Financial topics

[Higgenbotham]

I think anytime complex subjects like finance are discussed, practically anything that's stated is open to having holes blown through it.

Let's take my mention of the Bear Stearns hedge funds. At that time, the authorities said "subprime is contained" and that was the mantra long after those hedge funds blew up, if my memory is accurate. Nobody in a position of authority has taken a similar stance with regard to Greece, Ireland, Portugal, Spain, or Italy so far as I'm aware. What I mean specifically is had the authorities reacted to Bear Stearns at the onset in a similar fashion to how they reacted to Greece (or Illinois), something would have been done immediately besides just words. I can imagine that if the Fed were to be able to do it over again, they would have immediately acted to shore up the Bear Stearns hedge funds and any similar funds by taking the collateral onto the Fed's balance sheet immediately, thinking that may have a chance of stopping the panic and would have been cheaper in the long run.

So, therefore, someone could look at my statement in the above post and say that I have no clue as to how the timeline may have varied if that had been done, then further state that since Greece was shored up and Greece was probably not a whole lot bigger than the subprime problem was in July 2007, this could go on for far longer than the 14 month timeline I am alluding to, and therefore it is irrelevant to bring that timeline up.

As a practical matter, I think big money intuitively understands this. They may not understand it in the examples and the depth I am speaking of but what I do believe they understand specifically is that the timing of any collapse can't be predicted precisely enough to be useful information ahead of time. But what can be done is to try to envision what kind of news event might come across the wire to indicate it's close and from there what kind of news event might come across the wire to indicate is is essentially here. And I think big money probably does that better than we can, as they can pay for much of the best brain power available and assemble it together. However, they can't pay for it all, and there are select places on the Internet nowadays that with the right mix of people might be able to get it somewhat right. I can still remember when the Bear Stearns hedge fund news hit the wire (it was a small one paragraph writeup) one evening, the futures sold off very sharply. That was smart money doing the above and making their exit. Reading through message boards at the time, amateur investors thought it was because yahoo or somebody reported bad earnings.

I think the present situation is more dangerous. I would have rather seen a less obvious start to the current mess than what we are likely to see. The article I quoted above where the European diplomat basically says we've been pumping air in for 2 years and now we can't pump fast enough seems like a dire warning. Whatever blows this time is likely to be big, but I can't see now how big money uses any other strategy but to game it out, wait for what they foresee as the actual fact, watch the news wires, and then hit the sell button when the news that they foresee as indicating the game is up comes across the wires. Which perhaps helps me see how and why generational panics come about, why they can't be prevented with the human race at its current level of development, and why this one is likely to be a big one. From that standpoint, the human race has not progressed since 1929, except to deliver the news faster and enable the sell button to be hit faster and that won't be helpful.

[vincecate]

bernankenose640.jpg (42.54 KiB) Viewed 4369 times

[aedens]

http://www.bea.gov/newsreleases/nationa ... elease.htm
http://www.youtube.com/watch?v=Tja6_h4lT6A
real GDP increased at an average annual rate of 0.3 percent. this hinges in what we seen here
Your right H the seen and unseen. As John noted a created narcissistic cultural matrix. Over the years or to say earlier in our case we have had some limited sucess on these notions of a level intent of group dynamics. I will convey a institutionalised mindset did not take long to over whelm since the original was a ruse just to survive the problem many did not even realise existed. At times it can be a overtly complicated process since the level of filterings plays into intent to defer culpability. Some are more ingrained than others to the group dynamic to conform at all cost but to infer precisely aimed attacks to control opinion based on deleterious effects that comes with the obvious solution for a few. As you conveyed before, do it and like, even when you knew the thought map was failure on your project as they clustered to a visceral reaction of intent. When a civilization or cluster reaches the point at which only coercive force is capable of holding it together, it is finished as a viable system. If you move a box 60 feet does it changes nothing to anything of validity to an effect. Since the processes of change that are implicit therein run counter to their purposes of a structured permanency and the ability of other to linger in another level to ignore what they can do for themselves and should.

Today, three seconds before the close, someone was in a desperate hurry to dump 60,000 E-Mini contracts - the equivalent of $4.1 billion in underlying notional (ignoring the reflexive impact on various correlated assets and downstream synthetic instruments like ETFs and options). tyler

We already posted what we seen for some pages back already. I will look at more numbers until August third and see what view
I can condense. I can see a few months of event driven issues good and bad as we all know as coin flips.I will stick to fundemantals and
discipline for a few months. Do not hurry at all...

the only way to expand the economy is to reduce the real interest rate; and the only way to do that is to create expectations of inflation.
Fisher, Irving, (1933), “The Debt-Deflation Theory of Great Depressions,” Econometrica, Vol. 1, no. 4.

