Posts by Ossi

The secret of Warren Buffett's success at Berkshire Hathaway

Re: Money, it's a crime...

"A bank issuing a mortgage loan does not borrow the amount it lends out from someplace else. It lends this money as a multiple of an existing capital base. Hence the term "bank capitalization". A bank's capitalization determines how much - in Fractional Reserve Lending - a bank can lend."

Sorry, but you've misunderstood. As I explained above, banks can only lend what they borrow - they're balance sheets have to - you won't be surprised to hear - balance. If they take a deposit of £100, and keep a reserve of 10%, then they can lend £90, and that's all:

asset (the loan and reserve) = liability (the deposit) = £100.

The creation of money, as I tried to explain above, comes about as a result of the interaction of the bank and the wider economy.

Re: Money, it's a crime...

"That's true, with full reserve a bank couldn't make a single mortgage at all. Because it would only be able to lend out money on the terms that money was lent to it. Given that no one at all makes 30 year deposits in banks then a bank would never be able to offer a 30 year mortgage."

@ST - This is a very important point, and one that should interest you. In 'the bubble' banks were offloading assets (and liabilities) into the securities market so they were, in effect, acting as intermediaries rather than as traditional banks - they effectively were just passing the money from the securities market to the mortgage borrower. A full reserve banking system, which you're a proponent of, would almost enforce that role on the banks - or some other intermediary - as banks' ability to originate loans would be severely curtailed. Are you sure that's what you want?

Really, if you want to take aim anywhere take aim at the securities market, not the banks. I think you'll find that the problems were largely there.

Re: Money, it's a crime...

Thanks Tim for saving me the effort.

Re: Money, it's a crime...

Fractional reserve banking is a much misunderstood idea. It is, in a sense, a 'licence to print money', but it doesn't enrich banks, or anyone for that matter. Money, at the end of the day, is just tokens that you pass around. Briefly, the idea behind fractional reserve banking is that banks only hold back in their vaults a proportion of their deposits as they don't expect to pay out all their deposits at the same time (if they did, that would be a run on the bank and that would be the end of the bank). Imagine, for simplicity, an economy where there is only a bank and one person, and all money is held as bank deposits.

We start with person A, who has £100 - so there's £100 in the economy. She puts the money in the bank, the bank keeps, say 10% as a reserve, and it can now lend £90. It lends £90 to her and that's deposited in the bank, so there's now £190 in the economy. The bank lends £81 of that etc.

Now, one important thing to realise is that the bank has not created free money - it has to pay interest on all that money deposited. The other important thing to realise is that the bank itself has not made the money - the interaction between the bank and the economy has made the money. My model had to have 2 actors in to work. The depositors are playing an equal part to the bank. Note that net assets in the economy are still £100, and that belongs to the person, not the bank.

Finally, both the bank and the economy have not in any sense been enriched. The assets in the economy have remained the same. The output of bread, hammers or whatever in the economy is the same. To see this, imagine a prison where cigarettes are used as currency. If there was a sudden influx of cigarettes, the prices would all go up but there wouldn't be more stuff to buy and sell in the prison 'economy'. The economy wouldn't be 'better off'.

This is why governments need monetary policy to control prices - they don't have direct control of the money supply, but they do need to control it.

Forget 1,000 lashes for Facebook posts, Saudis now want to behead blogger Raif Badawi

Re: Women driving

Nice theory, but unemployment in the UK is lower than in Germany:

Unemployment in Germany: 6.5%

Unemployment in UK: 5.7%

I don't have figures for Muslims alone. Perhaps you would like to point me to where you got those from? However, it would be wrong to say that it's not a problem in Germany:

http://www.euro-islam.info/country-profiles/germany/

The proportion of Muslims in each population is approximately the same.

It might have more to do with the fact that Germany's Muslims have a largely Turkish heritage whilst the UK's have a South Asian one i.e. it has more to do with the culture of the Muslims than the host country. That would seem not entirely unlikely to me.

By the way, is there a kind of Godwin's law for blaming Thatcher?

Re: Reproachless

It's not an 'either...or', it's a 'both...and'. Criticise corruption, despotism, inequality, and injustice wherever it is. Why confine yourself to one place? Does the rest of humanity not matter?

