean we are going to bomb ourselves back to the stone age! Neo-conservatives want us to believe that because it will preserve the power of concentrated capital to maintain a suboptimal sharing of the wealth, and power, or what is wrong with it, just as Jefferson anticipated.
Obama/Biden!
Where Jefferson wanted to keep the financial system small, private and parochial, Hamilton wanted to establish a national bank with regional branches under a central banking authority, much the way it is organized today, but our financial system is privately owned under private bureaucratic authority of the Federal Reserve Bank, allowing for a Jeffersonian legitimacy with Hamiltonian results.
For Jefferson, having a national bank was a sure way to consolidate power for exploitation of The People like the monarchs did. Hamilton knew that without a central bank with a common currency and coordinated action, economic development for nation building is severely restricted, and he was right, as Jeffersonian Republicans quickly realized.
After the War of 1812, a central means of finance was clearly needed and Jefferonian Republicans occupying the executive went to a national banking system to coordinate national production and build needed infrastructure. Western expansion beyond the Appalachians was financed by the central banking system. The financiers in the system leveraged the assets based on the appreciated value of the land (the labor being put into it to make it productive), so even land that was not productive became overvalued (a bubble).
Of course, that bubble burst and the leverage scheme, the pyramid scheme of borrowed money from the central banking system, collapsed, or as we call it today, unwound.
Banks could not repay the loans from the central bank and had to foreclose on the settlers. This was the panic of 1819. The workers lost everything and moved back to the cities in the East. Now, our Ivy League economists are telling us that the loss of value was just an imaginary value (the bubble). No, the value was collateralized by the labor value and was foreclosed on--it was consolidated, but we are not allowed to talk about that part of it without invoking the fear of socialism.
Instead of fear, and an apoplectic acceptance of the status quo, the virtue, the strength, of our intellect.
Management of The Capital needs to be decentralized for The People. This does not mean we are going to bomb ourselves back to the stone age! Neo-conservatives want us to believe that because it will preserve the power of concentrated capital to maintain a suboptimal sharing of the wealth, and power, or what is wrong with it, just as Jefferson anticipated.
Obama/Biden!
Thursday, October 16, 2008
The Leverage Leviathan
The Computer Modeling of Leverage Finance
There is a description of the crisis we are in that attributes it to the computer modeling of profiteering. The implication is that the computer modeling turned capitalism into an out-of-control leviathan of leverage finance.
At the time of the Industrial Revolution, capitalists heralded the model of finance that produced profits exponentially by representing the value of risk of investment (growth) with the highest reward (profit). Since monetarism had not been invented yet, that extra value had to come from labor. This, according to the capitalist, is a non-zero-sum game because as long as the risk is not impeded, by government authority for example, the risk to expand the economy will always be taken and labor will always benefit from growth.
While the high return, the reward, was not assured, the prospect of the reward always drives the risk, and besides, you can buy insurance to hedge the risk, like credit default swaps.
Critics of the classic model noticed that while the model created wealth, it did not share it. Doing the math, the model was a zero-sum and the exponential value represented value lost, not really gained (not a win-win) so that after running the program the model blows up at the end, kind of like what we have now.
One sure way, the capitalist learned, to hedge the risk of failure and assure the high return is to be too big to fail. Monetarism was invented and the money supply expands to produce an innovation like computer programming to manage complex derivative instruments that produce exponential profit without risk, but blows up at the end. That's ok though, because you are too big to fail, and just as in the old days of classic capitalism, the competition is too small to survive.
To imply that the computer programmers created a leverage leviathan they could not control is perfect nonsense. The outcome is the product of classic empirical capitalism. You can paint a picture of it or snap a digital image of it and it is still a big ugly monster that blows up at the end!
The reason capitalism fails its pluralist, populist legitimacy is because, while it creates wealth, it does not properly share it. It consolidates it.
Not properly sharing the wealth is why the creative creature of capitalism always turns into a big ugly monster that just gets bigger and bigger till it just blows up at the end and causes a big mess...it causes crisis.
Since not sharing the wealth is what is wromg with it, sharing the wealth is not something to be afraid of. Would someone please explain that to John McCain.
All of us need to understand that it is the consolidation of power that is the determining variable. The capital exists as long as there is an economy in operation. We are not going to be rid of The Capital. The question is, are we going to manage it for The People.
Managing The Capital for The People is to share the wealth.
