----- Original Message -----
From: "Charles Brown" <[EMAIL PROTECTED]>
To: <[EMAIL PROTECTED]>
Sent: Wednesday, August 22, 2001 12:11 PM
Subject: [PEN-L:16184] Re: WB/IMF reconstructing capitalism yet again-
!!??
>
>
> >>> [EMAIL PROTECTED] 08/22/01 02:12PM >>>
>
> > ((((((((((
> >
> > CB: Since it was bailed out when it lost its bet, LTCM was taking
> zero risk. It was the opposite of a high risk taker , yet it is
> "rewarded" the most of all because it claims to take risk.
> >
> > (((((((
> =======
> Ex ante it took the risk. Ex post, the risk was diffused.
>
> (((((((((
>
> CB: If ex post it didn't take the risk, then it didn't take the
risk. The ex ante risk was an illusion.
=======
No. That's too teleological and smacks of post hoc ergo prompter hoc
We have to struggle to see ex ante and ex post as an ongoing time
asymmetric dynamical system. Risk is a dynamical process. You're
trying to "freeze" the dynamics. It's akin to, but not identical with,
John Wheeler's delayed choice experiments in quantum theory. That we
have some but not total, leeway in configuring the accounts of the
past is not the same as saying the future is already "out there" and
thus risk is an "illusion."
Imagine the debt is repudiated. How far back in time would the IMF
need to go to rewrite/clear the books? I would venture to guess to the
very beginning of it's existence. We're talking about the erasure of
information from an ongoing computational process. The larger question
is why the credit/debt binary even exists for us. Look at those
passages where M. is saying we need to get beyond money itself in
order to be fully human.
"But the mere trading of risks, *taken as a given*, is only part of
the story, and in many respects the less interesting part. The
possibility of shifting risks, of insurance in the broadest sense,
permits individuals to engage in risky activities which they would not
other wise undertake. I may well hesitate to erect a building out of
my own resources if I have to stand the risk of its burning down; but
I would build if the building can be insured against fire. The
shifting of risks through the stock market permits an adventurous
industrialist to engage in productive activities, even though he is
individually unable to bear the accompanying risks of failure. Of
course under these circumstances, some projects will be undertaken
which will turn out to be mistakes; that is what is meant by risk.
But at any moment society is faced with a set of possible new projects
which are on the average profitable, though one cannot know for sure
which particular projects will succeed and which will fail. If risks
cannot be shifted, then very possibly none of the projects will be
undertaken; if they can be, then each individual investor, by
diversification, can be fairly sure of a positive outcome, and society
will be better off by the increased production." [Kenneth Arrow]
Hence the 2nd rule when capital and credit markets "miscompute" time:
Panic first--Robin Hahnel.
Ian
