Comments on: Another Finger of Instability

By: Thrifty Anite tests resolve : Interactive Investor Blog

Thrifty Anite tests resolve : Interactive Investor Blog — Tue, 06 Oct 2009 07:01:43 +0000

[...] John Maudlin says that the simple cause and effect economics we read about, is no match for reality. [...]

By: TheTradingReport » Blog Archive » John Maudlin: When Debt Gets Bigger than GDP It’s Big Trouble

Mon, 05 Oct 2009 10:55:46 +0000

[...] Mauldin’s post this week, via Barry Ritholtz, goes over some of Mauldin’s ongoing concerns specifically the debt we [...]

By: John Maudlin: When Debt Gets Bigger than GDP It’s Big Trouble | Reaction Radio

Mon, 05 Oct 2009 09:50:35 +0000

[...] Mauldin’s post this week, via Barry Ritholtz, goes over some of Mauldin’s ongoing concerns specifically the debt we [...]

By: WaveCatcher

WaveCatcher — Sun, 04 Oct 2009 14:39:38 +0000

Excellent article. John, I recall one of your articles a couple of years ago, before the collapse, that referred to Hyman Minsky’s fingers of instability. It has stuck in my mind ever since, such a cogent metaphor for our piles of debt.

Perhaps the first avalanche has abated, but the government seems intent on rebuilding the pile of debt ever higher.

By: BG

BG — Sun, 04 Oct 2009 14:39:08 +0000

Excellent article. Definitely worth reading and pondering the possibilities it presents.

JoWriter writes:

As grains of sand are *taken off* the pile, doesn’t the instability increase just as much as putting the grains on the pile does? The mind reels at the possibilities.

Excellent point.

Good poop.

By: Mark E Hoffer

Mark E Hoffer — Sun, 04 Oct 2009 14:07:32 +0000

Nice article, John. I think you’ll find this one to ‘age well’, too.

Also, certainly, HBD !~ and, remember, One’s true age is never measured by # s, but, most importantly, by attitude.

Past that, this area of study should, now, seem, to those that have read your letter, more accessible –
http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Fractal+Economics

and, my favorite abbreviation of Minsky’s Insight: “Stability breeds Chaos.”

By: CJ

CJ — Sun, 04 Oct 2009 10:00:21 +0000

First, Nobel laureate Hyman
Minsky points out that stability leads to instability.”

Unfortunately, Hyman Minsky never won any Nobel prizes, and AFAIK never won any kind of academic honors. That was probably because he didn’t use any mathematical models, unlike the slew of experts who signally failed to foresee the current crisis.

By: How the Common Man Sees It

How the Common Man Sees It — Sun, 04 Oct 2009 05:11:05 +0000

The current political class and their intentions are dangerously close to killing the golden goose. It is one thing to steal the eggs; it is an altogether different thing to kill the goose through ignorance of the consequences. And the size of the deficit, for as long as they plan to have it, will most assuredly kill the goose.

That may not say it all but it certainly says a lot

By: insaneclownposse

insaneclownposse — Sun, 04 Oct 2009 02:43:19 +0000

Well put. Timing the beginning of the next crisis is the key to investing success these days. In 2006-2007, bears were astonished at the amount of time it took for the house of cards to fall apart. I think investors will be just as amazed at how quickly the next crisis begins. The key difference is that before the financial system blew up, the U.S. had a vast reserve of credibility. Now, not so much.

By: JoWriter

JoWriter — Sat, 03 Oct 2009 21:15:14 +0000

@ pmorrisonfl – maybe there wasn’t enough room in the article to make that observation about debt at banks. Some of those piles have been shifted over to the government.

Another thing not dealt with in this excellent article is: how does this theory of instability – stability and critical mass apply to the huge *decrease* in personal credit card debt we are seeing? A clerk/owner of a gift/stationery store told me that hardly anyone uses credit cards anymore. Could this be a reverse ‘sand pile?’ As grains of sand are *taken off* the pile, doesn’t the instability increase just as much as putting the grains on the pile does? The mind reels at the possibilities.