Don't buy arguments that are designed to make you fear doing the right thing, and do not allow those that will make you fear the moral imperative access to power.
Vote for Obama/Biden!
There is a description of the crisis we are in that attributes it to the computer modeling of profiteering. The implication is that the computer modeling turned capitalism into an out-of-control leviathan of leverage finance.
At the time of the Industrial Revolution, capitalists heralded the model of finance that produced profits exponentially by representing the value of risk of investment (growth) with the highest reward (profit). Since monetarism had not been invented yet, that extra value had to come from labor. This, according to the capitalist, is a non-zero-sum game because as long as the risk is not impeded, by government authority for example, the risk to expand the economy will always be taken and labor will always benefit from growth.
While the high return, the reward, was not assured, the prospect of the reward always drives the risk, and besides, you can buy insurance to hedge the risk, like credit default swaps.
Critics of the classic model noticed that while the model created wealth, it did not share it. Doing the math, the model was a zero-sum and the exponential value represented value lost, not really gained (not a win-win) so that after running the program the model blows up at the end, kind of like what we have now.
One sure way, the capitalist learned, to hedge the risk of failure and assure the high return is to be too big to fail. Monetarism was invented and the money supply expands to produce an innovation like computer programming to manage complex derivative instruments that produce exponential profit without risk, but blows up at the end. That's ok though, because you are too big to fail, and just as in the old days of classic capitalism, the competition is too small to survive.
To imply that the computer programmers created a leverage leviathan they could not control is perfect nonsense. The outcome is the product of classic empirical capitalism. You can paint a picture of it or snap a digital image of it and it is still a big ugly monster that blows up at the end!
The reason capitalism fails its pluralist, populist legitimacy is because, while it creates wealth, it does not properly share it. It consolidates it.
Not properly sharing the wealth is why the creative creature of capitalism always turns into a big ugly monster that just gets bigger and bigger till it just blows up at the end and causes a big mess...it causes crisis.
Since not sharing the wealth is what is wromg with it, sharing the wealth is not something to be afraid of. Would someone please explain that to John McCain.
All of us need to understand that it is the consolidation of power that is the determining variable. The capital exists as long as there is an economy in operation. We are not going to be rid of The Capital. The question is, are we going to manage it for The People.
Managing The Capital for The People is to share the wealth.
Don't buy arguments that are designed to make you fear doing the right thing, and do not allow those that will make you fear the moral imperative access to power.
Vote for Obama/Biden!
Volatility Indicator
The CBOE volatility index, the VIX, is over 80, at a new high.
As I noted recently, big volatility indicates the bottom valuation. It also indicates the inimical effects of a consolidated capital.
As capital, industry and markets continue to consolidate with the deflationary phase of the business cycle, valuations are uncertain and The People largely lose.
The benefit of the cycle is solely the top one-percent of income class. If you are not a member of this class, supporting the conservative agendae, be it economic or social, is not your self-interest, it is not the collective interest.
While the high VIX indicates an undershoot--an oversold condition, it also indicates what the institutions of high finance don't want to tell you. It means not only will The People lose their jobs, but as they dip into their savings to finance daily expenses, they lose net value to the VIX.
Even if you can average-in to the financial markets, the gain to restore your losses could be years away if you are not able to play the volatility. If you do that, the sole determinant of price movement is the money flow of consolidated capital and what side of the market your volume is positioned; that is, the market is rigged for you to lose because the concentration of capital allows for an inequity on the bid which manipulates prices against your position, whatever it may be.
Successfully playing the volatility requires you always be opposite the money flow indicators. Do not hesitate. Do not wait for the top or the bottom. Just bail out, or in, as the case may be. Big money on the bid will change the technicals at a moments notice, leaving you holding the toxic waste.
If you thought the bailout plan would be beneficial to The People... no, it is proving detrimental as I said it would, easily predictable because the plan fits the Hamiltonian model of finance which is to assure the welfare of the rich in priority.
The plan supports consolidation of financials, making them bigger and so will increase the probability of leveraging risk--what causes the crisis we are in. It is not the solution, it is the problem, short and long.
The solution we need is antithetical to the Hamiltonian model--a genuine bottum-up bailout by taxing the gain and reinvesting that gain in pluralizing, recapitalizing, the economy. Capital is made available for growth rather than just profits on an expanded supply of money and an increasing public debt with a declining ability to pay it with a highly regressive, no-groth tax code. The result will be an easily predictable, robust economic recovery both short and long.
