Guest Post: Everything You Know About Markets Is Wrong?

Tyler Durden's picture




 

Submitted by Eric L. Prentis,

The financial elite—using academe for intellectual cover—want you to believe that markets are efficient, as defined by the Efficient Market Theory (EMT). My research strikes down this hoary old EMT economic dogma, used by duplicitous bankers and hedge fund managers to con US politicians and 99% of Americans.

The Efficient Market Theory (EMT) is a significant foundation theory in economics. Prove the EMT wrong, and economics becomes largely an empty shell. Therefore, the EMT is the most important fundamental issue in economics and for America.

US politicians mistakenly use EMT based economic theories to pass laws favorable to Wall Street. First causing and now worsening the credit crisis. Examples of credit crisis enabling legislation include:

  • Gramm–Leach–Bliley Financial Services Modernization Act of 1999
  • Commodity Futures Modernization Act of 2000
  • Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
  • Jumpstart Our Business Startups (JOBS) Act of 2012

Three tenets define the EMT.

  • The first tenet—that markets are in equilibrium and if unexpected events cause disequilibrium, it is only temporary because markets are self-equilibrating—is disputed in the literature. A stock market always in equilibrium and efficient is impossible because traders have different endowments, beliefs and preferences. In addition, arbitrage costs throw markets out of equilibrium.
  • The second tenet—that stock prices “fully reflect” all information—has long been challenged in the literature, with many inconsistencies reported. Tenet number two goes on to say asset prices properly represent each asset’s intrinsic value, and as a result, prices are always accurate signals for capital allocation. Researchers in behavioral economics find fault with this EMT assumption, because it does not account for human nature and inherent herding behavioral instincts of market participants. EMT theorists—Eugene F. Fama and Burton G. Malkiel—claim assuming market equilibrium is close enough to reality, and that research into EMT tenet two contests only the semi-strong form of efficiency. That is, where earning higher returns than the stock market, with lower risk, is not achievable by knowing all publicly available information. EMT theorists continue to support the EMT and say, “If you want to do better than stock market returns, you have to take on more risk than the stock market.”
  • EMT tenet number three is most important—that is, stock prices move randomly or are uncorrelated with, if not independent of the prior period’s price change. Therefore, earning higher returns than the stock market, with lower risk, is impossible to achieve using only past prices (i.e., technical analysis stock trading rules or stock charts). Empirically prove EMT tenet number three wrong— because it tests the weak form of market efficiency—and the EMT is wrong, period!

EMT theorists specify two methods to test EMT tenet number three. The first method is statistical inference. Calculate serial correlation coefficients of stock price changes. If the serial correlation coefficients are zero or close to zero, this supports assuming serial independence in the price data. Therefore, one can infer that technical analysis stock trading rules cannot work. The second method requires using a technical analysis stock trading rule predictive model that forecasts the future, based solely on past prices—where expected profits are greater and risk lower than they would be under a naïve buy-and-hold policy.

 

Research that supports the EMT makes one-or-all of the following mistakes:

  • Using the wrong data—Systemic market risk and random unsystemic risk make up individual company stock price movements. As much as 50% of a company’s stock price actions are random unsystemic risk variations associated with the internal circumstances within that particular company. The remaining 50% of a company’s stock price movements represent the systemic risk of the overall market. The random unsystemic risk is the chaotic portion of the stock price data—that if removed leaves only the systemic market risk of the overall market, which may then be analyzed. Most EMT research studies day-to-day stock price movements of individual companies, which is mistaken. Granted, this unsystemic and systemic, day-to-day individual company data look random, but it is the wrong data to analyze to determine overall, long-term market trends.
  • Using the wrong method to analyze the data—Most researchers use statistical inference to test tenet number three. However, there is a serious problem with using statistical inference to test whether stock price data are independent. That is, it is difficult to distinguish between a rootless series and one where the systemic quality is faint. Research shows that five-thousand years of data are needed to identify independence in stock price data using statistical inference. However, these data do not exist. Consequently, statistical inference is not the correct method to use to test tenet number three.
  • Jumping to mistaken conclusions based on half-truths—Statistical inference tests using day-to-day individual company data report serial correlation coefficients that are close to zero. This supports assuming serial independence in the price data. Therefore, one can infer that tenet number three is valid. Unfortunately, this proves nothing of the sort. Analyzing the wrong data over an inadequate number of years simply gives a false positive.

 

What day-to-day stock price movements are for individual companies is the wrong research question. Instead, we want to know what the overall stock market is doing over the long term. The correct way to look at market data follows.

 

Using correct data—Individual company stock price behavior, which includes the randomness of unsystemic risk, is not evaluated. Instead, only systemic market risk is analyzed in my published journal research—please see here and here—by comparing only systemic market risk of two well-diversified S&P 500 Index portfolios. S&P 500 Index portfolio B is for active trading and S&P 500 Index portfolio A is the benchmark portfolio. Focusing only on systemic market risk in the data studied, removes much of the random or chance stock market price behavior of individual companies.

