Wednesday, December 17, 2014

Reorganization of sorts

Moral: Wherein we look at blogger improvements in order to bolster the medium, hopefully enhancing the message.

Namely, using the "Page" header in order to present information more coherently. As in, outside of the temporal view supported by the normal listing. Even, to the extent of getting away from the constraints of categories.

Ca-pital-sino, anyone?

Remarks:  Modified: 12/17/2014

12/17/2014 -- 

Monday, December 1, 2014

Fiat money

Moral: Wherein we look at "fiat" money, again, plus the cheshire multiple.

We have not had a post on this topic, for a while, but a recent WSJ article (How the 'Reserve' Dollar Harms America, Nov. 21, 2014) prompted such. So, back to the old themes.

This topic has been touched upon in all three blogs:
Call it funny money or what you may, the whole process depends upon wizards to control the process which easily veers out of control, as we have seen time and again. That the U.S. must lead the way is obvious to many; 'how is this to be?' is less so. 

Along with consideration of 'fiat' and 'gab-standard' having some focus, there ought to be, as well, some sensitivity to Minsky's thinking.

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How high can it go? Well, the DOW is close to 18K today (12/3/14). There is a run-up going which we will watch. There are two caveats that need repeating.
  • This is funny money, folks, except for those who are in the position to exploit the situation: those who run the game, those with the wherewithal (the Buffets and more) to rake in gains (ill-begotten), and such. The fact: this group is a minority (very small in cardinality even if their pockets balloon immensely). 
  • Those who buy in now are lining up to be sacrificial lambs. Ah, the humanity. The fact: losers outweigh the winners by far. Even if we graduate the amount of winnings (ignoring near zero, for now) from reasonable to extremely greedy, the winner set would be small (far less than 10%, if that).  
Reminder: In the context of these discussions, 401K eyeballers are not "winners" (grieves me to even use the concept since the reality is so putrid - when the kimono is lifted) until they have cash in hand.

Now, having said that, what is needed? Rather than the headline says, Apple drops 22B in a day, we ought to think about another accounting approach where buyers/sellers bounce against an entity with a history (to be discussed). Yes, the peanut buttering of gains and losses across a whole population is stupid (always has been). 

When computers came along, were they applied to beefing up the accounting? No, they were turned into gamers to extract even more from a silly system. How has this gone on so long? 

The vested interests benefit, essentially. We do not have to rise to the level of ethics to bring the problems to public viewing. No, all that is necessary is to lay out the scheme's basis and how the ca-pital-sino is a type of "shell game." 

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We were on this theme six years ago (Crooked games) and will go back to the earlier thoughts. The FED has changed the character of the game, delayed the consequences, muddied the water (really), and set us up for some interesting failings (will be worse than the last time - as many say). 

Remarks:  Modified: 12/06/2014

12/06/2014 -- Put here as placeholder: Capitalism's gravediggers.

Sunday, November 23, 2014

Creme dela creme

Moral: Wherein we celebrate a voice of reason, Morgan Housel. He stands out in this day and age where value (cream) is siphoned off daily by the jerks of Wall Street (and their compatriots).

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Morgan is of the WSJ. The weekend of 11/23/2014, Morgan wrote this: The Market Is Your Friend. Really: One Millennial’s Advice to Peers. There will be a lot to discuss, over time, such as: what is the market? friend? why is this? what is value? ...

All in all, though, the article is a very good read, for any of the generations, including my own (retired, being slapped silly by Yellen and crowd).

The image comes from Morgan's article. Essentially, he is looking at different cohort groups based upon several decades in the 1900s and comparing them during the years of 18 to 30. The curves show the difference in value at the end of the period of money that was invested at the beginning ($1,000). The upper curve deals with those born in 1970.

Again, this post is a place holder depicting future discussion. As, take that first question: what is the market? Depends. But, of those definitions that are possible, the ca-pital-sino is the worse of the sort (for many reasons, not the least of which is that it bolsters/inflates year-end bonuses for people doing things that are not necessary; but, we can, and will, go on about this.).

