Tuesday, August 23, 2011

Europe's Slide to Default...!

by Satyajit Das
July 21, 2011

Executed with Northern European creativity, charm, flexibility and humility and Mediterranean organization, leadership diligence and appetite for hard work, the European rescue plan–"the grand compact"–is failing.

Wrong Medicine
The EU response has relied on two mechanisms – the ECB and the European Financial Stability Fund ("EFSF").

The ECB has financed the beleaguered countries by buying their bonds in the secondary market (around euro 75 billion) and also by financing banks, against collateral of increasingly questionable quality such as Greek government bonds. There are allegations that the ECB and other European central banks have also used the euro-zone payments system to lend money (around euro 300 billion) to the crisis-stricken members. All this while the ECB has publicly been critical of banks, which are "addicted" to and substantially reliant on ECB financing.

The "temporary" EFSF due to terminate in 2013 proved poorly designed. Instead of the touted euro 440 billion, the fund had only the ability to lend around euro 250 billion, due to structural flaws. The EFSF is now to be replaced by the "permanent" European Stability Mechanism ("ESM") which will have lending capacity of euro 500 billion, the originally proposed level.

The euro 500 billion ESM facility too has deep structural flaws. It relies on a similar mechanism to the original EFSF to achieve its AAA rating – a system of separate guarantees and capital. The euro 500 billion fund is theoretically backed by euro 80 billion in cash and euro 620 billion in guarantees from euro-zone members.

The euro 80 billion will only be provided over 5 years starting in 2013. In part, this was a concession to member countries, including Germany, who were reluctant politically to provide the cash except on deferred terms. There is provision for speeding up payments into the funds if required, for example, by the need for additional bailouts. The facility also provides for member countries to provide cash to support the ESM, where its credit rating falls below a specified threshold to reduce the performance risk.

As with the EFSF, the reliance on euro-zone members guaranteeing each other is problematic. Some of the guarantors are themselves are vulnerable with the real and contingent liabilities. For example, every euro 100 billion provided by the ESM increases Italy’s potential liabilities by euro 18 billion, equivalent to 1% of the country’s GDP, and Germany’s potential liability by euro 27 billion, also equivalent to 1% of GDP.

Drawings on the facility may result in a spiral of credit downgrades and cash calls. For weaker guarantors, their financial position may be undermined, potentially encouraging them to withdraw from the ESM itself. For stronger members, it places increased pressure on their support and weakens their credit rating and finances.

The position is made worse by the fact that non-common currency EU members may not be part of the new structure. The UK has indicated that it will not be part of the ESM, depriving the euro-zone members of a significant source of funding and support (around 14% of the EFSF).

The ESM perpetuates existing and introduces new problems. Access to the ESM funding requires unanimous agreement amongst the euro-zone members. The ESM can provide loans only where the country agrees to accept EU/ IMF prescriptions for reformation of public finances and the economy. It will lend to the troubled country or purchase its bonds in the primary market, but not in the secondary market.

Unlike the EFSF arrangement, ESM funding would be senior to existing government debt (a standard feature of IMF rescues and bankruptcy financing, which was surprising excluded in the initial bailout condition). The ESM stipulates that restructuring is a requirement in the "unexpected" instance the government in question is determined to be "insolvent." In addition, from 2013, all future government bonds issued by euro-zone nations will need to include collective action clauses (CACs), designed to make restructuring mandatory under certain conditions.

If the current financing pressures on the troubled economies continue, then the existing support mechanisms may be inadequate. The countries, which have already sought bailouts, may need to seek additional support if commercial financing sources remain unavailable to them. Maturing debt and projected budget deficits for Greece, Ireland and Portugal will require around euro 300 billion in new funding between 2011 and 2013. If Spain needs to resort to the EU Funding mechanism, then the ability to provide additional would be severely strained.

In reality, an EU support mechanism of something in the order of euro 1.5-2.0 trillion would be needed to ensure a credible ability to bailout the embattled economies. Some European finance ministers have already called for an increase in the ESM to euro 1.5 trillion. If Italy was to need a bailout then the amount would be even larger - say euro 3-2.5 trillion. The political support for and economic viability of a facility of this size is unlikely.

At the same time, the terms of the ESM, especially the subordination of existing lenders to bailout funding and the mandatory CACs will increasingly force lenders and investors to avoid funding vulnerable countries. In effect, this will ensure that the peripheral economies becoming increasingly dependent on EU support, triggering the negative spiral described.

