Summary, 2014

Moral: Wherein we take a look at 2014 and a new approach for 2015.

This is our fifth year for a summary: 2009, 2010, 2011, 2012, 2013. In first year, there were more posts - 2009 (57). This year we only had 36 posts.

Part of that decrease might be due to the early focus of the blog to which we'll have to return. Perhaps, by 2010, the realization of the Fed's largess continuing, and increasing (QE infinity), sank in and caused depression. Not. Rather, it has taken time to get to the current situation which is just loaded with things to discuss: FED backed into a corner, the few pilfering the economy, savers slapped silly and flayed to within an inch of their lives, ... So, we will be getting to all of this.

However. let's look at this year's numbers for Past 30 days and for All time.

Past 30 days                     All time       

Given that 2015 is a year for celebrating the Magna Charta, we can use that to talk about economic issues. The King and the Barons. Ah, how many ways can we map those to characters here now? We have already mentioned Lords/Serfs.

Finally, in the "All time" sense, the "Chimera: sellers and buyers" has overtaken "Computation, finance and engineering" which is interesting.

It is nice to see "Reorganization of sorts" get attention (we will need to talk about a lost generation or two - unfortunately, this is true even if their pockets bulge with money).

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The tone of the blog will lose its scoffing flavor. When Ben was in charge, raspberries were in order, after all he ought to be able take the heat. Trouble is, he gets more heat from other sides. This blog is, basically, rationally based. So, we'll get away from the barracks (yes, was in such as an impressionable 17-year old; at the time, it was WWII and Korean veterans - POWs even; so, give me a break, okay?). Yes, the operative word will be the absence of uncouth thought and actions. Hey, ever heard someone like Patton carrying around a recording device when he was in the field with his men?

That last bit is mentioned mainly to bring forth the fact that a whole lot of veterans got their start with the Bill that enabled their education and economic progress. Many of these were as smart as the privileged best-and-brightest (yes, right under Harvard - see the image). One could argue that the push toward fullness in the economy was related to the efforts of that generation and those who followed. And, it was pre-computer.

I was later, but I spent my career working with advanced computational systems. So, I know the lot. Who of the younger set can say that? Actually, the thing that I wrote several years ago needs to be rephrased. We'll be doing a lot of that as we go back and lift back to now the nuggets embedded in this work for the past few years.

Remarks:  Modified: 12/31/2014

12/31/2014 --

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: 12/30/2014

12/30/2014 -- Added Lord/Serfs (note, please, 2015 will be the year of the Magna Charta - that whole bit is related to what we are doing here). Next up, Chimera (ah, yes, it is true, folks). There will be more.  

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:

• FEDaerated (see fiat, gab-standard, coo-coo, and goo-goo) 
• Truth Engineering (see fiat and gab-standard)  
• 7oops7 (see fiat and gab-standard) 

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.

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.

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 quaffíng) 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.

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?).

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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: 01/15/2015

12/30/2014 -- Working on using pages to organize the material - as in, the message depends upon the medium.

01/15/2015 -- At last, a series that will establish the basis and extensions, as required. We are going to go back to some simple and come forward to the modern, complicated economy. Why? My long chain of ancestors (inherited via Prof. Lucio Arteaga) is one motivation.

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: 03/22/2015

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

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

03/22/2015 -- Jealous? No way, Jose. FED gives Wall Street what it wishes.

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. 

Weighing in

Moral: Wherein we stop to weigh in. At least, we got the memes right.

The context? We're now six days in to a string of losses in the U.S. markets. So, while things were going down from 17k to 15k (quick bounce) and back to 16k (lower realm), we had to wonder how long it would take for the coo-coo, goo-goo to start.

Well, it was later than expected. You see, the opinions of the blogger about the ca-pital-sino firm up on the downturns. Why? That is the time of the profit-takers.

Who pays for the upswing? Again, forget the cheshire multiple aspect. We know that some of this is from the hapless being pulled in by the media and other market sellers. Too, though, some type of pump priming goes on.

How to get to the bottom of this? Well, there is a lot of work to do.

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For now, let's just enjoy a take from Financial Times. They're talking "After QE." Then, they use stabilizers as the next thing needing to go to have a "real" market. As in, not one partying like mad as the Fed keeps spiking the bowl.

You see, too, the financials need (more than they admit) the government support. How is this different than the lowly ones being dependent upon government assistance?

The problem? These financial types rake in the dough as there is mis-allocation of capital (from the pockets of the hapless to that of the fat cats) on these upswings. And, their pockets bulge when there is the downturn (actually, their selling causes the downturn - profit taking, big time - we need to get back to the buyer-seller thing).

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Wait, today, too, we get the golden sacks head talking up the Fed. Sure, asking big daddy (or is it sugar mommy?) for continued handouts. How is that different from what we see of panhandling? Tell me, please.