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Let's harken back three months. This blog had a post depicting how savers are being flayed to an inch of their skin. For what reason is this? And, why is it still happening when the bubbles of equity markets are apparent to all who can see?

You see, Housel is not talking that market which is short sighted. No, he is talking longer term. And, we will get back to this.

So, about the post (Savings and savers). Notice please. A set of bonds bought in the 1980 were cashed in 2010 for a value that was 4.2 times. You see, those who tout equity do not consider the risks properly.

Why? Well, that is another thing to discuss. But, I, personally, have seen lots of people who lost. Am I lucky or what? That is, for having seen them? No, just observant. At the same time, I came through (applying my own set of rules) unscathed (except for angst in being ineffectual in trying to get the attention of the likes of Yellen - look you Ivy-leagued members of the Fed (am I wrong?), get out to Main Street and talk to real people).

Let me repeat, the return from bonds was 422% over the period. The post, of course, talks about the downturn in earnings of some bond holders brought on by the Fed's feeding the frenzy of the addicts. ... Enough (the blood boils).

Look, again, look, the thrust ought to be sustainable economics (not special interest catering - though, money does talk, as we all know).

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Now, in closing this, let's just say the following: so what the difference between $6,800 (or thereabout) and $4, 200 (or so) when it comes to getting one's bucks? At least, that $4,200 is not blood money'd (too, there was little angst over the years). What? Yes, the inflation caused with the current equity schemes (ponzi, made-off -- all of this can be seen here via search) is such that the house grabs (daily) its take.

And, you know what? Let me explain, if you will listen. In doing so, they are diluting the remainder. Taking the cream away, leaving very slim picking (that is, everyone else is forced to diet - how long will such fat cat'ism be the way of the land?).

So, that, at the end, the residue is what people get.

Strange state of affairs, people. Marx is laughing up his sleeve.

Remarks:  Modified: 11/24/2014

11/23/2014 -- Now, given the likes of Morgan, can this old guy rest a little easier?

11/24/2014 -- Over bought. Troubles with stocks: the cheshire multiple, not dollar equivalent. Neither of these say, no equity. But, mature minds do not run after the ephemeral chimera even if it does pay out (because of the fact that its payout is only) to the lucky few.

Tuesday, November 18, 2014

Beveridge

Moral: Wherein we ask, can data-driven be hellish?

The original use suggested that we can get ourselves purgatory'd, real quick. From the Fed side (notice the shift? - pun intended), we, the savers, probably ought to feel the pain. That is, those of the ca-pital-sino game (and their residue) are seen as of prime importance for an economy (as in, lift the boats - former head quoted in a recent WSJ article).

However, in this date and age, computation ought to be of some use for improving our understanding. Trouble is, at the core, economics is dismal, but let's have some fun anyway.

That same WSJ article showed a Beveridge Curve (no, not related to quaffĂ­ng) that may point to troublesome news for savers. As in, there has been a shift (see Figure 1 (page 5), for example, in the New York Fed report). It is problematic to savers since wage inflation has not come around as expected.

But, then, those of us who have been around for awhile were thinking that interest would rise about three years ago or so. Little did we know, it seems.

Basically, there are structural things to consider. But, even so, some at the Fed do not see anything related to an equity bubble. Yet, the old guy (two times removed) says so, since where are there long-term sights being rewarded?

That last statement acknowledges the urgency of reward from returns (even if ill-begotten) as determined by a year's worth of activity. In other words, let's sit back and watch the manipulations and extraordinary adjustments.

Hopefully, the new year will bring some reality (as in, those who are not on the teat) into the scene.

Remarks:  Modified: 11/19/2014

11/19/2014 -- Cass: “My view is the Fed has made a mockery of fundamentals, that there is no real natural price discovery," he says. Kass believes, "Every asset class in the world is being tied relative to the U.S. 10-year yield which is artificially depressed and even more depressed because of the recessionary conditions and the sovereign debt yields in Europe... It's leading toward malinvestment."

