The preposterous claim that deviations from market efficiency were not only irrelevant to the recent crisis but could never be relevant is the product of an environment in which deduction has driven out induction and ideology has taken over from observation.
The belief that models are not just useful tools but also are capable of yielding comprehensive and universal descriptions of the world has blinded its proponents to realities that have been staring them in the face. That blindness was an element in our present crisis, and conditions our still ineffectual responses.
Economists – in government agencies as well as universities – were obsessively playing Grand Theft Auto while the world around them was falling apart."
John Kay, An Essay on the State of Economics, October 4, 2011
"With a monetary expansion intended to help cure a credit bubble crisis that is not accompanied by significant financial market reform, systemic rebalancing, and government programs to cure and correct past abuses of the productive economy through financial engineering, the hot money given by the Fed and Treasury to the banking system will not flow into the real economy, but instead will seek high beta returns in financial assets.
The monetary stimulus of the Fed and the Treasury to help the economy is similar to relief aid sent to a suffering Third World country. It is intercepted and seized by a despotic regime and allocated to its local elite and warlords, with very little going to help the people.
Those who have taken a huge share of the last three bubbles would like to stop the bubble now, keep their gains, and return to a system of fiscal restraint with light taxation on their windfall of assets. So why does this not just simply happen?
It is difficult to reduce a population of free men into debt slaves, without risking a significant reaction. Therefore, it seems most likely that the government and the Fed will try to 'muddle through' for the time being, and look for an exogenous event [such as a war] to break the stalemate."
Jesse, October 2009
“Stand up for what you believe, even if you are standing alone.”
Sophie Scholl
The transfer of wealth through cycles of bubble and bust continues unabated.
The oligarchy is audacious.
Stocks slid lower.
Gold bounced while silver remained flat.
VIX chopped sideways.
The Dollar was moving sideways.
Expiration tomorrow.
The spice must flow.
Have a pleasant evening.
