Last night I got a text message from a friend about something that got me thinking about it the next day. At first, I was not that interested because it was such a cliché question. I used to think about this question long time ago but kind of forgetting it now. Many philosophers have been asking the same question: what makes us happy? Aristotles, hedonists, utilitarists, etc. are among them.
Here is the conversation:
He, 10:40 pm
Could you say one reason why we should be happy in this life?
Me, 10:54 pm
A lot: instant noodle when it’s raining, lying down on grass field facing up d sun, long talk with a friend, surprising emails or calls … etc. Hehe, not serious?
He, 11:07 pm
They r temporary. U wont lie down on d grass field all year, or have a surprise call every day. Just one thing as a reason 4 us to be happy in this life … (?)
Me, 11:17 pm
I don’t thnk theres ONE thing that could make people happy permanently. It’s a combination of many thgs and has more 2 do with our state of mind.
He, 11:32 pm
If this is so, d one thing we seek after is d happy state of mind: how we perceive this life. It depends on d state of mind, not things in d world.
Me, 11:42 pm
Yeap. Maybe the correct word is not ‘perception’, too idealistic. It should include our attitude, approach towards life. Why asking? Seeking 4 happiness? Hehe
He, 11:57 pm
Why asking? Doesn’t Heidegger say question is d piety of thinking? I am practicing it. Life isn’t that interesting but that’s why it is interesting to think about it.
Me: 12:11 am
Really? I thnk life is soo intrstng that’s why it is interesting to thnk abt it ;-). Full of unpredictable thngs, mystery, irony, anxiety, unspeakable moments … Sometimes despair, pain, boredom color it. But they make life more intrstng. It’s a truly great work of art.
But when I was writing down my last message I actually forgot that I myself had been too focused on goals or targets (no matter how authentic they are). I thought achieving the goals would make me feel happy and enable me to escape the gloomy, depressing, disturbing emotions or state of mind such as despair, anguish, agony, boredom. Unfortunately, they are a fact of life. They are parts of life. Instead of running away from them maybe I should befriend them. Oriah Mountain Dream perfectly says it in the Invitation:
It doesn’t interest me what planets are squaring your moon...
I want to know if you have touched the centre of your own sorrow
if you have been opened by life’s betrayals
or have become shrivelled and closed
from fear of further pain.
I want to know if you can sit with pain
mine or your own
without moving to hide it
or fade it
or fix it.
Thursday, May 31, 2007
Sunday, May 27, 2007
Hot Money and Simulacrum
How exactly the stock price or exchange rate is determined? There are some models and theories out there but I don't think there has been any single theory that could accurately determine the price and thus predict the price movement. Maybe there will never be. The capital market would be so boring if there was such a model ;-). Let us keep the mystery going so that the analysts have many things to say or revise.
Perhaps Kant is right about the noumena behind the phenomena. The so-called fair market value can be viewed as the noumena which according to Kant cannot be possibly known. Price which should reflect the fair market value seems to live in its own world. As I mentioned in my recent article in Ecosoc, hot money, depending on its size, may turn the price into the signify which gets disconnected from the signified i.e. the fair vale as described by Ernst Cassirer, the Kantian philosopher.
Are we talking about what Baudrillard called simulacrum that is the world of symbol which gets entangled from the real world where you can't tell the real apart from the signs or the symbol? I still believe that though the symbol may wander off the reality for sometime, it cannot go that far. There will be a market mechanism that alllows a correction to occur bringing the price back to its fair value. But which fair value? How do we tell that the price has returned to its value? Here, we are back to the problem of determining the fair value.
Gee, this reminds me so much of the discussion between realism and anti realism in philosophy. One could end up being an objectivist or a relativist or somewhere in between i.e. "I am this but ..." kind of approach. It is always safe to be in the middle, isnt it ;-)?
I personally think that we could somehow "know" the fair value or at least get near it. It could also be just a consensus among the market players but the consensus is always based on something i.e. what they believe the fair value is. The market is not all that anarchic ;-).