11/19/2014 -- Wait, despite all of the new beginnings, things like this headline announces (market down after investors look at Fed minutes) is just plain stupid from the viewpoint of a sustainable economy.

Tuesday, November 4, 2014

America and its roles

Moral: Wherein we start anew, with a fresh slate, and cover the bases (congrats, SF) after admitting that there is no jealousy.

Harvard is mentioned several times in this blog (22 posts). Too, though, there have been references to related themes (Harvard, supposed spawning point for world leaders) of American history (14 times - as well, use of "America" is not chauvinism - we're talking way before 1770s) and of civilized notions (20 times - albeit, Brit, as in Magna Charta). You see, the manias related to the chimera (in all of its variations) are very much counter to proper thinking.

So, since we can leave things in the capable hands of Janet and crew, we will be able to get back to considering the issues, as necessary.

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Now, before we go further, let me make something clear. Look around now at the turmoil. For the most part, we see that youngsters are the ones who are providing the energetics. What has been interesting of late is how many places on the planet are seeing this phenomenon. Say, use the past 10 years to make the count. Astounding.

Over the past few decades, we have seen this time and again. And, the first occurrence, here, can be placed in the 60s. Having started, there were all types (which are well known) that followed over the years. Actually, we could put Berkeley first. But, coincident would be the activities related to Civil Rights.

We are talking more than civil disobedience, in a sense. We have to talk about conventions and such. Yes, it relates to business (in oh so many ways). For one, the bifurcation, so well documented as being so extreme, comes about from the human dynamics that we will explore (essentially, feudal lords ruling over their abstract'd entities seemingly without any constraints - not even from their stockholders).

And, the lord/serf theme is recurrent, to boot (40 times). The modern work environment is so much worse than what our remote ancestors faced (how do we get those supposed smart folk to wise up to the fact? -- let's take them down to the trenches so that they can see/smell the reality).

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Right now, we will talk about the beginnings of Harvard. There are plenty of stories that tie into the event. Then, there is the long history. For now, we will only be looking at that early point.

It is said that the students rule there. Now, let's see. If that were true, then, it would have been the first occurrence of such a thing. Anywhere. Is that our legacy? Are we now paying the price in terms of the interminable power grabs of the best and brightest? Does thinking about this help us see why the stalemate continues at the top (supposed top - it was to be a government of the people, etc. -- remember?).

And, recall, too, that we started off talking about the youngsters being behind the revolutions. That was not true for the Spirit of 1776. No, it was not.

Old and young (just look at the wide range of ages in the large collection of patriots in the Massachusetts) cast in their lot. Female and male. All the race/cultural types were represented. Except, for the jolly old English (called royalists).

Disclosure: As we go through the analysis/discussion, there is a personal note in the sense of familial relationship with the players of the early days. Foremost, though, is the first instructor: Nathaniel Eaton. But, there are ties, too, with the whole lot of the players: motivators, payers, students, ... Hence, we can make that the central focus (where did we go wrong?).

--

We are doing this exercise for several reasons. Firstly, things are awry. One reason is mathematics being misused (a little knowledge is dangerous - albeit, we have supreme modes of abstracted nonsense nowadays). What has helped make this worse is computation with its inevitable culmination in big data. Secondly, we just had the 200th in a gaga mode. But, look around. Do you really see an American spirit anywhere? How did this happen? Of note, next year is the 800th of King John's first coerced signing (sealing) of the Magna Charta. This whole thing is seminal and will be more so (until the energy peters out - let's hope that it does not).

