Archive for the ‘Discussion’ Category

How does a city get to be ‘smart’? This is how Tel Aviv did it

April 20, 2018

One does not even know the meaning of a smart city but has become a buzzword.

If it means having technology in whatever we do, then it could also mean every step can be recorded.

However, there is another model of using technology selectively and make the city more people centric. For instance, Tel Aviv is doing its bit to use tech to involve citizens and become so called smart city. Interestingly, Thane has adopted Tel Aviv strategy as well:

Smart cities, digital cities, virtual cities, connected cities. Are these just trendy buzzwords? Perhaps. But these types of cities are supported by infrastructure that is more than bricks and mortar.  These cities are smart (thoughtful, people-centric), digital (driven by data acquisition, measured, analysed and sometimes exchanged) and virtual (experiential). And, as a result, they are connected, creating more potential interactions between people and their place.

Tel Aviv is one of these cities. Undoubtedly the 2009 book Start-Up Nation: The Story of Israel’s Economic Miracle contributed to its reputation as a “non-stop city” with innovation clusters teeming with companies at the cutting edge of technology.

However, Tel Aviv’s standing is not only built on commercial success — it has an internationally recognised local government. Winning first placein the 2014 World Smart City Awards not only boosted its profile on the international stage, but Tel Avivians, well, they actually have positive things to say about their local government.

I find all this tech usage a bit too much. One would still say Copenhagen type model is a better bet.

On Tel Aviv, there is also this interesting link on the city’s new Independence Trail…

 

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18th century Pretzel standardization

April 19, 2018

Nice post in Managerial economics on standardisation.

Pretzels, or bretzels, were an important part of the cuisine in southern Germany at least since the 12th century. Apparently, shirking on the size of pretzels could be a problem. The photo here is from Heidelberg and represents a solution adopted nearly three centuries ago. The size and shape of a ‘standard’ pretzel, about 10″ in diameter, was engraved onto the stones at the base of the central cathedral. If anyone suspected they were being cheated, they could place their pretzel on top of the engraving to verify if it was, in fact, large enough. This is an early example of the regulation of minimum quality standards.

BTW, pretzels in southern Germany (with a little butter) are delicious and Heidelberg is a lovely town to visit.

History of standardisation is really important to figure….

Understanding digital currencies via the money tree

April 19, 2018

The Czech central bank Vice Governor, Mojmir Hampl had earlier remarked:

the positive philosophical influence of bitcoin on the conservative world of central banking. True, it is far from clear that anytime soon a full-fledged digital currency (be it blockchain based or not) will be created by a central bank (some of you may be following the debate in the Riksbank in Sweden), but the last three years have seen an explosion of research on this idea in many central banks. Bitcoin must be credited for this powerful intellectual stimulus. When so many professors at the most esteemed universities of the developed world are not thinking about potential reforms of the current monetary order, we have received a stimulus from the libertarian IT guys instead. Fine.

The intellectual stimulus has been amazing as one is getting to read so much on money and its basics.

BIS researchers gave us the money flower:

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How Copenhagen avoided the car culture and keep its citizen-focused design?

April 18, 2018

Superb article in Guardian newspaper written in 2016. There is an entire series on cities which should be worth reading.

In this piece, how Copenhagen managed to keep its design of a pedestrian and bicycle friendly city. In 1960s, there was huge pressure on European cities to build this car culture as seen in American cities.  How Copenhagen avoided this and today it is seen as one of the ideal cities all other cities are trying to aspire to become.

Needless to say, the Indian cities destroyed their pedestrian and cycle friendly culture and have just become urban nightmares…

Superman at 80: How two high school friends concocted the original comic book hero

April 18, 2018

Prof. Brad Ricca of Case Western Reserve University has researched on Superman and shares her key findings in this piece.