C'mon! Greece isn't really bust and it can pay its debts

"The statement that "low interest rates screwed Ireland" seems to be one of those shortcuts. I thought it was Ireland taking advantage of those low interest rates without any thought of the future that screwed them."

I think you're rather anthropomorphising a complex system there. It seems that by 'Ireland' you mean the Irish economy, which you can't credit with consciousness. It's odd to try to blame it. The reaction of the Irish economy to low interest rates was simply exactly how any economy would react.

If by 'Ireland' you mean the Irish government, then I think you'll find that it was fiscally responsible during this period and ran a surplus.

He's baaack: Microsoft's axeman Nadella to give Chinese staff the chop

Nokia had started to make Android products, and wanted to sell its phone division. Microsoft really didn't have any choice.

The biggest problem with Microsoft's phone strategy is that they were far too late to market. That's a constant with Microsoft. When Microsoft do finally enter a market they get obsessed with a 'strategy' (to the exclusion of, you know, what the customer actually wants). The irony is that they're clearly a company with no forward-looking strategy or sense of direction at all.

Don't pay for the BBC? Then no Doctor Who for you, I'm afraid

Re: We should pay for TV we dont want

"Er, this is kind of how public service and taxation works (for tax is what the license fee is).

See also:

Roads

Railways

The NHS

Schools

etc etc."

So your argument is that we pay for roads out of general taxation; therefore we should pay for a broadcaster out of it? Am I missing something here?

Didn't the Left once want the WORKERS to get all the dosh?

Re: Captialism got rid of Racism!!

Erm, the 'spade' was clearly allegorical in both the above posts. He wasn't actually claiming that 'the' capitalist had invented it.

Surprised you missed that.

Re: Captialism got rid of Racism!!

"The problem is that the Capitalist uses their financial power to exploit the workers who are more important to the creation of wealth than those who simply move money around."

I always find this 'the boss is an evil exploiter' talk curious. At what point do they become evil exploiters? When they've got a market stall and hire an assistant? When they've got a shop and they've got ten workers? When they get their second shop? Is there an 'evil boss' induction ceremony they have to attend?

Do you really think dividing the world into good guys and bad guys is a good way to understand it? Do you really think it's that simple?

Re: Free markets or competitive markets?

"The author seems to ignore the Marxist policies of today"

In what sense has he 'ignored' them? In the sense that he hasn't discussed every single economic policy of government?

Virgin Media to splurge BEELLIONS on UK network infrastructure expansion

Too late

I live in a part of London with high density expensive new housing. It sounds like an ISP's delight. However, all those brand new blocks had direct (and very long) lines to the exchange. No cabinet meant no FTTC. Broadband speeds were pathetic. Low hanging fruit for a company like Virgin, which had adjacent networks, doubly so when you consider they closed down an analogue network here, so presumably still have some infrastructure.

So what did they do with an area full of well-off people crushed together in a small space and desperate for decent broadband and with no effective competition? I'll tell you what - nothing. Other operators have moved in now and it's too late - the freeholders wouldn't let them in the building now. Idiots.

It's not easy being Green. But WHY insist we knit our own ties?

Re: Let me get this right:

@Neil Barnes

Time is a scarce resource, so its value is never zero. In order to spend your time on one thing (and isn't it interesting that we can 'spend', 'save' and 'buy' time?) you have to give up another thing. There's a cost to using time. There's no revealed monetary value because there's no transaction, but that's the only reason.

In fact, we do put monetary value on our free time all the time. A simple example is when people choose to hire cleaners. I hear the objection that you might simply not like cleaning - but that is, in fact, the point: you value the time spent not cleaning higher than the cost of the cleaner.

I wonder how many parents here decided to look after their own children rather than send them to a nursery and go to work? That's what the article's getting at.

Re: Yeah well...

Tim is not saying you shouldn't do your own plumbing. That's the retort.

"A large assumption there. Want me to point it out to you? That only occurs if the benefit from that increased efficiency is shared equally among those contributing to that gain. But since the world now has 1% of the population claiming 50% of its wealth, it's pretty evident such benefit is not being equally distributed.