Remarks:  Modified: 10/21/2014

10/16/2014 -- Sandbox in the players. Let the plumbers handle the systemic issues. 

10/17/2014 -- So, the St. Louis Fed guy talks coo-coo, and the markets soar today. One has to wonder whether we're seeing more suckers come to the table or if this is from a serious priming the pump attempt. In the case of the former, eventually, the sucker set will diminish to be of no help. The latter? Needs more study.

10/21/2014 -- Fed talking to Banks about their culture.

2010 to 2013

Moral: Wherein we weigh in, rationally.

Federal Reserve Bulletin, September 2014 (Vol 100, No 4 - pdf) has some juicy tales to tell. We'll just look at one and give our explanation. This Fed report looks at results from the triennial Survey of Consumer Finances (SCF) and provides us with their interpretation.

Nice. In fact, one section mentions "saving" (which is not a foreign concept - have we, perhaps too much, stressed the maltreatment of those who save? Not!). See Box 4 which looks at "Saving Behavior" and shows what we would expect. The more one makes, the more one can save. The less one makes, the less the savings.

Moral-oid: The less one makes, the more important savings are; too, playing the ca-pital-sino with one's hard won savings is not rational at many levels of these levels of income.

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There will be plenty to talk about in this report. First, though, let's remember that the 2010 SCF showed declines from 2007 for most. We will have to go back to look at that. And, we will relate what we see, to boot, to our start (August, 2009).

I pulled Table 2 out (see image) from the report. Now, some things strike me immediately (if it is not apparent, my interpretation will differ from that of the Fed Res -- and, my viewpoint is well-founded in both theory and practice and experience).

Please, look at the second grouping ("Age of head (years)"). Then, consider the age groupings. For one, "75 or more" represents the class of those who have been "flayed" by the policies of late. These are those who cannot use the ca-pital-sino, except in a limited sense, in a reasonable fashion (look, the majority of those in financial services/consulting - advisors? - need a lesson in "near zero" as part of their training). Many of this group who did try the ca-pital-sino lost and could not recover.

So, "75 or more" had losses from 2010 to 2013. Guess what? That is on top of what they had already lost from 2007 to 2010. If you look at the Fed's actions in supporting the fat cats, you ought to see that they need to understand the need for "stable" means to manage one's "wealth" (lots to talk about there, too). And, "stable" would cover much more than those age-sensitive strategies that we see touted so much.

But, notice, too, that the age groups of "45-54" and "55-64" also lost. An in-between group gained. Methinks that these are those who could delay their retirement (the inflated 401k types - virtual money, except many of these (early takers) will be able to get their little bit of gain - most will not).

---

Enough for now. The report is worth a read or two (see above link). I am thankful that the Fed does this type of analysis on a regular basis.

Remarks:  Modified: 10/06/2014

10/06/2014 -- Banks proved themselves untrustworthy in this last downturn. Of course, they were bailed out; but, many who felt the ramifications of their misdeeds (said to be stupidity therefore not illegal - but, immoral?) were never compensated. Consider please. With the troubles of the cloud, and bankers, like Chase, being hacked, are we not in a worse situation than 2007 (thereabouts)? There is still much to discuss about computability (and beliefs thereof).

Considerable time?

Moral: Wherein we react, after news.

Ah, the goo-goo, coo-coo talking keeps going. Oh, the Fed has to continue to soothe the little ones (actually, overgrown idiots) who cannot go without their training wheels.

Imagine. If the Fed dropped those two words, thinks Janet (and her buddies - with two dissenting votes), the market vultures would panic and fly away from the lifeless bodies of the savers.

Yes. Is Janet afraid that those who are sucking the loudest would fear that a weaning moment loomed and would cry for help? Don't want that. Keep the addicts happy with their spiked punch.

Mixing all sorts of metaphors? Sure. But, then, who would have thought that we could have come to all of this just because the financial types just had to crash the system with their gaming the system, get bailed (as they expected) out over such a long period of time, and then fling mud in the face of those who cleaned up their diapers?

Wait! Of course, the Fed is of that ilk. And, it's mere playing with fiat money (and two funny controls); albeit, real people are getting hurt (at least, a couple of good-heart'd humans voted for some constraint to be put on the partying pigs).

---

So, the flaying will continue (for a "considerable time"). Those savers who are still alive will have to stay hunkered as the chimera bubbles.

At some point, we ought to consider this type of thing (slapping of the face, flaying to the bone) to be a desecration of the dead (the landscape is scattered with savers who have been flayed to the bone) - has our society come to accepting that?

