Archive for the ‘Discussion’ Category

How studying history brings success?

June 22, 2018

David Meltzer, CEO of  Sports1 Marketing says studying history helps us in many ways which we only realise with time:

When I was a child, my mom told me that studying history would greatly benefit me. My initial thought was, History is in the past — I need to focus on the future.

My young, arrogant mind didn’t fully grasp what my mother meant until I realized one thing about her advice that brought everything together for me: Human nature never changes.

Probably everyone has heard the phrase, “History repeats itself,” but most of us do not make the effort to investigate why this phrase is so often repeated.

In my estimation, the reason this phrase has become so commonplace is simple. While people might change, their nature does not. Understanding human nature gives you a massive advantage in business and in life because it enables you to emotionally connect with others. Understanding both human nature and history prepares you to act while others react.

One of my favorite pieces of advice that I give to my interns and coaching clients is, “View history as a mentor.” 

That is a good way to put it..

 

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Petition to the US President and Congress to end the Federal Reserve..

June 22, 2018

Just came across this petition filed with White House to end the Federal Reserve:

WE THE PEOPLE insist that:

1) Any authority previously given to the Federal Reserve be immediately terminated;

2) The President and Congress fully reestablish Congress’ singular power to mint, regulate, print, or otherwise control the form, amount, and backing of all U. S. legal tender;

3) Our U.S. Government undertake all necessary means to assure the ongoing operation and stability of U.S. currency;

4) Presidential Executive Order #13818 be applied to any Federal Reserve-affiliated person or entity involved in corruption, trafficking, etc., and that all assets thereof be frozen; and

5) All assets held by the Federal Reserve, and any and all of its holders of value, be nationalized and applied to reducing the federal deficit.

For more, Please Visit: http://www.endthefedreserve.com/

The petition was filed on 13 May 2018 and required 100,000 signatures. It could just manage 12628 signs. Thus it just closed without any action.  The website (http://www.endthefedreserve.com/) makes hefty allegations against Fed.

I am surprised to see not much articles on this petition. There was some focus o Swiss referendum but barely any discussion on this petition. Part of this reason is there have been few more such petitions in the past (one , two). So, people have stopped noticing.

But even then filing petitions to end Federal Reserve, the mightiest of financial institutions in the world is quite something.

 

 

Argentina signs up for another IMF bailout..

June 22, 2018

Argentina’s fortunes in football and economy go parallel. In 2002 , the country was facing huge crisis and expectations were on the Football team to bring some hope and respite. But a world beating team crashed out in Round one itself.

It is staring at a similar position now with the football team looking to crash after round one and the economy has already crashed. The country has again signed up for an IMF bailout. Christine Lagarde addressed the media on the plan:

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A Brazilian Adam Smith: José da Silva Lisboa as the Founding Father of Political Economy in Brazil

June 22, 2018

Interesting paper on how ideas transcend borders.

Paulo Roberto de Almeida (Brazilian Ministry of Foreign Relations; Centro Universitário de Brasília (UniCEUB)) points to works of José da Silva Lisboa> He brought Adam Smith teachings to Brazil:

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Why Did We Start Living in Cities? Were homo sapiens destined to become metro sapiens

June 22, 2018

Nick Cassella on this fundamental question: Were homo sapines destined to become metro sapiens?

The city life did not immediately spark human flourishing like Aristotle argued and Civilization VI implies, nor did it offer sweet refuge from a brutal world, like Hobbes claimed. Our evolution towards greater population density, like all things human, was messy and anticlimactic.

It’s not hard to understand why this less glamorous explanation has been omitted or ignored. Humans love a good, linear story and have a low tolerance for uncertainty. We prefer to embellish our place in the universe, instead of demean it. Frankly though, it’s more impressive to know that our modern world emerged from trial and error and not simply because of destiny. Our species’ success loses no shine by acknowledging that “lesser” truth.

Nonetheless, Civilization VI, like the rest of us, has continued to idolize an attractive, yet imprecise past. We now have enough evidence from our ancestors to know better. And if they’re anything like us, they’d want their story to be told accurately.

 

Eurogroup completes its 20th anniversary…

June 21, 2018

Amidst all the European doom, Eurogroup completes its 20 years today.

Eurogroup  is the group of euro area finance ministers and they released a statement on the anniversary:

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Bhutan warns its citizens of holding Indian Rupees..

June 21, 2018

A strong notice from Royal Monetary Authority of Bhutan (HT: TCA Sharad Raghavan’s piece):

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Thousands of Swedes are inserting microchips into themselves – here’s why

June 21, 2018

Prof Moa Petersen in this article:

So why are Swedes so happy to put microchips into their body? One theory put forward is that Swedes are more prone to sharing their personal details because of the way the Swedish social security system is structured.

