China Syndrome, Part the Fourth

Once again, reporting on the ground belies some/much of what quants think, or at least say, about the China situation. Many wear rose-colored glasses. A large part of the problem is that Beijing is well known to make up macro-economic data. While a fine practice from a political point of view, it leaves decision makers (Chinese citizens, foreigners, and Chinese bureaucrats) in the dark.

More reporting today: zombie factories. Even "60 Minutes" has found the effort to report on ghost towns. But... since so much of Chinese GDP is funneled into "investment", much of it non-producing by the bye, it matters materially what's going on with those investments.

Basically, nothing. What's even more amusing is this:

Like many industrial cities across China, Changzhi, which expanded aggressively during the country's long investment boom, has too many factories and too little demand. That excess capacity, many economists indicate, will have to be eliminated for the Chinese economy to return to healthy growth.

[my emphasis]

One might wonder how that logic is supposed to work? Must be some Austrian economists. The point, of course, is that Beijing has used its fiat over labor to flummox the West out of being productive. This whole, "Beijing is finally steering the economy to domestic consumption" is baloney. Just as the Austrians have provided the Republicans with the excuse for income concentration, so to in Beijing. As it ever was, "It's the distribution, stupid". Neither Beijing nor the RNC want to hear it.

Tom Cruise Was Right. Damn!

I'm among those who don't watch daytime TeeVee, save for late afternoon ESPN (though that may stop now that they've canned Olbermann), so I didn't see Tom jump up and down and scream and yell on Oprah's show, and, no I haven't watched the YouTube feed either. Just seen the clips on the news. Doesn't mean all that much to me.

What does matter is Tom's indoctrination against all things psych-. I have some kinship on that point. R-bloggers is awash in posts dealing with marketing and sales schemes built on mind-bending adverts. Bah. Doesn't seem quite fair to manipulate folks into buying worthless widgets through emotional stratagems. Not everybody agrees, since the Big Data crowd make lots of money doing so.

Well, may be it's all a case of an emperor and his new clothes. It's worth noting that many of the methods widely used in quants and stats came the psych- fields.

Now, a painstaking yearslong effort to reproduce 100 studies published in three leading psychology journals has found that more than half of the findings did not hold up when retested.

Could it be that all that commercially driven quant is equally frail? Even supposedly hard science is susceptible:

Stefano Bertuzzi, the executive director of the American Society for Cell Biology, said that the effort was long overdue, given that biology has some of the same publication biases as psychology. "I call it cartoon biology, where there's this pressure to publish cleaner, simpler results that don't tell the entire story, in all its complexity," Dr. Bertuzzi said.

Now, of course, the psycho-adverts crowd can rebut with, "but we get results, and that's all that counts". But are the results because of your work, or just something in the ether? These quants learned their chops in school, doing just these sorts of studies. If the methods and designs are squishy from the outset, may haps they still are when Mr. Market pays $$$ to conduct the self-same protocol to sell Depends?

Yet More Tyranny

Remember The Tyranny of Average Cost™? It exists just about everywhere in production. One the of major irritants of modern life is "paying" for cable channels "I don't want to watch". Interestingly, ESPN's many channels have been the major benefactors of this bundling.

Today brings a new analysis of Apple garroting the cable networks.

The thesis of the piece is somewhat on point, which I'll dwell on. Of interest is many (most? all?) comments, which boil down to: I only want to pay for the channels I watch. TeeVee a la carte, in other words. For those well off enough to eat in classy restaurants, ones that offer both dinners and a la carte menu, know full well that the a la carte meal is far more expensive, and not always superior to the dinners on offer. Again, The Tyranny of Average Cost™ strikes again. With a la carte TeeVee, in due time only the mega channels/networks will survive, and there goes choice. There exists choice of off-the-mainstream TeeVee because all subscribers subsidize the utility. And, despite what the Masters of the World assert, cable/sat TeeVee is a utility.

