Energy Trading: Asian Options.

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Consider a risky asset (stock, commodity, a unit of energy) with the price S(t), where t ∈ [0, T], for a given T > 0. Consider an option with the payoff

Fu = Φ(u(·), S(·)) —– (1)

This payoff depends on a control process u(·) that is selected by an option holder from a certain class of admissible controls U. The mapping Φ : U × S → R is given; S is the set of paths of S(t). All processes from U has to be adapted to the current information flow, i.e., adapted to some filtration Ft that describes this information flow. We call the corresponding options controlled options.

For simplicity, we assume that all options give the right on the corresponding payoff of the amount Fu in cash rather than the right to buy or sell stock or commodities.

Consider a risky asset with the price S(t). Let T > 0 be given, and let g : R → R and f : R × [0, T] → R be some functions. Consider an option with the payoff at time T

Fu = g(∫0u(t) f (S(t), t)dt) —– (2)

Here u(t) is the control process that is selected by the option holder. The process u(t) has to be adapted to the filtration Ft describing the information flow. In addition, it has to be selected such that

0T u(t)dt = 1

A possible modification is the option with the payoff

Fu = ∫0T u(t) f(S(t), t)dt + (1 – ∫0T u(t)dt) f(S(T), T)

In this case, the unused u(t) are accumulated and used at the terminal time. Let us consider some examples of possible selection of f and g. We denote x+ = max(0, x)

Important special cases are the options with g(x) = x, g(x) = (x − k)+, g(x) = (K − x)+,

g(x) = min(M, x), where M > 0 is the cap for benefits, and with

f(x, t) = x, f(x, t) = (x − K)+, f(x, t) = (K − x)+ —– (3)

or

f(x, t) = er(T−t)(x − K)+, f(x, t) = er(T−t)(K − x)+ —– (4)

where K > 0 is given and where r > 0 is the risk-free rate. Options (3) correspond to the case when the payments are made at current time t ∈ [0, T], and options (4) correspond to the case when the payment is made at terminal time T. This takes into account accumulation of interest up to time T on any payoff.

The option with payoff (2) with f(x, t) ≡ x represents a generalization of Asian option where the weight u(t) is selected by the holder. It needs to be noted that an Asian option , which is also called an average option, is an option whose payoff depends on the average price of the underlying asset over a certain period of time as opposed to at maturity. The option with payoff (2) with g(x) ≡ x represents a limit version of the multi-exercise options, when the distribution of exercise time approaches a continuous distribution. An additional restriction on |u(t)| ≤ const would represent the continuous analog of the requirement for multi-exercise options that exercise times must be on some distance from each other. For an analog of the model without this condition, strategies may approach delta-functions.

These options can be used, for instance, for energy trading with u(t) representing the quantity of energy purchased at time t for the fixed price K when the market price is above K. In this case, the option represents a modification of the multi-exercise call option with continuously distributed payoff time. For this model, the total amount of energy that can be purchased is limited per option. Therefore, the option holder may prefer to postpone the purchase if she expects better opportunities in future.

Why Do Sovereign Borrowers Seek to Avoid Default? A Case of Self-Compliance With Contractual Terms.

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Every form of debt is typically a contractual agreement between a lender and a borrower. The former initially pays a money amount to the latter, the latter promises regular interest payments in the future (ct) for a certain time period (n years) and then return of the whole nominal value of the contract (C). This practically means that the owner of the contract (creditor) acquires a right on a future stream of payments and the contract a present value for the same reason. In a general case, the present value of the contract is given by the following formula (r is the discounting rate):

PV = ∑t=1n ct/(1 + r)t + C/(1 + r)n

Put simply, the equation gives the present value of the liability discounting all future anticipated payments. Default is by definition any ex post change in the stream of current and future payments on the debt contract. This change makes the contract less valuable to the creditor, reducing its present value for non-execution of the agreed payments.

In the case that the borrower is a private firm (or a household), law and related third party enforcers (including but not limited to the courts) guarantee the execution of the contractual terms. If the borrower in the international financial markets is a sovereign state, things are quite different as the third-party enforcement is typically futile. Sovereign borrowers may voluntarily choose to self-comply to the contractual terms; nevertheless, if not, there is no typical third-party enforcement on the international level. Even in the case that the debt contracts are subject to foreign law, the enforcement powers of the foreign courts are limited. The case of Argentina is indicative enough. As it is now well known and widely discussed, the court judgment of Thomas P. Griesa determined that the Argentine government should pay the holdouts pari passu despite the fact that the great majority of creditors had agreed to a restructuring. The decision had its results and triggered a new mini-default, but by no means could typically enforce a policy change to Argentina. In the relevant literature, this is usually called fundamental asymmetry of the sovereign debt market. In the mainstream misleading analytical context (where states, firms, and households are treated as coherent agents acting on a cost/benefit basis and pursuing the optimum position) the key question is the following: why do sovereign borrowers comply with the contractual terms much more often than expected?

Sovereign borrowers avoid default and self-comply with the contractual terms because the strategic benefits from a default do not exceed the anticipated losses. There is truth in this argument. For instance, a sovereign default would heavily affect the domestic financial system, which is usually not only exposed to domestic sovereign debt but would also face serious impediments in its organic connection to the international markets (in the case of a developed capitalist economy, this implies extra financial costs for the private sector and thus serious macroeconomic consequences for employment and growth). One should also take into consideration the economic and political consequences of a default, since negotiations with the creditors take considerable time. The list of cost/benefit analysis can be quite long, but this train of thought misses the crucial factor: the very nature of contemporary capitalist power.

Cost-benefit analysis takes a concrete form only within the contemporary context of capitalist power. International financial markets do not curtail the range of state sovereignty – they reshape the contour of capitalist power. Contemporary capitalism (the term “neoliberalism” is too restrictive to capture all its aspects) amounts to a recomposition or reshaping of the relations between capitalist states (as uneven links in the context of the global imperialist chain), individual capitals (which are constituted as such only in relation to a particular national social capital), and “liberalized” financial markets. This recomposition presupposes a proper reforming of all components involved, in a way that secures the reproduction of the dominant (neoliberal) capitalist paradigm. From this point of view, contemporary capitalism comprises a historical specific form of organization of capitalist power on a social-wide scale, wherein governmentality through financial markets acquires a crucial role. The new condition of governmentality (reproduction of capitalist rule) thus takes the form of a “state-and-market” type of connection. Regardless of the results of cost-benefit calculus, the organic inclusion of the economy in the international markets is a critical premise for the organization of capitalist rule. On the other hand, it is also clear that a recomposition of the relation to international markets (national self-sufficiency) can easily incite the most regressive and authoritarian forms of state governance, if it is not accompanied by a radical shift in the class relations of power.

