akapital

Are We Headed for a Green World or Business-as-Usual?

Any so called "free marketer" who believes that prevalent fuel sources are more a function of cost and accessibility rather than political forces is an idealist in the worst sense of that term, while those who are looking to even the playing field when it comes to energy subsidies is an idealist in the best sense. One has an idealized view of the current state of affairs, the other has an ideal view of the future. One lives in a deluded state of an objective reality which exists independent of human forces e.g. (invisible hand) while the other understands that reality is created by individuals, sometimes very powerful individuals who join together and form oligarchies and cartels...and sometimes not so powerful individuals who have a great idea that might threaten those very powerful individuals...

Everything Is Backwards, But We Can Endure

"I don't tend to gravitate toward conspiracy theories"

So you're no Woodward or Bernstein then I guess....

But seriously, although most often the simplest explanation is true (Santelli forgot to take his medication that day) there are cases where these things are planned out by a group of people - by the way that's a nice way of saying conspiracy. But when more than one person plans something and it seems farfetched or marginal we just call it a conspiracy.

Thank goodness some people do speculate on these things (and not just markets)...

Be Careful Playing with the Black Swan

Big fan of Aristotle's use of the black swan in his Posterior Analytics and demonstration of the syllogism. Interesting use of it in Taleb's book but I think the concept is highly overused now.

The whole point of the Black Swan has to do with the limits of our experience; The Greeks took it as universal that all swans were white because everything in their experience (whether direct experience or otherwise) taught them this. Little did they know there were black swans in Australia. Thus, the Black Swan was actually incorrectly invoked by Aristotle, unbeknownst to him that were indeed black swans.

Conversely, trades gone bad, financial meltdowns, great depressions, etc. are within the confines of our experience, whether direct personal experience or shared historical preserved in the form of the written word or various other media. Black Swans are not simply the confines of mine or yours socio-historical horizon but that of a whole society.

Bleak Economy, But Not the End of the World - So Stop Panicking

Two of your comments:

"The market is not a wise, all-knowing processor of information and seer of the future. The market is an idiot."


"And unless the American public has become collectively lazy and stupid all of a sudden, the technological advancement and productivity growth that has made this country the richest nation the planet has ever seen will continue."

You can't separate the market from its participants. You make some very general, far reaching comments about the intelligence of both the markets and the general populace. Were either idiots or the smartest people in the world? Fact is, smart people do stupid things; stupid people can do smart things. Power and wealth may not have any correlation with intelligence. I think that is the biggest critique of efficient market hypothesis.

A Capitalist Reformation

Excellent article. Just as the human species evolve over millenia and human beings over the course of their lifetime, economic systems evolve. This is the great value of Marx' theory over other static enconomic theories.

What many people faill to realize is that Marx' was not a critic of capitalism per se. He only saw it's hisotical limits/finitude and that it would eventually exhaust itself. It is the economic precedent to socialism because without an industrial revolution under capitalism there would be productivity or excess capital (just as feudal agrarian societies were precedent to industrial capitalism). China and Russia were not ideal environments for socialism/capitalism because they did not fully mature as industrialized capitalist countries before adopting socialist policies.

America and Europe are ideal mature economies that can progress. Looking at the scandanavian model is a promising indicator.

Also, another commonly misunderstood principal of socialism is that everyone will be wearing the same uniform (as if we don't already all wear Gap and Brooks Brothers) and equal in everyway. In fact, in theory it is quite the opposite. it is step in economic maturity towards creativity of individuals...each according to his ability...but nobody bothers to read through the literature and I am sure this article will elicit the typical "pinko" comments...from the apes who have not evolved yet.

Regulations and Markets: Making a Bad Situation Worse

What many people fail to realize is that truly competitive markets depend on regulation - else the logical conclusion of competitive markets without regulation would be monopolies.

I agree that we need balance policy and not pendulum swings from no regulation to over regulation but there are real lessons to be learned from recent events and many of them point to some basic regulation that protects companies and shareholders from themselves.

Impending Inflation? The Global 'New Deal' All but Guarantees It

well, when I think of New Deal I think of FDR and the U.S. gov't itself spending loads of money on infrastructure (roads, bridges, schools, etc.). That was a catalyst that jump started the U.S. economy and the recovery from the great depression

So if we do truly have a sort of Global New Deal where gov'ts start spending I think that will indeed get to the consumer sooner rather than later and spur growth and perhaps inflation.

There are many large scale initiatives that many would argue global gov'ts need to invest in now:

1. Improve Water treatment, clean water preservation
2. Clean coal technologies
3. upgrade grid technology
4. alternative energy developments
5. public schools & public hospitals
6. highways and bridges

Chasing Unicorns: The Cycle Gods Are Still Playing with Us Mere Mortals

The Unicorn in this case is a good metaphor since they are chimeras - created from the conflation of experience but not themselves a part of our sensory experience - and consist of disparate parts. Certainly the current mix of government and markets is a perplexing chimera of sorts. A creature not seen in these parts...

Your analogy also reminds me of the Black Swan metaphor as espoused in a recent book by the same name. The gist of it is, prior experience is not an indicator of future experience. The Black Swan was oft used in ancient greek logic (Aristotle) as an example of an existential universal (No swans are black) proven to be false when the geographical horizon of experience revealed there to be black swans in Australia.

In short, we must avail ourselves of disparate methods of knowledge as experience teaches us that experience is fallible...

On a Return to Normalcy: Dow 8,500

Great article but one thing, while you can't argue with the principal of reversion to the mean when it comes to flipping quarters there is no hard science of what the PE mean really is in the case of markets. Of course historical precedent may be useful indicator but not necessarily. Great article nonetheless...

Don't Be Fooled - Short Selling Restrictions Do Work

naked short selling is the true culprit and enforce the uptick rule.

I personally seek out short squeeze opportunities so I appreciate when shorts go bad...which of course means that I support short sellers in principal. I believe that they are entitled to take a short position so long as shares are available to borrow. But when one sees volume turnover like we have recently in some stocks it indicates that there is naked shorting...sometimes in excess of the entire float of the stock....that should be illegal.

The Great Consumer Crash of 2009

Great article, great comments by all. Despite my agreement I am also hopeful that we can avoid the worst case scenario of consequences. Consider that the majority of the issues discussed concern a way of life style and culture that is relatively recent. Granted the majority of its participants may not see it this way but we can change. We are capable of great change. Whether that change comes in some measure by planned proactive resources or is mostly reactive after the dust clears remains to be seen...

The Only Chart True Investors Need to See

Good article, some great comments on historically flat periods and time horizon...but one thing I would point out that I do not believe has been mentioned yet is that regardless of the "market" per se, there are some great investments out there. Another words there are some great stocks regardless of how the overall market or indexes perform.

I think if one spends enough time studying key sectors one can pick up on what industries will outperform. In my opinion one such opportunity for the foreseeable future it is alternative energy. Perhaps this distinction becomes moot if and when indexes add what are today considered peripheral to the economy but which become central later. But still there is always the opportunity to realize this before the market does.

Days of Cheap Energy-Fueled Innovation Coming to an End

Great comments.

I agree that ultimately the end of the oil era presents tremendous opportunities and innovation for true free market capitalism - but alas we don't live in a true free market. We live in an oligarchy controled by interests of big oil.

We could have addressed this proactively years ago but such action is rare in human history.

Unfortunately, this is a dynamic of the human situation. Most humans don't do anything about obesity or cancer until they are faced with dire circumstances...the disease is like a pregnancy (to paraphrase Nietzsche). Our economy is in a similar situation. Like others I am hopeful that innovation can overcome tradition.