When investing over 1, 2, 3, 4, 5 years or more—day-to-day stock price movements are immaterial to trading success and may be thought of as just daily market chatter. Concentrating on daily price movements of individual company stock or the stock market as a whole is not the correct question. Day-to-day stock price action is volatile. To dampen out this daily chatter and give perspective to what is occurring long-term in the stock market, S&P 500 Index “monthly price data” are used to smooth out stock price volatility.

Monthly price data are important in dampening out day-to-day price movements. However, using last month’s price to predict next month’s price is also not conducive to long-term trend development. To further smooth price variations and focus on systemic stock market risk. Nine and two-month simple moving average (SMA) trend lines are fit to the S&P 500 Index monthly price data for actively managed portfolio B. Smoothing out data volatility, which gives an overall view of the long-term stock market trend. This is the third step in removing much of the random stock market price behavior from the research data.

Focusing only on systemic stock market risk in the monthly data and smoothing stock price volatility using nine and two-month SMA trend lines for the well-diversified S&P 500 Index portfolio B—to lessen random variations—is a major difference between my research and other EMT research in the literature, and a major reason the results are so significant.

My research covers 1871-through-2008, 138 years. All available Standard & Poor’s (S&P) 500 Index data are included in this research study, making it the longest duration and complete in the literature.

 

Using the correct method to analyze the data—Fama’s approved second method for testing the EMT, requires using technical analysis. Fama says to develop and test, over both good and bad economic conditions, a technical analysis stock trading rule predictive model that forecasts the future, based solely on past prices—where expected profits are greater and risk lower than they would be under a naïve buy-and-hold policy.

My empirical research method directly tests stock market price independence of EMT tenet number three, using a new technical analysis stock trading rule predictive model. To test whether expected profits are greater and risk lower than a benchmark naïve buy and hold policy, which Fama calls, “an equally valid scientific method versus statistical inference.”

 

Empirical results—In my US stock market research, the relative maxima and minima stock trading rule S&P 500 Index portfolio B—by $495,360 dollars (i.e., $580,423 - $85,063)—makes +582% more money than buy-and-hold S&P 500 Index portfolio A—and is only 64% as risky over 138 years—from January 1871 through December 31, 2008.

 

The new technical analysis relative maxima and minima stock trading rule predictive model makes substantially more money at significantly less risk than the naïve buy-and-hold policy. EMT theorists say this thorough beating of the US stock market should be impossible to achieve using only technical analysis. Thus, tenet number three and the weak form of the EMT are invalid, making the Efficient Market Theory wrong, period!

 

Discussion

 Neoliberal economic philosophy, starting around 1980 and now mainstream in academe and American politics, promotes laissez-faire economic policies of reducing the size of government, deregulation and privatization of government services. Neoliberal economists base this philosophy on the belief that neoclassical economic theory is correct. That is, that “markets are efficient”—my research shows the EMT is dead wrong.

Gullible US politicians believe that markets are efficient and defer to them. Therefore, US politicians abdicate their responsibility to manage the overall economy, and happily for them, receive Wall Street money. Mistakenly, the primary focus during the 2008 credit crisis is on fixing the financial markets (Wall Street banks) and not the “real economy.” 

Wall Street touts markets as trustworthy and infallible, but that faith is misplaced. Big market players easily manipulate markets. For example, by changing accounting laws so banks no longer have to mark-to-market, High Frequency Trading (HFT) front running, and multinational companies buying back their common stock shares, along with favorable huckstering of stock positions on CNBC—owned by Comcast and General Electric. In addition, Chairman Bernanke, because of his Quantitative Easing II, takes credit for the Russell 2000 Index of small company stocks reaching an all-time high of 860.37.

The Federal Reserve (Fed) talks of added quantitative easing (QE), but this would mainly help the richest 1% of Americans and hurt the “real economy,” with higher gasoline and food price inflation. Unfortunately, QE only helps overinflate the stock and commodity markets by manipulating prices. Despite Fed programs QE I&II and Operation Twist, America is experiencing the worst economic recovery from a recession, ever! President Obama, if he wants to lose the 2012 election, will let Bernanke electronically print more QE money and make the “real economy” worse than it otherwise would be.

The continuing credit crisis is serious—with the world economy poised for a double-dip recession. The current US government policy of increasing the national debt by $5 trillion dollars over the past four years, keeping insolvent banks from going bankrupt, a Federal Reserve zero interest rate policy (ZIRP), causing malinvestment, and monetizing the national debt (which is what tin-pot dictators do just before they are forced to flee the country) with quantitative easing by the Fed, and austerity for the 99% to repay bad bank loans has not worked—and doing more of the same will not work—and defines insanity.

 

The financial elite are using this “cover-up and pray” policy—hoping that rekindled “animal spirits” will bring the economy back in time to save the status quo. This is impossible because the trust is gone. The same sociopaths control the economy. Instead, the financial elite are just protecting themselves with outlandish pay bonuses, based on cooked books; while the “real economy” flounders with high unemployment, unsustainable budget deficits, a struggling real estate market, and low capital formation, crumbling infrastructure and high gasoline and food price inflation.

