The Market Has Become Dangerous For Humanity. It Isn't Reaching Equilibrium, It's Falling Into Chaos

[girl gone mad]

Paul Woolley: "The Market Has Become Dangerous For Humanity...It Isn't Reaching Equilibrium, It Is Falling Into Chaos"
http://www.zerohedge.com/news/paul-woolley-market-has-become-dangerous-humanityit-isnt-reaching-equilibrium-it-falling-chaos

For anyone who is still confused why the tail-wags-dog reverse relationship of the stock market as a leading indicator to the economy, and to western civilization in general, can be a problem for said civilization (not to mention the former) once the current iteration of central planning loses control over everything, as it always does, here is an interview between German daily Spiegel and Paul Woolley, a one time fund manager, and currently head of the LSE's center for Capital Market Dysfunctionality (sometimes affectionately known as the Princeton Economics department) who explains why things are on the edge of a precipice. His message for anyone who thought that Irene may have been a risk: you ain't seen nothing yet. "The developments in recent weeks have made it quite clear that the markets don't function properly. Things are spinning out of control and are potentially dangerous for society. Only a fraternity of academic high priests connected to the finance markets is still speaking of efficient markets. Still each market participant is pursuing their own selfish interests. The market isn't reaching equilibrium -- it's falling into chaos."

From http://www.spiegel.de/international/business/0,1518,782315,00.html">Der Spiegel:

Financial markets are inefficient and growing to the point of overwhelming the economy, according to Paul Woolley, an expert on market dysfunctionality. In an interview with SPIEGEL he explains why it's up to investors to stop dangerous trends and hold financial institutions accountable.

SPIEGEL: Mr. Woolley, you were fund manager for many years, but went on to found a research institute at the London School of Economics to study why financial markets repeatedly go haywire. Now speculators are once again betting against the euro, and share prices for big companies are falling by 20 percent in a day only to shoot back up again. What is going on?

Woolley: The developments in recent weeks have made it quite clear that the markets don't function properly. Things are spinning out of control and are potentially dangerous for society. Only a fraternity of academic high priests connected to the finance markets is still speaking of efficient markets. Still each market participant is pursuing their own selfish interests. The market isn't reaching equilibrium -- it's falling into chaos.

http://www.zerohedge.com/news/paul-woolley-market-has-become-dangerous-humanityit-isnt-reaching-equilibrium-it-falling-chaos">more...

[NYC_SKP]

1. It was always doomed to failure, eventually, as it's based on expansion and exploitation...

corporations gobbling up weaker ones and/or moving into new markets to exploit, until they run out of options.

Unsustainable.

Doomed to collapse.

[RKP5637]

5. Yeah, it is. It's a battle 'till the last one standing and then they fall. It's

always been a ridiculous system, not based on the best rising, it's a slap happy rigged game fueled by greed and emotion, not by brains, but for those on the take 'till they are exploited too. In fact, the entire economy runs on vapor and exploitive computer systems thrashing at each other, and the fumes are running out.

[ixion]

2. k/r

we're closing right in on that cliff.

[lib2DaBone]

3. What scares me... is when the markets fail....

..The PTB will need another Bin Laden to keep the population occupied and divert their attention away from the shitty living conditions imposed by our Banker/Politicians.

Will it be a plane into the Sears Tower? A dirty Bomb in San Francisco? How about a nasty Swine Flu epidemic unleashed on America? Or how 'bout a MRSA infection released into our blood supply?

Stay tuned... they are working on it now as we speak.

[RKP5637]

6. I'm sure they are, the next target, the threat, the one that's gonna get us, and

MSM is well part of the game. In some corner someplace it's being plotted, the next distraction and big money maker for some, one can be sure of that. What a pathetic place we have become in my lifetime.

[Ruby the Liberal]

4. The casino is fueled by Swaps and HFT

Why I finally got out in July. Unemployment isn't a cake walk by any stretch, but at least I can sleep at night now.

[cyberpj]

11. "Got out"

I'm wondering if you mean you cashed out or moved whatever funds you had into low earning money markets funds?

I was just telling someone the other day I was tempted to cash out while I was sure I could still get to my own money in 401k plan but he said that 401k plans are protected, real money kept separate from investment firm funds used to play the market.

Do you know if that's true? Is it safe to leave our funds in 401k (I moved them all to money markets fund last June.)

Thanks for any info.

[Ruby the Liberal]

12. I am not one to follow.

I got out of the market in late 2007 when I saw where financials and real estate were going, so missed a large runup in 2008. I tend to be bearish and too soon.

But when I say 'got out', I left my job as a broker. Had a talk with the boss that I didn't want to do that anymore and wanted to pursue other opportunities within the firm.

As far as your 401k, there is no such thing as "401k protection". It depends on where/how the money is invested.

- Banks are covered under FDIC, so a money market through a bank is covered (to Federal limits).

- If it is held by a financial services firm (like Merrill, Citi, JP Morgan), then may or may not be covered, depending on how it is classified (Merrill can hold assets under the BoA FDIC umbrella for example). The financial firms are covered under SIPC, but only if they fall - not on individual investments under their care.

- If the assets are held by an insurance company (Met Life, Prudential), then it is up to your state and likely once again, there is only some protection if the firm fails.

Check with the plan administrator at your work and if they can't answer, get the number to the firm you all are working with and call them directly. The specific question you want to know is (i) how is your money invested (there are major differences between "money market accounts" and "money market funds" and (ii) what protections are in place to protect the principal balance.

[cyberpj]

13. Its Vanguard. And thankyou - I will take your call and question advice. nt

[Ruby the Liberal]

15. Feel free to PM me if you don't get the answers you are looking for

and I will be happy to help you cook up a few more pointed ones. :evilgrin:

[Po_d Mainiac]

14. 401K/403B are not covered by any blanket "protection" per se.

Most IRA accounts are, but fall within the limits of NCUA/FDIC coverage.

If your retirement savings are invested in mutual fund/s, (as most are) the gains and/or losses are real.

MM funds may not even pay enough of a dividend to cancel out management expenses.

[applegrove]

7. Large investors hedge against equilibrium. What do you expect? The profit motive

wins out over anything else.

[starroute]

8. We really need to rethink the function of companies

It seems pretty intuitive that the function of an automobile manufacturer is to make cars. The function of a shoe company is to make shoes. The function of a newspaper publisher is to publish newspapers. And so forth.

But somehow, all this has been devoured by financialism. Now the sole function of those companies is to make profits for their shareholders -- even if their primary function is done more and more poorly or barely at all.

That's what needs to be changed. It's possible that even capitalism could work if it was simply directed towards the goal of channeling investment into useful and beneficial enterprises. But the system we currently have isn't even capitalism any more. It's something far more toxic.

[femrap]

9. The best investment

one can make is food, water, wine, and pot....wish it were legal. Plus solar panels.

[bemildred]

10. Look, you have to be naive to think for even a second that markets are self-balancing,

or whatever biazrre phrase one wnats to use. In the first place history shows nothing of the sort, markets thrash around like chickens with their head cut off, that's what history shows. And in the second place self-balancing systems have certain characteristics, they don't just balance by magic, and markets don't have those sorts of chracteristics. Markets are commercial activities created and run by humans looking for profit, and they are and always have been rigged, manipulated, and managed for the benefit of some select few.