There was talk about renaming the Krugman thread for this purpose, but that seems to be going nowhere. Besides which, I feel the Krugman thread should be left to discuss Krugman while this thread can be used for more general economic discussion.
Discuss:
- The merits of competing theories.
- The role of the government in managing the economy.
- The causes of and solutions to our current economic woes.
- Comparisons between the economic systems of different countries.
- Theoretical and existing alternatives to our current market system.
edited 17th Dec '12 10:58:52 AM by Topazan
Lost in Space
![[up]](https://static.tvtropes.org/pmwiki/pub/smiles/arrow_up.png "[up]"){kind=icon}
Until everyone's using it, then the price of bitcoin is determined almost entirely by that program and nobody has a comparative advantage.
It seems like Tesco's house of cards is toppling.
HGW XX/7
House of cards seems an interesting term to use. Care to elaborate?
Schild und Schwert der Partei
V
Shopping has changed in Britain — people now shop little and often, and are careful with money. Tesco, with their large supermarkets, have got the wrong model.
edited 23rd Oct '14 5:01:49 AM by Greenmantle
Keep Rolling On
Lost in Space
It seems to me that Tesco has been pulling all kinds of shenanigans in an attempt to keep its profit margins up amid a challenging retail environment, and those deals have been getting progressively shadier in a Sunk Cost Fallacy progression. The trouble is that such things, when they unravel, unravel quickly and catastrophically.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
"House of cards" is an English expression that basically means that your whole business, ideology, or whatever, is built on very flimsy standing. That if only a small amount of your façade is exposed, if only one or two tricks are exposed, the whole thing looks like it will fall apart.
Re: Bitcoins - I agree. I meant I'd like to use the program before it catches on, which of course is impossible. It would be fun to watch libertarian dreams implode, however. I want to see gold crash.
edited 23rd Oct '14 6:13:11 AM by BonsaiForest
HGW XX/7
I know what house of cards means. I was asking Fighteer why he used it in connection with Tesco.
—
Tesco's shady practices are very well-known, but on the other hand I don't really see how they would contribute to the company's instability. I think it's more to do with the competition they face from cheaper alternatives like Asda, Lidl, and Aldi taking their poorer customers, with the simultaneous way in which their brand is becoming toxic for wealthier customers, who are migrating towards Marks & Spencer, Waitrose, and Sainsbury's.
Schild und Schwert der Partei
Lost in Space
It's possible that I used the metaphor incorrectly. It does seem like a snowballing crisis for them, though, with each new revelation further damaging the brand.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Interesting things about internet vampire porn.
Now that I've got all of your attention...
The article's actually about one company. Mindgeek, that has begun quietly drawing more and more of the Internet's porn industry into its tentacles (That Came Out Wrong), to the point where they own both the porn studios and the major distribution channels (which, as I understand it, usually connect to the same material with a slightly different front end, thus giving the illusion of being different sites). Funny thing is, the big money is in the ads on the *tube sites and not on legit porn sales (because only Mindgeek makes money off the pirate videos), with the end result being that they can intimidate the porn studios (due to their ownership) into not pressing them over piracy, and can afford to respond to takedown requests with the kind of scorn that even Youtube would flinch at. Slate refers to this as a "vampiric ecosystem" where Mindgeek can use its monopoly power to suck all the money out of the business directly into its own pocketbook.
When a company is making ad money off of piracy of its own stuff, it might be time for antitrust men to take a look at it. ...not that way.
(I probably should be able to discuss the subject without this much snickering, but it's too much fun.)
edited 23rd Oct '14 3:21:29 PM by Ramidel
Lost in Space
Well it's hardly any surprise to me that all the "free" porn hubs recycle the same material through different interfaces. I've recognized that for years. What's hard for me to figure out is where the actual money in the industry comes from, if they're just selling ads that they themselves purchase.
I suppose the paid sites are also under their control?
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Fuck you, Fascist sympathizers
Plenty of people are willing to pay for porn, at the end of the day. Being addictive in a certain context means that there are folks compelled to get past those paywalls.
The ad money comes from outside sources as I understand it. You know, like Youtube.
Low Down Payments Are Coming Back
On Monday, Federal Housing Finance Agency Director Mel Watt announced that mortgage-finance companies Fannie Mae and Freddie Mac would start backing loans with down payments as low as 3%.
And on Tuesday, three federal agencies approved a loosened set of mortgage-lending rules, removing a requirement for a 20% down payment for a class of high-quality loan known as a “qualified residential mortgage.”
Loans with little to no down payment were a common feature of the lax lending practices that were prevalent during the housing market’s bubble years.
...
“We shouldn’t obsess about down payments,” said Julia Gordon, director of housing policy at the liberal Center for American Progress. “Research confirms that low- down-payment loans to lower-wealth borrowers perform very well if the mortgages are well-underwritten, safe and sustainable.”
It’s imperative for policymakers to figure out how to do safe low-down-payment lending, Ms. Gordon said, because the majority of new home buyers in coming years will be minorities from lower-wealth backgrounds who “lack access to the Bank of Mom and Dad.”
Borrowers with low down payments do default in higher numbers than similar borrowers with higher down payments, said Mark Zandi, chief economist at Moody’s Analytics. That’s because homeowners with plenty of equity in their homes who fall into financial trouble can sell their houses rather than fall into foreclosure.