Thirdly, how did we get so bound into the chimera (personally, I like to keep my distance)? It entraps (the whole game and the potential payoffs - silly for mature thinkers, really). Too, though, go back to the first reason. We are overlaying ourselves (allowing ourselves to be entrapped) in a very strong web - let's wake up and smell the roses now - it's the right of the people). The proper view is not tightly considerate of what Janet (before her Ben and so forth) is doing. And, bemoaning the abstract'd views ought not be misconstrued. We need mathematics. ... But, consider that the metaphor of plumbing and plumbers is more strong for money/finance than the current set of brainy types will allow (add to those, the greedy, etc.). Fourthly, we have been at this for awhile and got off the track. But, not really, Janet and the Fed have put us in an unknown situation. We have been experimented on real time. By cowboys and cowgirls. Why did this happen? Because they could. Yet, Janet is talking data as if that is some silver bullet. The real deal is that the oracle could be more in tune with what is needed if the views were lifted. Harvard is not a lifter (is that the implication?)? We shall see. As we get back on track and start anew.

Finally (not), things will crash. We want to be able to explain the cheshire multiple in terms that are understandable. For now, everyone, please, know that markets (the chimera-typical thing currently in vogue) are set up to guarantee losers. What is annoying is that the loser set is more than 50%. Yes, our task? Describe this and make it clear. After that reality sinks in, then we can start to talk about better ways and means (also, enjoying old Marx's comments about fictitious capital).

Remarks:  Modified: 11/04/2014

11/4/2014 --

Saturday, November 1, 2014

Aren't you jealous?

Moral: Wherein we get serious.

With the upswing, after a little downturn, of the markets, of late, one can easily think of those who are elated. On the other side, you have myriads, a much larger set (we will get to that), who are not rolling the dough. Such as? Think of President Clinton who said that he missed the rally (poor guy, perhaps, he was kidding (but, we can use him as an example of this larger set - albeit that he is not of the usual bent there) - we can go on at length, and will, at some point).

Of that set, too, are people without the 401K (or with one that stinks). In particular, the question came from one who was at a company that had a prime (we will go into that) plan but who sold out. So, the questioner was thrown into a second-rate situation after having experienced the world of the elated.

Oh, those elated (we will go on about them, too). His query came to me after I expounded upon near-zero, somewhat briefly. The thing is that the Christian belief system of the guy ought to consider some of the adages on not running after money or throwing away the soul for worldly pursuits or ... (again, we will go on about this - God help us).

Essentially, my response was no, I am not jealous. In fact, I would not want to be ca-pital-sino stuck (even on the winning side - karma, folks, for one). Too, there are better ways which I am in the process of defining. Anyone listening? The motivation is to have sustainable economics.

 Now, let's itemize some players.
  • The game runners. They win, either side. But, as new money comes in (we will go on about this), there will be the bull side until they run out of suckers (again, can go on). On the downside, these people sweat as their easy (ill-begotten) gains are shown to be flim-flam (very much made-off in character). Too, they can lose, for many reasons. 
  • Leveragers. They who would use debt to enhance their gains (see ill-begotten). My question is how can money flowing in be considered "gain" in the sense of income. Rather, it is money moving from one person to another without anything of value being in the situation. So, these types can lose big. 
  • Those who talk bull are elated. Why not? However, with the proper deconstruction, their whole bit of hype is seen as what it is. 
  • Which brings up Janet and her crowd. And, Ben. He started this bubble (we will go on about that, too). So much to say here. Like, it must be nice to see the "investor" community hang on one's every word. What if the Fed told these types to put money to solving "real" problems? 
  • Those with good 401K plans or who are on the proper side of the ca-pital-sino, especially if they can sell when they think some max is set. But, then, things could fall fast too (as we have seen time and again) so that they lose more than they wanted.
  • Those who like the cheshire multiple which takes a little input and throws out marvelous numbers (as if by magic) to which the talking heads can pay a lot of attention in their eternal drive for prime at being-in-your-face-ness.
  • Those who can sell now and move to something more mature (yes, sandbox, please). At some point, we'll have the downturn that will remove "gains" faster than an eye blink. 
  • They who bought late (poor souls). We have to define the model properly to show that the most will lose by the nature of things.  
  • ... 
So, let's be real. Do I wonder sometimes if I am correct? Do I get little green-eyed states? Of course, I am human. However, it does not take the rationality long to put pins in that type of euphoria. At the same time, I get more bolstered in the arguments for near-zero (yes, it is game theoretic) and its reality (despite the win-win whiners - will go on about this).

