naked capitalism

Richard Kline says:

Buiter: “Liquidity is not a thing – not something wufting around in the ether. Liquidity is a multi-demensional property of assets. The degree of liquidity of an asset (real or financial) depends on (a) the speed with which it can be sold (b) the transactions costs incurred in a sale (as measured, say, by the bid-ask spread) and (c) the spread between the realised price of the security and its fair or fundamental value. These three characteristics are of course not independent.” That is an excellent way to express the capacity, as a multi-dimensionl matrix relationship. And just as in this case of ‘liquidity’ problems in 2007 and 2008, it does not take a collapse in _all_ dimensions to radicially change the state of the matrix itself. If one collapses just one dimension—say trust—the dimensionality of an insturment’s ‘liquidity’ can collapse as far as the interaction space in which it is represented is concerned.

This point which Buiter makes in this instance is something I’ve pondered for long with regard to other issues. We still commonly discuss things like liquidity, price, balance of power, industrial output and the like as if they are ‘entities,’ that is low-dimensional or single-dimensional volumes or states. But in fact most capacities are multi-dimensional in their state. This is one reason why things can seem to change suddenly or via radical trajectories, leaving us puzzled, because even small changes in non-obvious variables can make massive changes in the dimensional state of presumed to be ‘robustly solid’ states of being. And moreover, this complex dimensionality is, to my mind, far more prevalent than the presumed default robust unitary states most envision as determinative in the world around them.

If life was different (and first of all twice as long), I’d love to write a book on this, but given what I’ve got to do now I’m laying no money on my getting to that text. But if somebody else’d write it, I’d read it tomorrow.

Skippy says:

That they ate them selves out of house and home. That they over extended them selves during the good times and used improved technology to put off small climatic bad times till it could not be corrected for. Then the ruling classes with the help of their enablers *the priests* went on a ritual sacrifice killing spree using the gods are not happy ploy *see pretend and extend aka HTM etc*.

This worked for a good time as one long drought period ended before the population got wise, but with in a generation an other drought struck and having not fully recovered from the prior one *stressed* or changed their ways of old felt the affects even greater.

The same ploy was used by the ruling classes as it had worked before, but the masses soon realized the truth of the matter and struck back before being wiped out feeding the gods. So they had a BBQ of the ruling class and their enablers before splitting up into small groups and looking for a better life…key music to JAWS…untill the Spanish came to Finnish off the job their rulers could not…diffrent god same result, En Fin.

Skippy…climate models work great for the past as the data input comes from forensic samples, where the future is not as accurate, but with in reasonable probability and getting better all the time, especially when compared to economics lol.