Monday, September 22, 2008

Financial Markets Sept 2008

Financial Markets Sept 2008
Andre Willers
19 Sept 2008
The time of writing is 18h55 SA time , 2008-09-19

“Cry havoc , and loose the dogs of war.” Shakespeare

What is going on ?

We have to go back to the start of the Reagan era (early 1980’s)
Not to put too fine a point on it , the US and Western systems were losing .

The USSR (and later China) used the Akademgorsk Model (see below ) .
This is superior to the freedom system in the short term .

If it were not for nuclear weapons as a stopper , Western Europe and later the USA would have been overrun .

Freedom in the West had been eroded by concentration of commercial interests .
Democracy presupposes a free and independent mass-media , but the Media had turned into Maenads .

In the meantime , physical production and innovation had been shackled by legislation written in gentler times .

An historical analogue would be Rome vs Carthage circa Hannibal’s occupation of Italy .

The Reagan Intervention .
The AI(3.1) advisors recommended unshackling the Western economic engine . All the laws preventing the positive-feedback mechanisms leading to unrestrained cancerous-type growth were repealed during the 1980 – 2002 term . This was a deliberate policy . They realized that later on this would have consequences , but first they had to survive and worry about these later .

What the system developed was not only the expected capitalist growth pattern , but a method of tapping future wealth to use now (ie “futures”) . Refer to the superiority of English and Dutch Banking systems during the Napoleonic wars .

This enabled a surge of wealth (via synergism) ,where a relatively small (6% of Western wealth) percentage was sufficient to overwhelm USSR efforts .

Put it another , more accurate way :
The marginal extra growth of the Freedom system was sufficiently higher to beat the marginal extra growth of the Akademgorsk Model .

What will happen now?
The system has driven license to it’s extreme .

As discussed in “Holidays and financial stability” , “ Artificial Intelligence “ and previous posts , the system has sufficient self-awareness to avoid self-destruction .

The memory of the external database in similar previous circumstances is utilized .
The system has learned . See “Artificial Intelligence.”

Futures market regulation will evolve . It has already started , in the banning of shorting in US and UK markets . Retroactive criminal prosecutions a-la-Enron are sure to follow . Rules and penalties will follow .

In other words , the system will settle down . Future shocks will be along a logarithmic curve .Beth(0)

But of course , everybody will be trying to out-guess everybody else . This will have to be along terms of Beth(x) .

Beth Bubble Wars
See “Infinite Probe” , “AI” , “Randomness” etc
I will leave these to your imagination (hint : the boundaries of the rules of engagement will be reminiscent of 16th or 20th century warfare .)
A simpler , gentler age .

Have you ever seen ferociousness along a Beth(n=3 or n=4) system ?
Everybody is having a grand old time , but rather ho-hum , nobody survives .

Appendix A
The Akademgorsk Model :
Concentrate and isolate technological streams in special cities by fiat .

Thesis: this enhances speed of short-term innovation
(eg Medieval Trade Towns , Sagres : Portugal became a world power for a short time by concentration of resources .)
Pollution is disregarded .

Anti-thesis: the isolation (eg Guilds , Unions ,Soviets) lead to problems in the long term with vested interests . Pollution (which is a cross-discipline , becomes a major problem)

Synthesis : Internet . Virtual Akademgorsk’s .

The Western Freedom System does concentrate technological streams
(eg Birmingam , Detroit , Silicon Valley ) , but it does not isolate them either .

And so it goes .


No comments: