Categories
Economics

Just a little bit more Bitcoin trouble

Originally published on June 17, 2014

There has been so much tumult in bitcoin and cryptocurrency over the past few days! Interest and concern extends beyond online communities. Motives vary.

Categories
Economics

Activism for profit

Activist hedge funds have been playing an increasingly central role in corporate governance. Stock markets do not capture the long term costs of short-term pillaging. As a result, these activist investors can pursue transactions that increase prices at the expense of long-term performance, such as cutting project investments or reserve funds.

Categories
Economics

The EPA is not the Federal Reserve of oil markets

Energy market pricing behavior seems contrary to the relationship between supply and demand. The oddly behaving RIN market is an intermediate factor that influences gasoline prices for automobiles. RIN (Renewable Identification Numbers) should be decreasing. Instead, they are too high.

Categories
Economics

Oil prices and OPEC influence

Light, sweet crude is the most desirable grade of crude oil because it requires minimal refining while producing the most gasoline. This chart is useful when considering geopolitical risk and commodities prices, as it illustrates where the “best” oil is.

Categories
Economics

Privatized British Rail

Actually, I think they are. Regardless, privatized British rail has another problem: British rail is nationalised all over again – by foreign states:As ticket prices skyrocket again today, a new video points out the absurdity at the heart of Britain’s privatised railways. Huge chunks of Britain’s rail operating companies are now owned by the French, Dutch and German governments. A chunk of the profits made from hiking fares in the UK are paid in dividends to state-owned companies such as Keolis, Arriva and Abellio.

It gets worse

…because Britain’s privatised rail companies receive massive government subsidies – some £4.8 billion in 2015-16 – even taxpayers who never use trains are effectively subsidising European services.

So, British taxpayers subsidize the public services of various wealthy European nations.

I found another source, which confirms that yes, British Rail is in fact owned, and operated at a profit, by the governments of China, The Netherlands, Italy, Germany, France, and Hong Kong, depending upon which rail line one chooses, and where one is traveling.

Certain political parties say they don’t believe in state control, yet are perfectly happy to allow Britain’s train companies to be run by state-owned railways – as long as it’s another state!:…there’s a choice of trains into London: those run by the Dutch, or those run by the Chinese…Welsh railways fell to German-owned Arriva long ago, while ScotRail is also in the hands of the Netherlands’ Abellio. The French, as part of Govia, own much of Britain’s biggest commuter franchises, including Southern Rail. Still, the news last week that South West Trains – serving destinations such as Weymouth and Windsor from Waterloo – would from August be operated by First MTR, partly owned by the Hong Kong government.

Categories
Economics

Fear and the Flash Crash

This fine recording is courtesy of Zero Hedge and The Internet Archive. It is a recording of market maker activity from the S&P 500 futures trading pit during last year’s “flash crash”. Futures prices plummeted, then soared back up again, probably due to algorithmic trading, although the event remains the subject of investigation by the U.S. Securities and Exchange Commission, among others.

his is one of the most dramatic audios I’ve ever heard. It is approximately eleven minutes in length, audio only. It was recorded in the S&P index futures pit on 6 May 2010, when the DJIA crashed by nearly 1000 points in 20 minutes. 

Categories
Economics

Business thrives while consumers languish

Via Curious Ellie’s TypePad Annex: Business investment is doing fine, July 23 2011.

Residential construction investment is still profoundly depressed. Commercial real-estate isn’t thriving either.  Yet businesses aren’t feeling any pain. Why? Well, wages are flat due to recession. Corporate taxes are not overly burdensome. There is capital available for businesses to invest in equipment and software. 

This observation from Professor Bradford de Long is troubling news, specifically in the context of the U.S. economy. It doesn’t bode well for a speedy recovery any time soon.

Categories
Economics

HIPAA Risk

A Systematic Approach to Managing Business Associate Risk

The need for a structured Business Associate oversight program for data security risk management.

HIPAA and the HITECH Act have highlighted the importance of Business Associate (BA) security. Covered Entities (CEs) need to effectively manage Business Associates security risk, and BAs need to understand their compliance requirements and liability under HIPAA and HITECH for PHI.

Categories
Economics

Hedgefund Data with 2012 Tax Year Update

Anne Dinning is standing, in the second row, center, between the pretty woman with red hair, v-neckline to the left and a hideous huge woman wearing brown, she towers over the entire picture, and looks like a man in a dress, on the right.

Categories
Economics

Cassandra Is Sooooooo Correct

Nihon Cassandra is more of a stock market investor than macroeconomics type. In other words, she isn’t really into bonds. In her own charming words,

So long as my distribution is skewed-right, and the tail not overly kurtotic, I am sanguine.

Recently, Cassandra excoriated herself for failing to predict our current global macroeconomic malaise, specifically, the odd lack of self-preserving behavior by those who have the most to lose. I think she is being unnecessarily harsh, as she understands far better than many others do, even now.

It was a close call. From September 2007 through 2010, the masters of financialization escaped ruin by the skin of their teeth. Saving the system, at public risk and expense, was useful to asset holders, e.g. the AIG crowd, Goldman Sachs and friends, Stevie Cohen, Walmart family scions, Icahn, Einhorn, Pritzkers, Koch brothers, Larry Ellison, Larry and Sergei Google, Mark Z, Jeff Bezos, Bill and Melinda, other much less publicly known owners of nation-sized yet privately owned wealth.

Cassandra expected that the excesses leading up to the 2008 financial crisis, e.g. over indulgence in luxury goods, real estate and high-end everything, would be known later as “Peak Inequality”. If the authorities were to bail out highly-levered asset-owners (enriching them further in some cases e.g. the notorious AIG bonuses payments), Cassandra expected that the State would promptly devise a way to recapture most of this taxpayer-funded largess.  In return, a modicum of social stability, sustained by an orderly market economy, would be assured.

In the aftermath, the Federal Reserve and fiscal policy makers would realize how fragile consumption was. They would not raise taxes nor cut government spending precipitously. Bad actors would fall from grace. Attitudes would change. All of us would feel chastened, and act accordingly.

In other words, prevent a nationwide populist revolt due to massive betrayal of public interests.

Trade recommendation for the integrity market: Sell calls

Cassandra, and I, expected that the 0.1% of the 0.1% would have been grateful. They were not. They are not now. Integrity is a market for perma-bears. Various practices associated with rapacious greed, including regulatory and legislator capture, have continued unabated. Inequality continues its incessant rise. Economic recovery is scant, yet deficits grow absurdly. Political divisiveness spreads. There is no end in sight to the public loss of confidence in,

  • elected government and
  • due process as a consistently effective means of fairly resolving disputes

Since Cassandra has clearly-stated content re-use rules, I recommend that you navigate over to her blog, and read her post directly. Focus on the final six paragraphs, and don’t forget to read the comments.

* I question the usefulness of higher marginal taxes or changes to capital gains taxes. Tax laws have power over the “poorer wealthy”. It does little good to raise taxes on small businessmen, physicians and others whose income is between $100,000 and $1,000,000 (net worth between $100,000 and $5,000,000). The real control of capital is concentrated among those with one or more magnitudes of order greater assets than that.