The creators of Superman were from her region which prompted her to study why the superhero was created. The story behind the creation is as interesting and full of struggles:

In the mid-1930s, Jerry Siegel and Joe Shuster were two nerds with glasses who attended Glenville High School in Cleveland, Ohio. They worked on the school newspaper, wrote stories, drew cartoons, and dreamed of being famous. Jerry was the writer; Joe was the artist. When they finally turned to making comics, a publisher named Major Malcolm Wheeler-Nicholson gave them their first break, commissioning them to create spy and adventure comics in his magazines “New Fun” and “Detective Comics.”

But Jerry and Joe had been working on something else: a story about a “Superman” – a villain with special mental powers – that Jerry had stolen from a different magazine. They self-published it in a pamphlet titled “Science Fiction.”

While “Science Fiction” only lasted for five issues, they liked the name of the character and continued to work on it. Before long, their new Superman was a good guy. Joe dressed him in a cape and trunks like those of the era’s popular bodybuilders, modeled the character’s speedy running abilities after Olympic sprinter Jesse Owens, and gave him the bouncy spit-curl of Johnny Weissmuller, the actor who played Tarzan. It was a mishmash of 1930s pop culture in gladiator boots.

When they were finally ready, they started pitching Superman to every newspaper syndicate and publisher they could find. All of them rejected it, some of them several times. This continued for several years, but the duo never gave up.

When Superman finally saw print, it was through a process that is still not wholly clear. But the general consensus is that a publisher named Harry Donenfeld, who had acquired the major’s company, National Allied Publications (the predecessor to DC Comics), bought the first Superman story – and all the rights therein – for US$130.

 

The world was introduced to Superman in “Action Comics” No. 1, on April 18, 1938, with the Man of Steel appearing on the cover smashing a Hudson roadster. The inaugural issue cost 10 cents; in 2014, a copy in good condition sold for $3.2 million dollars.

When the comic became a runaway hit, Jerry and Joe regretted selling their rights to the character; they ended up leaving millions on the table. Though they worked on Superman comics for the next 10 years, they would never own the character they created, and for the rest of their lives repeatedly filed lawsuits in an effort to get him back.

There is another story of how Jerry paid tribute to his father in the comics. Thus, there is more to the Superman series:

Why is Superman’s 80th birthday important? It isn’t just about celebrating a “funny book” about a guy who has heat vision and can fly. It’s about using fantasy to make sense of the world, plumbing personal tragedy to tell a story, and using art to envision a more just and safe society.

Nice to know…

Why are Karnataka’s religious mutts so powerful?

April 18, 2018

Anyone watching upcoming elections in Karnataka will notice the power of the religious mutts and how the political parties are trying to impress them.

K. Giriprakash of Hindu Business Line tries to figure the reasons:

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Chasing The Machine: India’s first computers and the Cold War

April 16, 2018

Fascinating account of  history of computers in India by Prof Nikhil Menon of Notre Dame University.

Prof Menon starts with this story of Morton Nadler who escaped from Prague to Calcutta for setting up a computer at Indian Statistical Institute at the behest of PC Mahalonobis. The entire tale is woven with ongoing Cold War and geo-political affairs. It was several events and conspiracies which led to computers coming to India.

What caught my eye was how computers were needed to “mine big data” to usher planning:

An encounter with Prasanta Chandra Mahalanobis—founder of the Indian Statistical Institute, and the driving force behind India’s Second Five Year Plan (1956-61)—presented Nadler with an escape route. Mahalanobis made Nadler an offer to work for the institute in Calcutta as a computer scientist. Czechoslovakia could not object to Nadler leaving for India (given India’s friendly relations with the Soviet Union), and in American eyes spending time in a democracy that was formally non-aligned in the Cold War helped rub off the stain of communism. Nadler signed a two-year contract to join the ISI “to work on electronic computers.” At the time, the institute was home to the only two electronic computers in India.

