The Ground Gives Way - Eric Janszen

[LargoWinch]

Re: The Ground Gives Way - Eric Janszen

What makes you think it will average only 10%?

As of Nov 2008, the adjusted monetary base was growing at 75% year over year. I'm not a doom-and-gloomer, but the odds of inflation only being 10% per year after that kind of input would seem to be pretty small -- and it seems like the worst spikes are probably yet to come.

Sharky, what I meant - in a not so clear way I must admit - is that inflation running 20% per year (see EJ's previous work and forecast) coupled with a benchmark rate of say 10% (that is my guess, without supporting data), hence giving us 10% real negative rates.

EJ is assuming that this 20% inflation scenario will last for about 5 years or about 100% for the period (lets ignore compounding for now).

The above would be pretty bad, but it does not mean Argentina. It looks to me more like the 70s on steroids and that is far away from the madmax scenario.

[LargoWinch]

Re: The Ground Gives Way - Eric Janszen

Also, a bunker update! Looks nice.

[LargoWinch]

Re: The Ground Gives Way - Eric Janszen

Yes. But I for one would have no objection to catfood in the executive cafeterias of the bailed out banks. ;)

...or what about some delicious Maple Leaf food?



For more on this inside joke:
http://www.google.com/hostednews/can...YMQHN05u0c1x0Q

[marvenger]

Re: The Ground Gives Way - Eric Janszen

Schumpeter's theory is that the success of capitalism will lead to a form of corporatism and a fostering of values hostile to capitalism, especially among intellectuals. The intellectual and social climate needed to allow entrepreneurship to thrive will not exist in advanced capitalism; it will be replaced by socialism in some form. There will not be a revolution, but merely a trend in parliaments to elect social democratic parties of one stripe or another. He argued that capitalism's collapse from within will come about as democratic majorities vote for the creation of a welfare state and place restrictions upon entrepreneurship that will burden and destroy the capitalist structure. Schumpeter emphasizes throughout this book that he is analyzing trends, not engaging in political advocacy. In his vision, the intellectual class will play an important role in capitalism's demise. The term "intellectuals" denotes a class of persons in a position to develop critiques of societal matters for which they are not directly responsible and able to stand up for the interests of strata to which they themselves do not belong.

Capitalism has its problems too, to point out trends to a more collective mindset as a form of mass horrendous stupidity as the shit hits the fan from capitalist excesses seems a bit rich.

We need both mindsets it seems in some kind of balance. As far as I can tell socialists can be thankful for some of the outcomes generated by those with capitalist mindsets and capitalists can be likewise be very thankful for positive elements brought about by those with a more socialistic perspective.

The successful capitalists have been concentrating their wealth and power over the last couple of decades and due to time proven human faults they blew it again. Now the state is having to step in to fill the void. To now start blaming people who try to look beyond their own self interest, now matter how infused with flaws their theories undoubtedly must be, strikes me as being particularly lame and striking at an easy target; and extremely ideological.

Not being a doomer I take your concerns are not involving some kind of socialist revolution but rather greater state involvement. Sorry, the purely self interested goons that you idolise so greatly were plenty involved in necessitating the state intervention that they apparently ideologically abhor but accept readily when they achieve too big to fail status.

[*T*]

Re: The Ground Gives Way - Eric Janszen

Its almost amusing how many folk are "religious" about TA - on both sides. Even EJ, who is not a TA fan, grants that there are such things as a trade within a trade.

I am not religious about TA, much of it is bunk. I used to be religiously anti-TA. But I have seen moving averages bounced off, trendlines form etc too many times to ignore.

Edit: sorry I have got so off-topic.

[*T*]

Re: The Ground Gives Way - Eric Janszen

I'm not sure I follow.

Because there is a day and night cycle, therefore technical analysis is valid?

The problem with this assertion is that each and every credit cycle is not identical. Sometimes they break higher, sometimes they break lower, sometimes the government intervenes.

How then does a simple graphing of arbitrary indices take this into account?

I am not saying all technical analysis is valid (that would not be true).

I am saying that credit cycles on any given timescale imply rising and falling liquidity. Market indices are basically liquidity barometers.

Deviations from the Markov-chain random-walk type assumptions are apparent on longer timescales when you analyse the time series.

[bart]

Re: The Ground Gives Way - Eric Janszen

And to follow Lukester's point I would point out that the existence of credit cycles logically contradicts the assertion that all technical analysis is bunk.

An imperfect but valid analogy:
TA is just a bunch of tools. Some people can't use a screwdriver or pliers or other tools, or hire someone to do odd jobs for them.
When a screwdriver slips and gouges the material, its not the tool's fault either.


No one will disagree with investing with the trend being part of the wisest path... and a simple trend line does nothing other than reveal if one is still investing with the trend on whatever time frame they use and prefer. The trend line tool is like any other tool - it takes time and practice to become good at its use.


Lastly:
“All through time, people have basically acted and re-acted the same way in the market as a result of: greed, fear, ignorance, and hope – that is why the numerical (technical) formations and patterns recur on a constant basis”
-- Jesse Livermore, "How to Trade in Stocks"


Its almost amusing how many folk are "religious" about TA - on both sides. Even EJ, who is not a TA fan, grants that there are such things as a trade within a trade.

Some have success with trading and/or TA and some don't - its no more complex than that. It works for me, and I use it - just like any set of good tools with which one has experience.

