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PwC Auditors Arrested In Satyam Fraud Inquiry
theodp writes "Indian police arrested two employees from the affiliate of PricewaterhouseCoopers who audited Satyam Computer Services, the IT outsourcing giant at the center of the nation's largest fraud inquiry. The move comes after Satyam founder Ramalinga Raju said he had fabricated $1 billion of assets and confessed to making up more than 10,000 employees to siphon money from the software company. State Farm Insurance has severed its ties with Satyam, citing uncertainty about the company's future as 'the only factor responsible for the termination of the contract,' which will reportedly affect at least 400 on-site Satyam employees. Other customers, including GE, are standing by Satyam, one of the top recipients of H-1B and L visas (so much for those $500 Fraud Prevention and Detection fees!)."
Pricewaterhouse Coopers is a huge company and actually audits 40 percent of companies in the FTSE 100 Index. They audit everyone from aerospace & defence contractors to general retailers and chemical goods manufacturers. Scary news.
This game will waste your life. Don't clicky!
How do you make up $1bn in assets in a Labor-focused business? If they admit to 10,000 fakes they probably really had 100,000 fakes.
It looks FTA that it's GE's India division (not GE in America) that's pledging to continue to work with them "for now", so I don't understand the poster's comments about H1B and L visas. GE builds water treatment and other kinds of major plants over there.
In current US regulatory environment, any company here pledging to work with a company like Satyam would be stopped.
We need a world-wide currency, world-wide wages, world-wide costs for raw materials, etc. Until then, it's always going to be fucked-up.
Wouldn't it be nice if we were all the same, and some world-wide authority to make sure none of us broke that golden rule.
Unless you plan on normalizing climate and remaking Pangaea, things will always have different costs in different countries. Japan will never have herds of free-range cattle; beef will always be more expensive there. Housing will never cost as much in West St. Bumblefuck as it will in Hong Kong. It will never be as expensive to heat your house in Florida as in Canada.
Global inequality and exploitation isn't exactly a good thing, but there has been real progress made over the last 40 years. Your ideas aren't going to help.
DATABASE WOW WOW
'Obstruction of justice'? Enron, anyone?
(I don't think it will come to that though, in part for good reason - but it's a tantalizing thought)
How about you take your Fucked up NWO ideas and move to China. Oh wiat you sound like a Bildeburger plant - Now we have outed you!
The Truth is a Virus!!!
We need a world-wide currency, world-wide wages, world-wide costs for raw materials, etc.
We're already better than that. We have several competing world-wide currencies: the US Dollar, the Euro, the Renembli. Slavery is almost universally outlawed so we have everyone getting paid for their work, hence, we have world-wide wages. And of course, extracting raw materials costs something so we get world-wide costs for raw materials.
And don't tell me that it doesn't matter if the guy in China only gets paid US$100 per month since his rent is US$50, because the problem here is imports/exports and local wages vs your own country's wages.
Who in the world would make an argument like that? Besides it's more than import/exports and local wages. Someone in China making $100 per month just isn't doing valuable labor. The reasons are probably that they're far away from trade routes and have little local infrastructure to support themselves. Someone in the US with equivalent education, makes more because they are closer to the customer and have great infrastructure support.
As an East Indian, do these corporate assholes not realise the extent of their greed?
Due to the US Economy
1. Outsourcing is getting slashed as jobs need to to be retained on US soil.(rightfully so I guess)
2. Crap like above effing kills whatever reputation we have, there enough jokes flying around about the lack of quality or whatever from Indian work. This just made things worse.
Now this is not a flamebait, or troll post, I am not bashing my fellow Indians or the Americans/whoever.
I am however rightfully pissed at these corporate assholes who did this. There are folks who had purchased homes, property rates were rising, and now they'll plummet, people will be laid off.
Most of all, the company's name was Satyam (truth), and this came out of it. All of us Indians who work overseas have to deal with this in addition to the rest the usual crap.
To you effing lying executives, own up to your crap, you've put all of us in misery.
-Angry Brown Dude.
I don't know why the world's media gets its giggles from reporting on people arrested. Police arrest people all the time and after questioning, let them go and never talk to them again. If they are CHARGED it's a much bigger deal. But tell that to Bloomberg.com who also went wild with Martha Stewart's rather mild "crimes" and made her out to be worse than Charles Manson
...confessed to making up more than 10,000 employees to siphon money from the software company.
