Kudos to MMs
- Thread starter nitro
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People talk about Germany bailing out Greece, or Spain etc. They are not paying attention to the Germans own debt:
http://www.cnbc.com/id/30308959/The_World_s_Biggest_Debtor_Nations
No wonder the German people don't want to go there - the Germans have a 80% worse debt problem in relation to GDP than we do, and is worse off than Greece on the same scale!!!! Everyone is hoping to grow out of debt by making more things that China and other emerging markets will buy. God help us when that musical chair ends.
http://www.cnbc.com/id/30308959/The_World_s_Biggest_Debtor_Nations
No wonder the German people don't want to go there - the Germans have a 80% worse debt problem in relation to GDP than we do, and is worse off than Greece on the same scale!!!! Everyone is hoping to grow out of debt by making more things that China and other emerging markets will buy. God help us when that musical chair ends.
i think you talked about this before. so feel free to ignore the question.
do you think you need a separate model that produces ETA for FV values? if ETA is dynamic that could explain why FV could be frequently so much off but still "correct" (with the best info available to it).
in other words, FV model could be the "holy grail" and go wrong only in two cases:
1) whenever it is unaware of "unknown unknowns"
2) whenever ETA becomes distant then the market could fluctuate in a wide range without apparent regard to FV.
do you think you need a separate model that produces ETA for FV values? if ETA is dynamic that could explain why FV could be frequently so much off but still "correct" (with the best info available to it).
in other words, FV model could be the "holy grail" and go wrong only in two cases:
1) whenever it is unaware of "unknown unknowns"
2) whenever ETA becomes distant then the market could fluctuate in a wide range without apparent regard to FV.
Because the market is hierarchical in nature, and each level of information flow gets out in sequence, the last one to get out being the least informed participants, the general public, by which time it is right to get in again! Look at how right Peter Schiff was (see video above), and it tool a full TWO YEARS to bear out!
There are people probably buying this market now (i.e., Mutual Funds), and yet by all indications this is a disaster waiting to happen. Funny! But on all time-frames something works even against the obvious. Look at this way, it has been KNOWN for three years that Greece has to default and in fact it has been talked about at length before. The first time Greece defaulted was 2400 years ago! LMAO! Why is it that now this is affecting markets, as if this some uknown unknown? My god man this is a known known! Because markets can be made to ignore the long term and fixate on the short term. It is like giving in to a crying child that wants more sugar so that you will be left in peace, but you know that you are creating a little monster. Until one day enough is enough and you confront the problem head on, if it kills you. Someone somewhere hit a brick wall in Europe. And if they (G20) "fix it" this weekend by magically giving into Greece? Markets will rally (maybe but the child is easily tricked), until, what? When? LOL! FV is supposed to know this? If FV had turned at 1370, I would probably have the SEC at my door with lots of questions.
I cannot control the emotions and lack of logic in other people. FV sits somewhere in "holy grail" between insiders and the public. Notice that FV indicated that long was correct as little as a month ago! It adjusts to markets, not predicts them, for the most part. Yet, people sold 1370 all the way down. THOSE guys are the smart money with information flow that we would kill for, i.e., it is probably illegal and would make you and Bernie Maddoff a neighbor. We just get the crumbs.
It took FV about 150 handles to realize it needed to shift gears. On 1370, that means I miss about 10% of a 20% bear market. Not bad. Not great, but not bad. On the upside, we will have to see.
this Durden character gets it.
"The problem with bilateral netting is that it is based on one massively flawed assumption, namely that in an orderly collapse all derivative contracts will be honored by the issuing bank (in this case the company that has sold the protection, and which the buyer of protection hopes will offset the protection it in turn has sold). The best example of how the flaw behind bilateral netting almost destroyed the system is AIG: the insurance company was hours away from making trillions of derivative contracts worthless if it were to implode, leaving all those who had bought protection from the firm worthless, a contingency only Goldman hedged by buying protection on AIG. "
http://www.zerohedge.com/news/five-...ivative-exposure-morgan-stanley-sitting-fx-de
"The problem with bilateral netting is that it is based on one massively flawed assumption, namely that in an orderly collapse all derivative contracts will be honored by the issuing bank (in this case the company that has sold the protection, and which the buyer of protection hopes will offset the protection it in turn has sold). The best example of how the flaw behind bilateral netting almost destroyed the system is AIG: the insurance company was hours away from making trillions of derivative contracts worthless if it were to implode, leaving all those who had bought protection from the firm worthless, a contingency only Goldman hedged by buying protection on AIG. "
http://www.zerohedge.com/news/five-...ivative-exposure-morgan-stanley-sitting-fx-de
Interesting video follow up on that:
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Note to self:
"The fields that get expectation values and spontaneously break symmetries are generally taken to be âscalarâ fields â that is, they are single functions of spacetime, not something more complicated like a vector field. If a vector field did get a nonzero expectation value, it would have to point somewhere, thereby picking out a preferred direction in spacetime...."
Markets clearly break vector field symmetry (as opposed to scalar fields) thereby "pointing somewhere", so we can tell who is most likely to be right. The question of whether it is correct over large time frames (many many trials) to trade in this way is still an open question to me - i.e., do we want to trade in an "inertial coordinate frame" or not. Further, the vector symmetry has to be really subtle (or at least only obvious to the educated eye) and perhaps only obvious at "high energies" (high VIX), otherwise everyone would be rich and hedging would be almost non-existent and debates like the one between Schiff and others in the above video would be non-existent.
"The fields that get expectation values and spontaneously break symmetries are generally taken to be âscalarâ fields â that is, they are single functions of spacetime, not something more complicated like a vector field. If a vector field did get a nonzero expectation value, it would have to point somewhere, thereby picking out a preferred direction in spacetime...."
Markets clearly break vector field symmetry (as opposed to scalar fields) thereby "pointing somewhere", so we can tell who is most likely to be right. The question of whether it is correct over large time frames (many many trials) to trade in this way is still an open question to me - i.e., do we want to trade in an "inertial coordinate frame" or not. Further, the vector symmetry has to be really subtle (or at least only obvious to the educated eye) and perhaps only obvious at "high energies" (high VIX), otherwise everyone would be rich and hedging would be almost non-existent and debates like the one between Schiff and others in the above video would be non-existent.
"Fed Study Says Its Plan Is Working"
http://www.cnbc.com/id/44644213
I hope it works, but I don't know any more.
"...So are lower interest rates raising employment levels? It's actually possible the Fed's statement is backfiring in terms of achieving growth...."
Schiff has been saying this forever. We must allow the recession to happen [naturally?], and encourage people to save, which means raise IRs. Trying to force the issue otherwise, somehow makes things worse and makes the inevitable worse when it comes. I don't know who is right anymore...
http://www.cnbc.com/id/44644213
I hope it works, but I don't know any more.
"...So are lower interest rates raising employment levels? It's actually possible the Fed's statement is backfiring in terms of achieving growth...."
Schiff has been saying this forever. We must allow the recession to happen [naturally?], and encourage people to save, which means raise IRs. Trying to force the issue otherwise, somehow makes things worse and makes the inevitable worse when it comes. I don't know who is right anymore...