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. 

That old chimera, the train

Moral: Wherein we consider the train, again.

Train? Yes, we said that there was none such. But, today, someone says that the train is on top of the 17K mountain (DOW flirts with 17k). And, you are not there unless you stayed in stock.

Otherwise, you're back in the muck in the valley.

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So, let's, first, look at the use of the train, in this blog (and related).

• November 6, 2009 -- Back then, the thought was that getting on a "train" and riding on other people's money was not what one needs for a sustainable economy (still true). Now, I will argue about those who like a free lunch; too, though, is the troublesome pursuit of finance after the perpetual motion event (their market). 
• November 6, 2009 (Truth Engineering) -- Some might have gotten on something and, in doing so, had gains (ill-begotten, in more way than one) to brag about. But, the discussion, below, will look at why gloating is suspect.  
• November 6, 2009 (7oops7) -- What was behind the gains (see above) then? Who would have thought that Ben would QE us as in screw savers even more than he had done to that date? Of course, a whole lot of system finagling has been done to keep the down-side in control, so can we ever get back to where the proper grounds can be known?   
• November 7, 2009 -- The train that is at 17K has the fat cat cars, up front, in which most of the value has been sucked. It is at the top, when the other cars can be let loose to fall to perdition, below. 
• ... and references, thereafter, in other posts

Then, we would have to discuss the fact that all cannot be on top of the mountain, in the train. In fact, the train is on very shaky tracks besides being loaded with cars that have been sucked dry of their value.

Too, as those on the top of the mountain being to sell, it'll start (train and all) to tumble (built on faith).

...

At some point, near-zero will have to get attention (too, the fact that Ben's largess was required to get to this "inflated" state).

Remarks:  Modified: 06/14/2014

06/14/2014 -- The future is chimeric; actually, our view of the past, given what we know of memory has the same problem. For some reason, if there are mathematics (mis-used, to be explained) and computers involved, then people's mind close up. Ah, yes, the wizards know. Hah! Given the issues, still unresolved, with computation, we ought to shake in our boots as we let technology run rampant. If only we knew. ... So, changed the profile from a "mirage" to a long road to unknowns as those crossing the continent saw in the early days (say, 1800s - and still do). What was ahead (the road was not there, by the way; again, representative of our thinking that we have paved some way)? Daily sight increasingly looming as those people toiled over the landscape - trudging, foot by foot); and, what lies ahead is not known until one gets there. Yet, those unknowns were tamed enough to establish and to cultivate (through long years of work and struggle by determined people - whereas,capitalists want returns from sitting on their expansive arses while others do the work and sweating - sheesh -- and without pay - [for each $200 that is paid for a smart device (supposed - of a certain type), those who do the work, collectively, get $10 - oh, didn't know - all of you smart-device users?]. Never conquered, though. That's one point (our over-estimation of ourselves in terms of handling the future - risk, in some senses).

Dalio, again

Moral: Wherein we consider other views of the Fed.

Forgetting the particulars of Janet, we can discuss Ray Dalio's take. In an earlier view (Feb 2014), we looked at his model of the economy. And, we suggested that people watch his video with which he presented his mechanistic model (see image).

Aside: For Ray's view, "mechanistic" is used purposefully to align the conversation toward science. We all know that the dismal-ness of economics can be, in part (small part), lessened with better science. However, as we know, too, the mechanical view is a rough order-of-magnitude approximate to the relativistic look (which, by the way, is not complete - to be filled in, eventually, through consideration of things left out, for now, due to the troublesome-ness).

Now, Dalio has accommodated us with  more of the same in a talk with James Freeman: Soul of a Hedge Fund 'Machine' (WSJ Sat, 6/7/14). In fact, Dalio admits that he runs his people as if they were machines which is something that we will get back to.

For now, we will say that people lining up to be driven by machines, if they are remunerated properly for doing so (and are doing so voluntarily), is just another example (perhaps) of human nature (consider, though, Smart and its money, we have barely touched upon that).

