Dent Rattle Jun 27 2014: There Are No – Financial – Black Swans
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John Vachon Times Square on a rainy day March 1943 Oh Japan, what are you doing, where are you going? As Japanese consumer prices rose 3.4% in May (an
[See the full post at: Dent Rattle Jun 27 2014: There Are No – Financial – Black Swans]So, how many politicians will be elected on a promise of extreme austerity, and a halving of the present standard of living for all who are not in government or in industries favored by government?
How many will be elected on a platform of print, print, print until the debt is gone, besides, we owe it to ourselves, and in the long run, we’re all dead?
Either the bullet is bitten, and default is allowed to take place, of all excessive debt, public and private, or the dollar is killed, putting all debt denominated in it to rest.
Only two ways out of this, and one just won’t happen, because it isn’t “political career” sustainable.
Stagflation? Not Deflation?
Word smithery aside, I read a book warning of all this back in 1979 that used terms such as Deflationary Depression and Inflationary Depression, the latter being the most devastating. Appropriate definitions, I think.
That was what first drew my attention to the fiat monetary system we have had since the dropping of the gold standard. The writer was (is?) very familiar with the Austrian School, and was certainly ahead of his time in 1979.
He also wrote a news letter, but had some bad calls over the years because he didn’t understand how far governments would go in preventing deflations. Such as actually replacing free markets with direct intervention, as now.
I understand there is an updated version, but the original is classic. Interestingly, this author was called a nutter and lunatic back then.
I am no entomologist, but I throw the BS flag on the “car fumes” killing the bees. It sounds reasonable, but it’s not because they have been around for decades upon decades and used to be much worse in America. Moreover, insects don’t really work by smell, but by vibrations. That’s why they have those unique insect developments, antennae, which are finely attuned to variations in refraction and the resonances in plants and minerals.
If I was the suspicious type, I’d suspect that this is the rhetorical device of planting a plausible counter-story to detract attention from the real story, that the main class of insecticides which Dow/Monsanto peddles, is the likely cause of bee extinction.
“I need industrial strength tranquilizer, a shot of Old Crow and a glass of Budweiser, to help survive inflation with falling pay.
It takes industrial strength tranquilizer, a shot of Old Crow and a glass of Budweiser, to help the workin’ man through the workin’ day.”Austin Lounge Lizards, from “Stagflation” days, excellent Texas swing.
“Herd behavior is a fundamental aspect of capitalism,” Keen chides, but it is left out of conventional economic theory “because they don’t believe it;” instead having faith that investors are all “rational individuals”, which he notes, means “[economists] can’t foresee any crisis in the future.” The reality is – “we do have herd behavior” and people will follow the herd off a cliff unless they are aware it’s going to happen. “Contrary to herd wisdom, financial crises are not unpredictable black swans…”
It’s not left out of conventional economic theory because “they don’t believe it”. It’s left out because “they do believe it”; they are causing it. If people knew they were purposely being herded, they’d step off. Bernanke, Greenspan, Yellen, Abe, China’s central bank, Congress/Senate, no matter the stripes – they’re all steering the herd. It’s a modern-day Buffalo Jump. Scare people a certain way (make them fear their money will be worthless/they’ll be left behind), entice them with thoughts of riches, work on their egos – it’s being done all day, every day.
I agree that financial crises are not unpredictable. They are beautifully engineered with intent. They might not get the whole herd, but they get enough to eat. Criminal, sociopathic behavior.
On “Predictable” Black Swans, may I point out “Tail Risk” and other Standard Deviation variances.
Of course, most economists will tweak their predictions after the fact, to match the event as closely as possible.
Otherwise, of what use are they? Economists, that is. On the other hand,,,if ya lined ’em all up from here to the moon, a conclusion still wouldn’t be reached anyway, so?
Herd behavior and “Conventional” Economics, you say?
How about Unconventional Economics?
Dated, but timeless;
Professor, from the above article: “So if Greenspan hadn’t run an easy money policy in the first place, there would have been nothing in the mortgage arena for the “animal spirits” to have latched onto. This is always the case with financial asset bubbles. Excess hope only comes into play after the central bank has set the boom in motion. Excess fear is the inevitable follow-up once the bubble is popped.”
Yes, AFTER the central bank has set the boom in motion. The trap is set first, and THEN the herd moves in.
The article is entitled, “Greenspan Still Doesn’t Get it”. I agree with everything said, except I respectfully think the author doesn’t get it if he thinks Greenspan didn’t know exactly what he was doing and exactly where it would go. He laid out the game, called in the herd, and they bit. He’s a liar, plain and simple, along with Geithner, Bernanke, et al.
They all “get it”. I wish people would call them on it. They all should be behind bars.
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