This must be what Brooks meant about the best programmers being 10 times more productive.
tomorrow who's gonna fuss
Your call is important to us.
Press 1 if you'd like you're information stolen, 2 if you'd like to participate in a pyramid scheme, 3 if you would like to speak directly to a lawyer.
Thank you.
I work for GE. GE is hardly standing by Satyam. We need proof of breach of contract before we can legally severe ties. Give the lawyers a bit of time and it will happen.
Indian police arrested two employees from the affiliate of PricewaterhouseCoopers who audited Satyam Computer Services, the IT outsourcing giant at the center of the nation's largest fraud inquiry.
Let's see, companies ship thousands of jobs to places that don't have the reporting and oversight capabilities we have here (or at least used to have) and are outside the jurisdiction of US courts in order to save a few bucks at the expense of several thousand local employees. They deal with the language barrier, the cost of travel, a culture where bribery can be a way of life, and time zone issues. Then said companies get taken to the cleaners because they can't audit their operations on that side of the world properly.
Hmmmm, let me be the first to say HA-HA! I guess we need new batteries in the sympathy meter because it's showing a big, fat ZERO right now.
That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
Looks like the submtitter likes to bash on the H1B visas, but in this case where is the H1B fraud? Satyam seems to have brought in employees to work on-site and they seem to working there. I see no hint of H1B fraud anywhere in the links provided at all.
This space for rent.
is that "Satyam" is truth in Sanskrit - or even more, something like ultimate truth...
that the US is now even outsourcing corporate accounting fraud.
HAH. I lost my job due to outsourcing to these idiots at Satyam, and let me say, they are TERRIBLE at what they do. They are apparently trained to just say "Yes" to everything, and lack technical skills. When the outsourced IT support don't know to use ssh to connect to a server something is very wrong... I have no sympathy whatsoever to any of them that get sent back to where they came from.
These folks are virtually a privatized branch of government. The US elites depend on companies like PWC to understand what is going on in big organizations. If PWC is compromised, that means the US elites are effectively flying blind.
Now, personally I think use of H-1b workers for critical financial infrastructure is stupid. It is impossible for an American to do a good background check on someone in/from India.
Nobody really knows how they will react when they have a chance to steal millions of dollars. Putting a young guy far from home into the position where he can do that-and the costs are born by citizens of a country he may not identify much with isn't doing that country or the young guy any favor.
One problem is that traditional audits really don't work very well as a rule. There are too many ways of beating an audit and the cost of an audit often is greater than the stealing it reveals.
It is hard to believe that companies that exist to sell auditing service are not well aware of these problems and therefore sort of corrupt in general as they often are not offering a reality based service.
Then management has decided that no matter what an RCA that goes to auditors can never ever mention that the root cause was they let go half the staff for a particular department and the remaining people couldn't keep up with the work.
It is too bad that human nature means that the power in audits will swing way back into the corporations being audited in the near future instead of getting to a nice balance.
Who is this guy who is far away from home & has a chance to steal millions of dollars?
In this particular story?
You need me to have a job and pay your premiums, then ship jobs overseas. How's anybody in the U.S. supposed to have money to pay you if nobody here has a job? No jobs here, no cars or houses bought, no insurance needed, State Farm gets no more revenue. Duhhhhh. Start supporting American jobs and maybe American companies won't have to keep going to the taxpayers for bailouts.
PricewaterhouseCoopers is not actually a company. They are a network of partnerships across the globe that utilize each other to perform global audits. Just because one office is crooked doesn't mean that it is true in another office, as each one is managed by a separate partner who makes their own choices regarding how to run the office (in this case crooked as hell).
How about you take your Fucked up NWO ideas and move to China. Oh wiat you sound like a Bildeburger plant - Now we have outed you!
Hell, yeah. Those creepy secretive fucks are trying to influence world opinion by posting AC comments on Slashdot!
About the only plausible conspiracy surrounding this comment is that it's a setup to make NWO types look stupid. Or maybe it's a setup by the NWO types to make the anti-NWO types look like the kind of people who'd set up a poor quality fake to knock it down. Or maybe it's.... ah, sod it.
Oh wiat you sound like a Bildeburger plant
Is that a plant that grows Bildeburgers? I want one of those!
