Thursday, October 7, 2010

Examples of Positive Quiddity 35

(just a partial list, a sample rather than an index)

Winston Churchill
Norman Borlaug
Jimmy Durante
Carmen Cavallaro
Max Steiner
Coco Chanel
Rudolf Friml
Filo Farnsworth
Ely Culbertson
George Kennan
George C. Marshall
Madame Curie
Edwin Land
Sidney Reilly
William Stephenson
Princess Noor-un-nisa Inayat Khan
Jack Benny
Jack Paar
William Seward
Felix Grant
Alfred Hitchcock
Edith Head
Nelson Mandela
Sir John Guilgud
Eddie Heywood
Paul Volcker
George Carlin
Eugene O'Neil
Marlene Dietrich
John Barrymore
Arthur Miller
Friedrich August von Hayek
Jackie Gleason
John Ericsson
James Watson and Francis Crick
Harry Warren
Hoagy Carmichael
Rod Serling
Clara Barton
Antonio Carlos Jobim

Wednesday, October 6, 2010

Positive Quiddity Described 34

Positive Quiddity

Positive Quiddity is the quality of ingenuity, created through a godly inspiration of wit and cleverness. In Greek mythology, this god has already been described in stories as Hermes (or the Latin cognate Mercury). Here is a wise summary:

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"Hermes is the god of the interior nervous system. His presence amounts to heavenly wit. When we are in Hermes’ field, messages pass with fantastic speed between the brain and the fingertips, between the heart and the tear ducts, between the genitals and the eyes, between the part of us that suffers and the part of us that laughs. Hermes is Mercury, and we know that mercury cannot be held in the hand – it rolls everywhere, separates into tiny drops, joins again, falls on the floor, rolls under the table, moves with amazing quickness. It is correctly called quicksilver.

"This mercurial energy is called, among other things, Odin in northern Europe, Mercury in Italy, Hermes in Greece. Its day of the week is Wednesday (Odin’s Day) and Mercredi in France.

"Sometimes when friends are talking in a closed room, the heat of the conversation begins to increase: witty things are said; contributions flow from all sides; leaps of imagination appear; the genuinely spiritual follows an instant after the genuinely obscene. Hermes has arrived. At some beautiful moment of the conversation a silence falls that feels mysterious; everyone hesitates to break it. In Spain until the fifteenth century that silence was called “Hermes’ silence.” So Lόpez-Predraza says in his fine book on Hermes.

"The old tradition maintains that true learning does not take place unless Hermes is present. That is depressing, because university English departments, and sociology departments, and religion departments usually get rid of teachers with Hermes energy first. The whole Ph.D. system was created by Germanic Hermes-killers. Hermes is magical, detail-loving, obscene, dancelike, goofy, and not on a career track.
Hermes slips in true information in that split second between the moment your tongue starts a word and the moment it finishes. You plan to say, “This is my mother,” and you say, “This is my wife.” I did that. My mother looked very pleased. You plan to say “farther” and it comes out “father,” because Hermes moves faster than our thought. What people call a Freudian slip is really a Hermes precision. Hermes punctures pomposity, piety, sureness, self-satisfaction."

--Iron John by Robert Bly, ppg. 142-3.

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Other cultures have other figures, usually spirit animals, for these stories of great cleverness. The African hare is an example that has been Americanized through B'rer Rabbit as well as Bugs Bunny. Aboriginal North Americans, particularly the Lakota and Apache, refer to coyote spirit or coyote energy.

This jolt of cleverness is consistent with responding to the power of the Sea of Quiddity. Here are some observable examples of such inventiveness:

Composing a new melody – we may be stuck with the legal definition of a copyright for melody, seven unique notes unlike any other on file. The mysterious ability to make these notes memorable and attractive has defied analysis and computer simulation to the present day

Turning a myth into reality – such as NASA using the Mercury, Gemini and Apollo programs from 1961-72 to go to the moon. The Greek myth of Daedalus traveling through the air under his own power from Crete to mainland Greece was made real in 1988 by a man-powered aircraft designed and engineered by M.I.T.

