Archive - Nov 29, 2009 - Story

A stunner to end the Black Friday news flow. It appears the race to the hyperdeflationary bottom just shifted into overdrive.

On December 3rd, senators will have to decide: will they vote with their conscience, or with Wall Street's checkbook. Bernie Sanders has made his choice: "No, I absolutely will not vote for Mr. Bernanke. He is part of the problem. He's the smartest guy in the world, why didn't he do anything to prevent us from sinking into this disaster that Wall Street caused and which he was a part of? No, I will not vote for Bernanke to stay on as chairman."

Returning briefly to the "Nothing to see here, please disperse..." theme, it seems that Dubai World is destined to throw some Sharpie-adorned, brown-cardboard placards up on the city's light fixtures and other signage to announce the pending garage sale. (And, not to be upstaged, China drops some hints with respect to her continued indulgence for debt-funded American excess).

The problem with the Greeks was ultimately their love of conflict. If anything could be said of the fall of the city-state generally it would be that more than a hundred years of effectively unending warfare (rainy season, fighting season, rainy season, fighting season, lather, rinse, repeat) finally exhausted the resources of the dominant political unit of the time. Sort of troubling in this vein is the connection (and therefore the related failure) of "direct democracy" to the identity and existence of the city-state. Direct democracy was lovely, after all, and philosophically easy to envisage, that is until, in the wake of a crumbling Alexandrian Empire, it collapsed under its own increasing weight (or the increasing weight of military spending). What was left of the polis, the central, individualistic notion that the Citizen was of great particular import, was rather directly absorbed into cosmopolis, and the importance of managerial infrastructure to keep the aqueducts clean. After all, direct democracy (and the mob rule that accompanies it) had killed Socrates, hadn't it? That Plato dedicates The Republic partly to the import of the Philosopher King years later might have been predictable.

Amusingly, no sooner than a series of commentators rushed to point out how stable and friendly Dubai is (including some local names that might surprise you) Dubai reminded everyone that there is no freedom of the press in the city-state by yanking Western papers critical of the jurisdiction off the stands.

The National Retail Federation has reported that the average Thanksgiving spend has declined from $372 in 2008 to $343 in 2009, as more shoppers sought out rock-bottom 5 am bargains: the estimated number of bargain hunters increased from 172 million to 195 million.

Empirical data suggests that High Frequency Trading, and VWAP algos in particular, introduce numerous adverse selection and increased liquidity shortfalls relative to non-HFT trading strategies. The ultimate cost of currently existing HFT-mediated market tolling may far surpass any proposed transaction tax, implying trading costs may in fact be reduced as a Tobin variant removes the externality features associated with adverse HFT market-dominant algorithms.

Silver has its place. It’s an industrial metal, has a nice correlation to equities, and has been used as money for thousands of years, which gives it a kinky personality. But don’t think that silver currency (or gold standard) is an effective way to handcuff government theft. As long as there have been silver coins circulating, there was a crooked Mint debasing them to its advantage. The “Tungsten Effect” is the rule, not the exception. Historically, the most common metal in coinage was lead. This is simply the nature of things. Cash of any kind exhibits exponential decay, a half-life. Real safety is found in paying your taxes.

The strongest discipline imposed on a state is not connected to its currency. Iron discipline stems from credit. The government bond market is the crown jewel of any state. A state will torch its constitution before it lets its bond market get crushed. It’s like choosing to repair a ruptured jugular instead of getting a facelift. So Treasury paper credit risk shouldn’t be a worry to anyone right now. As long as the United States is around, there will be Treasuries paper earning income, however meager. Let me say this in another way: if the Treasury market goes, so the does the U.S., and pretty much everything else with it. Wait… did I just feed the beast?