Causal Isomorphism as Homeomorphism, or Diffeomorphism or a Conformal Isometry? Drunken Risibility.

Let (M, gab) and (M′, g′ab) be (temporally oriented) relativistic spacetimes.

We say that a bijection φ : M → M′ between their underlying point sets is a ≪-causal isomorphism if, ∀ p and q in M,

p ≪ q ⇐⇒ φ(p) ≪ φ(q).

Then we can ask the following: Does a ≪-causal isomorphism have to be a homeomorphism? A diffeomorphism? A conformal isometry? (We know in advance that a causal isomorphism need not be a (full) isometry because conformally equivalent metrics gab and Ω2gab on a manifold M determine the same relation ≪. The best one can ask for is that it be a conformal isometry – i.e. that it be a diffeomorphism that preserves the metric up to a conformal factor.) Without further restrictions on (M, gab) and (M′, g′ab), the answer is certainly “no” to all three questions. Unless the “causal structure” of a spacetime (i.e., the structure determined by ≪) is reasonably well behaved, it provides no useful information at all. For example, let us say that a spacetime is causally degenerate if p ≪ q for all points p and q. Any bijection between two causally degenerate spacetimes qualifies, trivially, as a ≪-causal isomorphism. But we can certainly find causally degenerate spacetimes whose underlying manifolds have different topologies. But a suitably “rolled-up” version of Minkowski spacetime is also causally degenerate, and the latter has the manifold structure S1 × R3.

There is a hierarchy of “causality conditions” that is relevant here. Hawking and Ellis impose, with varying degrees of stringency, the requirement that there exist no closed, or “almost closed,” timelike curves. Here are three.

Chronology: There do not exist smooth closed timelike curves. (Equivalently, for all p, it is not the case that p ≪ p.)

Future (respectively, past) distinguishablity: ∀ points p, and all sufficiently small open sets O containing p, no smooth future-directed (respectively, past-directed) timelike curve that starts at p, and leaves O, ever returns to O.

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Strong causality: For all points p, and all sufficiently small open sets O containing p, no smooth future-directed timelike curve that starts in O, and leaves O, ever returns to O.

It is clear that strong causality implies both future distinguishability and past distinguishability, and that each of the distinguishability conditions (alone) implies chronology.

The names “future distinguishability” and “past distinguishability” are easily explained. For any p, let I+(p) be the set {q: p ≪ q} and let I(p) be the set {q : q ≪ p}. It turns out that future distinguishability is equivalent to the requirement that, ∀ p and q,

I+(p) = I+(q) =⇒ p = q.

And the counterpart requirement with I+ replaced by I is equivalent to past distinguishability.

Fundamental Theorem of Asset Pricing: Tautological Meeting of Mathematical Martingale and Financial Arbitrage by the Measure of Probability.

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The Fundamental Theorem of Asset Pricing (FTAP hereafter) has two broad tenets, viz.

1. A market admits no arbitrage, if and only if, the market has a martingale measure.

2. Every contingent claim can be hedged, if and only if, the martingale measure is unique.

The FTAP is a theorem of mathematics, and the use of the term ‘measure’ in its statement places the FTAP within the theory of probability formulated by Andrei Kolmogorov (Foundations of the Theory of Probability) in 1933. Kolmogorov’s work took place in a context captured by Bertrand Russell, who observed that

It is important to realise the fundamental position of probability in science. . . . As to what is meant by probability, opinions differ.

In the 1920s the idea of randomness, as distinct from a lack of information, was becoming substantive in the physical sciences because of the emergence of the Copenhagen Interpretation of quantum mechanics. In the social sciences, Frank Knight argued that uncertainty was the only source of profit and the concept was pervading John Maynard Keynes’ economics (Robert Skidelsky Keynes the return of the master).

Two mathematical theories of probability had become ascendant by the late 1920s. Richard von Mises (brother of the Austrian economist Ludwig) attempted to lay down the axioms of classical probability within a framework of Empiricism, the ‘frequentist’ or ‘objective’ approach. To counter–balance von Mises, the Italian actuary Bruno de Finetti presented a more Pragmatic approach, characterised by his claim that “Probability does not exist” because it was only an expression of the observer’s view of the world. This ‘subjectivist’ approach was closely related to the less well-known position taken by the Pragmatist Frank Ramsey who developed an argument against Keynes’ Realist interpretation of probability presented in the Treatise on Probability.

Kolmogorov addressed the trichotomy of mathematical probability by generalising so that Realist, Empiricist and Pragmatist probabilities were all examples of ‘measures’ satisfying certain axioms. In doing this, a random variable became a function while an expectation was an integral: probability became a branch of Analysis, not Statistics. Von Mises criticised Kolmogorov’s generalised framework as un-necessarily complex. About a decade and a half back, the physicist Edwin Jaynes (Probability Theory The Logic Of Science) champions Leonard Savage’s subjectivist Bayesianism as having a “deeper conceptual foundation which allows it to be extended to a wider class of applications, required by current problems of science”.

The objections to measure theoretic probability for empirical scientists can be accounted for as a lack of physicality. Frequentist probability is based on the act of counting; subjectivist probability is based on a flow of information, which, following Claude Shannon, is now an observable entity in Empirical science. Measure theoretic probability is based on abstract mathematical objects unrelated to sensible phenomena. However, the generality of Kolmogorov’s approach made it flexible enough to handle problems that emerged in physics and engineering during the Second World War and his approach became widely accepted after 1950 because it was practically more useful.

