Book Title; The Map and The Territory
Author ; Alan
Greenspan
Publisher ; Vintage
International
Year ; 2013
(1) Commentary (2) Review (3) Conclusion
The former Fed Chairman Alan Greenspan argues in this book ‘The Map and The Territory’ that the 2008 experience was profound in its complex largely for exposing the impact of U.S markets on the rest of the world who’s forfeit of troubled Investment Banks such as Lehman Brothers and Bear Stearns left more mark to be desired and may forever live in infamy. But they saw it coming, that it seems to him that the attachment of these Investment Banks to the Federal Reserve, especially JP Morgan where he worked for a time, may have convinced these Banks that lending at such high risk as would have seen inevitable, especially to individuals and corporations with checkered past, will not matter since these Banks were Too Big To Fail and the tenuous bond to the Federal Reserve will revert to their rescue.
The human factor is that the investment from savings which were thin from as at 2003, continued since the Housing boom in 2000s did not abate or show any signs of diminishing, that it was not justified for any reasons was clear enough but yet it continued to boom. It seems to him that the Banks may well be blamed for the problems of 2008 financial meltdown, but it was a meltdown that was long awaited going by human nature. In rear-view, the hustle over the US market came from elsewhere he argued, particularly Europe with their investment Banks penetrating the US housing market.
The cornerstone of his book may be reduced to this theme that irrational financial behaviors, especially human behaviors, constitute as much relevant forecast instrument as other business indicators, that emphasis on behavioral economies is not misplaced given the events of 2008 with limited run down of the variables which does not exclude the human penchant for risk especially when the outcomes are less than desirable. Real Price of Oil may represent a kind of shock Index of the spot Price and notional GDP price index (Log) and Feds Rate, it is not necessarily within the …
From this paragraph, it is clear that we are suggesting that the success and failure of ‘The Map and The Territory’ can objectively be measured by the use and abuse of economic forecast and indicators and not necessarily its history, or perhaps the book success is by the degree through which it offers a defense of economic indicators and its interpretive relevance to the forecast of US economy and Federal Reserve.
It is not to be said that there are alternatives which he pointed to but excess indulgence on degree of argument does equal the index of purely human form. It is not easy to quantity human behaviors but there is leniency towards a full and authorized pursuits of Herd-like behavior which based on instance capacity is often reduced to the opening gaps; beta from alphas, and in spite of the many few arguments on interests and inflation, the 4i quadratic is perhaps a Consumptive economic behaviors whose estimate is based on information, the flow. While the familiar territories and maps for forecast factors inventories and savings – particularly savings, the system here is not saved by rate of return or debt, maps for territories in comparative assessment to any market exist by reasons of the regression from a broad index of graphs. That is, the spread or the gaps between graphs...may or may not be leading the future all the time; it is unlikely that these forecast and monitors would not use savings and investment as tools for very significant tools.
Greenspan made light the argument that US markets experienced a shift of emphasis from savings to debt in the last decade. He is looking to emphasis savings along the lines of Debt, going at the rate of public consumption of durable goods, and such future estimate may require sacrifice. Hence Savings away from Investors is also a healthy practice in spite of the Chief source of returns for instance Interest Rate.
The author speaks of a fat tail for instance, that a fat tail in a graph usually reverts to the extent of losses. Subtracting expected losses from actual losses equals unexpected losses, but if any investor is looking to place the ‘beta factor’ role on his or her stock, it should not be done with respect to the stock in of itself, it should incorporate as much information as possible, including the legacy of business cycles and the human behavioral dynamics. Fat tails in ordinary circumstances of economic indexing, may equally result from the shift from production (production possibility) to cost is a transition strategy involving an industry and not necessarily manufacturing, but the length of the risk bearing tail beyond the excision of a risk averse investor mainly illustrates direction of the market after the shocks, and some of the shocks are irreversible.
A fat tail is usually coincidental to the shift from left to right of the unemployment and inversely correlated inflation graph, best associated with Michael Philip as the Philip curve. The challenge to Philip’s curve by Michael Phelps does not diminish the attention it receives from of all economists since it is a logical explanation behind Labor as fixed index in any economy and there is a matter of wage to consider, and a shift from household to macroeconomics. It is an econometric tool.