Phew ... I have never realized how close the capital market and philosophy can be ...
This is what I wrote in Ecosoc blog :
The hot money phenomenon in Indonesian capital market has prompted a debate over the possibility of another economic crisis. Hot money is the very short-term fund from overseas that is invested in liquid instruments such as capital market instruments or foreign currency. Is the worry justified?
Considering the fact that the foreign reserve of Bank Indonesia is currently at its high record (USD50 billion) many believe that Indonesian government would be able to manage the would-be huge money outflow while keeping a crisis away from the economy. However, I would argue that the possibility of another crisis is just a matter of degree of the magnitude of the real problem itself. The fundamental problem of the hot money itself is often being played down. Even at a normal scale, hot money would create enormous volatility in the financial market especially that of the emerging market because of its size and its short-term period of investing.
Hot money would not only increase the volatility or fluctuation of the prices but would also disconnect the prices from their underlying assets these are the fair value of the companies (for stocks and bonds) and the countries’ economy condition (for currency). It is as if the price became the signify that engaged in its own world, the world of symbol, isolated from the signified i.e. the underlying assets as described by Ernst Cassirer. The signify is supposedly the symbol, something that represents, the signified. But according to Cassirer the signify could then create its own structure and values which are no longer attached to the signified. Is that what happened with the superior performance of the Jakarta Composite Index (JCI) lately? Has the JCI turned into the signify that is disconnected from the fair value of its underlying assets?
Theoretically, the stock prices, aggregately represented by the index, should reflect the fair value of the listed companies. However in reality the price does not always accurately mirror the fair value due to the nature of the price determination or price discovery itself. But in normal situation, there prevails in the market a mechanism that allows correction to happen “guiding” the price back to its fair market value. What exactly this fair value and how it is determined is another discussion. But we could say here that when the price is getting too high it will be “forced” to come down and vice versa. It’s a matter of timing. However certain situation might arise that the correction is being put on hold. This would result in an even bigger correction than it should be. The liquidity shock stemmed from hot money is one example of the situations. Instead of moving in accordance with the changes in fundamental conditions of the companies, price is now largely moved by the liquidity.
Let us take JCI as an illustration. In May 23, 2007, JCI set its highest record at 2.104 after previously creating new a series of high records. For the first 5 months of 2007 (up to May 23) JCI has grown by 16.6%. Meanwhile, the economy only grew by 5.4% p.a. for the first quarter of 2007 or 1.35% for 3 months. We obviously could not do a par-to-par comparison on the index and the economic growth because the index or stock price is based on the ongoing-concern assumption. But the discrepancy between the index growth and the economic growth in itself has been already quite big. It is even bigger should we consider the JCI past performance in 2006 that stood at 55% making it the 3rd best performer worldwide after China and Russia. Therefore, the 5-months performance in 2007 cannot be the continuation of any correction that should have happened in 2006. This discrepancy might even get worse if we take into consideration the problems in real sector that has made the real sector fall behind the financial sector. JCI seems to have been pulled off its root i.e. the fair value of the companies.
It is therefore plausible to argue that Indonesia is currently experiencing a bubble. This bubble phenomenon apparently is not the monopoly of Indonesia. Some other Asian countries particularly China are undergoing similar situation. Shanghai SE A Share Index grew phenomenally by 112% in 2006 and 56% for the first 5 month of 2007. But perhaps China should be seen as a different case from Indonesia. The bubble here in Indonesia is due to the hot money inflow flooding the market with excess liquidity and the effect of the US stock market performance. According to Bank Indonesia (BI), the central bank, in April 2007 around Rp 45 trillion foreign funds are invested in SBI (a sort of treasury bills), Rp 77 trillion invested in bonds and Rp 5.6 trillion invested in stock. BI also estimates that a total of US$10 billion (Rp 90 trillion) of short-term funds may leave the country any time from now. This amount comprises US$1.5 billion in SBI, US$5.5 billion in bonds and US$3 billion in stock. It is a huge amount for Indonesian market. The average daily trading volume of stock in Jakarta Stock Exchange in 2006 was only around Rp 2 trillion and the average daily trading volume of bonds in SSE was about Rp 3 trillion. This small trading volume is corresponding to the small market capitalization. The market capitalization of the Indonesian stock market now is ranging from Rp 1,200 – 1,400 trillion and the market capitalization of the bond market in 2006 was around Rp 470 trillion. It is considerably small compared to other stock market in the region. For instance, the market capitalization of Hong Kong stock market in the end of 2006 was US$ 1,715 billion (Rp15.435 trillion) and the Singapore stock market was US$ 393 billion (Rp3.537 trillion). Accordingly, it is easy to see how the hot money would affect the market with the size as small as Indonesian.
