NO PRIOR MODELS TO WHAT’S HAPPENINGAugust 31, 2012
In Babylon's Banksters, I observed that much of the current financial woes can be traced to the influence of the formula of Dr. David Li, a Chinese mathematician who sought to capture in one scalar quantity a whole nest of credit default bundles and derivatives. As I pointed out there, Dr. Li glibly dispensed with the need for any appeal to historical data in the concoction of his formula, and, for that matter, there really was no historical precedent either for his formula, or for the types of "securities"the banks began to trade and list as assets.
Thus, when the meltdown came, it came at an unprecedented scale, and to a degree that all indications are that not one of the major banks really had any clue as to what was happening, or why (beyond their own rapacious fraud in the mortgage sector). It is this absence of any real model or historical precedent that, to my mind, in part explains what I have been describing as the feel of "panic" to the banksters' actions, a panic that, in my opinion anyway, one senses lurking just beneath the carefully controlled (and probably heavily sedated) exteriors presented calmly to government committees of inquiry.
Well, now zerohedge is coming to very similar conclusions:
In other words, if the outwardly calm Ben Bernanke seems to have an underlying touch of anxiety, a just-this-side-of-hysterical-panic edge in his voice, the reason is, it's probably true, simply because nothing like this has ever been seen before in human history, and the banksters, who brought on this whole situation, are responding to it with formulae based on earlier models, models which no longer apply. In short, that panic may be genuine, and not just a put on.
The question now is, if this hypothetical speculation be anywhere close to the truth, what is to be done about it?
See you on the flip side.