Category: A Rationale
Posted by: Admin
The most general and the most pervasive way I make sense of the world is through economics. Concepts inspired by the great economic thinkers and philosophers applied to business and life. Here are their stories and my stories......
30/11: Quite a difference....
There are many reasons for defending CE compensation, even large compensation packages. For those involved even peripherally in business these are obvious enough not to need spelling out. Perhaps the one point worth making however is that receipt of top compensation implies at least a modicum of good judgment.
It was an utter and absolute lack of any semblance of such judgment.......
It was an utter and absolute lack of any semblance of such judgment.......
It would be difficult to develop anything involving an invitation to "do as much or as little as you like so long as it isn't actually specific, in your own time, suiting your own political paranoia and tastes while passing what buck there is left to a few ineffectual intellectual agencies", than the communiques released by the G20 World Leaders.
Happily expectations of this sort of bunfight involving these types are so low amongst the seriously concerned as to mean that the posturing does little other than confirm their analytical weakness and joint interest in politics - domestic politics at that - before anything much else.
Here are the action points:
-Continue "vigorous efforts and take whatever further actions are necessary to stabilize the financial system.
-"Recognise the importance of monetary policy support, as deemed appropriate to domestic conditions.
-"Use fiscal measures to stimulate domestic demand to rapid effect, as appropriate...
-Help "emerging and developing economies gain access to finance in current difficult financial conditions... .We stress the International Monetary Fund's important role in crisis response...
-"Encourage the World Bank and other multilateral development banks to use their full capacity" in support of developing nations.
-"Ensure that the IMF, World Bank and other MDBs have sufficient resources to continue playing their role in overcoming the crisis."
Luckily it is close to impossible to work out what this tripe means let alone what to do about it (except that it is an international mandate to do your own thing. I can't see how any country would feel moved to change any policy on this basis)... so we have to use our own brains. This is never a bad thing.
Oh and see you in Europe in April for another productive meeting....
Happily expectations of this sort of bunfight involving these types are so low amongst the seriously concerned as to mean that the posturing does little other than confirm their analytical weakness and joint interest in politics - domestic politics at that - before anything much else.
Here are the action points:
-Continue "vigorous efforts and take whatever further actions are necessary to stabilize the financial system.
-"Recognise the importance of monetary policy support, as deemed appropriate to domestic conditions.
-"Use fiscal measures to stimulate domestic demand to rapid effect, as appropriate...
-Help "emerging and developing economies gain access to finance in current difficult financial conditions... .We stress the International Monetary Fund's important role in crisis response...
-"Encourage the World Bank and other multilateral development banks to use their full capacity" in support of developing nations.
-"Ensure that the IMF, World Bank and other MDBs have sufficient resources to continue playing their role in overcoming the crisis."
Luckily it is close to impossible to work out what this tripe means let alone what to do about it (except that it is an international mandate to do your own thing. I can't see how any country would feel moved to change any policy on this basis)... so we have to use our own brains. This is never a bad thing.
Oh and see you in Europe in April for another productive meeting....
I note Barack Obama's historic win elsewhere. I noticed two things of signifcance:
- how much more gracious, elegant and civilised the Americans are in defeat and victory than we crude types who would scorn them.
- to the extent that the win vindicates a "failed policies of the past" myth... be very, very scared.
Helen beat many in adopting this inaccurate and poisonous slogan - and she has built much long term welfare destruction off the back of it... albeit with good intention.
Is it now thw worlds turn????
- how much more gracious, elegant and civilised the Americans are in defeat and victory than we crude types who would scorn them.
- to the extent that the win vindicates a "failed policies of the past" myth... be very, very scared.
Helen beat many in adopting this inaccurate and poisonous slogan - and she has built much long term welfare destruction off the back of it... albeit with good intention.
Is it now thw worlds turn????
The Commerce Commission have concluded that gas supply companies Vector Energy and Powerco are overcharging consumers by an amount which requires them to drop their retail tariffs by 11%. So drop them they shall - by law. we know all too well why this type of policy and pronouncement are a problem but it is worth reminding ourselves of the most glaring issues and ripples.
Is the Commission right about the prices ? Or not. We can never tell and nor can they. What we can say is that they are not the party facing the best incentives to conclude correctly. The suppliers are in a better position since they face stronger incentives to get the conclusion right - there are jobs and large amounts of capital at stake - far more so than at the Commerce Commission.
Unsurprisingly Vector and Powerco are unimpressed and report that capital expenditure and expansion will be slowed and in some areas of their businesses stopped. Even allowing for incumbent supplier overstatement it is unlikely enough else much could happen - unless they want shareholders divesting as returns drop below competitive levels.
Less expansion, lower levels of maintenance and a slow down in investment in the gas industry would seem anything but helpful at present. The electricity sector faces generation shortfall, there seems to be constant concern about security of energy supply and over loading the electricity sector through decreasing investment in the gas sector does not appear to be clever.
Will consumers be overjoyed with the fall in prices and switch to gas? Well possibly - but they wouldn't want to do it in great numbers since if the new tariffs are uncompetitive relative to investment requirements the suppliers will not be able to supply - unless of course they raise prices - which they are forbidden to do by law.
it really would have been a lot easier to simply let consumers switch away from gas if they really wanted to - turn off a tap turn on a switch than to have the Commerce Commission try to guess the "right price" at no cost to them for failure.
Is the Commission right about the prices ? Or not. We can never tell and nor can they. What we can say is that they are not the party facing the best incentives to conclude correctly. The suppliers are in a better position since they face stronger incentives to get the conclusion right - there are jobs and large amounts of capital at stake - far more so than at the Commerce Commission.