In the context of the first statement of the FTAP, a ‘martingale measure’ is a probability measure, usually labelled Q, such that the (real, rather than nominal) price of an asset today, X0, is the expectation, using the martingale measure, of its (real) price in the future, XT. Formally,

X0 = EQ XT

The abstract probability distribution Q is defined so that this equality exists, not on any empirical information of historical prices or subjective judgement of future prices. The only condition placed on the relationship that the martingale measure has with the ‘natural’, or ‘physical’, probability measures usually assigned the label P, is that they agree on what is possible.

The term ‘martingale’ in this context derives from doubling strategies in gambling and it was introduced into mathematics by Jean Ville in a development of von Mises’ work. The idea that asset prices have the martingale property was first proposed by Benoit Mandelbrot in response to an early formulation of Eugene Fama’s Efficient Market Hypothesis (EMH), the two concepts being combined by Fama. For Mandelbrot and Fama the key consequence of prices being martingales was that the current price was independent of the future price and technical analysis would not prove profitable in the long run. In developing the EMH there was no discussion on the nature of the probability under which assets are martingales, and it is often assumed that the expectation is calculated under the natural measure. While the FTAP employs modern terminology in the context of value-neutrality, the idea of equating a current price with a future, uncertain, has ethical ramifications.

The other technical term in the first statement of the FTAP, arbitrage, has long been used in financial mathematics. Liber Abaci Fibonacci (Laurence Sigler Fibonaccis Liber Abaci) discusses ‘Barter of Merchandise and Similar Things’, 20 arms of cloth are worth 3 Pisan pounds and 42 rolls of cotton are similarly worth 5 Pisan pounds; it is sought how many rolls of cotton will be had for 50 arms of cloth. In this case there are three commodities, arms of cloth, rolls of cotton and Pisan pounds, and Fibonacci solves the problem by having Pisan pounds ‘arbitrate’, or ‘mediate’ as Aristotle might say, between the other two commodities.

Within neo-classical economics, the Law of One Price was developed in a series of papers between 1954 and 1964 by Kenneth Arrow, Gérard Debreu and Lionel MacKenzie in the context of general equilibrium, in particular the introduction of the Arrow Security, which, employing the Law of One Price, could be used to price any asset. It was on this principle that Black and Scholes believed the value of the warrants could be deduced by employing a hedging portfolio, in introducing their work with the statement that “it should not be possible to make sure profits” they were invoking the arbitrage argument, which had an eight hundred year history. In the context of the FTAP, ‘an arbitrage’ has developed into the ability to formulate a trading strategy such that the probability, under a natural or martingale measure, of a loss is zero, but the probability of a positive profit is not.

To understand the connection between the financial concept of arbitrage and the mathematical idea of a martingale measure, consider the most basic case of a single asset whose current price, X0, can take on one of two (present) values, XTD < XTU, at time T > 0, in the future. In this case an arbitrage would exist if X0 ≤ XTD < XTU: buying the asset now, at a price that is less than or equal to the future pay-offs, would lead to a possible profit at the end of the period, with the guarantee of no loss. Similarly, if XTD < XTU ≤ X0, short selling the asset now, and buying it back would also lead to an arbitrage. So, for there to be no arbitrage opportunities we require that

XTD < X0 < XTU

This implies that there is a number, 0 < q < 1, such that

X0 = XTD + q(XTU − XTD)

= qXTU + (1−q)XTD

The price now, X0, lies between the future prices, XTU and XTD, in the ratio q : (1 − q) and represents some sort of ‘average’. The first statement of the FTAP can be interpreted simply as “the price of an asset must lie between its maximum and minimum possible (real) future price”.

If X0 < XTD ≤ XTU we have that q < 0 whereas if XTD ≤ XTU < X0 then q > 1, and in both cases q does not represent a probability measure which by Kolmogorov’s axioms, must lie between 0 and 1. In either of these cases an arbitrage exists and a trader can make a riskless profit, the market involves ‘turpe lucrum’. This account gives an insight as to why James Bernoulli, in his moral approach to probability, considered situations where probabilities did not sum to 1, he was considering problems that were pathological not because they failed the rules of arithmetic but because they were unfair. It follows that if there are no arbitrage opportunities then quantity q can be seen as representing the ‘probability’ that the XTU price will materialise in the future. Formally

X0 = qXTU + (1−q) XTD ≡ EQ XT

The connection between the financial concept of arbitrage and the mathematical object of a martingale is essentially a tautology: both statements mean that the price today of an asset must lie between its future minimum and maximum possible value. This first statement of the FTAP was anticipated by Frank Ramsey when he defined ‘probability’ in the Pragmatic sense of ‘a degree of belief’ and argues that measuring ‘degrees of belief’ is through betting odds. On this basis he formulates some axioms of probability, including that a probability must lie between 0 and 1. He then goes on to say that

These are the laws of probability, …If anyone’s mental condition violated these laws, his choice would depend on the precise form in which the options were offered him, which would be absurd. He could have a book made against him by a cunning better and would then stand to lose in any event.

This is a Pragmatic argument that identifies the absence of the martingale measure with the existence of arbitrage and today this forms the basis of the standard argument as to why arbitrages do not exist: if they did the, other market participants would bankrupt the agent who was mis-pricing the asset. This has become known in philosophy as the ‘Dutch Book’ argument and as a consequence of the fact/value dichotomy this is often presented as a ‘matter of fact’. However, ignoring the fact/value dichotomy, the Dutch book argument is an alternative of the ‘Golden Rule’– “Do to others as you would have them do to you.”– it is infused with the moral concepts of fairness and reciprocity (Jeffrey Wattles The Golden Rule).

FTAP is the ethical concept of Justice, capturing the social norms of reciprocity and fairness. This is significant in the context of Granovetter’s discussion of embeddedness in economics. It is conventional to assume that mainstream economic theory is ‘undersocialised’: agents are rational calculators seeking to maximise an objective function. The argument presented here is that a central theorem in contemporary economics, the FTAP, is deeply embedded in social norms, despite being presented as an undersocialised mathematical object. This embeddedness is a consequence of the origins of mathematical probability being in the ethical analysis of commercial contracts: the feudal shackles are still binding this most modern of economic theories.

Ramsey goes on to make an important point

Having any definite degree of belief implies a certain measure of consistency, namely willingness to bet on a given proposition at the same odds for any stake, the stakes being measured in terms of ultimate values. Having degrees of belief obeying the laws of probability implies a further measure of consistency, namely such a consistency between the odds acceptable on different propositions as shall prevent a book being made against you.

