Bitcoin: How A Mathematical Artifact Became A Bubble - And Now Needs To Be Regulated

The headline ('Crypto Investors Dig Out of Disaster') in the Markets section  (p. B10) of the Jan. 2, WSJ  was not exactly an earth-shaking revelation to those who've been following the fortunes (or misfortunes) of crypto-currencies like bitcoin.  So we kind of muttered 'Meh' on seeing the quotation:

"A lot of people got punched in the face when bitcoin fell below $6,000"

According to Chris Burniske, author of 'Cryptoassets', and also a partner at the venture capital firm  Placeholder.   And as we further learned::

"After rising nearly 1400 % in 2017, bitcoin reversed hard in 2018, falling about 70 percent and erasing some $160 billion worth of value.  The selloff exposed the budding currency market's shaky footing.

Despite the entry of some established Wall Street players, scammers abound and few tangible uses for bitcoin and its underlying blockchain technology have emerged."

Then asking (ibid.):

"Where does the digital currency market go now that many speculators have been wiped out?"

Well, I'd say 'nowhere'. Or at least they shouldn't.  One huge strike against it is that bitcoin is not a real entity at all but a mathematical creation,  an artifact invented by quants using obscure equations for its design. So it is a virtual currency only,  as well as being built on shaky assumptions for security and transparency.  While I know my Morgan silver dollar (which I can hold in my hand)  has the full faith and credit of the U.S. government behind it, all I know about bitcoin is something called 'blockchain' is supposed to assure us of legitimacy.

In this respect, bitcoin is called a :cryptocurrency" because its very existence relies on the abstruse mathematics underlying cryptography to exist in the first place. Mathematics such as the peculiar functions known as elliptic curves, i.e.

http://brane-space.blogspot.com/2016/12/peculiarities-of-elliptic-curves-and.html

Thus, for example, bitcoin uses elliptic curve technology - a type of public key cryptography = to ensure the validity of transactions. I.e. that the bitcoin you are using is every bit as valid as the one I am using.  You can learn more here: about elliptic curve cryptography.

An inherent problem has always been with the potential duplication of bitcoin and especially  using it to generate "counterfeit" bitcoin. Think of it this way: I mathematically invent a digital currency using fractional calculus and call it a "Copernican Copper'.  Fair enough. But then if I send my precious little virtual 'copper' off  to ten friends they might simply cut and paste it and send it to ten of their friends. In no time the value would be gutted, and any hopes for a speculative "market" dashed. . But on the other hand, if one absolutely halts such a crypto from being duplicated, he also stops it from being circulated and it still becomes worthless.  Catch 22 here?  Not really.

While this would pose a humongous problem for any virtual currency,  Bitcoin attempts to solve it using what's called  "blockchain".  Basically, this is a registry of all the Bitcoin transactions to date, and which all users can see.  It includes: when the Bitcoins were created and the dates for transactions between individuals.   The problem then becomes ensuring the blockchain is accurate. This is accomplished using powerful, number crunching computers that basically solve fearsome elliptical equations that help in verifying the Bitcoin transactions, dates, and hence the blockchain is accurate. If not, then it would be possible to steal or duplicate the currency.

This then gets us back to the confidence of investors in Bitcoin and all the other cryptocurrencies,  namely those who remain "wary of owning too much of the still risky market" (ibid.)  And to quote once more Mr. Burniske of Placeholder:

"Crypto has a hard time realizing how small and nascent it really is."

Which may well be because there remains the need to develop a means for determining a fair price for Bitcoin and the other virtual currencies.   This effort may well get a boost when the Intercontinental Exchange Inc., the parent of the New York Stock Exchange, launches its crypto-based exchange Bakkt.    This exchange will allow customers to buy, sell, store and spend digital currency.  If Bakkt can prove as safe and secure as the NYSE it could alleviate the concerns of may investors.

But, like the NYSE - especially with the obscure credit derivatives  that infiltrated the markets in 2007-08  -  it will not prevent speculative asset bubbles or busts.  Recall those credit default swaps were also mathematical creations, using something called the Gaussian Copula formula, e.g.













The formula, invented by David X. Li while working at JP Morgan Chase and articulated in his (2000) paper: ‘On Default Correlation: A Copula Function Approach”  was blamed for “wrecking your 401k” according to an article ('A Formula for Disaster’) appearing in WIRED  in 2009.  On account of the lingo used and the complex nature of the underlying formula – few ordinary mortals would figure the credit default swaps  (CDS) out before it was too late. I n the meantime, the Gaussian formula itself allowed the credit derivatives to be sliced and diced numerous ways to package them throughout ordinary securities such as collateralized mortgage obligations.  The failure of the credit agencies themselves to be onto the junk bond nature of CMOs and allowing the presence of one fraction of ‘AAA’ bonds in each – then designating the whole AAA - led directly to the collapse of the credit markets in 2008.  

In many respects the rush to CDS especially in the baking system,  was the result of a bubble, in  this case of a risky asset that insinuated itself into bonds.  It was difficult to track because of its complexity and the mathematics used to create it, which was beyond the comprehension of nearly everyone but the quants.   As Jack Rasmus, author of 'Central Bankers At The End Of Their Rope' has put it:

"Is Bitcoin the new ‘Subprime Mortgage Bomb’? Just as subprime mortgage bonds precipitated a crash in the derivative, Credit Default Swaps (CDS), at the giant insurance company, AIG, in September 2008, setting off the global financial crash that year—will the Bitcoin and crypto-currency bubble precipitate a collapse in the new derivative, Exchange Traded Funds (ETFs) in stock and bond markets in 2018-19, ushering in yet another general financial crisis?"

Is this true?  It's possible.  According tot he WSJ special investment article ('Exchange',  Dec. 15-16, p. B18),  'Bit Coin Was No Bubble Until It Was':

"A speculative craze isn't defined by its frequency or even its amplitude, which makes defining a bubble tricky.  When bitcoin appreciated by more than 1 million percent ab expert in manias said it didn't meet his criteria for a bubble. Months later, bitcoin finally ticked off nearly all his boxes."

