So on slashdot someone advocating monopolies to drive technological innovation gets modded +4 Insightful?
(Pssst: Competition is the main driver of innovation in a market system, you should be thankful we have _any_ innovation coming from Microsoft instead of cheering for them)
I'm not an economist, but it's easy to see when something like this isn't working out.
I am, and your comment made absolutely no sense...
But the fact of the matter is, the US economy is on a race to collapse, called inflation.
The US had an annualized inflation rate of 0,09% in December 2008 and hasn't had an inflation rate above 4% since 1991. What exactly are you talking about?
Maybe if overpaid workers and grossly overpaid management aren't raising the prices of products, they'd sell better overseas. Granted the auto-industry is too easy a dead horse to kick at the moment.
BMW, VW, Mercedes all produce their cars in high-wage countries. The problem with GM is that they make cheap shitty cars in the US. No one wants their cars AND they are expensive to manufacture... Not exactly what I call a brilliant business model. If anything, wages in the US should _increase_, because American workers are highly qualified.
Some countries, whether or not it's ultimately good for their economy, forces inflation down. Forces cost of goods down. Forces wage down. Forces their currency's worth down. And keeps all the wealth in the government (and elite few), and in an ideal world, manage the money for the best of the country better than spreading to everyone in the country who'd squander it on luxury and living beyond their realistic means.
To lower inflation you increase the interest rate... which decreases its exchange rate (and hence INCREASE its value). You can't both artificially keep your currency low AND keep inflation low. (Unless you use price-fixing, but that always backfires anyways, so that can only work in the short term).
Think about it, does it really make sense that you're making $50k a year, and paying $4.50 for milk and in 2000 making $33k you were paying $3.00
Euh, yeah it does, not only because you have 8 more years of experience and should be paid accordingly, but also because the real growth (growth - inflation) is positive, and therefore goods should be cheaper to buy on average.
You want an easy example of economies collapsing due to artificially created currency, look at MMORPG. In Everquest, items are bought and sold by the millions. It's not the same force driving inflation but it's the same result of inflation. Although if you want a real life example, Zimbabwae. While you purchase your month's grocery by a hundred dollars, they're doing it in millions.
The creation of money is governed by supply and demand of loans, there is nothing artificial about it. Comparing the US to Zimbabwe is not very credible, I'm sorry.
Simple rule-based laws leave massive loopholes... Even incredibly complex rule-based laws leave loopholes. Principle based laws usually don't leave loopholes, but some defined rules are inevitable. This is why I believe in a mixed approach between rule based and principle based.
Atheism is the belief that there is no god. Agnosticism is the belief that one has no knowledge of God or his/her/its existence. Look at the damn word roots.
Atheism is saying: "Since there is no evidence whatsoever of the presence of a god, there is no reason to hypothesize on there being one."
Agnosticism is hypothesizing that there might be one.
What you are talking about is merely the reaction of atheism towards theism, without theism, everyone would be atheist, yet no one would even think about the statement "God does not exist". In other words, this question arises only because some people believe that God does exist.
Well, it's not so much that they wanted to minimize their risk of being fired as they wanted to maximize their bonuses... But your argument stands nonetheless...
Now there is a lot of criticism about using wrong distributions (usually assumed Normal/Gaussian). Economists have known this for a very long time: pretty much anybody who as studied the subject knows most financial returns are not Gaussian.
That's why the capital requirements are set to 3 times VaR (10 days, 99%), of course this is only takes the "fat tails" problem into account.
To be frank, every risk manager (and regulator) has known that the VaR figures were arbitrary since the start, but you have to set the capital requirements somewhere... and that somewhere will ALWAYS be arbitrary because indeed, correlations and risk will always be dynamic...
The biggest criticism you could make to banks are not that they use VaR models (or Estimated Shortfall), but how BAD THEIR MODELS WERE. Before the end of 2007, almost no bank reported exceptions to their VaR calculations... And not even did they not report exceptions, they never even got close to their VaR... When you understand that, on average, this VaR should be exceeded on average 3 times a year... but it never (well almost, it happened 3 times for the whole industry in 3 years if i remember correctly) happened! Now you could say that they were too careful, but no, they included fees into their returns... effectively hiding their risk exposure to the regulator.
