May 7, 2010

The 1000 Point Drop and What Is Happening Now

220px-Tychonian_system.jpg
not even close, but that's what the data shows

I. This is What Happened Yesterday:


dow may 6.jpg

II.  This Is What's Happening Now:


(Jim Cramer) ...Remember, we were down a lot.  You cannot have that kind of drop, even if it was exasperated by some sort of computer trading glitch, unless something is really, really wrong in the world, dead wrong in the world.  So what is the problem? I have got a theory,  it goes like this: governments of the world are uniting in hurting their economies...

No government is ever worried about the stock market.  Not in their country, not in our country-- that would be unseemly, beneath their dignity...

Governments worry about three things: paying the bills, keeping people in work, and keeping inflation in check. The issue right now is that these are conflicting goals all over the world.   The areas that generate jobs for other places, especially China and Brazil, they are slamming on the brakes.  The areas that are desperate to pay the bills are doing so at the expense of jobs, that is Europe.   And the US, we don't know what we're doing-- other than worrying about punishing the rich people who work at banks.  That seems to be a major theme that has captivated Washington.



III.  This Is What Happened A While Ago:

Why was Galileo persecuted by the Church for saying what the Church had previously paid Copernicus to say?

Copernicus was afraid to publish On The Revolution of Celestial Orbs not because he thought the Church would stone him, but because he was afraid other academics would laugh at him.  What was threatened was the Aristotelian paradigm.

A hundred years later, the paradigm was much more... flexible.  It could accommodate new data supporting an old theory.

Oddly, Galileo's own data technically showed that the Earth didn't move-- the Sun revolved around it-- but that the rest of the planets revolved around the Sun.  But Galileo was seeing his data through another (Copernican) paradigm, so he... interpreted things differently.

Galileo had an epic scientific debate right under his nose that would have kept everyone occupied for hours.  The Church would never have been involved.  But Galileo wasn't satisfied with science; he wasn't satisfied with showing that Ptolemy was wrong, nor was he worried that he might be showing Copernicus was wrong-- he wanted his data to be evidence that Catholicism was wrong, e.g that Scriptures had to be interpreted figuratively.  

Galileo broke the Cardinal Rule: wovon man nicht sprechen kann, daruber muss man schweigen.


IV.  Repeated, for emphasis:

...Remember, we were down a lot.  You cannot have that kind of drop, even if it was exasperated by some sort of computer trading glitch, unless something is really, really wrong in the world, dead wrong in the world.








Comments

Uh, I don't get it.... (Below threshold)

May 7, 2010 2:23 PM | Posted by Anonymous: | Reply

Uh, I don't get it.

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Damn. I had a feeling "Math... (Below threshold)

May 7, 2010 3:04 PM | Posted by Lou Natick: | Reply

Damn. I had a feeling "Math is hard. Let's go shoppng!" would be used in this post.

Oh well, can't win 'em all. But hey, I hear the consolation prize is mandatory participation in this Jobless Recovery I've heard so much about. At least I've got something to look forward to.

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Also, When Copernicus' work... (Below threshold)

May 7, 2010 3:04 PM | Posted by Anonymous: | Reply

Also, When Copernicus' work was finally published near/after his death, it was in Latin, while Galileo published his work in the common vernacular at the time, which gave the general population greater access to his theories. Had he done it the other way, the church might not have felt the need to flex their power.

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Damn. I need a drink. Or si... (Below threshold)

May 7, 2010 6:05 PM | Posted by demodenise: | Reply

Damn. I need a drink. Or six.

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I think I might get it...bu... (Below threshold)

May 7, 2010 6:19 PM | Posted by Psychiatry Student: | Reply

I think I might get it...but I'll feel more comfortable once I've had a full 24 hours from my last final exam to give my brain time to heal.

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doG bless proposition 7, I ... (Below threshold)

May 7, 2010 8:24 PM | Posted by David: | Reply

doG bless proposition 7, I say. Does this mean Cramer was about as close to truth as Palin is to intelligence? I mean, given the man still holds his various media positions ... he must be talking about something he can speak thereof. Like bullsh*t, for example.

