Via Kevin Depew in Minyanville:

Narratives are linear by design. Scenes are set, characters identified and defined, actions unfold over time in steps that lead toward a resolution. Unfortunately, while narrative is convenient in helping us understand things, it is useless in predicting how things unfold. Why? Because history does not unfold in a linear manner.

....Man, in retrospect, it all seems so clear. Have you ever thought that? .... But why? Why does everything seem so clear in retrospect? Because we are hardwired to recount events in linear narrative fashion… even events that do not unfold in a linear manner!

In other words, our need for linear narrative colors our perception of history. Linear narratives unfold in steps, the output proportionate to the input…. e.g. the Federal Reserve Chairman lowers interest rates, the first a surprise 50 basis point cut, the stock market rallies, credit becomes less expensive, so people borrow and put that money back into the stock market, or in houses. That’s the 2000-2005 period, right? It certainly seems that way.

However in reality, in non-linear systems, the output is not directly proportional to the input. So it’s not the case that, say, if the Fed does X, a proportional outcome will follow, or if the Fed and politicans implement Y and Z, a series of proportionate outcomes will follow

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Sterling Hayden in Seafarer:

To be truly challenging, a voyage, like a life, must rest on a firm foundation of financial unrest. Otherwise you are doomed to a routine traverse, the kind known to yachtsmen, who play with their boats at sea—”cruising”, it is called. Voyaging belongs to seamen, and to the wanderers of the world who cannot, or will not, fit in. If you are contemplating a voyage and you have the means, abandon the venture until your fortunes change. Only then will you know what the sea is all about.

Little has been said or written about the ways a man may blast himself free. Why? I don’t know, unless the answer lies in our diseased values. A man seldom hesitates to describe his work; he gladly divulges the privacies of alleged sexual conquests. But ask him how much he has in the bank and he recoils into a shocked and stubborn silence.

“I’ve always wanted to sail to the South Seas, but I can’t afford it.” What these men can’t afford is not to go. They are enmeshed in the cancerous discipline of “security”. And in the worship of security we fling our lives beneath the wheels of routine—-and before we know it our lives are gone.

What does a man need—-really need? A few pounds of food each day, heat and shelter, six feet to lie down in—-and some form of working activity that will yield a sense of accomplishment. That’s all—-in the material sense. And we know it. But we are brainwashed by our economic system until we end up beneath a pyramid of time payments, mortgages, preposterous gadgetry, playthings that divert our attention from the sheer idiocy of the charade.

The years thunder by. The dreams of youth grow dim where they lie caked in dust on the shelves of patience. Before we know it, the tomb is sealed.

Where, then, lies the answer? In choice. Which shall it be: bankruptcy of purse or bankruptcy of life?

Money talks, BS walks.

Via Minyanville:

The Fed wants to be the systemic risk regulator. But the Fed is the systemic risk,” Bunning said. “Giving the Fed more power is like giving the neighborhood kid who broke your window playing baseball in the street a bigger bat and thinking that will fix the problem. I am not going to go along with that and will use all my powers as a Senator to stop any new powers going to the Fed.”

Bunning was already deep into Fannie Mae (FNM) and Freddie Mac (FRE).
““[L]et me say a few words about the GSE bailout plan,” Bunning
continued. “When I picked up my newspaper yesterday, I thought I woke
up in France. But no, it turns out socialism is alive and well in
America. The Treasury Secretary is asking for a blank check to buy as
much Fannie and Freddie debt or equity as he wants. The Fed’s purchase of Bear Stearns’ assets was amateur socialism compared to this.”

“If there’s anything worth arguing about, either bet on it or shut up.”- Amarillo Slim

Finance is a tool for greasing the wheels of an economy, and when it
serves its proper role, finance can be a very good thing. But it can
(and should) never be the economy itself; it is fundamentally
derivative on the labor of real people doing real work. By extension,
an economy that gives pride of place to what should be a tertiary
concern is an economy that is winding down and running out of ideas.
Just as the ascendancy of the lawyers is the death knell of an industry
(cf. the dying spams of the major record labels and the RIAA), so the
dominance of financial services signals an economy that has become
tired and spent.

Via – Felix Salmon:

Rich doesn’t mean you have no debt. Rich doesn’t mean you don’t want more money. Rich doesn’t mean you can have whatever you want, or that you can live on the interest on your interest. And rich certainly doesn’t mean you have no worries and are satisfied with your lot in life.

Rich doesn’t mean the top half of the population, or the top quarter, or the top eighth, or even the top sixteenth. But the top 3.5%? Sure.

Are you in that income bracket? Then admit it. You’re rich. It’s nothing to be ashamed of.

Mauritania | Setting sail | Economist.com:

Armoud, a Gambian taxi driver who attempted the pirogue trip to the Canaries last year. With time to spare, I ask him to tell me his story.

In lyrical English, he recounts three attempts to reach Europe since 2002. He tried and failed to enter through Algeria and Libya, returning to his home in Banjul where he worked for his younger brother as a taxi driver.

After eight months he returned the car. “It’s Africa,” he says defeatedly. “When you have nothing and your younger brother has a small amount, they control you.”

Determined to return to Gambia a rich man, he went to Mauritania, raised money as a taxi driver and travelled to the Canaries by pirogue. Three people died on the way because they “felt crazy inside the sea” and jumped out of the boat. The Spanish returned him to Mauritania after a few weeks.

He is determined to keep trying. He thinks his best bet is to make his fortune in Libya. It is not as “sweet” as Europe, but the risks are lower and there is work to be found. No matter what, he will only return to his family in Banjul a wealthy man. “Then,” he says, “everybody can feel proud and enjoy it together.”

EconTalk, Economics Podcasts Hosted by Russ Roberts: Library of Economics and Liberty:

2008 Investment company factbook. There are now twice as many mutual funds as stocks in the US.

Putting Death to Sleep with an eventful life:

Liberty is a wonderful antidote to socialism. Freedom appeals to those who can take care of themselves, socialism appeals to those without much confidence in themselves. The faux security of socialism is an easy sell over the visible risks of personal responsibility.

Wall Street is, as always, little more than a sublimated pirate fleet,
albeit a highly educated, highly compensated one. Many are called, few
are chosen, and fewer still rise through the ranks to run an entire IB
division.

Succeeding in the upper echelons of a Wall Street firm is as much a matter of nuanced power politics as anything else. You need to be good at the actual job, to be sure. But you also need to be good at favor-trading, strategic maneuvering, and convincing the board of directors that you’re good at your job.

In the U.S., with a population of 300 million, the average person uses 25 barrels of oil a year. In Asia, with a population of 3 billion, the average person uses two barrels a year.