Saturday, November 9, 2013

Stable value I

Moral: Wherein we attempt a brief look at normalcy's lure.

What with twit-ville getting lots of press and money (into the pockets of the founder in a big way, then in a lessor amount - but still substantial - into the hands of some who work for the founder) plus the markets being volatile - one day down, then the next up - this past week plus continuing worries about Ben's largess coming to an end (the training wheels coming off, the teat being pulled from the lips of the brats, the narcotic being removed from the presence of the addicts, ..., what have you) plus a lot more, there is one major problem with today's world that we can correct.

Aside: About the monies flowing so greatly, these are ill-begotten and attained on the backs of workers, savers, rational folks, and more (about which we can expand as necessary).

One wag said that Ben has trashed all asset types but equities. That is not far wrong. But, it dances around the problem.

Want to know what the main issue is?

In our relativistic world (thanks Albert - of course, this guy bemoans the bastardization of what he pulled out of the unknown; yes, he did not invent; he merely described a portion of reality) - as seen by certain types of eyes and models, the economy is now such that attention goes to what is really a fool's game (sorry motley guys, you did not invite foolishness) at which we are to marvel and to whose players we are to bow as if they're the epitome of something worthwhile.

Say that again?

Allah           -              Moolah
Talk to any of the financial ilk (if you want to degrade yourself, okay?), and they'll spout off about mixes of asset holdings, principally based upon two biggies - namely, equities and bonds. Now, equities bounce up and down. They have only gone up, of late, due to Ben's largess to Wall Street and his slapping silly of the savers. At any moment, they can trash the landscape and impoverish many.

How? Look, if all holders sold, the mere fact of the sale will cause a downward motion of value. It's inevitable. The total sale cannot be instantaneously accomplished. There would be a sequence, with those in the early part of the sale getting more -- as in, much more -- then those in the trailing edge getting less and less -- this is true despite the billionaires and millionaires we see; why?; near zero - their gains are on the back of the hapless.

Aside: There is a point at which we have nothing left but losers. Of course, the vultures then come in and feed (ah, see below that this is not by necessity the way to run a modern economy - those with the power have fetishes that need to be brought out to the open).

Now, bonds? Well, as we saw this year, when the interest rate goes up, the price goes down. So, holders of these type of bonds -- said this way, as this need not be -- lose value when interest rises. The mere hint of Ben raising rates makes bond holders - of this ilk - quiver.


The fact of the matter is that the current model is arbitrarily defined, for the most part so as to enhance the sucking of monies from the hapless to the players. These players, then, add churn in order to keep their obvious necessity (ah so) known to the populace - and this has gone on for years.

Is there another way? Yes, always has been.

Take a "stable value" view. Yes, suppose that you could hold something that would pay you what you expect plus some increase - ignoring, for the time being, issues related to inflation. Would that not be desirable? That is, you would not have to worry about some player putting his/her hands in the till and removing what you need to feed yourself down the pike - by the way, as savers have experienced for the past few years with no end in sight for their suffering.

Oh, say the wags, you would not make enough to retire on. Not true. Stability is a boon, many different ways. There are plenty of examples for us to use.

We will go on about this. That's why the title says, Stable value I.


Ben does not see any use for stable value. I can understand that. But, he has to know that his slapping of the savers is not sustainable. Too, he has to know that he's aerated things in ways that are unprecedented and that recovery from which will add more pain - to the savers and Main Street . Ben is leaving, so Janet ought to know (and her ilk).

The economy needs to be based on a stable basis that allows us to have a better look at the future than the one that we have now that is (has been) beclouded - so that the odds lean in the favor of the finance community. That is the core issue.

Then, the ca-pital-sino can be allowed (in a sandbox with diapers on the players so that their crap stays in their little playground) so that those who need the titillation can find solace and comfort. The sandbox would wrap those higher-order, supposedly, instruments which have been so seductive to the players.


All of these themes have been addressed over the years in this blog and the related blogs -- at some point, perhaps, links will be provided; right now, this is just air clearing - Ben's been doing that enough.

Whether we address this further with "Cosmology of business" or otherwise is not certain at this time. The game gets its attention, and money, every week - Cramer gets his air aired, to boot. That the shitty nature of the current mode is felt in Main Street will not abate; yet, there is some urgency that is needed.

You see, the computer has exacerbated the problem. Not by necessity. Rather, some, who could - as in, are allowed - have exploited things willy-nilly by enshrouding things in complex ways. Sleight-of-hand, if you would. The stench is still there - the nose will be important to establishing stable processes.

Too, those, with numeracy in their pocket, have been allowed carte blanche. And, powers that be have gone along with the so-called best-and-brightest. Meanwhile, those with the proper talents are waiting in the wings. In fact, determining just what that talent might be will be on the plate.

Remarks:  Modified: 10/30/2014

11/09/2013 -- One Fed guy said that their decision about QE - Infinity and the interest rate would be driven by data. I supposed that this is to help establish an aura of scientific discipline; you see, economics being other than dismal? Isn't that a hoot? The guy (I ought to look up his name) is under the delusion that data are not suspect. Guy, whoever you are - I just saw a headline and didn't go deeper, conflict comes about from differences in interpretation of fact. Using "data" as some abstracted type of glorification of our common knowledge does not raise the issues beyond how humans deal with their world. Opinion? Obviously, the Fed is loaded with people who would rather suck up to the rich, trash the savers and the old-timers, and, generally, run amok since they have the power to do so; rather than what? Talk about Main more than the Wall (unnecessarily complicated in order to hide the extractions that occur regularly - how else the high life styles? ..., why the large bonuses that don't seem to have a reasonable basis? ...). Wait, don't they talk unemployment? Yes, that fetish of the Fed being able to push that string thereby effecting full employment. All the while jobs (never seen in the proper light) are pawned off to external regions under the guise of globalization when, in truth, it's exploitation to the extreme.

11/11/2013 -- The Fed ought to address computability issues with regard to monetary policy. Yes, the genie is out of the bottle, but we can regain some control.

11/24/2013 -- The ACM has a review article on algorithmic trading that everyone ought to read. Essentially, if we use a plane as an example (consider what Boeing has had to do to get the 787 out and about), we would say that the financial folks are putting passengers on experimental aircraft with little regard to their safety and comfort. The whole notion is atrocious. How does it happen? They've coached things in mathematics and computerese, plus they've bastardized Adam Smith's ideas. Where is our sandbox, and where is the stable economic system that we can build?

10/30/2014 -- Where are we? For one, let's talk how most are losers, okay (due to idiotically applied multiples)? This can be ignored when their reality is pushed outside of common awareness. So, we have the top tier (0.001 or less) gaining under the present scheme (even with it being stopped, QE, that is, the latest of it). The other? Dire straits, indeed. Yet. the talking heads chase the DOW daily, as if it has meaning (ah, why this?).

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