When the Put Comes to Call

Calling the Options Put to the Futures

If financials operate to buy (call) what is being sold (put) in the futures, what are the options?

According to former secretary, Geithner, “the big risk” dictates the policy options. He describes an obtaining risk ontology that has an existential determination. The ontology identifies who we are and what we have to do to manage a catastrophic risk proportion when it comes to call. It tests, he says, the capacity to “reduce our vulnerability” under stress.

A mainstream economist, and a likely treasury secretary, intends to discount what is put to the call. The natural identity of managing macro risk is more about what we are buying, not selling. Micro and macro risks do not align so “the risk” has to be forced into alignment.

Geithner describes how a deflationary maelstrom occurs when there is a run on the banks. Although it is not in the micro interest of each depositor to make the run, we run with the herd to avoid the stampede in a macro proportion. In other words, we cause the risk we are trying to avoid, and to avoid that, we naturally rely on regulatory authority.

Conduced in private, remembering that the capital is privately owned and free to enterprise, “We” rely on a social contract to manage its consolidated, risk proportion. Operating with the force and legitimacy of public authority, all be it convected from and into private hands, the contract intends, naturally, to save us from the tendency to destroy ourselves out of self-interest.

The options (the probabilities) are limited and analysts refer to this as “convection flow.”

(Articles by griffithlighton on “convection flow and probability” in a political-economic “risk dimension” can be found on the World Wide Web.)

In 2007, mergers rose to about $2 trillion. It has fallen to about half that since. Over that same space, the slope of consumer debt is inverse to the declining slope of M&A. So, instead of providing liquidity for organic growth (which raises equity to debt) it has been provided for inorganic growth (raising debt to equity).

When industry and markets are merged, more debt is needed (put) to demand (call) the supply. What, supposedly, we want to grow is drowning in debt.

Remember that bailing out a sinking ship drowning in debt is the first thing Alexander Hamilton did as America’s first treasury secretary. When he became secretary, the financial sector was overleveraged, just like in 2007. Yielding to the intendency, Hamilton bailed it out.

Geithner says, when the weather gets bad it’s up to the captains of industry and finance to get the ship to shore.

When economic crises occur, there is no conspiracy to bias the outcome, Geithner argues. It just happens to be that the people who wrecked it are the best, and the brightest, to fix it. At the same time, however, the mainstream also argues that the captains did not know, or understand the risk; but no, that’s a hard put to call when the ship is steered into bad weather to test the stress.

The exculpation not only fails the test, it admits the “natural identity” of the risk to be avoided.

Being put at risk to the point of failure is not a hard call to make.

Pushing something till it fails does not require a whole lot of intelligence. Then, thinking it quite clever, to argue nature convects the risk, and pulls us in like a cyclone that moves where it may, is but to identify the risk to be avoided!

For the mainstream, testing the limit is the stress of our natural existence. The identity of this “objective reality” is, however, a meta-logical existence (an addjective reality) that is really never now.

Like the weather, we can see a persistent pattern of recurrent risk, but despite its ontological attribution, unlike the weather, the risk is “being” convected–yielding to the intention of an ontological existence.

While technicians are apt to rely on treasury yields to indicate what direction the wind blows, they don’t agree on what direction it is blowing. With this kind of circular, convection flow (with equity interest rising against low interest rate pressure), it does not appear our economic ship has been shored up. Instead, revolving around capital that is too consolidated, it likely means the ship is sailing back to the shoals and not to shore, convecting the risk to be avoided.

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About griffithlighton

musician-composer, artist, writer, philosopher and political economist (M.A.)
This entry was posted in Political-Economy and Philosophy and tagged , , . Bookmark the permalink.

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