On the other hand, what has ensured with out-housing and computational overlays is the onslaught of the privileged, can-do-it-cause-they-can upon the hapless. Yes, anyone who sits at a computer and drives human affairs ought to give themselves some time to pause and reflect.

Actually, I would propose this: such driving types, please go down and work those same processes, for more than a few minutes, and see how you can bear up.

You see, the whole framework of the economy is an endless supply of hapless people who can work, be exploited, and produce for their time (until they are spit out like an empty bottle). And, technology allows this since exploiters can bop from continent to continent finding new suckers (and local, corrupted lords who allow their people to be thusly mis-used).

Aside: It is nice that the uppers of the military (for the most part - 90-day wonders as an exception) came through the ranks (however, the academy experience is not sufficient - the O-series ought to spend some time (to be defined) in the enlisted ranks (walking in their shoes).

Dalio (talking to Freeman) says that the Fed's game is incomplete. There is another thing that they ought to be able to do (oh yes, consider the savers, please), besides the interest (knob and lever) and printing (say, QE?). What would that be? Dalio does provide us some relief due to his timely intrusions.

But, we're being brief for now and will return to Dalio's comments.

Remarks:  Modified: 01/02/2016

01/02/2016 -- Dalio used in Quora. 

Janet's moral make-up

Moral: How long will (can) Janet keep the punch bowl spiked?

By looking at posts on this blog, one can see that we said "unwind" a long time ago. Then, Ben was talking coo-coo to the investors (what a misnomer! gamblers is more apropos) as he witnessed taper tantrums. Now, Janet has said and says: oh no, jobs.

So, we see, today, that jobs are looking up (in ways where there are problems here, the FED's little gaming is not the issue). Too, the DOW is touching upward to 17K.

For why? Whence this? Inflationary pressures (Ben's stoking all of these years) on those markets that do not amount to anything real for the people on the street (as in, most of the populace).

Yet, at the same time, Janet and her ilk continue to flay (de-skin, first, then starting on de-flesh) the savers. Yes, we, the savers, feel like those cattle cruelly collected who are confronting catastrophic endings.

To whom will the flesh be sold? Please tell us, Janet or any of your partners.

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The Economist had a special issue on Shadow Banking. Seems that people want to get away from those types whom Janet (and, before her, Ben) so dearly loves to support.

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Why moral? Let's talk "moral hazard" as it applies to the billowing markets (aerated to the maximum point). That is, the safety net (Janet's put) urges those who have the predilection onward toward risky behavior.

Remarks:  Modified: 02/11/2015

06/07/2014 -- The ECB beat Janet to the punch (not to the bowl).

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

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.

Map-map

Moral: The effect of Janet's reign is coming clearer?

We finally heard from King Alan (more below). Prince Ben's take will be forthcoming shortly.

Yellen? Inconclusive, as of yet. Except for one thing that I noticed. Yes, the savers have been flayed. Will Yellen cut into the muscle (Moral) next? There are some stirrings of such.

Which brings us back to King Alan. He used map-territory in his title (see Summers' comments). The guy has to realize that from where he sits, he cannot get past map-map. Nor can any of those whose sole worldview revolves around money and measurement by money.

Oh yes, we see the takes gloating in their large pockets, enormous yachts, gigantic castles, and what not. Too, they can enjoy the size of the unfortunates who have to dependent upon their largess (by the way, only Ben has been noted for that, to date).

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We have been mostly silent, of late. Actually, the tact is to get more universal and proof based. Yes, indeed. Meanwhile, the machinations daily, from the providers and players, of the cheshire-chimera's playground are not of much personal consequence. Not even jealousy (as some cohort mentioned was his little sin for the day).

