The Miasma School of Economics

From Angry Bear Blog:

Economics today has a profound resemblance to medicine before the germ theory of disease.

Lots of people in 1854 were trying to figure out what caused cholera, and how it was transmitted. The dominant theory was “miasma” — basically bad air emanating from smelly, unsanitary conditions, especially in poor areas with lots of leaking, overflowing basement cesspools full of shit. These were contaminating the water supply, of course, so the real transmission mechanism was people drinking the effluent from previous victims.

The solution to the miasma problem? Empty the cesspools into the Thames River— systematically poisoning the water supply. Yes, that’s what they did.

Voltron says: Steve Keen refers to it as "Ptolemaic economics"   It reminds me of how the bubonic plague was blamed on cats.  After all the cats were killed, the actual cause, flea bearing rats, ran wild.

Full article: http://www.angrybearblog.com/2012/11/the-miasma-school-of-economics.html

Colbert: High Frequency Trading

Voltron says: Proponents of high frequency trading say that it adds liquidity. True, you can buy stock 1/10 of 1 cent cheaper because of it. But that is not going to be much help when the stock later has a flash crash of 50% and your stop-loss order gets triggered.

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
High-Frequency Trading
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Depicting the denial of reality

This was too funny not to post . . .

The dark line is the GDP of Greece.  The dashed lines were the official projections from the group that is bailing Greece out.  Not only were they wrong five years in a row, but the more the situation worsened the more rapid the predicted recovery.  The latest forecast was for an *immediate* improvement.

If you've been reading my blog long enough, you probably already know not to listen to official government projections.  If you are waiting for a bureaucrat, central bank or stockbroker to tell you when to sell, it will be far too late.