amanda more

In any kind of troubleshooting it is very helpful to do this:

A-

B-

In fact safety analysis involves a kind of simulation. Assume A happens what is the result? But if B happens what is the result?

Further on topic then:

"The problem is, it’s completely backwards. The “disagreeable medicine” Cooper suggests is budget cuts, including cuts in entitlement programs like Social Security. But that has nothing to do with the problem she presents at the beginning: slow economic growth. Anyone who is reading this blog already knows that budget cuts are contractionary in the short term. The “medicine” the economy needs now is more government spending, not less, and there’s nothing disagreeable with putting more people to work and building more stuff that people want.*"

This is from James Kwak http://www.economonitor.com/blog/2011/08/barack-obama-and-harry-potter/

So, contractionary means a decrease in the economy- recession. The classic lesson or science from The Great Depression means that having government spend less makes a depression worse. Simple. Eighth grade economics.

There is this odd thing in science where as great as it is to define the past and present to be really useful one wants to know effects and consequences. You will get no argument from me that it is a crystal ball having inherent difficulties. Yet, science has this history showing it has been effective.

Why is the stock market going to crash? Idiots tank the economy over wild unproven rhetoric versus studied history and science. Economy tanks, stock market tanks.

This discussion is too abstract for me. I think we need to begin with simpler concepts, such as a penny isn't worth a penny now that they are made without copper and if buried in Fall and dug up in Spring they will be rotted, some beyond recognition.

 

I think our big economic problem is, discussions of economics are not based in reality. We do not understand the relationship between oil and our economy, so how can we speculate about what will happen a year from now? Oops, baby is awake. Have to shut down and feed baby.

Discussions of economics are so very,very rarely based in reality. But now shock jocks and cheerleading style groups develop really crazy stuff. I suppose that can be a reason the economy tanks. Even if imperfect, views of reality are a bummer.

Aberrant B cell receptor-mediated feedback - A feature of human autoimmune disease is that it is largely restricted to a small group of antigens, several of which have known signaling roles in the immune response (DNA, C1q, IgGFc, Ro, Con. A receptor, Peanut agglutinin receptor(PNAR)). This fact gave rise to the idea that spontaneous autoimmunity may result when the binding of antibody to certain antigens leads to aberrant signals being fed back to parent B cells through membrane bound ligands. These ligands include B cell receptor (for antigen), IgG Fc receptors, CD21, which binds complement C3d, Toll-like receptors 9 and 7 (which can bind DNA and nucleoproteins) and PNAR. More indirect aberrant activation of B cells can also be envisaged with autoantibodies to acetyl choline receptor (on thymic myoid cells) and hormone and hormone binding proteins. Together with the concept of T-cell-B-cell discordance this idea forms the basis of the hypothesis of self-perpetuating autoreactive B cells.^[14] Autoreactive B cells in spontaneous autoimmunity are seen as surviving because of subversion both of the T cell help pathway and of the feedback signal through B cell receptor, thereby overcoming the negative signals responsible for B cell self-tolerance without necessarily requiring loss of T cell self-tolerance.

This is from wikipedia autoimmunity http://en.wikipedia.org/wiki/Autoimmunity

One thing I may have misunderstood. In this example we probably all have the Lupus bcell somewhere in our bodies- some bcells who remain activated and don't quiet. Those who have Lupus though have more of them. Anyone have a handle on this?

amanda; Profits and earnings are reported quarterly by each publicly traded company and they are required to send each stock holder these reports. I understand what your saying, in that maybe up to 30 people (larger companies) that work on these reports daily, could in some way falsify them or more to real point, maneuver sales/cost/obligations, to their advantage, but it's highly unlikely. No regulation conceived could unearth all the ways, figures can be distorted. During times when growth is expected P/E ratios generally average 18 times earnings and currently are around 8-9 times earnings and it's highly unlikely their all conspiring.

 

You earlier mentioned the possibility, a portfolio of stocks, might never recover from losses during one down turn in the markets and correct, but also correct in any years of your mentioned historical 6% gains, then I believe that's figure comes from the DOW and S&P's. Companies in these indexes have changed, sometimes on a yearly basis and many companies that have been in them have failed or near failed. If you or your adviser/broker had consistently made poor or bad investments, then during any point during those 6% gains you could have lost 6% and invested only in the 530 most traded stocks. Along this line of thought, if you got involved with Tech Stocks at the wrong time, you might not ever recover and many actually did during the early years.

