Wednesday, February 29, 2012

Stop whinging about partial asset sales–try something with real balls.

The French village of Courbefy, in Limousin, a region in central France, has been put up for sale for the seemingly low asking price of $436,370, according to the Telegraph. The village, which includes 19 buildings and a swimming pool, was once home to about 200 people. But after the town failed to transform itself into a tourist destination, local residents say it’s now filled mostly with “thieves, drunks and squatters.”

But Courbefy isn’t the only town to go up for sale recently. Last April, a medieval village in the central Italian region of Abruzzo was put up for sale for about $770,000, according to a separate Telegraph report. The village, which is largely uninhabitable, includes 11 “crumbling stone buildings” and a half-ruined 13th century church. More recently, the British village of Askham Richard near York, went up for sale with a price tag of more than $10 million.

Here is more, and for the pointer I thank Daniel Lippman via Tyler Cowan.

The magnitude of the micro econ problem in the EU

The EU is likely the worst example of production and growth utterly mired in labour market problems. The auto industry is a case in point. Some auto makers are doing well  - growth in sales, export opportunities and so on. Those that are failing however are doing that  in the grandest of styles.

Production costs are the chief problem. The following numbers provide a microcosm of the French economy, the EU and indeed the West:

  • it is 1,300 euro cheaper to make a Renault Clio in Turkey than in France. The key component in the cost difference is labour – too many workers and each one grossly more expensive than those in Turkey; and,
  • to change that? Just 200,000 euro per worker layoff. The Opel Vauxhall factory – long identified as needing to be closed would cost 8 billion to close.

Clearly unsustainable. It’s that simple – and that complex. Without minute exceptions only western labour markets all look like some version of this and the cost of changing – under present rules look like these as well.

Monday, February 27, 2012

Weasel words can’t hide it…..

When I entered local govt in 1982 I was told “the local body is not a viable endeavour”.  The guy who told me that made a living out of it and on it…

image

but he was, nonetheless, largely correct in his prognosis. This graph (NZ Listener) starts in 1993. Now in 2012 we simply have Greece lite - and the Council likely own the olives.  Is there really no scope and hope for change?

Brent

Wednesday, February 15, 2012

What is everyone else doing?

Courtesy of Ajay Makan and Dan McCrum at the FT, Barclays Capital estimates that based on reporting thus far earnings growth for S&P 500 companies was 7 percent in Q4. But if you strip out Apple, that plummets to 2.9 percent.

One company, in other words, is responsible for most of the earnings growth among the large cap firms in the index.

HT Marginal Revolution

Brent

Monday, February 6, 2012

Reality of Financial Systems

Sebastian Mallaby is a financial journalist with a strong understanding of the financial economics of capital markets. He is author of More Money than God which describes, explains and analyses the hedge fund phenomena. 

The following description of the financial system from the FT is accurate.

Most critiques of modern finance miss the mark. There is no point hoping, for example, that armies of Dodd-Frank enforcers will ever render finance truly stable. Finance is a system of promises about an uncertain future; barring the advent of some magical prediction machine, regulation cannot change that. Currencies will rise and fall; interest rates will fluctuate; some companies will succeed while others go bust. A good financial system will absorb these risks without taxpayers picking up the pieces. But the risks will still be there; financial firms will still blow up.

It also shows why people find the whole business a little hard to swallow, why conspiracy theories are so attractive, denial is to be found everywhere and politicians figure they can “fix stuff” – all responses which are – in the words of the immortal Black Adder – like a broken pencil - “pointless”.

Brent

Saturday, February 4, 2012

Good sense on SOPA

From Jon Chappell at Harmony Central – a musicians forum

Dear Musician,

SOPA-riffic! The loose but vocal collective that are the denizens of cyberspace achieved a small and perhaps temporary victory last week when several prominent bipartisan members of Congress—and the White House itself—withdrew their support for the proposed House of Representatives bill known as SOPA (Stop Online Piracy Act). The bill will now have to be re-drafted.

All of this was the result of the great hue and cry sounded not just by individual cybercitizens but many big organizations (like Wikipedia and Google), some of whom took their sites offline for a day to register their protest. At issue with SOPA, and its Senate counterpart, PIPA (Protect I.P. Act), is how much power the government should have in punishing those who allow access to websites that engage in piracy (the "P" in SOPA), or the illegal trafficking of copyrighted material, most of which is in the form of movies, TV shows, and music.

Warning!

No reasonable person is in favor of piracy. And many people were reacting to the source of SOPA's authorship—the entertainment industry—rather than the content of the bill itself. After all, Big Media (including movie studios, networks, and the record companies) are notoriously parochial and primitive in their attempts to deal with the illegal copying and distribution of their properties.

But whether you begrudge the entertainment industry their profitability or not, you darn sure don't want them in control of the Internet, nor do you want them to be the authors of the legislation that enables their ham-handed tactics. (My longtime favorite example of this is the anti-piracy warning that precedes rental videos, where viewers must sit through an insulting and non-fast-forwardable screen—complete with FBI logo—about how you'd better not be stealing this movie.)

That doesn't mean the points raised in the now-scuttled bill aren't without merit. The movie industry doesn't profit unless it can make money for its Spielbergs, Lucases, Woody Allens, and Michael Bays—the creators and artists behind the industry. This obviously trickles down to the mere mortals—writers and film score composers, session musicians who play on these recordings, and everyone connected to the entertainment business in which we all strive to succeed. No one wants their stuff given away for free. Not if you hope to be a professional at it.

But protecting copyrighted work doesn't mean that industry-drafted regulations are what's called for, either. Imagine YouTube not existing because some material wound up being posted that hadn't cleared the copyright bar. Or shutting down Facebook and Twitter because someone posted a link to a copyrighted video. What next—sanctioning Google for returning a search result that lists a torrent site in Russia? That's what the broad language in SOPA's submitted form was calling for.

Swift justice for wrong-doers might be appealing, but the other side of that coin is the “law of unintended consequences”—the phenomenon where passing a law to address one problem results in a greater detriment somewhere else. (Consider 1920s prohibition, Africanized bees in South America, and our own vicious political climate, courtesy of Citizens United v. Federal Election Commission.) That's what people are afraid of here.

We need to protect the content producers and their publishers. I don't want to be in a profession that doesn't do that. And to be sure, there has been misinformation in the protest language, too. But we musicians—as the ones who are ultimately affected by copyright laws—must be fully informed as to when our rights are being protected versus when our industry overlords are overreaching in their authority. Because one thing's for sure: that legislation is coming back, just in a different form. And when it does, we need to be ready, and we had better be educated.
— Jon Chappell

Brent

Thursday, February 2, 2012

Why is the quality of American Governance Low?

Frank Fukuyama writes:

Conversely, I would argue that the quality of governance in the US tends to be low precisely because of a continuing tradition of Jacksonian populism. Americans with their democratic roots generally do not trust elite bureaucrats to the extent that the French, Germans, British, or Japanese have in years past. This distrust leads to micromanagement by Congress through proliferating rules and complex, self-contradictory legislative mandates which make poor quality governance a self-fulfilling prophecy.

The US is thus caught in a low-level equilibrium trap, in which a hobbled bureaucracy validates everyone’s view that the government can’t do anything competently. The origins of this, as Martin Shefter pointed out many years ago, is due to the fact that democracy preceded bureaucratic consolidation in contrast to European democracies that arose out of aristocratic regimes.

I note that very similar arguments can be applied in NZ given its anti class sentiment upon settlement.

HT Marginal Revolution.

Brent