Wednesday, November 29, 2017

We need to restate productivity, real salaries, unemployment and GDP, to account for the many “working hours” spent consuming distractions.

In Bank of England’s “bankunderground" blog we recently read: “With the rise of smartphones in particular, the amount of stimuli competing for our attention throughout the day has exploded... we are more distracted than ever as a result of the battle for our attention. One study, for example, finds that we are distracted nearly 50% of the time.”

And on a recent visit to a major shop in the Washington area, thinking about it, I noticed that 8 out of the 11 attendants I saw were busy with some type of activity on their cellphones, and I seriously suspect they were not just checking inventories.

The impact of that on productivity, with less effective working time is being put into production, could be huge.

Also, going from for instance a 10% to a 50% distraction signifies de facto that full time or paid by the hour employee’s real salaries have increased fabulously.

And what about the real employment rate if we deduct the hours engaged in distractions? A statistical nightmare? Will we ever be able to compare apples with apples again?

And how should all these working hours consumed with distractions be considered in the GDP figures?

It behooves us to make certain how we measure the economy gets updated to reflect underlying realities. 

Perhaps then we are able to understand better the growing need for worthy and decent unemployments.

Perhaps then we are able to better understand the need for a Universal Basic Income, not as to allow some to stay in bed, but to allow everyone a better opportunity to reach up to whatever gainful employments might be left, like those “low-wage jobs” that it behooves us all, not to consider as “low value jobs”

PS. When you buy a web driven distraction you usually pay one amount… but your consumption of the distractions could be one hour per month or 300 hours per month, a difference that seems not to be considered anywhere.


Tuesday, November 28, 2017

Those bothering us and wasting our limited and valuable attention span on social media should not be able to do so at a zero marginal cost.

Those who on social media send us their advertisements, surely pay Google and Facebook the most, if we respond to their ads. In that sense all those players have a vested interest in targeting us as good as they can. 

But if they do not target us adequately, the marginal cost of that for them is zero.

And that is not good for us. That because we the ad-recipients have to pay the cost of using up too much of our limited attention span on ads, info and fake news we do not really need.

So therefore if all who we have not directly designated as friends, had to pay us something for contacting us on social media; like a one hundred of a $ cent, I am sure the Google and Facebook would be a bit more concerned about not wasting our time... and would then target us even better.

Nowadays they generously allow us to message them with an “I am not interested”. But, is that just not too late? We have already been bothered and since there are millions of vendors out there, I would hate to look forward to a future of having to waste years of my life sending “I am not interested” replies.

PS. Although sometimes we should not ignore it could be of much benefit to us to be targeted by something outside our comfort zone, so as to avoid incestuous intellectual degeneration.

PS. Potential Big Brothers’, redistribution profiteers plus ambulance chasers on web, are closing in on big tech and social media. Therefore it behooves Google and Facebook and similar, to team up with us who provide them all data, sharing advertising profits 50-50. I have some ideas about that

Sunday, November 19, 2017

Those absolutely no good at something, lack exactly the skill they need to know that they are no good at it. John Cleese dixit.

Monty Phyton’s John Cleese, fabulously interviewed at the Commonwealth Club by Adam Savage, the host of “Mythbusters”, and in reference to a theory by David Dunning, a professor at Cornell, says around minute 57:40 the following:

“In order to know how good you are at something requires almost exactly the same aptitude as it does to be good at that think in the first place.

Which follows, as a corollary, that if you absolutely no good at something, you lack exactly the skill that you need to know that you are no good at it.

And once you realize that, you see there are thousand of people out there that have absolutely no idea of what they are doing, and so they have absolutely no idea of that they have no idea what they’re doing.”

I wonder, could John Cleese by any chance be referring to those regulators who, when deciding on the risk weighted capital requirements for banks, assigned a meager 20% to those dangerously rated AAA, and a whopping 150% for those who rated below BB- have been made so innocous for the banking system?

Here some personal observations on those cuckoo risk weighted capital requirements for banks developed by the Basel Committee, for the world to use, God Help Us!

Saturday, November 18, 2017

Could this be a theme that for some strange reason TED Talks does not like me to talk about?

How long should we allow bank regulators, like the Basel Committee for Banking Supervision and the Financial Stability Board, to feed us their dangerous and hubris filled besserwisser bullshit?

How can any system that makes it easier for those who already have it easier to access bank credit, and harder for those who already find that harder be defined as a “fairer financial system”?

How can any system that risk weights with 20% the so dangerous AAA rated, and with 150% the so innocous below BB- rated, be defined as a system that fosters financial stability?

How can any regulator who does not care about the purpose of what he is regulating hold that he knows what he is doing? “A ship in harbor is safe, but that is not what ships are for”, John A Shedd

How can any regulator allowing banks to leverage their equity different with different assets and not understanding or caring about how that distorts the allocation of bank credit to the real economy, hold that he knows what he is doing?

How many more houses built because its financing is risk weighted 35%, will have its basements occupied by unemployed children, because the risk weight for unrated SMEs and entrepreneurs is 100%?

Friday, November 17, 2017

Is freezing at Christies US$ 450 million in purchasing capacity in Leonardo Da Vinci’s Salvator Mundi something good or something bad?

Clearly Leonardo da Vinci has to personally, from above, be extending his deepest gratitude to Janet Yellen of the Federal Reserve and Mario Draghi of the European Central Bank. Had it not been for their quantitative easing (QEs) and ultra low interest rates, he would never ever have seen his Salvator Mundi valued, so soon, at an incredible US$ 450 million.

Of course the wealth redistribution profiteers will scream bloody murder. The US$ 450 millions is like a voluntary tax that has escaped their franchise. 

The real question though is: Was the freezing of US$ 450 million in purchasing capacity in a painting (or in a storage room), like with a sort of voluntary tax, something good, or something bad. If bad how do you reverse it without other negative unexpected consequences?

But, for the time being, what is much more interesting is what are the vendors to do with US$ 450 millions in cash?

Saturday, November 11, 2017

Who nudged regulators into using stupid and dangerous risk-weighted capital requirements for banks? The bankers?

Banks not capable of perceiving risks correctly, or not adjusting to perceived risks correctly, with size of exposure and adequate risk-premiums, should fail as fast as possible.

Banks capable of perceiving risks correctly, and to adjust to these correctly with size of exposure and adequate risk-premiums, would in fact not need to hold any capital.

Unfortunately, since banks could belong to the first group, and there is also the risk of unexpected events that could affect even the best of banks, regulators need to require banks to hold some capital.

Curiously, unfortunately, bank regulators, with the Basel Accord of 1988 introduced risk weighted capital requirements. These spelled out more risk more capital, less risk less capital. 

Though at first sight that might all sound quite logical, in terms of searching for more financial stability it makes no sense whatsoever, as what’s perceived as risky poses by just that fact alone less danger to the banks. It is what is perceived as safe than can cause banks to create excessive exposures, which if these later turn out risky could put a whole bank system in danger. 

To top it up it the risk weighting translates into allowing banks to leverage differently different assets, thereby producing different risk adjusted returns on equity than what would have been the case in the absence of this regulations, and so it introduced a serious distortion in the allocation of bank credit that is affecting the real economy.

Who could have nudged regulators to do so? Since being able to earn the highest risk adjusted returns on equity on what is perceived as safe sounds like a wet dream come true for bankers, I have my suspicions.

PS. Here an aide-mémoire on the principal mistakes of risk weighted capital requirements