The first time he saw an electronic computer at Harvard in 1947, Mahalanobis was mesmerised. Stunned by its ability and convinced of its indispensability to economic planning, he believed that computers would solve one of centralised planning’s largest problems: big data. They could help with complex calculations and develop mathematical models of the economy. Mahalanobis believed that they could be vital for assessing trends for the extensive National Sample Survey that he was integral in launching. Unlike most countries that used computers in the mid twentieth century, in India their earliest use was for development—not in the military. The computer’s potential for planning was how Mahalanobis and the Indian government justified their pursuit and enormous expenses.

How this big data talk is seen differently today. But in reality the objectives are the same.

Highly recommended….

 

Women in Marathons: From being objected to becoming key for marketers..

April 16, 2018

Superb piece by Carly Drake PhD Candidate in Marketing, University of Calgary.

She tells the story of a Kathrine Switzer whose participation in the 1967 Boston Marathon was objected:

On an April morning in 1967, Kathrine Switzer ate a late breakfast of bacon, eggs, pancakes and toast. The Boston Marathon wasn’t due to begin until noon, so she had plenty of time to get to the starting line.

When the time came, she pinned the number 261 to her chest and started running through the Boston streets with her boyfriend, coach and friend in tow. Then, in a surprising contrast to the crowd’s cheers, she was attacked by a race official who’d noticed her ponytail and lipstick.

At this time, the Boston Marathon was a men’s-only race, and Switzer wasn’t exactly welcome in the field. After Switzer’s boyfriend warded off the race official by tackling him, Kathrine (registered as K. V. Switzer) crossed the finish line. Her efforts helped make the sport of endurance running more welcoming to women in the decades that followed.

“I wasn’t running Boston to prove anything,” she later wrote. “I was just a kid who wanted to run her first marathon.”

This month — 51 years after Switzer’s run — more than 10,000 women from around the world will compete in the Boston Marathon. The 42.2 kilometre (26.2 mile) run requires competitors to meet strict entry requirements, which means these women are some of endurance running’s fastest professional and recreational athletes.

As a marketing scholar, I study how gender and the body are represented in contemporary advertising. So, while the athletic world shifts its attention to Boston’s runners, I’m thinking about what those runners see in their social media newsfeeds or in the pages of the running magazines piled upon their nightstands.

She pores through advertising campaigns to encourage women to run:

In my research, I’m examining a sample of nearly 60 advertisements taken from the January/February 2017 issues of Runner’s World, Women’s Running and Canadian Running. So far, I’ve learned that Switzer’s run has left a complicated legacy in advertisements targeting female endurance runners.

Specifically, the advertisements celebrate women’s physical and mental strength and, in so doing, support women’s participation in the endurance running subculture. Yet these advertisements can also share a negative sentiment when they tell women exactly how they should look and behave.

Many of the advertisements glorify chasing the “ideal” running body — tall, lean and muscular — through unhealthy diet and exercise habits.

In the end, despite 50 years of Switzer, nothing much has changed:

Interpreted alongside the story of Switzer’s run, these advertisements are reminders that bodies are a part of history. Situated within an endurance running subculture that initially wasn’t quite sure how it would deal with the “woman problem,” these advertisements are evidence that female endurance runners are still bound by regulations.

While they are free to enter competitive races, the advertisements communicate that women’s success and value are tied to a certain training regime, body type and style of gender expression.

This focus on the body is a hallmark of the neoliberal ideology that colours Western public life more broadly. In neoliberal thinking, a “good” consumer makes the autonomous, rational choices that lead to physical fitness. Not only is fitness assumed to be more attractive, it benefits the state by saving on the economic costs of obesity.

Studying these advertisements, then, is an important task because advertisements tend to shape — and are shaped by — social norms, giving them a place of power in consumers’ lives.

What runners are seeing in the media can tell us a lot about what it means to be a runner today. If we know nothing else about these runners, we know that there are a lot of them. A year ago, Switzer ran the Boston Marathon on the 50th anniversary of her debut run. At 70 years old, she was the 9,856th woman to cross the finish line.

Because advertisers have no shortage of female endurance runners with which to communicate, it behooves them not to take another 50 years to change the conversation.