[jimmygu3]

Re: The Ground Gives Way - Eric Janszen

although THAT quote is from orwell's animal farm, there IS one quote from animal house that is germane: after returning from their road trip having thoroughly trashed the car that freshman pledge "flounder" borrowed from his older brother, one of the frat guys says: "flounder, you made a big mistake; you trusted us!"

Was it over when the Germans bombed Pearl Harbor? Hell no!

-B. Blutarsky

[ThePythonicCow]

Re: The Ground Gives Way - Eric Janszen

markets only ever APPEAR to be cycles. actually, the are in a state of constant change.

What you describe is, just looking at these words, indistinguisable from random noise. I don't think that's accurate.

While the cycles are not as obvious and robust as planetary motions, there are cyclical aspects to the market. The problem is that rather than having one dominant cycle that you can (rather literally) set your clock by, the aggregate signal is the summation of changing, untold elements, some quite transitory, some roughly periodic for a while, some strongly aperiodic, most quite unknown or at least unobvious to market analysts, and all too numerous and entangled with feedback loops and conceptual ambiguities to possibly analyze with scientific accuracy.

So you can get better than even odds of successful predictions just long enough to get cocky, raise your bet, and get wiped out. And hindsight, alternative theories and various conspiracy theories can all seem to have, to the right person on the right day, tantalizing insights into what is going on.

This is entirely and quite different from something like a mathematical random function, in which each value is quite unrelated to and probably discontinuous from nearby values.

In short - there are transitory periodic patterns, amidst alot of noise, aperiodic patterns and confusions.

[metalman]

Re: The Ground Gives Way - Eric Janszen

I'm not sure I follow.

Because there is a day and night cycle, therefore technical analysis is valid?

The problem with this assertion is that each and every credit cycle is not identical. Sometimes they break higher, sometimes they break lower, sometimes the government intervenes.

How then does a simple graphing of arbitrary indices take this into account?

night and day are true cycles... repeated, based on the movements of objects in physical space, without intelligent outside interference, thus predictable.

markets only ever APPEAR to be cycles. actually, the are in a state of constant change. if two or three changes share features in common, it is human nature to see a pattern and look for it to happen again. it might, or not, and sooner, or not, depending on chance, or interference by government or other intelligence... and i use the word loosely

look at any chartist's charts and his forecasts... carefully go back over the history... compare each call at each point in time across both bear and bull markets... chartists do best in bull markets when everything is going up, like everyone else... and i guarantee you you will find he is wrong at least half of the time, just like jim cramer, just like the wonder monkey.

[open4]

Re: The Ground Gives Way - Eric Janszen

[quote=EJ;71000]The Ground Gives Way


I leave you with this from his Capitalism, Socialism and Democracy, and a view of the future that strikes us as unfortunately prophetic.

Schumpeter's theory is that the success of capitalism will lead to a form of corporatism and a fostering of values hostile to capitalism, especially among intellectuals. The intellectual and social climate needed to allow entrepreneurship to thrive will not exist in advanced capitalism; it will be replaced by socialism in some form. There will not be a revolution, but merely a trend in parliaments to elect social democratic parties of one stripe or another. He argued that capitalism's collapse from within will come about as democratic majorities vote for the creation of a welfare state and place restrictions upon entrepreneurship that will burden and destroy the capitalist structure. Schumpeter emphasizes throughout this book that he is analyzing trends, not engaging in political advocacy. In his vision, the intellectual class will play an important role in capitalism's demise. The term "intellectuals" denotes a class of persons in a position to develop critiques of societal matters for which they are not directly responsible and able to stand up for the interests of strata to which they themselves do not belong. - Wikipedia





Yes it was accurately prophetic and it is this structure that has just catalyzed its own comprehensive destruction, it is not that the intellectuals who have influenced things in strata to which they do not belong were without vested interest in the outcome though the illusion of detachment provides an ideal platform to accelerate change towards Schumpeter's prediction also it was not to Schumpeter's benefit to undermine the illusory objectivity of the club of intellectual,

With the likely force of inevitable future disruptions the need for best practicable means may move us away from this terminal structure for some time but it is very dependent on the depth of disruption also most intellectuals being intelectual know when its good for them to hide and play diferent tunes,

[c1ue]

Re: The Ground Gives Way - Eric Janszen

And to follow Lukester's point I would point out that the existence of credit cycles logically contradicts the assertion that all technical analysis is bunk.

I'm not sure I follow.

Because there is a day and night cycle, therefore technical analysis is valid?

The problem with this assertion is that each and every credit cycle is not identical. Sometimes they break higher, sometimes they break lower, sometimes the government intervenes.

How then does a simple graphing of arbitrary indices take this into account?

[*T*]

Re: The Ground Gives Way - Eric Janszen

And to follow Lukester's point I would point out that the existence of credit cycles logically contradicts the assertion that all technical analysis is bunk.

[tsetsefly]

Re: The Ground Gives Way - Eric Janszen

EJ, or anyone who might know,
what where Von Mises and Hayek's views on these schumpeter's predictions?

[doom&gloom]

Re: The Ground Gives Way - Eric Janszen

Some Schumpeter readings:

Schumpeter: In his own words...
http://www.scribd.com/doc/258405/Sch...-His-Own-Words

Schumpeter: Theory of the Business Cycle
http://www.scribd.com/doc/7053417/Jo...ess-Cycle-1931