A right hand side variable (all right hand side variables) is mainly vector driven, but may be compressed to a three months, which is a final indicating of what has already transpired in the Markets, both Stocks and Notes, as the Banks indicators arms the Feds with GDP estimate, or conditions the reactions from the Feds or the reaction from the Government. And the length of the tail usually point to consistent problems of unemployment and may point to short falls in aggregate demand resulting from the disequilibrium of fixed income and price.
Talk about easy money or flow period, where there a foreseeable momentum, credit and securitization hitting a certain shock. The Kurtosis following a unsettling period usually require a definition, when for instance a variable such as Crude oil mitigates cost of production or deflationary Auto index, continues injection of money from the Banks may not be advised, yet withholding credit will force a negative adverse effect – usually psychological – on the market. Here the Feds will be expected to risk a line of Credit or react to the market through bond acquisition, a tool for negative truncation following the unusual agility (zig zag) of the market.
Here the run off is within two major variable, will not necessarily relate the Bayesian model for multivariable Bank Stocks dependent Fed Index, whereas Poisson manifold, dissimilar from Alpha-Beta Gaussian as used by Fischer Black and Myron Scholes, perhaps a Markov (preceding the Credit card) chain will do but on a specific year, the Monte Carlos computation, experience excitation may show better regression given the vectors aligned for 3 months and other deaths and decay will apply, possibly 15th or 22nd of the 30 day calendar.
The time or duration is important for both the VAR and AR, it is modeled after the previous execution and Time Series, which is not reality with due respect to Walk Process of the Bond as a definition of human financial behaviors, but measures the present from past record and hence the excitation, projection, earnings growth, GDP, in comparative performance to G-7 nations or peculiar others such as Britain and Germany the later Greenspan preferred over Japan for number of Banks and the role of American business tied up in Europe.
Review by
Of course the implication is that the houses which are
common sense real estate, or for other reasons suitable for converting money
from shadow Banking or Moon Walking (hot money) to real money receives the high
exposure which is capital investment with future rewards or not necessarily
discounting of flows through present value and the White noise of popularity.
It did not matter by the argument that the
We would interject that the house prices simply became hot
for nothing in the 2000s, and the reasons for the upsize in housing prices were
not visible to the greater public and since the reason were not obvious, the
heading North of the Stocks could have only suggested an ‘irrational
exuberance’ and perhaps nothing more.
Lack of formal or rational reason for the spike in houses
may have propelled American based banks particularly JP Morgan, Goldman Sachs,
Lehman Brothers, Bear Stearns, etc., to reposition themselves in the housing US
market, and the attention may not have forced other economic areas into a
recess, and widening the gap of the Balance Sheet. The general investment tool
of the 2006 in the discipleship of Modern Portfolio Theory or Efficient Market
Theory had to be done with or simply could not apply to the Feds and other
Power Lenders – for how else could a spike that signaled an inevitable burst
refuse to warn these investment Banks.
The money came, and if they did not come, they were manufactured by the
swell of interest from without.
In rearview to the events of this period, yet an equal
measure of concentration of the total investment entering the US market was not
expedited into other areas saving Housing, few would have mattered in the end
of the growth cycle, fewer ridden to the financial erosions that proved its
point in 2008. For it seems that such cold blanket by the actions of the Feds
and retributive aftermath needs not be spun, even if the FEDS had acted with
due respect to the underlining inflationary pressure of the US market under
George Bush, particularly its hosting of measured rate cuts by view of economic
soft landing.
It would seem that the efforts were primitive, that the
Federal Reserve under Greenspan had already accepted of theory of money supply (M2)
however digital however psychological, may have lacked the instruments to
curtail the exposure of US Banks to such events, and resorted to such steps to
exorcise the devils of inflation without hurting the economy as if the market
charged forward outside the housing numbers, heralds a doomsday, preventive measures
for this scenario is well practiced in all class of economic respect, and in
short, the essence of all the trainings required to invest in the markets and
FINRA certified is proof that a broker and a brokerage would avoid investment
pitfalls.
