SOUTH SEA BUBBLES OR SOUTH SUPER TRADING?? Engineers can calculate to degree of accuracy, the mass/weights and structures, engines and horse powers, gears and rollers, electron and current flows etc,. Mathematician can through tedious process come up with one and only answer. Surveyors can get their bearings to pin point, no doubt. To a chemist reacting sodium with chlorine anywhere in the world is ALWAYS NaCl With the pursuit and actions of those stated above, there is certainty and precision in the outcome of their action. But to an economist, there is no precision but bunch of assumptions; he is always working in a hazy/blurred environment, confronted with randomness and madness, so always employing the tools of optimization and estimation for better explanations or the opinions are differing and arguable. Here is an experience of someone who sees long distance planetary bodies with clear visibility and precision using his primitive telescope but failed to calculate the madness and randomness of people close by that he interacts with when it comes to investment (in stock market). ISAAC NEWTONS NIGHTMARE (SOUTH SEA BUBBLES) The cleverest man Sir Isaac Newton gave us three physical laws of motion but hasnt given us the fourth one may be regarding investment (especially in stock market), had he ever thought of it. [Anyway, he was a physical scientist not a social scientist]. His third law owing to vertical explanation is correct “what goes up must come down” but he never thought about his horizontal interaction when it comes to investment traders “what comes around goes around” Sir Isaac Newton in the year 1720 – After losing a bundle of money (fortune) in the South Sea Bubble, a company doomed by insider dealing and inflated stock prices said: I can calculate the movement of the stars (heavenly bodies), but not the madness of men.” If he had not been traumatised by loss, Sir Isaac might have gone to Fourth Law of Motion and might say: For investors as a whole, returns decreases as motion increases........hehehe The cleverest man Sir Isaac got it all wrong (caused him his fortune) when it comes to stock market investment/gambling, but for PNG Prime Minister, Peter ONeil who unilaterally thinks otherwise that it is all ok for him to gamble PNGs future in a stock market is such a mad rush and a mad decision. Borrowing to finance the deficit budget may be acceptable, though not economically sound given the existing debts but borrowing such huge amounts (K3 billion) to invest in a stock is something only a mad man can do. Why did ONeil rushed this commercial loan deal by by-passing constitutional and economic requirements and processes? Was PNG in a state of emergency or in a real desperate financial bail out situation? Does he ever give a damn shit about the success or failure (risk) of the Oil Search gamble or of the macroeconomic consequences in the domestic economy? Whose interest is the rush mad deal for, the 7 plus million people? Is he ONeil only a custodian or a owner of this country? PNG IS NOT SOUTH SUPER TRADING OR VOCO POINT TRADING... The SWF was created to channel/hold surplus earnings from LNG for investments purpose and for managing the domestic economy (stability). The K3 billion loan is essentially a pre-SWF transaction, clearly deemed dubious and illegal . The government should facilitate for the people or private sector to participate in commercial business activities. The government should instead rely on taxes from them and concentrate on its constitutional duty of service delivery (not involve in heavy and risky commercial investment undertakings or worse of it gambling in a stock market).
Posted on: Sun, 20 Apr 2014 12:31:09 +0000