Hmm…

It is really nice to learn about different types of research people are doing…

For home price trends in London, check the Tokyo listings…

April 16, 2018

The key reason behind sub-prime crisis spreading across US was how home price trends became similar across the country.

In its new research, IMF points how the home price trends are becoming similar across the world:

If house prices are rising in Tokyo, are they also going up in London? Increasingly, the answer is yes.

In recent decades, house prices around the world have shown a growing tendency to move in the same direction at the same time. What accounts for this phenomenon, and what are the implications for the world economy? These are questions that IMF economists explore in Chapter 3 of the latest Global Financial Stability Report.

Our study of 44 cities and 40 advanced and emerging-market economies shows that the growing integration of financial markets plays an important role. As a result, housing markets in one country are more sensitive to swings in another. Policy makers should pay attention, because the heightened tendency for house prices to move in tandem may signal greater odds of an economic slowdown.  An economic shock in one part of the world is more likely to affect housing markets elsewhere.

Why is this happening?

  • Interest rates: The world’s major central banks have kept interest rates unusually low for a long time in a bid to stimulate growth. That has produced a ripple effect of low borrowing costs, including cheap mortgages, across the globe, which has helped push up prices.
  • Institutional investors, private equity firms, and Real Estate Investment Trusts have been increasingly active in major cities such as Amsterdam, Sydney, and Vancouver as they seek out higher returns.
  • Wealthy individuals have also snapped up properties in major financial centers in search of safe places to invest their money (and perhaps to live). One result: because the wealthy prefer high-end properties, their investments push up prices in expensive neighborhoods in places like New York and London at the same time.
  • Economic growth: In addition to financial factors, coordinated movements in the real economy contribute to the phenomenon. In 2017, growth picked up in 120 economies, accounting for three-quarters of world GDP. It was the broadest synchronized growth surge since 2010. Economic growth is a major driver of demand for homes, and hence prices.

All of this suggests that house prices are starting to behave more like the prices of financial assets, such as stocks and bonds, which are influenced by investors elsewhere in the world. In countries that are more open to global capital flows, prices of both homes and equities tend to be more synchronized with global markets.

 

High-denomination Banknotes in Circulation: A Cross-country Analysis

April 13, 2018

Interesting research by Gordon Flannigan and Stephanie Parsons of Reserve Bank of Australia in the central bank’s revamped Bulletin.

They try to see the reasons behind demand for High Denomination notes in Aus, Canada and UK:

In Australia, Canada and the United Kingdom, the number of high-denomination banknotes in circulation has increased at an above-trend rate in recent years. Evidence suggests that overseas demand might be a common driver of this elevated growth. Increased domestic demand for both transaction and store-of-value purposes may also have contributed, as well as responses to changes in government and central bank policies. This research was undertaken with assistance from members of the Four Nations Distribution Working Group, in line with the group’s objective to explore banknote-related topics that are directly relevant to the member central banks.

The overseas demand is mainly from Asian countries:

A key source of overseas demand for AUD 100 and CAD 100 banknotes appears to be Asia. Liaison with the cash industries in Australia and Canada suggests that there has been an increase in the proportion of AUD 100 and CAD 100 banknotes shipped to Hong Kong and Singapore. For example, in the five years to 2016 it is estimated that 80 per cent of foreign shipments of CAD 100 banknotes were destined for Hong Kong, compared with 60 per cent in the previous five years. Further, it is estimated that shipments of CAD 100 banknotes to Hong Kong accounted for about 5 per cent of all CAD 100 banknotes on issue in 2016, significantly increasing growth in banknotes in circulation in that year. Similarly, partial data from the Australian cash industry suggest that shipments to Hong Kong and Singapore in 2016 were equivalent to about 6 per cent of all AUD 100 banknotes in circulation. The link between Asian demand and GBP 50 banknotes in circulation is less clear. GBP 50 banknotes are primarily demanded by foreign exchange wholesalers abroad, consistent with an overseas store-of-value motive (Fish and Whymark 2015). However, because the British pound is a more prominent reserve currency, offshore demand is likely to be more widespread across countries.