Unsurprisingly Vector and Powerco are unimpressed and report that capital expenditure and expansion will be slowed and in some areas of their businesses stopped. Even allowing for incumbent supplier overstatement it is unlikely enough else much could happen - unless they want shareholders divesting as returns drop below competitive levels.
Less expansion, lower levels of maintenance and a slow down in investment in the gas industry would seem anything but helpful at present. The electricity sector faces generation shortfall, there seems to be constant concern about security of energy supply and over loading the electricity sector through decreasing investment in the gas sector does not appear to be clever.
Will consumers be overjoyed with the fall in prices and switch to gas? Well possibly - but they wouldn't want to do it in great numbers since if the new tariffs are uncompetitive relative to investment requirements the suppliers will not be able to supply - unless of course they raise prices - which they are forbidden to do by law.
it really would have been a lot easier to simply let consumers switch away from gas if they really wanted to - turn off a tap turn on a switch than to have the Commerce Commission try to guess the "right price" at no cost to them for failure.
28/10: Present Demand.......
"Of course, the market demand is for "strong" leaders and for "strong" economists, who can fool the public into believing that they have great knowledge. The ones who do this best are those who have fooled themselves."
Arnold Kling from George Mason.
Arnold Kling from George Mason.
I have noted before that if someone comes to their senses over biofuels then soft commodity prices don't look flash - least of all in the light of food scarcities driven by diversion to biofuels. For N.Z. that might mean (further) trouble for dairy prices.
This from the FT:
UN agency calls for rethink on biofuels
ROME/MILAN, Oct 7 - The western world needs to rethink its rush to biofuels, which has done more harm pushing up food prices than it has good by reducing greenhouse gases, a United Nations report said on Tuesday.
The U.N. Food and Agriculture Organisation (FAO) said policies encouraging biofuel production and use in Europe and the United States was likely to maintain pressure on food prices but have little impact on weaning car users away from oil.
”The report finds that while biofuels will offset only a modest share of fossil energy use over the next decade they will have much bigger impacts on agriculture and food security,” it said in its annual State of Food and Agriculture report.
Growing demand for biofuels will boost prices of agricultural commodities in the next 10 years, the report said.
For instance, if demand for biofuel agricultural feedstock rose 30 percent by 2010 from 2007, it would drive sugar prices up by 26 percent, maize prices by 11 percent and vegetable oil prices by 6 percent, FAO said.
This from the FT:
UN agency calls for rethink on biofuels
ROME/MILAN, Oct 7 - The western world needs to rethink its rush to biofuels, which has done more harm pushing up food prices than it has good by reducing greenhouse gases, a United Nations report said on Tuesday.
The U.N. Food and Agriculture Organisation (FAO) said policies encouraging biofuel production and use in Europe and the United States was likely to maintain pressure on food prices but have little impact on weaning car users away from oil.
”The report finds that while biofuels will offset only a modest share of fossil energy use over the next decade they will have much bigger impacts on agriculture and food security,” it said in its annual State of Food and Agriculture report.
Growing demand for biofuels will boost prices of agricultural commodities in the next 10 years, the report said.
For instance, if demand for biofuel agricultural feedstock rose 30 percent by 2010 from 2007, it would drive sugar prices up by 26 percent, maize prices by 11 percent and vegetable oil prices by 6 percent, FAO said.
04/10: The $700 billion Ostrich
Both the US Senate and Congress have voted such that the US can now socialise some $700 billion of risk. Apart from the cost to taxpayers there are two fundamental tragedies here:
First - the world (since the US is only the most celebrated not the "only") is running away from the fact that it is individuals who borrow. In this case individuals borrowed when they couldn't afford it but liked the look of the money. The world is running away from the fact that individuals invest. In this case individuals invested when they didn't have the stomach for the risk but liked the look of the money.
Neither of these choices is a good one.
Second - the world (not just the US again there are versions everywhere) is saying - no matter - this can be fixed, it was caused by anyone but the individuals who caused it and we are on the case on your behalf. The loud and clear message is "Back Jack Do it Again, wheels turning round and round" with the government as croupier no one loses. The invitation to borrowers to continue borrowing beyond their means is an open one. The invitation to investors to have another plunge couldn't be warmer.
Perhaps a third characteristic of the human condition is that deep down - we all know this.
First - the world (since the US is only the most celebrated not the "only") is running away from the fact that it is individuals who borrow. In this case individuals borrowed when they couldn't afford it but liked the look of the money. The world is running away from the fact that individuals invest. In this case individuals invested when they didn't have the stomach for the risk but liked the look of the money.
Neither of these choices is a good one.
Second - the world (not just the US again there are versions everywhere) is saying - no matter - this can be fixed, it was caused by anyone but the individuals who caused it and we are on the case on your behalf. The loud and clear message is "Back Jack Do it Again, wheels turning round and round" with the government as croupier no one loses. The invitation to borrowers to continue borrowing beyond their means is an open one. The invitation to investors to have another plunge couldn't be warmer.
Perhaps a third characteristic of the human condition is that deep down - we all know this.
The Privileges Committee is supposedly the highest court in the land, this side of Parliament itself we suppose. One scene of the recent Peters debacle involved a hearing before that Committee. Both politicians interviewed and journalists reporting kept speaking incessantly about "how the members voted" and noting that "the vote went broadly along party lines". This is extraordinary. Since when is evidence and at least a vague search for truth something we "vote" for?