Consolidations will smooth out some problems for sectors as we noted. Fisher noted the problem that the dollar and assets managers of non cool aid
infected worth there salt will drill down on value added facts. We already cautioned normal people to defer after forensic analysis points of the social
media sheep pens. Like I assumed, for me alone, is in my view inflection point is near or in view. We already discussed we would better to not grow and deal with the thought maps upcoming and proposed contracts forwarded already being executed. If the executive branch will not nueter a few monsters
the taxpayer deserve all and more as we opine. Red or Blue could care less in theory about your bleached bones in the moonlight. As I note from watching monsters they are the same in form but varying means of colors mean nothing in the passage of time. The seal is in the forehead as we are warned. Neither will leave you be and it is always for the individuals benefit they will entail there wisdom.
Vae Victis

[Higgenbotham]

Today, three seconds before the close, someone was in a desperate hurry to dump 60,000 E-Mini contracts - the equivalent of $4.1 billion in underlying notional (ignoring the reflexive impact on various correlated assets and downstream synthetic instruments like ETFs and options).

Tyler may or may not be right. I don't think he is. For an example of how he may not be (he is implying somebody was holding the contracts and needed to dump them) let's think about Mr Warren E Buffett. Mr Buffett (and I do appreciate his candor) told us a few weeks back that the businesses he looks at are stagnant with the notable exception of housing. Now we note today that the Phildelphia Home Builders Index, HGX, closed at its July low, making a monthly reversal off of a 4 year high. The one bright spot apparently gone. So I would suggest that Mr Buffett or some large investor who can't dump billions of dollars worth of individual stocks that he owns is doing the best he can, going to the world's most liquid market, the E-mini, during the most liquid time of day, near the close, and not dumping, but hedging for all its worth. And I wouldn't doubt further that whoever this individual is was selling smaller blocks all afternoon so as not to be noticed.

2007 Bear Stearns
"I can still remember when the Bear Stearns hedge fund news hit the wire (it was a small one paragraph writeup) one evening, the futures sold off very sharply. That was smart money making their exit. Reading through message boards at the time, amateur investors thought it was because yahoo or somebody reported bad earnings."
2012 Spain?
"So I would suggest that some large investor who can't dump billions of dollars worth of individual stocks that he owns is doing the best he can, going to the world's most liquid market, the E-mini, during the most liquid time of day, near the close, and not dumping, but hedging for all its worth."

The big and smart money can hedge through the futures markets 24 hours per day, then clean it up later. Also, I saw about 2 million Spyders get sold at one point this afternoon, all at once. That's not as big but I noted it.

[Higgenbotham]

Your right H the seen and unseen. As John noted a created narcissistic cultural matrix. Over the years or to say earlier in our case we have had some limited sucess on these notions of a level intent of group dynamics. I will convey a institutionalised mindset did not take long to over whelm since the original was a ruse just to survive the problem many did not even realise existed. At times it can be a overtly complicated process since the level of filterings plays into intent to defer culpability. Some are more ingrained than others to the group dynamic to conform at all cost but to infer precisely aimed attacks to control opinion based on deleterious effects that comes with the obvious solution for a few. As you conveyed before, do it and like, even when you knew the thought map was failure on your project as they clustered to a visceral reaction of intent. When a civilization or cluster reaches the point at which only coercive force is capable of holding it together, it is finished as a viable system. If you move a box 60 feet does it changes nothing to anything of validity to an effect. Since the processes of change that are implicit therein run counter to their purposes of a structured permanency and the ability of other to linger in another level to ignore what they can do for themselves and should.