 

Conclusion—this is what to do:

  1. Reenact the Glass-Steagall Act. Allowing investment banks to speculate with savers’ money is criminal.
  2. The daisy-chained, unregulated $707 trillion dollar OTC Derivatives market will bring down the world economy, when it goes bust. JP Morgan’s recent huge OTC Derivative trading losses are a prelude to this eventuality, with many more instances to come. Start unwinding the OTC Derivatives market now, before it is too late.
  3. Insolvent banks are a drain on the “real economy.” Force insolvent banks to go bankrupt. TBTF is an irrational policy. Allow capitalism to work for the 1%.
  4. Public and private debt to GDP is about 360%, and 30% of Americans are being hounded by bill collectors for unpaid debts. Americans can no longer service their massive debt loads. Allow debt forgiveness for the 99% and institute austerity for the 1%—they can afford it.
  5. ZIRP is destroying capital formation and savers. Allow interest rates to rise, which will increase consumer demand. The Fed’s manipulation of capital markets causes malinvestment—resulting in crippling long-term penalties for the “real economy.”
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Mon, 06/11/2012 - 23:25 | 2516883 Dr. Engali
Dr. Engali's picture

The very thing that crushes small businesses like myself is the regulatory requirements and theft through taxation. I don't have fleets of lawyers and accountants other firms have to help me navigate the loop holes. So what are my options? 1)Cut costs, 2)live in less , 3)grow the business , or 4)consolidate with another company. Well I've done one and two, number three is tough in this environment so that leaves me with number four.

If we had a free market number 3) would be a better option because there would be a lot of dead firms out there instead of the walking zombies we have today. A lot of the bad players would be out of the system and there would be a little more confidence in the system.

Tue, 06/12/2012 - 09:57 | 2517709 AnAnonymous
AnAnonymous's picture

The very thing that crushes small businesses is that you are outcompeted by your competition superiors. Full stop.

Competition is about eliminating the concurrence and includes allocation of resources to decrease the competitiveness of a concurrent.

The fact that you are unable to make as much as functional competition tools like regulatory requirements and taxation shows you are outcompeted.

Funnily enough, in your free market utopia, resources should be allocated to prevent competitors from allocating resources to decrease a concurrent's competitiveness. You watch sports much? You know, the rigged competition scene US citizens use as theatrics to paint competition different from what it is?

Tue, 06/12/2012 - 09:47 | 2517686 AnAnonymous
AnAnonymous's picture

Free market, or otherwise, are liminar issues.

Competition forms monopoly. It is the stated goal of competition to achieve idealistically a monopoly situation.

Therefore yes, anytime competition is involved, the end goal has to be monopoly.

It can not be otherwise.

Mon, 06/11/2012 - 21:48 | 2516666 Freewheelin Franklin
Freewheelin Franklin's picture

1. Reenact the Glass-Steagall Act. Allowing investment banks to speculate with savers’ money is criminal.

 

Actually, no it's not. If the saver agrees to allow the bank to speculate, then it's a mutual, voluntary contract. The only thing "criminal" is the FDIC insurance that is backing savers' deposits. AKA: "Moral Hazard".

Mon, 06/11/2012 - 22:00 | 2516696 johnberesfordti...
johnberesfordtiptonjr's picture

Funny how EMT is still being seriously discussed given that Benoit Mandelbrot (see chaos theory) has proven (mathematically) that it simply isn't true... http://www.youtube.com/watch?v=vxbxXBrOPS8

It's rubbish but it has given academic respectability to every  manner of financial fraud, manipulation, and swindles. All in the name of upholding the all-seeing, all-knowing, and all-deciding "market."

Mon, 06/11/2012 - 22:29 | 2516771 Eric L. Prentis
Eric L. Prentis's picture

Perhaps Mandelbrot’s chaos theory disproves the EMT. However, what makes my research significant is that I follow all the rules, set down by EMT theorists, when disproving the EMT.

Mon, 06/11/2012 - 22:17 | 2516738 Titan28
Titan28's picture

How do you unwind the $707 trillion OTC derivative debacle? What exactly do you do?

Mon, 06/11/2012 - 23:02 | 2516859 Matt
Matt's picture

just net out the outstanding, then turn everything else to $0. There, unwind complete.

Mon, 06/11/2012 - 22:27 | 2516758 epwpixieq-1
epwpixieq-1's picture

There is no ECONOMic reality ( economy comes from economize: do with as few resources as possible ).

There is only EXPENSic reality ( expense: do with as much resources as possible, in order to increase you debt and from that your GDP of course ).

You take the economic pill and you dream whatever you want to dream.

You take the expensic pill, and you will see how deep the rabbit whole is.

And, it is a DEEP one.

Mon, 06/11/2012 - 22:35 | 2516785 boiltherich
boiltherich's picture

I nearly starved to death a couple of times putting myself back through college a second time for a business degree in Finance from 1993-1996, working usually full time while carrying as much as 16 semester hours per term, in my 30's. 

So, I know already that everything they taught was horse shit.  It was all about the way things are supposed to be, how to read a balance sheet or to value a stock on various ratios, how to regognize a company in trouble, how banking and central banking is supposed to work, but they did not say that the big investing houses have computers that void all of the normal practices.  How when they fuck up the taxpayers get the bill.  How you can have an IQ of 150 and ethics that would make Ghandi proud but in the end the only way you will get wealthy in the game is to marry the boss's daughter, or at least fuck his wife so she stays off his back while he plays internationally. 