Hmm..

Lots of other ideas and regressions in the study.

It was also interesting to note how government policies in Australia are creating speculation around High denomination notes:

Since peaking in late 2016, growth in demand for AUD 100 banknotes has declined considerably (Graph 4). This may partly reflect heightened uncertainty among consumers and businesses about the future status of AUD 100 banknotes following the Australian Government’s announcement in December 2016 of the formation of the Black Economy Taskforce (BETF). This taskforce aims to investigate and identify where regulations and policies could be introduced to reduce activity occurring outside the tax and regulatory system (excluding illegal or criminal activities). The BETF convening announcement included, among many other options, a discussion around strong demand for AUD 100 banknotes and identified the use of cash as an area to be investigated, generating intense media interest. This announcement coincided with heightened public interest in the future of high-denomination banknotes following decisions in some jurisdictions to withdraw the legal tender status of some high-denomination banknotes (India and Venezuela) or to discontinue production and issuance (euro area).

Daily lodgements of AUD 100 banknotes into cash depots increased sharply after the BETF announcement (Graph 7). It may have been that the BETF announcement, and associated media speculation about the future of AUD 100 banknotes, contributed to uncertainty among the general public and prompted some to spend AUD 100 banknotes that were previously held as a store of value. Liaison with the cash industry has indicated that the increase in lodgements has been evident across a broad range of retail customers, has occurred in most states and has been concentrated in capital cities.

 

Banking on a ‘shithole’: US-led racial capitalism in Haiti began long before Trump

April 13, 2018

Prof. Peter James Hudson in  this post writes on how City Bank (Citibank now) profited from racial ideology and economic policy to secure control of Haiti’s finances and banking.

In nut shell, so badly named shithole countries have been very lucrative for Wall Street players for a long time.

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Pinjore Gardens: A Plot to Outwit the Mughals.

April 13, 2018

Nice bit of history of Pinjore  Gardens in Panchkula (near Chandigarh) at Live History India portal.

The beautiful gardens were built by the Mughal Governor of Punjab. The local Maharaja feared that Mughals would move to Panchkula and occupy more lands. The Maharaja then devised a plan to keep Mughals away.

Read the article for more details..

Key lesson from Buffet and Munger duo: Simple makes you money…

April 12, 2018

Another nice post from Dhirendra Kumar of Value Research.

For close to two decades, as technology companies took over the world and started eating up practically every industry, the world’s greatest investors ignored it. For all practical purposes, Warren Buffett and Charlie Munger missed the technology bus. They started to invest in Apple and IBM only recently, after the former has transformed into a consumer durables company and the latter into a business services company. Why did they avoid technology? And more importantly, is there anything that us mere mortals can learn from thi

Even during their early years, Buffett and Munger often said that they did not invest in the stocks of companies whose businesses they did not understand. A simplistic response would be that they missed out on a lot of great investments because of that. Despite always having billions of dollars of investible surplus, they never made a dime out of stocks like Google and Amazon, which delivered more than 20X for investors over these years.

And yet, the duo is pretty sanguine about the opportunity lost. The reason for this is that they are still the most successful investors in the world at this scale. They were successful because they invested in businesses they understand. In hindsight it’s easy to say that they missed out on Amazon and Google. However, they also missed out on Pets.com, Webvan, Myspace and other expensive failures. Since they did not understand the business, they were just as likely to invest in these duds as they were to invest in Amazon and Google. After all, the great media moghul, Rupert Murdoch, did buy Myspace for US$ 580 million and then sold it four years later for US$ 35 million. To avoid this 94 per cent loss, all Murdoch had to do was learn from Buffett and Munger and not touch businesses he did not understand.

And that’s exactly what we should do too.