The author accurately points out that the "smaller" (read: left wing intellectual) channels can exist because they get more funds from bundling than it is expected they would get from a la carte. The result of either/both of unbundling and disintermediation would make a vewwy, vewwy compelling study and experimental design. Suffice to say that the conservatives would expect to see The Science Channel and its God and Guns hating ilk to die, while the liberals would hope that the God, Guns, and Amphetamine set go away. Given that the country, on the whole, is far more urban and liberal (closeted though it be) than right wing, I suppose that the result would surprise the snake handling set (yes, there are channels, "National Geographic" and "Animal Planet" which display such). No more "Outdoor Channel", too.

Production costs don't diminish with burgeoning numbers of channels. On the other hand, advert dollars are spread thinner, per channel. If one views 1960s TV on the Encore set, for example, one sees cheap production values: backlots and sound stages galore. Today, mostly on site, even if within the TMZ. Is it any wonder that the Golden Age of TeeVee profits fell off the table when cable dispersed from midwest farming towns to the Big City? Split three ways is one thing; split 500 is quite another. All that original programming on cable-only channels would disappear overnight. Well, except for the snake handlers, since they'll do it for cameras gratis.

I'm In Your Debt

You do remember The Joker (Rogoff) and Penguin (Rinehart) of quant econ? What quants and micros never seem to do is get beyond narrow, yet superficial, analytics. All the while spouting such rhetoric as "deep dive", "laser focus", and "it's the Damn Gummint's fault".

What the Right Wing apologists never do is look beyond affirming their agenda, that it's either the Damn Gummint or Little People who pay taxes who are the cause of all that misery.

Every financial crisis, he and his co-author, Carmen M. Reinhart, concluded, stems from the same simple problem: too much debt.

Well, Rogoff is at it again, this time gloating that he got China right long before anybody else. He didn't, really, but did go public early on. Only God knows who was first.

His explanation: too much debt. Yeah, so?

And, of course, that's quite wrong.

...distribution ... of wealth as it is currently produced ... to provide men with buying power equal to the amount of goods and services offered by the nation's economic machinery.

That's a quote from Eccles, which appears in the preamble to some of the versions of these endeavors. Since the quants and micros only care about maximizing profit for a narrow sector, or even just one corporation, the "winner takes all" meme is more to their liking, and never questioned. That "winner takes all" leads to collapse of the whole edifice, is never considered.

What Rogoff, and his ilk, fail to do is ask the question that matters: why is it that consumers turn to debt to pay for their widgets, rather than out of income???? Hmmm????

The Great Recession happened partly because The Giant Pool of Money demanded high-return, low-risk instruments, which the financial services sector was happy to concoct and provide. The problem, of course, was that the 99% couldn't float the needed mortgages with the existing, standard, protocol. So, the protocol was fudged. A lot. But the needed instruments were created.

One of the side effects of artificially inflated house prices was the Home Equity Loan: "use your house to pay for that dream vacation", and such. So, not only were the poor inveigled into McMansions with teaser APRs, but otherwise sensible folks enticed into making the homestead an ATM. And why not? Wages for the 99% have barely budged over the preceding decades, and this provided more cash flow to consumer goods companies. Do you really think they'd say, No? Of course not.

With the increased concentration of both wealth and income over the last three or four decades, money to buy widgets out of pocket for the 99% just isn't there. So, how do corporations shift widgets? Credit (or DEBT as Rogoff has it), of course. The key to The Great Recession was that mortgage companies, then banks who saw their market share dwindle, understood the real issue: monthly payment. Folks don't buy a $100,000 house, they buy a $750/month house. It's the monthly nut that matters. "Look, the initial payment is within your income. In a few years the payment will reset, but then just sell the house at much higher price, if don't strike it rich. You'll actually be better off."

We see the same scam going on now with auto sales. The 84 month car loan (25% of loans in 2014) is the same scheme: keep the monthly payment within protocol. Auto makers can shift higher cost/profit cars, too boot. Good deal for everybody. The amounts, per household, aren't (one hopes, anyway) as troublesome as the subprime mortgages. One hopes.