Ramsey is arguing that an agent needs to employ the same measure in pricing all assets in a market, and this is the key result in contemporary derivative pricing. Having identified the martingale measure on the basis of a ‘primal’ asset, it is then applied across the market, in particular to derivatives on the primal asset but the well-known result that if two assets offer different ‘market prices of risk’, an arbitrage exists. This explains why the market-price of risk appears in the Radon-Nikodym derivative and the Capital Market Line, it enforces Ramsey’s consistency in pricing. The second statement of the FTAP is concerned with incomplete markets, which appear in relation to Arrow-Debreu prices. In mathematics, in the special case that there are as many, or more, assets in a market as there are possible future, uncertain, states, a unique pricing vector can be deduced for the market because of Cramer’s Rule. If the elements of the pricing vector satisfy the axioms of probability, specifically each element is positive and they all sum to one, then the market precludes arbitrage opportunities. This is the case covered by the first statement of the FTAP. In the more realistic situation that there are more possible future states than assets, the market can still be arbitrage free but the pricing vector, the martingale measure, might not be unique. The agent can still be consistent in selecting which particular martingale measure they choose to use, but another agent might choose a different measure, such that the two do not agree on a price. In the context of the Law of One Price, this means that we cannot hedge, replicate or cover, a position in the market, such that the portfolio is riskless. The significance of the second statement of the FTAP is that it tells us that in the sensible world of imperfect knowledge and transaction costs, a model within the framework of the FTAP cannot give a precise price. When faced with incompleteness in markets, agents need alternative ways to price assets and behavioural techniques have come to dominate financial theory. This feature was realised in The Port Royal Logic when it recognised the role of transaction costs in lotteries.

Malthusian Catastrophe.

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As long as wealth is growing exponentially, it does not matter that some of the surplus labor is skimmed. If the production of the laborers is growing x% and their wealth grows y% – even if y% < x%, and the wealth of the capital grows faster, z%, with z% > x% – everybody is happy. The workers minimally increased their wealth, even if their productivity has increased tremendously. Nearly all increased labor production has been confiscated by the capital, exorbitant bonuses of bank managers are an example. (Managers, by the way, by definition, do not ’produce’ anything, but only help skim the production of others; it is ‘work’, but not ‘production’. As long as the skimming [money in] is larger than the cost of their work [money out], they will be hired by the capital. For instance, if they can move the workers into producing more for equal pay. If not, out they go).

If the economy is growing at a steady pace (x%), resulting in an exponential growth (1+x/100)n, effectively today’s life can be paid with (promises of) tomorrow’s earnings, ‘borrowing from the future’. (At a shrinking economy, the opposite occurs, paying tomorrow’s life with today’s earnings; having nothing to live on today).

Let’s put that in an equation. The economy of today Ei is defined in terms of growth of economy itself, the difference between today’s economy and tomorrow’s economy, Ei+1 − Ei,

Ei = α(Ei+1 − Ei) —– (1)

with α related to the growth rate, GR ≡ (Ei+1 − Ei)/Ei = 1/α. In a time-differential equation:

E(t) = αdE(t)/dt —– (2)

which has as solution

E(t) = E0e1/α —– (3)

exponential growth.

The problem is that eternal growth of x% is not possible. Our entire society depends on a

continuous growth; it is the fiber of our system. When it stops, everything collapses, if the derivative dE(t)/dt becomes negative, economy itself becomes negative and we start destroying things (E < 0) instead of producing things. If the growth gets relatively smaller, E itself gets smaller, assuming steady borrowing-from-tomorrow factor α (second equation above). But that is a contradiction; if E gets smaller, the derivative must be negative. The only consistent observation is that if E shrinks, E becomes immediately negative! This is what is called a Malthusian Catastrophe.

Now we seem to saturate with our production, we no longer have x% growth, but it is closer to 0. The capital, however, has inertia (viz. The continuing culture in the financial world of huge bonuses, often justified as “well, that is the market. What can we do?!”). The capital continues to increase their skimming of the surplus labor with the same z%. The laborers, therefore, now have a decrease of wealth close to z%. (Note that the capital cannot have a decline, a negative z%, because it would refuse to do something if that something does not make profit).

Many things that we took for granted before, free health care for all, early pension, free education, cheap or free transport (no road tolls, etc.) are more and more under discussion, with an argument that they are “becoming unaffordable”. This label is utter nonsense, when you think of it, since

1) Before, apparently, they were affordable.

2) We have increased productivity of our workers.

1 + 2 = 3) Things are becoming more and more affordable. Unless, they are becoming unaffordable for some (the workers) and not for others (the capitalists).

It might well be that soon we discover that living is unaffordable. The new money M’ in Marx’s equation is used as a starting point in new cycle M → M’. The eternal cycle causes condensation of wealth to the capital, away from the labor power. M keeps growing and growing. Anything that does not accumulate capital, M’ – M < 0, goes bankrupt. Anything that does not grow fast enough, M’ – M ≈ 0, is bought by something that does, reconfigured to have M’ – M large again. Note that these reconfigurations – optimizations of skimming (the laborers never profit form the reconfigurations, they are rather being sacked as a result of them) – are presented by the media as something good, where words as ‘increased synergy’ are used to defend mergers, etc. It alludes to the sponsors of the messages coming to us. Next time you read the word ‘synergy’ in these communications, just replace it with ‘fleecing’.

The capital actually ‘refuses’ to do something if it does not make profit. If M’ is not bigger than M in a step, the step would simply not be done, implying also no Labour Power used and no payment for Labour Power. Ignoring for the moment philanthropists, in capitalistic Utopia capital cannot but grow. If economy is not growing it is therefore always at the cost of labor! Humans, namely, do not have this option of not doing things, because “better to get 99 paise while living costs 1 rupee, i.e., ‘loss’, than get no paisa at all [while living still costs one rupee (haha, excuse me the folly of quixotic living!]”. Death by slow starvation is chosen before rapid death.

