I just want to comment on your thoughts about dividends.
There is a very good reason why some companies (and especially younger ones) don't pay dividends. They are usually at a stage in their development where they are growing at a fast enough rate that they can put cash to use more profitably than the average stock market investment.
The most famous example of a company that's done a much better job of investing that cash profitably instead of paying a dividend is Berkshire Hathaway. Warren Buffet is much better at allocating the cash and investing it than most (all?) of the shareholders. Paying a dividend would just limit growth and therefore make the shares a less worthwhile investment.
As tech companies mature and stop growing so quickly, you'll start to see them declaring dividends. The shareholders will demand it, as was the case with Microsoft. Right now, Google is still young enough and growing at a fast enough rate that it makes sense for them to keep their cash on hand.
That's not how it works. "Credit unworthy" people (who are not necessarily unworthy, but risky) are assumed to have an inherent risk in lending to them at all. This is regardless of rate. So if you have people who have a high risk of default regardless of the rate of the loan, then you have to charge a higher rate of interest in order to possibly earn some money.
Now if you have a pool of these risky loans out, the idea is to set the rate high enough that the lender still earns money even after the expected defaults, all the while not making the loan too burdensome that they increase the default rate and start losing money.
Do you really think that lenders haven't thought long and hard about this? If just charging higher rates caused more defaults and thus caused the lenders to lose money, they would never increase the rate. The lenders have done the math on how much they can lend out and at what rates for them to make money. It's up to the individual taking out the loan to decide whether they can shoulder that burden or not.
I was equating providers making ISPs pay for your content to having ISPs make content providers pay to be seen. You have effectively shown that I was wrong in that understanding.
they are the ones that are in a position to pick winners and losers.
Government pout them in that position, and can take their advantage away.
If this behavior is allowed, we will see the ISPs picking winners and losers amongs websites as well.
Which is why under the current circumstances I support net neutrality. Under a free market thought it would not be needed.
I might not have been clear, but I agree with this. My statements were more in response to the statements in the letter from the corporations. It's ironic that they're worried about one entity picking winners and losers and yet support the current model which does just that.
We can see this starting to happen already with ESPN360.
Isn't ESPN360 a content provider and not an ISP? I don't know, I don't watch sports and would rather be active instead of passive, but if ESPN charges for access to some content that is no different than any other content provider that charges for some content. The "Wall Street Journal" charges for some content as does "The Economist" and I have no problem with ESPN doing it. Heck Slashdot has subscribers paying.
The difference with ESPN360 is that they don't charge their customer for access to content like The Wall Street Journal. ESPN360 charges the ISPs. This means that only the subscribers the ISPs that agree to pay ESPN360 get to view the content. It's very much the same as the cable tv model where I can't view HBO without paying for a package including that channel.
I am the same as you in that I don't watch sports. But I would hate to be unable to read Slashdot because only customers on certain ISPs were allowed access without an option to pay directly for the content.
I have heard an argument for insider trading being a good thing for the market.
Liquid markets have the effect of fairly accurately pricing the stock when all of the current information about a company is taken into account. This is essentially the efficient market hypothesis (although I don't think EMH is as efficient as some think.) The idea is that with more information, you get a more accurate price. You can see the effects of this when there is a surprise earnings announcement or another event. The price of a stock can jump up or down significantly.
With insider trading being illegal, there is an assumption that everyone is trading on publicly available information. This gives insiders a huge advantage. If they know illegal news about a company, they can make immense profits and essentially take money from people right up until the official announcement.
But what if insider trading was legal? The insiders would still be able to profit from their knowledge. However, they would also have more incentive to act upon their knowledge in the market. Depending on how many insiders know and how many of them act, they could effectively slowly move the stock price to its most accurate price and therefore avoid the shock price movement on the official announcement. This could soften any blows on surprise news for the many investors without the inside knowledge. In effect, they have benefited from the market knowing the inside info even though they themselves knew nothing about it.
I do see some potential problems with this. Certain news that could effectively be hidden by top management very well might be, and allow them to make massive profits in the market at the company's expense. This could be dealt with by removing management/directors when the shareholders see what they're doing to enrich themselves.
There are certainly more flaws in this argument which would be great to hear. Do those flaws outweigh the ones in the current system? Could this potentially create a more efficient marketplace even though it has flaws?
Since the ISPs are monopolies right now, they are the ones that are in a position to pick winners and losers. This is clear in Comcast's attempt to destroy bittorrent, even in perfectly legal scenarios, by slowing the connection to a crawl when it's detected. If this behavior is allowed, we will see the ISPs picking winners and losers amongs websites as well.
We can see this starting to happen already with ESPN360. It's slightly different in this case in that ESPN was the one making the demands. But imagine if this is allowed to continue and the ISPs are able to treat the internet like cable tv. You'd sign up for packages allowing access to certain websites (who are undoubtedly shelling out money for the privilege of being in the package.)
Slashdot Mirror
I just want to comment on your thoughts about dividends.
