Hieronymus Bosch, The Magician 1475-80. Musée Municipal, Saint-Germain-en-Laye
On the subject of my post – The Derivative Trifecta – Internet, Jews, Wall St. The majority volume of the investments markets and indeed the bulk of the investments are not directly in a company stock but in a hedging instrument, different types of insurance vehicles. Nothing is bought outright anymore there is always a hedge. And this is the dominant American business practice; inevitably this is also the way of thinking, a philosophy. So when a local Rabbi is telling me with a smile that he runs “a business”, he actually means he sells a hedge. He is selling an insurance, perhaps there is a God, perhaps the Jewish thingy means something, etc. A prudent American must cover this unlikely eventuality with a hedge. So what Rabbis are selling is not an actual “product”, not even a stock in a product but they are selling the insurance. A Rabbi is an insurance salesman. No sane person goes all in into a religion, but a little religion on the side to hedge the tangible indulgences makes all the sense in the world.
Image published with permission from the Web Gallery of Art
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Before I comment I want to compliment you on the extraordinary aesthetic quality of this blog. The style of interlacing your interests with your thoughts on “The Jewish (Charedi) Question” ends up that the two foci reflect on each other in synergistic ways. It is a pleasure to read essays written in direct, stylish and smart ways. As a daily reader, I applaud this openess of yours to comments and ideas.
And last but far from least, I am appreciative and suprised that you chose to quote and comment on something I wrote. Thank you.
Onto hedging and risk. I look at a committment to Judiasm as an example of what they used to call in the cattle pit, as a joke, a Texas Hedge, long the cash, long the futures. A hedge is long X short or implicitly short Y as a wayof reducing risk. We are all long Judiasm, some have a 10 lot position, others a 100 lot. Reducing the size of the position isn’t a hedge. It is a shifting between asset classes…more cash, less cattle…more time spent on other interests, less time on Jewish religion and culture. For example charedim are long up the wazoo, (to use another more vulgar trading term) in yiddishkeit, but take no or little responsibility for the State of Israel. Except for maybe the Neturei Karta they are not short Israel. Shirking isn’t hedging.
In your description of the rabbi selling insurance, the rabbi ends up sounding like a huckster and a fraud, since unlike insurance companies he has no empirical clue how he will ever pay off. I don’t see how credit swaps help clarify the role of the rabbis.
One last point and somewhat off topic, I disagree with your suggestion that everyone in the system is so hedged that risk is eliminated from the system as a whole. Splicing and dicing doesn’t eliminate risk …it makes it more managable relative to a capital base. The proof is the entire financial world just went bankrupt and were bailed out because the govt. chose to print new money and give it/lend it to the banks. You seem to conflate hedging with trading by making a market. There is a spread which the market maker captures, and with mazal he ends up even at the end of the day. But the market maker performs the service of selling all the way up and buying all the way down, hardly a risk free operation.
ej, i am glad you noticed the art, i strive to show that there is a creative continuity to artistic expression and as you put it the ideas interlace. I use the term hedge sarcastically in light of the current financial implosion.