This sort of risk rest other issues associated with banks
but from the exposures that the Feds are concerned it, the total variances of
the all external and internal shocks to explicates on an indexes’ AR ‘Auto
regression’ and VAR which in spite of the risk and degrees of risk involved in
management, excludes the ‘residential investment’.
The confidence on
these numbers and what they may tend to suggest may be misleading going by the
native reaction of a Central Bank or our Federal Reserve whose estimates are
pretty much reduced to the rate of return of financial institution or banking
receipts (bank stocks), and will point to the origins of debt or debt ceiling
(rate of debt) as systematic definitions of a Central Bank or Federal
Reserve.
It would not therefore be a high standard in arguing that Investment
Banks were not inexperienced in dealing with problems of capacity and over-investment
leading to 2008, or lacked the expertise necessary for performing the least functions
of the public investment - Short or Long -, saving perhaps, the backroom
psychology that it will paper out in the end.
At the end - if there
was such an end - it matters that a greater share of blames is shouldered by
the general public who were responsible for their own investment leading up to
2006. Else would have suffered his or her finances to be compromised from
narrowing attention on one spectrum of a market from a general or sorted
investment portfolio.
Such outcomes has no defenses saving that of human element…
but was consciously ignored as pursuit of risk, which Greenspan believes was
human nature hence the cautionary entailment of logic that the trainings then
and now is no consequences, for that the Federal Reserve with measure of the blames.
The role of International Banks in US is any and one factor
– with or without respect to Gold – the permeating of US Markets would not have
mattered, it is from the combined market forces of U.S stock market and the
European, or what they call Archipelago, that majority of the short falls in
forecast seem to play into the world markets in spite of the separation of the
numbers.
By the 2006, the market were showing signs that it could not
be contained, that the general expectations is that the failure of the
government to erase some of the problems of the bubbles through tightening
financial instrument such as the FED rate was a burst day scenario. Although
the alleged strategic soft landing of the market did not expose to wage problem
of fixed income, investment was largely in one major area.
From the point of view of the 2008 incident where all the
fine points about Economic prediction and modern portfolio theory of financing
which essentially proved its limits in forecasting burst in the U.S economy is
played out, it is accurate to suggest that the book is 3 stars of 5 and
possible an additional ½, reduced from 4 star for insufficiency of real life
example such as Detroit, where the impact of COCO is felt with resolve on
credit and savings as essentially out of the question for debts that fell well
below a Threshold.
The Contingent Convertible (COCO) with sufficient respect to
Debt to equity is styled to depart from debt and convert equity, whose official
point should not be exceeded, or what Greenspan called a debt ‘threshold’ when
breached should revert to actions on the Collateral property or revert to
extraordinary measures.
This point equally count against Greenspan, for by the huge
Gaps in the investment Portfolios of many overnight lending Banks in 2006 and
after, were generally compromised long before the full extent of exposure went
public. That from facts that a burst could have arrived too soon, even in the
third tier efficient market, there was more than sufficient shreds of evidence
of unequal growth in the stock market, a disequilibrium that need not migrate
to the point of mathematical indicia given the ‘irrational exuberance’ of one
ends of the Market, the Housing Boom.
This breach of Debt stories usually force an action from all
sides of Party, with respect to the collateral arrangement, whereas the bigger
lenders are said to apply a control of money supply through emphasis on
Collateral, an exercise American economist migrate to Savings as the
counterweight for Austrian School one or all under Von Mises and Frederick
Hayek.
Counter Party economics resolutions of Schumpeter is still
popular in Boston, but the symmetrical and asymmetrical (asymptotic) price
resolution through technology replacement is closer to Keynes than Mises,
largely for the quantity of Credit but the momentum of Keynes aggregate
spending and demand theorem does not support savings in Shorts, would also
betray the point of micro-disequilibrium which reverts to savings and saving to
inflation and rates.
Therefore it seems natural that firms should convert debt
into equity, unless in terms of future money as with the US, that credit in the
forms of arbitrary repayment history or in terms of income would not have met
the demands of a US economy, will itself the economy a false economy – so also
Securities and overnight lending, in real time, revert to the near measure of
US currency to Gold (highest collateral) and a diminishing the impact of
Greenbacks since 71.
