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“Capitalism Has Gone Nuts!”

That’s what I said to my parents-in-law who asked me to explain the “market” behavior that turns on every bit of news.

To the ordinary people, American or Chinese or anyone else, the “market” is hard to explain/understand.  That’s because it really is nuts/bonkers/crazy/insane/irrational.  This is NOT some “rational market”, because this “market” of today responds to opinions of those who claim to know.  But do they really know?  Or are they merely seeking to influence the outcome with their opinion?

This is an age old thing.  Fortune tellers have been around since man conceived the abstract concept of time.

And as in every age, fortune tellers try to rationalize the irrational.  Astrology and card reading were once akin to some form of science.  Of course, some of this is based upon basic psychology and other scientific observations (if you know the weather pattern well enough, you can predict the weather fairly well).  But let’s face it, the more “extreme” the predictions are, the more irrational they tend to be.

Thus, I observed, why are all the “market experts”/news commentators making all those silly predictions (which often turned out to be untrue, even for their own markets, let alone for foreign markets)??  Particularly, why do they feel the need to shoot their mouths off on every bit of small “news”?

Itchy trigger much?

Take recently, the Chinese Communist Party leaders held a policy meeting, the Third Plenum.  I do not underestimate the importance of that meeting, but I seriously doubt that they would bother to explain all the nuances of policies, NOR would the news hawkers really understand any of it.

Which is all the more surprise that so many newsies started making doom predictions on the “uncertainties” of that meeting.

Which is also to note, WHY jump the gun?  Shouldn’t the MARKET determine whether policies worked??!  WHY preempt the MARKET?  WHY are all these loud voices trying to beat each other to get their opinions in, before the MARKET had a chance to see the policies in action??

It’s not just for China, it’s all of the West.

Obama gets elected?  Opinions react to drive the market, before any policies are actually made.  All worked up for a position that is supposedly “checked and balanced” by the system.  Isn’t the system supposed to be balanced enough to prevent the irrational ups and downs?

Well, apparently, nobody is educating the Newsies.

Now, I learned recently also, that there are actually new “markets”/casinos for betting on “options” of which politicians would win which election, because apparently, the market will shift up and down based upon whether Hillary Clinton will win 2016 Presidency of US.

Wow, yeah, that’s pretty nuts.

Adam Smith, someone is predicting that you are rolling in your grave, and betting money on that too.

No, it’s not the invisible hand, it’s the hands of the mob opinion driving the MARKET now.

Indeed, the ONLY rational markets now seem to be the ones supposedly “state-controlled”, such as the one in China.  They are actually specifically designed to ignore the Western market of Newsies, to buffer against and ignore irrational opinions (mostly by refusing to allow the Newsies to participate in the market, and prosecuting them for “rumor spreading”.  Yes, that’s why China is cracking down on rumors).

On that note, isn’t “democracy” one of those “predict-debate-ahead” kind of system?  Yeah, it sounds great, but does it really work, or is it just like every other system?  Shouldn’t the “market” determine that?

**

I also remember distinctly, back in 2008, when the real estate market in US was taking the most severe dive, when the bubble burst, that I was still getting “news” from various bank analysts on how the market was still doing well, and prices will still go up.

I was thinking, “what planet are these idiots living on?”

Of course, it’s entirely rational from their point of view.  Their “opinion” was that the Market should keep paying them ridiculous irrational prices to keep paying their equally ridiculous salaries/bonuses.  That’s the bottom line for them, not for the rest of us.

Lesson in this?  “Free opinions” are there to only make money for the Newsies, not for every one else.

“Market”?  If you let the “market movers” move you, then you are not a market, you are just cattle for the slaughter.

 

  1. ersim
    November 18th, 2013 at 06:41 | #1

    Western style capitalist system has been globalized in such a way that only those who created it can rig the whole “global market” to their exclusive benefit.

  2. Black Pheonix
    November 18th, 2013 at 07:23 | #2

    True adherents of Capitalism should all shut up and let the market decide on its own.

  3. ersim
    November 18th, 2013 at 07:53 | #3

    @Black Pheonix
    Good luck on that. XD

  4. Black Pheonix
    November 18th, 2013 at 08:11 | #4

    Better idea:

    In the old days, fortune tellers are sometimes allowed, but they are held accountable for their prophecies.

    If they were wrong in their predictions, they would be severely punished, for example, for lying to the Emperor.

    So, that’s my solution: Punish wrong predictions. (If you want to predict, do so at risk).