So, should we just sit there and watch the bubble burst out by itself? The current monetary system does not leave much room for the government to mitigate the risk i.e. the liquidity risk. Under the current system, the government has a limited control on the flow of funds coming in and going out of the country. Hot money is the phenomenon of the free market with the free-floating currency regime that indicates how vulnerable the financial market of a country can be. The most vulnerable of all is the emerging markets. Hot money put our financial market and economy at the mercy of the foreign (hedge) fund managers with million of asset under management.
Regardless of whether the phenomenon of hot money this time will trigger another crisis similar to the one in 1997 – 1998 or not, a huge and short-term funds flow could drift the prices away from the fair value of their underlying assets and thus create instability in the financial market and possibly the economy. The hot money flow ought to be kept in check. It is certainly not an easy job but obviously something has to be done.
Perhaps Kant is right about the noumena behind the phenomena. The so-called fair market value can be viewed as the noumena which according to Kant cannot be possibly known. Price which should reflect the fair market value seems to live in its own world. As I mentioned in my recent article in Ecosoc, hot money, depending on its size, may turn the price into the signify which gets disconnected from the signified i.e. the fair vale as described by Ernst Cassirer, the Kantian philosopher.
Are we talking about what Baudrillard called simulacrum that is the world of symbol which gets entangled from the real world where you can't tell the real apart from the signs or the symbol? I still believe that though the symbol may wander off the reality for sometime, it cannot go that far. There will be a market mechanism that alllows a correction to occur bringing the price back to its fair value. But which fair value? How do we tell that the price has returned to its value? Here, we are back to the problem of determining the fair value.
Gee, this reminds me so much of the discussion between realism and anti realism in philosophy. One could end up being an objectivist or a relativist or somewhere in between i.e. "I am this but ..." kind of approach. It is always safe to be in the middle, isnt it ;-)?
I personally think that we could somehow "know" the fair value or at least get near it. It could also be just a consensus among the market players but the consensus is always based on something i.e. what they believe the fair value is. The market is not all that anarchic ;-).
Phew ... I have never realized how close the capital market and philosophy can be ...
This is what I wrote in Ecosoc blog :
The hot money phenomenon in Indonesian capital market has prompted a debate over the possibility of another economic crisis. Hot money is the very short-term fund from overseas that is invested in liquid instruments such as capital market instruments or foreign currency. Is the worry justified?
Considering the fact that the foreign reserve of Bank Indonesia is currently at its high record (USD50 billion) many believe that Indonesian government would be able to manage the would-be huge money outflow while keeping a crisis away from the economy. However, I would argue that the possibility of another crisis is just a matter of degree of the magnitude of the real problem itself. The fundamental problem of the hot money itself is often being played down. Even at a normal scale, hot money would create enormous volatility in the financial market especially that of the emerging market because of its size and its short-term period of investing.
Hot money would not only increase the volatility or fluctuation of the prices but would also disconnect the prices from their underlying assets these are the fair value of the companies (for stocks and bonds) and the countries’ economy condition (for currency). It is as if the price became the signify that engaged in its own world, the world of symbol, isolated from the signified i.e. the underlying assets as described by Ernst Cassirer. The signify is supposedly the symbol, something that represents, the signified. But according to Cassirer the signify could then create its own structure and values which are no longer attached to the signified. Is that what happened with the superior performance of the Jakarta Composite Index (JCI) lately? Has the JCI turned into the signify that is disconnected from the fair value of its underlying assets?