Personally, in the U.S., I thought we were talking about how idiotic elected representatives are for trying to mandate some restraints on investment/banking ... you know ... bring them in line with what other countries in the semi-civilized/industrialized world are doing with THEIR banks. Can you believe the nerve? Of course, "our" reps caved. They always cave to power.

I'm so relieved the discussion involving the McCain-Cantwell amendment to reinstate Glass-Steagall protections, the Brown-Kaufman Safe Banking Act to put a strict cap on size and leverage and/or the Dorgan amendment, which is a variant of the Brown-Kaufman Safe Banking Act was stopped ASAP. How rude can politicians get?

You really want to see a demo of Prop 7? Dodd voted against HIS OWN BILL. Too cool.

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The big blip in the market ... (Below threshold)

May 7, 2010 8:53 PM | Posted by information addict: | Reply

The big blip in the market is no evidence at all that the world is coming to an end and so Cramer should just shut up about it unless he can make a real case.

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"not even close, but that's... (Below threshold)

May 7, 2010 8:58 PM | Posted by Anonymous: | Reply

"not even close, but that's what the data shows"

Doctor, repeat after me: Data is always PLURAL. That's what the data show. Would you say "that's what the datums shows?"

Start the mantra: Data is always PLURAL. Data is always PLURAL. Data is always PLURAL. Data is always PLURAL. Data is always PLURAL. Data is always PLURAL. Data is always PLURAL. Data is always PLURAL. Data is always PLURAL. Data is always PLURAL.

Eventually it will sink in.

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"not even close, but that's... (Below threshold)

May 7, 2010 8:59 PM | Posted by Anonymous: | Reply

"not even close, but that's what the data shows"

Doctor, repeat after me: Data is always PLURAL. That's what the data show. Would you say "that's what the datums shows?"

Start the mantra: Data is always PLURAL. Data is always PLURAL. Data is always PLURAL. Data is always PLURAL. Data is always PLURAL. Data is always PLURAL. Data is always PLURAL. Data is always PLURAL. Data is always PLURAL. Data is always PLURAL.

Eventually it will sink in.

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"<a href="http://dictionary... (Below threshold)

May 7, 2010 9:14 PM | Posted by Dave: | Reply

"data" can be singular.

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Sigh.... Did anyone actuall... (Below threshold)

May 7, 2010 9:45 PM | Posted by Cramer Apologist: | Reply

Sigh.... Did anyone actually read cramer's speech or whatever it was? Somewhere TLP wrote about cognitive biases and he described one where the value of the words is affected by the speaker. I'm willing to bet if he hadn't referenced Cramer, those paragraphs would have been more carefully considered.

I wonder if that's not why he talks about Galileo. Galileo is thought of as a great scientist, and we assume his position is well reasoned because of that. Meanwhile, he was wrong about what he thought he found and wrong in its application. Just a speculation. Either way, what cramer said is dead on.

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National governments really... (Below threshold)

May 7, 2010 10:16 PM | Posted by Jack Coupal: | Reply

National governments really do not care about their stock markets or any other nation's either.

The problem for national governments is that the voting public has lots of ITS money in stock markets. So, the public cares a lot about stock markets.

The temporary "leaders" of our national and local governments will receive a lot of bad news from voters in primary elections and the general election during 2010.

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None of that is inconsisten... (Below threshold)

May 7, 2010 10:42 PM | Posted, in reply to David's comment, by Anonymous: | Reply

None of that is inconsistent with what Cramer said. he was just describing the disconnect with what governments want in the short term with what the public, who own stock and mutual funds, and whose employment is highly related to their company's performance in the market, want.

I'm going to guess that Alone's diversion to Galileo was in anticipation of comments like yours- defensive of a paradigm to the exclusion of any contrary information. You're less interested in what's right than proving the other side, which you have melted together banks and Cramer and probably Catholicism, wrong.

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OMG...Did Cramer say... (Below threshold)

May 8, 2010 5:20 AM | Posted by Whatever: | Reply

OMG...Did Cramer say all of this? Or was it his ghost writer. Then again he's been known to say something sensible one in a while.

Those of us who've done extensive reading on the Great Depression are not too surprised by this drop. Startled maybe but not too surprised.

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That's not really true abou... (Below threshold)

May 8, 2010 5:31 AM | Posted by Rob: | Reply

That's not really true about Galileo. Where did you get your information?

