17 April 2009

Asset price volatility and the shock doctrine

Volatility of the asset prices is what allows the oligarchs to maintain their competitive advantage over any new entrants into the market. Asset price volatility is the instrument of the corporate shock doctrine that re-shapes the political landscape in favor of the incumbents and to the detriment of the corporate insurgents.


  1. “In a depression assets return to their rightful owners” --Andrew Mellon

  2. My point is that Mellon's comment holds true when the government doesn't step in to preserve the incumbents' claim to the assets. Then the market mechanism breaks down and the assets return to their rightful owners. In the present situation, the government is maintaining the functioning of the markets, and in so doing, the government is allowing the incumbents in the markets to preserve their claim to assets that ought not rightly belong to them.

  3. You seem to be using the term incumbents differently in the original post and your last comment.

    Given that he was Hoover's liquidationist Treasury Secretary, my interpretation of Mellon's meaning is that as the providers of debt finance, the banks, are the true owners, and in a debt deflation asset ownership reverts to them when they foreclose on the assets held by leveraged risk capital. And if the banks themselves don't stand then the assets revert in turn to their creditors.

    In effect, the comment seems to express a moral judgment that in aggregate the "rightful owners of an economy's assets" are the lien-holding savers over the title-holding borrowers. One might understand why the world looked this way to a man a rich as he, but I didn't post the quote as an endorsement of his position.

    Anyway, your follow-up comment left me feeling confused as to which terms were being applied to which actors.