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

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