There is a very good reason why some companies (and especially younger ones) don't pay dividends. They are usually at a stage in their development where they are growing at a fast enough rate that they can put cash to use more profitably than the average stock market investment.
The most famous example of a company that's done a much better job of investing that cash profitably instead of paying a dividend is Berkshire Hathaway. Warren Buffet is much better at allocating the cash and investing it than most (all?) of the shareholders. Paying a dividend would just limit growth and therefore make the shares a less worthwhile investment.
As tech companies mature and stop growing so quickly, you'll start to see them declaring dividends. The shareholders will demand it, as was the case with Microsoft. Right now, Google is still young enough and growing at a fast enough rate that it makes sense for them to keep their cash on hand.
That's not how it works. "Credit unworthy" people (who are not necessarily unworthy, but risky) are assumed to have an inherent risk in lending to them at all. This is regardless of rate. So if you have people who have a high risk of default regardless of the rate of the loan, then you have to charge a higher rate of interest in order to possibly earn some money.
Now if you have a pool of these risky loans out, the idea is to set the rate high enough that the lender still earns money even after the expected defaults, all the while not making the loan too burdensome that they increase the default rate and start losing money.
Do you really think that lenders haven't thought long and hard about this? If just charging higher rates caused more defaults and thus caused the lenders to lose money, they would never increase the rate. The lenders have done the math on how much they can lend out and at what rates for them to make money. It's up to the individual taking out the loan to decide whether they can shoulder that burden or not.
I can't wait until the day when I can pick any phone and then pick any network.
I was equating providers making ISPs pay for your content to having ISPs make content providers pay to be seen. You have effectively shown that I was wrong in that understanding.
they are the ones that are in a position to pick winners and losers.
Government pout them in that position, and can take their advantage away.
If this behavior is allowed, we will see the ISPs picking winners and losers amongs websites as well.
Which is why under the current circumstances I support net neutrality. Under a free market thought it would not be needed.
I might not have been clear, but I agree with this. My statements were more in response to the statements in the letter from the corporations. It's ironic that they're worried about one entity picking winners and losers and yet support the current model which does just that.
We can see this starting to happen already with ESPN360.
Isn't ESPN360 a content provider and not an ISP? I don't know, I don't watch sports and would rather be active instead of passive, but if ESPN charges for access to some content that is no different than any other content provider that charges for some content. The "Wall Street Journal" charges for some content as does "The Economist" and I have no problem with ESPN doing it. Heck Slashdot has subscribers paying.
The difference with ESPN360 is that they don't charge their customer for access to content like The Wall Street Journal. ESPN360 charges the ISPs. This means that only the subscribers the ISPs that agree to pay ESPN360 get to view the content. It's very much the same as the cable tv model where I can't view HBO without paying for a package including that channel.
I am the same as you in that I don't watch sports. But I would hate to be unable to read Slashdot because only customers on certain ISPs were allowed access without an option to pay directly for the content.
I have heard an argument for insider trading being a good thing for the market.
Liquid markets have the effect of fairly accurately pricing the stock when all of the current information about a company is taken into account. This is essentially the efficient market hypothesis (although I don't think EMH is as efficient as some think.) The idea is that with more information, you get a more accurate price. You can see the effects of this when there is a surprise earnings announcement or another event. The price of a stock can jump up or down significantly.
With insider trading being illegal, there is an assumption that everyone is trading on publicly available information. This gives insiders a huge advantage. If they know illegal news about a company, they can make immense profits and essentially take money from people right up until the official announcement.
But what if insider trading was legal? The insiders would still be able to profit from their knowledge. However, they would also have more incentive to act upon their knowledge in the market. Depending on how many insiders know and how many of them act, they could effectively slowly move the stock price to its most accurate price and therefore avoid the shock price movement on the official announcement. This could soften any blows on surprise news for the many investors without the inside knowledge. In effect, they have benefited from the market knowing the inside info even though they themselves knew nothing about it.
I do see some potential problems with this. Certain news that could effectively be hidden by top management very well might be, and allow them to make massive profits in the market at the company's expense. This could be dealt with by removing management/directors when the shareholders see what they're doing to enrich themselves.
There are certainly more flaws in this argument which would be great to hear. Do those flaws outweigh the ones in the current system? Could this potentially create a more efficient marketplace even though it has flaws?
Since the ISPs are monopolies right now, they are the ones that are in a position to pick winners and losers. This is clear in Comcast's attempt to destroy bittorrent, even in perfectly legal scenarios, by slowing the connection to a crawl when it's detected. If this behavior is allowed, we will see the ISPs picking winners and losers amongs websites as well.
We can see this starting to happen already with ESPN360. It's slightly different in this case in that ESPN was the one making the demands. But imagine if this is allowed to continue and the ISPs are able to treat the internet like cable tv. You'd sign up for packages allowing access to certain websites (who are undoubtedly shelling out money for the privilege of being in the package.)