Remarks:  Modified: 10/09/2014

09/30/2014 -- So, now, Evans is talking. Great, guy. Keep the markets roaring in their frenzy. How is that to have an effect on employment? You know the game? Finances churn; each tick sucks money from the pockets of the hapless to that of the fat cats? This, the FED has encouraged for years now. Sustainable? You really think? Ever heard of savers? You ought to have come to the bank the other day when I was further flayed, slapped silly, and downright abused. 0.01% was their offer. ... Now, let's look at the ca-pital-sino (you still awake, Evans?). It's floating. The talking heads tout 401K uprisings. Pure imaginary gains. Why? The system (of which you, Evans, are a part) sucks out the value. This is some epitome of an advanced society? ... At least, all of that (this comment, until now) was written without Yellen ever being mentioned. Definitely, a great diversionary scheme (many senses).

10/09/2014 -- Tiptoeing to avoid a taper tantrum. This time, it would be mommy, rather than daddy, who started psychic meltdown. Ah, the poor lil ones.

Capitalism and slavery

Moral: Wherein we consider a book review.

The WSJ, recently, had a review of E. E. Baptist's book: The Half Has Never Been Told. This look by Baptist rang true several ways. For one, lots of those who were heavy into slavery were out of the upper classes (even royal families) of the UK (Lords and Serfs -- from 2009, but still apropos even though it needs an update).

You see, the capitalist wants to keep all monies for th upper classes. Workers are assumed to be mere resources available for exploitation (even if found via out-housing). We are still waiting for some type of humanistic, univeralistic capitalism to emerge; as we see with the results of the FED's largess, ca-pital-sino is what we have.

---

Slavery allowed severely unpaid labor on this side of the big pond. In the South. While in New England, there may have been attempts to establish slavery which never took hold. Superior moral character (not that they did have their own problems)?

So, let's just use a quote from the review:

In the 1850s, the slave-based economy experienced a dramatic resurgence when a new wave of "Negro fever" doubled the price of slaves in relation to that of other goods. On the cusp of the Civil War, slavery showed no sign of dying a natural death, except in parts of Maryland and Delaware. Slavery remained, Mr. Baptist says, "both modernizing and modern" and its growth "muscular, dynamic."

In his January 1861 State of the Union address, the pro-Southern president, James Buchanan, spent less time addressing the secession crisis in South Carolina than he did expressing his hope of acquiring Cuba for the United States—a longtime goal of slave owners and investors who saw it as the best opportunity for extending the reach of American slavery. Only civil war and hundreds of thousands of lives would finally put an end to the lucrative partnership between the cruel machine of Southern slavery and the roaring engines of capitalism.

---

For many workers, their job experience can border on slavery. Then, when the push for loading up debt (40 million in the U.S. now shackled with educational debt, now?) is added in, one has to consider just much onerous debt is a form of slavery.

Most ought to be able to relate to the mental, and physical, strains associated with having such a ball and chain (perhaps, plural) with which to cope on a daily basis.

Remarks:  Modified: 09/11/2014

09/11/2014 -- 

The chimera attracts a lot of attention

Moral: Wherein we look around at all of the viewpoints (as in, Janet's is only one of many).

First, a disclosure. There was the beginning of a re-look at finance/economics six years ago from two viewpoints (pointer to the first post on finance, both September, 2007): truth engineering, 7oops7.

• The first blog has a more general theme which will be of more interest as things unwind (that is, when Janet deigns to let things take a "natural" course - she cannot keep her finger in the hole in the dike forever). As mentioned in that first blog (2007), things looked zero-sum at the time (even with all those talking win-win; too, remember all of those who said that we had "risk" trumped?). As time went on, near-zero became into focus (and will be explained further). As well, the whole gaming aspect makes one think of finance as basically a playground for the few (diaper'd set, for the most part, who we had to clean up after - idiots, and we'll go on about this). 
• The second blog started with a focus on engineering issues. One hard problem is earned value. Essentially, that deals with knowing how well progress measures are showing real status. Okay? Just like accountants can cook the books, project people play with these types of numbers (or, let's say, have been known to; however, saying that glosses over a whole lot of issues). But, it became apparent, about this time, that the brains of finance had led us astray - what? again? Remember, my advanced academic work was done in mathematical economics, for the most part. But, I worked, during my career, with engineering problems. When I woke up to the fact of the dire straits (not personal), old Rip came to mind. WTF? And, look, brains, I still am asking that? ... So, you see, evaluations (establishing value - needs to be updated) are more commonly necessary than one might realize. That is, operationally, we need to do this. What has happened, though, is that a whole lot of this type of stuff is being applied mindlessly (sheesh, talk about a real need for mindfulness).  

---

Today I ran across some writings by Doug Short (searching on evaluations). He started his blog in 2005 and found success: dShort Updates. Too, he has a data focus (with lots of nice charts). Too, he and I have some parallels, though I may be a little older. I like that he is autodidact in economics (there is a lot to discuss here). Actually, in any field, one has to follow one's own lead if venturing outside of the mainstream.