Nevertheless, a mini-Great Recession will occur with these car loans, if the job market gets soft. All those cars being repo-ed may well cascade through the economy nearly as evilly as the mortgages did. Folks get laid off. Stop paying for the car. Car gets repo-ed. Without wheels, you can't get work. And so on.

But it's all the fault of those greedy 99%, who won't live on the starvation wages corporations deem them worthy of. Eccles can't be denied, forever.

Carnac Predicts, Part the Third

A bit of news crossed the desk, and demonstrates a couple of Carnac's Watch predictions reported here:
- that sensors must needs be in the strap, since the inside of the wrist is where the plumbing is
- the strap is the place for batteries

Two for two. Not bad. Will go for the cycle next game.

Krugman Finally Says It

Some time back, I invented (so far as I know) the phrase "Tyranny of Average Cost"™ to describe the problem faced by capital/fixed cost biased production: in order to make moolah from the investment, one has to shift a lot of widgets at a moderate price or shift just a few at unaffordable price. Apple has, sort of, taken the latter course. Without sufficient demand, the investment never pays off. Without sufficient payoff, investment in physical assets slows, even stops. Economies such as Bermuda exist based on almost wholly fiduciary investment. Some here in the USofA are sore jealous.

Yesterday's missive told the tale of Intel and physical investment. The author of the piece sees superior use of fiduciary capital in finance. The comments, on the whole, argue that Intel (at least) should stay the course of making physical widgets. On the other hand, there is that siren tune of WhatsApp: a handful of guys with PCs getting $19 billion (not really, but it does sound good, doesn't it?). The ROI is outta sight. The problem, of course, is what your Good Mother told you when you were in short pants:

What would the world be like if everybody behaved like you?

Barriers to entry for such Service Economy companies is nil. Which is why WhatsApp got the $19 billion: it was simple extortion. Legal, but extortion nevertheless.

Well Krugman finally says it, almost.

More than a decade ago, Ben Bernanke famously argued that a ballooning U.S. trade deficit was the result, not of domestic factors, but of a "global saving glut": a huge excess of savings over investment in China and other developing nations, driven in part by policy reactions to the Asian crisis of the 1990s, which was flowing to the United States in search of returns. He worried a bit about the fact that the inflow of capital was being channeled, not into business investment, but into housing; obviously he should have worried much more. (Some of us did.) But his suggestion that the U.S. housing boom was in part caused by weakness in foreign economies still looks valid.

This financialization of the USofA economy has been going on for a while. Longer, in fact, than even Krugman admits in today's column.

What both Bernanke and Krugman miss, or are too tired to deal with, is that the glut began no later than the DotBomb. All that moolah to fund .coms like Pets.com (loved the sock puppet; just your average CEO in drag) came from somewhere. The "Giant Pool of Money" should be reviewed at least once a year; it explains most of what's going on. Still.

Which brings us to a new neologism (from your local Department of Redundant Redundancy): The Cudgel of Good Enough™. All producers of tech widgets find themselves facing the same problem: what functionality can be invented that is new, useful, and high margin? The smartphone business is ground zero, of course. The Big Deal with the next iPhone, if all these reports are to be believed, is Force Touch. Doesn't have quite the allure of an iPhone, when none existed, does it?

What's a company to do? On the one hand, income/wealth concentration continues apace, such that any growth in the global economy happens to the 1% (or .1%). For, say, Burberry that's not so much a problem, since selling a man Just The Right Coat For The Occasion™ is what they do. (You should have stayed with coats, Angela, I guess your Plan B makes it low risk?) For an iPhone shifter, not so much. Not even The Donald needs more than one. No, I've no idea whether he really does or not. Thus the Watch, which isn't likely to be a smash hit. Tim would have leaked that by now if it were.