In an exponential growing system, everything is OK; Capital grows and reward on labor as well. When the economy stagnates only the labor power (humans) pays the price. It reaches a point of revolution, when the skimming of Labour Power is so big, that this Labour Power (humans) cannot keep itself alive. Famous is the situation of Marie-Antoinette (representing the capital), wife of King Louis XVI of France, who responded to the outcry of the public (Labour Power) who demanded bread (sic!) by saying “They do not have bread? Let them eat cake!” A revolution of the labor power is unavoidable in a capitalist system when it reaches saturation, because the unavoidable increment of the capital is paid by the reduction of wealth of the labor power. That is a mathematical certainty.

Nihilism Now! Monsters of Energy by Keith Ansell Pearson and Diane Morgan

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Blurb: Have we had enough? But enough of what exactly? Of our mourning and melancholia? Of postmodern narcissism? Of our depressive illness and anxieties of not ‘being there’ any longer? Enough of enough! We now ask: what of the future of the human and of the future of the future? Is it now possible to produce revitalised ways of thinking and modes of existing that have digested the demand for transhuman overcomings and so are able to navi- gate new horizons of virtual becoming? Is it possible to save thought from its current degenerative and vegetative state at the hands of a smug and cosy postmodern academicism? Can we still invent new concepts?

If one follows certain influential contemporary accounts, it would appear as if the experience and question of nihilism have become passé. Is not the urgency informing the question of the `now’ of nihilism redundant and otiose? For Jean Baudrillard, for example, there is now only the simulation of a realised nihilism and little remains of a possible nihilism (a nihilism of the possible) in theory. In relation to previous forms of nihilism ± romanticism, surrealism and dadaism ± we find ourselves in an ‘insoluble position’. Our nihilism today is neither aesthetic nor political. The apocalypse is over, its time has gone and lies behind us:

The apocalypse is finished, today it is the precession of the neutral, of the forms of the neutral and of indifference. (Baudrillard)

Baudrillard goes on to make the claim, terrifying in its full import, that all that remains is a ‘fascination’ for these indifferent forms and for the operation of the system that annihilates us.

Surely, Baudrillard is being ironic when he claims that this mode of nihilism is our current ‘passion’? How can one be passionate about indifference and one’s own annihilation? As Baudrillard acknowledges, this is the nihilism of the observer and accepter. It is the nihilism of the passive nihilist who no longer aspires towards a transcendence or overcoming of the human (condition), but who simply announces and enjoys its disappearance, the spectator watching the spectacle of his own demise. History, politics, metaphysics, have all reached their terminal point, and willing nothingness appears to be the only desire of the will available to the post-modern mind:

The dialectic stage, the critical stage is empty. There is no more stage . . . The masses themselves are caught up in a gigantic process of inertia through acceleration. They are this excrescent, devouring, process that annihilates all growth and all surplus meaning. They are this circuit short- circuited by a monstrous finality. (Baudrillard)

Diane Morgan and Keith Ansell Pearson Nihilism Now Monsters of Energy

The Sibyl’s Prophecy/Nordic Creation. Note Quote.

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The Prophecy of the Tenth Sibyl, a medieval best-seller, surviving in over 100 manuscripts from the 11th to the 16th century, predicts, among other things, the reign of evil despots, the return of the Antichrist and the sun turning to blood.

The Tenth or Tiburtine Sibyl was a pagan prophetess perhaps of Etruscan origin. To quote Lactantus in his general account of the ten sibyls in the introduction, ‘The Tiburtine Sibyl, by name Albunea, is worshiped at Tibur as a goddess, near the banks of the Anio in which stream her image is said to have been found, holding a book in her hand’.

The work interprets the Sibyl’s dream in which she foresees the downfall and apocalyptic end of the world; 9 suns appear in the sky, each one more ugly and bloodstained than the last, representing the 9 generations of mankind and ending with Judgment Day. The original Greek version dates from the end of the 4th century and the earliest surviving manuscript in Latin is dated 1047. The Tiburtine Sibyl is often depicted with Emperor Augustus, who asks her if he should be worshipped as a god.

The foremost lay of the Elder Edda is called Voluspa (The Sibyl’s Prophecy). The volva, or sibyl, represents the indelible imprint of the past, wherein lie the seeds of the future. Odin, the Allfather, consults this record to learn of the beginning, life, and end of the world. In her response, she addresses Odin as a plurality of “holy beings,” indicating the omnipresence of the divine principle in all forms of life. This also hints at the growth of awareness gained by all living, learning entities during their evolutionary pilgrimage through spheres of existence.

Hear me, all ye holy beings, greater as lesser sons of Heimdal! You wish me to tell of Allfather’s works, tales of the origin, the oldest I know. Giants I remember, born in the foretime, they who long ago nurtured me. Nine worlds I remember, nine trees of life, before this world tree grew from the ground.

Paraphrased, this could be rendered as:

Learn, all ye living entities, imbued with the divine essence of Odin, ye more and less evolved sons of the solar divinity (Heimdal) who stands as guardian between the manifest worlds of the solar system and the realm of divine consciousness. You wish to learn of what has gone before. I am the record of long ages past (giants), that imprinted their experience on me. I remember nine periods of manifestation that preceded the present system of worlds.

Time being inextricably a phenomenon of manifestation, the giant ages refer to the matter-side of creation. Giants represent ages of such vast duration that, although their extent in space and time is limited, it is of a scope that can only be illustrated as gigantic. Smaller cycles within the greater are referred to in the Norse myths as daughters of their father-giant. Heimdal is the solar deity in the sign of Aries – of beginnings for our system – whose “sons” inhabit, in fact compose, his domain.

Before a new manifestation of a world, whether a cosmos or a lesser system, all its matter is frozen in a state of immobility, referred to in the Edda as a frost giant. The gods – consciousnesses – are withdrawn into their supernal, unimaginable abstraction of Nonbeing, called in Sanskrit “paranirvana.” Without a divine activating principle, space itself – the great container – is a purely theoretical abstraction where, for lack of any organizing energic impulse of consciousness, matter cannot exist.

This was the origin of ages when Ymer built. No soil was there, no sea, no cool waves. Earth was not, nor heaven above; Gaping Void alone, no growth. Until the sons of Bur raised the tables; they who created beautiful Midgard. The sun shone southerly on the stones of the court; then grew green herbs in fertile soil.