So, Doug is on the reference list that I need to build (early collection of blogs and miscellany). There will be more viewpoints added to the list.

---

Aside: Look at my academic and career background. Note, please, Data-Driven Purgatory has a lot behind it. Of course, it is my responsibility to support and to argue for the position. But, for beginners, consider, please quasi-empirical imperatives (trutheng, 7oops7). Despite large numbers (and their gifts), we are being over-layed insidiously with pseudo-truths abetted via computation and its mathematical associates and ought to be quaking in our boots. Even the IEEE wrote about having jobs in big-daddy data (essentially, machine learning and statistical testing). Forget ISIS (they, at least, are true to their word). This is much worse since it poses with such a nice demeanor while plotting our demise (not physical, as ISIS would have; no, intellectual and spiritual death - much, much worse.

Remarks:  Modified: 02/11/2015

01/15/2015 -- At last, a series that will establish the basis and extensions, as required. We are going to go back to some simple and come forward to the modern, complicated economy. Why? My long chain of ancestors (inherited via Prof. Lucio Arteaga) is one motivation.

02/11/2015 -- Wikipedia: Zero interest rate policy.

The Tetons weep

Moral: Wherein we stop to see the posturing in the western hills.

Say what? 2013 - Transitions, 2012 - After all of these years, 2011 - Financial piracy, 2010 Chimera II.

We are in the time of the annual pilgrimage, again. If only it were a pilgrimage. However, to whom would the oracles bow and pray (I know, it is the age of selfies, Lord, deliver us)?

It is really a meeting of the inflated heads who control money as if their bailiwick is central to any economy. Hence, posturing and preening before their peers.

Folks (of the money supply), we could easily barter, if we had to. Get over yourselves. Money? It cannot be eaten, nor breathed, or used for hygiene, ... Whence so much emphasis?

You see, gal and guys, your thing is more like plumbing. If only you could see that. Distribute the water and collect the waste. Okay? What? Yes, a utility ought to be how you consider your work.

We could use the heart and blood; but, the rapacious doings of finance (abetted by you people) keep us from using that (heart - wonderfulness, to the extreme. Okay? That could be applied to anything of the FED?).

---

William Gaston, in the WSJ, had some nice thoughts, which are below: 8/20/14 - Shared Prosperity Is a Moral Imperative. Perhaps, some day we could use moral in talking about the FED (will not hold my breath on this, though). To quote William:

In recent decades, the gap between the compensation of corporate leaders and that of their workers has increased many times over. The surge of the financial-services sector produced a new tranche of packagers, traders and managers who enjoy almost unimaginable wealth. Meanwhile, middle-class families have been treading water, and many parents fear that their children will do worse. (emphasis mine)

Nice, William. But, will the FED listen? 

Let me add one thing, for Janet. The current policy is pushing people to play the ca-pital-sino (not this old guy, talk to me about reasonable economics) where there are several problematic issues. For one, it's aerated (only a small percentage get their bucks - beyond those taking the cream daily - do you really need a lesson here?). Yes, the boat is floated with gaseous matter. And, most people are heavier than can be sustained (except on paper). For another, William says "treading" (as if they have the energy to do so). The real fact is that most are trying to not succumb to the flaying that has been going on for so long (thanks Ben). 

Methinks that these people would love to be like Isabella and Mortimer, partying while poor Hugh was disembowelled (Note: the spectators had "delight and merriment" at his expense.).  

Remarks:  Modified: 08/26/2014

08/22/2014 -- Flaying the savers will not solve the "What recovery?" problem. Finance caused the problem; it got bailed out; the current mode just reinforces "moral" turpitude (wait! is that the goal? screw everyone worse this time around?). Having the low rate is supposed to put people back to work? Ben, at least, mouthed the need for fiscal approaches. We ought to have had a jobs program a long time ago (opportunity missed; just like we missed out on nationalizing those institutions that created the problem - namely, banks).

08/26/2014 -- Gosh, Trish Regan (USA Today) has it right. However, even those (most of them) who think that they are gaining only think that. The cheshire multiple (plus insiders raking off the cream and other manipulations and ...) says otherwise. And, it does not have to be this way. ... Much to discuss.

FAME

Moral: Wherein we look at FAME.

In short, Finance and Accounting MEmos. See, fame-jagazine.com.

Nice, like the business model which expends the effort to condense, summarize academic papers in order to present these little overviews in a coherent form. And, on-line access is free. The printed copy requires one to come up with money.

To date, there have been two publications. These will be the source for coming posts.

We will have to give a nod to editors and supporters. Great idea.

Also, we will upgrade our opinions (FEDaereated - the latest, 7oops7, Truth Enginneering).