 

 

http://stockcharts.c...nasdaq1986.html

 

What and how any portfolio is managed, is determined by experienced advisers, based on many things, especially age, risk management, can you stay the course, not needed the cash and so on. Said another way if you expect high returns and long term 6% is high, more risk is involved...

This is a hard concept.

If off balance sheet transactions are allowed then it doesn't take any collusion to keep them off. SAP, standard accounting practice. The derivative market is a dark market. This means they don't have to report how much they owe. This means liabilities are distorted that are shown in the report. Like any Ponzi scheme, it works until it doesn't.

Beating the market seems like a doable goal. Yet crashes take down everyone.

There are ten year runs where a portfolio of blue chips never recover their price. You can lose much of your principle. Using horse racing analogies, logical difficulties are apparent. All of the sales-speak Americans have become accustomed to is dangerous.

I just thought of another reason for a stock market crash.

Next reason:

This is more a question than a reason. Because they are lean and mean do companies actually make goods and services or are they relying on contractors? That may mean they are vulnerable to the contractors increasing business without them. I do realize Goodwill is huge but is it truly "bankable"?

The market went down about 1000 pts in the last several days, based largely on hysteria and the unsurprising idiotic behavior of Congress. The value of my stocks dropped a small fortune. I can either sell, cementing the loss, and put the money in cash accounts yielding about 0 and holding dollars of questionable long-term value, or leave it invested in corporations that have strong balance sheets,produce useful products, pay dividends and invest in growing their business.

 

I think I can figure this out.

So some math. 1000 dollars. remove 200 dollars You will have realized a loss of $20 from where it was.

The market tanks 50%> Now you have $1000 - $200= $800 . That $800 is now $400 + $200 = $600

If you haven't removed it then

$400 + 1/2 $200 = $500

So,a scenario believing all is hunky dory with no underlying rotten fundamentals and you would have lost the $20 as the market "corrects itself."

But for proposed scenario you will have $100 more than you would have had if it does tank. The concern in scenario 2 is this is bad news. Odds are that $500 is going to be needed more as more of the economy tanks.

This means the paper losses are more likely to become real losses as that money is needed to say, eat. Historically there have been ten year periods of no recovery.

The flight to treasuries will keep interest rates down. But when they are at 5% and even if the current market is 14% the average run is 6%. That means the stock market player is risking his principal for a mere difference of 5% to 6%. That is truly a suckers bet.

So in keeping with the topic. People ignore the math until they can't.

Anyone who's panicking right now and selling is selling after a big drop. That's selling low, and it's a bad strategy. I haven't seen any analysis from Amanda, just an insistence that the market is going to crash. If I had seen an analysis it would include many companies with increasing profits and low P/E ratios; a temporary drop in prices is a buying opportunity, not a cause to jump out of the market.

The profits and P/E ratios are only as valid as CPAs and the rules makes them. What happened with Enron was hocus-pocus with numbers. Lying is currently legal on the numbers. Disclaimers are found in the English of the financial statement which was the only requirement resulting from Enron.

I am thinking the current drops. ups etc. are independent of the above, though. Look to the end of the current year long delay to open up off balance sheet numbers to cause real intensity. Overseas they talk percent. Selling after say a 2% drop is a stop/loss strategy. Selling after the crash is as you say.

Why would you......pardon my french.......pi$ fart around with a highly complicated electrical system, whose effectiveness is highly questionable, when you could just over spray the lawn with Yates Zero Bindii & Clover at about $8 for 500ml of concentrate that is guarenteed to work. The dicamba and MCPA in this product are entirely biodegradable, both in the soil and in the human body. Unless you wash your hands in it, drink it, inhale the mist or use it 24/7 it is not damaging to your health or that of your garden.

 

Until weed specific biological controls are available selective systemic herbicides are the best tool we have to combat weeds.

