Wednesday, August 12, 2009

The markets

Moral: Wherein we consider fair value, as an accounting rule change this year helped the financials (banks mostly) pull themselves into another frenzy. That rule had to do with mark to market which was pulling down the banks and just had to be relaxed, it was argued.


Well, they got their wish. Now, just what is that 'market' everyone talks about? Guess what? It has as many looks as people looking, almost.

Of course, one market is the one where people go to buy things, such as food and clothing. Useful things. What has been happening there is that things have become cheaper in cost due to discounting trends yet they have become 'cheaper' in make, too. We'll get back to that in a moment.

Now, another 'market' is that gaming place where the big boys and girls like to play, usually with the intent of maximizing their take. In fact, the WSJ today quotes one as saying (he of the $200 million, yes, million earnings last year) that he doesn't play any game in which he cannot find an advantage. We'll get back to this gaming market (Casino capitalism) in more detail, too. Note, though, that this market does not deal with real stuff; no, it is flim flam, of course, with real bucks flowing out into the pockets of those involved.

Now, there are markets that allow the types of hedging that is proper, such as those needed by producers or buyers of real stuff. These, too, need to be looked at.

There is that market, sometimes more mythical than not, which is the embodiment of whatever the wisdom of the crowds is supposed to convey. Yes, it tells us things. Prices. Ah, that rhetoric would be funny if it didn't have so many dire consequences for so many folks. But, it doesn't have to be that way; as the market could be a metaphor for decision making and for voting for choices.

You see, those seemingly interminable market definitions will all be of interest. But, remember that first one? The place where we get our stuff. Well, one change in modern times is that the links between those who produce the stuff and the market where we get it get longer and longer. The net result is that many more fingers are in the pot.

So, that is one impetus for the 'cheapening' of goods, reducing their intrinsic value, so to speak. With all that extraction going on, what is left for something real diminishes to naught, almost.

Now, for whatever type of market we speak, the marking to it sort of conveys some meaning as to its fair value. So, then the value of a thing becomes a function of what someone would pay for the thing. Naturally, this applies to people to boot in that you're worth what someone would pay for you. Ah, but we don't have slavery, except in the voluntary sense of you working for someone. Same thing, in most cases. Don't you know.

Where is all this going? It's basically setting the stage for looking at all that relates to 'market' as the core idea behind capitalism. We will see that those simple notions of the neighborhood market will apply upward in scope and scale as sort of a stabilizing metaphor. Or, I should say can, as it has not been given a try.

Why? Well, the computer came along and was allowed to be the instrument of exploitation for pocket extractions rather than as the basis for a stable economy. And, the fiat situation related to monies exacerbated the problems.

The supposed best-and-brightest were not ever interested in raising the overall level. If that were true, the financial industry would be as selfless as those in our military who are sacrificing themselves for the sake of the few.


03/15/2015 -- Finally, getting around to the pending business.

03/15/2011 -- The M & Ms are apropos.

10/14/2010 -- Capitalism, as known now, requires an endless supply of suckers.

10/14/2010 -- Does it not silly to hear self-righteous politicians talk about 'the market' as if it is more than a mere chimera.

09/27/2010 -- Capitalism is for the good of us, let's bring that forward.

05/07/2010 -- Out of control, essentially, and not healthy for the backbone.

03/20/2010 -- The basic problem of capitalism is that the Made-offs are its chief representative.

01/07/2010 -- We need to look at capitalism, closely.

12/01/2009 -- The consumer as focus.

11/06/2009 -- There ain't no train, just like there ain't no free lunch (TANSTAAFL).

10/16/2009 -- 201K <-- --="" 401k=""> 25601K, this denotes the current financial gaming.

09/09/09 -- We'll need to look at UUUN, as a framework.

09/04/2009 -- Markets work, since they handle undecidable issues bottom up. That approach will always outperform the top down, along almost all axes.

09/02/2009 -- Computation is the enabler for some markets. Hence, as says the Vienna School, undecidability is an important issue.

08/17/2009 -- Books on the credit crunch. This crunch involved "macroeconomic imbalances, greedy and incompetent bankers, and fraudulent American homebuyers."

08/12/2009 -- We would be remiss if we didn't mention a whole class of markets, namely those dealing with securities, whether toxic or not. But, there are many types of markets, though 'mark to market' wants to constrain itself to a few types. Yet, the concept ought to be looked at in a more broad sense.

Modified: 03/15/2015

No comments:

Post a Comment