This is a very complex topic and I've been thinking about making a series of posts on it. For one thing, it invokes the complexity of the group dynamic as described by Hayek, as representing intelligence at its highest known and current level. I mean intelligence in terms of human organization. I believe that is still true 65 years later. The current perception of such is entirely different and is faith based, where faith has been shifted through brainwashing to reallocate wealth and power. This has deadened the resolve of the population to the point where ignorance prevails and large scale collapse is the likely outcome (just my opinion of course, which has proven time and again to be inaccurate in many instances, accurate in some, as the archives here show). The other thing to mention is how this relates to the technologies that have been developed since, how those technologies really fit into the current social, political, and economic Industrial Age framework and whether the new technologies represent a true higher level of intelligence within that framework. Going further, can the new technologies be used to understand complexity and to reorganize human systems into their optimal configuration based on a knowledge of all measurable factors, in a way which is any better than the current dynamic process where none of that is known? Now to give an example of that. Today, copper is mined, refined into bars or whatever, then extruded into pipe and that conveys water, which is an essential need. I don't know the exact process; obviously, we can all look it up. The Romans may have looked at a conceptual design for an industrial machine and asked how do we make a piece of copper pipe out of this and not been able to come up with an answer. The analogous question today would be how do we use a computer to make a piece of copper pipe and can we get an answer to that question. Or going even further, how can a computer be used to create the thing that fulfills that need, whatever that thing is. Then how do we synthesize the answer to that question and a million others so as to optimally configure a human society? Specifically, I mean, not conceptually. And I haven't done enough research to know whether anybody has considered that question or similar. If the answers to those types of questions are known or can be known in the not too distant future, what does that imply as far as the destruction that will need to take place in order to make that transformation and what is the minimum or optimal time frame over which that can be accomplished. I would argue that you don't get to a higher level of civilization until first of all the social and political framework takes shape to provide the proper environment in which that can be understood, addressed and that transformation can begin to take place.

[Higgenbotham]

Same subject as above but from a different angle. We've discussed many times the "subprime is contained" mantra here. As our system is currently configured, nobody knows what Mr Bernanke should have said or done as he found himself in that unfortunate situation. Should he have lied? Should he have tried to "save" the Bear Stearn hedge fund? Should he have ignored the whole mess and said nothing? Just stayed mute when asked about it? Should he have resigned? Or committed suicide? By definition we don't know what the optimal behavior of Mr Bernanke should have been, but we all have opinions. From those various opinions, a consensus of sorts emerges, behaviors and actions are modified, and civilization moves forward in fits and starts in a blind and iterative process of the proverbial two steps forward and one step back. The question inferred above would then be is there a higher form of intelligence that can come from the new technologies that can provide a more optimal answer to that question of what Mr Bernanke should have done, which provides a better overall outcome than the current process, taking all known and necessary factors into account? Then, going further, can that higher form of intelligence then synthesize that answer along with answers to a million other questions to provide a roadmap for civilization to move forward in a less destructive and move optimal fashion than the proverbial two steps forward and one step back? In other words, given the fact that the current human system is not perfect and put Bernanke into an impossible predicament from which there was no positive outcome for him that I can see, is it possible for a higher form of intelligence besides collective human intelligence to provide a solution to that by recommending a series of optimal steps to take in order to intelligently design a "more perfect" way of getting to a "more perfect" system?

[Higgenbotham]

One last idea on the above subject for now. At the top of every bubble at the end of every age it seems to me that humans come up with some silly idea as to how a society can be organized or what it can deliver, which is completely unrealistic at that time and place.

One of the best examples I can think of is the South Sea Bubble. There was a time when I understood in great detail what that idea was, and my best recollection now is that the idea was to extract goods from the 4 corners of the earth and make those goods available to the public. In 1720, while enough technology existed to imagine that fantasy, it was unrealistic. Yet, almost 300 years later that has been realized and we can walk into a Wal-Mart and buy goods from all over the world or order things on the Internet from companies all over the world and receive those goods in 2 days, which I think is some version and realization of what the South Sea Bubble fantasy was about. At least, that was my thought as I studied it in detail. As Mackay described, there were many concepts and many frauds put forth besides just the South Sea Company.

Now, at the end of what may be another stage of human history, humans have come up with another seemingly silly idea, which is the idea that a form of intelligence which is ostensibly superior to collective human intelligence can be substituted for collective human intelligence, and somehow a more perfect society can be the result. That idea has been attributed as being the actual cause of the collapse of societies and mocked for its ridiculousness, and as we in the West mocked the Soviets for their less optimal version of it, perhaps we in the West will be subject to a similar fate as that of the Soviet Union, as our attempts to engineer a "more perfect" society lead to the same or even worse outcome.

But I wouldn't dismiss the idea that there may be some greater purpose to this seemingly silly and futile exercise, similar to the way in which the seemingly silly concepts formulated and rationalized in the South Sea Bubble led to their realization almost 3 centuries later, through technologies and systems that could be at most vaguely conceived of at the time, taking about 80 years of hard work and "real change" after the bursting of the bubble to put the foundation in place from which that idea was realized.

