— OCCUPY PIX

#union #iww #occupy #ows #p2 #p21 #tlot #tcot #TeaParty Understanding the Risks http://www.dallasfed.org/assets/documents/research/staff/staff1203.pdf Inherent in Shadow Banking: A Primer and Practical Lessons Learned “Keynes was careful to distinguish between risk, for which probabilities or frequencies could be calculated, and uncertainty, in which there is no scientiÖc basis on which to form any probability estimates.33 Keynes (1937) argued that uncertainty a§ects behavior in three ways. First, people largely ignore the prospect of future change when it involves something about which little is widely known. Second, individuals assume that the existing state of opinion as expressed in prices and the character of output is based on a correct summation of future prospects; it is accepted unless and until something new and relevant enters the picture. Third, people endeavor to conform to the behavior of the majority or the average. Keynes said the psychology of a society of individuals endeavoring to copy one another produces ìconventional judgment.îAccording to Keynes, investor di¢ culty forecasting the future leads to an inability to form pricing that avoids ìsudden and violent changes. … The forces of disillusion may suddenly impose a new conventional basis of valuation. … At all times the vague panic fears and equally vague and unreasoned hopes are not really lulled, and lie but a little way below the surface.î A commonly held belief, assumed for an extended period, tends to lead to complacency that breeds booms; the dispelling of the notion produces the bust. Therefore, a conventional wisdom that leads to a speculative mania can quickly collapse as sentiment turns on its head. Case in point: Shadow banking liabilities were believed to be ìjust as goodîas traditional bank deposits, not because they really were, but because they had been leading up to the crisis.” RELATED: http://conversableeconomist.blogspot.com/2013/02/maybe-too-big-to-fail-but-not-too-big.htmlhttp://www.twitpic.com/cjge1z