Wednesday, April 28, 2010

The Mind Over Money Folly

Last night PBS’s Nova had a broadcast titled “Mind over Money” about the ways psychology affects economic decision-making. It was a standard World take on the latest in behavioral economics, namely that there is really no such thing as a rational market.

The typical proponents of this view were favorably interviewed, Robert Shiller and Richard Thaler among them, stridently advancing the idea that emotions play such an important role in decision-making that few people are truly rational about the decisions they make. This is all played out in the market, and with the financial markets recently demonstrating how hosed people got, it must be true.

Nah. Sorry.

Everything anyone does is always and perfectly rational, every time.

The reason is simple, and has a bit to do with a portion of the show that featured a scientist doing experiments to graphically see how much of a certain part of the brain is activiated when a subject is offered money. It turns out it is stimulated the same as it is when offered sex, drugs, or food. The scientist then said something along the lines of “The brain has evolved yadda-yadda.”

Now, if evolution is the culprit, then why isn’t that perfectly rational? Heaven forbid we’d have evolved not to have an emotional switch to move us to get food to eat and have sex to procreate, or make it easier to do those things which is what the very reasonable tool of money does. Now, the idea of evolution is crap, but it does make perfect rational sense to someone who buys into a materialist world view. The interesting thing is, how can someone with such a view say what is rational or what is not? If it is perfectly rational for a beast who has evolved with a larger body, stronger muscles, and sharper claws to eat you, what do you have to say about that?

The “there is really irrationality after all” folly was further exposed when another scientist did an experiment in which a good number of subjects were all put in front of a computer connected to a market exchange simulation, and they were told that over time the asset they were trading would be devalued to nothing. They then started trying to buy or sell the asset.

As they got going they actually overvalued the asset for quite some time, forming a speculative bubble. As time went on the price of the asset was far above the value the simulation had established, until eventually the prices started tumbling dramatically, popping the bubble. The experiment was a success! These subjects unwittingly created a bubble thus proving they behaved, ahem, irrationally.


What is never addressed in these kinds of experiments (there are so many of them) is that the experimenters must make an initial assumption about what the value of the test asset is. Here’s the bazillion dollar question:

Where did that come from?

Where did the initial consideration that the asset was falling come from to begin with? The experimenters may look at the aforementioned results with glee, but real life is not like that. In real life somehow someway a market value of an asset comes to be—laboratory dweebs are not there to just say “This is the value and what you think about it is wrong.”

Again, why is what they say it is wrong while what you say it is is right?

No, it wasn’t that people were behaving irrationally—those experimenters were dutifully (and very rationally) worshipping one of the most powerful gods, Hindsight. Those subjects were simply trying to maximize their self-interest (quite rationally) and when people lie and cheat and exploit markets… and engage in extraordinarily rational human sacrifice, bubbles form and pop and form and pop and form and pop and you get a business cycle.

Which means the issue is not that people are irrational.

It means they are unrighteous.

That is the true folly. It is even more foolish that they dismiss what they think is the folly, but it is not irrational to do so because they haven't a clue about God or who He is, even though many will boast zealously that they do. Makes perfect sense, perfectly rational. It is wholly unrighteous, however.

There is only one way to be righteous, and that is to link up with the one perfect value assessor, Jesus Christ. He’s it. He’s the One.

Jesus Christ is the one quant who gets value correct all the time, every time. All the other quants no matter how brilliant they are with the numbers are just guessing, and if they try to get what’s valued without Christ they are only arriving at what the Jesuits want them to see.

In fact, close to the end of this Nova episode was a surreal scene with a number of young bright-eyed quants searing their attention into huge computer screens. Scanning scanning scanning. They will scan and scan and scan ultimately to do only one of two things.

One, they will further the human sacrifice efforts of millions and millions of people paying them to peel off any and all of those market discrepencies and anomolies so they can have their retirement secured.

Or two, they will ensure the pool of veritably valued capital sowed into the lives of those who love with Christ’s love will be manifest broadly so all may benefit and further demonstrate His love as He did.

Know what? I think everyone is very rationally doing the former.

I think no one is doing the latter.

How unrighteous is that.

Friday, April 16, 2010

Human Sacrificers Circle the Wagons

The biggest news on Wall Street is that the Securities and Exchange Commission is coming after Goldman Sachs. They've been hit with fraud charges, so significant that today the Dow took its first hit in a while. Everyone who watches what's going on there at street level isn't surprised that Goldman Sachs is in the crosshairs, and some are a bit surprised that the SEC is actually standing up and pointing its shaky finger at the behemouth.