Theoretically, the stock prices, aggregately represented by the index, should reflect the fair value of the listed companies. However in reality the price does not always accurately mirror the fair value due to the nature of the price determination or price discovery itself. But in normal situation, there prevails in the market a mechanism that allows correction to happen “guiding” the price back to its fair market value. What exactly this fair value and how it is determined is another discussion. But we could say here that when the price is getting too high it will be “forced” to come down and vice versa. It’s a matter of timing. However certain situation might arise that the correction is being put on hold. This would result in an even bigger correction than it should be. The liquidity shock stemmed from hot money is one example of the situations. Instead of moving in accordance with the changes in fundamental conditions of the companies, price is now largely moved by the liquidity.
Let us take JCI as an illustration. In May 23, 2007, JCI set its highest record at 2.104 after previously creating new a series of high records. For the first 5 months of 2007 (up to May 23) JCI has grown by 16.6%. Meanwhile, the economy only grew by 5.4% p.a. for the first quarter of 2007 or 1.35% for 3 months. We obviously could not do a par-to-par comparison on the index and the economic growth because the index or stock price is based on the ongoing-concern assumption. But the discrepancy between the index growth and the economic growth in itself has been already quite big. It is even bigger should we consider the JCI past performance in 2006 that stood at 55% making it the 3rd best performer worldwide after China and Russia. Therefore, the 5-months performance in 2007 cannot be the continuation of any correction that should have happened in 2006. This discrepancy might even get worse if we take into consideration the problems in real sector that has made the real sector fall behind the financial sector. JCI seems to have been pulled off its root i.e. the fair value of the companies.
It is therefore plausible to argue that Indonesia is currently experiencing a bubble. This bubble phenomenon apparently is not the monopoly of Indonesia. Some other Asian countries particularly China are undergoing similar situation. Shanghai SE A Share Index grew phenomenally by 112% in 2006 and 56% for the first 5 month of 2007. But perhaps China should be seen as a different case from Indonesia. The bubble here in Indonesia is due to the hot money inflow flooding the market with excess liquidity and the effect of the US stock market performance. According to Bank Indonesia (BI), the central bank, in April 2007 around Rp 45 trillion foreign funds are invested in SBI (a sort of treasury bills), Rp 77 trillion invested in bonds and Rp 5.6 trillion invested in stock. BI also estimates that a total of US$10 billion (Rp 90 trillion) of short-term funds may leave the country any time from now. This amount comprises US$1.5 billion in SBI, US$5.5 billion in bonds and US$3 billion in stock. It is a huge amount for Indonesian market. The average daily trading volume of stock in Jakarta Stock Exchange in 2006 was only around Rp 2 trillion and the average daily trading volume of bonds in SSE was about Rp 3 trillion. This small trading volume is corresponding to the small market capitalization. The market capitalization of the Indonesian stock market now is ranging from Rp 1,200 – 1,400 trillion and the market capitalization of the bond market in 2006 was around Rp 470 trillion. It is considerably small compared to other stock market in the region. For instance, the market capitalization of Hong Kong stock market in the end of 2006 was US$ 1,715 billion (Rp15.435 trillion) and the Singapore stock market was US$ 393 billion (Rp3.537 trillion). Accordingly, it is easy to see how the hot money would affect the market with the size as small as Indonesian.
So, should we just sit there and watch the bubble burst out by itself? The current monetary system does not leave much room for the government to mitigate the risk i.e. the liquidity risk. Under the current system, the government has a limited control on the flow of funds coming in and going out of the country. Hot money is the phenomenon of the free market with the free-floating currency regime that indicates how vulnerable the financial market of a country can be. The most vulnerable of all is the emerging markets. Hot money put our financial market and economy at the mercy of the foreign (hedge) fund managers with million of asset under management.