Who do I sue to get my money and my life back? 

You know what the worst part is?  Getting that education lifted the coins from my eyes so that I saw what life really is, and I would go back to being a dumb sheep any day of the week, life is short and we will all have to deal with the collapse when it comes, if it comes in our lifetime, but at least the sheeple can sleep at night and not have the nightmares of those who know what is to come.  By the way, I am not a survivalist because that life is worse than no life at all.

Mon, 06/11/2012 - 23:08 | 2516873 Matt
Matt's picture

You want to sue somebody for not educating you on things that did not exist yet?

HFT pretty much came about in 2006 and didn't get big till 2008.

CDS were probably fairly rare at the time, being in their infancy.

TBTF didn't exist then.

As for issues with immorality and unethical behaviour, that's been around as long as mankind. Maybe Ethics shouldn't be an optional course ...

Mon, 06/11/2012 - 23:32 | 2516935 Dr. Engali
Dr. Engali's picture

Actually I remember TBTF in the 70s with Chrysler. But as far as the mess we have today LTCM in 1998 really screwed things up big time. They should have let them fail then. That would have taken a lot of risk out of the system.

Mon, 06/11/2012 - 23:51 | 2516983 billsykes
billsykes's picture

Ah, nothing like a monday at ZH to get the spirits up. 
You make them pay boiltherich, make them all pay.

(This is jack drinking while he cleans his gun in the dark muttering to himself.)

 

 

Tue, 06/12/2012 - 01:10 | 2517073 potlatch
potlatch's picture

And they didst mock me as I read Plato, and Aristotle, Kant and Rouseau, Husserl and Derrida, on my way to a doctorate in -- roflmao -- philosophy...

 

 

 

mind if I have a wee last laugh here?  just a little one?

 

 

philosophy party at potlatch's house!  we can all read and act out some of Juvenal's farces!

Mon, 06/11/2012 - 23:26 | 2516918 glass
glass's picture

These snapback hats on sale ut these cheap snapback hats sures 100% quality and long lasting surety on the product. It is made up of 20% acrylic and 80% wool. For the better fitting it has a better grip and fitness. As these hats are mostly used sports lovers, each hat has a moisture absorbing sweat band. Its originality is proven by the switched new era flag and an embroidered major league baseball logo.

Mon, 06/11/2012 - 23:46 | 2516972 billsykes
billsykes's picture

would work but these are not free markets.  Anyway, buy and hold is so done even if the market does work.

Average person should stay away from stocks and invest in themselves instead, and gold/silver.

 

Mon, 06/11/2012 - 23:46 | 2516973 skepticCarl
skepticCarl's picture

I could go for debt write-downs where the debtor has zero ability to repay.  But for general debt forgiveness?  Too broad........the cheaters would win again.

Tue, 06/12/2012 - 00:39 | 2517038 headless blogger
headless blogger's picture

Then they should allow bankrupsy across the board...even for student loans. They can make them difficult to obtain but make it available so that people who truly are burdened have a way out. It is PURE NONSENSE that an individual cannot file bankrupsy on certain debts. Not everyone wants to file bankrupsy because of repercussions, but sometimes it is the only alternative.

I agree about the debt forgiveness, it would be abused AND most likely the Banks and Creditors would be allowed behind closed doors with the politicians to help influence and manipulate any outcomes.

 

Tue, 06/12/2012 - 08:28 | 2517406 Umh
Umh's picture

The student loan issue is like everything else that politicians try in their attempts to change the world. Because not enough students could afford college or get grants they should be loaned money to go to college. Because no one in their right mind is going to loan money to someone who can declare bankruptcy tommorrow they prohibit bankruptcy on the loans. The problem arises when they can't get a decent job after graduation. The real beneficiary of all this has been the schools, teachers and bankers.

Tue, 06/12/2012 - 09:15 | 2517556 headless blogger
headless blogger's picture

so-called "good" universities are not teaching anything useful to students in many instances. I went back to school, got straight A's and learned basically nothing (except I learned how to use MS Word).

Tue, 06/12/2012 - 23:47 | 2520365 Umh
Umh's picture

In my opinon there are very few jobs that cannot be done by someone with a decent high school diploma. Employers ask for more and greater degrees because they are scared to make decisions based on interviews and look for objective reasons not to hire someone. So we now have the race for unneeded degrees to get entry level jobs.

Tue, 06/12/2012 - 00:01 | 2516997 AUD
AUD's picture

Allow interest rates to rise

This would destroy the bond market, so it can't happen. There is a reason why interest rates have been, more or less, falling for the last 40 years - the bond markets are junk - their price needs to be inflated by government, through the central bank.

Tue, 06/12/2012 - 00:32 | 2517032 headless blogger
headless blogger's picture

"...their price needs to be inflated by government, through the central bank"

 

THEN we don't need them do we? Anything that needs manipulating needs to be let go.

Tue, 06/12/2012 - 00:01 | 2516999 stirners_ghost
stirners_ghost's picture

Politicians are the last people you should want to "manage the overall economy". Idiot.

Tue, 06/12/2012 - 08:25 | 2517404 falak pema
falak pema's picture

who should it be, your mother-in-law?

