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| High finance, high times ! |
John Authers is a feature writer for the Financial Times. A scarily-sophisticated writer for the "#1, go to, financial rag" on the planet. Last month he reviewed a new economic tome, "Money, Blood, and Revolution", by George Cooper.
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| The Ro(bust)deo !! Ride 'em "cowboys"... |
The book is a critique of current economics as ".. a science in crisis" - with many of the dogmatic, lap-dog breed of robusterians continuing to use "... scientific models that have been decisively disproved, simply because nothing better has come along".
You and I call this "riding a dead horse" or, more quaintly, "you can't fix stupid"!
Here's the brief summary: "Five years ago, in the wake of the crisis, requiems were sung for such icons of financial economics as the efficient markets hypothesis, or the "Value at Risk" model for assessing the daily downside risk being taken in a portfolio. These ideas proved catastrophically inadequate during the crash. Yet they are still used.... Contrary to these economic axioms, [markets] do not tend towards equilibrium or fair value."
Which leads to an interesting question...
STILL "ROBUST"?
...or...
"... catastrophically inadequate, yet still used?"
7 comments:
"Riding Recklessly on Hot Air".
As a consultant told us recently during our board meeting...according to ncua.gov/ngn/performance metrics-
2013 year end CCU Legacy Asset balance was $23.9 BILLION.
market value was $18 BILLION.
unrealized loss of $5.9Billion.
ncua (CUs) owe the US Treasury $2.9 BILLION.
does all this mean that the robsuterian ceo/economist humple's prognostication of a rebate might be, shall we say, "riding the cu gravy train of reckless hot air"?
just wonderin'
Efficient markets hypothesis is the hypothesis that markets are efficient based on certain assumptions being in existence. We all know what happens when you assume.
Because reality is never close to the assumptions the markets are never truly efficient. It does not mean that the goal of efficient is not the target.
How do you achieve an efficient market when so many components are rigged - libor, forex, mortgage, etc/
How do you "handicap" a fixed horse race?
(Many suckers still try - robustly!)
How do you achieve an efficient market when so many components are rigged - libor, forex, mortgage, etc/
How do you "handicap" a fixed horse race?
(Many suckers still try - robustly!)
Actually, markets are more efficient now than any time in history. The internet is a great disruptor that is causing markets to become more efficient because information is so readily available. This efficiency manifests itself in the lending industry by giving the borrowers easy opportunities to shop for loans for better terms.
Members can point, click and move money to different financial without leaving their home.
An improved efficient market was part of the problem with the Corporate Credit Union meltdown. Credit unions had choice, information and ability to check rates and move funds among multiple financial options. Funds moved out of institutions for a better 1/8 of a point. This lead to greater risk taking. Nothing says that efficient markets improve thinking or management performance.
Efficient market hypothesis warns against market rigging like libor, forex, mortgage, etc. Humans forget the lessons of the past and forget their duty to beware.
Efficient markets are an ideal not an actuality. You should pray that markets are as efficient as possible, because the option is a government controlled market!
I'll try to keep you updated today on the proceedings of the meeting in Alexandria...STAY TUNED !!!!
Will try to give you an update about every half hour ... from 12:30 or so until 4:00... really excited to hear about all the new thinking that the prior listening sessions will have generated at the NCUA! Really, just can't wait... this is s-o-o-o-o exciting!!!
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