<homer>Mmm..... Bilde burger....</homer>
"Slashdot - News and Chat Sites Deviant". (Click "homepage" link above for details).
Spoke to someone in does IT compliance for her company and the one thing she did not understand was how an audit of Cash Balances could go so wrong. After all a lot of things can be faked, but the cash on hand can always be verfied (by calling up banks, etc). PWC's actions were either criminally negligent or just criminal. I hope they bite the dust.
Pricewaterhouse Coopers is a huge company and actually audits 40 percent of companies in the FTSE 100 Index.
Yepp, Pricewaterhouse Coopers is one of the Big Four: http://en.wikipedia.org/wiki/Big_Four_auditors., one of the best, without question.
But in these matters, I tend to wonder if the auditors are in cahoots with the company that they are supposed to br auditing.
On another note, an executive once told me: "I can't steal $100 from my company. We have enough controls in place to detect that. Now, $100,000,000, you can do that, and nobody would notice."
At "The Economist" quipped on the Bernard Madoff case, "if you are going to steal, steal big."
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
he had fabricated $1 billion of assets and confessed to making up more than 10,000 employees
Sounds like excellent credentials for running both the Fed and the Labor Dept.
And he's going to be cheap! Win-win all round!
They were listed in US and have to follow SOX. And stop rubbishing the Indian laws already. The executives are already in prison. On the other hand isn't Bernie Madoff still in his penthouse.
There are differences in the real costs of some things. The problem is exchange rate differences. That is, work 40 hours in place A and you can live for a week there or then take that cash and live for a month in area B. Do that same 40 hours of work in area B and you can't even live for a day in area A.
The problem comes in because it's much easier to move a job overseas where labor is cheap than it is to move oneself overseas to where jobs exist.
Were the exchange rates equalized out, beef in Japan would still be more expensive due to shipping costs and houses in the middle of nowhere would still be cheaper, but there would be nowhere near the differences we see now between labor and living costs in (for example) New York and Mumbai.
In turn, that would lead to greater efficiencies overall. A pair of shoes takes X hours of human labor no matter where that labor happens. Currently it happens far away from the market they're sold in and then they get shipped halfway around the world. Were things equalized, they would still require X hours of labor but would only be shipped 1000 miles over land (much less resource intensive).
Economy is supposed to serve the people, not the other way around.
$100 per month isn't doing valuable labor?
Depends on how many units (and of what) he's assembling eh?
Looking at a wage-rate as a summation of the valuableness of
a worker (or productivity-rate) is a *horrible* assumption,
even here in the USA.
What's going on in India right now is no different than what went on the US in the late 90's with the dot-com boom. During the boom, demand far, far outstripped supply so people who could barely *spell* HTML were being hired as web designers and 90% of them were incompetent.
Same thing is happening in India right now, with approximately the same results. I have a feeling that one of the fallouts of this global credit crunch is that, just like the eventual dot-BOMB in 2000 and 2001, India is going face a major market correction.
The bottom line is that this is not an "India" thing or a "US" thing. It's a basic Economics 101 thing. Let's try not to make it too personal.
The
I can't believe someone with a 4 digit number can have such a stupid idea. The reason why there's disparities is because of scarcity of resources. For something like what you're suggesting to work, would mean that everyone has access to the same level of lifestyle. This is so far from true. At one point, one of my professors told me that the US consumes 70% of the world's resources. We definitely use a shitload of energy compared to the rest of the world.
How are you proposing to to raise the level of living in Africa so that they too can participate in this glorious new world of yours? Oh, wait, this new world is only for people whose standard of living approaches that of the western world?
And shipping by boat is far *FAR* cheaper than shipping by land. Please do some research.
... all the oversight capabilities helps us here is the good old USA.
http://en.wikipedia.org/wiki/Securities_fraud
The Continuum is a river whose current flows from those who want to those who have. According to this concept, there is a finite amount of wealth and goods in the universe, and any goods taken from one part of the "river" must be appropriately replaced or paid for by other methods. Thus, one must be sufficiently knowledgeable of the wants and needs of others to properly conduct business; a Ferengi sufficiently skilled at navigating this continuum will certainly prosper and amass great wealth and power.