Skin in the Game
The EU bailouts have always primarily focused on protecting European banks from the effects of a default by borrowers such as Greece, Ireland and Portugal.

In total, banks in Germany, France and the UK have exposures of over euro 500 billion to these three countries. If exposure to Spain and Italy is included, the global banking system’s total exposure increases to around euro 2 trillion. The position is complicated by complex cross-lending arrangements. For example, banks in Spain, which may require support, have a euro 70 billion exposure to Portugal and a euro 13 billion exposure to Ireland.

Central to the European debt problems is the credit boom that took place following the introduction of the euro. Prior to monetary union in 1999, interest rates charged on loans to individual countries better reflected risk of loss - from currency movements and ability to repay debt. The introduction of the euro eliminated currency risk. Surprisingly, credit spreads fell sharply, reflecting a lack of differentiation between the credit quality of individual nations.

The mis-pricing of risk was driven by a belief that the entire euro zone was AAA rated because of the "implicit" support of Germany. An additional factor was the fact under Basel 1 and to a lesser extent under Basel 2 banking regulations, lending to sovereign nations attracted favorable capital treatment. The combination of these factors drove lending to the peripheral countries and their banks fuelling large credit booms which are now unwinding.

Much of this debt – in the form of sovereign debt, lending to banks and also structured securities based on mortgage and corporate loans – is held by smaller banks in France and Germany. If Greece, Ireland, Portugal and (ultimately) Spain have to restructure the debt, then these banks will suffer significant losses. It is unclear whether banks, especially in Germany and France, have sufficient capital and reserves, to bear these losses. The IMF’s bi-annual Financial Stability Report has consistently argued that the euro-zone banks have not been recognized losses adequately. The inadequate 2010 stress tests conducted by European central banks and the ECB did not countenance the prospect of a sovereign default in determining bank solvency. There are suggestions that the underlying position of some European banks, especially German Landesbanks, is highly problematic.

In June 2011, Moody’s changed its outlook on 13 mid-sized and smaller Italian banks to negative and warned it could downgrade the long-term debt ratings of 16 others. This followed its announcement that it had put Italy’s sovereign debt on review for possible downgrade. Italian banks were less affected by the financial crisis due to conservative lending culture and high levels of domestic retail deposits. Despite these strengths, concerns about possible contagion from the peripheral countries and the problems of Italy itself in bailing out these countries are now increasingly problematic.

Default or restructuring of European debt, in all probability, will require State involvement in recapitalizing these institutions. In essence, attention will switch from bailouts of sovereign nations to bailing out affected national banks.

ECB Hurt Money
Default or restructuring would also affect the ECB, which holds around euro 50 billion of Greek debt alone. The ECB’s total exposure to Greece, including lending to Greek banks and loans against Greek government bonds, is much higher – euro 130-140 billion.

If Greece defaults, then the ECB could suffer losses as high as euro 65-70 billion (say 50% of the amount advanced). The losses would almost certainly require recapitalization of the ECB itself by euro-zone members. As of 1 January 2011, the ECB had paid up capital of euro 5.2 billion (due to be increased progressively to euro 10.8 billion). The ECB is owned by the 17 euro-zone central banks with the combined capital of around Euro 80 billion.

The ECB’s position on whether peripheral countries like Greece should be allowed to default increasingly appears to be complicated by its own vulnerable financial position. When Lorenzo Bini Smaghi, an Italian board member, stated that a Greek debt restructuring would be "suicide" he may have been referring to the ECB. Statements about Anglo-Saxon "vested interests" seeking the restructuring of Greek debt are now matched by the ECB’s "self interest" in avoiding the same.

The effect on wider money markets of defaults is unpredictable. Depending on the quantum of losses and the recapitalization requirements, the event could create concerns about affected euro-zone banks, providing a channel for contagion in financial market. This could destabilize markets, transmitting the shock through high cost and reduced availability of financing, in a manner similar to what happened after the bankruptcy filing by Lehman Brothers in 2008.

Grand Confusions
The deeply flawed European strategy entailed providing financing to meet maturing debt and budget deficits at a time when markets were not open to the borrower or, at least, at reasonable rates. The EU/ ECB/ IMF funding would reduce borrowing costs to alleviate the pressure on public finances. The "temporary" measures would provide the country with the opportunity to reform its public finances and economy to make its debt burden more manageable. In time, the measures would allow the borrower to regain the confidence of commercial lenders and regain access to markets. As a corollary, banks would be able to build up reserves and capital against the possibility of some modest write-off as a result of some "minor" restructuring of debt, in the unlikely event that this was required.