Obama/Biden!
As I noted recently, big volatility indicates the bottom valuation. It also indicates the inimical effects of a consolidated capital.
As capital, industry and markets continue to consolidate with the deflationary phase of the business cycle, valuations are uncertain and The People largely lose.
The benefit of the cycle is solely the top one-percent of income class. If you are not a member of this class, supporting the conservative agendae, be it economic or social, is not your self-interest, it is not the collective interest.
While the high VIX indicates an undershoot--an oversold condition, it also indicates what the institutions of high finance don't want to tell you. It means not only will The People lose their jobs, but as they dip into their savings to finance daily expenses, they lose net value to the VIX.
Even if you can average-in to the financial markets, the gain to restore your losses could be years away if you are not able to play the volatility. If you do that, the sole determinant of price movement is the money flow of consolidated capital and what side of the market your volume is positioned; that is, the market is rigged for you to lose because the concentration of capital allows for an inequity on the bid which manipulates prices against your position, whatever it may be.
Successfully playing the volatility requires you always be opposite the money flow indicators. Do not hesitate. Do not wait for the top or the bottom. Just bail out, or in, as the case may be. Big money on the bid will change the technicals at a moments notice, leaving you holding the toxic waste.
If you thought the bailout plan would be beneficial to The People... no, it is proving detrimental as I said it would, easily predictable because the plan fits the Hamiltonian model of finance which is to assure the welfare of the rich in priority.
The plan supports consolidation of financials, making them bigger and so will increase the probability of leveraging risk--what causes the crisis we are in. It is not the solution, it is the problem, short and long.
The solution we need is antithetical to the Hamiltonian model--a genuine bottum-up bailout by taxing the gain and reinvesting that gain in pluralizing, recapitalizing, the economy. Capital is made available for growth rather than just profits on an expanded supply of money and an increasing public debt with a declining ability to pay it with a highly regressive, no-groth tax code. The result will be an easily predictable, robust economic recovery both short and long.
Obama/Biden!
Flight to Quality
McCain says tax policy that will stop and reverse the current tax policy that has verifiably resulted in an extreme deflationary trend will result in a capital flight to quality.
That's wrong, Joe!
That McCain questions the propriety of raising taxes on anybody in a deflationary trend that is largely caused by a reduction of the tax rate for the rich, not for Joe who gets to pay the debt it causes, indicates some extreme analytical incompetence or a fatally blind belief to validate conservative "principles" despite the verified evidence that trickle-down tax policy causes economic crisis, and has been for over 200 years!!
Joe is worried about the wrong thing.
The regressive tax policy that McCain proposes, that we have had for the last eight years, is so bad that the capital has parked in nearly no-yield treasuries, hardly a flight to quality, occassionally coming out to spike equities to sell off for a quick capital gain that needs, according to McCain, an even more favorable tax rate to prevent it from being invested in growth (what is, by definition, a reversal of the deflationary trend).
The result of neo-conservative tax policy, McCain's tax policy, is a movement of money (capital flow) that is arbitrary and capricious, causing volatility that is the opportunity for short term capital gains to support leverage finance, not economic growth for Joe.
McCain, as prospective chief executive of the neo-conservative coalition, not only wants to continue the policies that depreciates the hard-earned value of The People, but magnify it.
Why, pray tell, would anyone, Joe, outside the top one-percent of income class--what McCain says we should not talk about--vote for McCain, or any other conservative?
The hedge funds we see collapsing because they cannot cover their leverages (having borrowed money to produce profit without growth--a sure formula for long-term failure), are selling off their equities to cover the margin calls (the money borrowed). It is supposed to suggest to The People that these people, receiving a favorable tax rate for their work over The People's work, are suffering the detriment of McCain and company tax policy together. That is an outright fraud!
These hedge fund entities and their managers socked away billions and billions of The People's hard-earned value for years and years. Yes, we're in this thing together alright--they win, The People lose!
Heaven forbid if we should make hedge funds and their self-satisified managers suffer an increased tax rate! Oh my word, please don't make them suffer billions of gains even after the proposed tax increase.
Hedge funds sold off equities yesterday (the index low) and bought them back today (an index high). Despite some of the funds declaring they are shutting their doors, they're still in business causing panic and uncertainty, being paid to do it beyond The People's wildest dreams and being rewarded for making our economy a complete wreck with a favorable tax rate.