But even if their VaR models had been realistic, they still did not take liquidity risk into account, and the massive leveraging that took place increased that liquidity risk to unsustainable levels... (exactly like LTCM)
SECONDLY, Saying the stock market is nothing but "rumors and speculation" is implying that Warren Buffett (who started with less than probably most of us here) is the luckiest being in the universe, and "just happens" to guess it right every time.
There will always be a "luckiest" guy on the stock market... If it wasn't Warren Buffet, it would be someone else. Implying that Warren Buffet hasn't been very lucky is quite absurd.
What exactly does America have going for her here? And what do you think Obama can do? Do you think his voodoo reaganomics will spend us out of trouble?
The voodoo economics refer to trickle down economics... which is the exact opposite of what Obama said he would do... Ironic considering reaganomics are much to blame for the current crisis!
Also the American national debt is even more of a concern to the RoW than for the US... so if the US really got into trouble, we (the RoW) would probably bail you out!
Oh and the situation was even grimmer in the 30s... So reform can turn things around (New Deal 2.0?)
Speaking of, that's another thing that Americans need to learn some sanity about. When I buy a house it'll be with a 15 year mortgage -- the payments don't double but you pay off the loan in half the time -- what's not to like?
The fact that you won't be able to afford as big of a house? The fact that you lose 15 years of inflation?
The clear response to that is to demand that the government overturn the inflationary laws that force retirees to continue to invest so late in their age just to break even.
No sane economist would recommend abolishing inflation (nope, not even the libertarian God Friedman), just as no sane economist would think economics could be resumed in one lesson (reference to the sig).
So because prices haven't bounced back in a few months, you think the strategy is wrong?
I'm not saying he is wrong... But saying that prices are cheap now is bullshit... Prices are low now (relative to a year ago) because risk is high, revenues will almost certainly be very low and the market mood is pessimistic. Only time will tell if prices were undervalued (cheap).
People tend to think that the hot shot stock brokers are really smart and know what they are doing. In reality, they are a jittery bunch mostly following a herd mentality.
Hot shot traders are usually smart, but are paid to trade for themselves with other peoples' money. Whether they know what they do is up for debate, but they are always up against a benchmark, so if they have absolutely no idea what they do, well they're pretty consistently lucky... The real debate is whether the cost of these traders is worth it (compared to indexes).
By staying calm and being willing to go against the conventional wisdom, there is a lot of money to be made over longer time periods.
What you are explaining is _precisely_ conventional wisdom. And again I was not disputing the fact that investing in the stock market with a 20-30 years horizon makes sense (as long as you diversify)...
OK, the USA did not defeat the Soviet Union... The Soviet Union defeated itself because communism is a flawed system that cannot work in the long run... If anything, the rivalry between the USA and the USSR _delayed_ the fall of the soviets because they wanted to prove to the US that their system was superior...
Communism doesn't work, ever, that's the only reason why the Soviet Union collapsed.
The problem is the same in Utah as it is in WV... The cost may be different, but the real problem (making sure people are healthy) is the same... By making different plans you are basically advocating that young tax paying people move out of WV because it costs too much to pay for their retirees...
Insurance should be reserved for the most catastrophic and expensive problems...chemotherapy, car accidents, etc.
Regular check ups are beneficial to the system and decrease costs long term, by saying that only the catastrophic expenses are covered, you're basically telling people to wait for the situation to be catastrophic... Just think of the cost difference between treating a small cavity and a root canal...
Also, private markets do not always provide an optimal solution, the best example being the US where a private solution not only costs _MORE_, but also provides lesser quality of treatment.
A good health is a MAJOR factor in productivity, and the positive externalities of having a healthy population are simply enormous, both in terms of GDP as of well being.
A private health care system does not make economic sense, because the incentives of the insurance companies go directly against the goal of the system... this will invariably result in an inefficient system.
By the way, these types of market failures is exactly what the government is necessary for, exactly how much private and how much government is needed to solve these inefficiencies is up to debate, but right now there is ample evidence that we should move towards a more governmental program, seeing how much more efficient governmental programs are.
Slashdot Mirror
So on slashdot someone advocating monopolies to drive technological innovation gets modded +4 Insightful?
(Pssst: Competition is the main driver of innovation in a market system, you should be thankful we have _any_ innovation coming from Microsoft instead of cheering for them)
I'm not an economist, but it's easy to see when something like this isn't working out.
I am, and your comment made absolutely no sense...
But the fact of the matter is, the US economy is on a race to collapse, called inflation.