Unfortunately, the premise that it was a "liquidity" rather than a "solvency" problem was incorrect. Breaking ranks, with other European central banks, Mervyn King, governor of the Bank of England, stated uncategorically that in his view it was an issue of solvency.

In reality, markets understood that the EU bailouts were a "get-out-of-jail" pass for poor lending decisions. There was no way that any of these nations would ever be able to service or repay current and projected levels of borrowing. The EU facility provided a means for the distressed nations to repay maturing debt and finance their deficits. In effect, the EU and official bodies have replaced commercial lenders as debt providers.

The bailout plan did not lower the nation’s interest costs or their access to markets. Interest rates on borrowing for Greece and Ireland are higher now than at the time of their bailouts. Despite the likelihood of EU support, Portugal’s cost of funds is unsustainably high. Spain and other countries, such Italy and Belgium, seen as vulnerable by investors have seen their borrowing costs rise inexorably.
The bailouts have made its less not more likely that these countries will regain access to markets in the near future. As existing debts mature, the funding provided official sources, the EU, ECB and IMF, is increasing. As these countries need additional financing, the absence of private financing will increase this proportion even further, leaving them to bear the bulk of losses in any restructuring.

The lack of confidence reflects the failure of the rehabilitation plans and the continued unsustainability of the debt levels of these countries. The lack of economic growth and deteriorating public finances is not likely to reverse soon. Even in the most optimistic scenarios, gross public debt in the most troubled economies will continue to increase as continued budget deficits will require financing. Greece’s debt to GDP is likely to stabilize at around 160-180% around 2014/ 2015. Ireland, Portugal and Spain’s debt to GDP will reach 125-140%, 100-115% and 85-100% over the same period. Italy and Belgium already have debt to GDP ratios above 100%, but their budget deficits are lower and they are less dependent of foreign investors. Italy, burdened with very high levels of debt and low growth, has recently been placed on "negative" credit watch by rating agencies.

Even at subsidized interest rates, the debt burden for Greece, Ireland and Portugal looks unsustainable, rendering the countries insolvent. Spain’s position is better, but problems in the country’s banking sector as the property boom unwinds would strain its finances significantly. If Italy's cost of financing continues to rise then its debt servicing burden too may prove unsustainable. Slower than forecast global growth would place even greater pressure on all these countries.
These concerns about solvency will drive the lack of access to private financing, especially post 2013 because of the subordination provision and the mandatory inclusion of CACs. The failure of the grand compact will increase pressure to ultimately restructure debt in some form at some stage.

In the near term, the EU and euro-zone members seem likely to persist with the failed strategy. Portugal’s bailout package will be financed by the EU, EFSF and IMF. Further funding needs will be accommodated as they emerge from the existing facilities as much as possible, until these are exhausted. The ECB will continue to support the bailout plans. German insistence on commercial lenders sharing some of the burden has wavered. Instead fuzzy ideas of a "voluntary" commitment of existing lenders to re-finance existing, maturing debt will gain traction.

Over time, the palpable failure of the bailout strategy–extend and pretend–will progressively be revealed. Pressure will emerge to improve the term of the bailout package.

Already, Greece has received reductions in interest rates on bailout funding and some extension in the terms of the financing. The need to provide additional funding to Greece of around euro 120 billion is already under discussion. In all probability, some deal will be done to provide the funds, against Greek promises that cannot and will not be met. There will be more and more of the same, in a desperate effort to avoid default or restructuring.

In the end, default or restructuring will become inevitable. Initially, minor changes, such as lowering coupons and extending maturities, perhaps as part of debt swaps, will be sought to manage the problem. Ultimately, a major restructuring, involving a significant write off of outstanding debt is likely. This is the case for Greece and perhaps the other peripheral countries.

Such defaults would be the first by a developed country since 1948. As most of the debt is issued under local law, a swift restructuring is feasible by the agreement of a simple majority or super majority (say 2/3rds of lenders). Based on history, a loss of around 30-70% of the face value of obligations is expected. The longer the time taken over the process, the greater the likely losses to holders of the obligations. The reason being that unless the debt burden is reduced early, continuing high servicing costs and deficits will continue to increase the level of write off necessitated to restore solvency.