Gee, since you called my idea STUPID, you must be a genus! I was Sooooo WRONG I think I'll nip off and kill myself now...
So, sarcasm aside, I fully realize that theres more than waving a magic wand involved, I just didn't have a month to prepare a proper scholarly work on the subject. Instead, I merely pointed at one point of attack for the problem. Unfortunately, that would involve extremely difficult things like putting an and to profiteering dictators constantly tearing societies there apart for their personal gain. A somewhat less charitable option would be a sort of legal impedance matching. That is taxing 3rd world transactions to remove the advantages of exploiting cheap labor (and perhaps spending the tax proceeds on aid packages to develop those 3rd world economies) or simply changing workplace regulations such that the 1st world corporations must make sure that 1st world workplace standards are applied by their offshore partners. Quadrupling the less that $1 per pair labor cost on $150 sneakers is not going to have much effect on the final price but would go a long way towards equalizing the economies. What's Nike going to do about it, refuse to sell in their most profitable market? Close down their non-existent U.S. factories?
As for shipping, you do realize that goods must travel over land anyway once they reach a port in the U,.S. don't you (or have you discovered a harbor in Kansas that can only be accessed by ships from Singapore?). Shipping half way around the world and then 1000 miles over land can NEVER be more efficient than just shipping 1000 miles over land. I apologize for overestimating your ability to see the patently obvious without spelling it out.
Wage is the value of the labor by definition. The value of something is what you can get for it. Duh!
To assume otherwise is to assume the market for labor is not working. Granting there are places where it is broken, rich kids and minimum wage earners are both overpaid for what they do.
$100/month is a very poor wage even for China. If they had valuable work to do they would find someone to pay them more.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
I'd have to say you're wrong here. The other replier nailed it. Value is what you can get. If you can get paid $20,000 a month, then that is what you are worth. If you can get paid $100 per month, then you are worth about 1/200 of the other guy.
The problem is what all those geniuses managing companies in rich countries, those wonderful CEOs that don't know that when something sounds too good to be true most probably it is.
Companies in rich countries were offered this pool of people that would charge you peanuts for doing top tier work, so they outsourced full operations to teams of unexperienced and often overworked people.
The reality in Indina towns was and is very different. If all these people were in a place without companies, infrastructure and in general an environment not conducive to develop their knowledge, then how it come they could be the experienced folk that could replace experienced people in rich countires? The answer is tha they weren't in general terms. They are enthusiastic newcomers that have not seen a mission critical system in their short professional carriers.
The best proof that rich countries' companies were far too gullible is that as soon as people in India and other poor localities become any good, they immidiately switch jobs or immigrate, demanding higher salaries that approach or meet rich countries' standards, so normally the people working outsourced or remotely for companies in rich countries are either relatively novices or not the brigthest spark since thay have not managed to move on to better jobs.
And yet still now, companies continue to do this, they don't see people in India as resources to be nurtured who require training. Forget about loyalty, our Indian counterparts are not stupid: they know they are replacing people in other countries that are technically more proficient (they are working with them day in day out, often learning as much as they can from them before replacing them) and they realize that if people with a broader depth of knowledge and expertise are dumped with such abandon, they surely can't expect to fare any better.
The blame is elsewhere. Those same CEOs that were flying private jets and buying expensive decoration for their offices bought this fairy tale system in which you replace knowledgeable people with almost beginners.
is it just me, or did a tag disappear from the summary ?
i believe there was originally a tag "enjoyprison" which is no longer attached.
how do tags work, anyhow ?
You do realize why the labor is cheap right? Because they have a lower standard of living, comparably, to western worlds. Which is why you don't outsource your factories to Europe or Japan.
If you start taxing them to make the labor cost equivalent to the western society, you just fucked them over - how the hell are they supposed to improve their standard of living?
And before you give me any grief about well, life sucks for them, remember, the west have been exploiting the rest of the world for cheap resources for 300-400 years, and once all the gold and other resources have helped built the west up, it is of course so easy to tell the rest of the world that well, buck up, you need to build yourself up just like us.
I'm always impressed by people with a magic wand who can wave problems away.
There's more to it than that. Even living at their standard of living here in the U.S. would cost more than it does there.
Also note that I suggested quadrupling their wages (still cheaper than paying for western labor) as a way to speed up the equalization. As an alternative I suggested direct taxation of foreign labor with the proceeds used to develop their economies.
