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Jerome, you still don't get that there are no facts but perceptions of facts?

"It's the statue, man, The Statue."
by Migeru (migeru at eurotrib dot com) on Tue Mar 27th, 2007 at 06:11:45 AM EST
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There is much "perception" behind indeed. In effect, we have - gasp - a social agreement of how we play the market game. As long as everyone agrees that a market is going up and that people will keep buying ever more pricey assets, everything will be going fine... except that there need to be ever more buyers. A collective illusion can go far, but not infinitely far.

But besides facts and perception of facts, we have numbers. They keep "surprising" WSJ analysts a few months in a row.

by das monde on Tue Mar 27th, 2007 at 06:39:57 AM EST
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In effect, we have - gasp - a social agreement of how we play the market game.

Keynes called it a "convention":

In practice we have tacitly agreed, as a rule, to fall back on what is, in truth, a convention. The essence of this convention--though it does not, of course, work out quite so simply--lies in assuming that the existing state of affairs will continue indefinitely, except in so far as we have specific reasons to expect a change. ...

Nevertheless the above conventional method of calculation will be compatible with a considerable measure of continuity and stability in our affairs, so long as we can rely on the maintenance of the convention.

For if there exist organised investments markets and if we can rely on tthe maintenance of the convention, an investor can legitimately engourage himself with the idea that the only risk he runs is that of a genuine change in the news over the near future, as to the likelihood of which he can attempt to form his own judgement, and which is unlikely to be very large. ... Thus investment becomes reasonably 'safe' for the individual investor over short periods, and hence over a succession of short periods however many, if he can fairly rely on there being no breakdown of the convention and on his therefore having an oportunity to revise his judgement and change his investment, before there has een time for much to happen. ...

... But it is not surprisingthat a convention, in  an absolute view of things so arbitrary, should have its weak points. ...



"It's the statue, man, The Statue."
by Migeru (migeru at eurotrib dot com) on Tue Mar 27th, 2007 at 06:46:26 AM EST
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What prevents us from having a social agreement (or convention) that escalating a housing market is not great or fair way to get rich fast?
by das monde on Tue Mar 27th, 2007 at 06:52:27 AM EST
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Nothing, it's just different from the agreement we do have.

But I'm afraid that, by and large, cultural norms (like scientific paradigms) only change when the old people die off.

"It's the statue, man, The Statue."

by Migeru (migeru at eurotrib dot com) on Tue Mar 27th, 2007 at 06:54:18 AM EST
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I do not think that old people are the problem. They still know how to earn a living in harder ways. It is younger people that may have too much expectations that things can go easily indefinitely. Similarly, "new" people from emerging economies might be the biggest enthusiasts of the boom[&bust] game. They just learned the way to get rich... No one is educating them anything else.
by das monde on Tue Mar 27th, 2007 at 07:05:49 AM EST
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I don't mean "old people" as in "elderly". I mean that the people who embody the current cultural norm that you decry have to die off (or become outnumbered and be overcome) before the cultural norm can go away and be replaced by a new one.

"It's the statue, man, The Statue."
by Migeru (migeru at eurotrib dot com) on Tue Mar 27th, 2007 at 07:09:41 AM EST
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I wonder, does the ecosystem of cultural norms has to be dominated by a few dominant norms, one for each aspect? Do weaker cultural norms have no means to "remain themselves" and form an opposition to a dominant norm? The ecosystem of living styles seems to be very Jurrasic (or even pre-Cambrian) at the moment: everyone aspires to be more among top few percent most powerful or affluent; no one "knows" how to survive happily with the satisfaction you have.
by das monde on Tue Mar 27th, 2007 at 08:05:24 AM EST
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Another example: the "old culture" of a job for life and a single "career" that starts with your choice of university degree is being replaced by something new. The old generation won't unlearn their ways and a sizeable proportion of the new generation has learnt that cultural norm all too well. So the old generation needs to die off and the part of the new generation embodying the old mores have to be outnumbered before a new cultural norm more adapted to the current economic context can take center stage.

"It's the statue, man, The Statue."
by Migeru (migeru at eurotrib dot com) on Tue Mar 27th, 2007 at 07:13:36 AM EST
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But some things do spread damn fast - "virally" -nonetheless.

And the "napsterisation", due to internet "peer to peer" connectivity, means emerging phenomena such as Voice over IP catch on a lot quicker.

Are generations becoming more adaptable?

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Mar 27th, 2007 at 07:24:13 AM EST
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I think you'll find people adopt technologies in their formative years (late teens and early twenties) and after that they take a lot of effort to switch.

What happens is that technologies are starting to go obsolete and disappear from the market over a decade or two, so people are being forced to adopt new technologies more than they used to.

"It's the statue, man, The Statue."

by Migeru (migeru at eurotrib dot com) on Tue Mar 27th, 2007 at 07:30:55 AM EST
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What should we expect of the future? Will technologies appear and go obsolete in a few months? Or is this crazy tempo somehow temporarily, just for a few decades?
by das monde on Tue Mar 27th, 2007 at 08:07:34 AM EST
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