This could not be more wrong, and we are supposed to vote FOR that!
Get the cowboy capitalists and the frauds out of the marketplace by reinvesting their ambition with a tax on there gains and a favorable rate to produce economic growth that fully values the worth of Joe The People instead of fully devaluing it.
Yes! Let's have a flight to quality for a change!
It's time we invest in you, Joe, not the people that will promise you the American dream with policies and programs that will deprive you of it. It's time to fully vest The People that share your dream with the political will to provide it.
Obama/Biden '08!
That's wrong, Joe!
That McCain questions the propriety of raising taxes on anybody in a deflationary trend that is largely caused by a reduction of the tax rate for the rich, not for Joe who gets to pay the debt it causes, indicates some extreme analytical incompetence or a fatally blind belief to validate conservative "principles" despite the verified evidence that trickle-down tax policy causes economic crisis, and has been for over 200 years!!
Joe is worried about the wrong thing.
The regressive tax policy that McCain proposes, that we have had for the last eight years, is so bad that the capital has parked in nearly no-yield treasuries, hardly a flight to quality, occassionally coming out to spike equities to sell off for a quick capital gain that needs, according to McCain, an even more favorable tax rate to prevent it from being invested in growth (what is, by definition, a reversal of the deflationary trend).
The result of neo-conservative tax policy, McCain's tax policy, is a movement of money (capital flow) that is arbitrary and capricious, causing volatility that is the opportunity for short term capital gains to support leverage finance, not economic growth for Joe.
McCain, as prospective chief executive of the neo-conservative coalition, not only wants to continue the policies that depreciates the hard-earned value of The People, but magnify it.
Why, pray tell, would anyone, Joe, outside the top one-percent of income class--what McCain says we should not talk about--vote for McCain, or any other conservative?
The hedge funds we see collapsing because they cannot cover their leverages (having borrowed money to produce profit without growth--a sure formula for long-term failure), are selling off their equities to cover the margin calls (the money borrowed). It is supposed to suggest to The People that these people, receiving a favorable tax rate for their work over The People's work, are suffering the detriment of McCain and company tax policy together. That is an outright fraud!
These hedge fund entities and their managers socked away billions and billions of The People's hard-earned value for years and years. Yes, we're in this thing together alright--they win, The People lose!
Heaven forbid if we should make hedge funds and their self-satisified managers suffer an increased tax rate! Oh my word, please don't make them suffer billions of gains even after the proposed tax increase.
Hedge funds sold off equities yesterday (the index low) and bought them back today (an index high). Despite some of the funds declaring they are shutting their doors, they're still in business causing panic and uncertainty, being paid to do it beyond The People's wildest dreams and being rewarded for making our economy a complete wreck with a favorable tax rate.
This could not be more wrong, and we are supposed to vote FOR that!
Get the cowboy capitalists and the frauds out of the marketplace by reinvesting their ambition with a tax on there gains and a favorable rate to produce economic growth that fully values the worth of Joe The People instead of fully devaluing it.
Yes! Let's have a flight to quality for a change!
It's time we invest in you, Joe, not the people that will promise you the American dream with policies and programs that will deprive you of it. It's time to fully vest The People that share your dream with the political will to provide it.
Obama/Biden '08!
Investing the Talent
Organizing for Economic Growth
There is some indication that technocrats are having to admit that economic growth correlated with organizational size and efficiency means that the financial sector should be encouraged to consist of small firms.
The grudging implication is that a proper, fair, and efficient action plan for economic stabilization may be to invest a competitive multiplicity of the matketplace, or switching to a more pluralistic practical model.
That is very wise and will yield quick, strong-positive results for everyone.
The allowed consolidation of industry, markets and capital meant that most of the entrepreneurial, MBA, talent that our many business schools graduate have been employed to wreck our economy because that is where the money, the capital, is. It is very clearly, overwhelmingly, the model of inefficiency and has not only brought the world economy to the brink of collapse, but has questioned the practicality of the very fundamentals of power, making the risk too high to merely temporize the way to recovery with what obviously does not work.
Instead of entrepreneuring innovative leverage schemes to magnify the profits of a consolidated capital, our highly educated and innovative talent may be utilized to engineer, organize, for maximum growth and employment with minimum inflation.
Instead of organizing for the instability of providing for the least number of people by depriving the greatest number of The People, we will be organizing for the General Welfare.
