This is just a heads up to the 12,675 registered users on this site that you are about to receive an email from me asking for your residental address.
This is intended just for the fraction of individuals who have registered at or upgraded to a membership level that entitles them to an eBook or hardcopy version of the second edition of Debunking Economics, which will be launched and available on October 4th (in the UK–its availability in other countries depends on shipping times). However there is no way for me to select just that subset for emails from within WordPress (if any WordPress guru knows otherwise, please tell me how!), so all of you will receive the request (assuming that the plugin works as advertised).
A note for those who are expecting an eBook: it is possible to do this in the USA via a “gift” from Amazon, but it appears that in other countries even Amazon hasn’t set this facility up. In that case, you will be sent a paperback copy–which is why your addresses are needed.
Finally, to put some substance into this post, watch this excerpt from a BBC interview with a trader (Alessio Rastani) which outlines a common view in the hedge fund community. It’s something I hear all the time–and which makes me seem relatively cheerful about our current economic predicament (and certainly more concerned about its social impact!)
Amazingly honest. Too bad we rarely have the equivalent in the economics profession apart from the slim minority with an ethical backbone e.g. Steve, Fred Harrison, etc.
Might be ‘too good to be true’ and @dsquareddigest has been investigating and it looks like it might be classic ‘yes men’ hoax – brilliant hoax though if it is. Robert Peston has got him on the record on the BBC in last few mins to state he is not a member of the Yes men – beyond satire.
If you really want to be scared see this video of the slow unrolling of chinas bank crisis – http://www.creditwritedowns.com/2011/09/private-lending-china.html
Level of bank debt causing a run to cash and rich individuals acting as financial intermediaries instead – lending sub-prime at high interest rates.
This kind of structure really needs modelling as it is instability without exogenous monetary creation. All transactions are hard cash not book transactions – like full reserve banking.
I enjoyed watching that interview. Watching the faces of the studio presenters and their reaction. It just shows how much the media presents a one dimension, rose tinted goggles, version of reality. At least when the crash comes they cant say it was a ‘surprise’!
Huffpost uk has on its front page the story that it could be a hoax http://www.huffingtonpost.co.uk/2011/09/27/alessio-rastani-hoax-on-bbc_n_983156.html
Although he looks nothing like the guy from the 2004 Yes Men bhopal interview.
l
Alessio Rastani though only seems to have an identity on the internet and nonone has said – hey i work for a Hedge fund – I know him personally and professionally.
His blog has a tiny number of posts pre this week, and back to 2010. They can easily be faked in WordPress server side. The number of facebooks friends on his blog and facebook are identical, a little too convenient,
His blog post is almost word for word what he said on the BCC ‘Why I pray for a Recession’ http://www.leadingtrader.com/09/global-recession-why-i-pray-for-another-recession/
Scripted to be picked up by media has to be the best guess.
If he really was self employed by selling training advice on stocks he would be blogging and opinionating every day.
The interview that forbes did to test if he was ‘for real’ smells to high heaven
http://www.forbes.com/sites/emilylambert/2011/09/27/trader-or-prankster-we-called-alessio-rastani-and-asked/
Reads like someone who read an airport book on day trading, and might do a bit of that a hobby.
The BBC has issued a press release saying hes for real an ‘independent market trader’
http://www.bbc.co.uk/pressoffice/pressreleases/stories/2011/09_september/27/statement.shtml
Certainly not the wall street hedge fun guy he was pitched as
http://www.abc.net.au/lateline/stories/s690761.htm
Australian economist called the bubble in 2002 using the debt to GDP ratio analysis.
Ha ha every media organisation has been hunting down this guy and its the number 1 trending topic
It turns out hes almost a neighbour of mine, isnt a registered dealer and as I suspected day trading is a hobby of his
“They approached me,” he told The Telegraph. “I’m an attention seeker. That is the main reason I speak. That is the reason I agreed to go on the BBC. Trading is a like a hobby. It is not a business. I am a talker. I talk a lot. I love the whole idea of public speaking.”
http://www.telegraph.co.uk/finance/economics/8792829/BBC-financial-expert-Alessio-Rastani-Im-an-attention-seeker-not-a-trader.html
But dont laugh the crash of 29 was down in large part to hobbyists, the paper gold crash is down to hobbyists, we now have 1000s of hobby chinese banks that are storing up problems. Greed is a big hobby. The guy told it like it is and im sure he has a great media future on the comedy panel shows.