This myth of the “naive Swede”, who innocently trusts the government and Sweden’s national institutions, is an exaggeration – which has even been noted by the Swedish Ministry of Foreign Affairs. If it is part of the explanation, it is certainly not the whole truth. More convincing is the fact that in Sweden, people have a strong faith in all things digital. Swedish people have a deep belief in the positive potential of technology.

Over the past two decades, the Swedish government has invested heavily in technology infrastructure – and it shows. The Swedish economy is now largely based on digital export, digital services and digital tech innovations. And Sweden has become one of the most successful countries in the world at creating and exporting digital products. Notable companies, such as Skype and Spotify, were founded in Sweden.

A belief in digital technology and a trust in its potential has strongly affected Swedish culture. And the transhumanist movement has built upon this. In fact, Sweden played an important part in the formation of the transhumanist ideology. The global transhumanist foundation Humanity+ was co-founded by the Swede Nick Bostrom in 1998. Since then, many Swedes have become convinced that they should be trying enhance and improve their biological bodies.

So as the world expresses shock at the number of people being microchipped in Sweden, we should use this opportunity to delve deeper into Sweden’s remarkable relationship with all thing digital. After all, this latest phenomenon is just one manifestation of an underlying faith in technology that makes Sweden quite unique.

Phew..

Women’s unpaid work must be included in GDP calculations: lessons from history

June 21, 2018

Prof Luke Messac has this Interesting bit of history on GDP calculations.

There was a researcher names Phyllis Deane who had pointed to the limitations of GDP in 1940s itself:

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How to Avoid Getting Sick From Financial Markets

June 21, 2018

Barry Ritholz has a piece which if not now will affect all of us very soon.

Falling stock prices seem to precipitate a broad range of physical and psychological problems. 1  Studies have found a strong correlation between market volatility and health. The number of hospital admissions increasesheart attacks rise. Anxiety, panic disorder and major depression increases significantly; suicides increase substantially. To take an extreme example, during the 1987 Black Monday crash when U.S. markets tumbled almost 23 percent in one day, California’s hospital admissions spiked more than 5 percent.

Perhaps every mutual fund, stock certificate and exchange-traded fund should come with the following notice: “Warning: Investing may be hazardous to your health.”

This is no joke. As my colleague Nick Maggiulli explains, “financial post-traumatic stress disorder” is a genuine threat to individuals. He says we “replay traumatic market moments in our head over and over again and they can come to define how we invest in the future.” There is a sort of “helplessness cycle” that I believe gives rise to dangerous and occasionally fatal emotional responses.

He says one should take cues from behavioral economics to let go off things which are beyond our control:

A helplessness cycle is caused by the illusion of control. It is how most people operate; that moment of realization that they lack control over many important events gives rise to fear and then panic.

Behavioral finance has provided a solution to this problem: Understanding what is and isn’t in your control can go a long way toward avoiding the sorts of emotional reactions that can put people in the hospital.

Easier said that done. The way we are all moving and being pushed into financial world, we are going to be paranoid about slipping value of investments….

Why do the Governments appoint economic advisers who eventually leave citing personal reasons?

June 20, 2018

One was actually expecting it and wondering what took so long.

The Finance Minister Arun Jaitley announced that the Chief Economic Adviser Arvind Subramanian will not continue. He will leave to US for personal reasons.

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How Broadcasters should handle the Prime Minister lying?

June 20, 2018

Nice post by Prof Simon Wren Lewis:

One of the most remarkable polls during that campaign was that more people trusted Trump than Hillary Clinton. How can someone who lies all the time, almost every time he says anything, be trusted more than Hillary Clinton, who has had countless Republican inspired investigations into her affairs and has never been convicted of anything. For some time cognitive linguist and philosopher George Lakoff has pioneered the idea that (among many other things – see for example a Guardian article with Gil Duran) lies that are repeated often enough become associations in people’s minds that they find it hard to combat. So the phrase ‘crooked Hillary’ that Trump repeats all the time has a purpose beyond firing up the base. Equally when Republican’s start investigations into her affairs that alone puts an association of guilt in people’s minds. That is a key reason why before the election they trusted Trump more than Clinton.
In the United States Trump played the media big time, and continues to do so. If the media is not careful the same thing could happen here. The phrase ‘Brexit dividend’ is the equivalent of ‘crooked Hillary’. If it is repeated enough, a sufficient number of people will begin to associate Brexit with a ‘dividend’, whether that dividend is real or not. And in case someone reading this does not know by now, the Brexit dividend is a complete fiction.
…….
But I think its importance goes well beyond Brexit. Why don’t politicians lie more often to enhance their cause? Some have integrity, but for the others the deterrent is being found out. But being found out depends critically on the media calling out lies when they happen. And when a large section of the media are very selective about how they treat lies depending on who said them or why they were said, or indeed are often the source of these lies, society has a serious problem.
That is the situation in the US with Fox and Trump and in the UK with the right wing press and Brexit or the Conservatives more generally. How the print media in the US and the broadcast media in the UK treats lies has therefore become critical. With lies ‘she said, he said’ type reporting is just not sufficient to defend democracy. Now often it is quite difficult to prove someone is lying, but if I could delineate a barefaced lie as one where it is very easy to establish the truth, then the Brexit dividend is a barefaced lie. OBR documents, accepted by the government as the basis for their tax and spend decisions, show quite clearly that the money has already been spent. You cannot spend the same money twice.
The right wing Brexit press have already supported this lie. As most of their readers also watch broadcasters, it is imperative that these broadcasters inflict some political damage on those who tell the lie. If they do not, the lesson certain politicians will draw is that they too can get away with barefaced lies, encouraging the kind of behaviour we see with Trump. For that reason broadcasters have to speak truth to power, otherwise the non-partisan media becomes complicit in propaganda or just a mouthpiece for politicians.
Hmm.. One could say this is happening in quite a few countries. Media is just playing to the government gallery and making lies appear as profound truth…

Why do eminent bankers usually fall? Case of Chanda Kochar

June 20, 2018

It is still quite unbelievable to read all the drama around Chanda Kochar, ICICI Bank’s CEO. Common sense would suggest that the CEO should have stepped aside until the inquiry was over. But once again it showed common sense is not so common.

Amidst all this one still cannot fathom this happening with Ms Kochar of all people. She was seen as this bright jewel amidst all the bankers and took over ICICI when it was under trouble following the 2008 crisis. Much of her tenure was without much hype and earned huge admiration from all quarters. How quickly all this has unraveled?

It is another case of an eminent banker falling from tall heights:

Kochhar has had a dream career. In 1984, when she joined ICICI as a management trainee, no one would have imagined she would become MD & CEO 25 years later. From a trainee to the CEO & MD to Padma Bhushan to the stain of corruption, Kochhar’s rise as well as fall seem incredible. 

Why does this happen so frequently in banking of all sectors. One could actually be weary each time you see a central banker/banker earning huge praise. You never know how the downfall will come.

Each time it happens, one cannot help but recall John Galbraith’s words:

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One of the planks of Communist Manifesto was to have central banks in most countries…

June 19, 2018

A food for thought article by Prof Dipankar Gupta. He titles it as: We are all marxists: Liberal democrats have understood The Communist Manifesto better than communists”.

The article is in written for 200th birthday of Karl Marx. Prof Gupta says Marx would be pleased that around 60% of his suggestions have already been implemented in most countries which prize themselves as liberal democracies:

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War over country names: Like Greece and Macedonia now, India and Pakistan had a (brief) naming dispute in 1947..

June 19, 2018

Shoaib Daniyal in Scroll:

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Man vs Machine: How Mexico’s win against Germany has upset the machine…

June 18, 2018

Germany’s loss to Mexico in FIFA world cup 2018 is likely to rank as one of the biggest upsets in footballing history.

So much so, it could upset many an algorithms which predicted a German win:

Several banks predicted that Germany had a direct route to the World Cup finals in Russia. Mexico’s 1-0 win overnight may upset many, including algorithms.

Out of 32 the teams contesting the championship Germany is the bankers most common pick to lift the trophy. Banks that predicted Germany will be lining up in the finals include UBS, DBS and Goldman Sachs, according to a «New York Times» report.

UBS predicted that Germany, Brazil and Spain are most likely to win but Germany was their favourite. The bank gave Germany a 24 percent chance of winning.

The article discusses how Germany was one of the favorites for many other Banks’ predictions.

Good friend Ira recently asked: Why do so many banks predict WC football winners?

Football’s roots in India are old and strong, but economic factors have kept it from flourishing

June 15, 2018

Just like in case of East Germany, economic factors have played a role in Indian football as well.

Unlike cricket, Football was played by one and all. It was hugely popular across India in mid 1900s”

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Why German football team has players mainly from west part of Germany: Capitalist vs. communist football

June 15, 2018

Interesting piece by Prof Per Urlaub.

Football in East Germany was visible till unification. Post-unification, there are hardly any players from East. Why?

What happened? Why – with the exception of Kroos – are none of the other players on German’s current national squad from the Eastern part of the country?The answer lies in economics.