A Matter of Political Classes
European decision making increasingly echoes Shakepeare’s Richard II’s lament: "I wasted time, and now doth time waste me." The EU and major euro-zone members, notably Germany and France, lack the political courage or will to tackle the problem. The absence of an "easy" and "painless" solution means that career politicians and euro-crats see no benefit in advocating the complex and messy process of default and restructuring.

European leaders dissemble that the debt crisis was the result of traders and financial markets. Anders Borg, Sweden’s finance minister spoke of "wolf-pack markets". José Luis Rodríguez Zapatero, Spain’s Prime Minister, blamed "cynical hedge funds", "cocky credit-ratings agencies" and "neoconservative capitalism." Greek Prime Minister George Papandreou accused traders of visiting "psychological terror" on his country. Michel Barnier, the European commissioner for the single market, accused financial institutions of "making money on the back of the unhappiness of the people." Mr. Zapatero also found fault with a duplicitous Anglo-Saxon press. In short, it seems anybody but the Europeans are to blame. Cognitive dissonance looms large.

Increasingly, the trajectory of the crisis is driven by political considerations. The denouement to the European debt crisis, probably some way off, will come via by the "street" or the ballot box.

In the afflicted nations, public protests and disturbances are increasing as the populace rejects greater austerity. Populist politicians, willing to reject the need for further "sacrifice" and repudiate the country’s debt, hover in the wings. The argument that the country will be an international "financial pariah" doesn’t carry much weight when you are already one with no one likely to lend you money any time soon. It also has less weight when you don’t have a job and the country is on the brink of social breakdown.

For the countries that must provide the bulk of the bailout money, there is angst that the increased level of financing required by the problem borrowers has turned the EU into a "transfer union." Karl Otto Pöhl, the former head of the Bundesbank, stated that: "The foundation of the euro has fundamentally changed as a result of the decision by euro-zone governments to transform themselves into a transfer union. That is a violation of every rule. In the treaties governing the functioning of the European Union, it explicitly states that no country is liable for the debts of any other. But what we are doing right now, is exactly that. Added to this is the fact that, against all its vows, and against an explicit ban within its own constitution, the European Central Bank (ECB) has become involved in financing states."

The lack of decisive and timely action has allowed smaller political parties to gain momentum. Parties like Finland’s True Finns and France’s Far Right, rejuvenated under the leadership of Marine le Pen, have gained electorally on a policy platform of a mix of rejecting bailouts, nationalism, anti-immigration and other sundry forms of xenophobia.
Discontented and angry voters in Germany and other saving nations at some stage may also decide to call time on the fruitless and self-defeating support for the overly indebted euro-zone members.

Having falsely linked the problem of over indebted states with the canards of the continuation of the euro and the survival of the euro-zone itself, Europe is increasingly drifting towards an inevitable, disastrous and destabilizing debt crisis. Rather than amputating a gangrenous limb, European leaders risk poisoning the entire body fatally – weakening the financial positions of the stronger euro-zone members and their economies, which are paying for the bailout and will suffer the losses when the inevitable defaults come.

Monday, August 1, 2011

The Complex “Epistemology of Logic” & The Simple “Intentionality of Fucus…”

(This may offer some help Tim. I wrote it for a general audience of philosophers…)

How does one even begin to describe the mechanics of self-logic__that’s a logic, looking at itself, to understand itself…? Is it even possible, without running straight into the many epistemological, teleological and ontological unsolved historical problems, of others’__thus far attempts__at trying to explain this concept, or its mechanics…? I know of no sound eclectic, polymathic philosopher or logician who did not try their best to clearly explain the epistemology of logic and rationality involved, but I still must come up short, of giving them full credit for their efforts__as I still see far too much left un-explained. Why has it been so difficult, to delve deep enough into the logic-psyche of perception, to truly understand it…? Does not intelligence equate to a__or the__knowledge of logic and psyche, within perception__or is this truly an incommensurability concept of the complex mechanics of logic and psychology__at the very core of our ‘heacceitic/supervenient/one-many’ understanding, of the total functioning mechanics…? Would an esthetics of intelligence better serve our foundations of understanding of this most complex a concept__and where does our simple intentionality of focus, fit in…? These are just a few of the questions I’m starting out with, to see if just possibly, I can achieve any better understanding, than all the great logicians’, estheticians’ and philosophers’ attempts__before me. Let’s see how I do…