Which shows me the expert's 'perception of a mania or asset bubble was too conservative.   In the case of Bitcoin, as with CDS, another striking alarm was the use of leverage for purchases. Many institutions went way out on leverage to purchase CDS back in 2007-08 leading to the unimaginable amount of nearly $55 trillion in toxic assets left on banks' balance sheets. (See e.g. 'The $55 TRILLION QUESTION' FORTUNE, October, 2008, p. 135)


The same applied to Bitcoin where we learned WSJ, ibid.) "stories of people selling all their possessions to invest in crypto currencies or buy it with credit cards."  And the kicker - showing the direct analogy to CDS:

"Futures contracts, a traditional way to make a bet with even more bang for the buck, also took off. In fact, researchers from the San Francisco Federal Reserve believe it is no coincidence that bitcoin peaked the day the Chicago Mercantile Exchange listed contracts on it. Futures finally gave skeptics a way to bet on its decline."

In the case of the CDS realm, side bets were allowed on all sorts of things, such as whether particular collateralized debt obligations (CDOs)  would lose money, or the interest rate (average) on a segment of them would drop one half percent, or whether there would be at least 100,000 foreclosures in the third quarter of the financial year.

In the case of the credit default swap, all that was needed to make the bet formal was a counter-party. Thus, the “party” renders the bet and the amount wagered, and the counter-party takes the bet. The actual exchange, as already noted, was often done on cell phones and no formal records other than what the cell phone statement showed were available.  It is fair to say that for both Bitcoin and CDS leverage  helped drive the respective bubbles into danger territory.

Even more basic in the case of bitcoin, it is the currency of choice for hackers as well as nefarious transactions of all sort on the dark web. As Janice put it yesterday when I aleted her to eh $160b lost by investors: "They deserve to lose that money if they're dabbling in a currency that supports and enables criminals!"  Ouch!

The earlier (December) WSJ piece however warns "Bitcoin skeptics need to remember that early froth doesn't necessarily mean an asset is flawed."   Maybe not, but too much investment in an asset that indeed is the preferred choice of n'er do wells, can indeed render it toxic - maybe even as much as the CDS became financially toxic -even requiring the Fed to implement TARP (the Toxic Asset Relief Program).

The good news is that the SEC has finally cracked down the past year on what are called "initial coin offerings" - a method of financing cryptocurrency ventures.  SEC regulators cited in the Weekend WSJ (Exchange,  by Anthony DeBarros) have stated many ICOs were "fraudulent" while most "failed to comply with rules that require investors be given audited financial statements and detailed risk disclosures".

Pardon me, but these lapses, failures remind me too much of how the main credit agencies, i.e. AIG, Standard & Poor's, didn't do their due diligence before allowing the toxic CDS assets into all manner of bonds and rating them AAA.  In each case,  Bitcoin and CDS, a lack of transparency contributed to the attendant financial woes and the resulting harm. At least now there is a chance to catch the Bitcoin bubble before it gets out of hand.  As on WSJ author (Spencer Jakab)  put it: 

"Clearly, bursting bubbles doesn't inoculate us against falling for another one."

Evidently, neither does having the old saw "If something sounds too good to be true it probably is" drilled into your head a million times.

Capitalism IS A Zero Sum Game - It's Time Its Apologists Understand That

Despite Bernie Sanders' campaign bringing some degree of enlightenment to the 2016 presidential race (by making it okay to criticize capitalism), much more needs to be done. That includes holding its sundry apologists to account for the loose thinking, and false logic they consistently display.. One such case emerged in the August 15th issue of The Economist in a review of John Plender's book: Capitalism: Money, Morals and Markets.

The anonymous reviewer observed how "capitalism lacks defenders while protests against it have fresh vigor" forgetting that most of those protests have not occurred in the mainstream media but in the marginal media or blogs, as well as on the streets. Hence, it's debatable how much of an impression has been made.

What we can say is that when an illustrious person like Pope Francis speaks out on capitalism's ills, or a Thomas Piketty (in his books) then it's more likely the mainstream news takes note - but more often than not criticizes the critics for their short sightedness. Thus, in the review of Plender's book do we see a faint damning of ancient critics like Socrates who "declared that the more men think of making money, the less they think of virtue."

Which is probably true for most humans, just look at the tallies of those who win giant Powerball jackpots then blow them on booze, drugs, unwise gambling or unwise investments (often in the same category as the previous one).  Money -sighted people then, as I've often found, are basically two dimensional operating on the existential axes of time vs. money and seldom express an original thought outside this reference frame,

Gordon Gekko, of 'Wall Street'  movie fame,  may be something of a caricature but his basic persona is often replicated in many of the Street's money men (bond traders, investment bankers - once referred to as "big swinging dicks" by one of them in a FORTUNE piece, or plain old stock brokers.)   Their failure in morals then, if it transpires, usually occurs by virtue of a failed larger vision or perspective. One that transcends their yearly bonus and where they will spend their grand vacation or how - killing protected lions in Zimbabwe, or going on a week -long million dollar golf binge at a St. Kitts resort, while their wives enjoy $250k each rose and wine wraps - with or without cucumbers.

Usually, the defenders of these guys just plain fail to see the vast harm of which they are capable. Consider just the credit meltdown and freeze of 2007-08. How many attribute the cause to the correct source? Very few! Usually the lazy media (often right wing) blames it on poor dopes who had maybe $100 in an account but were offered sub-prime mortgages by unscrupulous scheisters (such as depicted in the film, 'The Big Short'. Based on the excellent book by Michael Lewis).

Seldom (either) do they look at the pseudo-intellectuals or “quants” that helped develop the Gaussian Copula formula (see embedded graphic at top) who were quite confident that when they applied it to the development of credit default swaps (a bastardized form of credit derivative)  they’d be virtually home free. On account of the lingo used and the complex nature of the underlying formula – few ordinary mortals would figure them out before it was too late.

To refresh memories, these nasty devices were geared to enable commercial banks (the ones that hold your passbook savings) to leverage their assets to preposterous ratios, sometimes as high as 33:1.  In other words, their generation of profits would largely be based on phantom money – since they lacked the reserves to make good if the bets (which is what the credit defaults swaps were) failed. In the meantime, the Gaussian formula itself allowed the credit derivatives to be sliced and diced numerous ways to package them throughout ordinary securities such as collateralized mortgage obligations.  The failure of the credit agencies themselves to be onto the junk bond nature of CMOs and allowing the presence of one fraction of ‘AAA’ bonds in each – then designating the whole AAA - led directly to the collapse of the credit markets in 2008.

 Since then  it’s become ever more evident why elite economics is a failure and can’t even be regarded as a science like Physics, or even in a “pre-scientific phase” . If it had then the main practitioners of the dismal science ought to have been able to predict the effect of their CDS on a vulnerable home debt market. They didn't.