I work in technology so I'm not a complete Luddite. There is a vast experiment underway where we are exposing ourselves to a chemical soup. Here is one study:

http://ccceh.hs.columbia.edu/pressreleases/press042111.html

Herbicides should be safer. Still, how odd responsible people using bug bombs to keep a roach free place inadvertently harmed their children. I wonder if heat can be used without causing flame making it safer for those standing on wet ground. A bunch of weeds were just pulled from my yard. That is a pain. I have never had chemicals on the yard but did do a few bug bombs inside years ago.

I've seen Frontlines episode, The Warning, a few times, actually. I still have no idea what you're on about, nor how any of your posts relate to those quoted within.

I think your posts are excellent and you have provided several answers to the question.

This is tiring I know but this works as tree,forest,ecosystem.

With dozens of answers to this question there is also which one occurred at what level of this hierachy.

Say one answer is that the bad economy tanks stock markets. Yet, as you have pointed out,it is so much more.

Certainly, if I was on here doing something really useful, I would have bought on margin. The Nikkei is down right now.

Data suggests that it's because the markets don't see a path for growth right now. All they see is austerity and contractionary measures, and this is made worse since the change in our credit rating from S&P will make the cost of borrowing higher for the immediate future (this means it will be that much harder to grow). On top of that, based on the way trades looked today, the market had already factored in the political nonsense from the "brinksmanship" you reference. They were flying into US bonds like they were hot cakes, and that's a sure sign that they trust this is a good place for their money to be right now.

 

Also, why do you continue to focus on all of these conspiracy theories and just the US market? Global markets are down right now, not just the US, and largely all for the same reason. The path to growth is being hindered by bad policy and the need for bailouts in Europe. I get the sense that you want to understand these issues, but simply don't have enough information to do so, and you instead are replacing rational discussion with hysterics and conspiracy theories, which helps nobody and isn't useful when having a fruitful discussion.

 

As an aside, I expect we'll see some firm announcements tomorrow (or in the rather near future) from the European and US central banks to calm the volatility.

iNow, honest rhetoric has long been squished by those jazzed by wild eyed junk taking lots of bandwidth.

Yes, it smells of that and so I am so hoping it is wrong.

The underlying rot is a real reason. The stock market would inevitably crash. So that apparent wild eyed stuff just points for a way to have cash by timing the market.

Should they stop the delay and open up the dark market of derivatives that is 1200 trillion dollars worldwide. Over $120,000 for every man, woman, child.

Too bad I just don't have the makeup for all the fictional stuff. It must be great for those who can be soothed by recreational fiction wrapped up as real. Alas.

So balance sheets are currently a fiction. Check "The Warning" on frontline. The off balance sheet transactions are the 1200 trillion dollars.

Reason number whatever: The underlying rot of derivatives cannot be held back any longer from the light of day which brings to light that the companies are not profitable as their liabilities exceed their profit causing acknowledgment by the financial guys and a run away from stocks.

I just want to add, that on individual securities, you shouldn't wait till its worthless. Incorporating a stop/loss strategy is good. 80%? 90%? It's up to you. Money could be potentially better off somewhere else. How does performance compare to the market? This can be a good indicator of prevailing opinion regarding a particular stock, but I don't need to tell most of you that.

The bog boys are out. You are right. But millions have salesmen/brokers BSing them into the long haul.

http://online.wsj.com/article/SB10001424053111904480904576496552754467380.html?mod=WSJ_hp_LEFTTopStories

Another reason: The big boys do use stop/loss and get out.

In the event of another crash like in 2008, I wonder if they will disallow put options again. If they don't, many stand to make a fortune on a crash.

Please,please don't be true. I am too discouraged to google it. Really could it be that the House majority leader put cash into a hedge fund that (and I have read nothing) that was doing Margin trading.

So my reason number 3. Why is the American Stock Market going to crash? Because the politicians knew bringing the debt ceiling to the brink would crash it.

Suppose DrRocket wants to cash in on his investments some years from now. Why should he sell investments now, when they're down, when a crash would be temporary and the companies may recover within five or ten years?

May. The stock market I firmly believe does make 6% a year as it has for the last 100 years. This was when America was up and coming. Still unless you plan on living forever, it may not recover in your lifetime.

The lottery prevents you from losing more than 50% here again assuming a lot of betting over many years.

