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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (80045)	6/11/2008 5:17:30 AM
From: axial	Read Replies (1) \| Respond to of 116555

Mish, I liked the characters Dr.John and Fat Tony. Dr John is the economist or banker who thinks he can manage risk through mathematics. Fat Tony relies only on what happens in the real world. Fat Tony or Old Hand, somebody better start listening to them. "And what he knows does not sound good. The sub-prime crisis is not over and could get worse. Even if the US economy survives this one, it will remain a mountain of risk and delusion. “America is the greatest financial risk you can think of.” Its primary problem is that both banks and government are staffed by academic economists running their deluded models. Britain and Europe have better prospects because our economists tend to be more pragmatic, adapting to conditions rather than following models. But still we are dependent on American folly. The central point is that we have created a world we don’t understand. There’s a place he calls Mediocristan. This was where early humans lived. Most events happened within a narrow range of probabilities – within the bell-curve distribution still taught to statistics students. But we don’t live there any more. We live in Extremistan, where black swans proliferate, winners tend to take all and the rest get nothing – there’s Bill Gates, Steve Jobs and a lot of software writers living in a garage, there’s Domingo and a thousand opera singers working in Starbucks. Our systems are complex but over-efficient. They have no redundancy, so a black swan strikes everybody at once. The banking system is the worst of all. “Complex systems don’t allow for slack and everybody protects that system. The banking system doesn’t have that slack. In a normal ecology, banks go bankrupt every day. But in a complex system there is a tendency to cluster around powerful units. Every bank becomes the same bank so they can all go bust together." Jim

To: mishedlo who wrote (80045)	6/11/2008 11:24:17 AM
From: kormac	Respond to of 116555

Excessive trading in oil futures? Message 24666475

To: mishedlo who wrote (80045)	6/27/2008 2:23:15 PM
From: axial	Read Replies (1) \| Respond to of 116555

Here's another one for you, Mish - "Likewise, I find it stunning that anyone would take any prognostication by Alan Greenspan or Ben Bernanke, on any subject, as worthy of consideration, given that the past and present Fed chiefs, respectively, apparently understand nothing about what has been the engine of the economy for more than a decade -- that is, speculation. Muzzle the (never-wuzza) maestro Just last week, Greenspan could again be heard shooting off his mouth. He now sees the reduced possibility "of a deep recession" and said, regarding the mortgage crisis, that "the worst was over or soon would be" (as paraphrased by Bloomberg). What really made me burst out laughing was this headline (again on Bloomberg): "Risk managers should learn from market turmoil." What's so ironic is that the man who created the turmoil is the one person who has never seemed to learn anything." More: articles.moneycentral.msn.com --- The question I keep asking myself is how can the markets continue to defy gravity. It's just crazy. The only reasonable explanation came in someone else's comment that recessions are like the 5 stages of death (Kubler-Ross): the stage we're in right now is called "denial". Jim