This is pretty much the way most banks with enough foreign
exposure operate, and it has a lot of problems associated with it. Why the COCO
is not without force, we are concerned with why it made it to the book where it
not to shine light on COCO consequences using a common place and real life example,
for instance in Detroit or in larger framework such as Freddie Mac and Fannie
Mae and HUD, where in another instance such as New York, Banks equally engage
in extreme of insuring the loss of equity through Debt.
Greenspan argues that U.S economy consists of Index and
graphs which allow independent Economic sources affiliated with the U.S
Government to make financial decision and forecast the economic features of the
government. He argued in his book that the process started as Ways and Means to
end the Economic Crisis (Bank Crisis) that by the 1930’s they were at least two
principle groups of economic measurements available in USA.
One such is the measurement based on Cycles which he argued
may go as far back as the period when the available of Agricultural Produce
such as Wheat was depended on Weather conditions, and for that Weather experts
–not as reliable as those in recent times – made forecast based on the year and
the Weather conditions at a given time running mainly the course of a
Season.
With the advent of Rail Roads, the loading factor with
respect to production replaced the old Horse and Carriage, the frightening
speed of delivery and size almost insured business success and it in effect
location along the business route applause for business credit.
Greenspan mentioned that, “Railroad expansion and the
Homestead Act During and After the Civil war, opened up the Great Plains to a
massive migration that led more than doubling of Wheat production. Steel
production, the backbone of American Industrial advance in the quarter of the
nineteenth century was propelled forward by the invention of the Bessemer
furnace (1856) and the discovery in 1806 of iron ore in Minnesota’s Mesabi
Range. Northern Michigan’s canal locks at Sault St. Marie, which opened in 1855
and linked Lake Superior and Lake Haron, enabled Mesabi ore to be shipped to
the burgeoning steel industry of the Midwest, and channeled a substantial part
of national grain output through the Erie Canal and to the populous East
Coast.”, is a way to introduce the changes that new forms of production gave
rise, to dissect that saving the accumulated incidents of the Rail Road
Recovery Act in 1902 – which was the first of the Recovery Acts in the 20th
century, it would seem to suggest that Steel production as a measure of
probable demands of labor or productive course of the Rail Roads or vice versa,
was by the end of the 20th, the determinant factor in detailing out
the production of Wheat or other similar produce, that construction of Rail
Roads detailed other avenues of Agricultural estimate, some of which clearly
affected the behaviors of consumers towards the periodic prices and seasonal
price lags, whereas these consumers rationed out these quantity of Wheat with
bushels with the point of realizing profits from Seasonal Agricultural and
aggregate demands.
New York for practical points of heavy investment in the
1920’s was excluded from what was happening in the rest of the country, and the
Bank’s Weekly clearing or what they called Letters, reflected new concerns in
the Country and hence aided investors comfortable with long or short term
investment. By the end of the 1920’s,
and beginning in 1919, the Federal Reserve began to keep an account of its
graphs and fluctuations, and in 1920, the National Bureau of Economic Research
was founded largely to entertain help the market and the country understand the
varying degrees of their actions. Its First Director was a Wesley Mitchell who
along with Arthurs Burns compounded the book on Business Cycles.
For Alan Greenspan the role of Arthur Burns in US market and
the working formation of the Federal Reserve is largely unknown saving for the
removal of US currency from gold standard, based in part on Fischer Black’s
citation but coincidental to formative inception of the role of the Feds in
helping to stabilize the markets through M1 and M2 monetary injection to banks,
particularly M2 (after Friedman and Schwartz) - but proclaims that the 40 years
of his friendship with him, that he more than influenced his Chairmanship
aptitude.
But then, the country did not expect the depression of the
1929 to have lasted that long, its longevity was diagnosed with the paucity of
objective indexing for market forecast. The National Index was measure of
information or activity, represents the flow (momentum) during trading hours
but then replaces the transaction receipt once the information or transaction
is confirmed as Stock Index (Stochastic).
