The Recession is Over – Or is It? Wrong But Inevitable Decisions

Filed Under (Financial News) by admin on 19-02-2010

Now we do know that the number of connections in the lattice and fractal structure determines the course of events. After the debase nodes started to break the supernodes had to follow.

The theory gives simple answers on how the supernodes should have reacted to avoid the breakage to move the system into it previous state but they didn’t. On the contrary, the worst possible decision was taken that leads to the further destabilization of the system, but it is also the immediate result of the theory. Therefore, before blaming anyone like governments or banks, we should understand that they had no other choice but to take the worst decision.

The extra feature that we should take into consideration is called clustering. The clustering principle in our case is based on the fractal levels. For example the highest nodes or supernodes are combined into first cluster, lower nodes into second and so on up-to the lowest nodes. Interactions inside the clusters are the strongest and changes start to happen inside the cluster. Like in our case the lowest cluster started to change the figure that caused the highest clusters to follow. Therefore clusters tend to have self-preservation built into them.

What happened when banks started to break-up and go into toxic debts? Correct, the cluster started to change it’s shape in the same manner other highest nodes had to follow. But other highest nodes are… governments! So the very existence of passing from hand to hand governments in their present form was at stake. And governments had to rush to save the fellow suppernodes in order to stabilise their clusters immediately. Governments were creating extra economy connections to replace the broken ones. Money started to pour into the banking system to repair broken connection and restore the cluster stability. This created extra connection but also pulled some government connections (tax) and split them (budget + bailout) and “stabilized” the highest part cluster.

But this “stabilization” is fictional. Lets explain this in more details. First of all we will make another definition: horizontal connections – connections within the cluster, and vertical connections – connections between clusters. Therefore vertical connections were pulled out to create horizontal, reducing vertical connections and in fact still reducing the total number of connections for a node. The idea was that the banks would start recreating vertical connections again from their side – “lending money” but it didn’t materialised. Remember, clusters attend to to create connections inside the cluster. This is not the only reason, the collapse of real estate send the current banking system into permanent turmoil by means of triggering “risk analysis” and preventing banks from making new connections. Therefore connection inside the supernode cluster and the closest semi-supernode cluster were given a priority, making the situation even worse. This created more and more difference between fractals in top and bottom clusters, adding to instability.

Many top economists were saying “let some banks go bust, this is the only way, the rest will take over the system”. And they didn’t learn why governments are not doing it. As you can see our theory explains this in full, instability in supernode cluster would immediately create instability of all nodes and this includes governments. Therefore no politics, advisors or anything could affect the decision – simple self-preservation of the supernodes was dictating the wrong solution and it was inevitable.

This also immediately answers other question: why government didn’t put much lesser effort to save, hindrance’s say, Woolworths? Again, simple answer, Woolworths is from a different grow in bunches and thence it would have never been saved from outside the cluster. Full stop!

M.Laziev (Expert Consultant)

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