Money For Nothing - part the third

One of the persistent themes in these endeavors: asserting continuity, especially over time, in a dataset is fraught with danger! Will Robinson! The sole situation where it makes sense, unambiguously, is when the data generation process is owned by God, which is to say the hard sciences: physics, chemistry, and in a pinch biology. God doesn't change his/her rule set on a whim to gain advantage over Man. Some religions posit that God rewards the loyal and destroys the disloyal, but that's bunk. God didn't flood the earth (well, the region over which each particular religion had hegemony) to punish non-believers. Jim Jones killed those folks. Just Jim Jones.

The last version of these missives had something to say about totally crackpot 'data analysis' in macro data. One of the pet exercises among the macro-analysts is predicting booms and busts. Buy at the bottom and ride the wave up. Sell/short at the top and make money (or, not lose any) on the way down. Money for nothing.

Today brings a trenchant condemnation of the financial industry. A writer after my own beating heart. If his text sounds a bit like, "house prices can't possibly continue to rocket into the sky forever"; well, yes it does. You have been warned. Whether there's as much moolah at risk of crashing the entire economy is the Big Question.

Each boom and each bust develops from specific actions/events. Some are repeated in later periods. Most not. Each boom or bust has had a unique driver. It ain't explained by Elliot or Kondratieva. Not that simple. Ya gotta look for the new scam. It's always a new scam, scurrying under the radar of regulators. Or, one might suspect, in cahoots with regulators. That way be dragons when Right Wingnuts 'regulate'.