 

No matter what product or service we are buying or using, nothing impresses us more than features, jargon, and complexity. Perhaps the modern technological world has trained our mind to champion most of the new wonders of the world that are too complex to understand. The underlying assumption is that anything that is complex is the best of the lot.

Unfortunately, in personal finance, this idea is fatally wrong. In case of personal finance products, simplicity is not just useful or helpful, it is an absolute necessity. The reason is simple–if an investor does not fully understand a financial product or service, then he or she has no way of telling if it is suitable at all, regardless of how good its seller may claim it is.

Railways to make the Marethan train popular amidst tourists…

April 12, 2018

The stories on old trains and attempts to restore old history are always great to read.

This one on restoring and making Matheran train more popular:

The Central Railway (CR) is planning a series of measures to make the Matheran toy train service popular. Key among them is to reintroduce the heritage steam engine. The CR is conducting trials and will be holding a ceremonial run on April 14 between Aman Lodge and Matheran.

Divisional Regional Manager S.K. Jain said, “We want to attract as many tourists as possible. We shall be conducting a ceremonial run of the steam engine with two coaches on April 14.”

The reintroduction of steam engines is part of the Indian Railways’ plan to promote its heritage and attract tourists. Apart from Matheran, steam engines will be introduced in other hill station routes such as Darjeeling-Siliguri, Kalka-Shimla, and Kangra Valley. The steam locomotive will not be coal-fired, but will be powered by diesel.

The CR has increased services on the three-km Aman Lodge-Matheran section since March 30. It is currently running 21 services on Fridays and 22 on the weekend. On Mondays, it operates 17 trains and during the remainder of the week, it runs 14 services daily. Railway officials said their weekend earnings have nearly tripled after introducing the shuttle service. Soon, one will be able to book tickets of the toy train on the IRCTC.

Among the other proposals is a revolving restaurant, where a coach will be placed on a turntable. The other plan is to renovate British-era bungalows. The CR also plans to have a heritage gallery, food plaza, and rest rooms.

The CR will be teaming up with the IRCTC to prepare packages aimed at foreign tourists. The packages will include booking of resorts at the hill station. “We have noticed that most foreign tourists either start their India tour in Mumbai or end it here. We are looking to target these tourists and give them an experience,” Mr. Jain said.

The train services were shut in May 2016, after two derailments. The CR restarted the toy train in October 2017 between Aman Lodge and Matheran. The line was opened in 1907, and railway officials are hoping to have it included in the UNESCO heritage list.

 Hope to do this trip sometime…

Politics of colour: Dressing Dr. B.R. Ambedkar in saffron

April 10, 2018

I just blogged about how blue became colour of Dalit community in India.

Came across this news today morning:

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How Indian vegetarians are different from Westerners who have given up meat? (and different kinds of vegetarians in India)

April 9, 2018

Profs Assem Hasnain and Abhilasha Srivastava of Bridgewater University in this piece:

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German politicians invest in opera when seeking re-election – here’s why

April 9, 2018

Prof. Pieter Vanhuysse (studies Comparative Welfare State Research!!) at University of Southern Denmark researches on the topic.

They show German politicians provide funds for Opera to impress highbrow voters:

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Why is this Made in China stigma still rampant?

April 6, 2018

Interesting bit of news. Apparently, customers of a French  shoemaker have been miffed with Made it Italy replaced by Made in China: (more…)

Australia’s funeral insurance market…

April 6, 2018

Did not know one can avail insurance for funerals. But then trust financial/insurance industry to venture into anything. The human imagination to first make certain things very expensive and then design financial products around these things is quite something.

Anyways, came across this piece by Profs. Sandra van der Laan (University of Sydney) and Lee Moerman (University of Wollongong). They list several ways to pay for “expensive funerals.”

Paying for a funeral can be a financial hardship and there are options to pay for it.

One option is a direct committal that takes care of only the disposal and documentation requirements required for a funeral. Many funeral directors and online providers offer this budget option for as little as A$1,200, but more likely around A$1,800 in a large city such as Sydney or Melbourne. You can then entrust your relatives, or your executor (if this is indicated in your will), to celebrate your life in any way you wish, a memorial without the expense.