PS Happy 292nd anniversary of the bursting of the South Sea Bubble. Acording to Mackay, the bubble peaked at the commencement of August, 1720. And until I looked at the time stamp on this post, I hadn't made that connection.

[aedens]

http://www.iadb.org/intal/intalcdi/PE/2012/09985.pdf

The problem is financial disease. It gained its initial foothold by crippling the guiding hand of government’s forward planning and regulatory mechanisms, and replacing progressive taxation and rent collection with favoritism over industry and labor.

This is the struggle that classical economics set out to arrange and quantify in order to design an appropriate cure aimed at creating amore equitable society and doing away with “false” and unnecessary rentier costs of production.

They are well under way as we note on the keynasian veil. The paper clearly lays it out as we have also.

Even as the tiny bubbles called the middle class simply cease to exist in the Obama induced myopia the drones refuse to wake.
We shall see and we know the GD outcome. We know the hope defered paradox.
" One might ask the question, "Aren't American socialists in favor of their own country's survival?"
To answer this question, we must turn to abnormal psychology.
Mr. Summers already answered this as I am reminded. viewtopic.php?f=14&t=2&p=3829&hilit=summers#p3829

Recall Keynes's erroneous prediction that within a century people's material wants would be satiated. When that happened, the demand for capital (to finance consumption) would plummet and rentiers (people who live on income from passive investments, such as stocks or bonds, and thus are hoarders) would be wiped out, a prospect that delighted Keynes, who looked forward to "the euthanasia of the rentier.
http://generationaldynamics.com/forum/v ... iers#p4427

hudson: In 1814, David Buchanan published an edition of The Wealth of Nations with a volume of his own notes and commentary, attributing rent to monopoly (III:272n), and concluding that it represented a mere transfer payment, not actually reimbursing the production of value. High rents enriched landlords at the expense of food consumers – what economists call a zero-sum game at another’s expense.

The 19th century elaborated the concept of economic rent as that element of price which found no counterpart in actual cost of production. and hence was “unearned.” It was a form of economic overhead that added unnecessarily to prices. In 1817, David Ricardo’s Principles of Political Economy and Taxation elaborated the concept of economic rent. Under conditions of diminishing soil fertility in the face of growing demand, value was set at the high-cost margin of production. Low-cost producers benefited from the rising price level. Ricardo helped clarify the concept of differential rent by applying it to mining and subsoil wealth as well as to land. Heinrich von Thünen soon added the more helpful concept of rent-of-location (site value).
The important classical point was that economic rent was produced either by nature or by special privilege (“monopoly”), not labor effort. Hence, it was that element of price that could not be explained by the labor theory of value, except by marginal costs on what Ricardo hypothesized to be “rentless land” as recourse was made to poorer soils. Ricardo’s follower John Stuart Mill explained that being income without labor or other costs, such rent formed the natural basis for taxation.
The Progressive Era developed the view that public utilities and other natural monopolies rightly belonged in the public sector, where governments would provide their basic services at a subsidized price or even freely as in the case of roads. The idea was to keep user fees no higher than the actual cost of production, so as to avoid rent seeking. This pejorative term means extracting income by placing tollbooths on the economy’s key infrastructure. To leave roads and railroads, electric and power utilities in private hands ran the risk of private owners “rack-renting” the population, adding to the cost of living and doing business. U.S. policy is just the opposite. Commercial real estate has been regressively “freed” from taxes – leaving the rental value to be pledged to banks as interest. This un-taxing of land rent has been a major factor inflating the real estate bubble on credit, much as deregulating monopolies has helped inflate their stocks and bonds on credit. This is the policy that the Bowles-Simpson Deficit-Reduction Commission endorses. Its regressive tax proposals would shrink the economy, pushing it further into debt. This transfer of revenue from labor and business to property owners – and from them to their bankers and bondholders – threatens to force up the government’s fiscal deficit (as states and municipalities are seeing today) and turn the United States into a Third World type neofeudal economy.

[aedens]

Jul 30 16:46 1720 Full moon any way, I did not check the volume for the es or to say did it catch a open bid.

[shoshin]

with respect to the massive blackout in India, are there any theories?....was this just an "accident" or was there a software worm that did some damage?...I have seen no discussion, and it rally seems odd...