After the fall of the Berlin Wall, the East’s best players immediately left to join the clubs in the West that could pay them higher salaries. Meanwhile, like the economies of other former Soviet countries transitioning from communism to capitalism, the rapid reorganization of East Germany’s economy led to the collapse of entire industries.

East German clubs felt the pain. Not a single club from the East managed to establish a permanent presence in the Bundesliga, Germany’s top professional league. No longer receiving government funding – and unable to attract the steady flow of cash from television deals and corporate sponsorships like their Western counterparts – the clubs from the East were forced to radically downsized their youth academies.

Kroos, of course, is the outlier. But he owes little to East Germany’s soccer clubs.

Instead, his father, Roland Kroos, was a soccer coach. Roland not only identified his son’s athletic potential, but he was also able to develop his boy’s skills. When Kroos was a teenager, his father placed his son into the youth academy of one of Europe’s most successful soccer empires, Bayern Munich. It was in the West where Toni – dubbed by his father the “family project” – matured as a player, before moving on to Real Madrid, where he plays when he’s not playing for the German national team.

Today, the West’s dominance in German soccer symbolizes the country’s economic divisions.

Like in many other industries, West German soccer had a head start after the unification. The geographic imbalance in German soccer is emblematic of the unacknowledged economic inequalities between East and West that persist to this day.

Hmm..

How Keynes took over the world (and Robertson lost it)?

June 14, 2018

Murray Rothbard in this long piece:

Keynes used tactics in the selling of The Genera Theory other than reliance on his charisma and on systematic deception. He curried favor with his students by praising them extravagantly, and he set them deliberately against non-Keynesians on the Cambridge faculty by ridiculing his colleagues in front of these students and by encouraging them to harass his faculty colleagues. For example, Keynes incited his students with particular viciousness against Dennis Robertson, his former close friend.

As Keynes knew all too well, Robertson was painfully and extraordinarily shy, even to the point of communicating with his faithful, longtime secretary, whose office was next to his own, only by written memoranda. Robertson’s lectures were completely written out in advance, and because of his shyness he refused to answer any questions or engage in any discussion with either his students or his colleagues. And so it was a particularly diabolic torture for Keynes’s radical disciples, led by Joan Robinson and Richard Kahn, to have baited and taunted Robertson, harassing him with spiteful questions and challenging him to debate.

 

What did Max Weber mean by the ‘spirit’ of capitalism?

June 13, 2018

Prof Peter Ghosh of University of Oxford argues that we have mostly misunderstood Weber:

Max Weber’s famous text The Protestant Ethic and the Spirit of Capitalism(1905) is surely one of the most misunderstood of all the canonical works regularly taught, mangled and revered in universities across the globe. This is not to say that teachers and students are stupid, but that this is an exceptionally compact text that ranges across a very broad subject area, written by an out-and-out intellectual at the top of his game. He would have been dumb­founded to find that it was being used as an elementary introduction to sociology for undergraduate students, or even schoolchildren.

We use the word ‘capitalism’ today as if its meaning were self-evident, or else as if it came from Marx, but this casualness must be set aside. ‘Capitalism’ was Weber’s own word and he defined it as he saw fit. Its most general meaning was quite simply modernity itself: capitalism was ‘the most fateful power in our modern life’. More specifically, it controlled and generated ‘modern Kultur’, the code of values by which people lived in the 20th-century West, and now live, we may add, in much of the 21st-century globe. So the ‘spirit’ of capitalism is also an ‘ethic’, though no doubt the title would have sounded a bit flat if it had been called The Protestant Ethic and the Ethic of Capitalism.

This modern ‘ethic’ or code of values was unlike any other that had gone before. Weber supposed that all previous ethics – that is, socially accepted codes of behaviour rather than the more abstract propositions made by theologians and philosophers – were religious. Religions supplied clear messages about how to behave in society in straightforward human terms, messages that were taken to be moral absolutes binding on all people……

The ethic or code that dominated public life in the modern world was very different. Above all it was impersonal rather than personal: by Weber’s day, agreement on what was right and wrong for the individual was breaking down. The truths of religion – the basis of ethics – were now contested, and other time-honoured norms – such as those pertaining to sexuality, marriage and beauty – were also breaking down. (Here is a blast from the past: who today would think to uphold a binding idea of beauty?) Values were increasingly the property of the individual, not society. So instead of humanly warm contact, based on a shared, intuitively obvious understanding of right and wrong, public behaviour was cool, reserved, hard and sober, governed by strict personal self-control. Correct behaviour lay in the observance of correct procedures. Most obviously, it obeyed the letter of the law (for who could say what its spirit was?) and it was rational. It was logical, consistent, and coherent; or else it obeyed unquestioned modern realities such as the power of numbers, market forces and technology.

 


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