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So, back to map-territory. Is there territory that is real enough for us to grasp? Yes, as any mature, effective human knows, and they are legend (myriad'ly speaking). As said before, we're moving forward. Snail's pace? No, considering things that are "hard" (those things overlooked by the current thinking and modeling that casts off to the hapless all of the costs beyond a mere handful -- look, how else the big pockets? near-zero, indeed).

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In brief, Alan used the right words. Can an economist (even a behavioral one) really get to the essence of the problems without serious adjustment of worldview?

Remarks:  Modified: 09/17/2014

05/20/2014 -- Of course, a question is begged: can we ever get beyond map-map? You know, some wise guy (not Jobs by the way) might tell you that just recognizing the problem might suggest a first step toward seeing the territory (you see, that chimeric is normal gives those who can (ability) and may (access) the means to rook the system - one little example). 

05/20/2014 -- The markets were down (DOW 130+). Some talk chatter of rate rise. Of course, Janet will coo-coo just like Ben did. That is, talking soothing to the addicts who are rampaging over the economy with their inflated (via the Fed's largess plus fiat monies) gaming. ... Today, a report that millions of households are still under water. Let me remind you, too, the Fed is hold toxic assets from the recent barfing time. And, those millions are paying their mortgages; let me add, at a higher interest that those getting the goodies now. Sheesh, Janet, go, at least, to 1%. King Alan, see above, says that savers are the key. Was he referring to Ben's largess and the continuation by Janet? One couple has bought a new house. They said that they'll rent out the underwater house until the price gets to where they can think about selling rationally. Those are anecdotal, I know, but the idiocy has gone on now for years (and years) such that only a certain class benefits.

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

Going forward

Moral: Janet persists in Ben's ways; once the savers are flayed of their outer coat, will she then start to carve out muscle?

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Let's see. Unemployment is down, by certain definitions. Things are progressing for some (but, is that not always the case?) while others labor (yes, capitalists' dream?). Too, the markets are hot and aerated (again, the FED's dream?) where the leeches can pull off real value daily (the only ones who actually benefit). Talking of leeches? The WSJ listens to the propaganda of the NASDAQ head (oh yes, he says, HFT is great). ... Ah, just too much,

The training wheels remain in place, and the punch bowl is filled every day. Sheesh.

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So, recall a look back from the turn of the year (Past 30 and All time). We thought that we would do that, again. Probably will make it a regular thing.

    Past 30 days                                  All time              

Well, on the right, "Chimera: sellers and buyers" (in essence, most will not get those values that are announced to them monthly with their, fictionally farcical, statements - yes, the WSJ recently had someone writing about the relaxed accounting rules that see income [without considering costs] as something to take note of) now has more reads than does "Computation, finance and engineering" which indicates something; for one, a post from 2013 came in over one from 2009. But, perhaps the "chimera" will be more fully recognized for what it is.

Now, for the shorter-term, "Near zero" seems to have come into focus. That is a key concept; any gain (especially by those whose intake is extremely bulbous) takes from myriads (oh yes, of those types that the uppers do not care about).

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As with anything, change have occurred in lots of ways and in all sorts of directions since the start of this blog. However, those early posts' basis is still there. One might argue that they ought to be re-written in a more up-to-date fashion.

Well, that is true. FB was not there to the current extent when this started. Other things have changed. Apps are now a fad. But, look at "Wake up, people, it's your right" for a view that I need to expand upon further. It has been touched upon a few times.

Look, the Magna Charta is getting a lot of attention now as 2015 is the 800th year of the first signing by King John. So,we have descendants of all parties concerned planning to have various types of celebrations. Ought to be fun.

We have mentioned the MC here (several times) starting in 2010. You see, labor needs it. The poor people of the earth need something like this to be protected from the rapacious ways of business as it goes around the world looking for the next set of people to exploit (out housing).

And computer (cloud) users need it to have a way to tell the pimply-faced wizards (I've been there) to back off (yeah, Zuck, et al). By the way, where is there any coherent of basics for computer safety and security for those who just want to use this stuff as it was intended (gift of God, if you must ask).

