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.

Tuesday, 17 October 2017

Trusts: mostly avoidance vehicle for the 1%

Trusts may have some justification to ensure the continuance of a fortune (as when knights left for an extended period during the Crusades). But that does not meam that they should not be subject to the same tax regime as any other taxpayer or business. In this case the wealth piled up by Ross (mostly by financial speculation) may escape inheritance taxes - so close to a billion passes to a group of beneficiaries while working income is heavily taxed.
New York Post via MarketWatch

Saturday, 14 October 2017

The Rich Get Richer: The Mathematics of Inequality

This Model hits the nail on its head! And if you add a myriad of other poor policies you have to wonder when the top 100 own the world! Just take copyright, corporate structures, weak inheritance laws, lack of antitrust enforcement to name the most blatant abuses. The rich and their media control politics and there is no end in sight to the tendency to rising inequality.
Tufts University

Wednesday, 4 October 2017

How to price an EBO (Employee Buyout)?

To continue with the case of Uber, in my opinion a perfect candidate for an EBO, one should ask how and on what terms an EBO should be executed. It makes no sense to start with the 'market' valuation as it will be as good a reflection of the real value as the price of bitcoins is for a digital entry on some computer. The only sensible starting point is the net asset value, i.e. the cumulative value of REAL investment that supports the business. As the firm cannot function without employees they should be able to drive a hard bargain.  While not being a supporter of Jeremy Corbyn's extreme views he may have a point with regard to re-nationalising the key utilities. Again, the baseline scenario for any compensation should be what the underlying assets are worth, not necessarily some number that 'Mister Market' arrives at during his random walk from manic depression to euphoria.

Business Schools would be well advised to work on how to make Wider Share Ownership and Employee-owned business work rather than how to squeeze the last dollar out of customers and into the pockets of a few top executives, - and at the same time charging students fees that bear no relationship to the value provided. Most of what they perpetrate any astute person could learn by delving into the top 10 or 20 business/economics text books.