Apocalypse This Way Comes -- Economic Commentary by Nelson Hultberg

Financial Sense Online ^ | 9/2/03 | Nelson Hultberg

[arete]

I see a bad moon rising
I see trouble on the way
I see earthquakes and lightnin'
I see bad times today
Don't go 'round tonight
It's bound to take your life
There's a bad moon on the rise.
I hear hurricanes a blowin'
I know the end is coming soon
I fear rivers overflowing
I hear the voice for rage and ruin.
Don't go 'round tonight
It's bound to take your life
There's a bad moon on the rise.
Hope you got your things together
Hope you are quite prepaired to die
Looks like we're in for nasty weather
One eye is taken for an eye.
Don't go 'round tonight
It's bound to take your life
There's a bad moon on the rise.

[Lazamataz]

Dammitall! First there's economic collapse, then there'll be no jobs, then there's asteroids, then there's global warming, and to top it off Hillary Clinton wants to be president... and now you tell me there's a bad moon risin'?

I give up.

(cocking sound)

*BLAM*

thud.

[arete]

That's one of the reasons I give so little credit to government reports anymore. The extent of the manipulations and outright fraud makes Enron accounting look conservative. It has become a big government propaganda tool.

Richard W.

[P.O.E.]

As usual, I defer to the "behaviorism" school of economics, (especially in light of the various bubbles mentioned above)

To have and to hold

Aug 28th 2003
From The Economist print edition

Can people learn to be as rational as economic theory supposes?

FOR several years now, a battle has been raging among economists. On one side are the traditional, “neoclassical” theorists, who believe that people should be thought of as rational economic agents. On the other are the upstart “behaviouralists”, who do not accept that people always get their complicated sums right (maximising utility subject to a budget constraint, and all that), or even act as if they do.

A top behaviouralist, Daniel Kahneman, won last year's Nobel prize in economics for pointing out the differences between Homo sapiens and H. economicus. Real people tend to judge their well-being relative to others, not in absolute terms; their actions depend on the way choices are presented; they fear loss more than they crave gain. Such insights form the core of what is known as “prospect theory”. Some economists think that prospect theory can overthrow two centuries of neoclassical thought. Others say that it only gives credence to the idea that people repeatedly make daft mistakes. Is there a way of settling the dispute?

...../SNIP/......

This implies that prospect theory can capture the behaviour of inexperienced people, of which the world has many in all sorts of markets. But experienced buyers or sellers in well-established markets get over their psychological “flaws”. They can even transfer their trading skills from one market to another. The neoclassicals, it seems, have scored a point.

Mr List notes that sellers seem to learn how to trade faster than buyers do. What might this imply for, say, stockmarkets? The green investors who discovered shares only when markets boomed in the 1990s had been slower than others to part with their cash and join in. But once in, were they afflicted by the endowment effect? Owning Amazon shares bought for $400 each made it hard to sell until much higher prices came along (they didn't). Sophisticated traders, especially the sell sides of investment banks, had no such baggage, and sold. The bear market, however, should have proved as good a learning experience as novice investors are likely to get.

[PhilipFreneau]

Remarkable. This article reminds me of the 18th chapter of the Revelation. The author has certainly done his homework.

He is correct about Bush. My wife and I voted for him. But we decided weeks ago that we could not vote for him again. He is no conservative, by any stretch of the imagination.

[PhilipFreneau]

>> By the way, have you covered your shorts yet?

Funny you mentioned that. I started shorting today. There are some NASDAQ stocks that are way overextended.

[NoControllingLegalAuthority]

At least you took charge of your fate, albeit in your gun hand.

[arete]

Well, some people learn faster than others. It took surprising little effort to get people right back into the casino. People always want to believe that "this time it will be different." Real life casino operators have it down to a science. They know exactly the payoff percentage necessary to maximize a slot machine take. Intermittent reward is what I think it is called. I would imagine that most lotteries are based on the same "make 'em feel like a winner' psychology.

Richard W.

[arete]

There are some NASDAQ stocks that are way overextended.

Absolutely true. Good luck. Those momentum players are running junk up to extreme levels. Looks worse than '99 in many cases.

Richard W.

[habs4ever]

Do you have much experience managing money, or longtime experience in financial markets? Things always look extended at early stages of bull markets.Always.You had three years to short and now you need to look for more ideas to short after a short time out of the gate in a new bull market? Wow....

You'll learn the hard way, but it maybe for the best :)

[arete]

Yes I have long term experience. No, I am not looking for new shorts -- already have a good list. This is not a new bull market.

Richard W.

[arete]

He is correct about Bush. My wife and I voted for him. But we decided weeks ago that we could not vote for him again. He is no conservative, by any stretch of the imagination.

That's funny cause I heard an interview regarding K-wave theory and practice that said whoever was in office during this phase would have to be liberal regardless of party affiliation. Michael Alexander Interview

Kinda makes you wonder, doesn't it?

Richard W.

[Tench_Coxe]

Bookmarked.

[yankeedame]

And I so wanted to live.

LOL! Well, at least you don't have to worry about contributing to your IRA this year.

[DeaconBenjamin]

Mooning theatre director refuses charity deal

A Brazilian theatre director who mooned at his audience is facing court action after refusing to donate money to charity.

The public prosecutor had offered to drop obscenity charges against Gerald Thomas if he paid £200 to charity.

But the director insisted he had done nothing wrong and refused to agree to the deal, reports Estado de Sao Paulo.

He said: "It is not acceptable to condemn an artist. This is catastrophe. I can't be censored by a government that is not a dictatorship."

Thomas showed his backside to audience members at the Teatro Municipal in Rio de Janeiro after they booed the opening night of his version of Wagner's Tristan and Isolde.

Judge Antonio Nascimento Amado said: "If he feels like this then he should trust his case will be judged fairly."

---------------------------------
Don't go out tonight
It's bound to take your eyes
There is a bad moon on the rise

[P.O.E.]

When belief outstrips reality: that's when the fun starts.

[Orangedog]

But this is the inevitable result when both parties subscribe to the SAME flawed fundamental premises. Those flawed premises are: 1) Government needs to be centralized and highly interventionist to be effective. And 2) it is permissible for political legislation to violate individual rights in order to convey special privileges to groups. It is upon these two dictatorial premises that both Democrats and Republicans structure the entirety of their policies. Arbitrary law has trumped objective law as a policy tool for each of them. Both have abandoned belief in a higher natural law. Both endorse the wholesale violation of rights. Consequently they both are driving us toward economic fascism and dictatorship.

This obsevation is the heart of the matter. Those who ignore or scoff at it due to party loyalty due so at their own peril. In this atmosphere, parties are able to successfully isolate politically inconvenient groups of society that are either too small or to sparcely grouped to consitute a large enough voting block to be a threat come election time.

[Orangedog]

Those momentum players are running junk up to extreme levels. Looks worse than '99 in many cases.

If it's worse this time it's mainly because 1999 was only 4 years ago. To have forgotten lessons that were so expensive and so recent is not a good sign.

[arete]

When belief outstrips reality: that's when the fun starts.

For most people, reality is whatever the CNBC cheerleaders and con artists say it is. LOL

Richard W.

[arete]

This obsevation is the heart of the matter. Those who ignore or scoff at it due to party loyalty due so at their own peril.

Two words -- Victory Act.

Richard W.