Tue, 06/12/2012 - 00:04 | 2517002 icanhasbailout
icanhasbailout's picture

As long as no one important ever gets prosecuted, it doesn't matter a whit what the law is.

Tue, 06/12/2012 - 06:42 | 2517243 logicalman
logicalman's picture

  "Give me control of a nation's money and I care not who makes it's laws" — Mayer Amschel Bauer Rothschild

Tue, 06/12/2012 - 00:22 | 2517021 infiniti
infiniti's picture

"my research shows the EMT is dead wrong"

People who can beat the market don't write articles like this. They create a REAL TRACK RECORD, find investors, co-invest, charge fees, get rich, and never have the time or a reason to write articles like this.

I want my 5 minutes back!

Tue, 06/12/2012 - 09:48 | 2517690 Eric L. Prentis
Eric L. Prentis's picture

Socrates said, “To know yourself”—I am an intellectual.

 

I do research on big national issues and try to get it published, often against the wishes of the moneyed interests of which you speak.

Tue, 06/12/2012 - 01:33 | 2517063 matrix2012
matrix2012's picture

NO WONDER AT ALL!!!

One should read thoroughly below info !!

 

 

"The Rottenschilds have been in control of the world for a very long time, their tentacles reaching into many aspects of our daily lives, as is documented in the following timeline.  However, before you jump to the timeline, please read this invaluable introduction which will tell you who the Rottenschilds are as oppose to who they claim to be.

The Rottenschilds claim that they are  J----- , when in fact they are KHAZARS. They are from a country called Khazaria, which occupied the land locked between the Black Sea and the Caspian Sea which is now predominantly occupied by Georgia.  The reason the Rottenschilds claim to be J----- is that the Khazars under the instruction of the King, converted to the  J-----  faith in 740 A.D., but of course that did not include converting their Asiatic Mongolian genes to the genes of the  J-----  people.

The most wealthy bloodline in the world bar none and the leader of the Ashkenazi J--- in the world today is the Rottenschild family.  As you will see in the timeline, the Rottenschilds have obtained this position through lies, manipulation and murder.  Their bloodline also extends into the Royal Families of Europe, and the following family names:  Astor; Bundy; Collins; duPont; Freeman; Kennedy; Morgan; Oppenheimer; Rockefeller; Sassoon; Schiff; Taft; and Van Duyn."

Read the entire summarized "TWO-AND-A-HALF-CENTURY" TIMELINE here: http://bit.ly/MhkwoV

 

Other related links:

-The History of the “Money Changers” (an illustrated version): http://bit.ly/LHBVoN

-The History of the “Money Changers” (text-only version): http://bit.ly/KCBArR

 

Then some info about the Bilderberg Conference!

 

The Illuminati are a kind of secret world government, their main goal is to create the New World Order (NWO), a fascist-communist global 1984-style dictatorship where every citizen is totally controlled with an implanted RFID chip. One of the exoteric key institutions of the illuminations are the Bilderbergs, for example.

 

Within the illuminati one can distinguish 3 circles:

 

(1) EXOTERIC (OUTER) circle: e.g. Bilderberg Group, Trilateral Commission, Council on Foreign Relations (CFR) and others. Many on this level (e.g. one-time Bilderberg participants) are more or less clueless what's really going on, but their egos are pleased that they are so close to those with the real power.

(2) INNER circle: e.g. regular Bilderberg participants

(3) ESOTERIC circle: e.g. Grand Masters of occult societies. That's where the NWO (New World Order) plans are erected. If these plans are implemented or not depends a lot on whether the outer circle can be convinced.

Back to Bilderberg: in the first decades secrecy was crucial but meanwhile they have become so powerful that that secrecy gets less and less important. Meanwhile we are close to the totalitarian-fascist New World Order, so it's time to accustom the population to the new world order government... MOREOVER, THERE IS ENORMOUS BIOLOGICAL TIME PRESSURE, time is running out for the esoteric circle: ZBIG BRZEZINSKI is 82 years old, HENRY KISSINGER 87 years, and DAVID ROCKEFELLER even 95 years. They have worked many decades for their big goal and have to act (too) fast, which will bring about their downfall.

Read the full here: http://bit.ly/KHpJGw

 

Bilderberg Conference 2009 Participants & some of their connections (graphical illustration)... connecting the dots

http://bit.ly/L1pTZZ

 

Bilderberg Conferences - The Unofficial site: http://www.bilderberg.org/

 

Bilderberg 2012: were Mitt Romney and Bill Gates there? | World news | guardian.co.uk

http://www.guardian.co.uk/world/us-news-blog/2012/jun/05/bilderberg-2012...

 

If one has the further curiosity, following books are good reading as well.

 

TRAGEDY AND HOPE: A HISTORY OF THE WORLD IN OUR TIME (1966) By Carroll Quigley

One should not spare this great book to fill in the explanation vacuum of mankind troubling history during the 19th and 20th centuries.

Professor Quigley was an extraordinarily gifted historian and geo-political analyst. The insights and information contained in his massive study open the door to a true understanding of world history in the nineteenth and twentieth centuries.

It is a work of exceptional scholarship and is truly a classic.

