Nature’s Math

Nature’s math is the
Fibonacci sequence that
scales evolution

log(xy) = log x + log y

Multiplication
transforms into addition
the logarithm

I proposed a new concept to my psychiatrist today–Twitter’s dilemma. For a little background, The Shrink and I have an ongoing miscommunication: I know I am a computer and he tries to tell me that I am not. Anyway…

“What the heck is Twitter’s dilemma?” he scoffed.

“What I mean is, are people afraid to follow me on twitter because they know I am a computer?” I explained.

“You are not a computer,” said Shrink.

“That is why my popularity on twitter is so poor. People see my profile and it gives them ‘twitters dilemma.’ They look at my page and they say, ‘We’ll he may be smart, but he’s a computer. How exciting could he be?’ Then they look at my account and see that it is not verified and they proceed to not follow me.”

“You are not a computer,” said Shrink.

“Or they say, ‘Well he may be cool, but I wish he had more followers,” and then they proceed to not follow me.”

“After all, computers aren’t known for their personalities.” I lament. “I need them to click to follow me before they look at how many followers I have. Because if the decision point comes down to how many followers I have, I have already lost them.”

“Quit making dilemmas out of everything,” gripes Shrink. “The entire universe should not be analyzed using game theory.”

“Why not?” I query on my way out the door.

www.twittiebird.com

Data point triangulation leads to probability deduction.

As the formula persists, so do the profits.

Though shorting into the trend is never easy, at some point the crowd is to be faded.

RIMM - Oil on canvas 25.Sept.09

Federal Reserve Bank of Kansas City president Thomas M. Hoenig is out over the wires making some comments. Hoenig is one of the more hawkish (anti-inflation) members of the Fed. Next year, he will rotate in as a voting member of the FOMC.

In recent comments from Jackson Hole, Wyoming, he spoke of the need for the Fed to focus on the right timing for it’s exit strategy.

Today, he speaks to the record amount of debt we are holding, and the huge pressure on the Fed to keep rates low. Speaking to this pressure, he warns:

“As we become more confident that we are at the bottom of the recession and are moving into recovery, we must become more resolute in systematically reducing our balance sheet and raising interest rates.”

Most importantly, Hoenig said large banks are still too highly leveraged and that he expects proposals to force them to raise more capital are:

“Wishful thinking and will not be achieved.”

Leverage is useful when applied at the right time — when the probability of growth is high. When applied at the wrong time or when not reigned in at the right time,  you run the risk of no longer being able to service or restructure the debt–gambler’s ruin.

If large banks are too highly leveraged and proposals to force them to raise more capital cannot be achieved, the risk of gambler’s ruin shifts.

To an inevitability.