To paraphrase again:

Before time began, the frost giant (Ymer) prevailed. No elements existed for there were ‘no waves,’ no motion, hence no organized form nor any temporal events, until the creative divine forces emanated from Space (Bur — a principle, not a locality) and organized latent protosubstance into the celestial bodies (tables at which the gods feast on the mead of life-experience). Among these tables is Middle Court (Midgard), our own beautiful planet. The life-giving sun sheds its radiant energies to activate into life all the kingdoms of nature which compose it.

The Gaping Void (Ginnungagap) holds “no cool waves” throughout illimitable depths during the age of the frost giant. Substance has yet to be created. Utter wavelessness negates it, for all matter is the effect of organized, undulating motion. As the cosmic hour strikes for a new manifestation, the ice of Home of Nebulosity (Niflhem) is melted by the heat from Home of Fire (Muspellshem), resulting in vapor in the void. This is Ymer, protosubstance as yet unformed, the nebulae from which will evolve the matter components of a new universe, as the vital heat of the gods melts and vivifies the formless immobile “ice.”

When the great age of Ymer has run its course, the cow Audhumla, symbol of fertility, “licking the salt from the ice blocks,” uncovers the head of Buri, first divine principle. From this infinite, primal source emanates Bur, whose “sons” are the creative trinity: Divine Allfather, Will, and Sanctity (Odin, Vile, and Vi). This triune power “kills” the frost giant by transforming it into First Sound (Orgalmer), or keynote, whose overtones vibrate through the planes of sleeping space and organize latent protosubstance into the multifarious forms which will be used by all “holy beings” as vehicles for gaining experience in worlds of matter.

Beautiful Midgard, our physical globe earth, is but one of the “tables” raised by the creative trinity, whereat the gods shall feast. The name Middle Court is suggestive, for the ancient traditions place our globe in a central position in the series of spheres that comprise the terrestrial being’s totality. All living entities, man included, comprise besides the visible body a number of principles and characteristics not cognized by the gross physical senses. In the Lay of Grimner (Grimnismal), wherein Odin in the guise of a tormented prisoner on earth instructs a human disciple, he enumerates twelve spheres or worlds, all but one of which are unseen by our organs of sight. As to the formation of Midgard, he relates:

Of Ymer’s flesh was the earth formed, the billows of his blood, the mountains of his bones, bushes of his hair, and of his brainpan heaven. With his eyebrows beneficent powers enclosed Midgard for man; but of his brain were surely all dark skies created.

The trinity of immanent powers organize Ymer into the forms wherein they dwell, shaping the chaos or frost giant into living globes on many planes of being. The “eyebrows” that gird the earth and protect it suggest the Van Allen belts that shield the planet from inimical radiation. The brain of Ymer – material thinking – is surely all too evident in the thought atmosphere wherein man participates.

The formation of the physical globe is described as the creation of “dwarfs” – elemental forces which shape the body of the earth-being and which include the mineral. vegetable, and animal kingdoms.

The mighty drew to their judgment seats, all holy gods to hold counsel: who should create a host of dwarfs from the blood of Brimer and the limbs of the dead. Modsogne there was, mightiest of all the dwarfs, Durin the next; there were created many humanoid dwarfs from the earth, as Durin said.

Brimer is the slain Ymer, a kenning for the waters of space. Modsogne is the Force-sucker, Durin the Sleeper, and later comes Dvalin the Entranced. They are “dwarf”-consciousnesses, beings that are miðr than human – the Icelandic miðr meaning both “smaller” and “less.” By selecting the former meaning, popular concepts have come to regard them as undersized mannikins, rather than as less evolved natural species that have not yet reached the human condition of intelligence and self-consciousness.

During the life period or manifestation of a universe, the governing giant or age is named Sound of Thor (Trudgalmer), the vital force which sustains activity throughout the cycle of existence. At the end of this age the worlds become Sound of Fruition (Bargalmer). This giant is “placed on a boat-keel and saved,” or “ground on the mill.” Either version suggests the karmic end product as the seed of future manifestation, which remains dormant throughout the ensuing frost giant of universal dissolution, when cosmic matter is ground into a formless condition of wavelessness, dissolved in the waters of space.

There is an inescapable duality of gods-giants in all phases of manifestation: gods seek experience in worlds of substance and feast on the mead at stellar and planetary tables; giants, formed into vehicles inspired with the divine impetus, rise through cycles of this association on the ladder of conscious awareness. All states being relative and bipolar, there is in endless evolution an inescapable link between the subjective and objective progress of beings. Odin as the “Opener” is paired with Orgalmer, the keynote on which a cosmos is constructed; Odin as the “Closer” is equally linked with Bargalmer, the fruitage of a life cycle. During the manifesting universe, Odin-Allfather corresponds to Trudgalmer, the sustainer of life.

A creative trinity plays an analogical part in the appearance of humanity. Odin remains the all-permeant divine essence, while on this level his brother-creators are named Honer and Lodur, divine counterparts of water or liquidity, and fire or vital heat and motion. They “find by the shore, of little power” the Ash and the Elm and infuse into these earth-beings their respective characteristics, making a human image or reflection of themselves. These protohumans, miniatures of the world tree, the cosmic Ash, Yggdrasil, in addition to their earth-born qualities of growth force and substance, receive the divine attributes of the gods. By Odin man is endowed with spirit, from Honer comes his mind, while Lodur gives him will and godlike form. The essentially human qualities are thus potentially divine. Man is capable of blending with the earth, whose substances form his body, yet is able to encompass in his consciousness the vision native to his divine source. He is in fact a minor world tree, part of the universal tree of life, Yggdrasil.

Ygg in conjunction with other words has been variously translated as Eternal, Awesome or Terrible, and Old. Sometimes Odin is named Yggjung, meaning the Ever-Young, or Old-Young. Like the biblical “Ancient of Days” it is a concept that mind can grasp only in the wake of intuition. Yggdrasil is the “steed” or the “gallows” of Ygg, whereon Odin is mounted or crucified during any period of manifested life. The world tree is rooted in Nonbeing and ramifies through the planes of space, its branches adorned with globes wherein the gods imbody. The sibyl spoke of ours as the tenth in a series of such world trees, and Odin confirms this in The Song of the High One (Den Hoges Sang):

I know that I hung in the windtorn tree nine whole nights, spear-pierced, given to Odin, my self to my Self above me in the tree, whose root none knows whence it sprang. None brought me bread, none served me drink; I searched the depths, spied runes of wisdom, raised them with song, and fell once more from the tree. Nine powerful songs I learned from the wise son of Boltorn, Bestla’s father; a draught I drank of precious mead ladled from Odrorer. I began to grow, to grow wise, to grow greater and enjoy; for me words from words led to new words, for me deeds from deeds led to new deeds.

