Tuesday, October 8, 2013

Rehypothecated Realities

Our world has become a place where massive wealth can be acquired through wagers on outcomes of alternate realities. In one reality, a large corporation is extremely profitable. In another it goes bankrupt. Sometimes a rumor, and a little leverage is all it takes.

If one reality plays out, one counterparty claims massive wealth. If the opposite comes true, the opposing counterparty claims equivalent massive wealth, based on certain basis spreads. This is a simplification of course, but the point is broad enough.

If the counterparties are systemically important banks, neither stands to lose any near equivalent of wealth by engaging in this activity, only to gain. It is risk free, not only in terms of the winning counterparty's stake, but in terms of the losing counterparty's loss mitigation, if a bail-out or bail-in is systemically required.

So while the talk of corporations gaining HUGE profits by outsourcing labor is all the rage, do not be fooled into thinking that these working class PIKERS could ever hold a match to the 1%.

The 1% produce nothing but slips of paper, through their banks, claiming wealth in payment for wagers of outcomes that they have expertly manipulated against financial "systems" which have more wealth than street smarts.

It has always been this way, but two things have changed.

The debt that fuels this self-perpetuating state of affairs is at a much higher level in it's exponential growth than ever before (and continues rising exponentially) and (2) the systems that automatically place these bets are on steroids.

So if you ever wonder why there are so many competing versions of alternate realities flying about in our electronic "info-spheres" like CNN, MSNBC, Huffington Post, ZERO HEDGE, FOX News, The POST, the TIMES and every other flavor or "brand" of reality created for the many left to right oriented personality types that create this rehypothecated world of thoughts and opinions .... it is because there is wealth to be made in playing them one against another.

Your reality against mine. Now, put your money where your mind is.

Roacheforque maintains that this state of affairs, like it or not, and despite many claims to the contrary, is indefinately sustainable. But ... is it desirable in its inevitable outcome - even by those who depend on its favors, or the tremendous advantages capital derives from it?

Perhaps that would depend upon your definition of "capital" ... which in turn depends upon which "reality" your capital is in.


  1. "Roacheforque maintains that this state of affairs, like it or not, and despite many claims to the contrary, is indefinately sustainable."

    Good God, I hope you aren't right about that! I've come to count on the eventual folding of the system, because for an honest person to truly get ahead in the current fixed system, one needs connections I don't have, or luck that has always eluded me.

    Hard work ensures that you will have more hard work, if you have work at all. The new normal is, sadly, one of diminished opportunity.

    Unless, of course, you are lucky enough to have the right connections. In that case, regardless of how fat and stupid you are, the future is so bright, you betta wear shades.


    BTW: Props on the new digs.

  2. Ahhh, noble BIMBY, welcome back. It is good to know that certain Giants would "end this thing" by desire as opposed to design, or some necessity. You do not need to know them, only to know their will.
    Hope you liked the change of scenery.