The initial philosophical argument mainly goes back to pre-suppositional background stances, and primarily as to whether we put more faith and credit in meta-physics, psychology or logic__at least in my opinion. This would really be our primary intentional focus of mind and thought, and there are hundreds of historical examples to choose from here, or to create our own view, anew. These ideas really came fully to the front burner, back toward the end of the 19th century, with the positions taken by Frege, Brentano and Peirce__then Husserl, Wittgenstein and others, in the early 20th century. My position about their positions is; they all missed the mark of hitting the target directly, and the entire world has been awash in confusion and conflation of and about these necessary philosophical ideas’ solutions__unnecessarily so__ever since…

Yes, it does make it rather difficult to explain one’s pre-suppositional, or preferred intentional stance by way of any one of the three offered focus points__metaphysics, psychology or logic__but, no matter which one’s pre-suppositional or preferred intentional stance is, you’ll end facing the same exact dilemma of explanation__which usually ends in a Socratic ‘aporia’__so what’s to be done to clear this matter up__a bit…? Let’s deliberately start out in logic, to show the difficulty of understanding just how logic ‘Herself’ can see and explain its own mechanics, to itself. If logic looks at straight logic, all the way back into the core of the self-processing mind__what does it find…? All one needs do is ask; “How does logic process itself…?”__to immediately see how difficult this problem is. So, instead of fumbling around here with logic, let’s take the logic concept to its core__or shell, however you want it__which imo, would be no more than natural perception, in its most primary state__pure neutral innocent perception, which contains logic and her twin, rationality__as our dialectic ‘self-questioning-answering-twins’, except one is usually primary and the other secondary, but semiotics throughout history has shown them to be able to exchange positions, i.e., inter-exchange as the needs arise as to ascriptions of other essence agents’ needs to each other, to such reason, rationalities and or logics, etc, dynamics and mechanics. The reason perception is being described as a neutral innocent agency, is the simple fact one’s brain/mind absolutely requires at least one open agent to act as fully neutral__thus acting as a bridge to transfer all agent and agency signals__and since perception is known to be thoroughly neutral to outside nature entering the gates of perception, unaided by any other of our agents or agency__it’s fully known to be neutral__even if it may have other extended capacities, that may be mentioned later…

It now seems, we may have a pure enough agent/agency to start with, to house the other bio-neuro-agents necessary, to set up the dynamics of transducible inter-acting thought mechanics__if just a bit of imagination is used to build a model of the brain/mind. It seems philosophers and such, have simply not investigated deep enough inside neutral perception’s potential to be the house of all the brain’s necessary thought mechanics, where a multitude of ‘bio-neuro-agents’ are set up by our pre-natural states of physiological mechanics, to function as a simple reflective mirrors' system, memory storing and understanding/seeing device__we simply peer into with perception’s reason and logic__or even psychology and metaphysics, if desired to do so__It’s simply all milti-levels of seeing. But, what makes the giant differences between our metaphysical ground states of focus, vs our psychological and logical ground states of focus…?

Let’s just watch what really happens when we take a ground focus state of logic to look at a bunch of trees, on the side of a hill, overlooking a lake__What do we see if we simply casually look, without clearly focusing in on any one object…? We simply process the information as a general universal vision, which if you really think about it__is not logic at all__even though you may be a logician, as I am. In this scenario, my or your mind has really turned from processing the images logically, to processing them psychologically__yet, we’ll almost always insist it’s processing on our logical focus, as being the truest focus, as that’s our preferred, pre-self-programmed, pre-suppositional primary focus and stance. The same will be true if I reverse the order to that of the psychological pre-suppositional processing__yet ask the psychological focus to intentionally concentrate on a particular object__say a frog sitting on a rock__at the water’s edge. The psychological mind will turn logical on the passage of its preferred psychological pre-suppositional stance, to that of the logical focus, without you or me even recognizing it, and still, we’ll usually swear we are making a psychological observation, even though in fact__the nature of the beast of the mind has self-changed its very mechanics, under our very noses, without any of us even noticing__unless you happen to be one who is already fully aware of nature’s given mechanics, multi-variably self-operating within our brains and minds…