Back to the SA story. The author does have a point: the marginal benefit of semiconductor progress has plummeted since the heady days of the Pentium, while the cost of implementing those benefits continues to increase. The Tyranny and The Cudgel beat Intel like a drum. Remember when the 450mm wafer was just around the corner? Never happened, of course. One might argue that node shrinks have been a substitute, but, if so, at much greater cost. Soon enough, control of power at 10nm (certainly below that) becomes an issue.

Is there a happy ending? As Krugman puts it,

But there's also, I believe, a sort of emotional prejudice against the very notion of global glut. Politicians and technocrats alike want to view themselves as serious people making hard choices -- choices like cutting popular programs and raising interest rates. They don't like being told that we're in a world where seemingly tough-minded policies will actually make things worse. But we are, and they will.

To quote the subtitle of one version of these endeavors, "It's the Distribution, Stupid".

China Syndrome, Part the Third

Well, I guess one can conclude that, if China's domestic hiccup can cause a global financial panic, then it really is a first world country. Sort of.

Intel-igence

Another in the many themes of these endeavors is that human knowledge of the macro world (as distinct from both cosmology and the sub-atomic/quantum) is, perhaps has, reaching the asymptote. In others, more than ever, there's nothing new under the sun.

Now comes an anonymous post, arguing that Intel should sell off its fabs. The reasoning is very Financial: with very low physical capital, the ROI for that capital can be quite high. This financialization of the USofA economy has been in process for at least three decades. It is somewhat amusing that, as I type, the comments are truly vitriolic.

Clearly, with the cost of wafers going up, by Intel's account 30%, processor sizes will decrease, as the PC market clearly would not react well to a significant price increase, given how fragile it already is. Also, outside of GPUs, the benefit of increasing size is not in proportion with the costs. As such, with overall smaller processors, and Intel's struggling grow, the difficulty of fully utilizing fabs will become even more difficult.

Put another way: the hedgies count only moolah, and assume that hard assets are really liabilities. In due time, if financialization continues, the USofA will look like Bermuda. Or so the hedgies wet dream. (Who would have guessed that The Donald would channel Progressives? Well, every now and again.) Without the USofA's consumer demand, all the financial engineering will end as galloping Gertie.

May we live in interesting times. Oh, and no, the market crash last week isn't motivated by anything like The Great Recession. But that doesn't mean, alas, that Mr. Market is smart enough to realize that.

A Well Rounded Education

As is well known, I've not been a fan of Jobs, his Reality Distortion Field, or Apple in general. The fact is, Apple has been an assembler of Other People's Parts from the get-go, just like most of the rest of the small computer (and compute device) sector. Unusually adept marketing is their value add.

The iPhone design patent is especially galling. Today it is reported that USPTO may be willing to revisit the blunder.

Now, in a new twist, examiners at the U.S. Patent Office have had second thoughts. In an August ruling, they agreed to consider new prior art evidence, which led them to a commonsense conclusion: the rounded rectangles design is obvious, and should not have been granted a patent in the first place.

Capitalists regularly rant that bureaucrats are stupid, incompetent, low lifes who should be left to starve in the desert. Except, of course, when their stupid incompetence grants market monopoly. And obscene infringement awards.

On, Comet! On, Cupid! On, Dunder and Blixem!

Just saw that Cray has sold an XC machine to the Danish weather folks. Which got me to wondering/assuming that the HFT folks are using such machines. Oddly, the innterTubes didn't pop up a story immediately, but did list this one on IBM's efforts to get Power7 and Power8 machines into the business.

With the Core i7 K series chip, says Keene, you can have four cores running at 4.5 GHz, or two running at 4.8 GHz, and even one running at 5 GHz, but he laughs and says you need liquid nitrogen to cool it. Moreover, these chips burn out in 30 to 60 days and they are not under warranty, either.

For the sole purpose of simply shifting moolah from the pockets of the 99% to the pockets of the .1%. And some call this progress?

Bayes At the Moon - Part the Second

While I remain unconvinced that Bayes has anything truthful to say about data and experiment, I do sympathize with those who've embraced Bayes over the all too frequent pissing contest about "what does p-value *actually* mean???".