And thus, you've glossed over the greatest failing of modern capitalism."

It doesn't 'only occur' if there is an equal distribution - that's just simple maths.

Aside from that, it's naive to think any system will produce an equal distribution of wealth or income (note, they are not the same thing). It's a flaw of capitalism for sure, but one shared with every possible alternative.

Re: So, in other words...

"Because commentards know how to fix computers ourselves we are poorer as a result. We should take them into PC World who would sell us another one and we would be richer.

Is that right?"

You know how to fix your computer. Good for you. But lots of people don't - if everyone decided to fix their own computer, then they'd all have to first learn to fix their computer. Most people find that it's a better use of their limited resources in terms of time and money to send it to PCWorld. That's Tim's point.

Let me make this clear - Tim's point is not that doing anything for yourself outside your working hours makes you poorer. Fix your own computer. Bake your own bread. Fill your boots. But that's not what the article is about.

"The problem is that large scale production pushes the supplier towards evil."

It really isn't unambiguously the case that small enterprises have a greater incentive to produce 'trusted' goods. Consider an airline with one aircraft. It may skimp on safety so every time it flies it has a 1% chance of crashing. It may be some time before that plane crashes. If a large airline with 400 aircraft took the same attitude its aircraft would be falling out of the sky constantly.

Skin colour's irrelevant. Just hire competent folk on their merits, FFS

Re: How to accurately measure diversity?

"While not relevant to every medical issue, your ethnic background predisposes you to certain conditions. Knowing which conditions a patient has a genetic predisposition to can be extremely important in making sure you get diagnosed and treated quickly and effectively."

I appreciate that, and I can see how it would be useful. Curious then that the form wasn't designed for that purpose, and it seems that separate clinical data are kept:

http://www.england.nhs.uk/iscg/wp-content/uploads/sites/4/2014/06/20140625_SCCI_Item_7_SCCI5566_SoN_2011_

Ethnic_Category_Coding_DSCN112008.pdf

[join 2 parts together]

Re: How to accurately measure diversity?

"Yes WHITE treatment fast and good.

NOT WHITE not so fast or so good."

Very good - painting the whole NHS as racist.

Re: How to accurately measure diversity?

Have you noticed every time you go to hospital, before any medical professional has seen you, you have to fill in the damn diversity form? This happened to me even when I was covered in blood after one of the good burghers of leafy Walthamstow had decided to administer a beer bottle to the back of my head. It completely defeats me how this information is useful. Are they going to demand more injured Chinese or something? How much money is spent on collecting this information and could, possibly, the NHS have better things to spend it on?

If the data are really useful (if), then do some sampling occasionally.

Basic minimum income is a BRILLIANT idea. Small problem: it doesn't work as planned

Thanks Tim. Really nice thought-provoking article.

Never going to happen, of course. There's no way that politicians will be be able to resist the temptation to take away from one group and/or give to another.

SamSUNK! Korean giant's electronics biz takes punch to the smartphone profits

A few pointers Samsung:

1. People do care about how their phones look. Make an effort.

2. Stop putting duplicates of Google services on the phones. It fills them with them crud and, let's face it,the Galaxy app store etc. are just never going to happen. Give in.

3. At least give an impression that you support your old models, and get your updates out in a timely manner.

4. You've got falling market share, and yet somehow you've convinced yourselves that you've got the market power to push people into Samsung-only ecosystems. You really haven't.

Phones are pretty much commodity items these days, so you just have to do the basics really well.

Have I missed anything?

Uber isn't limited by the taxi market: It's limited by the Electronic Thumb market

Re: Economy

@Lysenko

"Mathematics? (2 + 2 = <some value>). It doesn't matter what I want or need (2 + 2) to evaluate to, it IS "4" whether I like it or not (and trust me, I have frequently wished I could bend arithmetic to be what I want it to be)."

You're obviously confused by words having more than one meaning:

Value (noun)

(1) Relative worth, merit or importance

(2) Magnitude; quantity; number represented by a figure, symbol, or the like

Re: Economy

@Lysenko

Let's talk common sense. Nothing has a value unless someone wants or needs it. This is not an idea unique to economics. What other determinant of value could you possibly have?