But your right. If we just sit and do nothing it will surely be fixed by deus ex machina. Doing nothing always helps!
Having multiple currencies with floating exchange markets has a very, very important advantage: it helps to moderate the impact of inflation in one country on trading partners.
If you choose to have a single currency, you need to set a single supply regime. But what happens if one part of your economy needs cheap and easy money because it's stagnating, while another part needs its money supply tightened to avoid runaway inflation? It can't be done, you're screwed both ways.
Australia had this recently in the gap between New South Wales, the most populated state, which was stagnant, and Western Australia, much more lightly populated but in the midst of a mining boom. Our Reserve Bank chose to fight inflation. Now they're fighting recession. But either way the impact of their policies is uneven within a single currency.
The EU has a similar problem in the Eurozone. What is good for Germany can be bad for Spain, what is good for Greece can be terrible for France. With floating currencies each country can determine its own settings and the market will, more or less, adjust for it.
Of course the total dominance of the US Dollar means that we're all affected by Federal Reserve policy whether we like it or not, but some of the effect is soaked up in exchange rates. Until the crisis hit and everyone fled for US Treasury bonds, the US dollar was falling like a stone because it was too abundantly created by the Fed, which was driving up other currencies. The inflation in prices for US goods was offset by the increase in the price of other currencies.
The above analysis roughly holds in normal conditions. But these aren't normal conditions.
Classical Liberalism: All your base are belong to you.
Since I lost my job to some Humanoid overseas, I found that some recruiters were even outsourcing their talent search to some Humanoid overseas.
Once in a while, some disorganized dude with thick accent calls my number 6pm to have a "Telephonic Consultation", speeds thru a page's worth of their history, their client's history (sans name), some list of specification involving Saabs, Jeeps, See-Pound (they have no idea what that means, I asked), 6 months, Texas, at least 5 years experience, graduate degree from Ivy League, non manager (They didn't study my resume and online profile at all, I am a recent grad from a "Top" school, looking for jobs at the Northeast).
Then, since I have an Asian name, they asked me if I have a Green Card (sometimes, if I am "illegal" to work in the YouAss).
If PWC is one of the best I'd hate to see the worst. Our auditors lack basic understanding of IT process and technology let alone security. The stupid and basic things I get asked by our auditors amazes me. I have no doubt that I could perform any action in our IT systems without them having a clue what was going on. I know they aren't an IT security firm, but without the ability to ask the basic questions and delve into any anomalies I wonder how they can correctly perform an audit in an modern company. The scary thing is we are a fairly small shop with a fairly simple setup both financially and from a technology perspective, large multinationals with distributed operations must really boggle them.
/anonymous for obvious reasons.
You're assuming the market has perfect information and a perfect ability to assign value to labor, both are VERY far from the truth in the real world. Thanks to all sorts of distortions in the market the fair value of labor is almost never assigned. That doesn't mean capitalism doesn't work, just that it is far from a perfect system. We simply haven't found a better system to replace it or a sufficient way to limit its shortcomings yet.
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
Our auditors lack basic understanding of IT process and technology let alone security. The stupid and basic things I get asked by our auditors amazes me. I have no doubt that I could perform any action in our IT systems without them having a clue what was going on.
Your auditors may be fools, or they may be finding out who the clever people are.
If they ask about a process and you show them standardized documentation then you pass the test.
If you do anything else you do not pass the test.
If there is no standardized documentation then the company does not pass the test.
I happen to be a Satyam employee and let me give you a clear picture on this entire story till now
1. Investigation is still going on the details of the fraud. There is still no clue on the missing cash and where did it go. The current numbers are just from the arrested's (Raju, Founder) mouth which cannot be trusted.
2. Within 5 days of scam the govt had stepped in. appointed new directors. Directors appointed audit and 2 new accounting firms to do complete audit of company from 2001. The 8 week audit will give a clear picture of the fraud numbers.
They are also hunting for new CEO and CFO. Even in US corporates are happy the way indian govt and intervened.
3. US employees have been paid their Jan month Salary. Indian employees wait for theirs and it will be announced next week (In India we get have monthly pay cycle)
4. The founder and his brother and CFO were arrested in 4 days after founder confessed to the scam. He is in an ordinary Jail along with his bro and CFO. Multiple agencies: SEBI, CID, CB-CID, CBI are investigating the case.