Orchestration and arrangement – at best have the power to create an eerie and unmistakeable unity. A group of 40 selections of such music has been presented in postings 6 through 8 with examples at


Team sports – from Football or baseball to successful slam bidding at contract bridge to running the table at billiards to professional golf [the team for billiards and for golf exists but is hidden]

Creating a major new enterprise – desktop computers, the drafting of Magna Carta, a playwright successfully offering catharsis to an audience

Invention – such as lasers (coherent light of the same exact frequency, which occurs nowhere in nature), television, alternating current, new forms of geometry, additional states of matter, new forms of logical analysis, new philosophies (such as game theory)

Improvisational comedy – in which laughter comes forth from unplanned material

Mutual love – in which intimacy is exchanged without script nor manipulation

Acceptance of mortality – in which death is correctly yet rarely understood as a truth-bearing ally

Tuesday, October 5, 2010

Magna Carta ("Great Charter") 33

“No freeman shall be taken or imprisoned, or be disseised of his freehold or liberties, or free customs, or be outlawed, or exiled, or any other wise destroyed; nor will we not pass upon him, nor condemn him, but by lawful judgment of his peers, or by the law of the land. We will sell to no man, we will not deny or defer to any man either justice or right.”

– Clause 29 (originally 39 and 40) of Magna Carta, the “due process” clause


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How did this great accomplishment of due process come about? The short answer is the murder 45 years earlier of a popular archbishop by the king.

Thomas Becket (1118 – 29 December 1170), later also known as Thomas à Becket, was Archbishop of Canterbury from 1162 until his murder in 1170. He is venerated as a saint and martyr by both the Catholic Church and the Anglican Communion. He engaged in conflict with Henry II of England over the rights and privileges of the Church and was assassinated by followers of the king in Canterbury Cathedral. Soon after the death of Thomas Becket, Pope Alexander canonized him.”


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“The murder of St. Thomas Becket in 1170 was a significant event in defining the relationship between Church and State in Mediaeval England. It called into question the validity of the King’s authority, and the extent to which the Papacy were able to claim political, as well as spiritual, supremacy in England. The murder served to significantly change the relationship between Church and State in England in several ways, and also played a part in bringing about Magna Carta in 1215, the consequences of which are still relevant to English politics today.”


                                                             Canterbury Cathedral

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Magna Carta is an English charter, originally issued in the year 1215, and reissued later in the 13th century in modified versions which omit certain temporary provisions, including the most direct challenges to the monarch's authority. The charter first passed into law in 1225. The 1297 version, with the long title (originally in Latin) The Great Charter of the Liberties of England, and of the Liberties of the Forest, still remains on the statute books of England and Wales.
The 1215 Charter required King John of England to proclaim certain liberties, and accept that his will was not arbitrary, for example by explicitly accepting that no "freeman" (in the sense of non-serf) could be punished except through the law of the land, a right which is still in existence today.
Magna Carta was the first document forced onto an English King by a group of his subjects (the barons) in an attempt to limit his powers by law and protect their privileges. It was preceded and directly influenced by the 1100 Charter of Liberties, when King Henry I had specified particular areas where his powers would be limited.
Despite its recognised importance, by the second half of the 19th century nearly all of its clauses had been repealed in their original form. Three clauses remain part of the law of England and Wales, however, and it is generally considered part of the uncodified constitution. Lord Denning described it as "the greatest constitutional document of all times - the foundation of the freedom of the individual against the arbitrary authority of the despot". In a 2005 speech, Lord Woolf described it as "first of a series of instruments that now are recognised as having a special constitutional status", the others being the Habeas Corpus Act, the Petition of Right, the Bill of Rights and the Act of Settlement.
The charter was an important part of the extensive historical process that led to the rule of constitutional law in the English speaking world, although it was "far from unique, either in content or form". In practice, Magna Carta in the medieval period did not in general limit the power of kings, but by the time of the English Civil War it had become an important symbol for those who wished to show that the King was bound by the law. It influenced the early settlers in New England and inspired later constitutional documents, including the United States Constitution.




