To come to grips with our current economic problems we should first consider risk and whether real risk is being exposed and discussed in an open and transparent fashion. If it is, we can begin a public dialogue on solutions. If it is not, we need to ask the question why not?

When risk is masked, cloaked, hidden or mis-stated then you are going to formulate poor public policy. By masking risk we will consequentially become delusional about the the associated cost, consequence and elevating level of that risk.

Risk and cost are being hidden from us through unprecedented Monetary Malpractice, which by artificially lowering interest rates for a prolonged period, is mispricing risk, fostering malinvestment and allowing the economy to become delusional and dysfunctional through moral hazard and unintended consequences.

Financial Repression, as a central reason for hiding risk, is forcing the public to take on hidden and elevated risk in pursuit of ever shrinking yields.

Unfortunately the public is acting out what Charles Hugh Smith refers to as the "Spoiled Teenager Syndrome" within what he describes as the "Parasitic Financial Sector". A sector that now commands over 30% of corporate profits, 44% of the equity markets and 5.2% of GDP. A sector where the neo-liberal supporters of the central state, knowingly or unwittingly, both enable and enforce its predatory practices.

This sector has fostered the "Spoiled Teenager Syndrome" and is creating two fundamental problems. First it is not a productive use of capital and is bleeding productive capital from the US economy. Secondly, it is capturing the best and brightest in the workforce. As a leading Chinese government economist recently observed:

"In America the best and brightest are not creating products that people around the world want, but rather are engaged in trying to pick the pocket of others"


As humans we prefer illusion to the risk of adaptation. Much has been written about cognitive biases and errors, for example Confirmation Bias (seeking out data that supports our positions). Other well-known cognitive biases include:

Positive expectation bias

Neglecting probability

Post-purchase rationalization

Observational selection bias

Bandwagon bias

Projection bias (everyone is like us)

Anchoring effect (is it really 20% off, or is "20% off" the retail price?)

These fail to describe the tremendous appeal of delusion. Remaining in a delusional state feels safer than risking the disruptive consequences of adaptation, innovation and change. So we cling to delusion as the "safer bet." But decisions based on illusion necessarily yield catastrophic consequences.

Politicians understand that people react negatively to unwelcome realities, and so they sustain a state of delusion with short-term politically expedient "kick the can down the road" policies and continual reassurances that the increasingly unstable system is permanently stable.


False Entitlement Program Promises,

False Expectations of the sustainability of the current standard of living.

False Employment and Career Expectations,

False Expectations of the value of deficit spending and money expansion,

False Beliefs in the levels of equality and opportunity,

False Beliefs in the motivations and success of government public policy initiatives.

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commented 2013-01-31 22:52:35 -0500 · Flag
Delroi P. writes:

This is a f4rking calamity, the multi-culti grifter at the helm, driving the USS uncle sam into the shoals at warp speed.

Let’s see…4q print just came in, and it reflects gdp CONTRACTION (if you consider our $1.3tr annual deficit, this means we borrowed a theoretical $300bn+
in 4q and showed a decline… thanks ben, thanks nancy, thanks maxine).

Our foreign policy? Progressing on plan, with democracy and a renewed respect sprouting all over the god forsaken region… except for egypt, iran, iraq, lebanon, syria, libya, afghanistan, yemen, qatar, kuwait and jordan.

But “what difference does it make” that a rank sophomoric lie denying the abject failure of our policy was promulgated by the white house, embraced by the consensus media (-ie- democratic party audio-visual dept.), covering up the abandonment of an ambassador and three special ops. guards left to die at the hands of a 7th-century extremist horde, all to advance a mirage-narrative for nov.6 benefits, and the ILLITERATE public accepted it?

So now the step-n-fetch-its at the CBO awake from their politicized stupor to inveigh on the obvious: that a broken federal budget will be broken(er)?

Have you anything left but CONTEMPT for the lumpen electoriat?
commented 2013-01-31 22:50:36 -0500 · Flag
Ed writes:

The hidden costs of Obamacare beginning to be discovered…. (4ht largest non-discretionary program to be added to our already out of balance federal spending frenzy). Ed

In the original estimates, CBO projected that 19 million residents would receive subsidies to the tune of $450 billion in the first ten years. (the Joint Committee on Taxation estimated 14 million by 2020.) Now CBO estimates that the subsidies will cost $809 billion between 2013 and 2022 (the $645 billion estimate in a January 2012 report increased by $164 billion after the SCOTUS ruling), costing well over $137 billion per year by 2021, becoming the 4th largest non-discretionary program after Social Security, Medicare and Medicaid. As Douglas Holtz-Eakin and Cameron Smith have estimated, in a now outdated paper from 2010, given the growing estimates coming out of CBO, upwards of an additional 38 million individuals could access subsidies because it makes financial sense for companies to dump.