5. The lack of 10K employees is a baseless argument. Its currently under investigation though. One of the directors has also agreed that the 53K employee strength is true (http://www.thehindubusinessline.com/2009/01/26/stories/2009012651330100.htm)
6. Satyam like TCS, WIPRO, Infosys and other multitude companies operate on the outsourcing model. The working culture, people, environment and pay scale is extremely well compared to other indian jobs. Due to this indians are very professional, well mannered and living a better lifestyle. They have absorbed the american culture completely. Indian IT also has reflected into other industries with better pays and more professionalism and higher ambitions which is fueling india's growth.
This FSCK up is due to a bunch of family greed.
7. Many clients have shown support. They have personally called up project teams and shown support. People working on projects are continuing with their deliverables though the morale has fallen a little.
8. We have daily global calls where the entire company is addressed with the progress of company's future.
9. There are tons and tons of rumors flying around. I would suggest to wait and watch few weeks till all the investigation results comes out.
Only 15% of one billion Indians are earning more than $2 a day.
And they prefer to evade Taxes.
No Taxes means no Civilization.
And One Indian does not want fellow Indian to succeed.
Bribe or Caste is the only professional relation between any two individuals in India (politicians, business men, govt officials, judiciary etc).
Source of revenue for govt is corporate taxes.
Source of funds for political parties is corporate bribes.
I'd like to buy homeland for our 10 million people. http://twitter.com/mahadiga
You are aware that the Erris account you friended is one of Twitter's admitted sock puppet accounts.. right?
In fact, 25% of all your friends are admitted Twitter sock puppet accounts ;)
And yet for all your lambasting of the system, you still posted as Anonymous Coward.
So then why doesn't each city have it's own currency? Or each industry within the city? Playing with exchange rates is a very blunt instrument to solve a fine grained problem. Often manipulation of exchange rates is done rather than using a more appropriate fine grained approach primarily as a way to deny manipulation of the market.
Alternatively, a lot of auditors that I've met have only a rudimentary understanding of computer systems.
They understand some, but, the same way as most people in computers would have to have GAAP or IFRS explained to them, auditors might need someone to explain Caching, Access controls, etc. to THEM.
Don't equate foolishness with ignorance. The first you might be able to put something over on, the second might know something is being done that shouldn't, even if they are not sure what.
This space for rent. All reasonable inquiries will be entertained at proprietors discretion.
The market doesn't need perfect information to assign a value (which is inherently perfect since it is what you get paid that determines your value as labor) to labor. Which is good since there is no way to get perfect information.
Democrats globalized the good of Freedom;
Republicans globalized the evil of Slavery.
A Democrat balanced the budget, then, a Republican took over and topple the budget.
WTF is wrong in making programming commodious?
There are lots of socio-economic problems in the world.
And software can play a major role in solving these problems.
The onus is on programmers to create a business model and solve these problems.
I'd like to buy homeland for our 10 million people. http://twitter.com/mahadiga
Anatomy of Satyam fraud http://www.rediff.com/money/satyam.html?zcc=rl
1. Ramalinga Raju has siphoned away $7 billion of Satyam cash.
2. Most of this money landed in foreign banks through Hawala channels.
And the most surprising aspect till date is none of these Satyam Directors and Employees http://www.satyastory.com/ have filed a formal complaint with police (satyam@cid.gov.in)
Satyam Directors
Ram Mynampati
Vinod Dham
Mangalam Srinivasan
Vadlamani Srninavas
Rammohan Rao
Krishna Palepu
V.S. Raju
T.R. Prasad
I'd like to buy homeland for our 10 million people. http://twitter.com/mahadiga
Your right. I should just start robbing people like you.
Then you would be worth nothing and I would be very very rich (and hence
very valuable);
hence no-one would listen to your opinion since you are value-less
and everyone would pay more and more to listen to me hence relieving
me of the need to *physically* rob you -- I can just harness other
peoples greed/stupidity.
point taken?
Incidentally, ^^^ thats the missing step in all of those:
1. blah
2. blah
3. ???
4. profit!
>The market doesn't need perfect information to assign a value
you keep using that word value; I do not think you know what it means....
