Friday 10 August 2018

Academics and Bitcoin - a curious mix

On a day when there is a report out about the confused approach of regulators regarding the $200 billion 'cryptocurrency' market another report caught my eye: Academics study the probability that bitcoin's price will fall to zero - in one day! But a similar calculation would be to find the probability that a meteor hits the earth and wipes out all life - interesting but pretty useless. Cryptocurrencies serve those in failed states quite well, in addition to criminals and tax cheats. Use your common sense!
How likely it is that bitcoin will become worthless? (CNBC)

Friday 20 July 2018

How to control Tech Oligopolies

A new effort has not be made to control the power of the FAANG oligopolies. Similar to the Trust-busting period of the early 1900's. These firms provide products that are superior but the nature of this new wave of technology leads to a winner-takes-all situation and dominance by the market leader. So let's look at the major players one by one:

Google - should not be allowed to favor paid ads, no collecting of individual search histories, full publication of search 'algorithm', no cross-selling of other Google products

Amazon - break up the hybrid model, sell own products or third party products

Apple - do not allow exclusive App store, Pay system

Facebook - do not allow collecting and use of search histories

Netflix - do not allow mix of platform and own production (Film studies had to divest cinemas in the USA)

Microsoft - end the copyright protection, long overdue

Tuesday 17 July 2018

Carbon Trading - bureaucratic nightmare and fraudster's paradise

Whoever thought up the crazy idea of carbon trading is a card-carrying member of the bureaucratic, undemocratic and technocratic 'elite' that rules over us. Some 'academics' are always happy to support new schemes (think Tobin Tax) and cosy up to their political paymasters. A naive press also toes the official line in most instances.
But we have a long-established 'Carbon Tax' - it is levied in nearly all countries on the use of petrol and could easily extended to any oil and coal use. And it is not obvious why air transport, shipping and agriculture should be treated leniently. Or the heavy industry which gets also treated with kid's gloves in many countries.
Carbon tax an unwanted gift?

Wednesday 20 June 2018

Oligopolies fear Chinese Competition

If there is one thing that comes to mind when thinking about Chinese business acumen it is that Chinese are very competititve. If one guys develops a new kind of hula hoop there are zillions who immediately want to get into the craze. And that is good for the consumer. The one who came up with the idea has a first-mover advantage but cannot protect his patch ad-infinitum and enjoy what is basically a rent. Contrast this with the USA and most 'Western' economies. Microsoft, Google, Appla, the world of sports and entertainment are protected by massive moats that gullible politicians influenced by their huge lobbies erected. The consumer, the 99%, basically pay their inflated profits and paychecks. Just fortunate that no one thought of giving a patent to whoever opened the first supermarket!

Military-Industrial Complex: Crocodile tears about China

Tuesday 22 May 2018

Italy: how to ditch the Euro

Many 'Experts' agree that leaving the Euro would have catastrophic consequences for a country like Italy. In particular, (foreign) debts would explode bankrupting the state, banks and companies with debts denominated in Euros.
But a simple solution is overlooked - Italy, or any other country - could simply re denominate these debts as it can do it with any internal debts. There would be an outcry but extreme situations call for extreme solutions.
And anyone who arranges his financial affairs in a way so as not to take this possibility into account can only blame himself. Quite a few years ago - and before the Financial Crash - we said that a narrow spread of BTP to Bunds of just 15 bp or so was not viable and any investor was foolish to hold on to the Italian paper.
So you have been warned!

Wednesday 22 November 2017

Time to break up Tech Oligopolies

Are politicians in the pockets of Big Tech? All these firms use strength in their core business to expand their dominating position. Remember: In the USA film studios were forced to divest their cinema chains - so Netflix should stay out of film production, Amazon not offer third-party selling, Apple get out of music business etc
The Global Domination of Big Tech | FS Staff | FINANCIAL SENSE

Wednesday 18 October 2017

Absurd: Inflation was too low

Amusing - if it would not be sad - to read that 'prominent' 'star' economists like Barry Eichengreen  still regurgitate the fable of  'too low inflation'. So what is the right level of inflation for these confused thinkers? One shudders to think how many young students get indoctrinated by his kind.