Monday, April 27, 2009

Sovereign Wealth

Merton mentioned in his MIT talk that a soveriegn wealth fund (USSWF) for the US might work as the arbiter of the last resort. But, it, too, could provide some framework that is outside the 'juvenile deliquent' view of business (yes, it's current state in evolution is geared toward the short term and to the glorification of the poster boys and rogues at the top - ah, yes, the supposedly best-and-brightest needing tons of fat [via bonuses, etc.] while the populace is not much more than skin draped over bone).

A world driven by business, with no thought to its employees (this will be focus of People Matters) except that they are resources to be used and discarded, is hell, as we've seen. But, a dictatorship is no piece of cake either. However, we're talking the US, which supposedly exemplifies the God-given major role in extending freedom, in all its aspects.

Where is our pie?

Merton talked about the USSWF as something that could hold assets in the long term, providing relief for asset holders in terms of keeping them from the wolves and sharks.

Oh yes, speaking of the latter, why the hell is it that we allow sharks anyway in the business sense? Let's take that further, as it's been said here been said here before: any who gets out of the markets (yes, as defined by Wall Street and Chicago and ...) more than a certain amount (yes, we can define this, folks) is, by necessity, taking it from others, and probably doing more damage to the many than the collective benefit the fat cat is accruing.

Gosh, what type of parent would allow wolves and sharks amongst their progeny? What does that mean? The common economic weal is not unanalogous the family situation just like we all share, and abuse, the same planet.


07/17/2009 -- China's bucket is 2+ trillion. Ours, over here - the analogous thingee - is a growing deficit. You have to hand it to the Marxists who beat us at our own game of casino capitalism.

Modified: 07/11/2009

Friday, April 24, 2009

People matters, again

Some posts have been more hyperbole than needed. But, the past few months have been unparalleled in the demonstration of the affects of stupidity (by the supposedly best-and-brightest) on the rest of us.

Well, it's time to get serious with a re-look at subjects covered to date. Let's start with a redo of People matters (from March 2008).

People may have abstractions imposed on them by the smarties. Hey, that's the way that the world has worked. We may have to succumb to these abstractions (any bias can be explained in this manner, call it tribal mind, if you would - being mathematically based does not make this type of thing any better). But, freedom means having the ability (and choice) to go outside of these impositions.

An example of sophisticated mis-use of us, and our resources, is the poster boys ( and their smarties) screwing us over. It's encouraging to see all the analysis being published looking at causes and culprits.

Some of this is looking at fiduciary duty and its absence from the MBA's mindset (WSJ 04/24/09). Others are looking at reforms that might make sense (WSJ 04/23/09). We also need to look at how capital structures might matter (WSJ 04/21/09).

That last is of note in this context since some views think that there are stronger equivalences (think Modigliani) than is the case except for very abstracted cases (see Remarks about Merton's talk at MIT).

And, this grappling with the abstracted overlay is the same problem people face with issues related to finance as it screws up their lives. And, that is a broad statement, including employer relations with their resources, the money peoples' efforts at extracting dollars out of our pockets, and much more.

There needs to be some position set that allows for the most probable scenarios for those who expect to retire with some dignity. Chasing after the market, and gaming, is not it.

We'll continue on the theme.


06/20/2009 -- Yes, rent can go to labor (new look at capitalism), and finance can have a higher calling.

04/27/2009 -- 'People matters' will mostly deal with the issues that cause fat cat rogues to carry out more than their share (by millions of multiples) while the populace is mostly skin draped over bone. For instance, let's talk about a technology company (of any type) who wraps the employees in very tight constraints as to intellectual property. And then, when they're no longer of use, throws them out like old rags. And, in some cases, even picks their pockets to remove the little accumulations of wealth that they may have acquired over the long years of devoted effort for the firm. Ah, there are many, many of these.

Of course, one of note is a split out from a larger company, where the favored few collected millions of bucks, the east coast fat cats ate their large portion, and much more. In that situation, oodles of workers lost their careers, their pensions, their health care, and more. Ah, and the principle guy is a Christian (oh, we're not to judge?).

Modified: 06/20/2009

Friday, April 17, 2009

Minsky anew

Everyone ought to know that a lot of what is claimed to be the value that is represented in the market (NYSE, et al) is a hyped bit of nothing for all but a few. Why? Those who get big pockets happen to sell at the top which syphons money to their pocket from the pockets of scores of others. There is no way that all who own stock can get the topmost value. Why? As selling progresses, the price (basis for value) drops.

It's a simple mathematical principle. Yet, oodles of effort and resource go into keeping the game going. Why? Well, so that the few can continue their bonuses and spendthrift ways at the expense of the most.

Need it be that way? No. Can this gaming be controlled? Yes, we can do this despite Alan's grand claim (supposedly now dropped by the grand master) that we can only clean up the poopy diapers and not squelch those who like the bubbles. It will require will and better thinking.

Any who is only after a fatter pocket is not the best and brightest, folks. That is truism one which ought to be learned by poster boys.

Minsky is important to the control effort. We'll look at that further.

The powers that be, of the past few years, wanted us to believe that value was truth and vice versa. Large companies touted this to their employees. Of course, shareholders are important. Answer this? In this downturn, how many shareholders of umpteen institutions lost a whole bunch? Lots, right? Even Fannie and Freddie investors were slaughtered.

So, truth is more than value; the markets are going to require truth engineering. The task is to demonstrate how.


10/17/2011 -- If we're to challenge Harvard on its duty, then we'll need to beef this up. For one, is education only operationally important, measured in bucks? Ah, so much to discuss.

09/09/2009 -- Alan's reign will be looked at, in time.

08/27/2009 -- Madoff exemplifies (albeit somewhat indirectly) systemic risk.

08/17/2009 -- As promised, FEDaerated is here.

04/21/2009 -- The above is partly hyperbole that will be contained henceforth. A clarification is necessary in that equity is capital from the view that would relate share ownership to the workings of the firm. This is pretty clear. What is problematic is the abstractionists' add-ons that lead to leverage and froth. They can argue risk management, but it looks more to be just gaming with the intent to foster casino capitalism. Using Minsky again, and numbering the levels, regularized capitalism would go to 2+ (hedge and a little speculative). After that, and especially in the third level, we get Ponzi by necessity.

Modified: 10/17/2011