He makes the same fatal mistake that nearly all economists make when talking about labor. They assume that labor in and of itself has value. It doesn't. Only the products of the labor have value, and then only if someone is willing to value it.
Say what? Nearly all economists ignore the law of supply and demand? You're talking out of your ass man, no serious economist today believes that value comes from labor. And, by the way, this bozo is not an economist, he's an historian with a masters in political sciences...
It's fine that they are still productive. But members of the public should not be forced to give up some of their own productivity (in the form of money) to support such individuals when they become unproductive. Unless not saving them would mean all our productivity would go down the drain... which is exactly the problem that we are facing today.
I have no sympathy for people who sign contracts without reading them, nor for banks that associate with such shady sources. Companies and individuals that purposely do not investigate the risk of such endeavors will fall. It is not our responsibility to provide a safety net for bad practices - doing so brings the whole system down, because everyone starts thinking they can make mistakes and someone will protect them from the consequences (for free at that!) It's the exact opposite, government has to intervene to save the system from going down. That's the whole problem of the banking system, if a large enough institution fails, the whole system will fail and the "good" players will be hit as hard as the bad ones.
If economics were really as easy as you're trying to picture it, believe me, there wouldn't be so many problems with it. The Market is not a perfect ecosystem, it's full with market failures (asymmetric information being the biggest one), so there needs to be intervention or the whole system would go down in chaos.
This assumption of lack of correlation is what is causing the house of cards to tumble. Risk packagers assumed that there would be no fundamental common fall to the subprime housing market, and priced risk accordingly, which caused interest rates to be too low for the associated risk, which caused over-purchase of the loans. Everyone could have been completely honest, and we would still have this problem. They didn't assume lack of correlation, they assumed low correlation is calculated on historical data, and historically, loans were not given to subprime borrowers. As they gave out more and more loans, the marginal quality of the loans decreases, increasing the risk of the loans, but more importantly, increased the correlation between defaults.
Now, this phenomenon is pretty well known, since it had been observed in other lending markets, but one thing made things very different in this case... they also assumed that house prices couldn't go down!
Note that this scenario should have been stress tested, and dynamic correlations should have been assumed; but then again, who wants to see risk when leveraged positions allow for 25% annual return...
Except this isn't an LBO, this is a gamble on the MS bid to be reconsidered... He got burned by idiosyncratic risk and wants to force his way out of it...
Tough luck? As a major shareholder, he has voting rights. And he's using those rights to challenge Yahoo's board over their failure to seriously consider the offer. Anyone who believes that letting Microsoft walk away was going to increase shareholder value is an idiot. The $33/share offer was probably the highest value any Yahoo shareholder will ever again see for their stock. Well first of all, the job of the yahoo! board is to maximize shareholder value for _all_ shareholders, not just Icahn. Second, since when has the conjunction of two failed strategies ever worked out? Both Yahoo! and MS have failed to win marketshare over Google and somehow the combination of both will work? I might be too old and all, but a clear trend on the web is that small start-ups are the ones that usually succeed, not huge conglomerates, so keeping Yahoo! at a decent size might give them a bigger chance to adopt to what the market wants. Microsoft has a pretty bad track record (certainly recently) at meeting consumer demand, just look at Vista, the Zune, the whole range of Windows Live! services, etc... Why would Yahoo! want to sell-out to a company that obviously has a hard time meeting consumer demands in a market that needs exactly that?
You're the stupid one Am I? He has 1.5 billion invested in Yahoo, yet he buys _more_ stock this week with a few buddies and asks the board to reconsider a merger? He's trying to force a Yahoo! sell-out, this has nothing to do with long term shareholder value or what is best for Yahoo! as a company, this is an abuse of corporate governance to make short term profit. This is nothing more then an LBO-resale like strategy.
It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer. I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet. Translation: "I got burned buying Yahoo! shares betting MS would raise its offer, please resume talks so the share go up again and I can win my money back!"
Though luck Icahn, betting on a single stock is stupid, go back to your books and study what "idiosyncratic risk" means.
Euh, may I remind you that Germany invaded Belgium, which was also a neutral country? Didn't make the US jump in at all...
The main reason why the Germans didn't invade Switzerland was because it is virtually impossible to invade, even with an army 100 times as strong, due to the terrain. Switzerland is right in the middle of the Alps, just look at the Russian debacle in Afghanistan, then compare that to the Germans, 30 years before (without all the technological innovations) and with a much, much better trained army.