Economists don't attempt to magic up a value for something - they wait until there's a trade. The person buying then reveals, by how much they're willing to spend, how much they want or need something. Money is proxy measure for this - you'll pay more for things you want more. The value is determined by how much somebody wants or needs something - their 'psychology', if you want to use those terms. The value is measurable in the price.

If no one wanted or needed cancer research then its value would be zero. It turns out, as you've pointed out, that we do want and need it. Economists don't decide what the value of things are - people do.

Re: Economy

@ Yet Another etc. If a trade takes place, then value has been created. A seller will sell only at or above the cost of inputs. A buyer will only buy at or below the value she places on a good or service. Both buyer and seller benefit from a trade otherwise, in free market, they will decide not to carry out the trade. Common sense really, but I think you appreciated that in your post.

What, I hear you say, about all those taxi drivers losing out? Yes, they'll lose, but the gain to consumers will be greater. It's difficult to explain why without drawing graphs, but consider the ad absurdum situation of regulations saying that there can only be 10 taxis in a city. It might be easier then to imagine how the profits of the few are easily outweighed by the lost benefit of the many. The same argument holds with larger but restricted numbers of taxis. The maximum value is not realised until the total number of taxis is such that the very cheapest taxi meets the very meanest consumer, so to speak. All value has then been rung out of the system.

That's not to say that regulation is a bad thing or Uber is a good thing, just that the economics are on Uber's side. There are other extremely good reasons for regulating taxis.

Re: Economy

"But we've already established in previous discussion here that economics is not yet, and may never be, a science. Economists talk about wealth depending how it advances their arguments..."

They've got a single and very clear definition of wealth, and it's pretty much the same as everybody else's: the total value of a person's net assets.

"One might make the point, for example, that 'wealth' in the end comes down to how many megajoules one is able to command"

There were economies before there were megajoules. And if you think that's pedantic, consider this: Da Vinci might use the same amount of 'energy' producing a painting as Rolf Harris, but Da Vinci will produce a lot more value.

So let's talk about value. Everything an economy produces is ultimately satisfying human beings in some respect: someone (or some organisation) somewhere will only pay for something if they want or need it - money is a proxy for the amount of "satisfying" something does: you would be willing to pay more for something you really enjoy than something you rather enjoy. Thus, the value of something ultimately is related to how much "satisfaction" it creates. That's why Mr Da Vinci's work creates more value than Mr Harris's.

Re: Economy

"So you're nearly right. The economy is limited by the resources available to us on this planet. One day, no matter how careful we are here with our resources on earth, we'll have to go off and mine some asteroids, etc."

Not quite. The "size" of the economy (and Worstall, probably for didactic reasons, plays fast and loose with the term 'wealth' in this article) is its output, i.e. the value of goods and services produced in a year. This is found simply by multiplying the number of people by how much each person produces (and this, remember, is largely services these days). Thus, the limiting factors are the number of people, and how much value each person produces (known as productivity). Productivity has been increasing for at least 200 years. You don't need more resources to increase productivity necessarily - you need cleverer ways of doing things. We've been finding those for 200 years, and Uber's a clear example of this. Indeed, getting more out of less is the very definition of productivity.

Those resources you're worried about are not leaving the planet. They're still here. We're using up the energy, sure, but we already have replacements for that.

Take a look at the second graph on this page (http://wilcoxen.maxwell.insightworks.com/pages/804.html) which shows energy intensity (i.e. the amount of energy used per unit of GDP) in good 'ol gaz-guzzling 'merica as an example of how more output can be got from fewer resources.

That's not to say there won't eventually be a limit - there might be - but I confidently predict the limit will be our ingenuity, not natural resources. Or, to put it another way, the limiting resource will be humans.

This is not an anti-green message, just the way things are. There are other perfectly good arguments for looking after our planet and avoiding waste.

Is Windows RT not invited to the Windows 10 upgrade party?

Re: RT seems pointless now

Bugger - my comment was aimed at a reply (the 'total dog' comment), not the original comment. I have a cheap Windows tablet and it's perfectly usable, and very useful.

Re: RT seems pointless now

You've never tried one, obviously.