Now, watch what happens with the metaphysical__as it turns out to be the most universal focus stance to operate with, of all three__whether the logical or psychological minds have ever considered it or not__It has the natural power of ‘multi-variably-focusing’. The metaphysical has the advantage of resting neutrally in Nature’s own fundamental stance, if I can even word it like this, without offending some of the metaphysicians, logicians and psychologists. When pre-suppositionally positioning one’s focus knowingly and preferedly in the metaphysical stance__one has the easy choice of using either of the other two necessary positions of a general and universal psychological focus, or a particular and specific logical focus, yet still comfortably being able to return to its ground base of ‘multi-varible-metaphysics’__or the ground state of haecceity and supervenience__Nature’s own natural fundamental neutral processing state. So__Iff we wake up, we really do have a choice here__and it’s not one of any religious sort, but a simple choice of recognizing Ockham’s Razor’s ‘indiscernibility principle’ of the easiest possible ‘one/many’ processing path. We can foolishly fight the world of Nature’s reality, by insisting on being pre-suppositionally logical or psychological__or truly realize we can take the neutral stance and focus, on our ground point state of natural ‘one/many’ metaphysics__and thus allow our minds to ‘freely-flow’ from their natural ground states of their ‘multi-variable-focusing’ nature__Where we don’t have to control the states of our focus__where intentionality comes naturally, from our childhood memory states__before we foolishly chose either of the overly and unnecessarily hard paths of logic or psychology__as our overly-primary preferred mechanics of viewing this very natural and ‘uncomplicated’ world…

Metaphysics, over the centuries, may have got a bad rap and rep__but, it’s really a lot easier to accept what needs to be in the core of our understanding__the ‘one/many’ central concept__of our mind’s processing, than to unnecessarily fight the necessarily happening mechanics, of Nature’s natural systems__freely given to us, as a ‘best-fitting inference system mechanics’__Possible… I also wouldn’t want you to think this is real easy to understand, either__as it is not. I still think it takes the thorough understanding of sem(e)iotics’ very complex mechanics, of dynamic agent and agency interactions__along with a good dose of symbolic and graph logic__to fully understand the above, and according to one’s education and thought’s evolutionary state, what one may simply understand from the above’s more simple explanation…

The more complex I make this, the less it’ll be understood__so I’ll stop here… I’d simply suggest a good study of the web’s many pdf’s on epistemology and sem(e)iology, especially those by Charles Sanders Peirce and Bernard Bolzano, and any of the professionally done secondary literature of/on both__as it’s easier to understand, and quite thorough, if done by those authors who respect these great mens’ works…

“We should all know the full intentionality of our focus…” me

Addendum to the above:
I don’t quite know why it is so hard to state the above facts deep enough to achieve clarity, but I do know that every time I’ve tried to do just that__it’s been the most difficult job I’ve ever attempted, and I felt I haven’t accomplished the job I set out to do any better this time__so here’s an attempt to extend it to more meaning and clarity__if possible. First off, ‘Epistemology’, as I’m using it is to be known as ‘The science of the limits of logical knowledge, and its mechanics of mental processings’, and I’d like to recognize the fact I forgot to mention above that I was addressing normal logic/thought, of proto-logic/first logic, as that logic existing before we attempt any organization of normal logic into any type of formal logic. Also, the other proto-logic of ‘Modal Logic’ should be recognized as existing in this same area of thinking about this most fundamental level of logic. One never realizes how difficult this is, and the massive job Aristotle certainly had, to create the first formal logic ever produced. Yes, there existed a ‘formal modal logic’ before Aristotle, and that had been debated and argued extensively long before Aristotle, as to its three states of ‘possibility, impossibility and necessity’__and Aristotle included and extended the ideas of this also, but the deeper area of normal thinking to a fully formalized thinking of symbolic and syllogistic logic, was only first completed by Aristotle__the truest father of fully formal logic. I am simply trying to retrace this trail/train of thought through the ancient to modern paths, of how it must be understood__to function as the ‘formal logic’ it does(yet understood in more layman terms and ideas), or possibly extend it into a new ‘Best-Fitting hypothetical inference logic mechanics and proof system’__or really, a better and more complete explanation of ‘Abduction’__‘The true science and logic of hypothesis…’