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King John was forced by the barons to sign Magna Carta at Runnymede, a meadow along the Thames River upstream from London. The barons, the church and the commoners had had enough of tyranny since the murder of beloved Archbishop Becket. After signing the document, King John and the Pope immediately denounced it, but both died in 1216. Magna Carta survived many attempts at revocation. The “due process” clause quoted at the beginning of this post is still in effect.


A very brief summary of these events and attitudes is demonstrated in this poem:


What Say the Reeds at Runnymede?
A Poem Commemorating the signing of Magna Carta
Runnymede, Surrey, June 15, 1215


At Runnymede, at Runnymede,
What say the reeds at Runnymede?
The lissom reeds that give and take,
That bend so far, but never break,
They keep the sleepy Thames awake
With tales of John at Runnymede.
At Runnymede, at Runnymede,
Oh, hear the reeds at Runnymede:
'You musn't sell, delay, deny,
A freeman's right or liberty.
It wakes the stubborn Englishry,
We saw 'em roused at Runnymede!
When through our ranks the Barons came,
With little thought of praise or blame,
But resolute to play the game,
They lumbered up to Runnymede;
And there they launched in solid line
The first attack on Right Divine,
The curt uncompromising "Sign!'
They settled John at Runnymede.
At Runnymede, at Runnymede,
Your rights were won at Runnymede!
No freeman shall be fined or bound,
Or dispossessed of freehold ground,
Except by lawful judgment found
And passed upon him by his peers.
Forget not, after all these years,
The Charter signed at Runnymede.'
And still when mob or Monarch lays
Too rude a hand on English ways,
The whisper wakes, the shudder plays,
Across the reeds at Runnymede.
And Thames, that knows the moods of kings,
And crowds and priests and suchlike things,
Rolls deep and dreadful as he brings
Their warning down from Runnymede!
--Rudyard Kipling
1865-1936
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Full text of Magna Carta at http://www.britannia.com/history/docs/magna2.html


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Footnote #1: It is commonly prated by modern televangelists in the United States that the nation is of Christian origin and that the founding fathers were devout Christians. Therefore, separation of church and state is a synthetic thing, brought about by merchant and intellectual interests, to fracture the Christian nature of the nation and weaken it. This is an utter lie. Separation of church and state was devised by the church itself to correctly protect its indepenence from the state. Magna Carta begins and ends with strong references to the independence of the church, “forever.”


Footnote #2: Since Karl Marx, it is often misunderstood that public actions invariably take place to protect the class of the public figure advocating a certain policy. Thus public life and politics represent unending class warfare. The great achievement of due process, which necessarily involved an attack on the divine right of kings, was overwhelmingly supported by all classes of England, from the Norman barons to humble serfs. Therefore, obviously, there is more to politics than class struggle or deconstruction of motives.


Footnote #3: The whisper wakes, the shudder plays. The Sea of Quiddity is again disturbed.


Footnote #4: The English have not lost a battle with outsiders on their own island since limiting the authority of their government itself. Magna Carta is nearly 800 years old, and the Charter of Liberties is over 900 years old. Perhaps the surest way to live in peace, and to win the few wars it is necessary to fight, is to always limit central governmental power and authority while strictly maintaining due process.

Monday, October 4, 2010

American Common Law Smashed in 1938 32

A Brief Summary of Common Law from Wikipedia:
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Common law, also known as case law, is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action. A "common law system" is a legal system that gives great precedence weight to common law, on the principle that it is unfair to treat similar facts differently on different occasions. The body of precedent is called "common law" and it binds future decisions. In cases where the parties disagree on what the law is, an idealized common law court looks to past precedential decisions of relevant courts. If a similar dispute has been resolved in the past, the court is bound to follow the reasoning used in the prior decision (this principle is known as stare decisis). If, however, the court finds that the current dispute is fundamentally distinct from all previous cases (called a "matter of first impression"), judges have the authority and duty to make law by creating precedent. Thereafter, the new decision becomes precedent, and will bind future courts.
“In practice, common law systems are considerably more complicated than the idealized system described above. The decisions of a court are binding only in a particular jurisdiction, and even within a given jurisdiction, some courts have more power than others. For example, in most jurisdictions, decisions by appellate courts are binding on lower courts in the same jurisdiction and on future decisions of the same appellate court, but decisions of lower courts are only non-binding persuasive authority. Interactions between common law, constitutional law, statutory law and regulatory law also give rise to considerable complexity. However stare decisis, the principle that similar cases should be decided according to consistent principled rules so that they will reach similar results, lies at the heart of all common law systems.
“Common law legal systems are in widespread use, particularly in England where it originated in the Middle Ages, and in nations that trace their legal heritage to England as former colonies of the British Empire, including the United States, Malaysia, Singapore, Pakistan, Sri Lanka, India, Ghana, Cameroon, Canada, Ireland, New Zealand, South Africa, Hong Kong and Australia"