Lost in Space
It's risky, but I wouldn't call it a looming disaster. The loans that triggered the 2006 meltdown were subprime ARMs with low teaser rates designed to encourage rapid turnover of homes. You buy, wait for the price to go up 20%, then sell six months later.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
It's probably mostly just the administration trying to keep the economy from dipping too bad, if I had to wager a guess.
Copyright and Creativity: Evidence from Italian Operas
edited 24th Oct '14 9:03:04 AM by PotatoesRock
Visiting from the Hoag Galaxy
That thing about copyright is pretty interesting. It implies that the adoption of copyright forced people to come up with new, or at least sufficiently different, material instead of just ripping each other off.
Not Three Laws compliant.
@Potato: Stagnating wages are part of that, too.
@ Copyright, yeah. It makes sense, when forced to make your own stuff, stuff gets inventive. However, it does seem to make clear being allowed to hold onto your new idea forever isn't really that useful at a societal level.
Are the largest banks too big to manage?
In his conclusion, the warning was direct and explicit:
"...if those of you here today as stewards of these large financial institutions do not do your part in pushing forcefully for change across the industry, then bad behavior will undoubtedly persist. If that were to occur, the inevitable conclusion will be reached that your firms are too big and complex to manage effectively. In that case, financial stability concerns would dictate that your firms need to be dramatically downsized and simplified so they can be managed effectively. It is up to you to address this cultural and ethical challenge."
How can the needed change be accomplished? Dudley suggested several steps banks can take to bring about the needed corrections in behavior. After documenting the "ongoing occurrences of serious professional misbehavior, ethical lapses and compliance failures at financial institutions," he stressed that change must begin with the firms' leadership. The leaders must set the proper tone within the firms and set standards for proper behavior that are strictly enforced.
...
If a substantial portion of managers' compensation at large financial firms is deferred for many years — because it takes time to uncover and establish accountability for this type of behavior — and if the deferred compensation is at risk if wrongdoing is detected, then managers will have a strong incentive to root out and stop behavior that might put these "too big to fail" firms at risk.
...
Regulators have been reluctant to break up big banks in the past out of fear that it might undercut their ability to finance very large projects and hurt their competitiveness in international markets. And given that this behavior is so pervasive and has endured for so long, regulators haven't been as tough as they could be in stopping it.
Lost in Space
Are the banks too big to manage? Yes. Next question. 
Seriously, though, they have grown so large that they are no longer accountable in any real sense to their customers; they dominate the market through sheer inertia.
Krugman touched on this topic today by looking at the disconnect between profit and investment at major firms. He hypothesizes that this reflects monopoly power driving profits rather than innovation.
edited 24th Oct '14 12:23:33 PM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Lost in Space
Notes on Easy Money and Inequality.
In summary, there is a body of detractors who are advancing the argument that quantitative easing is harming consumers by placing more money in the hands of the wealthy and holding down interest rates on savings, thereby punishing "thrifty middle-class Americans". In other words, the Fed's actions are hurting Granny's retirement income.
Krugman shows concrete evidence (seriously, what is so hard about doing your goddamn research before you open your yap and sound like an idiot?) that this is false: that even among the 75-89.9th percentile, interest and dividends make up less than 2 percent of income. Further, there is no obvious causal relationship between monetary policy and housing/stock prices.
So if you hear people talking about how Yellen and the Fed are robbing thrifty grandmothers of their savings, they haven't done their homework.
edited 25th Oct '14 7:32:23 AM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
I can't find the site, but I saw something online showing the leverage of (ie debt) of the 5 biggest banks is 10 times the WORLDS GDP. Too big to fail indeed.
Fuck you, Fascist sympathizers
If the difference is between giving money to the bankers and the investors, we're rather fucked. Both are badly overpaid (or in investors' case, over-rewarded)
What would happen if the 5 biggest banks were partitioned?
edited 26th Oct '14 7:04:07 AM by Quag15
Strongly-worded begging from poor, impoverished bank executives about how they have to cut down on the gold-plating on their private jets, imperiling the jobs of hundreds of gold-workers?
Tesco chairman to quit over profits error
Tesco now says that profits in the first half of the year were overstated by £263m. That is an increase from last month's initial estimate of £250m. Tesco also reported a sharp fall in sales and profits for the first half of its financial year.
Accountancy firm Deloitte has completed an investigation into Tesco's misreported profits. It found that profits were overstated by £118m in the first half of this year, by £70m in the 2013-2014 financial year and by £75m before that.
Tesco had been doing deals with suppliers over promotions, which is commonplace for supermarkets, but it appears Tesco had been booking returns from those promotions too early, while pushing back the costs. Eight executives have been suspended since that practice was revealed. Tesco said there was no evidence of fraud or personal gain from the mis-statement. Deloitte's report is being passed to the Financial Conduct Authority (FCA) and other regulators.
Meanwhile, Tesco's trading performance continues to deteriorate. Like-for-like sales, which strip out new stores, fell 4.6% in the first half of the year and pre-tax profit slumped to £112m, down more than 90%note on the same period in the previous year. That profit number includes several one-off items, including an adjustment related to the overstated profit. Underlying profit before tax was £783m, down almost 47% on the previous year, and a little less than analysts were expecting.
Tesco shares fell more than 6% in early trading in London.