The bureaucracy does not have to operate to apply the dictates of an elite ruling class. It can "choose" to apply the welfare of The People.
The interest of the self can be perfectly correlated with the collective will and wisdom of The People.
Rather than being slaves to our passions and emotions, greed becomes fufillment, fear is turned into confidence, and loathing is the object of freedom denied.
Very best wishes.
There is some indication that technocrats are having to admit that economic growth correlated with organizational size and efficiency means that the financial sector should be encouraged to consist of small firms.
The grudging implication is that a proper, fair, and efficient action plan for economic stabilization may be to invest a competitive multiplicity of the matketplace, or switching to a more pluralistic practical model.
That is very wise and will yield quick, strong-positive results for everyone.
The allowed consolidation of industry, markets and capital meant that most of the entrepreneurial, MBA, talent that our many business schools graduate have been employed to wreck our economy because that is where the money, the capital, is. It is very clearly, overwhelmingly, the model of inefficiency and has not only brought the world economy to the brink of collapse, but has questioned the practicality of the very fundamentals of power, making the risk too high to merely temporize the way to recovery with what obviously does not work.
Instead of entrepreneuring innovative leverage schemes to magnify the profits of a consolidated capital, our highly educated and innovative talent may be utilized to engineer, organize, for maximum growth and employment with minimum inflation.
Instead of organizing for the instability of providing for the least number of people by depriving the greatest number of The People, we will be organizing for the General Welfare.
The bureaucracy does not have to operate to apply the dictates of an elite ruling class. It can "choose" to apply the welfare of The People.
The interest of the self can be perfectly correlated with the collective will and wisdom of The People.
Rather than being slaves to our passions and emotions, greed becomes fufillment, fear is turned into confidence, and loathing is the object of freedom denied.
Very best wishes.
Wednesday, October 15, 2008
Bottom-Up Vs. Top-Down Bailout
The Fed says that the economy will take much longer to turn around than the financial sector that not only reaped huge profits from years of unregulated leverage finance that drove the general economy into the ground, but is also receiving huge money from The People to bail The People out.
A reliable evaluative measure on the effectiveness, and real confidence, of top versus bottom bailout is the equity index.
When the treasury used capital from the bottom up (the stimulus package), the Dow peaked. When treasury used the capital from the top down (the stabilization Action Plan), the Dow index hit the bottom, clearly indicating the empirically proper course of action for a quick and stable recovery for EVERYBODY.
So, how come we are not doing that?
It is because it does not fit the Hamiltonian model of political economy--welfare for the rich in priority that cultivates the practical philosophy of "buy the greed, sell the fear."
Greed and fear are not a healthy basis for buidling a just and equitable society. It is not a philiosophy of freedom. It is a philosophy of dependancy. It is not a philosophy that provides, but deprives.
If the model does not work for The People, The People should throw it out.
Application of the capital from the bottom up not only hastens a recovery of the broader economy but the net worth of The People as well so that the least amount of value is lost from The People to the elite.
Where the top-down application of capital produces stagflation, recession, and devaluation of The People's worth to service the greed of a few that, in turn, instills greed in The People, bottom-up application nourishes growth and adds value to the savings, the net worth, not the net greed, of The People, who then have "nothing to fear but fear itself."
Obama/Biden!
A reliable evaluative measure on the effectiveness, and real confidence, of top versus bottom bailout is the equity index.
When the treasury used capital from the bottom up (the stimulus package), the Dow peaked. When treasury used the capital from the top down (the stabilization Action Plan), the Dow index hit the bottom, clearly indicating the empirically proper course of action for a quick and stable recovery for EVERYBODY.
So, how come we are not doing that?
It is because it does not fit the Hamiltonian model of political economy--welfare for the rich in priority that cultivates the practical philosophy of "buy the greed, sell the fear."
Greed and fear are not a healthy basis for buidling a just and equitable society. It is not a philiosophy of freedom. It is a philosophy of dependancy. It is not a philosophy that provides, but deprives.
If the model does not work for The People, The People should throw it out.
Application of the capital from the bottom up not only hastens a recovery of the broader economy but the net worth of The People as well so that the least amount of value is lost from The People to the elite.
Where the top-down application of capital produces stagflation, recession, and devaluation of The People's worth to service the greed of a few that, in turn, instills greed in The People, bottom-up application nourishes growth and adds value to the savings, the net worth, not the net greed, of The People, who then have "nothing to fear but fear itself."
Obama/Biden!
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