Posts Tagged ‘financial complex’

Innovation, Risk and the Forest Fire Analogy

Innovation, Risk and the Forest Fire Analogy  

Lava burning forest

Courtesy of Charles Hugh Smith Of Two Minds 

To clear open space for innovation to take root, sometimes you need a forest fire to destroy all the deadwood. Instead, we are frantically piling up more deadwood.

What was once an inflammatory outlier--that our brand of "capitalism" incentivizes exploitation, fraud, complicity, corruption and plunder--is now commonplace. Even the most mainstream financial media websites now sport commentaries which excoriate our systemic fraud, and books galore gleefully sport titles containing "hot" words like plunder.

That is a remarkable turn of events: that a radical critique of our entire financial system has gone mainstream, and in many circles has been accepted as "obvious." (For more on the tricky nature of what’s "obvious," please see the chapters on the politics of experience in Survival+.)

In Innovation: Financial, Technical and Institutional (June 30, 2010), I attempted to connect the dots between risk and innovation. I believe that the two concepts are intrinsically bound like oxygen and hydrogen in the water molecule, but this deep structural connection between the two is generally ignored or not even recognized.

In essence, innovations which remain inherently unstable and unsafe regardless of hedges, controls and safety features--that is, they embody intrinsic risk-- cannot be placed in the same category as innovations with inherently low risk.

One of the keystones of the Survival+ critique is the realization that the risks of our systemic "financial innovations" are ontological and cannot be massaged away to zero. Indeed, the idea that this was possible underpinned the entire credit bubble and its inevitable implosion.

Mathematician Benoit Mandelbrot discredited this notion in depth in his book (highly recommended) The Misbehavior of Markets.

I addressed this last year in The Yellowstone Analogy and The Crisis of Neoliberal Capitalism (May 18, 2009):

For decades, the operative theory of forestry management was that limited controlled burns-- mild reductions of dead underbrush and debris--would essentially reduce the possibility of a major fire to near-zero.

But the practice actually allowed a buildup of dead wood which then fueled the devastating forest fire which swept Yellowstone National Park in 1988. Various revisionist views sprouted up later, claiming the fire was not the result of misguided attempts to limit natural forces (Vast Yellowstone Fire Now Seen as Unstoppable Natural Cataclysm (NT Times, 1989)).

Now we’re in a financial conflagration which is widely considered the result of


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Phil's Favorites

Why Everyone is Selling Their Tech Stocks

 

Why Everyone is Selling Their Tech Stocks

Courtesy of The Reformed Broker

5:30pm ET LIVE premiere today – Subscribe for the alert!

Join Downtown Josh Brown and Michael Batnick for another round of What Are Your Thoughts? On this week’s episode, Josh and Michael discuss the biggest topics in investing and finance, including:

  • Tech Selloff – “To call this earnings season a blowout would be an understatement.”
  • Business Media – The WS...


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Zero Hedge

WTI Dips After Big Surprise Build In Gasoline Inventory

Courtesy of ZeroHedge View original post here.

Amid all the chaos in equity markets, oil managed to bounce back to modest gains on the day with WTI as a weaker dollar offset some concerns of a growing pile up of crude in the U.S. Gulf Coast as refineries there cut runs in response to the Colonial Pipeline shutdown.

Traders are expecting “a gradual resolution to the Colonial Pipeline shutdown,” according to Louise Dickson, an analyst at consultant Rystad Energy.

“The market is again looking to Asia, Covid-19 cases, and the next signals for oil demand outlook.&r...



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Chart School

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Courtesy of Read the Ticker

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Comment: PMI juiced back up ...



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Digital Currencies

China's digital currency could be the future of money - but does it threaten global stability?

 

China’s digital currency could be the future of money – but does it threaten global stability?

The Ys and wherefores. AnaKins27

Courtesy of Daniel Broby, University of Strathclyde

China is making promising progress with testing its digital yuan currency. It has announced the success of a pilot in Suzhou City, near Shanghai in eastern China, where 181,000 consumers were given ¥55 (&poun...



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Biotech/COVID-19

US support for waiving COVID-19 vaccine patent rights puts pressure on drugmakers - but what would a waiver actually look like?

 

US support for waiving COVID-19 vaccine patent rights puts pressure on drugmakers – but what would a waiver actually look like?

A COVID-19 surge has pushed hospitals in India beyond their capacity. A stadium in New Delhi was being used as a makeshift ward on May 2, 2021. Getty Images

Courtesy of Dalindyebo Shabalala, University of Dayton

The U.S. and Europe are debating waiving patent rights for COVID-19 vaccines, a move that could allow more companies to produce the vaccine around the world. But it’s not as simpl...



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Politics

If China's middle class continues to thrive and grow, what will it mean for the rest of the world?

 

If China's middle class continues to thrive and grow, what will it mean for the rest of the world?

Over the past few decades, hundreds of millions of Chinese citizens have become part of the middle class. AP Photo/Ng Han Guan

Courtesy of Amitrajeet A. Batabyal, Rochester Institute of Technology

China’s large and impressive accomplishments over the past four decades have spurred scholars and politicians to debate whether the decline of the West – including the ...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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Kimble Charting Solutions

Will Historic Selloff In Treasury Bonds Turn Into Opportunity?

Courtesy of Chris Kimble

Long-dated treasury bonds have been crushed over the past year, sending ETFs like TLT (20+ Year US Treasury Bond ETF) spiraling over 20%.

Improving economy? Inflation concerns? Perhaps a combination of both… interest rates have risen sharply and thus bond prices have fallen in historic fashion.

Today’s chart looks at $TLT over the past 20 years. As you can see, the recent decline has truly been historic. $TLT’s price has swung from historically overbought highs to oversold lows.

At present, the long-dated bond ETF ($TLT) is trading 7.8% below its 200-...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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Promotions

Phil's Stock World's Weekly Webinar - March 10, 2021

Don't miss our latest weekly webinar! 

Join us at PSW for LIVE Webinars every Wednesday afternoon at 1:00 PM EST.

Phil's Stock World's Weekly Webinar – March 10, 2021

 

Major Topics:

00:00:01 - EIA Petroleum Status Report
00:04:42 - Crude Oil WTI
00:12:52 - COVID-19 Update
00:22:08 - Bonds and Borrowed Funds | S&P 500
00:45:28 - COVID-19 Vaccination
00:48:32 - Trading Techniques
00:50:34 - PBR
00:50:43 - LYG
00:50:48 - More Trading Techniques
00:52:59 - Chinese Hacks Microsoft's E...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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