Trading models change. The Economy persists.

["John Gelles" <johng@xxxxxxxxxx>]

"Two trillion share trading days are now common place,
and that's many times the number of shares outstanding,
meaning each share is traded many time every hour.
Technicals have overwhelmed fundamentals a long time
ago in the real world.
"In the past two years, some $6 trillion of market
capitalization has been wiped out to generate a few
billion in profit for the astute few.  That is 60% of the
GDP!
"No economy has survive such volatility."

        --Henry Liu, today, on PKT

    The economy, by definition, corrects enough to be
there tomorrow. If its capital we want, equities will
supplement profits to provide it. If its credit we want,
central banks and their customers will offer it.  If its
production we want, people will produce.

    What Henry implies is some significant change in
all the above is coming to make the economy per-
form better in relation to people's, firm's and nations's
wants and needs.

    Will it be better labor standards? Yes.
    Better environmental standards? Yes.
    Better banking standards? Yes.
    Better investment and corporate governance
institutions and rules -- yes, but very slowly -- and
how they will evolve is harder to hazard a guess on
than for labor, ecology and banking, whose impera-
tives are more obvious.

    Interestingly, on the issue of patterns from past
data and their application to present decisions, SAS,
a hugely successful software house that markets to
business decision makers, was featured on CBS'
"60 Minutes".  They model the past and provide
useful guidance. Business leads the way. But the
economics profession is on watch for useful tricks
along these lines to solve the "ergodic" paradox.

        John Gelles