Financial topics

[vincecate]

In the 1920s, the object of speculation and consequent target for ridiculous prices and debt levels (or margin) was the stock market.

There are sort of 3 main asset classes, and then hard money. The 3 asset classes are bonds, real estate, and stocks.

In the 1920s there were 3 bubbles. The first was government bonds, the second was real estate (mostly Florida), and the 3rd was stocks. Each bigger than the last and the final pop a big one. After this people were moving into gold, till the government made that illegal.

Recently we have had stock and real estate bubbles, and trillions of fed dollars have gone into raising the price of bonds. So I agree the stock market should crash, but the biggest crash may be when the bond bubble pops.

I look at it as "3 bubbles and you're out". After bubbles in all 3 main asset classes, many people just want safe money, gold and silver.

Some think people are "deleveraging" and that this will cause deflation. But it really seems this is not so:

"Total Non-Financial Debt (NFD) expanded at a 5.1% rate during Q4 2010, the fastest pace of quarterly expansion since Q4 2008's 5.7%. For comparison, NFD increased at a 4.2% during Q3 and only 0.8% in the year ago quarter. For all of 2010, NFD grew 4.6%, up from 2009's 3.0% but below 2008's 6.0%. For comparison, NFD expanded 5.0% during year 2000 and 4.3% and 4.5% during the recessionary years 1991 and 1992. During the Credit boom years 2004 through 2007, NFD expanded 8.8%, 9.5%, 9.0% and 8.6%. Total system Credit market borrowings ended the year at $52.636 TN, just shy of a record level. NFD ended 2010 at a record $36.296 TN. Financial Sector borrowings closed the year at $14.236 TN, down significantly from the 2008 high of $17.1 TN."

"By sector, federal government debt expanded at a 14.6% rate during the quarter, with state & local borrowings growing at a 7.9% pace. It's worth noting that state & local borrowings expanded at the fastest pace since Q4 2007, although growth slowed markedly during Q1 2011. Total (including financial subsidiaries) corporate borrowings increased at a 5.7% pace, the strongest growth since Q2 2008. Household debt contracted at a 0.6% pace during the quarter, down from Q3's negative 2.0% and the mildest contraction since Q3 2008."

"In seasonally-adjusted and annualized dollars (SAAR), NFD expanded $1.830 TN during Q4, the largest expansion since Q4 2008's SAAR $1.897 TN. I have posited that NFD growth in the neighborhood of $2.0 TN is required to sustain the maladjusted U.S. "Bubble Economy," and I don't believe it is a coincidence that the employment backdrop has begun to stabilize now that the Credit system approaches this $2.0 TN threshold. At SAAR $1.320 TN and SAAR $191bn, federal and state & local debt growth combined for 83% of total NFD expansion during the quarter (down from Q3's 102% but still an incredibly high government dominance of system Credit). Total corporate borrowings expanded SAAR $413bn during the quarter, while household sector borrowings contracted SAAR $78bn."

"Federal government liabilities increased $1.692 TN, or 17.9%, in 2010 to $11.148 TN. Federal debt has increased $4.450 TN, or 66%, in just the past 10 quarters. Over this period, the increase in federal liabilities has exceeded 11% of GDP. Markets willing, federal borrowings remain on track to double in less than four years. During Q4, federal expenditures were up 6.6% y-o-y to $3.777 TN, while Q4 receipts rose 5.6% y-o-y to $2.356 TN. Comparing Q4 federal receipts/expenditures to pre-crisis Q4 2007, it is worth noting that receipts were down 12.1% from three years earlier, while expenditures were up 21.1%. Receipts would now have to increase 60% to match federal expenditures."

http://www.safehaven.com/article/20409/ ... w-of-funds

[Higgenbotham]

Some think people are "deleveraging" and that this will cause deflation.

This is bean counters counting the liabilities and saying they are so much. As an example we've discussed, when they count those beans, they wil count whatever MBS the Fed put on its balance sheet at face value. But we agree that with deteriorating real estate prices, those MBS would never actually bring face on the market. The Fed can pull them off the market and say they exist as well as whistle past the graveyard with regards to the other junk securities that the banks are holding.

Back in 2007, the bean counters were counting MZM and people were looking at it and saying, Wow, there is huge inflation in the system. About that time, the bubble cracked and then it became known that a lot of that MZM went no bid at auction. So we can't take the 2007 numbers as being real numbers either, but a free market process revealed that sooner.

