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players as predators: reconciling tin foil hats and emergent systems phenomena

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  • players as predators: reconciling tin foil hats and emergent systems phenomena

    [i don't recall where i came across a link to this story, so can't give credit to whomever first found it.]

    http://www.marketwatch.com/news/stor...&dist=hplatest

    PAUL B. FARRELL
    Meltdown 'inside' Wall Street's brain
    Seven rules for bull-and-bear predators in a 'brutal, manipulative world'

    ARROYO GRANDE, Calif. (MarketWatch) -- Soft landing? Worst is over? Recovery? Buy on dips? Strong economy? Hey, what happened to all the self-serving happy-talk of a month ago? When will we ever learn that the relentless daily onslaught of "news" spun by Wall Street is 99% brainwashing hyperbole and 1% reality, all scripted to manipulate the great American herd of 95 million investors.


    Sorry to be so darn blunt, but watching the high-drama of the post-14,000 meltdown on the Dow industrials made me mad as hell because it was so predictable ... record volatility as Wall Street went ballistic with every breaking news blip ... hedge funds bleeding money ... mortgage company failures ... a metastasizing credit crush forcing foreign banks to pull the plug on subprime deals

    While watching each twist and turn of this roller coaster I was reminded of a warning from BusinessWeek journalist Gary Weiss in "Wall Street vs. America: The Rampant Greed and Dishonesty That Imperils Your Investments:"

    "Years of advertising, image-building, and scandal-suppression by the titans of the security industry have produced a generation of Americans who sign papers they don't read, and buy investment products they don't understand from brokers whose backgrounds they don't bother to research. They deal with brokerage firms and mutual funds and hedge funds and investment vehicles of all kinds that are hyped by the media and treated with deference by the regulators that are supposed to be keeping watch over it all."

    And it's scarier today.

    Peeking inside Wall Street's predator brain

    Let's see how the "Wall Street Brain" really works. Five years at Morgan Stanley gave me some insight into what makes them tick. They were nice guys back then. Much different now. More Darth Vader. So what'll you see "inside" a "greed is good" Gordon Gekko personality?

    Well, I just ran across a description of it in Craig Crawford's new book, "The Politics of Life: 25 Rules for Survival in a Brutal and Manipulative World." When I first glanced at the cover I saw "The Politics of Investing." Then laughed. No, those rules are definitely not rules used by Main Street investors. Too passive. But the rules accurately fit Wall Street's elite million, because their brains are "political," they are "predators," they have the "killer instinct" and they do see the "world" as a "brutal, manipulative" war zone.

    Crawford's the White House columnist for the nonpartisan Congressional Quarterly. Last year he published "Attack the Messenger: How Politicians Turn You Against the Media." The Washington Post calls him "one of the capital's most celebrated journalists." You can also find him on air at MSNBC's "Hardball."

    His inspiration for the "25 rules for Survival in a Brutal and Manipulative World" was none other than Machiavelli, the 16th century philosopher and author of "The Prince," which is still the bible for all politicians.

    Crawford says "the human being is nature's top predator." Actually, Wall Street wins that honor by a wide margin. Why? Because Wall Street is America's biggest lobbyist and political campaign contributor. Its denizens pull the strings. Its top companies are some of the biggest advertisers. So they fit the profile: Powerful unelected politicians, shrewd predators.
    Let's translate Crawford's 25 Machiavellian rules to better understand what you're up against in every battle against Wall Street. Here are the key elements of the Wall Street brain at work, seen through the lens of seven of the 25 rules: ( Check out all 25 rules)

    1. 'Life is a filthy battle for control'
    Yes, ethically "filthy." They will do whatever's necessary to control the markets. Dirty fighting, anything, with little conscience. That's why Wall Street wins and you lose. They have a killer instinct, greed, the predator's gene. Main Street investors don't, they are the prey. I saw these profiles in action when writing "The Millionaire Code," a study of 16 personality types. The Wall Street brain must dominate the jungle. It's in the DNA.

    5. 'Ambition is never satisfied'
    Predators love the hunt. And in the jungle, predators' incomes are merely a way big egos keep score against competitors. And they're all competitors, with greed-is-good genes. So, by nature, they're all insatiable. They keep score by counting "kills," in dollar bills, with salaries averaging $300,000, several times the national average. Many Wall Street bosses pocket $10 million to $50 million a year. Annual Street bonuses exceed $25 billion. Yes, it is a "filthy battle to control" the jungle. And you are just another "kill." Don't take it personally -- they don't, it never enters their conscience.

    10. 'The more visible your power, the more its limits are known'
    They mimic stealth bombers. Revealing nothing unless forced to, even controlling the en-forcers. Wall Street operates behind a veil of secrecy, a "happy conspiracy" as Vanguard founder Jack Bogle calls it. They live by deals with politicians, lobbyists, SEC staffers, corporate CEOs, money managers, cable anchors, brokers, bankers -- the list goes on. Deals are hidden in the shadows, off the radar of Main Street's 95 million investors.