4th reason: Why is The American Stock Market going to crash? Sales pitches that have lulled smart but not entirely flush players to risk their life savings because of the marketing hype that it is investment which sounds like savings. Its not. It is a bet and every three years or longer everyone realizes it.

So your turn. There have to be hundreds. Anyone for the topic?

Indeed, we agree. I was just missing your intended point the first time I read it. I can clearly see now that you were suggesting that people who panic should avoid the market, as they will tend to make mistakes like selling low and buying high. Seems pretty obvious now. Thanks.

iNow What is high?

 

 

Who's this? As a general rule, folks should do the opposite. Were you suggesting Amanda comes across as the type to make that error?

Eureka. I think I have my book concept.

http://www.cxoadvisory.com/2231/individual-investing/genetics-of-investing-not-algorithms/

First glance is rudimentary. But from that wonderful graph it looks like this. Suppose you are pretty much broke and have few assets.

In general,let's imagine vice is independent of IQ.

Those who have the highest IQs still dump their paltry assets into the stock market.

So the reason that those one discusses the market with find it especially emotionally charged assuming they have decent IQs is because they are overextended.

The next reason the market will crash:

"Just as the lottery has been rebranded a game, the stock market has been rebranded not a risk but an investment."

So, then wakeup call. "Oh,no. It is folly." Crash.

The market went down about 1000 pts in the last several days, based largely on hysteria and the unsurprising idiotic behavior of Congress. The value of my stocks dropped a small fortune. I can either sell, cementing the loss, and put the money in cash accounts yielding about 0 and holding dollars of questionable long-term value, or leave it invested in corporations that have strong balance sheets,produce useful products, pay dividends and invest in growing their business.

 

I think I can figure this out.

A crash will be 50%. Sell. Half of your investments.

Eureka. I think I have my book concept.

 

http://www.cxoadviso...not-algorithms/

 

First glance is rudimentary. But from that wonderful graph it looks like this. Suppose you are pretty much broke and have few assets.

 

In general,let's imagine vice is independent of IQ.

 

Those who have the highest IQs still dump their paltry assets into the stock market.

 

So the reason that those one discusses the market with find it especially emotionally charged assuming they have decent IQs is because they are overextended.

 

The next reason the market will crash:

 

"Just as the lottery has been rebranded a game, the stock market has been rebranded not a risk but an investment."

 

So, then wakeup call. "Oh,no. It is folly." Crash.

 

 

 

 

 

 

A crash will be 50%. Sell. Half of your investments.

 

 

 

The balance sheet is fiction. No changes after Enron. Off the book liabilities are huge. (<and another reason)

 

 

 

A lot of people cannot handle arithmetic. A lot can.

Check this out.

Assuming it means that even low income smart people have participation in the market which would show a greater risk compared to their assets- smart people gamble on the stock market!

Not all purchasing is a gamble of course. But first glance looks that some of it is.

All vices appear to me independent of IQ. So in that way understanding that high risk tolerance is gambling then high IQ also bet.

No wonder people get so emotional when you tell them the stock market will likely crash tomorrow. It is money they can't afford to lose.

http://www.cxoadvisory.com/2231/individual-investing/genetics-of-investing-not-algorithms/

Cool,huh? This may be as simple as the sea change propaganda that has allowed gambling-lottery to be seen as a game and gambling-stock market to be seen as an investment. Hey the lottery only takes 50%.

 

I know of one former mathematics professor who is now a lawyer.

 

I have encountered some very stupid lawyers.

 

I taught college algebra to a local anchor man. He was one of the better students in the class. I have encountered reporters who could not count their fingers.

 

Generalizations are usually wrong.

 

A lot of people cannot handle arithmetic. A lot can.

Scientists and technologists can.

In fact they can speak math. I'm not saying all should do that. Instead of us having to put things in language, English why can't they (the other half) at least learn to understand the baby speech of probability?

You also made a comment about logical thinking. So a tea partyer say who explains calmly some weird party line feels as if he is being logical. He is calmly explaining and seeks to give that impression. The impression and comraderie is so important he recoils at being called on it.

He finds -logical thinking- a hindrance.

Hence if logical thinking impedes goals then that is why many avoid it? Or are their brains set up so they can't do it?