 In the case of the Gaussian copula, invented by David X. Li  -  while working at JP Morgan Chase and articulated in his (2000) paper: ‘On Default Correlation: A Copula Function Approach”  -  it wasn't even a true mathematically sound equation analogous to those used in physics or celestial mechanics.. It was more an intellectual Frankenstein monster that never should have seen the light of day any more than a four-headed baby with a pointed tail. For example, Li's misuse of the distribution functions (F_A(1)) and (F_B(1)) would appall any genuine mathematician or physicist. Each is actually based upon significant uncertainties via survival law distributions which can vary enormously. There is no way to normalize any probability based on (T_A, T_B so there is no way to equate Pr[T_A, T_B] to anything on the left side. The equal sign is dangerous recklessness masquerading as math. Did the illustrious economists or "quants" know any of this when they cranked out credit default swaps? Or assigned the bonds in which they were buried AAA ratings? The evidence of failure to predict the 2008 credit crash shows they didn't.

 

All of which supports Chris Hedges’ condemnation of these mental zombots, i.e. p. 98, The Empire of Illusion:

“They cannot grasp that truth is often relative. They base their decisions on established beliefs such as the primacy of an unregulated market or globalization, which are accepted as absolutes.”

 

In other words, these money men and derivative inventors inhabit a self-confected, solipsist world of illusion devoid of critical empirical testing or critical thought. I mean, Jeez, if any one of these so-called geniuses would have just taken the time to understand WHAT he was doing in applying the Gaussian Copula to credit derivatives he’d likely have seen it was the equivalent of a physicist taking a tiny piece of special relativity and trying to inject it into areas that had no relevance because the primary criterion (speeds near c, the speed of light) were not being  met.

But see, at least physics has and uses empirical testing before advancing – so the odds are less that physicists will make asses of themselves. Not so with these economic, political elites.   Unlike astronomers,  who can accurately predict the position of Jupiter or Mars in 2050 or the next lunar eclipse or occultation of a star, the economists can't even predict simple stuff in their immediate domain - say like forecasting the growth would be 3.2 % in 2011 when it was only 1.7%

 

Remarkably, Plender is aware of the cost of high finance on capitalism's rep and this is pointed ou by the reviewer (p. 75):

 

"It's not just that few people can see the benefits of complex financial products like credit default swaps. He adds that 'bankers have undoubtedly done their best to give capitalism a bad name. The extraordinary scale on which big banks have been rigging interest rates and foreign exchange markets and ripping off their customers is almost beyond comprehension."

 

Fair enough, but it still doesn't let the system itself off the hook, which breeds these tactics and the money men who use them.  This leads to a blindness about perceptions of capitalism.

 

For example, the reviewer's claim - echoing Plender- that the financial crisis was the latest example of "the inherent stability of capitalism", i.e. "allowing it to benefit from creative destruction". In fact, the financial crisis was just the opposite, a glaring example of capitalism's instability.  We actually came within a hair's breadth of another Depression and only barely escaped because the political system and party in control at the time was enabled by votes to use taxpayer money (nearly $897b) to bail the system out and interject liquidity.

 

In the same manner, if a series of nuclear reactors were to "nearly melt down" - governed by the same computerized control algorithms - one would not argue or assert the "system is stable" or "shows stability".  But no one - after all the taxpayer money was spent - came after the clowns that nearly wrecked the financial system, leaving it open to future predations.

Why do we keep paying attention to these clowns? Just because they have Harvard, or Cambridge or Stanford or whatever degrees after their names? Mainly, yes – and also because the politicos who achieve high office tend to install them in their cabinets so instead of being relegated to some corner office behind the walls of ivy, they have the ear of Presidents and Prime Ministers. These clowns can then help determine national policy which is usually to the detriment of the rest of us.

At root of it all, which none of them or the bought out media will tell you, is that the trillions of bucks circulating in the capitalist markets represents  FORCE. A force that can crush opponents underfoot, including presidential campaign opponents who dare to bring its nefarious consequences (to our electoral system) to light.

They also don't want too much exposed because they know deep down as capitalism ramps up it generates millions of losers a year, not to mention destroys what's left of our natural environment. As Naomi Klein has pointed out, it's no coincidence that a capitalism has spread and consumerism reached exponential levels, the planet's atmosphere has been laid waste to via the Greenhouse effect.

The Economist reviewer's claim then that (ibid.):

"For all its faults capitalism has raised the living standards of billions of people since the 18th century and improved their life expectancy"

Is only a half truth, since it ignores the other side: that this enhancement of living standards and life expectancy has come at the cost of the planet as a habitable future abode. These long lived consumers (no longer seen as citizens) now plunder the planet to the tune of the equivalent of 1.5 Earths' worth of finite resources per year. They are driven by capitalist-based advertising to do so, as it generates ever more 'wants' as opposed to fulfilling actual needs. Thus, every manjack has to have his own car to drive and pollute  with CO2. Every unused computer or 'Barbie' tossed into the landfill - along with soiled diapers and plastic bags - creates ever more waste and hazards.

It is no surprise that pollution and cancers have reached a peak now as ever newer weedicides and pesticides have to be created - not to mention GMO crops - to feed a growing population in which food sources must keep up with numbers.

But the other perverse aspect is that capitalists love overpopulation because it means - n their minds- vast "markets" of global consumers to buy their ever larger quotas of crap, that ever lowers Earth's store of non-renewable resources.

Perhaps no one has better explained the connection of global warming, especially, to capitalism, than Naomi Klein. Readers who are interested should get hold of her book, This Changes Everything: Capitalism Vs. Climate Change.  Basically, as Klein argues, capitalism is unable to affect or alter  the course of climate change due to its dependence on fossil fuels and need for continuous growth. Also,  the time for marginal fixes has expired, thus forcing us to now make radical changes in how we live.

 We simply don't have the luxury of using all the carbon that lies in the Earth. Yet capitalism's never ending growth engine would demand we do so to support the expansion of new markets for exploitation and wanton consumption.  Failing to note that the more we take from the Earth the less real wealth we have left: a zero sum game.

Insanity, Irrationality and the Inability of People to Reason: The Legacy of Jacques Derrida

Few people outside of academia have probably ever heard of philosopher Jacques Derrida. This is a pity, because apart from the PR-infested media- perhaps no other agent has been more responsible for the gutting of minds. Derrida is the founder of deconstructionism - a marginal area of modern philosophy that purports to "deconstruct" literary texts and specifically :

"a theory of literary criticism that questions traditional assumptions about certainty, identity, and truth; asserts that words can only refer to other words; and attempts to demonstrate how statements about any text subvert their own meanings."