In 1938, the Supreme Court denied the use of common law in the federal courts system, though it had been a benchmark for 150 years. Here is a summary of that revolutionary decision:

"THERE IS NO FEDERAL COMMON LAW, AND CONGRESS HAS NO POWER TO DECLARE SUBSTANTIVE RULES OF COMMON LAW applicable IN A STATE, WHETHER they be LOCAL or GENERAL in their nature, be they COMMERCIAL LAW or a part of LAW OF TORTS."  (See:
ERIE RAILROAD CO. vs. THOMPKINS, 304 U.S. 64, 82 L. Ed. 1188).
Complete text of 1938 decision:


Explanation (from Wikipedia):

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“Before 1938, the federal courts, like almost all other common law courts, decided the law on any issue where the relevant legislature (either the U.S. Congress or state legislature, depending on the issue), had not acted, by looking to courts in the same system, that is, other federal courts, even on issues of state law, and even where there was no express grant of authority from Congress or the Constitution.

“In 1938, the U.S. Supreme Court in Erie Railroad Co. v. Tompkins 304 U.S. 64, 78 (1938), overruled earlier precedent, and held "There is no federal general common law," thus confining the federal courts to act only as interpreters of law originating elsewhere. E.g., Texas Industries v. Radcliff, 451 U.S. 630 (1981) (without an express grant of statutory authority, federal courts cannot create rules of intuitive justice, for example, a right to contribution from co-conspirators). Post-1938, federal courts deciding issues that arise under state law are required to defer to state court interpretations of state statutes, or reason what a state's highest court would rule if presented with the issue, or to certify the question to the state's highest court for resolution.

Later courts have limited Erie slightly, to create a few situations where United States federal courts are permitted to create federal common law rules without express statutory authority, for example, where a federal rule of decision is necessary to protect uniquely federal interests. See, e.g., Clearfield Trust Co. v. United States, 318 U.S. 363 (1943) (giving federal courts the authority to fashion common law rules with respect to issues of federal power, in this case negotiable instruments backed by the federal government); see also International News Service v. Associated Press, 248 U.S. 215 (1918) (creating a cause of action for misappropriation of "hot news" that lacks any statutory grounding, but that is one of the handful of federal common law actions that survives today); National Basketball Association v. Motorola, Inc., 105 F.3d 841, 843-44, 853 (2d Cir. 1997) (noting continued vitality of INS "hot news" tort under New York state law, but leaving open the question of whether it survives under federal law). Except on Constitutional issues, Congress is free to legislatively overrule federal courts' common law.

-- http://en.wikipedia.org/wiki/Common_law


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My own arguments against the 1938 decision

Common law precedent means that it was developed as a result of real world disagreements rather than ideology. Reality trumps diktat (see the assumptions in blog post #1).

Under common law, a particular decision is made impersonally by comparison to the same situation faced elsewhere by others. The less personal a judicial decision, the better for the commonwealth.

The assumption by the progressive reformers who “won” this Supreme Court of the United States decision is that ideology trumps reality and that present day politicians know more than hundreds of years of court history. The reformers sought a system in which all law comes from the people through,and only through, their current legislators. Overthrowing common law was not necessary to improve society, but it was done anyway in pursuit of a subjective utopia of unlimited democratic power [rather than a republic of limited powers]. To counter this hubris, I offer the following quote:

"Law represents the effort of man to organize society;
governments, the efforts of selfishness to overthrow liberty".