Have you met any over 160 IQ types who doesn't do logical thinking? I'm thinking there have been dictators who are smart. What comes out of their mouths may not make logical sense. I assumed they are being duplicitous. But maybe not.

So, is there a way to explain to a 3 year old my example of a lottery that could be understood? I started to ask around about the lottery for the basis of a book I want to write. If I can't explain this simple example, I'm stuck.

Not sure what kind of books you are interested in.

 

Two of the best probability books are Loeve's Probability Theory and Feller's An Introduction to Probability Theory and its Applications. Probability and Measure by Billingsley is also very good.

 

For statistics I like van der Waerden's Mathematical Statistics and Cramer's Mathematical Methods of Statistics.

 

However your observation that if the government pays out 50% on a lottery then the government also keeps 50% should not require a book, but should in fact be obvious to the casual observer. The reality that this is not obvious to some people is merely a comment on what is meant by "average intelligence".

Thank you. I'll either dig out my own or check out one of these.

"Probability is often not intuitive and goes over the heads of many more. "

I think people do use probability but don't think of it in math terms. I think if they did think of it in math terms their odds would be wildly off. Yet, they have a feel for risk to get through life. Crossing the street. Necessary but needs vigilance. Crossing a sidewalk. Not as much vigilance etc.

In fact some streetwise kid can beat out an absentminded professor every time.

They can pass 8th grade probability. So majority intelligence is good enough for that. As I am finding today, in our economy everyone is blinded by money and decisions about money. Lawyers and journalists are by and large not stupid. Yet they generally can't handle arithmetic. Why?

Did you hear some fearmongering on television or something? The market went on a little run down, but there are plenty of decent fundamentals in place to avoid foretelling a crash. Maybe a bit of residual debt ceiling hysteria, but it's not like the sky actually fell. The U.S. isn't perfect.

It doesn't matter if it is chicken and egg. If the American economy is deteriorating then the stock will absolutely go down.

The only question is when.

I just found out the multimillionaires that hang out where I do have been in cash for several weeks. As Republicans they had to have some insider information on that.

So, treat it as a theoretical question. If the stock market was going to crash tomorrow what would be the reasons?

401Ks have a mechanism to choose investments. So maybe it is treasuries instead of an account but one can angle it for FDIC insured or government backed.

If you are one who reacts emotionally to fluctuations in the market, you shouldn't be investing in stocks. You tend to sell low and buy high.

 

 

 

Don't worry my pretty little head about it really? Check out PBS online or google it. Ask any Wall Street guy that isn't selling you something. It works on emotion. And now is actually high.

amanda; I hope your not thinking if the Stock Market did crash (it won't), that being insured through FDIC would protect your original investment from the lost value, which it won't. Depending on where your account is held and if FDIC secured, that bank/saving & loan of whatever fails, your account will probably first be bought or assumed by another financial institution, or if their are no buyers (highly unlikely) then the FDIC would assume your account.

 

Many people are cashing in their 401's, taking some substantial losses and I really feel making a serious mistake. Anyway, I'm not sure what you mean by moving to an FDIC insured company, since no program would ever be set up otherwise. There were some changes, actually for the better, more value insured and if your over the new limits, highly unlikely, their are other remedies your financial adviser can advise yo on.

 

 

 

http://www.womens-fi...icchanges.shtml

It turns out when it is your money (the people on this forum) and losing actual cash is eminent. What do we have? Emotion.

The market is forward looking meaning it is not as it is but what people think it will do. Again emotion.

Beyond that what are the fundamentals that are tanking the economy and the market? I don't need any particular order. I'll go first. "You can't have an economy based on a nurse, a doctor, a lawyer and a teacher." ie Destroy manufacturing then an economy tanks.

Now that is is eminent it does seem it was inevitable.

We can see how deeply horrible the economy is. Unless you are in Washington DC. But Wall Street has to have known it.

I am currently resigned that it was only a matter of time. Have you moved your 401k out of stocks? If not-why not (there is no penalty for shifting investments)

Still what are the reasons the street and the country are crashing? I can think of factors- can you?

 

 

Also, I strongly encourage you to clean up your own arguments, tighten them up quite a bit, and begin using evidence instead of emotional pleas. Your posts have done nothing in this thread except show your style to be lacking. Further, you ought to recognize that swansont is not even close to the caricature you've painted of him (this last point goes to you, as well, Jackson... just because you're struggling to follow his logic does not mean he's engaged in nefarious debating tactics).