Here's another such rant. Note that the author is from the psycho- world, so keep that bias in mind.

Just Like Ali

The financial quants must be getting tired of having their collective bell rung by Beijing's rope a dope. Once again, as always, motive and incentive murder data.

To be honest, no one has a clue where the [Chinese] economy is, and I don't think that it's properly measured.
-- Viktor Szabo/2015

Told Ya So

For some time now, especially since the Germans' assault on Greece, I've been telling ya'll that American corporations bleating about "the strong dollar" hurting their profit positions was the sprinkle before the hurricane. In due time, the BRICs would devalue in order to fend off other BRICs and the $/€.

Told ya so.

Briefing.com --
Overnight, China devalued the yuan by the largest amount on record, sending the USD/CNY pair higher by 1.9% to 6.3249.

We've only just begun.
-- The Carpenters

You Lazy Pigs

The climate change deniers have a thing or two to teach us. Mostly, if you've got the moolah, you can buy whatever data you want. The banksters did the same thing until the Great Recession made the scam impossible to continue.

Now comes Coke: "It's all your fault, not ours!". Read it, then come back. It'll curdle your blood.

Here's all you need to know:

A 12 ounce can of Coke contains 9 1/3 teaspoons of sugar.

To burn that off, you'd need to:
spend 26 minutes walking Spot.

That's just one can of Coke, which most folks will slurp up in a couple of minutes. Here's one example of what Coke will do to you.

To be fair and balanced, booze is worser. Some beer, not so much.

No, They Ain't Worth It

Recently, the usually smart Neil Irwin defended CEO comp in a manner I find puzzling.

...the stewardship of large, complex companies is really important, and anyone who cares about the American economy should want the most capable people in charge of them.

As to why, he says,

There are competing (and not necessarily exclusive) theories as to why executive pay has soared so much.

One is that it reflects self-dealing by corporate boards, mutual back-scratching by corporate elites who overpay one another out of some kind of cultural solidarity.

But then goes on to tell "the other side of the story". Very Pollyanna, that.

Yes, it is a case of a circle jerk. Where's John Stewart when we need him? At least, Maher is back.

On the face of it, stewardship is a reasonable statement. On the other hand, not one study I've seen or seen referenced has found that CEOs make a positive impact.

Across the board, the more CEOs get paid, the worse their companies do over the next three years, according to extensive new research. This is true whether they're CEOs at the highest end of the pay spectrum or the lowest. "The more CEOs are paid, the worse the firm does over the next three years, as far as stock performance and even accounting performance," says one of the authors of the study, Michael Cooper of the University of Utah's David Eccles School of Business.

Or, as I read somewhere (never kept, nor can I yet find, the cite):

If these really capable guys wanted to strut their stuff, they'd take on the basket cases. As it is, a sock puppet could run an American corporation.

Instant Karma

Early in the existence of ourselves as a unit, my colleagues sensing this irritation asked that I talk while they tuned. The theory being to cover one kind of noise with yet another. Well I accepted with a profound sense humility, which was subsequently fully justified. ... I thought things were going swimmingly until Baltimore. In that city at intermission we received backstage an anonymous card, which read as follows, "Lou semi-colon $%#$%. We'd rather here your partners tune up." Well, that was massive trauma. I raced home tearfully. Leaped into bed. Assumed the pre-natal position, and turned the electric blanket up to nine.
-- Louis Gottlieb/1961

That likely describes the situation FDA petty bureaucrats find themselves in today. On the one hand, one of its earliest heroes passed away. On the other, Amarin won its lawsuit. Quaking galore.

Frances Kelsey didn't believe the manufacturer of thalidomide:

"I had the feeling," she wrote after a meeting with company executives, "that they were at no time being wholly frank with me, and that this attitude has obtained in all our conferences, etc., regarding this drug."