– Henry Ward Beecher 1813 - 1887

The decision has made the Supreme Court more and more ideological, ultimately politicizing the body, which is where we are today. We have a court of nine individuals of strong political opinions which can be reliably forecast in advance. They are responsible, as a body, for the ultimate decisions of law. Such partisan friction is potentially to the detriment of us all.

In spite of the “supremacy of federal law,” under this decision federal judges sometimes have to ape or imitate state courts or remand issues to the state level, an unnecessary and unprincipled contradiction.

The logic and inherent fairness of case law, being the heart of common law, is too powerful and valuable to reject. Thus, in spite of the absolute language of the 1938 decision, of necessity, common law does continue in certain federal cases as outlined in red above. Therefore the 1938 decision courted a foreseeable categorical inconsistency which makes that decision erroneous.

When we get into the Greek-like mythological forces of Clive Barker's The Great and Secret Show, I will contend that common law preserves the purity of Quiddity. The 1938 decision pollutes Quiddity (partly through a tolerance of inequity and unfairness and partly through group-think and hysteria by legislators, viz, the “Patriot Act” of 2001) and invites an attack on the good qualities of the people.

Conclusion

The progressive attack on common law has dis-served the American people, allowed citizens with identical legal problems to be treated differently, and ultimately politicized the Supreme Court itself. This seems to be a victory for ideological arrogance that is, at least, devoid of significant cognitive bias. Further examples of ideological conflict in this blog will seldom be so pure.

The next blog post deals with the greatest political event in recorded history – Magna Carta.

Sunday, October 3, 2010

American Common Law (before 1938) 31

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American common law

The United States and most Commonwealth countries are heirs to the common law legal tradition of English law. Certain practices traditionally allowed under English common law were expressly outlawed by the Constitution, such as bills of attainder and general search warrants.
As common law courts, U.S. courts have inherited the principle of stare decisis. American judges, like common law judges elsewhere, not only apply the law, they also make the law, to the extent that their decisions in the cases before them become precedent for decisions in future cases.
The actual substance of English law was formally "received" into the United States in several ways. First, all U.S. states except Louisiana have enacted "reception statutes" which generally state that the common law of England (particularly judge-made law) is the law of the state to the extent that it is not repugnant to domestic law or indigenous conditions. Some reception statutes impose a specific cutoff date for reception, such as the date of a colony's founding, while others are deliberately vague. Thus, contemporary U.S. courts often cite pre-Revolution cases when discussing the evolution of an ancient judge-made common law principle into its modern form, such as the heightened duty of care traditionally imposed upon common carriers.
Second, a small number of important British statutes in effect at the time of the Revolution have been independently reenacted by U.S. states. Two examples that many lawyers will recognize are the Statute of Frauds (still widely known in the U.S. by that name) and the Statute of 13 Elizabeth (the ancestor of the Uniform Fraudulent Transfers Act). Such English statutes are still regularly cited in contemporary American cases interpreting their modern American descendants.
However, it is important to understand that despite the presence of reception statutes, much of contemporary American common law has diverged significantly from English common law. The reason is that although the courts of the various Commonwealth nations are often influenced by each other's rulings, American courts rarely follow post-Revolution Commonwealth rulings unless there is no American ruling on point, the facts and law at issue are nearly identical, and the reasoning is strongly persuasive.