---

As an aside, CALPERS seems to want to downplay equities. Perhaps, they're seeing that the aerated property causes things like the Minsky dump.

Remarks:  Modified: 08/12/2014

08/12/2014 -- 

Savings and savers

Moral: Wherein we use a simple example to start to talk the issues.

Granted that there are several factors involved, but the image shows the reality. That is, the backbone of the economy has been flayed. Backbone? Those who work, live within their means, pay their bills (including mortgages - as in, none of the saving class walked away from their debt: unlike some who, as adults, put on their back, knowingly, debt beyond their means, and then had the gall to just shuck off the burden (the old debtor prison came into vogue for such behavior) and walk away - still cannot find that other than unconscionable).

So, the likes of Ben, the past decade, and, now, Janet, care little for those backbone types. No, the ca-pital-sino (gambling, essentially - plus, illusory gains so that people can salivate about their 401Ks - which, for the most, will not provide what they think - all explainable) is the focus.

---

Let's start with a simple example. A set of savings bonds that was bought in the year of 1980 and cashed out in 2010 would have returned 422% based upon the purchase price of the bond. You see, those terms were the norm back in those days when bonds were still being sold under a patriotic guise. As in, every payday, whether you were already doing a payroll deduction for bonds, you would hear a spiel about the need for people working in the United States to buy and uphold the country.

Too, there had been inflation during that 30-year period (which is coming back, folks, despite the machinations of Janet - some are already feeling this, in many ways - as she fiddles with the definition of the measure). And, interest moved up and down as has become a regular thing until six years ago or so.

Three years of bonds
Note: figures obtained via the Saving Bonds Wizard
provided by the U.S. Department of Treasury

What happened then had all sorts of rationalizations attached none of which considered savers or their usefulness since "debt" seems to have become the preferred mode.

Now, the image shows three tables related to bonds that were bought in three different years. For each year, a bond was bought every month costing $150 which had a denomination of $300. So, the total cost for each of the years was $1,800.

The tables are evaluations of these bonds (using the savings bonds wizard) at five different points from February 2006, which is provided as a base, to August 2014. Now, by the time of the first evaluation - 2006, the value of the earliest set of bonds (top table - 1993) had already increased by 78% over a 23-year period (that is, 6% a year). Similarly, the 1997 and 2002 bonds had increased, 42% and 16%, respectively.

What we can see with the 2011 evaluation (1993 bonds) is a braking such that the returns reduce substantially. This is obvious for the other two years, with 2002 being the most dramatic (due, in part, to changes in the rules - necessary adjustments: some early I-bonds are paying 5% right now even with Ben and Janet trying to reduce that outflow).

The last column shows the difference for the bonds at maturity, that is, after the duration of the thirty years (after that, there is no more increment). For the 1993 bonds, the difference is only $6.00. However, there is a noticeable difference for the later bonds. This difference, folks, denotes unrecoverable losses due to the unfortunate reality that taxpayers had to bail out bankers who did not know how to do their job.

And, then, the fact that those who control the funny (fiat) money (have you heard, of late, about the Forbes guy talking some other method?) decided that they would set the interest rate at an unprecedented level. Why? Because they could; we still have to get this thing unwound with unknown consequences (by the way, will Janet talk coo-coo under the shadow of the Tetons in order to soothe the feathers of the addicts of easy, plentiful money?).

---

This is one little example. The other side of the coin needs to be seen. As in, the trappings of power in Washington puts serious blinders, many times. There is no reason to continue to flay the savers. In fact, the adjustments to the model that are necessary must be lifted to view so that we can get them discussed and, perhaps, understood.

Remarks:  Modified: 02/11/2015

08/12/2014 -- Leverage is balm for the banking, and finance, folks (but, then, the whole system seems to want to defy physical limits, say thermodynamics). They think that 22-1 is normal (whereas, in the olden days 12-1 was thought the upper limit).

22-1 means what? If someone came to you and offered you 4.5 cents for a dollar, would you not laugh? In essence, there are 22 demands upon the same dollar (so to speak).

Now, bankers make their money as they will take a dollar and give you paper that is supposed to be worth a dollar but is actually backed up with 4.5 cents. At the same time, though, they siphon off their take from the "real" and not their phony money.

Finally, for the economic wags, who will say that "real" money gets eroded by inflation. Yes, that is true; but, inflation denotes "real" pressure (meaning, something behind the phenomenon) on money. What we are talking with leverage (and, for the most part, the markets - that are behind everyone's 401K mania) is "aeration" pure and simple, Modigliani, notwithstanding. The equivalence is not there, as will be shown.

08/12/2014 -- Need to look at FAME.

08/25/2014 -- The Tetons visit might have been the time, but not. No, they want to push equity. So, will the S&P 500 at 2,000 be enough? Or, do you guys/gals want to  just aerated to where the mess is huge? Again, that is, so we can mop up the diapers of that market-playing class?  