The stock market is a Casino, somebody wins and somebody looses; it is only good for gambling not for people who are serious about making money. The best thing to do is, to term deposit your cash in Australia and earn 6% + the 5% on the depreciation of prices on all goods (minus 5% inflation). It is government guaranteed and gives you peace of mind. At this point you have time to work and earn money and save more. From nothing there is nothing, so long term this is the only way to get rich.
http://www.zerohedge.com/news/bbc-releases-official-statement-alessio-trader-rastani-he-perfectly-legit-and-interview-was-not
Maybe it’s not a hoax.
Yes, Peter Brain been a voice of sanity in this insane profession for ages. We first worked together in 1979, when I ran a conference on trade, and he had a stand-up fight with the IAC mob–great fun to watch.
Peter also warned of the Asian crisis too before it happened. Peter established the National Institute for Economic and Industrial Research:
http://www.nieir.com.au/
It’s based on his non-neoclassical, somewhat disequilibrium multi-sectoral model. He’s a very important and under-rated contributor to economic realism here in Australia.
Title: The Stock Market Is Not Necessarily A Casino
1. The stock market is not a casino for value investors;
2. I use the stock market to test my behaviour as endowed by evolution and confirmed that there is a monkey in me.
Steve’s suggestion to make secondary market stocks expire in 50 years would have made the stock market less casino like. Will Steve’s suggestion be adopted? Maybe around the year 2212 it will be (but in the long run we are all…).
http://news.anu.edu.au/?p=1157
ANU economics professor calls the bubble in 2009.
Good on him–I’d missed that one. Good to see.
Do you know the Western Sydney University economists Wayne Dwyer and and Haydir Alhashimi? Found an article of theirs from 2004 that denies the housing bubble.
“The residential property cycle and the Australian economy: no bubble, no trouble”
I’ve been reading through many papers and reports that purport to analyze the US housing market, coming from the Fed, NBER, conventional economic journals, etc. It is amazing that these credentialed and experienced economists could not see a $US8 trillion US housing bubble.
Many of the economists were floundering as their static models could not comprehend how disposable incomes could drive up housing prices. The worst was when they said that EMH and CAPM theory states that assets are priced efficiently by definition, so if housing prices have risen to the moon, it must be an efficient outcome – so absurd.
Yes, Wayne is a good mate and Haydir is a very nice bloke too, but they are primarily teachers rather than researchers. They stuck well within the bounds of conventional thinking in that paper.
@phillip,
Good stuff. So comical actually that “head out the window” analysis might have yield better prognostication as opposed to academia. Hits right at the core of modern economic education being somewhat absurd.
Regarding the BBC interview – there are so many rumors and so much “theater” going on in the mainstream media it has become nothing but a circus. I sincerely believe that this “circus” is, in itself, the signal that all is not well and something wicked this way comes!
@ Philip September 29, 2011 at 2:08 am | #
” It is amazing that these credentialed and experienced economists could not see a $US8 trillion US housing bubble.
Many of the economists were floundering as their static models could not comprehend how disposable incomes could drive up housing prices. The worst was when they said that EMH and CAPM theory states that assets are priced efficiently by definition, so if housing prices have risen to the moon, it must be an efficient outcome – so absurd.”
I too was amazed at the so-called profession of Economics and now, I too, find the whole scam of economics “so absurd”‘; criminally and irresponsibly so but the pretence must be maintained, and excused – by the Economists, of course.
Recommendation: I would replace “Many” above, with ‘most.
Note how the coerced Central Banks’ market manipulations surreptitiously led by the soon to be grande loser Mr. Bernanke are beating down Gold and Silver down in the criminal attempt to force money into the US Dollar and US T Bonds.
This tactic, involved causing a full unjustified and unnecessary bull store-high-in-transit (SHIT) panic in the EU by having their trained and loyal true-believer Economists and talking heads plus the media talk and print malicious lies. Actually, it is lies as these Economists actually believe the crap that they spruik is some sort of established science. Odes of Summers, Rubin, Roubini and Krugman, et al.
How deluded is that. Nothing worse than a happy convict and there are plenty around here.
But this is the only “Economic Theory” you need to know and it is called the supporting propaganda for governmental, and bureaucratic “theft” from the “governed” for the Banking System.
@ Peterjbolton September 29, 2011 at 1:01 pm
Most (if not all) economists do not understand the monsters they have created through their stupid theories. What Alessio Rastani does is no different from what other traders do, in Goldman Sachs and other investment banks, “doing God’s work”. If anyone is shocked by the candid comments, then the person has no idea of the true origin of the financial crisis.