Germany circumvented the Maginot line by going through Belgium to attack France, Switzerland was a million times harder to breach then the Maginot line.
the ability to charge whatever you want for your services with the only price control being supply and demand There are natural flaws in the market such as asymmetric information, moral hazard, adverse selection, collusion, monopolies, etc... The ridiculous stance that is getting more and more popular these days (Ron Paul, etc... ) to adhere to the principles of the capitalism and the free market without acknowledging its fundamental flaws is astonishing to me.
The economics and more specifically the political economics are more and more being shifted from science to philosophy if not ideology; as sound as it is to recognize the fact that free markets are the optimum way to prosperity and technological progress, uncontrolled markets would rarely if ever tend towards an optimum equilibrium for the society.
and that's why the financial sector is so expensive. To the public at least and in almost all countries. A big knowitall aganecy telling the little dumb citizen whom to trust, and even if they fail there is always the (knowitall) government to pay the bill - from the pocket of the little citizen.
The catch is that you have to trust the regulators who are appointed by a government/president elected by representatives/electors elected through a sometimes complicated process by you. Too many leverages there. Actually, most of the regulations are set by the Basel Committee (The Basel accords), which theoretically should guarantee that there is at any point 99.7% chance that the bank doesn't go bankrupt. What you have to trust are the agencies supervising the applications of those accords. Either way, the banks are the first wishing those rules to be enforced, because failure of on bank usually means crisis in the sector, and problems for every bank. But indeed, risk management is a very costly aspect of banking, not only in terms of overhead, but also in terms of return banks can make, so ironically it's in the interest of every bank to both follow and try to circumvent regulations at the same time (hence all the securitising that is taking place).
IANABanker but I suspect the last thing a financial regulator would want is a massive "voting with one's feet". Anything that has a slight chance of starting a bank run is seen as a danger. That can be one reason there are so little (public and detailed, comparative) data about data theft, card fraud etc.
(Which is sad but rather a problem of the system not of the regulators). Exactly, it's the role of supervisors to deal with such problems, and unless you force every person in the society to have a PhD in statistics and access to the whole financial structure of every bank, it's impossible for the average consumer to take proper decisions on which bank is more exposed to risk then another. Asking consumers to make their decisions on identity theft is like asking car buyers to make their decisions solely based on the quality of the cars wipers, ID theft is just one minor aspect of banking risk, so exposing such figures would just be counter-productive.
Isn't it the role of supervisors to regulate banks, and NOT the consumer?
I mean isn't the whole point of being able to call yourself a bank is that you apply to prudential rules set by the government and therefore the consumer doesn't have to ask himself questions whether the bank is safe or not?
Quite frankly identity theft is a detail compared to other risks the banks are facing, this is why the whole financial market is divided between the banking system (black box supervised by the government) and the markets (where the government just guarantees transparency and it's up to the consumer to make his choices based on the information he is given).
The problem with disclosing this kind of information is that it sets doubt on the banking system, and the whole banking system relies on trust to function (hence the tight regulation of the banking sector).
We're not going to ask consumers to assess the risk exposure of banks are we?
I think(and I have some biblical backing) on thinking the days of creation aren't a 24 hour period, but rather millions or billions of years long. Did God use evolution as a tool for making some living organisms, did he just let it happen naturally, or did he create them all manually is something up for debate. When you allow for more than 24 hours to happen in one of God's days, the only thing that comes up against the face of modern science is that the birds came before the dinosaurs. This could be a deal breaker for a lot of people, but I'm being honest with the long day theory that it really is the only thing that conflicts. The Big Bang, Pangea, and fossil records all add up. /quote>
Or, you know, just take God out of the equation and everything fits as well... I don't see any reason at all why we need to make the God assumption in the first place.
Science should be secular for the simple fact that religion has no concrete backing at all. Religions come and go. Some believe in Jesus, some in the Torah, some in Allah, some in Buddha, some in Krishna, some in Xenu, etc etc... There is no reason whatsoever for any decent scientist to favor one superstition over another, and even more importantly, it shouldn't accept _ANY_ superstition at _ALL_, because even if there is a divine entity or magical entity or whatever, nothing proves that we humans know of it and that we interpret it correctly. Just the many many many different interpretations inside each superstition should be a good indicator that those superstitions are not reliable.
History has shown that whenever a scientist surrendered to superstition to explain certain aspects he doesn't understand, it just puts a stop to further development, often leading to centuries of stagnation before someone puts the divine link in doubt and we once again can move forward.