BTW - your definition of value is the same as "mark-to-market" LOOK that one up ;)
I'm fairly sure Mr. Buffet would disagree with you too :)
BTW - your definition of value is the same as "mark-to-market" LOOK that one up ;)
Yes. That is my definition of value. And I'm not so sure that Mr. Buffet would disagree with me.
Note the title to our thread - only one way out of this mess....
a mess created by mark-to-market valuation.
The original poster was calling for some silly stuff. A "world-wide currency"? As I note, we have a number of world-wide currencies. "World-wide wages"? Huh? I gather he meant some sort of common global minimum wage, which would be complete nonsense since it would mean either meaningless wage floors in the Developed world, or massive unemployment in the rest of the World. If instead the minimum wage in question is tailored to the circumstances of the region, then it's not a global minimum wage. Besides what's the point of labeling it "world-wide" wages? I get paid the same no matter how globally my wages are labeled. 10 world-wide US dollars spend the same as 10 provincial US dollars. Same for world-wide costs. It's a label. Would be stupid to set the price of a resource at a fixed price globally. Hence, there's no point to the label.
The point is that the price of goods, labor, etc are locally determined. Sure it matters what price Chinese labor is. But they aren't a plug in replacement for my rental house's lawn service. Those guys make $100 per month per house where I live. My landlord can't import said Chinese worker for free and have him do the lawn.
Once we accept that what we pay for something is dependent on location and situation, then it's a simple matter to ask how to best implement the transaction. A market does that efficiently and we haven't found a better approach. In addition, what is the value of something, especially a ephemeral product like labor? Ultimately, it is how much we'd have to pay to obtain or replace it.
>I gather he meant some sort of common global minimum wage, which would be complete nonsense since it would mean either meaningless wage floors in the Developed world, or massive unemployment in the rest of the World.
meaningless wage floors in the Developed world, or massive unemployment in the rest of the World.
HMMM. have you tried living on 6.25 with a family? even if its a dual-income family?
HMMM. massive unemployment in the rest of the world?
we have both of those already.
>The point is that the price of goods, labor, etc are locally determined. Sure it matters what price Chinese labor is. But they aren't a plug in replacement for my rental house's lawn service. Those guys make $100 per month per house where I live. My landlord can't import said Chinese worker for free and have him do the lawn.
LORD. Yer landlord outsources said importation of Chinese workers for free (re: landscaping companies all use either illegal labor or recently legalized temporary labor)
>Once we accept that what we pay for something is dependent on location and situation, then it's a simple matter to ask how to best implement the transaction. A market does that efficiently and we haven't found a better approach. In addition, what is the value of something, especially a ephemeral product like labor? Ultimately, it is how much we'd have to pay to obtain or replace it.
-- A market does that efficiently - everbody parrots that, nobody actually proves that statement.
> In addition, what is the value of something, especially a ephemeral product like labor? Ultimately, it is how much we'd have to pay to obtain or replace it.
I would posit a single global currency (one world currency) would prevent the gross errors of magnitude in exchange rates. A person cleaning toilets in America gets paid 6.25 USD per hour;
a person cleaning toilets in China gets paid 6.25 USD per month -- how would you justify a 30-fold difference in valuation on the labor for essentially the same task? Its even worse when u
take into account the actual exchange rates for cross-currency transactions (of which we *all* pay the price in the form of duties, financial fees etc). I take the extreme example here, but
realistically this sort of disparate valuation exists throughout. How is your market efficient if 100% of the people who are getting screwed would want a higher hourly wage for *exactly* the
same labor.
we have both of those already.
Except for the massive unemployment and I'm not supporting a "family" on a minimum job.
LORD. Yer landlord outsources said importation of Chinese workers for free (re: landscaping companies all use either illegal labor or recently legalized temporary labor)
But why do that when we can have our own employee for the whole month? Mow lawns, fix up the house, cook food, fetch the mail, wash the cars, etc.
-- A market does that efficiently - everbody parrots that, nobody actually proves that statement.
There's a simpler explanation. You ignore the evidence. Markets are everywhere. You get more than a few people together who have stuff and need other stuff, then markets spontaneous crop up. There's millennia of history here. Markets are a natural, efficient social mechanism for transacting goods and services. And once again, if you have some better idea than the market, please let us know.
