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InvestmentMAGE
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InvestmentMAGE's Blog : Debt Ceiling Kabuki

Date July 31, 2011  Edited: July 31, 2011    Comments Comments (4)    Rate this post Recommend This Post (174)   
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Debt Ceiling Kabuki. 1


  The most likely outcome (Nash equilibria) is: The standoff will simply end with an 11th hour concession swap agreement, (a "Deus Ex Machina") no new taxes for the Republicans and a raised debt ceiling for the Democrats. 2 


It should happen this week, the sooner the better.


I would anticipate a near term rally once a deal is announced.


Invest wisely,


MAGE


1. The metaphor comparing politics to a "kabuki dance" refers to carefully scripted, yet meaningless movements that do not reflect reality, and is probably offensive to kabuki dancers.


2. http://experimentsocialthe.blogspot.com/2011/07/dr-john-nash-and-debt-ceiling-standoff.html

Tags : BRINKMANSHIP   SDS   FAZ   VXX   CHICKEN   GAME THEORY   DEBT CEILING  

4 Comment(s):

Author MackTheKnife     Date July 31, 2011 07:30 Abuse this post Report Abuse
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Howdy, Mage!

I would anticipate a near term rally once a deal is announced.

I also anticipate the equity market may experience a relief rally under the circumstances you describe. However, I expect its magnitude may be constrained by the condition of the U.S. economy, which both proprietary and nonproprietary data describe as -- er, uh -- not so hot (http://tinyurl.com/2d5zdv).

Good luck!

MackTheKnife
Author Burtman     Date July 31, 2011 10:12 Abuse this post Report Abuse
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Hmmm, wonder what will really happen if everyone is expecting a rally?
Author MightyMo     Date July 31, 2011 11:42 Abuse this post Report Abuse
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I'd be buying index puts if there is a relief rally.
Author InvestmentMAGE     Date August 1, 2011 12:45 Abuse this post Report Abuse
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Hey guys,

Looks like you all are right! This was the shortest relief rally I have ever seen.

MAGE

You may know where the market is heading, but you don't know where it's going after that.
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