But this stock of index was not itself totally dependent on
Business Cycles, it affected Business Cycles on short waves and it shows the
range and the graphs over a period of time and a day, reflect a trend which is
now behaviors capable of mitigating the Seasonal expectation; all day time
trading are dependent of the gaps between history of a price or a stock, which
changes to reflect information such as capital and company prospects.
The man responsible for putting together a larger framework
of measuring the range of operational dynamics of the United States was a
certain Simon Kuznet, though sponsored by NBER, worked for the most part
independently. In fact that the understudied implications of Welfare in America
was gifted new meaning from the supposed utility assumption of the state and
city budgets and the Taxes was a different matter. The relevant association of
Kuznet to GNP is derived from the comparative association of the remarkable
Business Cycles along with the Government earnings and spending.
Greenspan argued that from all the final computations of the
market which mostly took place in his reign and the fulfilling of a certain
Graham Moore predictions of the role of computers in the modern banking and
financing on one hand and marketing on the other hand, it is not without reason
that Modern Portfolio theory took on a new meaning during the Internet and
adequate information Age. He cited that a record of these graphs and movements
reflect a terrible similarity. Yet no particular decade is suitable for any
economic decade in the history of these United States; one whole year cannot
explain the other, economic forecast is relative largely for what he believes
to be human factor in decision making.
In essence, the
convenience of Maps and Territories for economic forecast of all types should
only be useful to a certain degree, does not betray that it heralds some
ultimate ends. In vein of 2008, it is not a misnomer, since the impact on rate
of returns was European currency migration into US market. The sheer size of
the money put on funk on the real estate, and there was no formal estimator
saving the human nature.
Such objective opinion on the use of indicators usually cast
the wrong aspersion on a system that is based on indexes which represents an
attempt on Equilibrium from all corners and tiers of the World Market, and at
times, those who promote arguments on the nature of Rational Economics, its
Time series, its forecast and limits are usually facing a lot of dislocation or
dissociation. For slippery books such as The Maps and The Territories, it will
hardly be surprising that the schools of interest in money and psychology of
advance economics and financial behaviors will be expected to take their cue on
either side of the arguments. Rationality which in many ways than one is
nothing else than forecast based on Business cycles and repeat seasons which is
about 8% increase in sales yet differ by small fraction year on year. In all aspects of economic certainty, are
expected to be opponents of Irrationality in market.
But this common sense approach is for the sake of argument settled
along the Intermediate Path of two possibilities, and it is either logical or
economical to cite that during Greenspan’s Chairmanship several signs were
already in effect hot comb, the CPI Index was high in Market Sensitivity, that
manufacturing applause from value from product took a low measure of market
reaction. During Greenspan, Retail Market Index overtook the Index for Durable
Goods which demonstrated the leniency of the former Chairman towards Welfare
and Consumptive economy.
In the past, Chicago School and Mercantile exchange moved
the interest facts of American Industries to the general public and at least up
to 1970, University of Chicago placed enormous faith on Studies of US
Industries which proved a lightning rod for Investment. But this Index with
respect to Industries and to some degree manufacturing, and with respect to Housing
certificates and permits as important Indexes proved a low probative market
sensitivity proved under Greenspan. It may seem that attention to trade
replaced the investment psychology of production and the transition from Small
Businesses to Mid Cap companies.
Rehearsed from behind, we may now interpret Greenspan’s use
of the word Irrationality as derived
from poverty of US financial literacy within the operational risk of the market
and the individual or collective investor, a statement which was respect Alfred
Marshal’s reduction of Irrationality
to the demand driven economy of lower class – usually the larger in number, but
not applied to Robert Shilling’s ‘Irrational exuberance’ which is a reflection
of the market structure and dissimilar from the human and devised elements of
consumptive behavior which Greenspan and Marshall may have alluded. But in
kindly light of Greenspan’s Age of Turbulence, Welfare from Greenspan position,
may supplant Alfred Marshall’s class complex.
How well does Government spending resolve the most promising
and telling problems faced by the most with the least? It is not the role of
the Fed to measure the left and right of Government Spending, it their role to
respond to significant Economic indicators, device plans through the tools
available to them and from all signs and signals, it applause the case that the
Feds is limited in its ability given the throes of Banks and Insurance
Companies that day by day determine the future of the Markets. This is probably
Rationalistic, since advances in Seasons and Cycles are only relatively
estimable.