On a side note, Science should be secular but not atheistic, Science should not have a goal other then seeking knowledge.
The real problem in this debate is the same problem that you have in all politics, which is short term vs long term. People live in the short term while humanity evolves in the long term, and people try to push their positions in the short term, often creating problems in the long term. If evolution is wrong, it will be debunked by the scientific community, just like all the other erroneous theories have been debunked in the past. If you believe, and are not just practicing wishful thinking, your best course of action to debunk evolution, is to accept it! Believe me it's every scientist holy grail to debunk a widely (if not generally) accepted theory, because it's when those generally accepted theories are debunked that science moves forward, and that scientists are glorified (read Newton, Einstein, Bohr, Curie, Galileo and even Darwin himself) !
.. so why should we care, there was a/. article a few days ago talking about the earth being vaporized so what are we saving exactly? Your new car you just bought will almost certainly be destroyed within 25 years, why don't you just crash it directly? What are you saving exactly?
Competition in the marketplace from Google has forced them to use the last of their cash on hand to try and acquire another company. Nah Bill Gates is just trying to mimic the contrarian habits of his good friend Warren Buffet...
That's your take on it, but cannot be derived from what the board said... As to whether this is a good deal or not, I'd have to make a FCF assessment, and even then it would just be an estimate... My guess is that the convergence between MSFTs and Yahoos operations make this acquisition much more lucrative for Microsoft then the real value of Yahoo!, hence the 62% premium, so yeah, I tend to agree with you...
This deal makes a lot of sense for Microsoft (sort of - I'm assuming Yahoo!'s ad business really is worth the cash), but I can't see how this is at all good for Yahoo! or the marketplace at large. The question is not whether it's a good deal for Yahoo!, the question is whether it's a good deal for Yahoo! shareholders... Anyways, paying a 62% premium on the market value to just let yahoo! die out seems like a pretty bad deal to me, so I very much doubt that Microsoft will just let the Yahoo! brand die out...
1) Sell your super high power 20 cores CPU uncrippled.
2) Make a platform where researchers can rent CPU power.
3) Allow your customers to rent their unused CPU power/cores.
4) Charge double what you give to your customers to the researchers.
5) Profit! (From both the sale and the rental afterwards).
5%? By who's metric? The official CPI. Of course it's not perfect, but I'm sure it will be vastly more accurate then the metric of someone who believes that hoarding cash is a sane investment.
I'm dumbfounded by your theory here. Easy credit is the reason why the price of used houses goes up in a bubble faster than inflation affects wages. Money supply growth causes prices to rise, savings to deplete in terms of affordability and malinvestments to be made.
I never told people to hoard for decades, just during bubble periods so you can buy assets post-crash at a huge discount. Yes, there was a housing bubble, but that doesn't wipe out the 50 or so years where housing steadily grew and credit allowed millions of people to have a house to live in. The reason why a bubble was created is because banks and other creditors considered mortgage backed assets as virtually risk free (especially using SIVs to put those credits off balance), this doesn't change the fact that credit is hugely beneficial for the lower and middle classes (it allows them to reach a utility curve above their consumption frontier). And even then hoarding is completely absurd, since had you invested your money in stocks you would have gained much more with that money then having stacked it up (just look at the indexes over 5 years Dow Jones: http://finance.yahoo.com/charts#chart5:symbol=^gspc;range=5y;compare=^dji;charttype=line;crosshair=on;logscale=on;source=undefined). You are completely ignoring the cost of opportunity and are only looking at housing, which is in the middle of a crisis.
Really? We now see PRIME borrowers missing payments, AmEx just wrote down $300m on top tier credit lines. Trillions in new dollars have been created, and still exist sitting hoarded in China and India's central banks, but credit is tight. Why? The hoarders are waiting for more price drops! Look who is buying Citibank!
No, the reason China keeps dollars is because their Central Bank is pegging the Chinese yuan to the dollar, they are not waiting for prices to come down, they are just trying to defend their exchange rates. Also, the Chinese central bank doesn't even "hoard" their money, they are invested in low risk assets mostly (Gov. Bonds), and have now started investing in riskier assets (such as stocks).
I've tripled my affordability profile in 5 years. Most people I know are poorer, much poorer in the same time. Analysts are shills for their bosses, duh.