The US had an annualized inflation rate of 0,09% in December 2008 and hasn't had an inflation rate above 4% since 1991. What exactly are you talking about?
Maybe if overpaid workers and grossly overpaid management aren't raising the prices of products, they'd sell better overseas. Granted the auto-industry is too easy a dead horse to kick at the moment.
BMW, VW, Mercedes all produce their cars in high-wage countries. The problem with GM is that they make cheap shitty cars in the US. No one wants their cars AND they are expensive to manufacture... Not exactly what I call a brilliant business model. If anything, wages in the US should _increase_, because American workers are highly qualified.
Some countries, whether or not it's ultimately good for their economy, forces inflation down. Forces cost of goods down. Forces wage down. Forces their currency's worth down. And keeps all the wealth in the government (and elite few), and in an ideal world, manage the money for the best of the country better than spreading to everyone in the country who'd squander it on luxury and living beyond their realistic means.
To lower inflation you increase the interest rate... which decreases its exchange rate (and hence INCREASE its value). You can't both artificially keep your currency low AND keep inflation low. (Unless you use price-fixing, but that always backfires anyways, so that can only work in the short term).
Think about it, does it really make sense that you're making $50k a year, and paying $4.50 for milk and in 2000 making $33k you were paying $3.00
Euh, yeah it does, not only because you have 8 more years of experience and should be paid accordingly, but also because the real growth (growth - inflation) is positive, and therefore goods should be cheaper to buy on average.
You want an easy example of economies collapsing due to artificially created currency, look at MMORPG. In Everquest, items are bought and sold by the millions. It's not the same force driving inflation but it's the same result of inflation. Although if you want a real life example, Zimbabwae. While you purchase your month's grocery by a hundred dollars, they're doing it in millions.
The creation of money is governed by supply and demand of loans, there is nothing artificial about it. Comparing the US to Zimbabwe is not very credible, I'm sorry.
Could come in handy...
What was it? Bed time?
Exactly!
You know, sometimes a CLI is just the best and easiest solution...
Simple rule-based laws leave massive loopholes... Even incredibly complex rule-based laws leave loopholes. Principle based laws usually don't leave loopholes, but some defined rules are inevitable. This is why I believe in a mixed approach between rule based and principle based.
Atheism is the belief that there is no god. Agnosticism is the belief that one has no knowledge of God or his/her/its existence. Look at the damn word roots.
Atheism is saying: "Since there is no evidence whatsoever of the presence of a god, there is no reason to hypothesize on there being one."
Agnosticism is hypothesizing that there might be one.
What you are talking about is merely the reaction of atheism towards theism, without theism, everyone would be atheist, yet no one would even think about the statement "God does not exist". In other words, this question arises only because some people believe that God does exist.
Well, it's not so much that they wanted to minimize their risk of being fired as they wanted to maximize their bonuses... But your argument stands nonetheless...
Now there is a lot of criticism about using wrong distributions (usually assumed Normal/Gaussian). Economists have known this for a very long time: pretty much anybody who as studied the subject knows most financial returns are not Gaussian.
That's why the capital requirements are set to 3 times VaR (10 days, 99%), of course this is only takes the "fat tails" problem into account.
To be frank, every risk manager (and regulator) has known that the VaR figures were arbitrary since the start, but you have to set the capital requirements somewhere... and that somewhere will ALWAYS be arbitrary because indeed, correlations and risk will always be dynamic...
The biggest criticism you could make to banks are not that they use VaR models (or Estimated Shortfall), but how BAD THEIR MODELS WERE. Before the end of 2007, almost no bank reported exceptions to their VaR calculations... And not even did they not report exceptions, they never even got close to their VaR... When you understand that, on average, this VaR should be exceeded on average 3 times a year... but it never (well almost, it happened 3 times for the whole industry in 3 years if i remember correctly) happened! Now you could say that they were too careful, but no, they included fees into their returns... effectively hiding their risk exposure to the regulator.
But even if their VaR models had been realistic, they still did not take liquidity risk into account, and the massive leveraging that took place increased that liquidity risk to unsustainable levels... (exactly like LTCM)
I wasn't disagreeing with you... Just saying that there is _always_ a trade-off.
SECONDLY, Saying the stock market is nothing but "rumors and speculation" is implying that Warren Buffett (who started with less than probably most of us here) is the luckiest being in the universe, and "just happens" to guess it right every time.