My personal introduction to Derridian madness was incepted and initiated via exchanges with deconstructionists - on the AOL forums , ca. 1993- who claimed "No REAL Humans were killed at Hiroshima and Nagasaki" only "mental constructions of humans, since the A-bomb was a mental construction of a real bomb". Of course, if NO real humans were killed and they view even an A-bomb as an abstraction, they'd have no qualms about carrying out any kind of killing themselves! Indeed, they'd regard any bombs or other weapons they use as "mental constructions"!

This sort of (literally) insane intellectual and moral "argument" paves the way to moral chaos and insanity since it seeks to conflate automatically what is in the (Derridian's) head with the outside world- thereby trivializing any external, or objective reality as non-existent - reducing it to what can be immediately sensed by the person.

Flash forward to two days ago - when I made a comment on the Financial Times website, after an article about "mathiness" in finance and the reasonableness of mathematics in financial analysis and models. My comment reflected earlier points I've made in previous blog posts that: a) the only math actually justified in finance involves basic statistics, i.e. such as applied to job numbers, GDP, interest rates, inflation etc. and no advanced maths can be applied to models since b) financial and economic models are purely confections of an artificial universe and have no genuine objects of inquiry. 

For example, in devising economic models all "externalities" are ignored. This would be analogous to physicists ignoring the role of energy in assorted models, say of stars. In an April 26, 2010 letter of mine published in The Financial Times,  I drew attention to the abysmal failure of modern macro-economics (touted as a “science”) to predict the 2008 market meltdown and financial crisis. I pointedly noted that economics ignored too many externalities which included aspects like environmental costs and resources that were omitted from its models, as well as lacking any consistent empirical basis analogous to physics.

Illustration of  the Gaussian Copula Formula used by economists to justify credit default swaps.

In the particular case of the failure in predicting the credit crisis and meltdown, academic economics erred by assuming a putatively poorly regulated system was capable of sustaining massive risk entrenched in obscure, poorly understood credit derivatives created by Wall Street “quants” , most of whom had forsaken bright careers in science or mathematics to invent these devious financial instruments for investment banks. The assumption saw all the hinges come loose when the credit default swaps were immersed in securities purported to be safe, since they were given AAA ratings by credit agencies like Moody’s and Standard and Poor’s.

Thus, the  forecast failure was predicated on a three-way collapse of the paradigm: 1) commercial banks taking on the risk of investment banks by leveraging their assets to preposterous ratios (sometimes as high as 33:1), 2) credit derivatives designed using the Gaussian Copula Formula which enabled them to be sliced, and spread throughout ordinary securities such as collateralized mortgage obligations, and 3) a failure of the credit rating agencies to take proper note of (2) and in effect, be blinded while assigning bond ratings the securities didn’t deserve.

Since then, it’s become ever more evident why economics is a failure and can’t even be regarded as a science like Physics,

In the case of the Gaussian copula, invented by David X. Li while working at JP Morgan Chase and articulated in his (2000) paper: ‘On Default Correlation: A Copula Function Approach”  it isn't a true mathematically sound equation analogous to those used in physics or celestial mechanics.. It is more an intellectual Frankenstein monster that never should have seen the light of day any more than a four-headed baby with a pointed tail. For example, Li's misuse of the distribution functions (F_A(1)) and (F_B(1)) would appall any genuine mathematician or physicist. Each is actually based upon significant uncertainties via survival law distributions which can vary enormously. There is no way to normalize any probability based on (T_A, T_B so there is no way to equate Pr[T_A, T_B] to anything on the left side. The equal sign is dangerous recklessness masquerading as math. Were economists or "quants" know any of this when they cranked out credit default swaps? The evidence of failure to predict the 2008 credit crash shows they didn't.

Getting back to my recent FT website comment, one poster using the monicker "camus_deferral" didn't take kindly to it, basically arguing astrophysics had no "real" objects of inquiry either, since after all black holes couldn't be observed, and how did we know anything about the universe since the distances weren't even "graspable".  Besides, he insisted, "all your parameters can change on a dime" - such as the current fact that the expansion of the cosmos is undergoing acceleration.

After patiently trying to explain astrophysics basics, including that black holes  - while not directly observable - were nevertheless detectable (i.e. via their x-ray signatures as part of binary systems) we came to an impasse based on what exactly defined a "real object" - assuming any such entity actually existed.

I tried to explain that in empirical science we define a real object as any for which definable properties could be exposed, say following observational or other analysis. This would also enable classification of such objects, for example stars into spectral classes O, B, A, F, G, K, M based on measured temperatures and spectroscopic analysis.  Thus, stars were certainly real objects, as were planets which could be grouped into "gas giants" (Saturn, Jupiter, Uranus, Neptune) and "terrestrial type" planets with hard surfaces. Also, we know planets are real objects by the fact space craft have actually landed on a number of them, i.e. Russia's Venera Probe on Venus, Viking and Rover on Mars, etc.

None of this mattered to "camus" who denied any such examples constituted real objects and they could as well all be merely in an astrophysicist's mind. To him it was only real if he could "hold it and touch it". Ironically, he was awarding himself reality perception on the basis of proximity to the senses, but dismissing it for astrophysics - for which he allowed only a Derridian facsimile. 

Interestingly, he failed to appreciate his definition would apply even more cogently to entities  fabricated in financial models, i.e. using the Gaussian Copula Formula which mixes functions from human actuarial tables, generic survival distribution laws, and a “probability” function based on coupling two financial entities in an actuarial table – then tossing in a correlation coefficient. 

Imagine a quantum physicist performing an analogous desecration of his probability density equation, e.g.

by incorporating standard Gaussian distributions (not normalized) and mixing electrons with macroscopic entities like marbles – then deeming the wave function is capable of capturing the survival probabilities of both marbles and electrons? And – to add injury to insult, fabricating a “correlation coefficient” to relate (couple) survivable marbles to electrons?

Any such quantum physicist would be rapidly deemed insane and trotted off for some needed intervention, including ECT treatments.

I was tempted to suggest as much for "camus". However, I decided to simply end the exchange by observing it wasn't possible to have a constructive debate with anyone incapable of distinguishing reality from unreality - or who didn't even understand basic astrophysics.