Saving via hoarding keeps you liquid, and ready. I bought a great home (100 year old and solid) for 1X income, not 3X or heaven forbid 5X. I bought an almost new 42" 1080p LCD for half price. I'm buying used gold jewelry for 65% of spot -- with hoarded cash. That's because the housing market is not a good place to invest even when there is no housing crisis (all costs taken into account). You obviously haven't heard of opportunity costs, you have lost money buy hoarding it, not won, even a savings account would have given you some return... The hoarding you did was plain stupid.
By the way, buying jewelry or gold is not "hoarding", it's investing in commodities, which are booming right now btw. You keep referring to buying gold as hoarding, which just shows how badly you understand what even keeping cash is.
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He makes the same fatal mistake that nearly all economists make when talking about labor. They assume that labor in and of itself has value. It doesn't. Only the products of the labor have value, and then only if someone is willing to value it.
Say what? Nearly all economists ignore the law of supply and demand? You're talking out of your ass man, no serious economist today believes that value comes from labor. And, by the way, this bozo is not an economist, he's an historian with a masters in political sciences...
And this gets modded insightful...
If economics were really as easy as you're trying to picture it, believe me, there wouldn't be so many problems with it. The Market is not a perfect ecosystem, it's full with market failures (asymmetric information being the biggest one), so there needs to be intervention or the whole system would go down in chaos.
Now, this phenomenon is pretty well known, since it had been observed in other lending markets, but one thing made things very different in this case... they also assumed that house prices couldn't go down!
Note that this scenario should have been stress tested, and dynamic correlations should have been assumed; but then again, who wants to see risk when leveraged positions allow for 25% annual return...
Except this isn't an LBO, this is a gamble on the MS bid to be reconsidered... He got burned by idiosyncratic risk and wants to force his way out of it...
Though luck Icahn, betting on a single stock is stupid, go back to your books and study what "idiosyncratic risk" means.
yeah like only 300 million people would die...
Euh, may I remind you that Germany invaded Belgium, which was also a neutral country? Didn't make the US jump in at all...
The main reason why the Germans didn't invade Switzerland was because it is virtually impossible to invade, even with an army 100 times as strong, due to the terrain. Switzerland is right in the middle of the Alps, just look at the Russian debacle in Afghanistan, then compare that to the Germans, 30 years before (without all the technological innovations) and with a much, much better trained army.
Germany circumvented the Maginot line by going through Belgium to attack France, Switzerland was a million times harder to breach then the Maginot line.
The economics and more specifically the political economics are more and more being shifted from science to philosophy if not ideology; as sound as it is to recognize the fact that free markets are the optimum way to prosperity and technological progress, uncontrolled markets would rarely if ever tend towards an optimum equilibrium for the society.
The catch is that you have to trust the regulators who are appointed by a government/president elected by representatives/electors elected through a sometimes complicated process by you. Too many leverages there. Actually, most of the regulations are set by the Basel Committee (The Basel accords), which theoretically should guarantee that there is at any point 99.7% chance that the bank doesn't go bankrupt. What you have to trust are the agencies supervising the applications of those accords. Either way, the banks are the first wishing those rules to be enforced, because failure of on bank usually means crisis in the sector, and problems for every bank. But indeed, risk management is a very costly aspect of banking, not only in terms of overhead, but also in terms of return banks can make, so ironically it's in the interest of every bank to both follow and try to circumvent regulations at the same time (hence all the securitising that is taking place).
Isn't it the role of supervisors to regulate banks, and NOT the consumer?
I mean isn't the whole point of being able to call yourself a bank is that you apply to prudential rules set by the government and therefore the consumer doesn't have to ask himself questions whether the bank is safe or not?
Quite frankly identity theft is a detail compared to other risks the banks are facing, this is why the whole financial market is divided between the banking system (black box supervised by the government) and the markets (where the government just guarantees transparency and it's up to the consumer to make his choices based on the information he is given).
The problem with disclosing this kind of information is that it sets doubt on the banking system, and the whole banking system relies on trust to function (hence the tight regulation of the banking sector).
We're not going to ask consumers to assess the risk exposure of banks are we?
/quote> Or, you know, just take God out of the equation and everything fits as well... I don't see any reason at all why we need to make the God assumption in the first place.
Science should be secular for the simple fact that religion has no concrete backing at all. Religions come and go. Some believe in Jesus, some in the Torah, some in Allah, some in Buddha, some in Krishna, some in Xenu, etc etc... There is no reason whatsoever for any decent scientist to favor one superstition over another, and even more importantly, it shouldn't accept _ANY_ superstition at _ALL_, because even if there is a divine entity or magical entity or whatever, nothing proves that we humans know of it and that we interpret it correctly. Just the many many many different interpretations inside each superstition should be a good indicator that those superstitions are not reliable.