Regardless of whether the phenomenon of hot money this time will trigger another crisis similar to the one in 1997 – 1998 or not, a huge and short-term funds flow could drift the prices away from the fair value of their underlying assets and thus create instability in the financial market and possibly the economy. The hot money flow ought to be kept in check. It is certainly not an easy job but obviously something has to be done.
Wednesday, May 23, 2007
The "Creative" Nothingness
I have got some interesting questions from Emanuel Bria, a Whiteheadian from East Timor ;-), in regards with my previous posting “Welcoming the Nothingness”. They are so intriguing that I decided to put the answers in a new posting.
I never really think of comparing Heidegger with Whitehead. So I am not sure if I could answer the questions correctly because first of all I don’t know much about Whitehead’s thoughts. Secondly, I am still very much confused about Heidegger’s thoughts. Thus, answering these questions is like walking in the dark … marching into the realm of Nothingness ;-) …
1. The idea of lethe as a "movement", reminds me to Whiteheadian "Creativity". It has no ontological status but "there is" (quite paradoxal isn't it?). For a thing to exist two conditions are necessary (1) Physical pole; (2) conceptual one. And "Creativity" has neither of them. How about this Heideggerian "lethe"?
Lethe = creativity? Well, let’s see what Whitehead said in Process and Reality about creativity: "It is that ultimate principle by which the many, which are the universe disjunctively, become the one actual occasion, which is the universe conjunctively. It lies in the nature of things that the many enter into complex unity. . . . The many become one, and are increased by one."
The catch is on the word “creativity” which suggests a process of creation. I have some questions about this. What is this "complex unity"? Is it something different and new from the “many”? Are the many and the one are of the same genus? What is the relationship between Creativity as the ultimate principle on the one hand and the many and the one on the other hand? I am not clear either with what “there is” here means and whether we could compare it with Heidegger's explanation about Being as “there is” in On Time and Being.
Meanwhile, Heidegger described lethe as a horizon from which things/beings emerge and to which beings rest. So it does not create beings or make it appear. It is actually Ereignis that allows beings to appear within our field of vision (see Discourse on Thought). This Ereignis appropriates Being and beings to their own most. If lethe then appears as a “movement”, it is, in my opinion, because of this Ereignis.
So, can Ereignis be associated with Whiteheadian Creativity then? I am not sure because Ereignis does not create something new, as the one come from the many as in Whitehead’s thoughts. It simply appropriates (Being and beings). Unfortunately there is not much can be derived from Ereignis except that it appropriates. This is so typical Heidegger to say of something as if it was already very clear while it is actually not ;-). But let’s say we accept what he said about that for the sake of argument. In From Enownment, Contribution to Philosophy, he said Ereignis is actually Being that holds sway. To compare it with Whitehead's thoughts, we need to be clear about the nature of Creativity and its relationship to the one and the many.
What Ereignis appropriates is the so-called belonging-together (Zusammengehörigkeit) of Being and beings. Being and beings are not the same, not of the same genus obviously if we could even say that, but they belong together. Between Being and beings there stands this famous ontological difference that forever cannot be bridged. In contrast, the one in Whitehead's thoughts comes from the many.
2. From your example about the shift in perspective of the idea of Being, can we say that "lethe" is similar to the moment of unknowness? If yes, then the category applies here is epistemological rather than ontological. Am I right?
If it is asked how we know that lethe “exists”, then yes it might be an epistemological issue in a sense that we know something is never fully disclosed when it "appears" differently throughout history. But this is where the importance of time in Heidegger’s thoughts sets in. It has got to do with the meaning of Being as presencing with temporal character as opposed to presence which is traditionally understood as something ever-present, constant, unchanging. Being discloses itself (or we can say Being gives itself) in an epochal way. By saying this Heidegger was injecting a sense of historicity to the meaning of Being.