Numerous ancient tales relate the divine sacrifice and crucifixion of the Silent Watcher whose realm or protectorate is a world in manifestation. Each tree of life, of whatever scope, constitutes the cross whereon the compassionate deity inherent in that hierarchy remains transfixed for the duration of the cycle of life in matter. The pattern of repeated imbodiments for the purpose of gaining the precious mead is clear, as also the karmic law of cause and effect as words and deeds bring their results in new words and deeds.

Yggdrasil is said to have three roots. One extends into the land of the frost giants, whence flow twelve rivers of lives or twelve classes of beings; another springs from and is watered by the well of Origin (Urd), where the three Norns, or fates, spin the threads of destiny for all lives. “One is named Origin, the second Becoming. These two fashion the third, named Debt.” They represent the inescapable law of cause and effect. Though they have usually been roughly translated as Past, Present, and Future, the dynamic concept in the Edda is more complete and philosophically exact. The third root of the world tree reaches to the well of the “wise giant Mimer,” owner of the well of wisdom. Mimer represents material existence and supplies the wisdom gained from experience of life. Odin forfeited one eye for the privilege of partaking of these waters of life, hence he is represented in manifestation as one-eyed and named Half-Blind. Mimer, the matter-counterpart, at the same time receives partial access to divine vision.

The lays make it very clear that the purpose of existence is for the consciousness-aspect of all beings to gain wisdom through life, while inspiring the substantial side of itself to growth in inward awareness and spirituality. At the human level, self-consciousness and will are aroused, making it possible for man to progress willingly and purposefully toward his divine potential, aided by the gods who have passed that way before him, rather than to drift by slow degrees and many detours along the road of inevitable evolution. Odin’s instructions to a disciple, Loddfafner, the dwarf-nature in man, conclude with:

Now is sung the High One’s song in the High One’s hall. Useful to sons of men, useless to sons of giants. Hail Him who sang! Hail him who kens! Rejoice they who understand! Happy they who heed!

Nick Land – The Dark Enlightenment: Neoreaction & Modernity

Nick on a fascinating discussion on Neoreaction, progressivism, and the future of Western civilization. Initially a libertarian, Nick eventually stumbled upon the work of Mencius Moldbug. This leads to a consideration of the central ideas of Neoreaction, and then over to discuss neocameralism, an approach to governance that incorporates free market forces. Nick then describes the cathedral, which refers to the alliance of institutions – NGOs, corporations, academia, etc. – responsible for promoting progressivism. Later, Nick draws an apt comparison between the invention of the printing press and the rise of the Internet. The first hour touches on much more, including universalism, modernity, and multiculturalism.

In the members’ hour (which sadly is a paid service!), gears are switched to consider potential solutions to the West’s decline. Nick argues that we must dismantle the managerial state, explaining that the Right shouldn’t count on being able to control it indefinitely. There is then a discussion on Islam and European politics. Nick explains how Europe’s ongoing demographic transformation is poised to drastically alter the European political landscape. Later, we talk about the need for an ideological divorce, as Western nations have become far too divided to function properly. Nick argues that such a divorce would allow for competition between different political factions, revealing which lead to success and which do not. The show concludes with a consideration of whether or not the Left will realize its mistakes before it’s too late.

Knowledge Within and Without: The Upanishadic Tradition (1)

www.krishnapath.org

All perceptible matter comes from a primary substance, or tenuity beyond conception, filling all space, the akasha or luminiferous ether, which is acted upon by the life giving Prana or creative force, calling into existence, in never-ending cycles all things and phenomena – Nikola Tesla

Teilhard de Chardin:

In the eyes of the physicist, nothing exists legitimately, at least up to now, except the without of things. The same intellectual attitude is still permissible in the bacteriologist, whose cultures (apart from substantial difficulties) are treated as laboratory reagents. But it is still more difficult in the realm of plants. It tends to become a gamble in the case of a biologist studying the behavior of insects or coelenterates. It seems merely futile with regard to the vertebrates. Finally, it breaks down completely with man, in whom the existence of a within can no longer be evaded, because it is a subject of a direct intuition and the substance of all knowledge. It is impossible to deny that, deep within ourselves, “an interior” appears at the heart of beings, as it were seen through a rent. This is enough to ensure that, in one degree or another, this “interior” should obtrude itself as existing everywhere in nature from all time. Since the stuff of the universe has an inner aspect at one point of itself, there is necessarily a double to its structure, that is to say in every region of space and time-in the same way for instance, as it is granular: co-extensive with their Without, there is a Within to things.

Both Indian thought and modern scientific thought accept a fundamental unity behind the world of variety. That basic unitary reality evolves into all that we see around us in the world. This view is a few thousand years old in India; We find it in the Samkhyan and Vedantic schools of Indian thought; and they expound it very much on the lines followed by modern thought. In his address to the Chicago Parliament of Religions in 1893, Vivekananda said:

All science is bound to come to this conclusion in the long run, Manifestation and not creation, is the word of science today, and the Hindu is only glad that what he has been cherishing in his bosom for ages is going to be taught in more forcible language, and with further light from the latest conclusions of science.

The Samkhyan school uses two terms to represent Nature or Pradhana: Prakrti denoting Nature in its unmodified state, and Vikrti denoting nature in its modified state. The Vedanta similarly speaks of Brahman as the inactive state, and Maya or Shakti as the active state of one and the same primordial non-dual reality. But the Brahman of the Vedanta is the unity of both the spiritual and the non-spiritual, the non-physical and the physical aspects of the universe.