There will always be a "luckiest" guy on the stock market... If it wasn't Warren Buffet, it would be someone else. Implying that Warren Buffet hasn't been very lucky is quite absurd.
What exactly does America have going for her here? And what do you think Obama can do? Do you think his voodoo reaganomics will spend us out of trouble?
The voodoo economics refer to trickle down economics... which is the exact opposite of what Obama said he would do... Ironic considering reaganomics are much to blame for the current crisis!
Also the American national debt is even more of a concern to the RoW than for the US... so if the US really got into trouble, we (the RoW) would probably bail you out!
Oh and the situation was even grimmer in the 30s... So reform can turn things around (New Deal 2.0?)
Speaking of, that's another thing that Americans need to learn some sanity about. When I buy a house it'll be with a 15 year mortgage -- the payments don't double but you pay off the loan in half the time -- what's not to like?
The fact that you won't be able to afford as big of a house? The fact that you lose 15 years of inflation?
There's always a trade-off...
The clear response to that is to demand that the government overturn the inflationary laws that force retirees to continue to invest so late in their age just to break even.
No sane economist would recommend abolishing inflation (nope, not even the libertarian God Friedman), just as no sane economist would think economics could be resumed in one lesson (reference to the sig).
So because prices haven't bounced back in a few months, you think the strategy is wrong?
I'm not saying he is wrong... But saying that prices are cheap now is bullshit... Prices are low now (relative to a year ago) because risk is high, revenues will almost certainly be very low and the market mood is pessimistic. Only time will tell if prices were undervalued (cheap).
People tend to think that the hot shot stock brokers are really smart and know what they are doing. In reality, they are a jittery bunch mostly following a herd mentality.
Hot shot traders are usually smart, but are paid to trade for themselves with other peoples' money. Whether they know what they do is up for debate, but they are always up against a benchmark, so if they have absolutely no idea what they do, well they're pretty consistently lucky... The real debate is whether the cost of these traders is worth it (compared to indexes).
By staying calm and being willing to go against the conventional wisdom, there is a lot of money to be made over longer time periods.
What you are explaining is _precisely_ conventional wisdom. And again I was not disputing the fact that investing in the stock market with a 20-30 years horizon makes sense (as long as you diversify)...
You want to buy stocks when the prices are low.
Funny, that's what everyone said back in august...
OK, the USA did not defeat the Soviet Union... The Soviet Union defeated itself because communism is a flawed system that cannot work in the long run... If anything, the rivalry between the USA and the USSR _delayed_ the fall of the soviets because they wanted to prove to the US that their system was superior...
Communism doesn't work, ever, that's the only reason why the Soviet Union collapsed.
Change.gov never stood a chance against change.com!
No contest.
wow, that made no sense at all... Are you the author of the article?
Less common? They are marginal... No sane economist can ignore market failures.
How many modern economists are libertarian?
Contemporary if you prefer...
How many modern economists are libertarian?
Libertarianism is completely at odds with modern economic theory... as much so as communism is I would add.
The problem is the same in Utah as it is in WV... The cost may be different, but the real problem (making sure people are healthy) is the same... By making different plans you are basically advocating that young tax paying people move out of WV because it costs too much to pay for their retirees...
That would be a genius plan...
Hell look at the ages of people in states:
West Virginia, with a median age of 38.9
Utah, with a median age of at 27.4.
These states are going to have different needs and a system which caters to them is best..
That's a very good argument in defense of a national health care system... Unless you want to spread old people across the nation of course...
Insurance should be reserved for the most catastrophic and expensive problems...chemotherapy, car accidents, etc.
Regular check ups are beneficial to the system and decrease costs long term, by saying that only the catastrophic expenses are covered, you're basically telling people to wait for the situation to be catastrophic... Just think of the cost difference between treating a small cavity and a root canal...
Also, private markets do not always provide an optimal solution, the best example being the US where a private solution not only costs _MORE_, but also provides lesser quality of treatment.
A good health is a MAJOR factor in productivity, and the positive externalities of having a healthy population are simply enormous, both in terms of GDP as of well being.
A private health care system does not make economic sense, because the incentives of the insurance companies go directly against the goal of the system... this will invariably result in an inefficient system.
By the way, these types of market failures is exactly what the government is necessary for, exactly how much private and how much government is needed to solve these inefficiencies is up to debate, but right now there is ample evidence that we should move towards a more governmental program, seeing how much more efficient governmental programs are.