09/17/2014 -- The coo-coo, goo-goo goes on. The landscape is strewn with the lifeless bodies of the savers. Thanks, Janet.

02/11/2015 -- Wikipedia: Zero interest rate policy.

Data-driven purgatory

Moral: Wherein we pipe up, just to show the interest is still there.

So, what is going on? Well, we're waiting to see Janet's influence emerge. Right now, it's still a sampling stage, it seems.

Janet's dashboard

The latest thing that motivated something here was Janet's talking about data-driven approaches (see the recent Bloomberg Businessweek interview, for example). As in, the data that she is looking at now won't get her to stop flaying the savers. Well, Janet, change your data goggles, for one thing.

Too, we all know that Economics is dismal. All of that data has so many faults (approach, viewpoint, ...) that any strict adherence to whatever comes from economic data can be categorized, at best, as irrational, especially if the exuberance at the data's wonderfulness is demonstrably obvious.

Savers are barely holding on to life. Who are they? Let's look at the other side. What rational society would indebted its future generations so heavily as we seem to expect now? Crazy. Of course, people needs jobs to spend and to save and to pay their debts. 

But, the gaming that is evident now, with the ballooning pockets, does not an economy make. Janet, have you looked at the infrastructural issues, of late -- say, the uncountable failing bridges, highways falling apart - and, those with the biggest pockets want to step away, taking their gains, which do not take into account the totality of costs? Near zero is the thing to bring forward in the discussion in this case.  

Look, debt even at a low interest is still that. Debt is something to manage and control. Too, the whole model of thinking that the consumer drives things, requiring debt thereby, is suspect. 

---

Aside. Alan was king while Ben was a real nice prince (the 17K+ can be mostly attributed to his largess). What can we say about Janet? Too early to tell. But, however this all unfolds, she will be bringing several unknowns to the table that we have not seen before. 

By the way, data driven implies computational system (which is so full of holes that we ought to be quaking in our boots) and many unresolved issues. Methinks that "data driven" brings along with it some type of blinders that are comforting to some folks.  

---

And, none of this ought to misconstrued as anti-science. Janet is right on one thing (perhaps, more). Rule-driven is chasing after silver bullets and is especially troublesome due to its reliance upon the computational. But, then her data-driven mindset is as problematic. 

Remarks:  Modified: 07/26/2015

07/31/2014 -- Added in Yellen's dashboard. Why is it that flaying the savers is the key action? She could have delayed the tapering and taken the rate up a notch or two. ... With the DOW sagging, as it is today, what will Janet do? More coo-coo as we saw from Ben all of these past years? 

08/05/2014 -- Will Janet talk goo-goo, coo-coo to the addicts? Actually, now might be a good time, in the confusion, to raise the interest rate to 1.25% or so. And, establish 1.0% as a lower bound.

09/17/2014 -- Yes, she did. The coo-coo, goo-goo goes on. The landscape is strewn with the lifeless bodies of the savers. Thanks, Janet.

01/15/2015 -- At last, a series that will establish the basis and extensions, as required. We are going to go back to some simple and come forward to the modern, complicated economy. Why? My long chain of ancestors (inherited via Prof. Lucio Arteaga) is one motivation.

07/26/2015 -- This has had some recent reads. Lots going on, including poster boys coming out of the woodwork. We intend to get back to this topic: consumer as central to things economic (metaphysically sound).

Rules for the Fed (Yellen)

Moral: Wherein we let John Taylor, et al, do some talking.

Yellen, and her ways and means, is under scrutiny. What that might foretell is something that we will have to watch and, perhaps, learn from.

John Taylor says that the Fed ought to follow its rules. WSJ: The Fed Needs to Return to Monetary Rules (there have been other articles the past few months). That raises a question: whose rules? Well, Taylor's, for example?

Rules? Who runs their life this way? Oh, I know, many. But, free people have fewer rules than do those under someone else's thumb. We just celebrated our supposed freedom a few days ago. But, look closely at all of the ties that bind (some very insidious - yes, thanks to Zuck and that ilk).

But, you have to wonder if Ben (little Timmy) and that whole crowd loved playing cowboy and rescuing the economy from those that were let loose by largess to begin with. The solution? More largess. Cowboy (apologies to the real cattle handlers)? Yes, that has been used to denote those who shoot from the hip (which suggests running amok, so to speak, versus being methodical) as Ben seemed to be doing as he, creatively, went deeper into manipulating in new ways.

Wait! The Fed does claim to be data-driven. So, pending discussion lurks here.