Saudi govt pauses flogging dad-of-3 for Facebook posts – after docs intervene

Let's examine your argument shall we? First of all, does the fact that a government is "democratic" mean that you have to agree with what it does? The answer, I think, is no. Popular support for that government is beside the point.

Can you take action against a government, no matter how democratic, that you disagree with? Yes you can. It's up to you, for example, who you decide to trade with. They have the same right with regards to your government.

Despite your assertions, I don't think people are calling for the overthrow of the Saudi government over this, they're just wondering why nations that claim to defend human rights don't do so in this case.

'It's NOT FAIR!' yell RICH KIDS ... and that's a GOOD THING

Not if you only claim that your conclusions apply to this group.

Re: Experimental design

What's the problem with changing 2? It's the interpretation of the results that matter - this demonstrates that the results coming from the rich kids of America are not generalisable in other situations. If you then want to discover if it's the poor or the non-market bit that is important, you need to do further investigation.

BILL GATES DRINKS 'boiled and treated' POO. Ah, 'delicious'

I'd be happy to buy him a coffee if he can't afford one.

No Santa, no Irish boozers and no regrets: life in Qatar

Re: That stadium...

Come come now.

Feds finger Norks in Sony hack, Obama asks: HOW DO YOU SOLVE A PROBLEM LIKE KOREA?

Re: Unconvincing

What evidence, specifically, would you like?

European Commish asks for rivals' moans about Booking.com

What's wrong with middlemen? Why shouldn't they get paid for their services? As a number of people here point out, you could just contact the hotel directly, but people still choose to use them, so they must be providing a useful service.

The parity clause is not obviously anticompetitive. If hotels were able to charge less on their own site, they would always have an incentive to do so. Once word got round that this was happening booking.com (and all other comparison sites) would be finished, as people would looking for a hotel on the comparison site, and then go to the hotel site to book. Having no comparison sites is not good for competition or choice.

However, it would be better if there were competition amongst comparison sites. Hotels should be able to offer different deals to different comparison sites (which would likely simply reflect the different charges - they wouldn't have any other incentive to offer different prices). In other words, booking.com's proposed solution seems like a fair one.

Deprivation Britain: 1930s all over again? Codswallop!

Re: Spot on

Well if there was any sleight of hand there (and there wasn't) it would mean that the increase in income was understated as it would make the dollar number look larger in 1935. That wouldn't really serve the purposes of the writer.

REVEALED: Titsup flight plan mainframe borks UK air traffic control

Can I just say what a nicely written report that was - objective, informative and concise. The best report about this incident that I've read. Nice work.

Re: MP

"WTF? The Transport Secretary would prefer everything just carried on as normal during a major systems failure?"

I don't think he said that, did he? I think he'd prefer it that the system didn't go down in the first place. Wouldn't you? Sure, it's not the cleverest or calmest of responses, I'll grant you. But it's probably better not to over-react to an over-reaction.

Web daddy Sir Tim Berners-Lee: Back off Putin, I'm no CIA stooge

Re: And Putin is a

A statement being one-sided is not evidence it is wrong. I've found the statements about CIA torture from various UK news agencies particularly one-sided since the report was published. I find physicist' statements about gravity one-sided.

It's interesting how you easily dismiss 'lots of articles from various UK news agencies' when you they don't suit your narrative, whilst accepting the torture report completely readily. Dismissing or downplaying evidence that you dislike whilst accepting and exaggerating the importance of evidence that you do sounds a lot like bias to me.

Re: New layout

Yeah. People don't like change. That's how UKIP happens.

Re: And Putin is a

I balance probabilities - it's the best we can all do. As you seem to have some strong opinions, presumably you're gaining information from some propaganda and agenda-free source. On what basis have you decided that the sources I'm looking at are propaganda, whilst the sources you're looking at are not?

Re: And Putin is a

It's difficult to tell whether it's lunacy or calculation, but in this case I rather fancy it's calculation. Putin is aware of the paranoia of the Russian people (amply encouraged by his propaganda). He's seeking to exploit that.

It's worth reflecting on that. Those who are the most paranoid are those who are, ironically, most easily exploited. Critical thinking is good. Paranoia and overreaction are not.