Slate writer Heidi Moore got through a manhole and looked around a bit underneath the street, and saw some very interesting things. Among all the stories in the web aggregate I look at, my attention was drawn to her piece: "It's Not Just Goldman--It's the Clients." Sure enough, you'll find that all of our huffing and puffing about rich guys being eeevil is woefully misplaced. We need to do a lot more huffing and puffing about


The fault, dear Brutus, lies with ourselves. Wait, I'm getting ahead of myself, for that's deeper down in the waterworks.

As for Moore's expose, she eloquently identifies uber-hedge-fund-manager John Paulson as the guy who convinced Goldman Sachs to arrange his notorious mortgage short-sells that netted him nearly $4 billion for the year a while back. Not only was Paulson working it working it working it, but many many many others were too. Getting deeper under the street now, in places where the rats roam. (Oh, don't worry, we'll go even deeper for you horrorphiles...)

A couple of posts ago I'd pointed out that Ponzi king Bernard Madoff was just the stupidest of all those working it. I'd wondered if some would think that a bit too inaccurate because before our (and his of course) hindsight he wasn't so stupid. Look at John Paulson now. Will he get in trouble simply for deftly gaming us dumb saps? Isn't the taxpayer the stupidest one of all?

The answer to the true meaning of "stupidest" can only come from understanding the distinction between the World and the Kingdom.

Here's the World's definition of "stupidest," when it comes to people like Madoff and Paulson and every other value extractor: 1. Did a rotten job of lying. 2. It was so rotten the liar got whacked by Caesar.

Here's the Kingdom definition: Wicked as all hell.

Madoff is the stupidest on both counts. But everyone else who successfully works it is only stupid on the second count. And as long as people continue to have their earphones plugged into the Catholicist megaphone they'll always be striving to avoid being stupidest by the World's definition no matter how stupid they are by the second.

A classic example of this spiritual lunkheadedness is in the No. 1 bestseller, Michael Lewis' The Big Short. Lewis does a super job of slithering around underneath the street close to where the biggest fattest ugliest rats are, but the only reason everyone wants to read it all is to see how they can be as good a liars as the John Paulson's of the world.

The Los Angeles Times had an interview with Lewis printed in its Sunday Calendar section. Calendar section??? What's with that? I guess they put it there because they thought The Big Short was a good book or something, except there is indeed a special section just for books. I think it was there because it's all just part of the great show.

A major reason this is so is because Lewis says in his interview that lots of people are politically agitated. Of course they are, it's part of the show. "That energy leads to change," Lewis said. The only thing that'll change is the switching around of the people who do value extraction in the biggest chunks.

He spoke of the complicated financial innovation "machine," one that "ended up being fooled by its own deceit." There's the World all right, big fat ugly rats swimming in sewage with a whole bunch of other big fat ugly rats trying to see who can lie the best.

When you get down further under the earthenworks, you'll start to taste the hell of all this.

In that blog post about Madoff I'd mentioned that Jesus did speak boldly about it, but I'd like to add here the way in which Isaiah wrote it down. It wasn't just that people don't listen, that they just don't get it--he wasn't saying "Hey you guys, come on, you should really try to listen a bit more carefully."

No, he was actually writing what God told him to say, and essentially it was: "You go right ahead and keep on being lunkheaded. Go ahead, keep being idiots. Keep being stupid. Go ahead. And as you keep doing that, just watch your cities crumble and your land go to waste."

Those weren't the exact words, I know. But read them there, right there, sixth chapter of Isaiah, verses nine on. You tell me if they are really any different.

This is where the horror story gets good. In and around that place waaaaay under the street are the voices of those sworn to make people stupid. The voices that say Jesus is of no matter, that He's just a spiffy fairy tale character we hear boffo stories about on Sunday mornings. Voices that tell us all that's all nice and all, but we've really got to get right back to work it work it work it so we don't let other liars get the better of us.

Only when you see things from the Kingdom can you see the hell that this is.

The SEC and Michael Lewis and all the other apparently brave, brave champions of non-stupidity can't do squat to rescue us from that hell. They're all just doing the bidding of Company men executing the best value extraction by profiting from value extraction. Moore even closes her piece by gushing that all this sudden SEC stirring may actually get us closer to who's in charge. I split a gut when I read that. They're only willing to go a few feet below the streeet to look--there they won't come close to finding out.

What lunkheads. They're very very wealthy lunkheads, I must say. Guess that's cool.

Or hot depending on where you're the richest lunkhead.

I wrote a home page piece a couple years ago about the "finders keepers losers weepers" philosophy employed by John Paulson and all World inhabitants. For more about living up in the fresh air, that's here.