So as the first answer to the question, ‘What is the world?’ we get this child’s answer in his growing knowledge of the discrete entities and events of the outer world and their inter-connections. The second answer is the product of scientific thought, which gives us the knowledge of the one behind the many. All the entities and events of the world are but the modifications or evolutions of one primordial basis reality, be it nature, space- time or cosmic dust.

Although modern scientific thought does not yet have a place for any spiritual reality or principle, scientists like Chardin and Julian Huxley are trying to find a proper place for the experience of the spiritual in the scientific picture of the universe. When this is achieved, the scientific picture, which is close to Vedanta already, will become closer still, and the synthesis of the knowledge of the ‘without’ and the ‘within’ of things will give us the total view of the universe. This is wisdom according to Vedanta, whereas all partial views are just pieces of knowledge or information only.

The Upanishads deal with this ‘within’ of things. Theirs in fact, is the most outstanding contribution on this subject in the human cultural legacy. They term this aspect of reality of things pratyak chaitanya or pratyak atman or pratyak tattva; and they contain the fascinating account of the stages by which the human mind rose from crude beginnings to clear, wholly spiritual heights in the realization of this reality.

How does the world look when we view it from the outside? We seek an answer from the physical sciences. How does it look when we view from the inside? We seek an answer from the non-physical sciences, including the science of religion. And philosophy, as understood in the Upanishadic tradition, is the synthesis of these two answers: Brahmavidyā is Sarvavidyāpratishthā, as the Mundaka Upanishad puts it.

क्षेत्रक्षेत्रज्ञयोर्ज्ञानं यत्तज्ज्ञानम् मतं मम

kṣetrakṣetrajñayorjñānaṃ yattajjñānam mataṃ mama

“The unified knowledge of the ‘without’ and the ‘within’ of things is true knowledge according to Me, as Krishna says in the Gita” (Bhagavad-Gita chapter 13, 2nd Shloka).

From this total viewpoint there is neither inside nor outside; they are relative concepts depending upon some sort of a reference point, e.g.the body; as such, they move within the framework of relativity. Reality knows neither ‘inside’ nor ‘outside’; it is ever full. But these relative concepts are helpful in our approach to the understanding of the total reality.

Thus we find that our knowledge of the manifold of experience the idam, also involves something else, namely, the unity behind the manifold. This unity behind the manifold, which is not perceptible to the senses, is indicated by the term adah meaning ‘that’, indicating something far away, unlike the ‘this’ of the sense experience. ‘This’ is the correlative of ‘that’; ‘this’ is the changeable aspect of reality; ‘that’ is its unchangeable aspect. If ‘this’ refers to something given in sense experience, ‘that’ refers to something transcendental, beyond the experience of the senses. To say ‘this’ therefore also implies at the same time something that is beyond ‘this’. This is an effect as such, it is visible and palpable; and behind it lies the cause, the invisible and the impalpable. Adah, ‘that’, represents the invisible behind the visible, the transcendental behind the empirical, a something that is beyond time and space. In religion this something is called ‘God’. In philosophy it is called tat or adah, That, Brahman, the ultimate Reality, the cause, the ground, and the goal of the universe.

So this verse first tells us that beyond and behind the manifested universe is the reality of Brahman, which is the fullness of pure Being; it then tells us about this world of becoming which, being nothing but Brahman, is also the ‘Full’. From the view of total Reality, it is all ‘fullness’ everywhere, in space-time as well as beyond space-time. Then the verse adds:

पूर्णस्य पूर्णमादाय पूर्णमेवाशिष्यते

pūrṇasya pūrṇamādāya pūrṇamevāśiṣyate

‘From the Fullness of Brahman has come the fullness of the universe, leaving alone Fullness as the remainder.’

What, then, is the point of view or level from which the sentiments of this verse proceed? It is that of the total Reality, the Absolute and the Infinite, in which as we have read earlier, the ‘within’ and the ‘without’ of things merge. The Upanishads call it as ocean of Sachchidānanda, the unity of absolute existence, absolute awareness, and absolute bliss. Itself beyond all distinctions of time and space, it yet manifests itself through all such distinctions. To the purified vision of the Upanishadic sages, this whole universe appeared as the fullness of Being, which was, which is, which shall ever be. In the Bhagavad-Gita (VII. 26) Krshna says:

वेदाहं समतीतानि वर्तमानानि चार्जुन ।
भविष्याणि च भूतानि मां तु वेद न कश्चन ॥

vedāhaṃ samatītāni vartamānāni cārjuna |
bhaviṣyāṇi ca bhūtāni māṃ tu veda na kaścana ||

‘I, O Arjuna, know the beings that are of the past, that are of the present, and that are to come in future; but Me no one knows.’

That fullness of the true Me, says Krshna, is beyond all these limited categories, such as space and time, cause and effect, and substance and attribute.

Why Deleuzean Philosophy Begins at Hegel and Becomes a Correctional Footnote Thereafter ? Note Quote.

That philosophy must be an ontology of sense is a bold claim on Deleuze’s part, and although he takes it from a Hegelian philosophy, the direction in which he develops it across the rest of his work is resolutely, if not infamously, opposed to Hegel. Whereas Hegel will construct a logic of sense which is fundamentally a logic of the concept, Deleuze will deny that sense is reducible to signification and its universal or general concepts. Deleuze will later provide his own logic of the concept, but for him, although the concept will posit itself, this will not be as the immanent thought of the sense or the content of the matter itself, but will rather function to extract or capture a pure event, or the sense at the surface of things. Similarly, although Deleuze will agree that “sense is becoming”, this will not be a becoming in an atemporal logical time, opposed to a historical time that would play it out, but a pure becoming without present, always divided between past and future, without arrow or telos, and actualised in the present while never strictly ‘happening’. The most distinctive difference, however, will be Deleuze’s invocation of a nonsense that cannot be simply incorporated within sense, that will not be sublated and subsumed in the folds of the dialectic, a nonsense that is itself productive of sense. Moving beyond Hegel, Deleuze will deny the reducibility of sense not only to the universal meanings of signification, but also to the functions of reference or denotation. Moreover, he will deny its reducibility to the dimension of manifestation, or the meanings of the subject of enunciation – the ‘I’ who speaks. Sense can neither be found in universal concepts, nor reference to the individual, nor in the intentions of the subject, but is rather that which grounds all three.