  5. ersim
    November 18th, 2013 at 09:46 | #5

    Let’s be hypothetical when it comes how the “markets” function. If we were to live in a world that the Chinese economic system was the prevalent system, what type of “punishment” they would give to the so called “expert” who comes up with some sort of mumbo jumbo prediction of either gloom and doom or economic “growth”.

  6. Black Pheonix
    November 18th, 2013 at 11:31 | #6

    @ersim

    Well, historically, the punishments were death, life imprisonment, or if they really wanted to inflict some punishment, removal of the tongue (for liars, like in Medieval Europe).

    If I want to be hypothetical, I would say the punishments might be less severe, more humane methods of punishment:

    For example, if someone wants to do financial predictions, and he/she is wrong, then it would only be fair that all their financial assets are confiscated (held indefinitely) to pay for any potential damages to societies and individuals.

    (But then again, pretty much every prediction comes down to some kind of financial prediction, so let’s just say ANY prediction).

    Hey, if you want to gamble with the future predictions, you better put up or shut up.

  7. ersim
    November 18th, 2013 at 20:26 | #7

    Black Pheonix<
    Hey, if you want to gamble with the future predictions, you better put up or shut up.

    If it were that simple. The criminals who provoked the 2008 global meltdown are laughing themselves rich into their own banks thanks to the bailout of the U.S. government. When it comes to “punishment”, the worse these criminals get is a ” fine”, which is a pathetic drop in the bucket compared to the billions they have in the global scale.

  8. November 19th, 2013 at 05:42 | #8

    I presume this is an article that attacks the “market movers,” the newsmakers, the tea leaf readeres, the predicters, etc. But if you do believe in the free market, you have to say, they exist because the market deems a need for them. Even if you outlaw “fakes” in the business, if the market can’t rid themselves of the “obvious” “fakes,” the market demand is such that there will grow an underground for it.

    The thing to understand is why – despite the poor record of so many “experts” – the market still seeks out “experts” who when you look objectively do not know any more than anyone else?

    I don’t know.

    We do know business moves in cycles. Science moves through paradigms. As sentiments change, there will always be demands to make sense of the current atmosphere. So there is always need for people who sell self-justification.

    But there has to be more. If you belief in the market, you look to “competition” to save the day. If there are enough pontificaters, the market should seek out the better ones – the ones who know what they are talking about.

    Yet … competition only seems to breed more incompetent experts, not less…

    I can think of 2 reasons.

    1. what the market seeks to know from these predictors are inherently unknown and hence truly hard to know/predict. If so, you can’t fault the experts for being mostly wrong.

    2. the market doesn’t really care about what is right or wrong. It is only seeking feel-good / feel-gloom news that match the sentiments (self-justifications) of the times, not really for truth or anything objective. The experts in this light don’t tell the market anything the market doesn’t know, they are but mirrors to reflect and articulate what the market already deems is the truth.

  9. ho hon
    November 19th, 2013 at 08:35 | #9

    Joseph E. Stiglitz said: “the reason that the invisible hand often seems invisible is that it is often not there.”

  10. Black Pheonix
    November 19th, 2013 at 11:14 | #10

    @ersim

    It could be that simple. China can crack down along that line. It worked well for China in the past.

    And I consider China’s current crack down on “rumors” along the same line.

  11. Black Pheonix
    November 19th, 2013 at 11:31 | #11

    @Allen

    3rd possibility:

    The market was all along, created and rationalized by those with dominant market power/ influence, to justify their hold /influence as “what the market wants”, when in reality, it’s not what the “market” wants, but rather what the dominant influencers ought to bring about.

    No, Steve Jobs didn’t make the iPhone because it’s what the “market” wants, but rather it’s what he wanted the market to buy at his price.

    Thus, every design component, every cost in the iPhone was not determined by the Market, but rather determined by Steve Jobs and his company to maximize the profit with the lowest cost.

    The “market” only determines whether to agree or disagree with Steve Jobs, after the fact.

  12. ersim
    November 19th, 2013 at 17:32 | #12

    Specifically which is the Chinese concept of what “market” suppose to mean versus the Western concept? My perception of what “market” means has been corrupted by the quasi-religious Adam Smith “invisible hand” b.s. that the so called “experts” preach when they do their mumbo jumbo predictions of how the “markets” will be.

  13. ho hon
    November 19th, 2013 at 20:14 | #13

    Check out: “The Tyranny of the Market – Why You Can’t Always Get What You Want” by Joel Waldfogel. I don’t totally agree with what he said but at least it suggests not believing in the holy Market unconditionally. Amen.

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