Friday, April 09, 2010

Human Sacrificers Testify

The Financial Crisis Inquiry Commission is holding hearings this week and whenever, calling all sorts of really official finance officials to the table to 'splain themselves.

Today's featured showman was Daniel Mudd, at the helm of Fannie Mae when she started sinking. (Fortunately just before she went completely under, millions of taxpayers with buckets started bailing feverishly to get her back into fine sailing form.)

He said something interesting today, I think. He said that if Fannie Mae were allowed to diversify, they'd have been better off. Now, what precisely does this mean? Please, do enlighten me, I want to get it straight. Tell me if I'm wrong, please, I mean it, I invite your comments.

But does this not mean that if Fannie Mae were able to suck the blood from other sources, they'd have been able to cover their asses when the blood they'd been sucking from home mortgages ran dry? After all, they were required by law apparently to have "all their eggs in one basket" (the worst evil in financial wizardry), namely that of those dratted home mortgages foisted upon them by those bloodsuckers themselves, Congress, who really only reflect the wishes and desires of... errr, 'scuze me, it's not polite to call Joe and Josie Averageamerican, bloodsuckers... Forgive me... (And please, never mind the use-the-house-as-a-personal-ATM man and woman behind the green curtain.)

Earlier this week former Federal Reserve Chairman Alan Greenspan had his comeuppance. They're all making their cameos, how splendid, speaking with great eloquence and pontificating regally about that wonderful thing called hindsight -- brilliant show, just brilliant.

Greenspan defended his policy of not using the power of Fed enforcement to go after "predatory" lenders, because if he did it might have given borrowers a false sense of security. The thinking here is that with a bunch of regulatory agents quite visibly snooping about, people might get the impression that they were actually doing their job proficiently weeding out the baaad eeevil lenders, and as such whoever they'd be dealing must be okay when they're really just crooks.

So then, let me get this straight. According to Greenspan, regulation presents a moral hazard.

I know many may be laughing their socks off right now, but look at this. Please, let me know what I'm missing here, because I want to get it right. Please, tell me if I'm wrong in any of this. Please don't leave me in the dark, I want to be sure about this stuff. Help me out.

But isn't it true that it wasn't just Greenspan who was in on this? It was everyone who wanted him to enable their bloodsucking investment practices. Everyone, meaning millions of bankers, lenders, brokers, and yes, borrowers. It meant every government or quasi-government agent. It meant every top talking head in the media. It meant all personnel at all levels of human sacrifice enablement. Anyone who just went along with the ride on this are all Alan Greenspan toadies.

The other amazing thing about this dynamic is its verity. It is quite twisted, yes, but it is veritable nonetheless. What do I mean by this?

I mean that the law shines light on sinners.

If Greenspan did unleash every Fed agent on every questionable lending case, the workload would be impossibly gargantuan. This is something Greenspan even mentioned himself! So the rules were in place, and there were a number of intrepid agents ready to head out into the wild blue--er, I should say red--bloodsucking yonder, but so many people were doing their standard bloodsucking thing that it just wouldn't have meant squat.

The profound truth in all of it is this.

People do really awful things. Fed agents there, Fed agents not there, doesn't matter. People will still do really awful things. Oh, and not just really awful things, but really awful bloodsucking things. Oh, and they'll do really awful bloodsucking things while wearing really nice suits and smiling really big. Oh, and not just that but they'll be enabled and encouraged and provoked and stimulated to do those things by World operatives whose sworn duty is to keep it thriving.

They must. It's their job.

The World operates thusly. If you're listening you'll figure it out. If you want to you'll understand. It should frighten you like nothing else, really. What is it they say? "If you don't know the predator, you are the prey." In the World you're always prey. It doesn't matter how much you're sucking someone's blood, someone is always sucking yours. And the World makes it that way. Always has, for millennia.

The Kingdom, though, is there, not far away, just right there for anyone who wants to go into it.

Yeah, does have a narrow doorway, but that's okay.

I should write Doorway, capitalized, because the Door is a Person.

Thing is, the Door is narrow. It's not big enough to let you in if you are still sucking the blood from others--working for the World or contractually expecting the World to keep funneling its regularly drawn blood to you. You must give it up and get completely out.

The great thing is He knows you can't do that on your own.

He knows. He's there. He's got your back.

He loves you so much that He'll see you get in.

My most recent home page piece covers the World's human sacrifice a bit more. Just more evidences to share with those tired of doing it, of being an accomplice to it, and may want to make that radical turn and follow a Lord who loves with His life. Some more on The Door is here.