You could also buy a pre-need or prepaid funeral. This product is rigorously regulated by state consumer laws. It gives you some control as you know exactly what you are buying (such as ceremony, coffin, disposal). The only downfall is that your funeral is “locked-in” to a particular provider and stories of aggressive upselling to relatives have been reported.

In Australia, your loved ones or executor are able to access your funds in your bank or even superannuation accounts to pay for a funeral. If you are on a government benefit, your partner may receive a bereavement payment to contribute toward funeral expenses. Many funeral operators will also allow your relatives to pay for your funeral by instalments.

Funeral bonds are also financial products and depending on the amount you invest in bonds, you are likely to limit any financial legacy resulting from your funeral for relatives and loved ones. However, funeral bonds also carry the same risks as other bonds.

Funeral insurance providers attempt to sell peace of mind to consumers. However, that peace of mind can become a financial burden as you age and premiums increase. It also may not even be used for that send off that you had imagined.

They then discuss how funeral insurance products are taxing Australians:

Despite more consumer-friendly funeral insurance products entering the market in recent years, most policies have stepped premiums which increase as you get older. Funeral insurance sellers are also still engaged in aggressive selling techniques, such as offering a gift card for buying a policy.

These fundamental problems lead to high policy lapse rates. That is, consumers take out a policy and then cancel or the policy is cancelled by the insurer for non-payment of premiums. While this is not unusual, the very high lapse rates make selling funeral insurance very lucrative for insurance companies.

In 2014 the Australian Securities and Investments Commission (ASIC) reported there were nearly three quarters of a million Australians covered by funeral insurance with an average benefit amount of A$8,859. Given the findings of a 2017 report suggesting average cost of a moderate “full service” funeral is around A$6,000, it appears many Australians are over-insuring.

Wonder what will Michael Sandel say to something like funeral insurance?

Rise of cryptocurrencies could curb America’s financial power

April 5, 2018

Profs. Nicholas Ross Smith  (University of Nottingham) and Zbigniew Dumieński (University of Auckland) in this piece:

In economic terms, the replacement of the US dollar with some kind of a decentralised digital currency would obviously reduce the influence that the US’s financial institutions have on the global political economy. It would also drastically increase its costs of borrowing. This would make the US’s currently heavily indebted position untenable, removing any relative advantage it currently has.

The flow-on effects of this, from an international power perspective, would be that the US would lose some of its ability to exercise effective economic statecraft – such as sanctions, embargoes and freezing of assets.

Also, over time, the US’s prestige of being considered the unequivocal global financial leader would diminish. It would therefore lose some of its insulation from the process of broader decline as other powers rise.

So even if there is a collapse in cryptocurrency (nearing one), we atleast have ways to think about curbing US financial clout:

Paradoxically, given how it could hinder US power, the US is actually among the fastest adopters of cryptocurrencies to date. Despite some strong federal-level resistance, some US states have made it legal to pay taxes in cryptocurrencies.

Its tech hub, Silicon Valley, is also home to many of the important ongoing advances related to cryptocurrencies, making the US something of an unwitting epicentre of the current revolution.

Of course, cryptocurrencies are not without their problems. Many have grown into massive speculative bubbles that are extremely sensitive. Recently, based on fears of a looming ban on adverts by Google, the value of all the world’s cryptocurrencies dropped by more than US$60 billion in a day.

But, as commodities expert Dominic Frisby points out, even if a collapse happens, the usefulness of the technology pioneered by the cryptocurrency boom will remain. Consequently, cryptocurrencies, in some shape or form, are here to stay. And because of this, their potential subversiveness to US power will remain.

It is surprising how few people get this aspect of cryptocurrency. I agree these are highly volatile and do not have all the characteristics of traditional money. But they provide hope from the government and central bank abuse of monetary powers..


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