Tuesday, January 26, 2010

The ideological errors of capitalism III - Shell games

Moral: Wherein we look to a drive for high gains (greed) and to lack of oversight of the best and brightest (Lordly Princes) as the basic ideological problem of capitalism whose 'casino' is best evidence that this is not the way of reasonable folks, with all due respect for Adam Smith. Too, we coin the proper descriptive term, Ca-pital-sino (the system migrates to inflationary schemes to the detriment of the people).

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If the Street were playing its games on Main Street, with the usual setup of a card table on a busy corner, and oodles of suckers passing by, they would be arrested for public exploitation and fraudulent activity. That is, shell games are illegal, in most civic situations.

Yet, the Street (Wall, if you must ask) has been playing this type of game for years. How else the huge gains and bonuses? Too, this has been seen as progress. What?

Wait! The government has done the same thing, to wit, the Ponzi-like schemes (12/13/2011 -- do not the new players bear the burden of funding?) behind Social Security, Medicare, and more. These two, the Street (and all of its ilk) and the government (those politicos who salivate when a buck is passed beneath their nose, individually and collectively) have led us toward perdition.

We can observe that there are mechanisms in place to allow several things. First, no compunction to establish value in a meaningful way due to fiat currency. Second, in-crowd manipulations since there is no insight, or oversight, because money has allowed itself the privilege of opaqueness. Third, gigantic PR spent glorifying the best and brightest and their mathematical malfeasance. Fourth, costs are pushed to other (what else is the motive for out-housing?) pockets including the mortgaging of our own progeny (indentured servancy). Fifth, allow the glory of big-pockets to cover the reality, near-zero, folks.

The people have awakened, with Main Street showing anger. For how long? NYU's Stern wants to move away from a financial focus. What took you so long, fellas? Stiglitz notes that banking is (ought to be) more utilitarian than not. Want to step up to replace Big Ben?

The goal here is to thoroughly deconstruct that which looks so glorious from a distance and to foster a proper description of how it ought to be (imperative for the continuation of the American spirit).

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Afterword:

Let's see, in the past week, we had several days slide of the Big Chimera. Then, there was an up day, then it started up today, and finally fizzled. Okay. What gives? Well, the Street vernacular talks 'The Market' as if there such a thing. Gosh, isn't that like saying 'The Economy' which we know does not exist?

Then, the uncountable talking heads and, supposedly insightful writers, all dispense their insights about why 'The Market' does this or that. Now, how many times do we have to see this to know that it's a crap shoot? Is this what we're supposed to build our future on?

Notwithstanding that near-zero says that gains in 'The Market' are suspect, we can still, and will, entertain notions about why such silliness has evolved as an epitome of the modern way. We have oodles of peoples every day (the above mentioned talkers and writers) offering their take on the matter. For all that hot air, and wasted ink, what was the contribution?

Yes, that is the question. We know that fiat currency is problematic. We know too, that gaming is not what you do with your grocery money. We know, three, that expecting someone to bail you out after you've gamed away your beans is the height of idiocy (and, generally, not allowed in polite society). We know, four, that the associated stupidities deal with leveraging and tranche-ing, to name only a couple of many. We know a whole lot of other things.

Yet, Big Ben, you seem to think that this is what we need. Wake up, guy. And, Mr President, work to have a closure of the market for a whole week. You have the power. Now, when and how to do that would be defined. During the downtime, there would be major surgery.

If you ask why? Well, why not? What has evolved is a sham on the face of the earth.

The metaphor? Open-heart surgery, of course. We would remove the heart of the beast that has been allowed to put its tentacles everywhere and put in one that is more amenable to advanced society (that is, who the heck needs John Galt?).

If you don't want to do that, nationalize the banks, at least. It's not too late. Which? Those who are deemed too big to fail.

Remarks:

03/16/2015 -- Let them eat cake.

10/16/2014 -- Silliness comes to mind.

10/15/2014 -- Today, the markets were down, again, as in, to the point where 2014 is negative in "gains" (I loathe to use that term for the ill-begotten takings). Now, of interest here is that the DOW got up above 17K hitting all sorts of new highs. The elation was continued even with a Fed head change, Ben to Janet. It was like a game, how high can we go? All bolstered by the largess of the Fed. Chimera? Cheshire multiple? Yes, all sorts of problems that are overlooked due to the power of those who run the game. Yet, the problems could be resolved via proper computation (and, by that, I do not mean algorithmic trading). ... I have to admit that I did lose the proper view what with the noise of the partying influencing the brain. But, I did not go in the rush. Nor do I bemoan the fact (as did President Clinton talking about his missing the upturn - actually, Bill, you need to talk to me about how that ca-pital-sino crowd is antithetical to what we need for a sustainable economy - okay?). Just watching was a conscious choice. And, we may have an upturn. What will be needed for that is uncertain? Is it within Janet's power to talk coo-coo, goo-goo to the addicts enough to turn around this thing? At some point, though, the underlying house-of-cards will, again, be problematic. Who will suffer? ... That enumeration is necessary.

08/04/2012 -- I can hear it: with the DOW over 13K, what are you talking about using 'chimera'? Well, look at the dire warnings, for one. Are you looking at FB as a poster boy? We'll get technical and explain the problem. Do we have a solution, at this time? Yes, essentially.

Also, the market pushers say that they need things like program trading, and whole bunch of other stuff that we'll get to. So, the idea is that we need computer-based 'gaming' in order to discover 'price' and to provide liquidity. Liquidity? Yes, like that put into the pockets of Zuck (see 7 points on FB) and his ilk after the IPO. You see, those who made money bailed when the price was high. It is estimated that if they sold now, the take would be 1/2. Notice that I didn't say return (for what? -- 'gains' obtained this way are near-zero). Whose to cheer that a few make some massive amount of bucks (well, beyond those personally involved -- even the bankers who put deals together)? This type of thing is capitalism? If so, do we really need this, folks?

12/13/2011 -- Pavlov and dogs. May seem appropriate, yet dogs eat mostly to live (that is, we're talking about Pavlov frustrating a biological imperative). We, on the other hand, do not need the ca-pital-sino (invisible hand? -- fantasy). -- On the Ponzi-ness: the basis has been spent (some see it as hand-dipping into a well-funded pot) with hopes for future funding; was that not the way? Of course, that brings up the serious issues of how do we ever obtain future payments with some certainty when so many obfuscate in order to rake off the cream (especially, those who run the system)? -- Belated nod to OWS, etc.

10/07/2011 -- Magna Carta, the celebration thereof. We need one of these for business. What would it look like?

Heard, from others, that the Wall Streeters jeer: we cannot help that we are good at what we do, find a job you lazy protesters. Oh, yes, Wall Streeters, you are good at what, exactly? Oh, yes, having defined the shell game, then you keep it running so that monies are sucked out of the pockets of the hapless.

08/13/2011 -- Banks still struggling. We could have taken them over.

05/25/2011 -- Lemons problem, dark pools, ... Oh, so much to look at!

04/03/2011 -- Tis tranche and trash.

03/17/2011 -- On the rise of the professional politician (will there ever be the citizen polico? that is, those who do not salivate when a buck is passed beneath the nose) toward robber barony. The M & Ms are apropos. As well, need to bring in Schervish's viewpoint.

01/27/2011 -- The chimera shines.

11/22/2010 -- Tranching, under the guise of securitization? Silly games.

05/25/2010 -- Who will (or can) lead out of the morass?

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.

02/01/2010 -- NYTimes reports that AIG's shell game wasn't on the fringe.

Modified: 03/16/2015

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