Just to let you know further how difficult chasing out logical thought, within the mind, truly is__I started this quest intently, clear back in the summer of 1972__and have been working on the best way of wording it ever since. It seems I can word it in my mind, as clear as a bell, but when it comes to writing clearly about it, the mind has a mind of its own, and takes me off course, even before I even start. It seems the reason is the mind just needs to convert logical thinking to psychological and metaphysical thinking, back and forth in such fast succession__that it’s near impossible for my thinking to pin it down to the natural set path it’s taking, inside me lil’ ol’ punkin. I know I can use the formal symbolic logic and semiotics to explain it better, but my goal is to explain it with simple and natural language, any 5th grade student can understand__and therein lies the problem. Each time I try to nail down a simple thought and or logic path, it changes to another definition of mechanics, right before my eyes. It’s like when I attempt to follow the universal group focus or vision of anything I may choose, to its specific particular focus of vision and description__still trying to maintain the thought path__it blurs into a non-descriptive indiscernible non-image, before I can even latch onto the mechanical processes taking place, deep within my mind. Now, I know this is the deep epistemological mechanics taking place at this level__but, I still question the fact of why I can’t keep track of what I know to be the essence agents, agency and mechanics the sem(e)iotic mechanics must choose from, to complete the concept to concept process__through all its disjuncts and conjuncts. And this means I’m fully aware of the eclectic mechanics taking place between the will having to choose its many different judgment and decision mechanics levels, as per say__empiricism, rationality, memory states of both subjective and objective storage event states, present working memory and direct perception states of subjective and objective events and objects, ascripted emotional judgments, formal rational judgments, all the many thousands of inference images, experiences, experiments and ideas from the outside and inside worlds of reality and natural memory, teleological ideas, ontological ideas, mereological ideas, disjunctions and conjunctions of all these many possible states of normal forms into formal forms, etc., on and on__But, my question has always been; “Why can’t I follow this total path mechanics, if I know it all exists…?”

It seems the mechanical process is just so fast at switching between the most fundamental states of logic, psychology and metaphysics(self-chosen as representative mental states) into a more uniform state of isomorphic mechanics of states, the mind is, or at least seems to be, simply incapable of following its own state changing mechanics__thoroughly enough__to capture its full integral path from first visions and thoughts, into final states of either group thoughts, if starting from the particular and passing to the Universal, or to particular specific final logic states, if starting from the group Universal thoughts, and processing to the specific logical states. What I’m trying to see into is; “Is it possible that nature’s natural inference state, may be interfering with all the state paths I am following, and entering her own state changing path mechanics, I can not normally see…?” We certainly know our eyes and perception take in the external world around us, totally passively, if we but do not interfere, by our intentionality of focus__so this same process, must by necessity, be happening all the time, we are also at the same time__internally processing our own private thoughts__therefore; ‘Nature, all by herself, must by necessity of inference flow mechanics, be changing the disjuncts and conjuncts of concepts integral paths, within the mind, as I’m looking at it…’ There is no reason we’d be able to see this ‘Natural Inference Mechanics’, because we don’t normally see it happening__that is as to its exact integral path mechanics, unless we re-represent it within our reflective perceptual working memory states, where our will can manipulate it__But, that initial ‘Natural Inference Mechanics’, would be taking place before our ‘Will and Judgments’ even became involved__and herein__"I’ve just this second realized”__is the lil’ ol’ ‘trickster demon’ that’s actually fooling our mind mechanics, at its most primary path state intersection__though it’s not really a ‘trickster demon’__but merely nature's natural mental biological-neuro-states’ necessary mechanics’ paths__to enable the mind to be fed any information__in the first place__to even have begun to work on, as all first inferred information must have a free-path circuit, to simply store such necessary primary information in the brain’s memory, without being self-judgment or decision acted upon, or we’d all get far too easily lost in any of our simplest motive actions in the real world__Nature requires a ‘free-path mechanics’, just as much as we require, at the least, a ‘partially free will’. The secret seems to be no more than ‘Inference Path Necessity of Nature’s Natural Mechanics…’ Simply put; “We can’t stop the natural path integral mechanics of Nature, influencing our personal will, judgment, decision and action mechanics__completely__so, we actually process all information in conjunction with Nature…” Thus, such a co-processing mechanics of images and thoughts, would absolutely necessitate a co-processing determined 'free-path' and indetermined ‘partially’ 'free-will…'

Now, maybe later, I can fully retrace all my thoughts from fundamental nature’s own inference mechanics, to my own natural to formal logical mechanics…

I’ll get back to this later in another post, as this discovery has over-flooded my mind, at this point__I need some thought space…