Formulaion of Federal Precedent


Unlike the states, there is no plenary reception statute at the federal level that continued the common law and thereby granted federal courts the power to formulate legal precedent like their English predecessors. Federal courts are solely creatures of the federal Constitution and the federal Judiciary Acts. However, it is universally accepted that the Founding Fathers of the United States, by vesting "judicial power" into the Supreme Court and the inferior federal courts in Article Three of the United States Constitution, thereby vested in them the implied judicial power of common law courts to formulate persuasive precedent; this power was widely accepted, understood, and recognized by the Founding Fathers at the time the Constitution was ratified. Several legal scholars have argued that the federal judicial power to decide "cases or controversies" necessarily includes the power to decide the precedential effect of those cases and controversies.
The difficult question is whether federal judicial power extends to formulating binding precedent through strict adherence to the rule of stare decisis. This is where the act of deciding a case becomes a limited form of lawmaking in itself, in that an appellate court's rulings will thereby bind itself and lower courts in future cases (and therefore also impliedly binds all persons within the court's jurisdiction). Prior to a major change to federal court rules in 2007, about one-fifth of federal appellate cases were published and thereby became binding precedents, while the rest were unpublished and bound only the parties to each case.
As Judge Alex Kozinski has explained, binding precedent as we know it today simply did not exist at the time the Constitution was framed. Judicial decisions were not consistently, accurately, and faithfully reported on both sides of the Atlantic (reporters often simply rewrote or failed to publish decisions which they disliked), and the United Kingdom lacked a coherent court hierarchy prior to the end of the 19th century. Furthermore, English judges in the eighteenth century subscribed to now-obsolete natural law theories of law, by which law was believed to have an existence independent of what individual judges said. They saw themselves as merely declaring the law which had always theoretically existed, not making it. Therefore, a judge could reject another judge's opinion as simply an incorrect statement of the law, like how scientists regularly reject each other's conclusions as incorrect statements of the laws of science.
The contemporary rule of binding precedent became possible in the U.S. in the nineteenth century only after the creation of a clear court hierarchy (under the Judiciary Acts), and the beginning of regular verbatim publication of U.S. appellate decisions by West Publishing. It gradually developed case-by-case as an extension of the judiciary's public policy of effective judicial administration (that is, in order to efficiently exercise the judicial power). It is generally justified today as a matter of public policy, first, as a matter of fundamental fairness, and second, that in the absence of case law, it would be completely unworkable for every minor issue in every legal case to be briefed, argued, and decided from first principles (such as relevant statutes, constitutional provisions, and underlying public policies), which in turn would create hopeless inefficiency, instability, and unpredictability, and thereby undermine the rule of law.
Here is a typical exposition of that public policy in a 2008 majority opinion signed by Associate Justice Stephen Breyer:

Justice Brandeis once observed that 'in most matters it is more important that the applicable rule of law be settled than that it be settled right.' Burnet v. Coronado Oil & Gas Co., 285 U.S. 393, 406 (1932) (dissenting opinion). To overturn a decision settling one such matter simply because we might believe that decision is no longer 'right' would inevitably reflect a willingness to reconsider others. And that willingness could itself threaten to substitute disruption, confusion, and uncertainty for necessary legal stability.* We have not found here any factors that might overcome these considerations.

However, since precedents became binding, it is now sometimes possible, over time, for a line of them to drift away from the express language of any underlying statutory or constitutional texts, until such texts are severely overloaded with implied meanings not even hinted at on their face. This tendency towards so-called judicial lawmaking has been particularly obvious in federal substantive due process decisions. Due to obvious tension with the reservation of legislative power to Congress in Article One of the United States Constitution, it is often subject to harsh criticism as "antidemocratic" from originalists such as Associate Justice Antonin Scalia, as in this 2000 dissenting opinion:

In imposing its Court-made code upon the States, the original opinion at least asserted that it was demanded by the Constitution. Today’s decision does not pretend that it is–and yet still asserts the right to impose it against the will of the people’s representatives in Congress. Far from believing that stare decisis compels this result, I believe we cannot allow to remain on the books even a celebrated decision–especially a celebrated decision–that has come to stand for the proposition that the Supreme Court has power to impose extraconstitutional constraints upon Congress and the States. This is not the system that was established by the Framers, or that would be established by any sane supporter of government by the people.



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* “necessary legal stability” means the continuous holding of power by a government organ is more important than being right.

Next post: the overthrow of American common law in 1938.

An afterword:

A profoundly vigorous defense of American Common Law as originally implemented is available at:

Saturday, October 2, 2010

English Common Law (ECL) 30

The atrophication of melody by music professionals and the financial mess we are in have common methodological elements that we will discuss later in this blog.  Both exhibit "negative quiddity."  To better explain this, further examples are going to be shown.  The next such example deals with English Common Law.

I am a lifelong admirer of English Common Law (ECL). There is something about it that rings with an amazing wisdom. ECL is something unique and profound, a system it can be imagined that Solomon may have devised.  It is so shrewd and deft regarding human nature that my conjecture is that it represents the living continuation of Druidic ethics, which were ironclad for ages but never written down.