"At Harvard, biochemistry was to be his major. But Harvard, expressing then a belief regarding a well-rounded education to which it has now returned, required a core curriculum including a course in the humanities. Quigley chose a history course, "Europe Since the Fall of Rome." Always a contrary man, he was graded at the top of his class in physics and calculus and drew a C in the history course. But the development of ideas began to assert its fascination for him, so he elected to major in history. He graduated magna cum laude as the top history student in his class.

Tragedy And Hope: A History Of The World In Our Time (1966) By Carroll Quigley

http://bit.ly/xo9I7S (pdf, 5.42 mb)

 

It's quite advisable that one reads the Quigley's work along with below companion guideline.

 

THE NAKED CAPITALIST (1970) by W. Cleon Skousen

Former FBI Agent W. Cleon Skousen’s book THE NAKED CAPITALIST first published in 1970 is described by the author as: “A Review and Commentary on Dr. Carroll Quigley’s (1966) Book: Tragedy and Hope—A History of the World In Our Time.”

Skousen’s book is highly recommended because it helps one understand the more salient issues Quigley has documented and puts Quigley’s monstrosity in perspective. Skousen helps the reader to comprehend what Quigley has written and discern Quigley’s biases.

Grab it here: http://bit.ly/KCjgOm

Finally, here are some more useful refs e.g.: None Dare Call It Conspiracy; Fearful Master; Crossing the Rubicon; The New Babylon; etc. Grab it here: http://bit.ly/IJwmn1 PLEASE READ THROUGH THEN YOU'LL SEE THE WORLD DIFFERENTLY!

 

Tue, 06/12/2012 - 06:27 | 2517228 falak pema
falak pema's picture

As a history buff I love taking a walk back thru time. Its fascinating to see the patterns of power and power players interplay with their opponents, the seekers of knowledge and social justice.  This interplay is the salt of our western civilization; where kings and Popes have never been able to douse the torch of knoweldge, justice and enlightenent by its obscurantist and slanted dogma.

But I never bought into the perspective of history as an ongoing, ethnically concocted and tentacular occult power game. No way, too many actors for any one blood line to control the sway. If anything the Papal construct and kings of large nations have played their part as there is OVERT continuity in the institutions they built to serve their purpose. But it has always been out in the Open, based on avowed mantras such as "Gods wills it" and " the seven sacrements of the Universal church will save you in after life" and "God and my divine rights of king"....etc. Until we had the nation-state and "we the people" became the new mantra.

Now as Oligarchy post-industrial globally offshore feudalism rears its financial head based on electronic money power and interconnected occult power networks, the conspiracy theory becomes fashionable again. And this will play out like all Empires into the dustbin of history, just as before. So no need to believe that DESTINY has imposed on humanity an evil illuminati to dictate totalitarian serfdom on all of us. Nope, "the fault dear Brutus lies not in our stars that we be the underlings..." And Brutus was an honourable man. So lets never forget him ! 

For those who cross the Rubicon...there is only one true resolution. And destiny is never written in advance, even by the Khazars! 

Not saying conspiracies did not occur amongst the elite, but it was a way of life and what the french king conspired with ottoman Soleiman the Magnificent, to bring down his Hapsburg opponent, his spanish rival neutralised by taking out the Pope and declaring himself sole representative of universal church. And it goes on and on; and the oligarchical thieves rival in their underhand play and it gets them nowhere, as its a zero sum game! Progress only comes from spreading the manure of capital all over the world, not heaping in up in hidden vaults! Even if they be of Montezuma! 

Tue, 06/12/2012 - 22:54 | 2520257 headless blogger
headless blogger's picture

They are not "heaping it up in vaults" and don't need to since they control the Central Banking systems. Also, you are mentioning people and history over a long continuum. The poster above you is mentioning a more current (last 2 to 3 hundred years) time frame. You cannot compare today's "Elites" with yesterdays Rulers of the dark ages and beyond (just the psycho-weapons and WMD alone change the entire scope). The khazar-jews got their big break into White-Anglo-Saxon World when they were allowed into the Christian/Occult Secret societies for the first time (back in the 1700's before the French and American revolutions). This was about the time that marked a massive shift in the West.

 

Tue, 06/12/2012 - 01:17 | 2517078 MoneyMagician
MoneyMagician's picture

Lol since when we had Laissez-Faire Capitalism? My understanding is this economy isn't laissez-faire. It's a fascist economy. Glass-Steagal wouldn't have prevented a housing bubble. Sure probably wouldn't have made it as big, but then again, no telling when the Fed would reset interest rates back up to their mean. China has similar Glass-Steagal regulation where investment banks are separated from deposit banks, yet it still had a housing bubble. In fact most of Europe has a housing bubble. Housing bubbles is a result of inflated money supply, where savings have not increased, but instead consumption. Also savings is used for investment, which relates to investment for future consumption versus today based on immediate need, or time preference. You borrow all the money from the future for consumption today, consumption in the future has to drop just as much. However, I do believe that Glass-Steagal shouldn't have been repealed. Fractional reserve banking, which is usually the core problem of most financial problems whether in history, or today. The author is correct on certain things however, interest rates are too low. They are more about preserving the bailed out banks than providing for the economy. This idea that low interest rates spur consumption is just plain ridiculous. When you are broke you are broke, you need to recoup your money, or capital to reinvest for the future production, which allows a real recovery. Zero interest rates are not going to bring back housing market to their peak bubble levels for example.