How much would be vulnerable to going no bid in 2010 versus 2007 is hard to say but probably a lot more now as real estate prices are well below 2007 levels and the debt levels overall seem more dependent on that than anything else. We have the Fed usurping the free market and saying that this junk will be walled off and not subjected to market forces and so therefore it is real money. Welcome to the Soviet Union.

Investors are believing the Fed can do that so the answer is precious metals. I guess strictly from a generational standpoint, the masses aren't participating in this particular bubble. But they have passively participated by not being more forceful in stopping it, which is why I've really questioned if standard generational forces will work here or if we just collapse Soviet style. We've never had such a heavy handed government and Fed during a generational bubble and crisis era that was so insistent that things that are "not real" are "real" and that's one aspect of how things are different in this cycle.

[John]

Dear Lily,

> In my view, the "crash" of 1920-21 corresponds most closely to
> crash of 2000.

> May I ask why? I'm honestly not certain that I understand where
> all the dividing lines between the generational periods are...

The geopolitical generational eras are local to each country and
region.

Financial crises can be local to an isolated country, or can be
global. Global financial crises tend to synchronize with world
wars, but there's still some independence between the two timelines.

Here's the way I would describe the global financial generational
timeline:

Financial crash 1789 1857 1929
False panic (crash+58) 1848 1914 1987
First test panic 1849 1921 2000
Second test panic 2007
Financial crash 1857 1929 201?

The false panic occurs 58 years after the the previous crash, when the
survivors are close to retirement and worry that younger people don't
know what they're going. The false panic serves to discredit the
concerns of the survivor generation.

The Test Panic occurs after a small bubble, and provides a fairly
painless recovery, so that people gain confidence that any sort of
bubble caused by financial abuse can be recovered from quickly (in
this case, by lowering interest rates). The result is that previous
financial abuses continue, and in fact greater abuses are perpetrated.

In today's world, we've apparently had two Test Panics. The second
one, in 2007, was worse than the first, and therefore instills even
more confidence that any problem can be conquered (in this case,
through quantitative easing). Once again, previous abuses continue
and worsen.

Finally, there's a new crisis, and the cycle begins again.

John

[Higgenbotham]

My assumption has been that there is no direct connection, and markets are never precisely analagous. However, they take the shape they do at any given time because of a psychological process that is playing out over time amongst the market participants, in the context of what is happening on the globe. My guess is that stock market charts from very different times show similarities because the underlying psychological processes are similar.

So perhaps all I'm saying is that the graph of the 1940 stock market and surrounding years shows an example of what it looks like over time when people slowly realize, over the course of a year or so and against the headwinds of regime propaganda happytalk, that their private-sector economy is complete crap, while at the same time the government has assumed a huge economic roll that it can barely sustain, and the administration decides to massively inject economically useless money into the system to make up for the gap. (At least Roosevelt was getting tanks and bombers in return for the money he was printing! All Bernanke is getting are bigger numbers at the casino.) Because investors base their behavior on the behavior of other investors, the process of this realization shows similarities across multiple cases where it occurs. And I think our case may be similar in many broad ways.

Got it. Now I understand what you were referring to in the comparison to 1940. I've said previously that the US government went "all in" debt up to their eyeballs earlier in the generational cycle this time around. And part of the propaganda, as my post in response to Vince this morning indicated, is to say that this "economically useless money" as you put it is "real money" when it is not. The Fed would like to park that money in the system and say it is real because, "When the bubble comes back, by God, we will need it and until then it's real because we said it's real."

My pairing of 1940/2011 isn't necessarily mutually contradictory to what I think you are saying, however. If the shape of the stock market post-2008 crash has been more a reflection of State policy than economic reality, especially including Bernanke's policies - which were deliberately intended to get the opposite result from the ones used after the 1929 crash, after all - than those factors might temporarily overwhelm cyclical factors as well. It might be that the post-2008 markets look like an inversion of the post-1929 markets because that is the ghost Bernanke is fighting. But just because he thinks it's now 1932 doesn't mean he'll be lucky enough to find that reality's challenges match his intellectual preparations...