It IS true that Galileo's observations supported the Tychonic system (showed that the Earth didn't move), though you make it sound like he backed the Copernican system in a total absence of evidence. There actually WAS data that supported the Copernican system, it's just the data was bad (Galileo believed some stupid things about the tides.) You can argue why exactly he believed what he did - very possibly he only believed it because it supported his pet theory - but your post makes him sound a little shadier than he actually was. It's not that clear-cut.

Your assertion that he wanted to somehow take down Catholicism is just wrong. The Church attacked Copernicanism first, which Galileo was associated with, and he defended it. Cue: controversy. Even though he's known for opposing the Church, there's really no evidence he was anything other than a (faithful) Catholic.

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For Cramer to say there is ... (Below threshold)

May 8, 2010 8:53 AM | Posted by Max: | Reply

For Cramer to say there is something wrong when the stock market goes down doesn't make him Galileo. It makes him the Church. Every time there's a big move downward in the market, CNBC brings him on to explain why it's irrational, and every time there's a big move upward, CNBC brings him on to take credit. He's the opposite of Galileo: always finding ways to make the data fit his world view, rather than changing his views when new data appears.

Cramer is an idiot. Take his investment advice at your extreme peril.

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But it is a good bias for p... (Below threshold)

May 8, 2010 12:46 PM | Posted, in reply to Cramer Apologist's comment, by vv111y: | Reply

But it is a good bias for people to discount Cramer as he has proven himself to be a useless and dangerous source of disinformation. Of course people should not pay attention to what he has to say.
If he actually said something right, then you will also be able to find it from a reputable source anyways.
There are lots of sources of info available now.

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Ok, I'm really confused now... (Below threshold)

May 8, 2010 1:17 PM | Posted by demodenise: | Reply

Ok, I'm really confused now. I interpreted this post way differently than everyone else. I'd like to know what I'm missing.

It appears that Alone is setting up a comparison between Cramer and Galileo.

Both were on to something really big. Huge, in fact. Like, blow open the existing paradigm big.

But, they both miss what is right in front of them because they are both so enmeshed in what the current paradigm they subscribe to--Galileo, wanting the info to bring down the Church, Cramer wanting the info to bring down the government. (figuratively speaking?).

Cramer is right about the data showing that there is something seriously wrong. But the wrong isn't necessarily caused by the government. The wrong is with the market, and by extension, the media, because the media is the market.

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Alone's response: regard... (Below threshold)

May 8, 2010 4:41 PM | Posted, in reply to Rob's comment, by Alone: | Reply

Alone's response: regarding the data: he saw diffraction circles around points of light, which he mistook to be stars. As seen by him, these stars were large. So if he thought those were stars, then he should have concluded that the stars are much closer to the earth than they actually are.

Regarding the issue with the Church, you are right. I did not mean to imply his mission in life was to destroy catholicism. It was that he wanted to use his information to make points about religion, e.g. that Scriptures could not be interpreted literally. Certainly he has the "right" to say that now, but he didn't then; and, more importantly, the fact that he was a scientist did not place him in a better position to argue about the the philosophical accuracy of catholic beliefs. But having a Ph.D after his name could be misinterpreted, by the public, as giving him some sort of superior knowledge about everything.

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Yeah, certainly he was will... (Below threshold)

May 8, 2010 5:46 PM | Posted by Rob: | Reply

Yeah, certainly he was willing to forget or fudge his data when it suited him. Thanks for clearing up what you meant about the Church - that makes more sense now.

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Darüber. German employs äüö... (Below threshold)

May 10, 2010 12:30 PM | Posted by nwt: | Reply

Darüber. German employs äüö and it is a real pain to read text that asininely as well as wrongly leaves them out.

Wittgenstein also wrote "muß", not "muss"; the latter is part of the 1996 spelling reform changes.

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German grammatical symbols ... (Below threshold)

May 10, 2010 11:00 PM | Posted by Jack Coupal: | Reply

German grammatical symbols (umlaut, etc.) and spelling are rare in English language North American web site postings due to absence of routine software providing them.

Same holds true for French (Canadian) posts where accent marks are ignored.

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