Monday, August 24, 2015

Wall Street's Borg Collective

By Stephen Pizzo, News For Real

08/24/2015 -- The world’s stock markets are in a tailspin. Another tailspin. Market crashes, which used to be a once-every-generation affair, now seem to visit us about once every seven or eight years.


Are the world's workers becoming less and less productive? No, just the opposite, they're working harder, for longer and for less money every year.

Are companies less profitable? Nope. Just the opposite there too, for the most part.

So what's up doc?

Blame it on the very technology you're using to read this now. The Internet, and related networking technologies, have changed how money in these markets flow.

In the past investors were like herds of roaming bison, in search for the next green pasture. They were widely dispersed. Separate herds went off in their own directions, following their own instincts, in search for their next buffet. Some did better than others. And, by the time word got out that some other herd had found a bonanza, by the time the others got there the bounty had been pretty much consumed.

Which is why those herds of investors back in the day were considerably less reactionary and more stable than we see today.

Today what we have is a hyper-connected, worldwide investing “blob” that moves as a single herd, able to move en-mass, almost instantly, to exploit a new real, or imagined, opportunity. They are the investment world's version of Star Trek's “Borg Collective.”

So one quarter everyone wants to be in bonds, the next the herd gets a whiff of smoke (a Fed move up on rates,) and the entire herd stampedes, running mindlessly in all directions until it comes to a collective agreement on what they believe the next big opportunity might be. Then they all head to it.

In the short run such behavior creates it's own affirmation. After all, when everyone whats to buy the same thing, at the same time, the price of that thing shoots up. And so the herd is happy and, as long as it stays happy, the price keeps going up.

But, as they say on Wall Street, “trees don't grow to the sky,” so, sooner or later the greater-fool theory breaks down as fewer and fewer buyers are willing to buy at increasingly ridiculous valuations. And then it crashes.

In the past crash in one market segment, while unpleasant, was rarely catastrophic to overall market as there were “other herds” grazing happily there. But no more. Now all the money heads where the Borg Collective has decided to in its collective “wisdom.” And why not? Even those who know what's likely to eventually happen, they also know that, when this mega-herd moves, prices move up. So why not pocket some sure money while it lasts?

Of course that's the trick in this new markets normal; how long to stay with the herd. When to hold-em, and when to fold-em. In the end way too few fold-em while there's still money to made. So most of the collective herd panic all at once when the obvious becomes, well, obvious.

That's it. That's why the market dove a thousand points at its opening this morning. Of course it will go back up again. The collective herd, while in panic mode now, is already on a search for the next market(s) they can pump for all they're worth.

And remember; resistance is futile. Those markets will be assimilated, exploited, gutted.

Saturday, August 22, 2015

Memo To My Progressive Friends

The past few weeks I've been sitting here at my computer watching many of my closest friends wrestling with their own convictions. I know these friends well, so I know what their real convictions are, and I share them. They are progressives, old progressives, veterans from half a century of the most important social struggles of the age; Vietnam, civil rights, voting rights, women's liberation, the environment. They are among the best amongst us.

Yet they seem to have found themselves stuck with a Hobson’s Choice, and it’s caused them to kind of lose their progressive GPS signal a bit. 

Now don't get me wrong. I'm not condemning them, just observing. I do understand the conundrum that's causing the static. They have a terribly flawed candidate for President, Hillary Clinton, currently in the lead for her party’s nomination -- if only because no other party big shot has challenged her. Against her is arrayed a small herd of Republican candidates that no satirist (or doomsayers) could have dredged from the darkest corners of their fevered minds.

These good friends, rightfully, fear that if their lead candidate does not prevail, all manner of awful things will descend upon us; Supreme Court, environmental disasters, a gutting of our national regulatory apparatus, rollbacks in civil rights and voting rights, restrictions on women's health choices, war, etc.

And yes, a GOP victory in 2016 would, to one extent or another, likely result in much, if not all, the above.

So I understand, and do not condemn my old progressive buddies for their steadfast support of Hillary Clinton. They're scared. And, with 2016, probably the most unsettled and dangerous election I can remember since the Nixon days, I'm scared too. And, if you're not, you're not paying enough attention.

