Fairy dust

Fairy dust, like its sib Happy Talk, has been part of the run up in business from a shaky start to a very flimsy structure. That the stock markets are dropping severely today (before the open of the US markets) indicates that the recent dust has not worked; that it sometimes catches into a frenzy is very much suitable for study.

Part of the dust influenced Alan's (he of the Congressional query, yesterday) long-time belief that banks (and other capitalistic organizations) could police themselves, that derivatives were magical (did not need scrutiny), and that bubbles could not be seen.

Yes, Alan, we cannot see the future. Science, therefore, has ex post facto eyes, for the most part. Any forward looking is highly constrained. It is mainly the business types who go out on the limb, extrapolating like there is no tomorrow, carrying with them the rest of us into perdition.

Until economics and business is more empirically (actually quasi-empirically) based, these burstings will continue.

Gosh, even the quants started to believe in their magic and led the financial engineers astray.

How to stop this, as WFB asked? Well, there are several ways. Expect these to be addressed in an incremental manner, including more technical analysis of the mathematical problems.

Remarks:

07/31/2013 -- Ben cannot unwind or taper down; he has too many Doves.

03/23/2012 -- Ben is doing a series of four lectures on his, and the FED's, role.

10/10/2011 -- The public is recognizing that we've been 'fairy dusted' the past few years. Was it meant to be a means of cover-up? Hopefully, Big Ben is seen to be as much of a culprit.

04/19/2011 -- On territory and its map.

01/19/2011 -- The quirks of capitalism are rank, not by necessity.

11/04/2010 -- Big Ben is still putting us at risk and trashing the savers.

09/15/2009 -- Lessons, one year after Lehman. Also, Time on culprits. Ben is happy-talking, again.

09/09/2009 -- Alan's reign will be looked at, in time.

08/31/2009 -- Go to FEDaerated to see Quant series that will expand to cover topics both theoretical and technical.

08/10/2009 -- As promised, FEDaerated is here.

05/18/2009 -- Oh yes, got us in a mess and still wants the bonus.

04/17/2009 -- Minsky and the facts of ephemeral value are a couple of topics on the list.

12/17/2008 -- Shoes continue to drop, but they are of several types.

11/20/2008 -- Boon and bust, the way of fairy dust.

Modified: 07/31/2013