Alas, this interlude shows the malformed, deconstructionist legacy of Jacques Derrida remains alive and well.  You will even find it in more sophisticated enclaves of the web, such as the Financial Times site.

See also:

http://brane-space.blogspot.com/2010/04/no-maths-was-not-responsible.html

And:

http://www.smirkingchimp.com/thread/jaime-oneill/62564/the-dumbfuckification-of-damn-near-everything

Why the ‘Ivy League’ Universities Really Comprise the Corrupt League – In Politics, Econ, Business

The Gaussian Copula Formula (top) used by economists to justify credit default swaps, and the Pareto distribution - used to justify the allocation of most wealth to the richest. These are two illustrations of the bunkum taught at 'elite' universities to subvert economics in our nation and the world at large.











It was actually a comment from a nitwit poster on a Guardian (UK) forum that caught my eye. It was in response to a previous poster’s eloquent contribution and a citation of Prof. Stephen Cohen of NYU.  The response comment read, taking on the source of the citation:

“From a 2^nd rate prof at a 3^rd rate university”

Really? Are there ‘third rate’ universities? In fact, not so much these days and hence the inexplicable  yen for so many t0 blow hundreds of thousands of bucks to  compile massive debt just to get into an Ivy league school for the sake of name cachet.  Or tens of thousands more merely to make futile efforts via applications, to enter the magic, golden doors.  The fact is, it makes very little difference which university you attend (assuming it isn’t a ‘for profit’ or online version). It is more the cachet and reputation of the specific department.  From the May 2011 issue of MONEY magazine: "Don't assume an Ivy League education is better than one from a public or state university."

However, as Chris Hedges observes in his remarkable book, ‘The Empire of Illusion’ it is the “Ivies” – the likes of Harvard, Yale, Princeton and others,  that are the source of a continuing flow of zombot, unthinking elites poisoning our nation and the world. To be clear,  this lot are being disgorged in specific academic areas, namely business, politics and economics. Their toxic views are infiltrating the memosphere and reinforcing the hegemony of the elites and their stranglehold on the country – including the ongoing inequality.

Thankfully, their scientific and math contributions remain relatively uncontaminated – unless they’re in the areas which receive corporate grants to support oil shale and natural gas fracking, or GMO foods. In astrophysics, for example, they’re generally fine.

Hedges’ takedown chapter is III: The Illusion of Wisdom and he comes out swinging for the fences with his opening paragraph (p.89):

“The multiple failures that beset the country, from our mismanaged economy to our shredding of Constitutional rights to our lack of universal health care to our imperial debacles in the Middle East, can be laid at the door of institutions that produce and sustain our educated elites. Harvard, Yale, Princeton, Stanford, Oxford, Cambridge, the University of Toronto and the Paris Institute of Political Studies, along with most elite schools, do only a mediocre job of teaching students to question and think. They focus, through the filter of standardized tests, AP classes, enrichment activities, high-priced tutors, swanky private schools, entrance exams and blind deference to authority, on creating hordes of competent systems managers. “

Adding:

“Response for the collapse of the global economy runs in a direct line from the manicured quadrangles and academic halls in Cambridge, New Haven, Toronto and Paris to the financial and power centers of the world.”

 

This is a breathtaking accusation but Hedges can fully back it up with his examples and citations. Nor is this simply a matter of “sour grapes from a loser” since Hedges did in fact lecture at Princeton for years. But what he shows is that the tolerance for divergent thinking in these assorted elite faculties and enclaves is almost non-existent. Hence,  the examples he provides shed light on the extent to which all the above named schools “disdain honest inquiry – which is by its very nature distrustful of authority, fiercely independent and often subversive.”

They therefore would have little tolerance for a remarkable political thinker like Neoliberal gadfly Henry Giroux,  who for many years was Waterbury Chair Professor at Penn State. But on account of his work and resolute critical voice (one of “the most vocal critics of the corporate state and destruction of American education”) he was driven to the margins of academia in the United States. The Neoliberal sock puppets and their assorted lackeys simply couldn’t abide his independent research and critical thought and so drove him to Canada where he now teaches at McMaster University. (Certainly not a ‘3^rd rate school’ if it has the likes of Giroux!)

But Giroux is only one of  many examples of the minds marginalized because of their outspokenness.  Hedges also cites those such as Noam Chomsky (linguistics prof from MIT),  consumer advocate Ralph Nader, the late historian Howard Zinn and others who are shut out once they critique the system keeping us all down, as serfs in the alleged ‘land of liberty’.

How do these wretched intellectual pretenders get away with this evisceration of faculty and critical thought? Well, by an entrenched and well-rehearsed, embedded template that sifts all yearly intakes to find the individuals that will be the most easily molded - the most confident carriers of the elite virus and zombie ideas. (Mainly, as Hedges also notes, little dweezils that follow their profs all around -  groveling-   while also grafting for 4.0 in all their subjects.)

As for the zombie ideas forced down the willing throats of these sycophant students, like:  “money is speech”, "corporate personhood", "free markets", "globalization"  and “trickle down economics”, they ought to have died ages ago .  But all are sustained via the publication of specious, pseudo-academic bullshit for which the dumpster would be the only rightful place in a rationally run institution of higher learning.

Hedges details the methods at the outset of the chapter:  

“They organize learning around minutely specialized disciplines, narrow answers …it allows students and faculties to retreat into these self-imposed fiefdoms and neglect the most pressing  moral, political and cultural questions.”

 

And then later elaborates some more (p. 103):

 

"This is what the Harvard Business School method is about, a didactic system in which the logic employed to solve a specific problem always, in the end, sustains market capitalism. These elites are not capable of asking the broad, universal questions, those staples of an education in the humanities, which challenge the deepest assumptions of a culture and examine the harsh realities of political and economic power. They have forgotten, because they have not been taught, that human nature is a mix of good and evil. They do not have the capacity for critical reflection. They do not understand that for every answer there arises another question- the very basis behind the Socratic method's search for wisdom."

 

One of the ways this occurs is the use of specialized vocabulary.  Thus, the pseudo-intellectuals or “quants” that helped develop the Gaussian Copula formula (see embedded graphic at top) were quite confident that when they applied it to the development of credit default swaps  few would figure them out before it was too late. Indeed choosing the name for this bastardized form of credit derivative ensured that they’d be virtually home free. On account of the arcane lingo used and the complex nature of the underlying formula, few ordinary mortals would have the time, intelligence or temperament to get to the bottom of it all.