We begin by adding that a shift from Rational Economics and
expectations of the Market is not saved by the spin off from the center which
is called Irrationality, rather, a common place argument that Irrationality in
market is as constant a factor as Greenspan argues, in indicating the left and
right of the market, is arrived by behaviors on the graphs. Therefore the
reasons for actions in human behaviors cannot be justified at any time, and it
is then Rationalistic to compare the supposing Irrational with as correlation
to Rational. Rational Economies is not the center and represents no Sympletic
and not true that the econometrics are Rationalistic side of the market, or is
it the best or necessarily have the best BLUE for forecast at any time. Bank
Stocks and SNL may only make up 20% of that crazy to expect world markets to
behave according to plan
The presence of in explicated economic growth or Wealth or
profit for instance would not be expected to conform to any statistics or any
season or any cycle in Business largely, for the fact that something like a
growth in houses and real estate goes beyond the primal numbers to a degree
that a sub-optimal of a long term reversal that is so well factored into the
markets is considered self-repairing, similar to Walras’ General Equilibrium.
The governing dynamics (consumptive expectation) of any market is subject to
new forms of sensitive changes. It is a leading argument that housing recovery
as an effective economic indicator is sensitive to economic recovery and
household management. It also affirms the health of the market, any market, for
the sake of expenses; Housing Recovery sensitive to the market as a practical measure
of investors’ confidence and an effective economic indicator.
It does (does mean) not mean that efforts to abbreviate the
depletion of US manufacturing Jobs was not factored into the dooms day
scenario, but exactly how well the unemployment numbers correlated the size of
turnovers and amount of Securitization in the massive and bullish 2000s would
not have easily, provides a summary of the lapses in current economic
indicators or forecast instrument which Greenspan merely highlighted.
It does not mean that the portfolio theory for instance
suffers in quality; it mirrors the demands of a new form of economic
expectations which he, Greenspan, labored in the book to put in clear and
concise themes, with emphasis on human financial behaviors. Rational and
Irrational Economies is not a study that can fit into any text book, it is a
world increasingly polarized on the expectations attached to any market
especially in context of two stimuli; one of which is the period of expansion
and the period of the contraction.
The latter is revised and advertised as a period in the
history of money management which some continue from the standpoint of some
benighted Austrian Money people, to be an inevitability from a general high
period of robust and loose credit expansionary market policies. Of course, this
diet is bad to the bone given the misleading inceptive in real time which both
schools employ as a way to absorb any market this boom and burst.
Although we expected Greenspan to place more faith on the
argument of Savings which seem at least Austrian, we find that it contradicts
his whole existence wherefore he slovenly discusses the paradigm with aplomb
and with Lorelei of positivist economist.
Yet his seamless web of interactive discourses on the relevancy of
savings manufactures a separate reason for the lack of formal capacity of the
Maps and graphs associated with seasons to forecast an economic future.
It is not from the Greenspan’s ‘The Map and the Territory’
that we learn the great expectation involved with Country Wide and it’s
dislocating relational to Bear Stearns. It is from Andrew Sorkin’s ‘Too Big to
Fail’ (2009) that we have a rearview into the collapsing world of Country Wide.
In fact Sorkin at some point began to point to Country Wide as the root of the
problems with the 2008 kamikaze. The show which began somewhere in March 2008,
concerned Bear Stearns but the connection between Investment Banks and Commercial banks has been finalized that efficient market hypothesis which corresponds to (M2) propounded by previous others including Fisher Black and Harry Markowitz has long since eroded, or at least since 1999, experienced a shift.