I would posit a single global currency (one world currency) would prevent the gross errors of magnitude in exchange rates. A person cleaning toilets in America gets paid 6.25 USD per hour; a person cleaning toilets in China gets paid 6.25 USD per month -- how would you justify a 30-fold difference in valuation on the labor for essentially the same task?
What gross errors? The tasks are not equivalent because they aren't taking place in the same location, aren't serving the same customers, etc. The former janitor is simply 30 times as valuable.
take into account the actual exchange rates for cross-currency transactions (of which we *all* pay the price in the form of duties, financial fees etc). I take the extreme example here, but realistically this sort of disparate valuation exists throughout.
These inefficiencies would still exist in a one currency world. You'd have to eliminate the segregation imposed by having more than one government.
How is your market efficient if 100% of the people who are getting screwed would want a higher hourly wage for *exactly* the same labor.
And now we get to the very core of your ignorance. Almost everyone wants more than they currently have. Why pay $4 per gallon for gas, when I can pay $3 or $2 per gallon? Why earn just $6.25 an hour, when I can earn $625 per hour? The fundamental problem of economics is that the things we want are scarce - "infinite" needs and wants in a finite universe. Since not everyone can have what they want, we need to have some system in place so that people get what they are willing to settle for. The market does that quite well. In the absence of interference, every transaction occurs because the parties to the transaction agree to it. And because there are choices, there is competition for these transactions.
>>we have both of those already.
>Except for the massive unemployment and I'm not supporting a "family" on a minimum job.
a) check your headlines - unemployment at 26 year high
b) try it sometime before you attempt to speak intelligently on the subject.
>>LORD. Yer landlord outsources said importation of Chinese workers for free (re: landscaping companies all use either illegal labor or recently legalized temporary labor)
>But why do that when we can have our own employee for the whole month? Mow lawns, fix up the house, cook food, fetch the mail, wash the cars, etc.
its called the H1-B program. we also have that.
>>A market does that efficiently - everbody parrots that, nobody actually proves that statement.
>There's a simpler explanation. You ignore the evidence. Markets are everywhere. You get more than a few people together who have stuff and need other stuff, then markets spontaneous crop up. There's millennia of history here.
So to does war crop up everywhere - you get more than a few people together who have stuff, need stuff and disagree, and wars sponstaneously crop up - there's a millenia of history there to. Doesn't mean its efficient or desireable.
>What gross errors? The tasks are not equivalent because they aren't taking place in the same location, aren't serving the same customers, etc. The former janitor is simply 30 times as valuable.
At this point I would think you are trolling.
>>take into account the actual exchange rates for cross-currency transactions (of which we *all* pay the price in the form of duties, financial fees etc). I take the extreme example here, but realistically this sort of disparate valuation exists throughout.
>>These inefficiencies would still exist in a one currency world. You'd have to eliminate the segregation imposed by having more than one government.
I'ld settle for the orders of magnitude less reduction (read: multiplicative inefficiencies) as a start. certes it would not be a complete solution - but a good start.
>>How is your market efficient if 100% of the people who are getting screwed would want a higher hourly wage for *exactly* the same labor.
And now we get to the very core of your ignorance. Almost everyone wants more than they currently have. Why pay $4 per gallon for gas, when I can pay $3 or $2 per gallon? Why earn just $6.25 an hour, when I can earn $625 per hour? The fundamental problem of economics is that the things we want are scarce - "infinite" needs and wants in a finite universe.
Reconcile scarcity with your patent system and "digital rights" management. That's a classic example of an infinitably copy-able non-scarce resource and yet under your thinking, a cd is worth 17$ USD.
>> Since not everyone can have what they want, we need to have some system in place so that people get what they are willing to settle for.
oho and here we come to the crux of your argument - it isn't about getting what you want; its about getting what you're willing to settle for. Joy - just what I want in the main mechanism for allocation of resources - sheer mediocrity.
>>The market does that quite well. In the absence of interference, every transaction occurs because the parties to the transaction agree to it. And because there are choices, there is competition for these transactions. ...in the absence of interference..... LOL. what world do you live in? and you forget my favorite, transaction under duress - certes paying taxes is a transaction and falls under that category - what happens if I try to evade my taxes I wonder?
Sir your method of valuation is both naive and crude. Its like you read a micro/macro economics book and actually *believed* everything you read.