Merrell's data wasn't enough to convince her. What's odd is that the thalidomide fiasco is credited with the FDA's emerging efficacy persnicketyness that continues to this day. But the issue with thalidomide wasn't efficacy. In actually did its job quite well, which is why it was widely prescribed in Europe. FDA, from the beginning, had drug safety as its primary remit. It was safety that Kelsey focused on; age old FDA business.

... attention focused on her partly because the Kennedy administration and its allies in Congress wanted to use the case to pass stronger drug regulations. The 1962 law required tighter proof of the safety and effectiveness of new drugs, full disclosure of side effects and generic names, and swift removal of unsafe drugs from the market.

Which brings us to the quaking. It's rather a long and torturous story, but the short version is that Amarin developed a highly purified fish oil, that was shown to lower LDL substantially. The FDA approval was for those with sky-high LDL, which is a small market. Amarin want to expand the label to include more moderate, but still high, LDL; a much larger market. Along the way FDA had said, "leap this hurdle, and you get the expansion". Amarin did so. Then FDA decided that lowering LDL wasn't a meaningful measure of a drug's effectiveness vis-a-vis heart attacks and such, so Amarin wouldn't get its expanded label. Amarin sued, on the basis that it had the First Amendment right to promote the drug with its data.

The preliminary ruling in U.S. District Court could strengthen the pharmaceutical industry's ability to distribute information about drug uses that have not been cleared by the FDA. That issue has been contested for years by the FDA and the companies it regulates.

Hmmm?? See why the quaking?

Now, it has been true for decades, if not forever, that doctors can prescribe FDA approved drugs for use not on the label, "off label" use as they say. But manufacturers and such aren't allowed to promote, advertise, or claim use not on the label. Amarin now has, modulo successful appeal by FDA, the right to actively sell its drug to anyone with high LDL. The ruling sets precedent, certainly not yet tested, for all drug companies to promote any use for which there is "truthful" data. For those who follow drug approvals, drug companies don't always play fair with trials. In particular, they have the habit of cherry-picking sub-groups from failed trials which show stat sig numbers. Strictly speaking, such stat sig results aren't "truthful" because the trial design, in most cases, isn't powered to support such a posteriori sub-groups. Just to be clear, Amarin didn't apply to expand using such tactics. It ran a trial approved by FDA, and met the endpoints. Basically, FDA changed its mind after the fact. Kind of the same sort of sleight of hand used by drug companies.

This will definitely get interesting.

To further the murk, thalidomide is usefully prescribed today for leprosy and cancer.

In the 2000s, the combination of thalidomide and dexamethasone, often in combination with melphalan, became one of the most common regimens for patients with newly diagnosed multiple myeloma.

Irony?

Carnac Predicts, Part the Second

It's not much of a secret that I've little patience with those who've taken as their life's work the manipulation of consumers' psyches for the sole purpose of shifting more of their employers' widgets. Not a righteous use of our collective intelligence. Jobs and Apple being the canonical example.

One side of the situation is "predictive analysis", which ignores all warts in the data in fealty to R². The notion espoused by the predictivists is, all that matters is correlation. Such fealty to old data predicting future data was what allowed the Great Recession to happen.

Now comes a new post on the book's site, and a quote I have to get behind:

A specialist in high content screening might naturally take the ratio of these two features of cells because it makes good scientific sense (I am not that person). In the context of the problem, their intuition should drive the feature engineering process.

In terms of the Great Recession, one might have said

A banker in housing markets might naturally take the ratio of house price to income because it makes good micro-economic sense (danger to the firm) as well as macro-economic sense (danger to the whole economy), and conclude that corruption was afoot.

In the case of cell science, there's God's Laws to obey. In the case of the Great Recession, they're fungible Man's Laws. In the former case, getting wrong will be punished, in the end. In the latter case, not so much.

