Daniel Boorstin's 1961 book The Image described the illusions, contrivances, simulations, and unreality — what he calls pseudo events — in news, travel, heroic ideas, books, celebrity worship, desire for prestige, advertising, business practises, etc.. He shows how one pseudo event can lead to another, and can become a self-fulfilling prophecy in which more falsity must follow. He attributes the growth of pseudo events to a chain started by the graphics revolution, which began with faster newspaper printing and telegraphs in the early 1800's. Boorstin characterises a pseudo event as one that is not spontaneous, and is planned primarily for the purpose of being communicated and replicated. It is ambiguously relative to reality, and designed to become self fulfilling. The news leak and the press interview are often prime recurring examples of pseudo events. He distinguishes pseudo events from propaganda by pointing out that the former is ambiguous whilst the latter is an appealing falsehood.

One finds that many pseudo events occur in the market, such as all the events that are leaked by actors in the fray, with a view to eliciting behavior that will help them in their jobs, happiness and wealth. The best example of this would be leaks by the various powerful boards and agencies related to the markets which support their favored news reporters and former or prospective brokerages. Other examples could be a leak of earnings or sales numbers to a reporter, the expansive modality that a high official takes when trying to show importance to a reporter of the opposite sex, the interview of a fund-manager or some great like the Palindrome or the Sage to describe his feelings concerning the dollar, gold, the market, or the likelihood of a crisis. Also the appearance at an investors conference of some elite system seller, the article written by an academic describing various anomalies he has discovered in a major retrospective file, the speech at an industry conference by the promoter of one technology or the other, the report of a hedge fund manager that he sees a 30% chance of a disaster to rival 1929, the theoretical mathematico-econometric arguments boiled down for the public of this or that academic showing that the solution to our problems would be less inequality, the prohibitions against cut throat competition or freedom of entry in all its forms so that no economic agent will be induced to offer anything but a Cadillac product, the protection of the public from using a product that is unsafe without regard to the benefits, the rules of thumb concerning following the trend, the buy and sell recommendations provided by star financial news people. The list of pseudo events in the markets is greater than the list that Boorstin elicits in our cultural life! I propose that a classification scheme for market events be developed in terms of their pseudo or actual occurrence, and that this should take into account whether each event has a definite time of occurrence and magnitude, as well as the information value of any ambiguous messages making up or relating to its content. I would be interested in other ideas as to how to navigate the minefield of pseudo-ness we are exposed to, with a view to precluding the public from losing so much more than they have to, as well as going about life as puppets beset by false strings.

George Zachar comments:

When I taught a course called "The Politics of Communication" in a remote town in upstate New York, that book and the concept of "pseudo events" were literally at the top my syllabus.

It is a crucial concept, and must be central to anyone's use of any information that is subject to prior filtration.

The types of infomercials enumerated by the chair should be transparent to market professionals. The dangerous ones are those that appear to be untainted, leaving specs with their mental guards down.

One useful test is to google the board members of any research outfit one is unfamiliar with. Within seconds, the agendas and motives become clear.

To pick an obvious example from today, I poked around the background of a Yale professor whose anti-inequality schtick is the meme-du-jour. In about a minute I traced him to a think tank chock-a-block with Clintonites.

George Zachar further adds:

Following up on the chair's discussion of pseudo events and the need to categorize them, I would like to suggest a related game.

This link goes to a program that generates bingo cards using buzz-phrases related to Apple media events.

Why not have Doomster Bingo(tm)? Each card needs 24 phrases or concepts, and the first player getting five in a row wins.

Now, what should go in the boxes on the cards?

Options Scandal
Executive Compensation
Consumer debt
Savings rate
The dollar
Inverted yield curve
Housing prices
Peak oil
Carbon tax

…no doubt there are dozens of other better, candidate phrases.

Perhaps we can have a party game where one reads a random Abelson column aloud as folks check their cards…

Professor Charles Pennington offers:

This is just a start, but I predict that at least six will be found in next week's Abelson column.

"Those who don't remember history …"
bubble (extra points for "South Sea")
tulip mania
dead cat bounce
rising dollar
falling dollar
overheated economy
March 2000
"predicted 1987 crash"
stock tips from shoe-shine boys
"sentiment well off the lows"
"the smart money"
"This time it's different." (this is used in an ironic sense to mean "this time it's not different; it's going down just like in 1929.")
a double negative, as in "One might not be uninclined to take profits."
"October is a bad month to buy stocks … others are November, December, January …"
"more concerned about return of capital than return on capital"
"Rule Number 1: Don't Lose Money; Rule Number 2: Don't Forget Rule Number 1"
margin of safety
Keep some powder dry.
Look out below.
"an esteemed economist/stockpicker/broker/proprietor at X, but we won't hold that against him"


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