Still I have to say that, acting on fear has been something I've tried to avoid my entire life. Fear is the parking brake of life. You either release it, or you're not going anywhere. And I'd like them to release it now. Because, while they feel that supporting Hillary is the best way to insure that none of the GOP wing-nuts never get within spitting distance of the Oval Office they, in the process, are jettisoning their most core values and beliefs. And doing so erodes the power of those values at a time we need the pursued even more vigorously.

So I ask them, and you, just do this for a moment: change shoes. Make Hillary the leading GOP candidate (not too much of stretch.) Now go through what we've learned about her and her values and her governing principles. Remember the “scandals,” real or contrived. Remember how her husband governed. 

First, we know she, like her husband, believes rules that prevent her from getting what she wants, are for not rules, but obstacles to over come. So she walks the razors’ edge of right and wrong. And, as always happens to those who think they are above it all, she often slips off that edge ending up on the wrong side.

Emails? Yeah, that's the most recent example, but there are plenty of others, large and small, that go all the way back to her disastrous and hubris-driven belief that she and she alone could repair America's broken healthcare system, in secret, behind closed doors, with the help and financial support of many of the same big medical and pharma players who caused, and profited from, the mess to begin with. That failure set healthcare reform back by two decades.

To see Hillary as a progressive is also a stretch. Her best friends (and contributors) a from the far-upper crust of America's financial world like Goldman Sachs. Her husband signed the repeal of Glass-Steagall, which contributed to the massive financial collapse in 2008. And just last week Hillary, when asked about that, supported that repeal, claiming it had nothing to do with the troubles that followed.

She supported, and continues to support, NAFTA, which was no favor to working Americans, to put it mildly. Now she supports the pending TransPacific Partnership trade deal as well. Some protector of the working class. And the Tar Sands pipeline from Canada? She won’t say, but we know, don’t we.

Once “dead broke,” she is now richer than Imelda Marcos was when she was in the clover... the similarity between the two also nags at me, though everyone tells me I'm crazy. Maybe.

Don't worry, I'm not going to drag you through the Clinton Chronicles of Horribles and Incidentals, from Whitewater forward. You remember, I'm sure. When I think of the Clinton's the image that always flashes in my head is of Pigpen, the Shultz charger who, in every frame in the cartoon, trails a cloud of dust and dirt along with him. That's Hillary.

Then she never takes personal responsibility for any of it. It’s aways one kind of "conspiracy" against her or another. There is something in that too that unsettles me about her. I once knew a woman who later proved to be a borderline psychopath. (Oh boy, now I've done it – crossed the line into truly nutty territory, right?) Well, I'm not saying Hillary is a psychopath. All I am saying is that one of the key traits this other woman displayed was that nothing that went wrong in her life was ever her fault. She always had a excuse, and explanation, no matter how much it strained credulity, she never took personal responsibility. (She eventually was sent to prison for embezzlement.)

So, there you are. My friends want me to stop harping on Hillary’s glaring progressive shortcomings. They say that I, and others like me, are “undermining” her. (Though her own behaviors seem to be doing that without much help from us.) But that if I and progressives like me don’t knock it off we are going to end up putting another Republican in the White House.

But I too am faced with a conundrum. To support Hillary Clinton I would have to jettison the very core values that formed and continue to form my life and politics:

- I abhor a liar. 
- I don’t like people who cheat. 
- I hate people who talk one way, and live another. 
- I do not trust “triangulating” opportunists. 
- I am dislike and distrust those who insult my intelligence by feeding me a line of self-serving bull instead of the truth. 
- I am not buying the claim that a candidate worth millions of dollars and who runs with Wall Street’s top dogs, knows or cares a damn thing about ordinary, working Americans.

And I am not going to let fear change any of that. Which means I can't, and won't, vote for Hillary Clinton if she ends up the nominee. I will just skip that box on the ballot. There are some things that are simply more important than a single election.

Because, if it's the current corrupt system you want to change, you don’t get there by voting for it.