Reasons Matter

Watching Theil on 60 Minutes got me thinking. Theil, chess wizard, Pay Pal inventor, Facebook charter investor; is paying 6 figures  for students to drop out and pursue their entrepreneurial windmills. He is right about much of what he preaches. Education, like any other asset class subsidized by the government, experiences bubble like price appreciation. The output rises but not the quality. Degrees propagate like McMansions. Higher education is about becoming an adult.

Getting the topic right isn't good enough, however. As with markets, reasons matter. Being right for the wrong reason is the last bastion of a charlatan. I have heard harsh personal attacks on the likes of Bernanke and Geithner for the decisions they have made. When no debt collapse occurs and the value of the dollar reverses course- with no adjustment to policy- they remain ignorant but pundits somehow become "right." Teenagers with charts and no understanding of Long Term Repo Operations or Target 2, let alone Operation Twist; cheer the rallying bond market.  Massive and unending Baby Boomer money flow or serendipitous mistakes by foreign central banks are rarely mentioned.

Reasons matter. They are what separate us from the predetermined fates of the gods. Reasons make us human. Those kids that Theil is paying to drop out? They're the mathletes that blew up LTCM. They're London Whales without the ties. They breed black swans faster than sea monkeys from back pages of comic books. When the dust settles from the current clusterfuck, will history say that SoandSo "called the fall?" Should we take succor from the Nostradamus-like prediction? Why not demand change if the course is so obvious? Should we be willing to get the reasons right? Should we be so brazen as to demand that our activities carry gravitas? God may not play dice with the universe but the rest of us? Coming out!

2 thoughts on “Reasons Matter

  1. lwmaus

    Your essay stimulates thought and I like what you say and how you said it. I believe in having a vision. A consistent vision over time. Not one that bends with the wind. The vision of the Globalist is not one that I share. We all are living now in the maelstrom results of the Globalist vision that has been consistently applied for over a hundred years. We (the world populous) are strongly interconnected now, particularly financially, by Globalist design. The Globalist elites do not care about the Constitution (the laws) of the USA. We have lost a tremendous amount of personal liberty and sovereignty, and not only in the USA. The not so invisible hand of the Globalist vision is hard at work now in Chicago (G8). I do hope in the end it fails but recent past history says that it wont. To your point, a classical education is not in demand nor is it even desired now. We seem to be technocratic robots bouncing from one crisis to the next. The span of institutional memory is better measured in milliseconds. I wish I had a more optimistic outlook but current circumstances are getting in the way. Good trading and put mine on red and let it ride ..

  2. Ivan

    I like the craps table metaphor. Roulette is another one. Reasons do matter. Casinos let you keep track of all the prior spins of a roulette wheel (they’ll even do it for you), because some folks believe there’s information in past history that they can use to place bets. There’s not. That doesn’t stop some people from weaving an “analysis” to form the reasons for their betting actions. The casinos don’t let you use historical cards dealt information at the blackjack table (they throw you out if they catch you trying). That doesn’t stop people from playing their systems.

    In our financial markets we get plenty of data on history. But in the casino that has become the markets sometimes this history is inconsistent with the economic positions we’ve taken or the bets we’ve made. Instead of the data flow causing people to change theses or adjust bets, many have chosen to challenge the data’s pedigree, significance, consistency or existence. Reasons do matter because they are born from the truth, not from what some might seek to fashion as the truth. As we are starting to see in a few places around the globe, particularly in Europe, denials of truth and reason can’t and don’t last forever. It’s the meanest type of reversion.


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