This is a difficult topic. I'll first state a few thoughts that may or may not be correct or useful in answering this but form a basis for looking at the specific question. Since 1932 happened, I don't think there is any way to completely nullify its long term effects - they will reverberate for centuries, then gradually die out. The only way in my view to completely neutralize an event like this so soon is to go through a Dark Age and societal reorganization that is sufficient in length for the collective memory and response to disappear. It may be true that Bernanke is trying to neutralize the effects as best he can by studying that incident in isolation and attempting to recreate a proper environment with one gigantic intervention. The problem with that, I think, is the system is probably too complex to isolate one historical event and neutralize it because history didn't start in 1932. In doing so, my fear, which I think is well founded, is that by trying to stave off the collapse of a part of the structure where in 1932 everything did eventually survive pretty much intact, these actions will 3 or 5 or 10 years down the road collapse a much larger part of the financial system. On the other hand, that may be inevitable, or it may be a good thing in the long run - better than losing just part of the system now as occurred in 1932/3. I suspect, though, that's not the case, and that taking the banks into receivership in 2008 and going through the process of investors taking haircuts which is the basis upon which Western Civilization was founded and has prospered for many centuries would have been the correct path to take. The incorrect path I feel Bernanke et al have taken is the path that I believe will lead to a scale of collapse that is on the order of 50 or 100 years.

One reason for thinking that is the convergence of many cyclical factors as we are discussing. So while I don't think what you mentioned is the "main event" we are dealing with, it is part of the mix of things that are converging on the same or similar timelines. By trying to spread out the effects of the real estate bust, Fed and Treasury will be dealing with multiple problems all at once instead of cleaning up one problem at a time. It becomes possible that they will lose control of the multiple problems at a critical time.

[Lily]

My judgement was that Obama, Bernanke and team have completely lost control of events already. In terms of foreign policy, I think that happened early last year. Definitely since the last half of last year they've had absolutely no earthly idea what they are doing in terms of fixing the economy, expanding credit, adding jobs, doing anything about the debt(s), playing domestic politics, dealing with foreign powers, persecuting our existing wars, dealing with ongoing environmental problems, or ANYthing. Obama and all of his people are totally over their heads and have zero control over events, which is why they keep getting utterly and ruthlessly run over by reality. The remnants of the powerful US post-Cold War geostrategic position left over after Bush finished raping it sufficed to keep things at least nominally under control during the first half of Obama's presidency, but that stored power capital was pretty much completely depleted last year if I'm any judge, and it's essentially all gone now.

The regime will definitely lose control over multiple cascading problems, and essentially already has. They are trapped in their own reality-distortion bubble and they can now only re-act out of fear. Doesn't QE2 remind you of a desperation move? The erosion of their power to act is basically complete, and is the result of their strategic ineptitude. In terms of forecasting the future, I think the influence of their decisions from now on will be very small compared to the influence of 'systemic' factors and that of actors who have not thusly hamstrung themselves i.e. the military-industrial complex, the plutocracy, the US shadow government, and aggressive foreign powers like China, Iran, Israel, Russia and others, plus the mega-corporations and criminal cartels. The same is true of all the major western states. Their powers are sapped, through and through, and their leaders are disoriented and scared. NATO is finished.

Before I realized this, I was thinking that perhaps some kind of regime action would delay a financial catastrophe until after the next election; clearly it is in Obama's vital interests to do this. But I don't think he or his team is anywhere CLOSE to competent enough to be able to pull it off in the face of the incredible challenges that will come up. They are only helpless fools, trapped in their assigned rolls. That's a big part of why I think we'll crash this winter, or very soon thereafter. If that happens, the war will likely begin in earnest next year.

Unfortunately, only the bad guys seem to retain much capacity for decisive action at this point, so it should be their actions that shape the ongoing process the most. However, the situation is so chaotic that even they will be very hard pressed to ride out the volatility. Probably only the most adaptable and well-prepared actors will continue to be able to influence events according to their will. (Right now that's probably China, who seems to be the only power that knows what it is doing...) At this point I think we are just waiting for the Armada of Horrifying Problems to converge on us suddenly.

[Higgenbotham]

My judgement was that Obama, Bernanke and team have completely lost control of events already.

I've called this the "business as usual" phase. Like they said in the old Soviet Union, "We pretend to work and they pretend to pay us." At some point, multiple converging events will probably disrupt "business as usual".

Let's just take this real estate thing as an example. So you want to buy a foreclosure, OK, we have 9 months of inventory they tell you. Truth is, it's more like 4 years and probably more like infinite if the business as usual environment breaks down. But you can do that today and many are, the bank is still open, they will assign a negotiator after a few weeks and you might close in 6 months at an artificially high somewhat maintained price which is now in danger of not being maintained. If you want to buy the house for what it will ultimately be worth under free market conditions, that won't be possible and it will be maintained vacant on the market at taxpayer expense with the artificial listed price.