Now I understand. As long as you (not individually let's say one) As long as one can parrot the dubious bull that one's golf buddies continually repeat then wow- now you are (one is) not emotional. With your (oops one's) buddies on one's sides it has been sanitized. Cleaned. Made pristine and oh so pleasant. Form a party. Enjoy.

You have excellent posts.

I suggest though that the current state of affairs does not profit from pleasant violin music. A certain drumbeat may be considered possibly appropriate. Certainly. I think it is brave to call ridiculous claims out. It isn't like you (now this means you) are going to be facing tanks over it.

I'm currently hearing "brinkmanship" and all kinds of gobblygook Washington DC terms that I think no one who keeps saying them even understands the meaning of. So let's define it in terms you (here you) find totally inappropriate. Brinkmanship = smallminded Good Old Boy deadly Gameboy-style gameplaying chicken, endangering with heartlessness the wellbeing of all concerned and especially you and me. (you all and me)

Sanitizing in dispassionate third person will prove more effective for any who have difficulty with understanding. A suggestion might be made to meet halfway and allow a little writing flare from the direction from which things are considered on the part of very lucid posters such as iNow.

As far as lacking style- right back at ya. Plus I failed to quote again and used the same words sent to me.

Curious- have you moved your stocks in your 401k to FDIC insured?

By the way I have an interest in the question Why is the American economy deteriorating? My interest is peeked by immediate current events.

I guess history will tell.

I think the underlying poor financials that are fudged in such a wholesale way have to collapse like the Ponzi scheme it is.

So the clueless drones can be seen as causing the time of the collapse but not the underlying rot.

Come to think of it- follow the money. Someone just sold short and they are about to reap a huge margin call. I'd look to the hardliners in Congress. Who funded the Tea party?

After all you don't think wealthy Bin Laden types kept their money in as they sent off the 9/11 group? That was a very predictable outcome. This may have almost been as predictable a bet. I'd also check who is invested in Standard and Poors and then would be running it.

Difficult? yes, a bit. But taking over aircraft wasn't a piece of cake.

http://en.wikipedia....with_Statistics

I guess I am trying to show how to tell the truth with statistics. At least with the lottery example.

Is it because those exposed to numbers in this country are suspect about any math and rightly so? Is that why they cannot speak even the equivalent of a pidgin style of math?

I appreciate the efforts to explain here. I'll source the book.

I'm not so sure of the impact of this these days. We don't have a draft and don't increase the size of the active duty military during wars anymore; it's actually gone down in the last decade. So it's not like you're mobilizing a million job holders that need replacing. Some of the additional money appropriated for the wars is spent overseas. It's not like WWII where we retooled factories to make war materials. At some point after that we maintained a permanent level of production, which only ticks up marginally when there's shooting somewhere.

That is a good point. We also don't have the reserves of cash which can be unleashed when war spending crashes.

I am wondering just how much corporate interests are foreign corporations. So when policy is effected by corporations how much interest do they have in well being of Americans? What American companies are there? For producing type companies there is Exxon, Darden, Ford, GE. But most of the rest are military industrial guys. Follow the money. Who benefitted from holding the debt ceiling hostage.

The good jobs around I've seen are the military industrial ones. I think those have a huge multiplier effect.

I think this is sort of an accurate conclusion since economics is sort of an inaccurate science like weather, in which you try and predict it but tomorrow something happens outside the scope of your model and by day three, you must start all over. You also have a potentially infinite number of variables working against you, such as 2,000 pages of IRS code supporting an infinite list of various deductions in effect, all designed to support various special interests and get things done. Also reminds me of a joke about this president who says,"All I ever wanted was a one handed economist, because they always say,'On the one hand, this will happen, but on the other hand, this will also happen.'"

 

However, if you had a question or issue regarding economics as it is applied to the sciences, why not Applied Mathematics?

Let's consider three levels. The tree, the forest, the ecosystem. The answer to why is the American economy deteriorating? could better be discussed on the forest level. Bouncing down to the tree level, may provide great data but does little to answer the question. Continuing to escalate it as a purely political question influences people to leave logic behind.