... Ah, too much, need we go on?

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So, I'm back to wondering when Janet will "mama" the economy rather than the screwing everyone like some "papas" (yes, if you must, the capitalists at their worst) try to do.

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Now, how to retool for the future? Evidently, Janet will take her time. We'll have to get from our PTIME view and be a little more proactive, perhaps.

Remarks:  Modified: 05/12/2014

05/12/2014 -- Yes, today, there's talk of negative rates. In other words, we pay the bank to hold our money. Sheesh. Is that not like cutting out the muscle (see Moral)?

HFT and other riggings

Moral: Are the markets rigged? Let's stop and re-look at high-frequency trading (list of posts that used the term).

First of all, think of the Cheshire Multiple which guarantees that early sellers get the pie (the rest get crumbs). Yet, we have based peoples' future on this. These HFT types get gains on both sides. We will explain.

However, when the HFT types pulls their gains, it has a real impact on the size of the pie and the potential crumbs. In short, think leeches and parasites rather than anything positive.

So, are they necessary for liquidity? We'll get to that, too.

Below are pointers to additional material, for now. We will get back to our arguments about silly games and fiction in regard to things financial.

• WSJ Book Review: Flash Boys 
• WSJ Five things to know 
• ...
• Edgar Perez argues for HFT 
• ... 

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The image is from the first bullet, the book review by Philip Delves Broughton. These are the last two paragraphs. Granted Mr. Lewis loudly shouts out about a lot of stuff. However, he does have some merit in the current situation.

I have ranted about quants and HFTs since the beginning of this blog. Being an outsider, though, I'm only applying a smell test based upon years of mathematical computational experience, degrees in Economics, long years in the American economy, and a basis in grappling with foundational issues.

My early take on quants was that they were youngsters let loose by old guys with money for the sole purpose of filling pockets (taking from the hapless). That notion has not changed.

The argument for liquidity and efficiency are bogus. The near zero (search in this blog) notion is the proper argument. Those who dance with the money angels not only accumulate bad karma for the rest of us via systemic risk, they enjoy a "mirage " (yes, Mr. Broughton) of gains that are not real (upon the backs of others).

You see, to be truthful to ourselves, any high-order computational system would be redundantly viewed (yes, even those offered by the webbers), verified often, kept within reasonable bounds (and a lot more). Why? Sustainability, in short. Human dignity, for the longer view.

Let me propose to the HFT people that I, and others, could help them define these bound. The fact that these people think their type of front-running is legal indicates serious moral failings. Did we just hear that bankers want to get moral?

To be brief, as we have been at this several years now and it's nice to see something like Mr. Lewis' view crop up, HFT is a symptom of a serious disease. That computers allowed this (were the enabling factor) ought to give us pause.

PhDs? Yes, more likely, moral cretins. Actually, they do not have much grasp on how we have progressed.

You see, the natural sciences can run off a little further and faster since Nature will knock them down. Take a physicist into the realm of the dismal science and watch out. That reaction was predictable. I could smell it back in 2007 when I woke up to the fact that the financial types had taken the perdition-laden path. With finance and economics, we have harder problems. That some want to fill their pockets at the expense of others (ah yes, out-housing to exploit) needs attention.

I said it before. The markets ought to be run by a different order of people: those who do not salivate at the sight of a buck (dollar, if you must ask).

Remarks:  Modified: 04/14/2014

04/14/2014 -- Several quandaries lay about, for one, the "cheshire multiple" ought to give pause, especially for those looking through the fancy glass at future takings. With a crooked game, we know where the real value goes through a leeching effect. But, what of thinking of "tainted" (or did we forget the toxic assets of a short while ago?)? Yes, what are called earnings (gains) in  many cases, with the equity gaming, is really dirty money? Clean money? Oxymoron? Not really, as a sustainable economy would about with such. To be discussed.

04/14/2014 -- Steven Pearlstein of Washington Post weighs in.