Most people are still working, still driving, those who aren't get transfer payments and food stamps, the lights are on, the factories mostly run, the food gets delivered. Warren Buffett still vociferously applauds the wisdom of the authorities on business television, which is still being beamed across the country, as being great for 309 million Americans.

As you do, I recognize this as a system that has already collapsed, and "business as usual" as being a phase of that. That might be wrong though. As long as "business as usual" lasts, I recognize the authorities as being in control, and it probably lasts as long as most view the authorities as being legitimate (most definitely still do) and the authorities view themselves as being legitimate (absolutely the case at this point). If "business as usual" grinds to a halt, that's my definition of when control will be lost. With loss of control, there will be no more bailouts, checks and food stamps may arrive late or short or not at all, the banks may be shut and the shadow inventory auctioned off at pennies on the dollar, Warren Buffett may disapear from the media, etc.

Cyclically speaking, there will typically be a few years between the onset of a situation like that and the onset of a war, at least as I understand the history. But Charles Nenner, who John has quoted, is saying he's looking at late 2012, I believe, for the onset of a major war. And I think it's easy to see in the present case how that could happen fairly soon. That's not something I've studied in depth though.

[Lily]

John - what about this?

Financial crash 1789 1857 1929
False panic (crash+58) 1848 1914 1987
First test panic 1849 1921 1994
Financial crash 1857 1929 2001

If you assume that there should have been a big crash around the millenium, but that it was avoided by Greenspan's loose money policy just as the Great Depression was kicked into high gear only by the sharply contractionary tight monetary policy of the Fed in the early 30's, the cycles seem to add up. In 2001 the Fed did the exact opposite thing from the Fed in 1929 and got the exact opposite result - a bubble/boom that was as sharply expansionary as the depression was contractionary. By year number 9, though, or more or less the same result in each case, since in both cases the private sector economy just collapsed and had to be replaced by government intervention before anything could improve.

This intereperetation also might make some sense given how very close to the 'hot' period of global crisis we seem to be now. I say the international situation looks more like 1940 than 1932 in that many different targets are in play, very powerful interests are in essential conflict in such a wide variety of different places and they are starting to shoot. We are now entering the shooting war phase of the ephocal global conflict, not the 'jocking for position and establishing power base' phase.

It's worth mentioning that the Nazis were unprepared to go to war in 1939, and that most of their military plans forsaw a war sometime in the early 1940s, while the Navy was planning for a war starting no sooner than 1945. Because of the anarchic, emotive decision-making and analysis process of the Nazi party, different arms of the state embarked on rearmament at chaotically different rates. What really drove the rush to war in 1939, though, was pure raw materials shortages. The Germans didn't have enough oil or rubber or coal or iron to simply continue their existing frenetic military buildup, and they certainly couldn't slow down the buildup, since by that point their neighbors had already caught on and were engaging in catch-up militarizations. They wouldn't have been able to wait more than a few months longer than they did, and German military production would have ground to a progressive but very damaging halt, which would have put the Reich in immense danger. Similarly, Japan only struck at the US when the US and Britain cut off their oil supplies; they couldn't maintain their empire without getting a hold of the raw materials, and they could do that only by siezing control of what they needed by force.

The US Navy (but not the other branches of the military) is preparing for a war with China around 2016-2018, but it will come earlier than they expect, and they will not be prepared. China, however, is avoiding Germany's mistakes, and has ready a flexible, reasonably high-tech, well-drilled, doctrinally-advanced, absolutely fucking *massive* ground force AND an extremely savvy, aggressively trained modern naval force, not to mention equally frikken huge reserves of all kinds of ballistic and cruise missiles.

I believe that China is rapidly nearing the point where they will have to strike or lose their shot, and that the leaders of the Communisty Party *fully* understand this fact. They have in-depth plans ready to strike decisively at US naval power in possible conjunction with Iran, to invade India in possible conjunction with Pakistani elements for the purpose of distracting Chinese populance's attention from the famines and social devastation wracking the state, and to invade Vietnam with 300,000 troops and and sieze all resources of water, raw materials and food.