Tuesday, April 06, 2010

Oh! No One's Listening! What a Surprise!

Harry Markopolos has a new book out, the one you’d think: “Bernie and Me.” Well, that’s not the title, but that is essentially what it’s about. If you don’t remember who in blazes Harry Markopolos is, he’s the mid-level high-finance seer who eagerly wondered how investment genius Bernard Madoff made bazillions in the markets when he really shouldn’t have. Markopolos then tried like crazy to duplicate Madoff’s success and discovered that it was not only impossible but certifiably criminal. He blew the whistle a number of times only to find he was blowing a dog whistle, you know the kind, completely inaudible to human beings fully immersed in keeping their human sacrifice humming along smoothly.

Thus, the real title of the book: “No One Would Listen.” Sure Markopolos is making the key point that incessantly screeching about bad things and shoving gobs of veritable numbers in the faces of those humming “Camptown Races” with their eyes closed and ears plugged by fingers makes a compelling narrative that’ll earn bazillions in royalties.

But the truth is this.

It is nothing new that no one listens to the loudest evidences of unrighteous behavior all around them in the highest levels of governance, in every institution—political, financial, commercial, ecclesiastical.

Not new at all.

It is really not new that it is not limited to those fancy schnazzy people. Human sacrificers in the ivory towers just make the rules and then spin them so they benefit the most. Crafting the words and images about it all is designed to elicit the most heaving shrug that we’re not like that, that it’s some other cretin to ferociously revile, that we shouldn’t worry that our piddly little human sacrifices are of any matter.

That everyone is deliberately kept in a state of abject reprobation is a key facet of Markopolos’ expose. We like to sneer at Bernard Madoff but the duplicity happens everywhere. Markopolos was himself a Jesuit-educated quant sworn to hunt down the worst of them, he should certainly know. He was all about figuring out what these investment wonks were doing to, as he writes, “make the numbers dance.” Much of the book is a grand but perversely indifferent citation of all the ways value extractors do their job. Madoff just happened to be the stupidest about it. If you look around it is just not hard to find many other fabulous examples.

Here's a good one. Just recently it was reported that film actor John Malkovich is seeking to recover his $2 million Madoff investment. Malkovich includes in this sum what he was told he should be getting. Guh? Where exactly is that amount of money going to come from? It never went anywhere to begin with. And if Malkovich gets any money at all, it will be from sales of Madoff’s assets, but then that means other bilked clients will not be getting their money back—why is Malkovich so special? Or could he be getting it from taxpayers who have handed gobs of money to Caesar only to have it wind its way through the tortuous maze of federal bailout codependency eventually landing in Malkovich’s favorable judgment?

What kind of observer are you? Are you enraged at Malkovich’s gall, or are you doing precisely the same thing? The key is: What’s the difference? The former means you’d like to kick his ass, the latter means you’re, well, kicking someone’s ass somewhere.

Is anyone out there any different than these two very typical kinds of persons?

Does no one listen?

Jesus knew. He knew that no one listened. He quoted Isaiah, from the sixth chapter, right there in the 13th chapter of Matthew:

“They hear but don’t listen. They see but don’t understand.”

He was the only one who knew this. He just knew.

What is phenomenal is that He asked those who’d want to know like He does to follow Him and find out.

And listen and understand.

They’d listen and understand that World inhabitants do human sacrifice, it’s what they do. Christ listeners would understand that they should just be left alone to do it, with maybe a mention about The Way out of it. A follower of Christ loves just enough to share Jesus’ words with them, the ones about the narrow gate. Some may just actually listen. They really may.

A beaucoup number won’t. They just won’t.

Those who really won’t are all the Roman priests dissembling up the gazotch about the most horrific sexual abuses, all the Obamaesque bureaucrats feverishly pounding out more piddly entitlements, and all the slobbering Wall Street vampires who valiantly work to keep the markets a fresh bloodbath.

They're supposed to not-listen. It’s what they do.

Don’t like it?

Are you someone who’s listening? Really listening? Then act on your understanding and get out of the World. Don't challenge it, don't question it, don't make demands of it, don't have a rally holding up big mean-spirited signs, don't run for office in it, don't do anything but acknowledge as Christ did that "because of the increase of wickedness, the love of most will grow cold," but that with Him you may still love them but do it from the Kingdom.

Go for it, get out of the World and into the Kingdom.

But you gotta take your fingers out of your ears first.

That verse Jesus said is in Matthew 24. Right after it He said, "He who stands firm to the end will be saved." For more on the contrast between the World and the Kingdom, look here.