For thousands of years around the world, the tribal elders have sat around the fire and arbitrated disputes by gathering evidence and making decisions. English Common Law is a clever system of gathering and organizing these decisions for use in future cases through precedent. Under ECL, a legislature exists to correct mistakes and address issues that have been overlooked or have not been adjudicated under ECL.  Under normal circumstances, the law makes itself through the common sense of judges and the ability to apply precedent.

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                                                Royal Courts of Justice, The Strand, London
The essence of English common law is that it is made by judges sitting in courts, applying their common sense and knowledge of legal precedent (stare decisis) to the facts before them. A decision of the highest appeal court in England and Wales, the Supreme Court of the United Kingdom, is binding on every other court in the hierarchy, and they will follow its directions. For example, there is no statute making murder illegal. It is a common law crime - so although there is no written Act of Parliament making murder illegal, it is illegal by virtue of the constitutional authority of the courts and their previous decisions. Common law can be amended or repealed by Parliament; murder, by way of example, carries a mandatory life sentence today, but had previously allowed the death penalty.

England and Wales are constituent countries of the United Kingdom, which is a member of the European Union. Hence, EU law is a part of English law. The European Union consists mainly of countries which use civil law and so the civil law system is also in England in this form. The European Court of Justice can direct English and Welsh courts on the meaning of areas of law in which the EU has passed legislation.
The oldest law currently in force is the Distress Act 1267, part of the Statute of Marlborough, (52 Hen. 3).[5] Three sections of Magna Carta, originally signed in 1215 and a landmark in the development of English law, are extant, but they date to the reissuing of the law in 1297.

Common law


Since 1189, English law has been described as a common law rather than a civil law system (i.e. there has been no major codification of the law, and judicial precedents are binding as opposed to persuasive). This may have been due to the Norman conquest of England, which introduced a number of legal concepts and institutions from Norman law into the English system. In the early centuries of English common law, the justices and judges were responsible for adapting the Writ system to meet everyday needs, applying a mixture of precedent and common sense to build up a body of internally consistent law, e.g. the Law Merchant began in the Pie-Powder Courts (a corruption of the French "pieds-poudrés" or "dusty feet", meaning ad hoc marketplace courts). As Parliament developed in strength legislation gradually overtook judicial law making so that, today, judges are only able to innovate in certain very narrowly defined areas. Time before 1189 was defined in 1276 as being time immemorial.

Precedent


One of the major problems in the early centuries was to produce a system that was certain in its operation and predictable in its outcomes. Too many judges were either partial or incompetent, acquiring their positions only by virtue of their rank in society. Thus, a standardised procedure slowly emerged, based on a system termed stare decisis. Thus, the ratio decidendi of each case will bind future cases on the same generic set of facts both horizontally and vertically. The highest appellate court in the UK is the Supreme Court of the United Kingdom and its decisions are binding on every other court in the hierarchy which are obliged to apply its rulings as the law of the land. The Court of Appeal binds the lower courts, and so on.

Criminal law


English criminal law derives its main principles from the common law. The main elements of a crime are the actus reus (doing something which is criminally prohibited) and a mens rea (having the requisite criminal state of mind, usually intention). A prosecutor must show that a person has caused the offensive conduct, or that the culprit had some pre-existing duty to take steps to avoid a criminal consequence. The types of different crimes range from those well known ones like manslaughter, murder, theft and robbery to a plethora of regulatory and statutory offences. It is estimated that in the UK, there are 3,500 classes of criminal offence. Certain defences may exist to crimes, which include self defence, necessity, duress, and in the case of a murder charge, under the Homicide Act 1957, diminished responsibility, provocation and in very rare cases, the survivor of a suicide pact. It has often been suggested that England should codify its criminal law, in an English Criminal Code, however there has been no overwhelming support for this in the past.

http://en.wikipedia.org/wiki/English_Common_Law


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[English Common Law precedents developed a profound influence on constitutional law, administrative law, family law, torts, contracts, property, trusts, labor law, rules of evidence, and other areas such as licensing law and residency. As a poignant example, the development of the rules for hearsay evidence under English Common Law are ingenious (see http://en.wikipedia.org/wiki/Hearsay_in_English_Law ). Hearsay evidence is, wisely, further restricted in its use in the USA.]