---

There is nothing cynical to the viewpoint. Rather, we are in a mess for several reasons. For one, who knows what is what? Even if we did not have the fact of disinformation, there are all sorts of human foibles that we face. One of those is our real lack of insight, purported evidence otherwise notwithstanding. Secondly, we have a century-plus of mish-mash mathematics (ah, how to get this discussed) to contend with. Thirdly, the computer exacerbated, and spread the influence of, the second (just prior) note. Yes, several genies are out of the bottle. ... The litany is long.

Out of control, essentially.

---

We knew that unwinding's effects would be something to observe. Yellen's delaying this is only going to make things worse. But, then, however she and her kind unfold the future will result in the unexpected. So, we will have a show to watch no matter.

It is just that the savers were de-skinned as a result of Ben's ways and means. Anyone care? The consumption side would only work if debt is constrained. But, how? We can get to that. Consider, what kind of sustainable economy would impoverish future generations by loading them up with debt that is now being accumulated?

Say what? Yes, we'll get back to that, too.

However, there are many examples of debt being used to fill the pockets of some. As in, equity-biased folks stacking debt on a company (that debt allowing big payouts to the participants - to wit, if you doubt this, Hawker - 2008 post, want to discuss what ensured in the following period?) with the hope that an IPO would spread this amongst supposed investors.

---

We ought not envy Yellen (her limousine, big office, etc.) as she has (and will continue to have) to deal with Ben's gifting of the monied.

Remarks:  Modified: 02/11/2015

07/09/2014 -- Markets were down yesterday. Lots of talk of heated values. Then, Yellen talks goo-goo, or the markets think. So, we have an up day. Goo-goo? Actually a release of notes from an earlier meeting. Insanity? There is no way that all in markets can get their bucks when needed. That story needs to be told more clearly. Why? The cheshire multiple, for one. 

02/11/2015 -- Wikipedia: Zero interest rate policy.

Startling news?

Moral: Wherein we commiserate with Ben that he is not at the Fed desk as the results of his largess come to fore. Well, Janet can claim some credit; too, she'll have to handle the downside that is coming.

What results? Well, the DOW running sky high.

The headline says it all: Dow flirts with 17,000, but most people missed the ride. (emphasis mine)

It ought to read: Dow flirts, but most people cannot ride. (why not? to where does an illusion take one?)

---- This was brought from a Facebook post, dated 7/2/2014 ----

Most people missed the ride? Even those who got on that "train" will lose out. That is by definition how the system works. Its main purpose is to lure the hapless. 

Even under the best of situations, the "most" cannot get out of this type of market what they have put in. That message is never given. Rather, the talking heads say that people did not get on and missed the "train." It would be comical if it were not so sad. Ah, let's count our hypothetical wealth (and, arguing that the cash equivalents are as flaky is not proper - to be discussed).

Again, all of those on the train cannot get their booty (the Zucks of the world have and will). Why? The cheshire multiple, the chimera, and such.

Early sellers get the goodies. At some point, which is a lot closer to the top than you might expect, the majority of the rest become losers since they must sell below their cost. Oh, wait it out, is the adage? Not if you need your money (and a whole lot of other reasoned responses - these issues have always been known, but the gaming fills the pockets of those who run the system).

http://finance.yahoo.com/news/dow-flirts-with-17-000--but-most-people-missed-the-ride-202459906.html

So, one big disservice, of many, of the FED, of late, has been not allowing a rationally sufficient return to those who want to preserve principal. No, they would rather push gaming (as if that is the proper mindset for a sustainable economy - to be discussed). 

Remarks:  Modified: 07/03/2014

07/01/2014 -- Euphoric territory? How do images and illusions attract so strongly?

Asset rich, income poor

Moral: Wherein we look at savings and savers, a little more (no reason to think that we are complete, at this point).

The WSJ (June 20, 2014) article, The Asset-Rich, Income-Poor Economy, was a welcomed change due to its reasonableness and to the obvious proper insight of the authors (for example, they note the problem of retirees straining to enjoy their golden years under the current regimen). Actually, I'm running into articles that remind me of 2006/2007 when I was first reading analysis about the state of the economy. Many analysts were seeing problems mounting up way  before the downturn occurred. And, I don't need to list those who kept up their headstrong rush all the way to their crash.

Must we have these silly crashes? No. Is Yellen helping? Not like she thinks. Is it good for her to continue to flay savers? We'll see, they are a hearty lot.

Back to the article which is worth a read. The authors provide a chain of relationships that support a sustainable economy. It is termed in the sense of "wealth" in the following way:

A proper mix of labor, capital, and know now goes into productivity; productivity provides labor income; income goes, in part, to savings; savings becomes capital; capital supports investment, ... and so forth, recurrent-ly. (emphasis mine)

One can think of this as cyclic or even with a mechanical sense. But, if you want to get relative, that works, to boot. The thing is that we have never balanced these things in the manner to which they ought to be handled.

