Finance is the mechanism by which consumption is deferred from the present to the future via savings. Alternatively, consumption is transferred from the future to the present, via debt. In the context of allowing accumulated wealth to be transformed into productive capital assets via investment, it's an extremely useful tool. It securitizes future cash flows against a present value investment.
To the extent it allows current generations to liquidate future generations for consumption, it's a total fucking disaster. And in the context of making ultra-cheap money available to buy revenueless IPOs, so Etraders can bask in the momentary joy of fake wealth, it becomes even more asinine. And reflects upon the abject lack of values of a debased Idiocracy.
I just read another fantasy story about "Black Swans", "fat fails", and "outlier events". Fancy finance bullshit to explain something that a Third grader already knows. Clever dunces telling us how smart they are for predicting the inevitable. "The Invisible Vulnerability of Markets":
"Critical points help explain our perpetual surprise at fat-tail events"
I have no idea what the hell that means, and I never want to know...This, below, was a "fat tail" event. Because Chinese house wives using 10x margin to buy worthless stocks when GDP is at a 25 year low, had "unpredictable" results, all of which had a shelf-life at the top, measured in hours. Holy fuck, we're doomed.
ZH: July 18, 2015
Chinese Stock Rout Rocks [Already Falling] Property Market
The "invisible vulnerability" of Netflix going parabolic with the economy still Missing In Asia. Critical greed and stupidity completely explains our perpetual surprise at obvious insanity...
"That looked like fun, but I bet we can throw away more money here..."
The "Black Swan" article should be titled:
"The Total Fucking Retard's Guide To Borrowing Too Much Money."
And it would be one paragraph:
"When you spend too much money, you have to pay it back. If you pay it back with more borrowed money, then that's a Ponzi scheme, leading to an 'outlier event' known as bankruptcy. If you borrow to buy stocks that are fluctuating 10% per day, you will receive an 'outlier event' known as a margin call, likely within hours."
With 100% probability. No finance degree required.
2008 bought time for everyone to figure out how dumb these tools at the top really are, BEFORE they had a chance to generate the inevitable final collapse. And time to prepare accordingly.
The ones who didn't get the memo, are already toast.
That delayed "revelation" will be a brown swan event. Change of underwear required.