Tue, 06/12/2012 - 01:27 | 2517099 matrix2012
matrix2012's picture

I quote here my two favorite warnings from EZRA POUND, said many decades ago yet they're still quite relevant as of yesterday.

 

    “The Nomadic Parasites will shift out of London and into Manhattan. And this will be presented under a camouflage of national slogans. It will be represented as an American victory. It will not be an American victory.

    Until you know who has lent what to whom, you know nothing whatever of politics, you know nothing whatever of history, you know nothing of international wrangles.” — Ezra Pound (1885–1972)

 

“The monopoly of money, or the restriction of its circulation, is merely a variation of this simple form of monopoly. That is all. The stupid fall into the trap. Wars are provoked in succession, deliberately, by the great usurers, in order to create debts, to create scarcity, so that they can extort the interest on these debts, so that they can raise the price of money (i.e., the price of the various monetary units controlled by, or in the possession of, the same autocrats), altering the prices of the various monetary units when it suits them, raising and lowering the prices of the various foodstuffs when it suits them, completely indifferent to the human victim, to the accumulated treasures of civilization, to the cultural heritage.” — Ezra Pound (1885–1972)

Tue, 06/12/2012 - 06:51 | 2517248 GeneMarchbanks
GeneMarchbanks's picture

The first quote is only accurate if we make a crucial distinction, now here my message might get distorted as I have to resort to the parlance of the psychoanalytic movement, but the point remains nonetheless: It isn't so much a 'Nomadic Tribe' as it is a certain 'type' of person or people that find a way to live off of a culture/civilization without actually being a component of the national ideology. Taking advantage of patterns within society, making shortcuts these are some of the characteristics of a particular type not a specific race.

Tue, 06/12/2012 - 01:41 | 2517107 Centurion9.41
Centurion9.41's picture

Seriously, what is truly amazing is how strongly the MBA types are still under the influence of this Kool-Aid fed to them during school.

Anyone with a BS that has a good foundation of math & science quickly realizes most business school, and most specifically the practitioners of the Dismal Science are either morons or liars.

Tue, 06/12/2012 - 08:42 | 2517449 Umh
Umh's picture

This is what makes education hard. You have to sit through classes instructing you in theories you know are incorrect and then remember the incorrect stuff to pass the exams. It's much easier to remember things that are true than to remember random noise like EMH. Institutions like schools and government are so convinced of their correctness that they ruin the very people who need them.

Tue, 06/12/2012 - 01:41 | 2517108 Centurion9.41
Centurion9.41's picture

Seriously, what is truly amazing is how strongly the MBA types are still under the influence of this Kool-Aid fed to them during school.

Anyone with a BS that has a good foundation of math & science quickly realizes most business school, and most specifically the practitioners of the Dismal Science are either morons or liars.

Tue, 06/12/2012 - 02:05 | 2517122 LarryDavis
LarryDavis's picture

Are the following scenarios efficient or would they imply an asymmetry of information:

 

Hi, It's Steve Cohen. I was thinking about investing in your business. How is the quarter going?

Hi, Mr. Blankfein it's Senator McConnel. I was thinking about the time your secretary blew me and I was wondering if you could let me have a few of my interns gang bang her?

 

Markets are about as efficient as the caprice and ethics of the people who control them. I've have an informal command of econ but as my understanding of financial chicanery and whatever is left of the markets grows (and it does almost daily with the help of Zero Hedge) I can't help but notice how pathological and psychological the markets are. If you want to understand the "markets" study human INefficiency, what happens when you give sheltered people with marginal IQs control of trillions of dollars, mix in some serial killer case studies and you won't need to use the latest SAS econometrics package for 60gs to make deductions. Fuck all the school shit (random walk tests, price distributions, etc.). Here are some free insights that will not let you down (I will liberate you from your mom's house) see the VIX at 15 or Facebook at 42 go long on the former and short on the latter. 

Tue, 06/12/2012 - 02:11 | 2517134 LarryDavis
LarryDavis's picture

Did anyone notice the correlation between stock and indices for most of 2011?

Tue, 06/12/2012 - 02:52 | 2517162 TacticalZen
TacticalZen's picture

Lots of good thoughts. However, the explosion of the OTC derivatives market guarantees an eventual catastrophic implosion on a worldwide basis, and much faster than ever before. They truly poisoned the well we all depend on. Will our new reality look like 1930, 1830 or 500 AD?

Tue, 06/12/2012 - 02:56 | 2517166 Nukular Freedum
Nukular Freedum's picture

Let me get this straight. You ran a simple moving average crossover system using only two randomly selected (?) moving averages out of an infinite number and you made a lot of money ex of commisions and slippage? This disproves the EMT how?

Tue, 06/12/2012 - 09:56 | 2517708 Eric L. Prentis
Eric L. Prentis's picture

Please see my published journal research— here and here.