China has hated the US realllly really badly for decades, but they've been very politely holding their tongue while they patiently gathered together enough power never to have to submit to a foreign state. They engaged in a messy forced industrialization at our expense, loaned the money back to us to pay for our costly imperial wars, loosened our strategic global military roots, and watched us foolishly alienate our allies and confuse/worry neutral powers. Now our Middle Eastern empire is in flames, our closest allies are even worse off economically than us, and our military is tied down in pointless guerilla fighting. The speed of their industrialization poisioned, polluted and destroyed the productivity of the land, and that in tandem with the effects of the collapse of the oceanic thermohaline circulation are resulting in the global drought hitting China especially hard, right now. The US economy will collapse soon, providing China with a once-in-history moment to slam a global hegemon with its pants down. The first move of their endgame is dumping dollars and US bonds to buy food. I think that their hand will be forced *this* coming winter, but I cannot see how it could be any later than the next winter after that.

So that might support an understanding of our cyclical position as being closer to 1940 than 1930. I'd always thought that 2010-2011 had to be closer to 1939-1940 because of semoitic concerns i.e. rate and extent of gender polarization in popular media, analysis of fashion trends and stuff like that. I didn't realize that most people here agreed with Bernanke that 2008 was most similar to 1929.

I say this because I'd always thought that the generational dynamics period breakdown in the US went approximately thusly

2000~~2018 Crisis period
1984--2000 Unraveling period
1963--1984 Awakening period
1947--1963 Austerity period
1929--1947 Crisis period
~1910--1929 Unraveling period
~1890--1910 Awakening period
~1870--1890 Austerity period
~1850--1870 Crisis period
~1830--1850 Unraveling period
~1810--1830 Awakening period
~1790--1810 Austerity period
~1770--1790 Crisis period

I'd always assumed that it was like this because that fits with what I know about art history, military history, fashion trends, religious and social writings, etc etc. I'm not sure if this periodization is different from the cannonical one, if such exists?

As you do, I recognize this as a system that has already collapsed, and "business as usual" as being a phase of that. That might be wrong though. As long as "business as usual" lasts, I recognize the authorities as being in control, and it probably lasts as long as most view the authorities as being legitimate (most definitely still do) and the authorities view themselves as being legitimate (absolutely the case at this point). If "business as usual" grinds to a halt, that's my definition of when control will be lost. With loss of control, there will be no more bailouts, checks and food stamps may arrive late or short or not at all, the banks may be shut and the shadow inventory auctioned off at pennies on the dollar, Warren Buffett may disapear from the media, etc.

Cyclically speaking, there will typically be a few years between the onset of a situation like that and the onset of a war, at least as I understand the history. But Charles Nenner, who John has quoted, is saying he's looking at late 2012, I believe, for the onset of a major war. And I think it's easy to see in the present case how that could happen fairly soon. That's not something I've studied in depth though.

I haven't read that Charles Nenner article; I'll have to go find it. But that accords with my own analysis as well, unfortunately. I think the descent into madness and blood will happen fast, like a veil passing. I desperately hope that I am wrong.

I've been coming to the conclusion that the nitty-gritty details of a global conflict might be worth wargaming out a little bit in as much precision as possible, since otherwise the war would make it so difficult to predict outcomes with any precision beyond a few years. It's quite the high-stakes global chess game these days, so perhaps a deeper analysis of the military, economic, political, environmental, and social factors affecting the various potential combatants would repay reflection. I'm most concerned about the domestic fallout - can you imagine Obama losing a war to the Chinese amidst a collapsed domestic economy, exploded financial system, and hyperinflation? Great odds the very next president is a super-hardcore right-wing thug at the head of a shadow looter consortium like Russia has. The possibility that the US could fall under militarized rule under someone like Trump in a scenario like this is very real, so detailed contingency plans might prove very useful.

[Higgenbotham]

I haven't read that Charles Nenner article; I'll have to go find it. But that accords with my own analysis as well, unfortunately. I think the descent into madness and blood will happen fast, like a veil passing. I desperately hope that I am wrong.

I've been coming to the conclusion that the nitty-gritty details of a global conflict might be worth wargaming out a little bit in as much precision as possible, since otherwise the war would make it so difficult to predict outcomes with any precision beyond a few years. It's quite the high-stakes global chess game these days, so perhaps a deeper analysis of the military, economic, political, environmental, and social factors affecting the various potential combatants would repay reflection. I'm most concerned about the domestic fallout - can you imagine Obama losing a war to the Chinese amidst a collapsed domestic economy, exploded financial system, and hyperinflation? Great odds the very next president is a super-hardcore right-wing thug at the head of a shadow looter consortium like Russia has. The possibility that the US could fall under militarized rule under someone like Trump in a scenario like this is very real, so detailed contingency plans might prove very useful.