History has shown that whenever a scientist surrendered to superstition to explain certain aspects he doesn't understand, it just puts a stop to further development, often leading to centuries of stagnation before someone puts the divine link in doubt and we once again can move forward.
On a side note, Science should be secular but not atheistic, Science should not have a goal other then seeking knowledge.
The real problem in this debate is the same problem that you have in all politics, which is short term vs long term. People live in the short term while humanity evolves in the long term, and people try to push their positions in the short term, often creating problems in the long term. If evolution is wrong, it will be debunked by the scientific community, just like all the other erroneous theories have been debunked in the past. If you believe, and are not just practicing wishful thinking, your best course of action to debunk evolution, is to accept it! Believe me it's every scientist holy grail to debunk a widely (if not generally) accepted theory, because it's when those generally accepted theories are debunked that science moves forward, and that scientists are glorified (read Newton, Einstein, Bohr, Curie, Galileo and even Darwin himself) !
And that is all I have to say about that.
.. so why should we care, there was aAnd that's a good thing? Want other Enron/Woldcoms?
That's your take on it, but cannot be derived from what the board said... As to whether this is a good deal or not, I'd have to make a FCF assessment, and even then it would just be an estimate... My guess is that the convergence between MSFTs and Yahoos operations make this acquisition much more lucrative for Microsoft then the real value of Yahoo!, hence the 62% premium, so yeah, I tend to agree with you...
Judging by that blur, the board is just doing what it is supposed to do, which is coincidentally to "maximize long-term value for shareholders".
Basically they're saying that they are doing what they are supposed to do, not sure where you see acceptance in that...
1) Sell your super high power 20 cores CPU uncrippled.
2) Make a platform where researchers can rent CPU power.
3) Allow your customers to rent their unused CPU power/cores.
4) Charge double what you give to your customers to the researchers.
5) Profit! (From both the sale and the rental afterwards).
And there is no ?...
I never told people to hoard for decades, just during bubble periods so you can buy assets post-crash at a huge discount.
Yes, there was a housing bubble, but that doesn't wipe out the 50 or so years where housing steadily grew and credit allowed millions of people to have a house to live in. The reason why a bubble was created is because banks and other creditors considered mortgage backed assets as virtually risk free (especially using SIVs to put those credits off balance), this doesn't change the fact that credit is hugely beneficial for the lower and middle classes (it allows them to reach a utility curve above their consumption frontier). And even then hoarding is completely absurd, since had you invested your money in stocks you would have gained much more with that money then having stacked it up (just look at the indexes over 5 years Dow Jones: http://finance.yahoo.com/charts#chart5:symbol=^gspc;range=5y;compare=^dji;charttype=line;crosshair=on;logscale=on;source=undefined). You are completely ignoring the cost of opportunity and are only looking at housing, which is in the middle of a crisis. Really? We now see PRIME borrowers missing payments, AmEx just wrote down $300m on top tier credit lines. Trillions in new dollars have been created, and still exist sitting hoarded in China and India's central banks, but credit is tight. Why? The hoarders are waiting for more price drops! Look who is buying Citibank!
No, the reason China keeps dollars is because their Central Bank is pegging the Chinese yuan to the dollar, they are not waiting for prices to come down, they are just trying to defend their exchange rates. Also, the Chinese central bank doesn't even "hoard" their money, they are invested in low risk assets mostly (Gov. Bonds), and have now started investing in riskier assets (such as stocks). I've tripled my affordability profile in 5 years. Most people I know are poorer, much poorer in the same time. Analysts are shills for their bosses, duh.
Saving via hoarding keeps you liquid, and ready. I bought a great home (100 year old and solid) for 1X income, not 3X or heaven forbid 5X. I bought an almost new 42" 1080p LCD for half price. I'm buying used gold jewelry for 65% of spot -- with hoarded cash. That's because the housing market is not a good place to invest even when there is no housing crisis (all costs taken into account). You obviously haven't heard of opportunity costs, you have lost money buy hoarding it, not won, even a savings account would have given you some return... The hoarding you did was plain stupid.
By the way, buying jewelry or gold is not "hoarding", it's investing in commodities, which are booming right now btw. You keep referring to buying gold as hoarding, which just shows how badly you understand what even keeping cash is.