These nasty devices were geared to enable commercial banks (the ones that hold your passbook savings) to leverage their assets to preposterous ratios just like investment banks, sometimes as high as 33:1.  In other words, their generation of profits would largely be based on phantom money – since they lacked the reserves to make good if the bets (which is what the credit defaults swaps were) failed. In the meantime, the Gaussian formula itself allowed the credit derivatives to be sliced and diced numerous ways to package them throughout ordinary securities such as collateralized mortgage obligations.  The failure of the credit agencies themselves to recognize this enabled them to be outfoxed by the specialized lingo and the presence of one fraction of ‘AAA’ bonds in each. This  then led directly to the misrepresentation of junk bonds as AAA and the collapse of the credit markets in 2008.

Since then  it’s become ever more evident why elite economics is a failure and can’t even be regarded as a science like Physics, or even in a “pre-scientific phase” as one respondent (Sanjay Bissessur)  to an original  Financial Times letter of mine showed. But economists' failure to even appreciate or use the Gaussian Copula formula correctly shows that they aren't even in the pre-scientific phase. And Bissessur’s pathetic efforts to compare the incident to “early physics” was plainly based on false analogy and disclosed his own lack of critical thinking.

 

In the case of the Gaussian copula, invented by David X. Li  and articulated in his (2000) paper: ‘On Default Correlation: A Copula Function Approach”  it isn't even a true mathematically sound equation analogous to those used in physics or celestial mechanics.. It is more an intellectual Frankenstein monster that never should have seen the light of day any more than a four-headed baby with a pointed tail. For example, Li's misuse of the distribution functions (F_A(1)) and (F_B(1)) would appall any genuine mathematician or physicist. Each is actually based upon significant uncertainties via survival law distributions which can vary enormously. There is no way to normalize any probability based on (T_A, T_B ) so there is no way to equate Pr[T_A, T_B] to anything on the left side. The equal sign is dangerous recklessness masquerading as math. Did elite economists or quants know any of this when they cranked out their credit default swaps? The evidence of failure to predict the 2008 credit crash shows they didn't.

All of which supports Hedges’ condemnation of these mental zombots, i.e. p. 98:

“They cannot grasp that truth is often relative. They base their decisions on established beliefs such as the primacy of an unregulated market or globalization, which are accepted as absolutes.”

 

In other words, they inhabit a self-confected, solipsist world of illusion devoid of critical, empirical testing or critical thought. I mean, Jeez, if any one of these so-called geniuses would have just taken the time to understand WHAT he was doing in applying the Gaussian Copula to credit derivatives he’d likely have seen it was the equivalent of a physicist taking a tiny piece of special relativity and trying to inject it into areas (i.e. thermodynamic systems at room temperature)  that had no relevance because the primary criterion (speeds near c, the speed of light) were not being met. But see, that sort of moral value perception would also have required a moral dimension to their research and its applications, and all the elites lacked it in spades.

At least physics has and uses empirical testing before advancing to hard claims  – so the odds are less that physicists will make asses of themselves. Not so with these economic, political elites.   Unlike astronomers,  who can accurately predict the position of Jupiter or Mars in 2050 or the next lunar eclipse or occultation of a star, the economists can't even predict simple stuff in their immediate domain - say like forecasting the U.S. economic growth would be 3.2 % in 2011 when it was only 1.7%

So why do we keep paying attention to these overpaid clowns? Just because they have Harvard, Cambridge, Princeton, Stanford or whatever degrees after their names? Well, mainly because the politicos who achieve high office (and have similar backgrounds)  tend to install them in their cabinets so instead of being relegated to some corner office behind the hallowed walls of ivy, they have the ear of Presidents and Prime Ministers. These clowns can then help determine national policy which result is usually to the detriment of the rest of us. (Think of the 'chained CPI' gimmick that Obama once entertained.)

Which elicits the question of whether Obama is caught up in this elitist matrix. It was clear in his recent salon.com piece Thomas Frank believes so, as he writes:

"The Obama team, as the president once announced to a delegation of investment bankers, was “the only thing between you and the pitchforks,” and in retrospect these words seem not only to have been a correct assessment of the situation at the moment but a credo for his entire term in office. For my money, they should be carved in stone over the entrance to his monument: Barack Obama as the one-man rescue squad for an economic order that had aroused the fury of the world. Better: Obama as the awesomely talented doctor who kept the corpse of a dead philosophy lumbering along despite it all.

The Age of the Zombie Consensus, however poetic it sounds, will probably not recommend itself as a catchphrase to the shapers of the Obama legacy. They will probably be looking for a label that is slightly more heroic: the Triumph of Faith over Cynicism, or something like that. Maybe they will borrow a phrase from one of the 2012 campaign books, “The Center Holds,” and describe the Obama presidency as a time when cool, corporate reason prevailed over inflamed public opinion. Barack Obama will be presented as a kind of second FDR: the man who saved the system from itself. That perhaps the system didn’t deserve saving will be left to some less-well-funded museum."

In other words, Frank's take is that Obama has helped to preserve and sustain the defunct market capitalism system taught at the elite schools, as well as the whole corporate hegemonic infrastructure. What does Chris Hedges think? He writes (p. 113):

"Obama is a product of the elitist system. So are his degree-laden cabinet members. They come out of Harvard, Yale, Wellesley and Princeton. Their friends and classmates made huge fortunes on Wall Street . They belong to the same clubs. They speak the same easy language of privilege, comfort and entitlement. The education they have obtained has served to rigidify and perpetuate social stratification."


Not that Obama is any different from Clinton before him and worst of all his immediate predecessor,  Bush Jr.,  who we learned benefited as a "legacy student" at Hah-Vahd. Hedges observes (p. 102) that Harvard sports something called the "Z-list" wherein 25 to 50 well-connected but borderline applicants "are told they can enroll if they defer for a year". Hmmmm.....nice trick if you can get it.  Especially if your pappy happens to be a wealthy SOB that can bestow personal grants on the universiy!

Will this corrupt system ever change to benefit the larger society? Not likely! So long as corporate money, personal wealth and advantage are extolled above principles, honor and moral decency, the myopic, amoral elites will lead their blind, greedy and obsequious students, the blind politicos and the rest of us (who aren't so blind) into oblivion. In this light, Hedges'  words are perhaps most trenchant (p. 103):
.
"A culture that does not grasp the vital interplay between morality and power, which mistakes management techniques for wisdom, which fails to understand that the measure of a civilization is its compassion, not its speed or ability to consume, condemns itself to death."