A few random comments.

Nenner just did an interview that's posted on Youtube. I watched it last night. He started out by saying the Dow is going to 5000 within the next year or two. The interviewer asked him why and he said well, I hate to give you the bad news but a major war is due late 2012, early 2013.

As far as economic similarities to the late 1930s, there's another that I forgot - short term interest rates never hit zero until the late 1930s. Our short term rates didn't hit zero until late 2008. To see the short term rates, I've never seen a better long term chart than the one found in the Fed paper "Monetary Policy When the Nominal Short-Term Interest Rate is Zero." On the other hand, there are many major differences between the two periods that I see, most of which involve things that haven't happened yet.

I think there's a major long term global crisis era coming that we are on the cusp of, but the world as a whole hasn't tipped over into crisis mode. The current situation might be similar to being in the month of September when an ice age is coming. There might be some very cold nights and even a dusting of snow a couple months early, but it still really is Fall. So I don't see this as being a crisis era yet and I think the world is working very hard to keep the short term generational cycle in unraveling mode in order to avoid tipping over into that larger crisis period.

In keeping with that idea, I believe China realizes any struggle is likely to be quite protracted and complex. China, I believe, sees the US as more vulnerable economically and strategically than militarily. For now (5 years let's say), I believe they want to get as close to equality militarily as possible just in case while continuing to bleed the US economy out very slowly so as to not collapse it and provoke a military struggle. I believe the chess game they are playing would be the equivalent to what Bobby Fischer called gaining "an accumulation of small advantages" because that's what will work best for them at this time. I don't think that's going to work, but I don't know how soon it will stop working. The when it stops working part is pretty critical as far as knowing what happens next, I think.

I believe that China is rapidly nearing the point where they will have to strike or lose their shot, and that the leaders of the Communisty Party *fully* understand this fact.

Why do you think that? Because they're running out of food? Maybe I missed it, but do you have a few links describing whatever critical situation they may be facing in the upcoming Winters?

Typical example of what is mentioned above:

http://online.wsj.com/article/SB1000142 ... 12040.html

[John]

Dear Lily,

> John - what about this?
>
> Financial crash 1789 1857 1929
> False panic (crash+58) 1848 1914 1987
> First test panic 1849 1921 1994
> Financial crash 1857 1929 2001

There is no way that the 2001 Nasdaq crash was a generational crash.
The S&P 500 P/E index didn't even go below average, let alone to
crash levels:

> If you assume that there should have been a big crash around the
> millennium, but that it was avoided by Greenspan's loose money
> policy just as the Great Depression was kicked into high gear only
> by the sharply contractionary tight monetary policy of the Fed in
> the early 30's, the cycles seem to add up.

If there SHOULD have been a generational crash around 2000, then there
WOULD have been a generational crash around 2000. Greenspan would not
have been able to change that.

Since there WAS NO generational crash around 2000, then there
SHOULDN'T HAVE BEEN a generational crash around 2000.

John

[shoshin]

John, no one would accuse you of being shy about the power of GD, or your relentless espousal, but maybe you should read this book, or this book review, from the NYTimes...
http://www.nytimes.com/2011/03/27/books ... ?ref=books

the review is headlined, "Why Experts Get the Future Wrong" (the book is "Future Babble:Why Expert Predictions Are Next to Worthless, and You Can Do Better"

here is an excerpt....
The most generous conclusion Tetlock could draw was that some experts were less awful than others. Isaiah Berlin once quoted the Greek poet Archilochus to distinguish between two types of thinkers: “The fox knows many things, but the hedgehog knows one big thing.” Berlin admired both ways of thinking, but Tetlock borrowed the metaphor to account for why some experts fared better. The least accurate forecasters, he found, were hedgehogs: “thinkers who ‘know one big thing,’ aggressively extend the explanatory reach of that one big thing into new domains” and “display bristly impatience with those who ‘do not get it,’ ” he wrote. Better experts “look like foxes: thinkers who know many small things,” “are skeptical of grand schemes” and are “diffident about their own forecasting prowess.”

note the skepticism for "grand schemes"...I'm just sayin', be a bit cautious...of course, that goes for "lily" too...