Therefore, it is not simply an epistemological category because (at one point of time) there is no telling about what there is to know or yet to know or whether we could know it or not. Being is hidden not because we have or do not have knowledge about it but because it is the way Being discloses itself. It discloses itself in history which Heidegger called the history of Being. This way, Heidegger is saying goodbye to the never-changing, absolute, Idea of Plato.
This is as far as I understand ... or misunderstood ;-)
I never really think of comparing Heidegger with Whitehead. So I am not sure if I could answer the questions correctly because first of all I don’t know much about Whitehead’s thoughts. Secondly, I am still very much confused about Heidegger’s thoughts. Thus, answering these questions is like walking in the dark … marching into the realm of Nothingness ;-) …
1. The idea of lethe as a "movement", reminds me to Whiteheadian "Creativity". It has no ontological status but "there is" (quite paradoxal isn't it?). For a thing to exist two conditions are necessary (1) Physical pole; (2) conceptual one. And "Creativity" has neither of them. How about this Heideggerian "lethe"?
Lethe = creativity? Well, let’s see what Whitehead said in Process and Reality about creativity: "It is that ultimate principle by which the many, which are the universe disjunctively, become the one actual occasion, which is the universe conjunctively. It lies in the nature of things that the many enter into complex unity. . . . The many become one, and are increased by one."
The catch is on the word “creativity” which suggests a process of creation. I have some questions about this. What is this "complex unity"? Is it something different and new from the “many”? Are the many and the one are of the same genus? What is the relationship between Creativity as the ultimate principle on the one hand and the many and the one on the other hand? I am not clear either with what “there is” here means and whether we could compare it with Heidegger's explanation about Being as “there is” in On Time and Being.
Meanwhile, Heidegger described lethe as a horizon from which things/beings emerge and to which beings rest. So it does not create beings or make it appear. It is actually Ereignis that allows beings to appear within our field of vision (see Discourse on Thought). This Ereignis appropriates Being and beings to their own most. If lethe then appears as a “movement”, it is, in my opinion, because of this Ereignis.
So, can Ereignis be associated with Whiteheadian Creativity then? I am not sure because Ereignis does not create something new, as the one come from the many as in Whitehead’s thoughts. It simply appropriates (Being and beings). Unfortunately there is not much can be derived from Ereignis except that it appropriates. This is so typical Heidegger to say of something as if it was already very clear while it is actually not ;-). But let’s say we accept what he said about that for the sake of argument. In From Enownment, Contribution to Philosophy, he said Ereignis is actually Being that holds sway. To compare it with Whitehead's thoughts, we need to be clear about the nature of Creativity and its relationship to the one and the many.
What Ereignis appropriates is the so-called belonging-together (Zusammengehörigkeit) of Being and beings. Being and beings are not the same, not of the same genus obviously if we could even say that, but they belong together. Between Being and beings there stands this famous ontological difference that forever cannot be bridged. In contrast, the one in Whitehead's thoughts comes from the many.
2. From your example about the shift in perspective of the idea of Being, can we say that "lethe" is similar to the moment of unknowness? If yes, then the category applies here is epistemological rather than ontological. Am I right?
If it is asked how we know that lethe “exists”, then yes it might be an epistemological issue in a sense that we know something is never fully disclosed when it "appears" differently throughout history. But this is where the importance of time in Heidegger’s thoughts sets in. It has got to do with the meaning of Being as presencing with temporal character as opposed to presence which is traditionally understood as something ever-present, constant, unchanging. Being discloses itself (or we can say Being gives itself) in an epochal way. By saying this Heidegger was injecting a sense of historicity to the meaning of Being.
Therefore, it is not simply an epistemological category because (at one point of time) there is no telling about what there is to know or yet to know or whether we could know it or not. Being is hidden not because we have or do not have knowledge about it but because it is the way Being discloses itself. It discloses itself in history which Heidegger called the history of Being. This way, Heidegger is saying goodbye to the never-changing, absolute, Idea of Plato.
This is as far as I understand ... or misunderstood ;-)
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