It is we the people who generate the force that causes those making the decisions to act in the direction that they do. We make the policy. Leaders can't operate in their own vacuum.
Ho ho ho. What planet do you live on? I understand this is what we would like to believe on aggregate, but I hardly think that is the way things work in present reality. In fact, I think we are on the verge of global corporations actually pulling the strings. Maybe I'm just a bit to cynical.
Did you know that scenario creation in stock market strategy is the worst thing you can do? Inventing a possible future is absurd. It's all part of the hoodwink job of modern pseudo-sophisticated management whose real intent is to keep a fat job.
Ouch, and I've been moving to embrace that thought process. I have gained some weight. Hmm. I think the rational for inventing scenarios is not that you might get lucky and actually create one that resembles a future outcome, but that by having thought through some of the possibilities, you might be better postioned to recognize indicators or trends earlier and make effective decisions in a rapidly changing environment.
LTCM took that view as do the gold companies. Leverage pushes a positive expected return into a negative one, because levered risk which is non-linear can't be managed under the linear assumption upon which it is always built. Nonlinear risk estimation is completely unstable.
Your point on the nonlinear aspect of life- I agree linear think gets us into holes.
On leverage, one of the things credited to holding back much of the Islamic world is their prohibition on interest. It is said (Great Reckoning) that reducing or eliminating the reward to accumulate and share capital, the islamic people were unable to make the capital intensive investments required to make the industrial age leap. Hence, Afghanistan only has a total of 18 miles of rail track laid. Some of these societies are moving forward by using their oil to finance a post industrial move (highly dependent on education and skilled people).
This suggests that much of the industrial age would have not taken place or would have been greatly extended without the use of leverage and debt financing to build out the infrastructure.
In truth, it's not the debt that is the problem, but the effective use of the leverage to create future productive capacity in the forms demanded by the consuming public so that the debt can be effectively serviced and retired. I'm sure you agree with this in principle, as you've hinted in previous posts, yet the last few have come across as totally abhorring debt in any form. |
