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)

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

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?

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

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!

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

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.

Der Standard (German)

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

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

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.

Softbank to invest in Uber?

What is the purpose of this muted investment? Uber hardly needs any cash - except to pay exorbitant 'compensation' to top executives and the existing investors. But basically the drivers ARE all there is to Uber, without them the firm is nothing except a bit of software (which can easily be put in place for a fraction of its valuation, i.e. net asset value of fixtures). All Softbank and its backers want to do is get hold of the stake and sell it to someone else at a later stage - probably the great unwashed public and it agents, the fund management community that will lap up any IPO however inflated the price may be.
People sniggered when MBO's and LBO's came into fashion during the 1980s. Now it is time for the EBO - the Employee Buyout. Unions and Investment Bankers have to team up and take control of business. Let capitalists (lenders, Share owners) control the underlying hard assets but wrest ultimate control from them. As the saying goes: all wheels come to a standstill if the workers don't participate.
BBC

Half Million Dollar Drug - Spiral of Greed?

One has to wonder who checks the costing that Novartis uses to justify the price of its Kymriah Cancer Drug. What would Robert Koch, Louis Pasteur or Alexander Fleming make of this behaviour?

https://www.bloomberg.com//news/articles/2017-08-30/cancer-breakthrough-heralds-new-era-of-cures-costs-and-choices

Insane Economics? Nomen est Omen?

Fullest employment potential reached with more immigration? How does that work Mr. Insana? So by inviting millions you boost 'growth', but per capital income is what counts!
Ron Insana: Tax reform is a great idea, but tax cuts just might be a waste of money

Gary Cohn's teacher once told his parents he'd be lucky to be a truck driver

So money piled up is the main measure of the man? Maybe a truck driver does work that is more valuable? The world could well get on without the Gary Cohn's of the world, but without truck drivers, hospital nurses, street cleaners it would be a bad place.
Time to review the system that distributes rewards in the Economy.
Gary Cohn's teacher once told his parents he'd be lucky to be a truck driver — and now the Trump adviser and Goldman boss is worth $266 million

Google is paying Apple to remain on the iPhone

And the regulators and anti-trust people are asleep on the watch. When do payments become a bribe?
Google is paying Apple billions per year to remain on the iPhone, Bernstein says

Nobody cares if Bill Gates gets richer because of tax cuts?

Forbes is a card-carrying member of the 1%. His arguments are ludicrous. Of course, Joe Six pack does not care, because he does not know or better - the numbers involved are so absurd and beyond the comprehension of the average citizens that he CANNOT care! But the Billionaires' wealth is not 'created', it is redistributed, like the wealth of feudal lords was not 'created', they took their lands and the majority had to put up with it. In those days it was just brute force, now it is ideology supported by media that is basically controlled by the 1% (remember: free speech means that 200 rich people are allowed to say what they want you to hear, think Murdoch, Barclay Brothers etc).
This ideology perpetuates the 'trickle down' effect, so if Louis XIV builds his Versailles the workers benefit from the expenditure. Now of course the capitalist (better: free market) system needs free interplay to generate a growing and productive economy. But with the wrong signals and rules of the game we get absurd results. People who make billions playing the markets, benefiting from market failure and rigged rules that preserve them (copyright, corporate law, tax subsidies for financial gambling casinos).
All these are the result of a lack of democratic control where the lobbies of the (Super)Rich control the state and prevent full and public discussion. Paying the multitudes off with 'Welfare' and driving them into ever-larger indebtedness (to the Haves, as every debt is the asset of someone else) has led us to the present situation where a public revolt is becoming increasingly likely. Populism will become more and more 'popular'.
Steve Forbes says nobody cares if Bill Gates gets richer because of tax cuts - MarketWatch

Pension fallacies (cont'd)

UK pension system is fatally flawed, subsidies go to the better off, administration is hugely expensive (all the intermediaries in the pension 'industry' take hefty cuts, up to 2 per cent PER ANNUM (!!). State pension for all, no admin, one computer, payment kicks in when pension age is reached, total estimated cost 0.01 per cent! No surprise that providers do not want to hear this! But they still would have their place, people could and will save on their own to provide a better retirement - if they wish to do so.
http://www.cityam.com/269694/robbing-grandson-peter-pay-grandpa-pauls-pension-unfair

US sanctions have taken a big bite out of Russia's economy

US Sanction Mania should not really have too big an impact if the economy is managed correctly. So what if a part of the world is becoming a white space on the world map? Before America was discovered Europe did perfectly well, and same can be said of time before China entered the World economy. What is dangerous is the fact that nobody seems to be man (or woman) enough to put a stop to this encroachment promoted by sinister lobbies and 'think tanks' in the United States.
US sanctions have taken a big bite out of Russia's economy

Eurozone - not much of a Democracy

Dirdem: Eurozone - not much of a Democracy

Obsession with Corporate Tax

Not sure about your obsession to lower corporate taxes, it just creates a massive loophole for the 1%. Tax rate should be on a level with income tax, double tax can be avoided with other measures, eg low income shareholders get rebate etc. Investment is sheltered as depreciation reduces tax rates, dishing out money on repurchasing shares is made less attractive. And the foreign cash? just change the tax code, there is no reason to keep the exemption!
Fiscal Policy Dreaming - Scott Grannis Blog