A Question of Balance, Part the Second

Every now and again, the mainstream pundits catch up with these endeavors. Not often enough, evidently. The major theme has evolved to: when the process under discussion obeys God's Law then data reflects an unbiased reality, if one is careful collecting the data, and can predict the future; but when the process is some Human Endeavor, data means little to decision making while motive and incentive drive these decisions; humans will change the data generation process sub-rosa (to those not in on the scam). The Housing Bubble happened because that Giant Pool of Money (still with us and growing) demanded a high-return, low-risk instrument, so mortgage companies (thence, not first, banks) found cracks in law and regulation which made creation of yet more and larger mortgages a fact. The data, price/income ratio, said this was stupid, but the motive and incentive was to ignore contrary evidence. And so it was. The Giant Pool was happy. Until it wasn't, but the smart money had already exited, so it didn't care.

What's been going on with the Euro follows much the same pattern. Adam Davidson brings forth some new reporting, which is required reading. Once again, the smart money followed motive and incentive, rather than data. The smart money made a bundle, then left the 99% holding the bag.

There is definitive proof, for anyone willing to look, that Greece is not solely or even primarily responsible for its own financial crisis. The proof is not especially exciting: It is a single bond, with the identification code GR0133004177. But a consideration of this bond should end, permanently, any discussion of Greece's crisis as a moral failing on the part of the Greeks.

He goes on to provide a primer on how bonds are "sold", and it's important to understand this mechanism. The US Damn Gummint uses the same method. The interest paid on US bonds is not set by the Fed or Treasury, although perhaps by the Trilateral Commission (yes, it really exists, not merely a co-figment of left and right paranoia). Buyers of such instruments aren't also buying Savings Bonds. They're "sophisticated" investors, with lots of computers to decide what to pay.

So, Greece became a Euro country, and Germany had one more nation where it could export on a hard currency. And Germans won't stand for getting anything less than a full Euro; otherwise Europe with the Euro is just like Olde Europe where countries fiddle their currencies against predators like Germany. Can't have that. Exactly like our Red states with conscripted labor selling into Blue states, with (dwindling) middle class consumers. It will end just as badly, but with more bloodshed in all likelihood. As knuckleheads like Walker kill off his state's middle class, the Red states will find their Total Addressable Market shrink. And don't give me any crap about international exports. The bleating about the "strong dollar" killing profit increases in volume with each quarterly. And that's only the beginning. Just wait for countries explicitly devaluing. "The horror! The horror!"

Davidson brings up Bretton Woods, but you should do, at least, a Wiki journey to learn more if you can't do a five minute Toastmasters' on the topic.

Here's the punch line:

But the bailout broke this virtuous circle, signaling that the bond market would stay safe even when bond buyers were wildly reckless, pouring billions of dollars, for example, into risky subprime-mortgage bonds. The bailout represented a transfer of wealth from the rest of the economy into the bond market -- precisely the opposite of what is supposed to happen.

Ireland, earlier, sacrificed its citizens on the bank altar, so there's reason for Greek bondholders to demand the same.

The IMF said that as a result of the failure to impose losses on bank creditors, "many in Ireland question why Irish taxpayers should be the ones covering the cost of addressing such euro area-wide concerns. A bail-in or other solution that would have 'mutualised' these costs would likely have resulted in more equitable burden sharing."
...
Banks had extended credit heavily to property speculators during the latter stages of the Celtic Tiger economy, between about 2002 and 2006, but the sector collapsed when the global financial crisis hit in 2007 and 2008.

IOW, Ireland crashed, as did the USofA, on the backs of out of control banks. Somewhat different from Greece, certainly.

And, back to Greece.

The institutions that bought that €7 billion in Greek debt in 2009 made a very bad judgment. Even at the time, it was clearly a foolish gamble -- so foolish, in fact, that it can be explained in only one way. They believed that in the event of default, the Germans would bail the Greeks out. And just to be clear: This doesn't mean they believed that the Germans would be kind to the Greeks. It means they believed that the Germans would be kind to the people who owned Greek bonds, a significant percentage of whom were certain to be German themselves.

So, in the end, what mattered to those buying in on GR0133004177 was motive (high-return at little risk) and incentive (failure would be paid by others), not data. As it always is in the venue of human processes.