Will the elites take any notice of this and act to change their ways before the pitchforks really come out? Hardly! They are too smug, self-satisfied and arrogant to take seriously anything an outside critic has to say.

Which more or less resembles the stance of the French elites before the pitchforks - and guillotines - came out (during the French Revolution) , to lop off thousands of elitist heads and send them rolling into large baskets.

"Lights Go Out on Dismal Science"? A Long Time Ago!

Illustration of  the Gaussian Copula Formula used by economists to justify credit default swaps.


"How many economists does it take to change a light bulb? One!  When the one they used in graduate school goes out, they sit in the dark."

The above joke, as cited by Neolib hack Robert Samuelson, is supposed to hint at why economists are so pathetic at making accurate predictions. Unlike astronomers,  who can accurately predict the position of Jupiter or Mars in 2050 or the next lunar eclipse or occultation of a star, the economists can't even predict simple stuff in their immediate domain - say like forecasting the growth would be 3.2 % in 2011 when it was only 1.7%

Of course, the reasons for that failure are now well known. Unlike astronomers and astrophysicists who - when they make predictions - must take into account all relevant information, the economists tend to leave out what they dismiss as irrelevant. In the case of the growth forecast, it was simply that the economic stimulus passed in 2009 wasn't large enough to promote the growth expected. As Nobel winning economist Paul Krugman noted it needed to be at least a trillion dollars more, given the recession was much deeper than the economists originally thought.

On April 26, 2010,  a letter of mine published in The Financial Times,  drew attention to the abysmal failure of modern macro-economics (touted as a “science”) to predict the 2008 market meltdown and financial crisis. I pointedly noted that economics had too many “externalities” which included aspects like environmental costs and resources that were omitted from its models, as well as lacking any consistent empirical basis analogous to physics.

In the particular case of the failure in predicting the credit crisis and meltdown, academic economics erred by assuming a putatively poorly regulated system was capable of sustaining massive risk entrenched in obscure, poorly understood credit derivatives created by Wall Street “quants” , most of whom had forsaken bright careers in science or mathematics to invent these devious financial instruments for investment banks. The assumption saw all the hinges come loose when the credit default swaps were immersed in securities purported to be safe, since they were given AAA ratings by credit agencies like Moody’s and Standard and Poor’s.

Thus, the  forecast failure was predicated on a three-way collapse of the paradigm: 1) commercial banks taking on the risk of investment banks by leveraging their assets to preposterous ratios (sometimes as high as 33:1), 2) credit derivatives designed using the Gaussian Copula Formula which enabled them to be sliced, and spread throughout ordinary securities such as collateralized mortgage obligations, and 3) a failure of the credit rating agencies to take proper note of (2) and in effect, be blinded while assigning bond ratings the securities didn’t deserve.

Since then, it’s become ever more evident why economics is a failure and can’t even be regarded as a science like Physics, or even in a “pre-scientific phase” as one respondent to my FT article (Sanjay Bissessur) claimed. But economists' failure to even appreciate or use the Gaussian Copula formula correctly shows that they aren't even in the pre-scientific phase.

In the case of the Gaussian copula, invented by David X. Li while working at JP Morgan Chase and articulated in his (2000) paper: ‘On Default Correlation: A Copula Function Approach”  it isn't a true mathematically sound equation analogous to those used in physics or celestial mechanics.. It is more an intellectual Frankenstein monster that never should have seen the light of day any more than a four-headed baby with a pointed tail. For example, Li's misuse of the distribution functions (F_A(1)) and (F_B(1)) would appall any genuine mathematician or physicist. Each is actually based upon significant uncertainties via survival law distributions which can vary enormously. There is no way to normalize any probability based on (T_A, T_B so there is no way to equate Pr[T_A, T_B] to anything on the left side. The equal sign is dangerous recklessness masquerading as math. Were economists or "quants" know any of this when they cranked out credit default swaps? The evidence of failure to predict the 2008 credit crash shows they didn't.

Back to Robert Samuelson who,  in his recent piece on the Dismal Science (2/ 21, Denver Post), attempts to blame Keynesianism (the theory of John Maynard Keynes that when aggregate demand is low government must offset the decrease via stimulus and deficit spending.)  He asserts "the U.S. DID respond aggressively to the financial crisis" - but misses the point (as was missed by most Pareto- compromised economists) that in reality the stimulus and deficit spending weren't large enough!  This was only evident in retrospect when it was learned the negative growth actually hit -1.6 % in the first quarter in which the stimulus was initiated, in 2009.  Hence, Krugman's insight that the stimulus ought to have been nearly $1.7 trillion instead of $787 billion.

Samuelson also makes the error of most Pareto -distribution based economists, in referring to the "Fed pouring $3.2 trillion into the economy since 2008 to keep interest rates low and accelerate economic growth".   He adds that "so much money pumped out so quickly should have spawned higher inflation by monetarist reasoning, but it hasn't."

But one wonders what planet he's living on. In fact, inflation has been going up and rapidly  - more than 16% a year in the health care costs domain, and 5% a year in food costs. Don't believe me? Check meat , egg, dairy costs at different intervals. The problem isn't that there is no inflation, but that the Federal Reserve selectively ignores those costs -expenses it doesn't want on its cost of living assessments.  The problem is that the Fed leaves these costs, as well as for fuel, out of its CPI or Consumer Price index.

According to  former Fed honcho Ben Bernanke (WSJ, Feb. 17, 2012,, p. B1, 'Consumers Price in Real Cost of Living'), all such costs as food, housing - even exploding rent, as well as meds - are designated as "shelter costs". Hence, they are, get this:  "essentially made up numbers" .   Bottom line, according to Bernanke's statistics, higher costs of gasoline, groceries, rent and so forth - while not directly in our heads- are of no concern to him as regards inflation. After all, the CPI or consumer price index, is gamed to lowball the impact of these shelter costs so that even if inflation is really going up by about 2% a month, to Bernanke and his Pareto-stats it is really ZERO since his statistics (like the 'owner's equivalent rent") don't show up anything worth fretting over.

And economists wonder why they can't even get basic predictions correct?

The other aspect, is that although Bernanke pumped in $3.2 trillion - via his "quantitative easing" - it largely benefited only Wall Street and the stock pushers, traders by inundating them with cheap money.  Bernanke likened the Fed’s $85b a month bond buying to giving the economy small, needed doses of medicine - but it was more like crack to the financial markets that quickly became hooked on it.  This is the main reason a giant stock bubble has been produced which has no relation to actual corporate performance, i.e. corporations are still sitting on over $1.7 trillion in cash - one reason job creation is so sluggish.