---

Notice, savings goes to capital (not the ca-pital-sino, per se) in a real sense. And, there are better ways to handle savings than with the chimera and its train. So, we will be describing further the chimeric aspect of the proverbial train (at the same time, debt's role needs to be considered - as in, pure debtors (that is, those with no capital) create an inner & inter generational drag on the economy).

Remarks:  Modified: 06/23/2014

06/23/2014 -- Yellen behind the curve? 

Sucker money

Moral: Wherein we consider how the Fed is setting up for losses by those who cannot afford such.

In other words, sucker money will (may) be flowing in. May? Perhaps, people are smarter this time around. The "sucker" post was from 2010. That was before Ben did some of his trickery.

In the meantime, savers were flayed to within an inch of their lives. Perhaps, they'll be like cats and have nine of these to give up.

You see, several things needs to be explained. We'll get to that. In the meantime, it will be interesting to watch how all of this unfolds. Except, the victims will be those who were pulled late due to all of the hype that has inflated as much as have the markets.

Those late buyers will buy from the early entrants (or even those who stayed in last time, getting what they expected Ben to do (and now Yellen), in hopes that the punch bowl would be kept full) who will have massive gains. Then, as things tumble, those late buyers are guaranteed losers (assuming they sell, if they do not sell, what type of trickery will be required for the next load of dope for the addicts?).

Minsky's notions, of course, will come into play as we look at this matter, again.

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But, we can talk moral hazard, too. Lots to talk about there.

Then, we will look at how savers have been hurt, using numbers. Perhaps, it's time to re-evaluate the model that has consumer spending weighted so heavily. Near-zero's reality is lurking.

You see, our infrastructure is decaying all around us. The fat cats don't usually bother with such things (as we will show). Why? Their position (as in, they're the best, deserve everything they can obtain via exploitation, and a whole litany) leads them to believe in perpetual motion (we'll do a post on this - something from nothing, if you must ask - as we see with the chimera). Yes, idiotic, isn't it?

Remarks:  Modified: 06/20/2014

06/20/2014 -- Last fall, there was a flurry of activity, looking at Yellen's approach. Two examples: Folly of the Fed, P/E Multiples. That was last fall, who is looking now? Well, Smithers is still at it. Also, quote from the Economist (May 10, 2014) -- emphasis mine: Janet Yellen, the Fed’s head, rather bizarrely used the prospective price-earnings ratio, one of the weakest of all measures, to justify a statement that Wall Street was not overvalued. (This was doubly strange since her husband, George Akerlof, co-wrote a book with Robert Shiller, who has championed a much better measure, the cyclically adjusted price-earnings ratio.). ... From my analysis, we'll see something else: the earnings are less than expected just by definition (such that allows book cooking in order to reduce the influence of costs - see infrastructure allusion earlier). 

Minsky, again

Moral: Wherein we say that Minsky still makes a lot of sense as he did before the bulls ran amok; but do we learn (or listen)?

Interest in Minsky?
via the New Yorker

Minsky? Yes, he of the moment. As in, the moment that is around the corner of this inflated, conflated state that we find ourselves in, for many reasons.

Piketty is the rage now. Either, his thoughts explain things to people; or, he is trounced upon by those who are avid capitalists (as in, near-zero exploiters - we will get back to the ca-pital-sino, as almost an essential result from misusing Adam's thoughts).

Well, earlier, a mere six years ago, Minsky was the rage, though long passed on.We invoked Minsky several times: FEDareated, Truth Engineering, 7oops7. Others did so, as well, but, earlier: New Yorker Feb 2008.

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December, 2008: We asked, is finance, by necessity, Ponzi-like (er, actually, Made-off was in there as an example, too, so we ought to say, by necessity, Made-off-ish).

We're at a similar place, via different paths. Back in 2009, no one envisioned that Ben would reach into his bag of tricks and do his QE stunt. Look at the chart in the post, Ben's put to see what looks to be highly correlated graphs (not talking causality, at the moment). In the times of that post (2013), many would not accept that Ben was pushing us toward some Minsky state. Too, though, all sorts of revelations were coming about in regard to the malfeasance (mortgage issues and more).

So, Minsky was forgotten, it seems. Or, his thoughts put on the back burner as less relevant.

The gist of it: Moms and pops ought not get pulled into the current game. Not, let's say, until Janet gets interest back to where we can graft some skin on the poor savers who have taken the worse of it (so that the fat cats could be coddled, sweet/baby-talked, and the like).

Too, we ought to have better access to the neutral truth, rather than to the marketing material pushed by different viewpoints (money-making schemes that abound and that are harped about daily by the talking, screaming, and spitting heads).

Remarks:  Modified: 06/14/2014

06/14/2014 -- Review of Piketty's book.