Re: the list and Minsky

[David Lloyd-Jones <dlj@xxxxxxxxxxxx>]

Doug Henwood wrote:
>
> How much "fundamental uncertainty," which I take to mean something deeply
> systemic rather than the quantifiable risk of the CAPM, is there for First
> World investors? In the U.S., we've had bailouts for the S&Ls and "Mexico,"
> which really means Mexico's U.S. creditors. (As Penny Ciancanelli says, the
> First World gets Minsky bailouts, and the Third gets Fisher deflations.)
> There were huge state bailouts in Scandinavia and elsewhere in the late
> 1980s and early 1990s. Where is this "fundamental uncertainty"?

Well if the State goes along merrily bailing out the Chryslers and CD
holders of this world long enough, it might find its currency devalued
by a factor of, say,  26/36 = 72% over a brink of an eyelash -- just to
pick post Nixon dollars against yen as an example.

More seriously, Doug, it's a fine jape to mock the certainty with which
the bourgeois state comes to the rescue of the bourgeoisie (are we
supposed to be surprised?); this does not add up to an extension of our
understanding of "fundamental uncertainty."  Just to take your Black &
Scholes example, note that beta reflects the past, I can't keep track of
which Greek letter is the latest addition to the Nth derivatives of
volatility that those people track, and in any event that whole
proposition of so uncertain that the soi-disant rocket scientists* are
generally off into refractive backpropagation, or some damn thing.  I
predict that value investing will rise from the grave.  Briefly on the
third day.

                                      Cheers,

                                          -dlj.

Since I'm having a Saturday morning of being silly, a word about rocket
scientists may be in order.  I once read "Inertial Rocket Guidance" by
Si Ramo, the R in "TRW," who was at Hughes Aircraft and just about the
king of rocketry when he wrote it.  The most important thought in the
whole book -- which he presumably wrote down to get the Germans at
Redstone Arsenal up to speed -- was that the guidance of a ballistic
rocket is different from that of a ground-hugger, because the optics are
all different; ground huggers follow a circular path, Earth being round,
while ballistic rockets are on a parabola.

No doubt there is a secret edition of the book, unavailable to the
public, is which he cuts out this parabola guff and puts in the correct
word, hyperbola.  You can improve the accuracy from yards to feet right
there.

                                                   -d.