Bernanke's pumping up of the economy  via QE I and II certainly hasn't helped seniors on fixed incomes who depend on the interest earned from fixed income investments for extra money to spend. (They lack the time horizon to be dabbling in stocks, or even mutual funds,  as they'd never have the time to make up the losses like a young Turk.)  It hasn't helped most college students whose loan costs have grown higher, and it hasn't helped minimum wage workers who've now seen their food stamps benefits cut!

In fact, a much superior alternative, if the economists had any sense and weren't tied to their delusions (and the Tea Party idiots in the House wouldn't have opposed it), would have been for much greater food stamp benefits - no cuts -and similarly extending unemployment benefits especially for the long term unemployed. These simple measures would have instantly - relatively so - spurred aggregate demand and a healthier economy. The reason? People receiving that money would have gone out to buy food, pay car or home loans, or buy fuel and meds. As opposed to corporations using the money to buy back their own stocks creating a false jump in stock prices, or traders jacking up the P/E ratios to make stocks look better and enhance their own commissions.

The sad fact is the entire U.S. economy is 'upside down' - in so many ways it makes a genuine scientist's head spin. In any rational real world economy, for example, the country would be creating jobs to repair its crumbling infrastructure - thereby killing two 'birds' with one stone (or rather stimulus cash infusion). It would also long since have pulled out of Afghanistan, realizing that quagmire, like Iraq, is a losing wicket and merely a money drain. All the money saved from the last two years in Afghanistan alone could have funded a major infrastructure repair program.  But we're a nation too deluded by external "threats" and security while ignoring our true domestic security.

Incredibly, the dismal science economists even have much of the nation  dumbing down - going gah-gah over their stocks or mutual funds' performance, but forgetting that doesn't mean diddly if they can't get water because their water mains are rusted through, or their toilets back up because the sewer lines are corroded.

The very condition of our nation, with so many serious, unmet domestic needs,  shows that the economics adhered to is more in the way of magical thinking than any "science"-  even a dismal one.

Gas Prices Nudging Down? You Can Thank Obama!

 Not long after my blog on Oil speculators playing us for fools, viz.


http://brane-space.blogspot.com/2012/04/oil-speculators-still-playing-us-for.html


President Barack Obama announced that he'd be willing to pursue tougher penalties on oil manipulators (who artificially bid up the price of gas for all of us) and thus, according to an obscure WSJ article yesterday (p. C1):


"shined a spotlight on commodities regulators who have won relatively few cases in the murky world of energy trading".


Murky world indeed! But we know that from time immemorial the green-eyeshade types, financial jocks and jag-offs have used obscure language and bullshit to conceal what they're really doing from the regulators (who often lack the same fancy educations, or at least the physics -statistics backgrounds of the quants that invent half this crap.) Thus, people - ordinary citizens- have often been left in the dust after being victimized by gamed mortgages, rigged private student loans, or even life insurance. With the losses often in the billions.


Look no further to the recent financial meltdown and the role of "credit default swaps" for the "baffle with bullshit" modus operandi.  In effect, these devices - derivatives were created by sophisticated egghead types using complex math formulas based on David X. Li’s (Gaussian copula) formula. Because of its structure and complexity, the widespread use of the Gaussian copula enabled unscrupulous parasites to load good bonds (rated AAA) with crap -junk bonds and then get away with having the whole rated "AAA".


Most of the sordid details of how it was done were revealed in the 2009 Financial Times article: 'Out of the Shadows: How Banking's Hidden System Broke Down, by Gillian Tett and Paul J. Davies. It noted the "plethora of opaque institutions and vehicles" that have emerged this past decade in American and European markets. The authors also noted how the esoteric products, namely SIVs (structured investment vehicles) and CDOs (collateralized debt obligations) were created by a second tier, hidden "banking system" which had effectively taken the loans of banks and repackaged them as these obscure products.


It was within this world of SIVs that people unwittingly purchased what they believed to be secure (AAA) bonds on good faith, which then proceeded to collapse because they were really laden with junk (BBB or lower)  and what's been called "toxic waste".


No regulator could make anything stick with these complex derivatives so no intent could be proven for wrong doing and no one was sent to jail for screwing 90 million people who placed trust in the financial investment system.


Now, with the WSJ article yesterday, we learn that days after Obama's warning the Commodities Futures Trading Commission came down on Optiver Holding BV, which the CFTC asserted was responsible for manipulating the price of oil on the futures markets, helping to add extra cost to all of us.


As the Director of the CFTC's Division of Enforcement, David Meister put it as he announced a $14 million penalty (ibid.):


"The CFTC will not tolerate traders who try to gain an unlawful advantage"


The method imputed to the Optiver bunch (who somehow managed to dredge up enough BS and obscure horse pockey to get the charge reduced to "recklessness" (i.e. no manifest intent) ?


It is called "banging the close" - words which will now live in infamy whenever we as ordinary citizens suspect that gas prices are going up too fast, and for no good reason.


What is "banging the close"? According to the WSJ article, it entails


"taking big positions ahead of the close of futures trading in order to influence the day's settlement price".


In other words, it would be roughly analogous to a stock trader doing a million extra "buys" on a particular stock  using his flash trade (high frequency trading) computer just before the bell. In so doing, he'd have artificially enabled the stock's  closing price to be a lot higher than it ordinarily would have been.


The difference is that in the futures markets for oil the final price - or settlement price - doesn't just affect the immediate sellers or buyers, but everyone, who must now pay more for gas. at the pump. 


All this shows an immediate cause-effect relationship between oil speculation and rising gas prices. So, please, don't blame Obama - blame the parasites that are manipulating  the oil trades using "banging the close" and other nefarious means. Notice how the gas prices have gone down nearly 10 cents a gallon the past week since the penalty was announced? Well, duh, why do you think so? It's because the speculators now believe the CFTC has teeth not just a bark and can use them! Also, the pain inflicted may be worse than any benefits.


Obama also said on Tuesday he wants to increase the fines tenfold to a maximum of $10 million per violation and beef up the CFTC.  These are good moves, but look for the Reeps to try to block them since first, they love reckless speculators who screw the 99% so -called, and also they love it when parasites earn money off specious manipulation. Hell the Repukes do it all the time!