Wednesday, November 18, 2009

The unknown cause that causes because ...

'To say of what is that is not, or of what is not that it is, is false; while to say of what is that it is, and of what is not that is not, is true.' -Aristotle

'The greatest part of mankind have no other reason for their opinions than that they are in fashion.' -Samuel Johnson

"A man can get to love shit if his livelihood depends on it, if his happiness is involved." -Henry Miller

'Free your mind.' -Morpheus

Pop-quiz hotshot,

a)Scientists can teleport atoms across a room.

b)Scientists have developed a plasma window.

c)Scientists theorize that a supercharged plasma window combined with a laser curtain and a carbon nanotube screen and an advanced form of photochromatics will create an impenetrable force field.

d)Scientists have created a high-temperature superconductor utilizing a substance called mercury thallium barium calcium copper oxide, which becomes superconducting at 138K (-135C). (Add-on, told we're up to -35C. Cool, I want my levitation belt. -AM)

e)Scientists theorize that if room-temperature superconductors can be found we'll have flying cars and trains.

f) Securities such as collaterized debt obligations, pools of fixed-income securities that require complex computer modeling to design and understand are hard if not impossible to value.

Question : Which of the above is science fiction?

Answer : You know the answer.

Although this blogger has a bunch of respect for Taleb I still read the WSJ and Financial Times every day although admittedly only the first and last paragraph of many articles.

Heck I'll even turn the sound on for CNBC between 715 and 815 CST but usually only for Santelli and Cashin.

In Taleb's tome, 'Fooled by Randomness' he describes a mechanism called Wittgenstein's ruler : Unless you have confidence in the ruler's reliability, if you use a ruler to measure a table you may also be using the table to measure the ruler. The less you trust the ruler's reliability (in probability called the prior), the more information you are getting about the ruler and the less about the table.

Substitute ruler for dollar and table for markets and the shadow of the form of the now in vogue, hoocoodanode?,dollar carry trade narrative becomes clearer.

Further substitute confidence for dollar and future for markets and our dilemna is clearer still. To wit : Unless you have confidence in your confidence's reliability, if you use your confidence to measure the future you may also be using the future to measure your confidence. The less you trust your confidence's reliability, the more information you are getting about your confidence and the less about the future.

Although one might suppose the future as being unknown, today's market is predicated on confidence that 'free and easy money and models showing 100% success' are a known unknown.

Bernanke has promised to monetize cows to increase the price of milk; asset classes are moving based on the confidence of how sour that future glass might be.

But there are also unknown unknowns. These are things we do not know we don’t know.

What we do not know we don't know is what the long finger of instability from the Hand will ultimately do to the markets and the economy that are still the home of the brave but alas are now a different land.

What we do not know that we don't know is how the continuing liquidation of Main Street and bifurcation of America will interact with the bankrupt ideology of the rich that had greatly succeeded in drafting the inner monologue of regular folks so that they would vote against their self interests and are trying to do it again.

'In argument, answer your opponent's earnest with a jest and his jest with earnest.' - Leonitus Gorgias

My jest to the Federales' earnestness in defending their strong dollar policy -

Pomp and Happenstance : Can you spot the Nancy Capitalist?
They are killin' Sam.I know it was you Timmy. You broke my heart.
The Oracle at Eccles: At Rally's End or the new Fickle-Down Economy? Though we walk through the Valley of Debt we fear 'No Easing'.
Nancy Capitalists in a Sovereign Democracy that are Hell Bent to seek Rent.
The insouciance of elites and the Antoinette economy ... exhibit thyself to a public that may hiss thee.
The manufacture of contempt : it is only a Great Depression if they say it is.

My earnestness to the Federales' jest of a strong dollar policy -


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