Tue, 06/12/2012 - 02:56 | 2517167 Nukular Freedum
Nukular Freedum's picture

Let me get this straight. You ran a simple moving average crossover system using only two randomly selected (?) moving averages out of an infinite number and you made a lot of money ex of commisions and slippage? This disproves the EMT how?

Ever heard of "infinite variance"?

Tue, 06/12/2012 - 02:58 | 2517168 Nukular Freedum
Nukular Freedum's picture

Whoops.

Tue, 06/12/2012 - 03:50 | 2517186 dcb
dcb's picture

to th writer of this note:

everything you say it correct, but making it out like it's your research is rather funny. the efficient market thing was torn to shreds many, many years ago.

now you are dealing with the topic of cultural hegomony I mention the other day.  this is how  it works, academics and think tanks are used to intellectually justify policies that may have nothing to do with reality, they are usually bought by industry, then they are invited to talk on legislation, or gven a position in policy making. the structure of the system is then devised, securing benefits to the elite. there are many games to this.

Example; industry works very hard to insert complexity, loop holes, then complains the legislation is too costly to implement.

you will really see th e game at work in congressional testimpny. where htey invite everyone with aparticular world view and outside views don't get heard. then the crooked eleted officlas can vote for industry. no body beleives the horse shit they are hearing,, they just nedd some pretened intellectual reson to justify the vote to the electorate.

heck the people don't have to beleive it either, but you will get polls (staying on mesage) sopouting the sme nonsense over and over. and there are a number of really stupid pople out there who then internalize the message.

it is sort of a mass paropaganda effort of business, washington on the people.

There is a term I have invented: I call it a "conspiracy of thought". While there may be no actualy conspiracy by deefinition, but making sure everone involved in the legislation/ regulation/ thought process thinks the same way you ensure the desired outcome. you don't need little cabals to carry out the conspiracy, you just need everyone beleiving (or pretending to believe efficient market) and make all the governors of the federal reserve voting boare think the same way. Notice there are no austrian theory advocates anywhere of any position of authority I can find in the United states. I can find no marxist economists, the republicans veto or fillibuster a labor economist.

All of this represents a conspiracy of thought. then as that way of thinking gets presse in the media, we get cultural hegemony.

Notice how comunism gets demonized. It's just a fucking economic system, it's neither good or evil. in my view of people have frre will to determine that is the system they want to live under it's good. I know dictatorshipts and totalitarian governemnts are bad.

Please excuse typo's: my speel check doesn't work on this site, and as far as I can tell there is no option of spell check for me to select above. I really have a problem with spelling.

Tue, 06/12/2012 - 03:56 | 2517188 Demologos
Demologos's picture

If I told you there was an all-knowing Force in the universe that controls everything, you would think I'm some kind of nut.  But if I say there is an all-knowing "market" Force that determines everything financial, then I'm a fricken economic genious.  Nothing we have was built by "market" forces.  It was people acting on a need, often the need to survive or resist foreign domination, that built everything we find useful in this world today. 

If we had to wait for an "entrepreneur" to get the financial equivalent of an erection at the thought a profit could be made, we would have no national highway system, no major bridges, no international airports, no aerospace industry, no computer industry, no medical advances, no dense energy sources, etc.  For example, we needed water so we built aquaducts and reservoirs.  No business or corporation could get the financing to do those kind of projects because the payoff is decades long.  Unless people were going to spend the same amount of money in the 30's for water that we spend now for milk.

Things are built when human beings act upon the available natural resources or use well-understood physical properties to get something needed done.  I don't care how big a pile of money you have (or gold and silver for that matter) that "wealth" can't accomplish anything on its own.  Even if some human beings were available to work for a portion of that pile, what they would earn is useless unless there is something else to exchange it for, like food or shelter.

And yes, Glass-Steagall would be the stake in the TBTF vampire's corrupt heart.  They wouldn't dare risk their own money on the phony investment opportunities they market to the mickeys.  Its OPM that gives them the balls to do what they do.  If it was their money, and the taxpayers weren't there to bail them out, you can bet they would be way more careful with it.

 

Tue, 06/12/2012 - 09:02 | 2517507 AnAnonymous
AnAnonymous's picture

Infrastructures being what they are in Smithian economics, it is better to presume that there was no pay off.

The costs of it was simply absorbed by a third party.

Tue, 06/12/2012 - 10:16 | 2517794 Demologos
Demologos's picture

Not sure what that means.  Even if the king paid to build the road with gold he mined personally when he was a teenager, there is still a third-party paying:  the king.  I guess if God laid down a level pathway with fallen logs across creeks and crevices, so that people could engage in commerce between two villages without spending a cent on infrastructure, then there would be no cost for a third-party to absorb.  Unless of course, God's time has no value (He does have a lot of it - existing throughout eternity and all).  Otherwise, God is absorbing the cost by spending his time and therefore is the third-party.  Somebody has to be "it" when a job needs to be done.  Its either many people coughing up a little bit for a benefit all can use, or someone doing charity work with their own time and money.

Tue, 06/12/2012 - 04:10 | 2517192 Tum
Tum's picture

Why is it that every time I read an article based on how lousy free markets are, it's filled with details about which government law, regulation, or manipulation, or a combination of the three, did what to whom and when? Are there only a few sane people left on this planet who see the glaring contradictions?

 

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