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There are a few more who could be numerated in this set of the elated (elites, mostly).

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Again, no. I am not jealous. My interest is showing other ways that are more suitable for mature folks.

Remarks:  Modified: 11/03/2014

11/03/2014 -- American roles are still related to the dream.


Thursday, October 30, 2014

Where are we?

Moral: Wherein we weigh in with a reminder that the story of Main Street's lingering effects from having to change the diapers of the gamesters (yes, the ilk of Wall, etc.) still needs to be told.

So, one chapter closed with the meeting of the Fed. According to the WSJ headline: benefit of bond-buying experiment remains unclear as central bank's focus returns to interest rates.

The graphic of the Fed's balancing act is a nice touch as it splits out their holdings by type. Note the amount of mortgage-backed securities. Some of these were from the toxic era. What would closer analysis show? All sorts of economic positions are being argued now.

One fact is clear. Yellen is focal and expected to remain as such. After that, all things are fuzzy. But, let me make two comments here that are very much apropos.
  • The downturn, if you remember, was caused by financial gaming, especially that of the financial engineering type. What has changed there? Banking froze as none of the players knew who they could trust. Has that changed (as in, with the spiked punch bowl, who of that crowd cared?)? Has the coddling quit entirely? No, of course, not. Savers are not part of the equation. In fact, it's the opposite. The thrust is to load people up with debt (ah, dire straits to be expected when the rates do arise - like the burden the US will face with its debt). For the poor, it's an abyss of no end. For the smarties? You see, they are still leveraging with cheap (Yellen's) money. The ca-pital-sino soars, however the reality of most not getting money from that is ignored. What that means is not related to those who chose to not be in the casino. That most are losers, by definition - can be explained, is hard to see when you get the Zucks (and others) rolling in the dough. At some point, perhaps, we can describe this a little better (where is that pivotal point?) such that those who are now lost in the mania (of the media) can see these things from a more reasonable stance. 
  • Prior to the downturn, and to the present, the blogger has had a mortgage that was taken on only after the banker assured the borrower that they, the bankers, were not selling their mortgages. Now, the same banking company still handles the payments, and such. Except, the downturn time saw the banker (meaning the company, of course, with the head guy's face as the representative icon) buy into a high-flyer (who crashed). The banker thought that they were getting a deal (and were very much surprised). So, what that means is that the bought company is the new mortgage department. I'm watching to see how this impacts things, as I can get out at any time. Too, the banker has received oodles of interest payments during this time (hey, someone has to bear the brunt - and, we pay taxes, too -- will expound, ad infinitum, about this to those who might want to learn about the real economy - meaning sustainable). Yes, the mortgage was 30-year, fixed rate. No complaint, but for this. Has there been any thank you from the banker? Sheesh, no. The banker has been paying fines (related to their, supposed, wind-fall) and licking their wounds. Oh, what a tale to tell (will be told, along with the tale of being thrown out of a bank for having the gall to point out a process that was bordering on illegal -- the Fed's response? oh, banking customer, you sue them - we see the merit of your claim but do not care). ... On the other side of the coin, the Fed then pushed obligations (interest paid, rather than fat skimmed) of bankers for their customers to near zero (aside, when I talk near-zero, it has to do with the fact of the ca-pital-sino not being zero-sum (which, then, allows those pushing it to talk as if they're saintly), but it is close (when one does the proper accounting - as in, not buy into the spiked-punch-bowl-colored  world view). ... 
Stopping now. The tales, to be told, are not, as of yet, touched any more than barely. How many more points to cover? Well, consider this. The view? Economics trained, econometrics focused, computer modeled facilitated, essentially scientifically predisposed, intuitively oriented (as necessary), and more. ... The whole caboodle needs a look (is time infinite?). 

Remarks:  Modified: 10/30/2014

10/30/2014 -- Pause would have a great influence on our models. Now, how to do this? For one, let's get back to the sandbox necessity