Conclusion
It is a shift that began its journey from the dumping of
Gold as a standard for US currency 1971, a point that approaches the problems
of CAPM from the participation of International currencies in U.S market. It
amounts to commentary to add that CAPM safe-net is applause by the
corresponding relational between currencies moving to US from International
markets at 200 percent profits to nearly twice the amount when it moves from
U.S into foreign markets. If the Feds still use Cross Section Dispersion, of
bank Stock as estimate, Bank level of return on CAPM regression and daily
yields over the S&P 500 Index and estimate, usually on U.S based companies
such as S&P 500 Index suing SNL for Bank Stocks, it prompts a 12 month
calendar clearing a comparison with a 2 year Treasury Notes (Merrill Lynch). We
push the daily calculation from a month to month basis, and calculate the
deviation from previous records (standard deviation), and the rest is easy for
instance the overnight lending or LIBOR would be reduced to a three months with
respect to 12 Bank stock regression and 2 year notes. It is a variance of 12
months measured from daily monitor or estimator with specialization of each
Bank for a given month.
The problems of the United States with regards to the Shadow
banking is shocking of its system by the negative externalities from Europe or
from any regional economic environment such as Asia. Money laundry is one area
the Fed Chairman did not torch on. The size of the wealth that is available in
the US from foreign littoral impacts the local economy, that shadow banking
alters the Internal Rate of return by the sheer size that a spike in Housing in
disequilibrium to …the estimate of US Banks Stocks and Treasury Notes, usually
eliminates the problems of unforeseen shocks to system and is hence a
Univariate applicable model, a Vector Auto Regression (VAR) that mitigates
Internal Rates without the housing numbers. Yet the problem was a credit problem is
derived from housing numbers widening on the reasons why there was reluctance
to do much yet signifying that the problems was not unknown.
But if the housing numbers now experience more than normal excitation
due to foreign or International Hot Money for short peculating the Residential numbers separately
or independent of Feds Index. The 2000s economic boom in measured light was not
a Boom, it was uneven and a robust attention on one key area of the market.
2008 was also a housing burst that major Investment Banks with more than one
crop Portfolio.
Ordinarily, this safe-net explains why Japanese interest
rate is usually lower than US and US than Europe, but from this arrangement and
its relevance to overnight lending, we may fail to discover in the speeches and
statements of Greenspan as Chairman in the 2000s that points to the money
function of Euro to Dollars and the boom of Shadow Banking in US as A danger to
Economic equilibrium, and an attack on the Internal Rate of Return reflecting
the measure of general equilibrium, and/or disequilibrium which is not the same
as Irrationality (unknown consumptive behaviors – usually a transition from
Long Wave to Short Wave and its Variance which are the shocks to the market, or
in advance money Fed Index over GDP) in spite of human financial behaviors
which impacts (Graphs, Cycles) where the word Maps is here a macabre for these
graphs and movement on the graphs and therefore Rational with due respect to the
calculus and algebraic matrices of seasons and cycles and estimators, whereas
the irrationality as a breakpoint, reflects movements on a graph reduced to a
1% by Greenspan – though not equal to 1 index. Or that the foreign financial
machination was practically removing the estimator from the U.S Real
Estate.
Shadow Banking in U.S is not just a European Banking
disease; it is a very Asian in concept. If Greenspan is for instance blamed for
short falls in the oversight, it is to be said that the source of his
‘irrational exuberance’ which Robert Shilling mentioned without inciting
Europe, is clearly a divide between his oversight of the cause of the
disequilibrium of US market and the emphasis on housing as an economic
indicator, or that his faith in the trusted Fed’s tools and application did not
and the large percentage of European banks involved in American Real Estate
industry and the impact of Euro has not received adequate press, especially the
roles of some its major Investment Banks which in turn acquired by European
Corporations.
The Financial Crisis Inquiry Report of 2011 did mention the
impact of Euro on US housing, which is a spent force in the new book by
Greenspan, the boom in the 2000s was only a housing bubble.
Greenspan argues that in 2006 nearly everyone in the market was
using the basic concepts of Modern Portfolio Theory, which Myron Sholes, Harry
Markowitz, Fisher Black, Franco Modigliani, along the lines of Paul Samuelson
made popular. That it was also observed that the theory had limited
applications, and was not unsuspected to measure a fraction of the market. The
distribution of risk and losses is not governed by Micro or Macroeconomics,
equilibrium or disequilibrium, it is a product of one’s willingness to accept
that certain movements in the market cannot be justified and therefore caution
is advised. But as Greenspan shares from his book, excitation from robust gains
and large increases in numbers is not easy to manage hence the Institutions are
also advised.
