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Pardon in advance the subjective, non-empirical approach of this post. But I happen to believe the quants are only as good as the milieu that throws them up. Asset value today is about as empirically-rendered as a twirling compass in the Bermuda Triangle. Part of the reason is that the Masters fear price discovery. So they are waving their magic wands frantically. However the more you push on a string, the more balled-up the string gets.
So let's get physical. We inhabit this realm of imaginariness. The term itself, stress test, makes it sound like they're testing the girders on a bridge. Once again they're stealing from the Real to bolster the Imaginary.
The fact they're tossing around a lot of manly euphemisms suggests to me they're scared ****less. Mark-to-market, Level 2, Fed 'facilities', troubled asset relief, the derivative 'complex', 'structured' finance. Favorable stress tests make troubled assets disappear. Pure magic. But what then happens to the PPIP program? I thought that was a stress-relief program? Doesn't the imaginary realm require even some rudimentary consistency within itself?
They're bulldozing houses in California. That's a step in the Real direction.
For now, it's Wizard of Oz in the booth with the curtain half-pulled. Look up at the cloud in the sky. I see an anvil. You see an angel. One of us will be crushed. One of us might fly away. If you reflect too much on the sheer arbitrariness of it all, the whole world becomes positively frightening.
My alternative to madness is an reinvestment in the intrinsic. For this, I prefer silver over gold. I prefer oil over gold. An investment theme? Hold onto your personal sanity without which a comfortable retirement is impossible. I want things I can understand, things that do something. Sorry, but gold is half-smoke. Spare me the gold-buggery. You can't eat gold. But you can sort-of eat silver and oil.
For now, it's Wizard of Oz in the booth with the curtain half-pulled. Look up at the cloud in the sky. I see an anvil. You see an angel. One of us will be crushed. One of us might fly away. If you reflect too much on the sheer arbitrariness of it all, the whole world becomes positively frightening.
My alternative to madness is an reinvestment in the intrinsic. For this, I prefer silver over gold. I prefer oil over gold. An investment theme? Hold onto your personal sanity without which a comfortable retirement is impossible. I want things I can understand, things that do something. Sorry, but gold is half-smoke. Spare me the gold-buggery. You can't eat gold. But you can sort-of eat silver and oil.
At some point we have to start addressing the psychological health of market participants. Can a true narcissist part with magical money, the power to make it? Or will the end have to arrive with a bang? Or if the madness succeeds in ensnaring greater fools can it run on for another round? How many fools does it take to screw themselves? Globalism gave birth to the Fewer Fool Theory. I don't thik they can spin it for another round. But I reserve the right to be surprised.
Gotta love California.
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