Friday, October 1, 2010

One Firm Alone Caused A Market Panic 29

Introduction:  Bloggers are urged to take a look at a link mentioned in post 22 to achieve an understanding of what is meant by the term” high frequency trading,” because this alone could provide the mechanism, the deus ex machina, for a collapse:

high freuqency trading.See: http://en.wikipedia.org/wiki/Algorithmic_trading

With that in mind, we see an unexpected and unanticipated source of panic. Thus a panic from a “black swan” is less rare than expected when the instruments were set free in the marketplace. To provide some detail of this development, here is a news article from today:
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One Large Trader Led to May 6 Stock Market Plunge
Gov't Report Finds Large Trader Triggered May 6 stock market plunge with $4.1B Computer Trade
Marcy Gordon and Daniel Wagner, AP Business Writers, On Friday October 1, 2010
WASHINGTON (AP) -- A trading firm's use of a computer sell order triggered the May 6 market plunge, which sent the Dow Jones industrial average dropping nearly 1,000 points in less than a half-hour.
A report issued Friday by the Securities and Exchange Commission and the Commodity Futures Trading Commission determined the so-called "flash crash" was caused when the trading firm executed a computerized selling program in an already stressed market.

The firm's trade, worth $4.1 billion, led to a chain of events the ended with market players swiftly pulling their money from stock market, the report said.

The report does not name the trading firm. But only one trade that day fit the description in the report. The firm Waddell & Reed, based in Overland Park, Kan., has acknowledged making such a trade that day.

The free fall highlighted the growing complexity and diversity of the fast-evolving securities markets. Sleek electronic trading platforms now compete with the traditional exchanges, with stocks now traded on some 50 exchanges beyond the New York Stock Exchange and the Nasdaq Stock Market. Powerful computers give so-called "high frequency" traders a split-second edge in buying or selling stocks -- based on mathematical formulas.

The risk looms that electronic errors at high speeds could ripple through markets and disrupt them.

The stock market was already stressed even before the plunge that day. Anxiety was mounting over a debt crisis in Europe. The Dow Jones was down about 2.5 percent at 2:30 p.m. when the trader placed an enormous sell order on a futures index of the S&P's index. The trade on the E-Mini S&P 500 was automated by a computer algorithm that was trying to hedge its risk from price declines.

In that one trade, 75,000 contracts were sold in a span of 20 minutes. It was the largest single trade of that investment since the start of the year. The firm's previous transaction of that size took more than five hours, the report notes.

The trade triggered aggressive selling of the futures contracts and that sent the index down about 3 percent in four minutes.

In a previous statement, Waddell & Reed acknowledged that it had sold the contracts to reduce its funds' risk quickly. It said traders were worried that the European debt crisis could spread to U.S. markets.
The company maintained that the transaction "was not the cause of any abnormal price action." It said the move involved just 1 percent of the contracts of that type that changed hands on May 6. The sale would not have caused problems in a normal market, the company said.

"Our portfolio managers and the funds acted in a manner consistent with the interests of their fund shareholders," it said.

Nearly 21,000 trades were canceled in the ensuing weeks because the exchanges deemed them erroneous.
Responding to the episode, the SEC and the major U.S. exchanges agreed on a six-month pilot program that briefly halts trading of some stocks that mark big price swings. The new "circuit breakers" are in effect until Dec. 10. Under the rules, trading of any Standard & Poor's 500 stock that rises or falls 10 percent or more within a five-minute span is halted for five additional minutes.

On May 6, about 30 stocks listed in the S&P 500 index fell at least 10 percent within five minutes.


http://finance.yahoo.com/news/One-large-trader-led-to-May-6-apf-4236028562.html?x=0&.v=11


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Footnote: In A Demon of Our Own Design, Bookstaber offers a brilliant analysis of the various systemic risks involved in synthetic instruments, declaring that the instruments involved mutate faster than the ability of regulators to control them.