    12. 'Most would rather follow a leader than lead a following'
    Sad but true. The vast majority of Main Street investors are prey, passive sitting ducks targeted by Wall Street's aggressive predators who pretend to be "leaders," acting as if they can predict the future of the economy and the markets. They hide behind many masks, as brokers, planners, money managers -- any role that gets you to surrender your money and become dependent on them, at a high price.

    13. 'Those who prefer to lead a following cannot be trusted'
    Never. In the Wall Street jungle, those seeking the role of leader have one goal in mind: Not just getting rich, but getting "filthy" rich. They are obsessed, addicted to money and power. Bogle calls it the "iron law:" They play a zero-sum game where every dollar Wall Street makes comes out of Main Street's pocket. Ergo, to get "filthy rich," Wall Streeters must do whatever's necessary to get their hands in your pockets, with no moral qualms that "greed is still very good."

    17. 'Those who are dependent on you will be the most faithful'
    Back in the mid-1990s Wall Street initiated a major strategic move to expand into the asset-management business and control vast sums of money. Since then they've brainwashed investors into a childlike dependency. Today Main Street investors are passively buying into the scam, even with Wall Street's subpar performance and excessive charges. In criminology this is known as the Stockholm syndrome, where the victim sides with the criminal.

    25. 'The powerful never give up control; it must be taken away'
    Remember the scandals five years ago? Wall Street and the fund industry got away with murder. How? They have "friends in high places," by controlling your politicians through lobbyists and tons of "filthy" campaign money. They fight every reform bill and every new regulation like a special-forces warrior. The predator's gene never surrenders. No matter what's involved -- turf, power, family, ego -- it's always a fight to the death.


    So in this jungle, Main Street cannot beat Wall Street. The jungle belongs to the most aggressive predators, and they own it because they live by the "25 rules for survival in a brutal and manipulative world."

    Know your enemy. You're at war. They outgun you. In head-on combat, odds are against you. You must redefine the rules of engagement. Go into the shadows, yours. Never play by their rules, on their battlefield. Fight an asymmetrical war with the insurgent's tactics. Play your game, by your rules. You must decide. Fight your way ... and you will win.
    this model makes sense to me. it's not exactly a pure conspiracy theory, since these predators compete as well as collude at times. also, being the top predator doesn't mean you have unlimited power to control events. events can spin out of control. and the small, scavenging mammals outlasted the great reptiles. [though it may have taken a huge meteor strike to make that happen]

  • #2
    Re: players as predators: reconciling tin foil hats and emergent systems phenomena

    JK -

    I'm going to irritate the hell out of you for saying this - but too much analysis leads to paralysis. If scholarly research is the aim, then by all means we should study the markets further in intricate detail.

    If one's most private aim is not scholarly investigation, but rather a burning desire to gain wealth in ones investments, then simplicity and a very wide-angle summary of the current turmoil to take in the most probable eventual destination is much more valuable (actionable).

    Point your investments wherever you think the market will come to rest in five years time and invite the wife or your girlfriend to a martini lunch.

    And by the way - I think all your commentary is A1.

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    • #3
      Re: players as predators: reconciling tin foil hats and emergent systems phenomena

      part of why i do this is personal gain, or - even more - personal protection. but another reason is that i find the whole think intellectually stimulating.

      btw- i don't believe in looking at only [what i think is] the most probable outcome. i am acutely aware that there are many possibilities, and a large chance i will be wrong in my predictions. or, as has happened in the past, i'll be right in general but wait for more extreme outcomes and not cash in at the proper time.

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      • #4
        Re: players as predators: reconciling tin foil hats and emergent systems phenomena

        JK -

        I find your summaries of turning markets subtle and highly readable - it's a difficult balance to achieve, and it's a boon to readers like me on iTulip hunting around for the bottom line on complex market topics.

        So you may never notice it, but I'll be quietly cribbing a few of your best ideas as we move along.

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        • #5
          Re: players as predators: reconciling tin foil hats and emergent systems phenomena

          10. 'The more visible your power, the more its limits are known'
          Actually there is a reason why those in (Wall Street) power hide it.

          As the communist revolutions have shown, it IS possible to anger the masses enough that revolutions occur.

          In addition, it is possible that the Internet and cell phone communications revolutions are significantly reducing the population percentage necessary to achieve self sustaining momentum in a political movement.

          Certainly this has happened in the armed struggle front as al Qaeda continues to demonstrate.

          However, al Qaeda must continue to be small as its goals are not sustainable as a public power.

          This would not be true for an uprising against a perceived non-representative political system.

          Think of a new IMRO (the populist version of the Black Hand, of starting WWI fame) whose goals were the economic freeing of the people (vs. independence for Serbia)

          One of those things I keep an eye out for interesting new data points.
          Last edited by c1ue; 08-15-07, 03:54 AM.

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