@ Lyonwiss September 29, 2011 at 1:58 pm | #
“Economic theory development has been driven unfortunately, largely by rhetoric and by political and financial support of the rhetoric. This then distorts the education system, which is mostly a meal-ticket purchase system, where regurgitation of material is a low-risk approach to meeting the job objective.” Lyonwiss August 13, 2011 at 2:52 pm |
Just for the record Lyonwiss and for proximity, I take great pleasure in posting an earlier “utterance” of your origination – see above – that brings great clarity and understanding in the most qualitative and succinct manner.
Thanks for being a human being.
In a few hours we shall know the result of the Germany EFSF attempted ratification. If it fails, which it should, then it will be back to reality and the puss of the boils will spew forth unrelenting. If is passes, it will be merely a postponement of what is to come.
Germany Backs EFSF Expansion With 523 Votes In Favor, 85 Against; EUR Sells On The News
From: Zero Hedge
Madness and Insanity
Political Cowardice and I thought that the Germans had some backbone; sigh.
The news that Germany backed the EFSF is to me another sign that a Greek default simply is very dangerous. That the EU cannot seem to find a good way to let this happen. Otherwise, I believe it would have already occurred. Therefore, I willing to take the next leap of faith to say that the EU is now “all in” on the process of avoiding any sort of critical sovereign default. The can has been kicked again.
However, nothing has fundamentally changed. In fact, the economic environment continues to deteriorate. There will come a point that the can will not be able to be kicked any further. And all the intervention will have effectively only increased the potential “economic” energy of the system to a point that the release of said energy will be akin to an economic nuclear detonation.
I suppose the purpose is a game of trying to outrun the inevitable better than another (say creditor). A hot potato game betweent the EU and US, waiting for China to implode first. Just speculation on my part of course.
I found a good report on international comparisons of mortgages.
http://www.housingamerica.org/RIHA/RIHA/Publications/74023_10122_Research_RIHA_Lea_Report.pdf
I find it odd that the mainstream says that Australia is in no danger because we have a low rate of non-performing loans. Yet these loans only rise significantly after the bubble peaks and unemployment rises. Non-performing loans in Spain and the US remained steady and only increased after the bubble burst, not before.
The attached image shows this fallacy. Funny that Chris Joye should interpret it in the opposite manner.
http://www.businessspectator.com.au/bs.nsf/Article/residential-house-prices-commercial-property-super-pd20110928-M53GN?opendocument&src=rss
Interestingly, Australia has the same non-performing housing loan rate of Spain in 2007 and we know that Spain is in a debt-deflation.
@Lyonwiss September 29, 2011 at 1:58 pm
“What Alessio Rastani does is no different from what other traders do, in Goldman Sachs and other investment banks, “doing God’s work”.”
The common believe in a “God” (Christain, Judism or Islam) or any book that promote such concepts can only arise due to delusional thinking.
http://en.wikipedia.org/wiki/Psychosis
Also, those who burn a system that is part of their own means of survival is akin to not using right speech (less alone right action). They will destroy the very thing that can help with there existence (to a point of destroying the earth or bio systems on the earth).
Alan Gresley September 30, 2011 at 2:35 am
The interview cited in one of the above comments:
http://www.forbes.com/sites/emilylambert/2011/09/27/trader-or-prankster-we-called-alessio-rastani-and-asked
is frank, truthful and accurate from my own experience in trading, both personal and institutional. Most traders cannot speak openly because they are gagged by their bosses or by their associations. Alessio Rastani (AR) said: “I trade my own money, my own account. That’s what I always wanted to do. I like the idea of not having a boss. I did work for one institution, but I realized I want to do it for myself.” (Totally logical: if you really can make money, you don’t need a boss.)
The world is run by economic thinking which is delusional. “This is not a time right now for wishful thinking that governments are going to sort things out,” Rastani told the BBC. “The governments don’t rule the world, Goldman Sachs rules the world.” Governments don’t make money; Goldman Sachs does. Making money is “doing God’s work”.
As a personal account trader, it is entirely logical for Alessio Rastani to wish for a recession, when you can make money most quickly, as the market goes up by the escalator and goes down by the lift-well. Alessio Rastani does not feel responsible for what he says, because economic theory accepts that any opinion alone is unimportant and diverse opinions are needed to create a market and provide liquidity.
An important aspect of the social psychosis is people’s delusional understanding of how the economy really works versus how the economy actually works, being driven by false economic theories which may be logically consistent, but dangerous and delusional.