It doesn't have to be math or politics. Just as hurricanes can be discussed scientifically so too can economics.

No, what you are observing is both correct and very simple.

 

But you are talking to lottery players, and that is a group that accepts a very poor bet from an economic perspective, some for the entertainment value of a minor expense, but many from a position of abject ignorance.

 

You will find that almost any logical argument goes over the heads of a great many people. Probability is often not intuitive and goes over the heads of many more.

Any books on that?

There are many very odd things happening now. In anyones personal life, I don't find that intense logic helps very well in day to day life. A well developed EQ appears to provide an easier time of it.

I have found the very disturbing gamemanship in Congress to have had no logical basis.

This stuff must be a symptom of an underlying malaise.

Could fear cause people to lose their heads? Is there an example to use where people can find probability more intuitive?

There are the scientists/technologists and the everybody else. The "everybody else" runs this country.

They are ignorant of even the most basic "words" in the language of science - math. Could this lack be one of the root causes of what appears to be crazy behavior? They can't understand arithmetic and so cannot understand the effects of their behavior?

In a rigorous treatment of the theory of probability, the probability of elementary events is given, not calculated. The starting point for probability theory is a Set, a sigma algebra of subsets and a positive measure of total mass 1 on that sigma algebra.

 

Probabilities based on relative frequency of occurrence are really estimates based on the law of large numbers. Probabilities based on combinatorics are really definitions of a probability measure, and an assumption that some given class of events are of equal probability. This sort of treatment is usually found in very elementary and non-rigorous treatments of probability theory that attempt to give an overview of the subject while avoiding the measure theory on which rigorous probability has been based since the work of Kolmogorov.

 

The heuristic "definition" in terms of relative frequencies is conceptually useful but is not a practical way to determine actual probabilities. It is not strictly speaking correct, hence my qualification of it as heuristic, but rather is roughly a converse to the law of large numbers, modulo some loose language as to the sense in which things are meant to converge (see "convergence in probability" or "convergence in measure".)

 

The only way to do this correctly is to use the general theory of measure and integration. For that see the book of Loeve. Probability is the most misused and incorrectly presented branch of mathematics. A good deal of what one finds in engineering, physics and introductory mathematics texts is not strictly correct.

I am unsure how to explain this. I want nonscientists to understand the absolute basics of probabiliy.

"Assume a state takes in 100 million dollars. 50 million is kept by the government ." "I understand that> I know the lottery makes money for the state. Then I ask so "when a $1 lottery ticket is purchased 50 cents goes to the government." 9 out of 10 lottery players find this goes over their heads. Why? Am I actually using some kind of sophisticated theory here?

Also, consumer confidence has been down in the dumps for quite some time now. If we ever divorce ourselves from these wars, it will be interesting to see how long we can get around to working on ourselves for a change.

The wars actually employ people. We are in the toilet even with a wartime economy.

I don't see you making any logical argument that my thoughts are not sensible and as I have harboured those thoughts for more than 50 years they can hardly be described as "kneejerk".

 

If a child repeatedly demands more from a parent than the parent can afford it is being unrealistic. If the parent decides to use credit repeatedly to meet this demand then the parent will eventually be in financial difficulty.

If employees repeatedly demand of their employer more than the business can support they are being unrealistic. If the management of the business decide to repeatedly use credit to meet these demands the business will eventually fold.

If the citizens of a country repeatedly demand more than taxes can provide they are being unrealistic. If the government(s) of that country tries to keep in office by meeting the demands by steadily increasing the national debt year by year then even the government will find itself in financial difficulty.

 

It seems, from today's news that there are many in the world, particularly from China, who share my concerns.

I attach a quotation made by Charles Dickens in a novel written in 1849 that is generally accepted as good advice.

 

I also attach a couple of "Hoover" quotes. I deduce that, like me, he was in favour of sensible levels of credit.

You individually are not doing this to the economy.

I put at least half the burden on the kneejerk reactions of the TEA party. Meaning they profess proud ignorance of fundamentals and just "feel" it is the right thing to do. Hence a more impulse reaction.

I suppose there is no way to have a scientific discussion about economics.

Oh well. The moderator even feels comfortable believing it must be politicized.

So, this is why this country tanked.