Friday, November 30, 2012

NYT US Tax infographic

Via: NYT

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Gold [infographic[

Via; Reuters

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Friday Links




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Thursday, November 29, 2012

Bangladesh and their garments[infographic]

Via: Reuters

 

 

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Quick note on the US debt ceiling

“Currently the Treasury is just $81 billion from the $16.394 trillion debt ceiling limit. This limit is expected to be reached in the next two weeks. After that the Treasury will run down its cash balances and ‘borrow’ from government trust funds and pension funds. This should allow the government to fund itself through February. As a side note, if a private sector company funds itself by running down cash balances and raiding trust and pension funds, everyone goes to jail. When the government does it, it is considered sophisticated asset/liability public sector management.” Jim Bianco, November 28, 2012

Via: BR

 

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Thursday Links



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Wednesday, November 28, 2012

Wednesday Links


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A lesson from Roman History

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Last week I posted about the history of the Drachma and Greece. 
Thought it would be interesting to share the history of the Roman empire and its currency. The following is an excerpt from a speech by Joseph R. Peden given in 2009.
Scholars have devoted a great deal of energy to examining the problem of how the Roman Empire lasted so long? And did it decline, or was it simply transformed into something else?
Monetary policy always serves, even if it serves badly, the perceived needs of the rulers of the state. If it also happens to enhance the prosperity and progress of the masses of the people, that is a secondary benefit; but its first aim is to serve the needs of the rulers, not the ruled.
To look at the mentality of the Roman emperors, we can look just at the advice that the Emperor Septimius Severus gave to his two sons, Caracalla and Geta. This is supposed to be his final words to his heirs. He said, "live in harmony; enrich the troops; ignore everyone else."
Carcalla He took that so seriously to heart that his mother remonstrated with him and urged him to be more moderate and to restrain his increasing military expenditures and burdensome new taxes. He responded by saying there was no longer any revenue, just or unjust, to be found. But not to worry, "for as long as we have this," he insisted, pointing to his sword, "we shall not run short of money."
His sense of priorities was made more explicit when he remarked, "nobody should have any money but I, so that I may bestow it upon the soldiers." And he was as good as his word. He raised the pay of the soldiers by 50 percent, and to achieve this he doubled the inheritance taxes paid by Roman citizens.
He then went further by proceeding to debase the coinage. The basic coinage of the Roman Empire to this time — we're speaking now about 211 AD — was the silver denarius introduced by Augustus at about 95 percent silver at the end of the 1st century BC. The denarius continued for the better part of two centuries as the basic medium of exchange in the empire.
But the real crisis came after Caracalla, between 258 and 275, in a period of intense civil war and foreign invasions. The emperors simply abandoned, for all practical purposes, a silver coinage. By 268 there was only 0.5 percent silver in the denarius.
The next emperor who interfered with the coinage in a meaningful way was Constantine, the first Christian emperor of Rome. In the year 312, which is also the year he issued the Edict of Toleration for Christianity, Constantine issued a new gold piece, which he called by a new name, the solidus — solid gold. This was struck at 72 to the pound, so it was in fact debased more than Diocletian's.
Now, one of the things that had happened in the course of this 3rd-century inflation was that the government found that when it paid its troops in token coinage, or even in debased silver coins, prices immediately rose. Every time the silver value of the denarius dropped, prices naturally rose.
The result was that the government, in order to try to protect its civil servants and its soldiers from the effects of inflation, began to demand payment of taxes in kind and in services rather than in coin. They wound up, in effect, repudiating their own issued coins, not accepting them for tax collection purposes.
What were the causes of this inflation? First of all, war. The soldiers' pay rose from 225 denarii during the time of Augustus to 300 denarii in the time of Domitian, about a hundred years later. A century after Domitian, in the time of Septimius, it had gone from 300 to 500 denarii; and in the time of Caracalla, about 10 years later, it had gone to 750 denarii. In other words, the cost of the army was also rising in terms of the coinage; so, as the coinage became more worthless, the cost of the army had to be increased.
The advance in the soldiers' pay in the rest of the 3rd century and into the 4th century is not known; we don't have figures. One reason is that the soldiers were increasingly paid in terms of requisitions of supplies and goods in kind. They were literally given food, clothing, shelter, and other commodities in lieu of pay. This applied also to the civil service.
Except in emergencies, which were usually related to war, the Roman government generally followed a policy of free trade and minimal restriction on the economic activities of its population. But now under the pressure of this need to pay the troops and under the pressure of inflation, the liberty of the people began to be seriously eroded — and very rapidly.
So the government solved that problem by simply passing a law that any taxes that decurions[tax collectors] could not collect from others, they would have to pay out of their own pockets. That's known as the incentive method for the tax collector.
As you can well imagine, as the crises became greater and the economy was disrupted by civil conflicts and invasions and the effects of inflation, the decurions, strangely enough, no longer wanted to be decurions.
What we have here is a kind of nationalization of private enterprises, and this nationalization means that the people who use their money and their talent are now compelled to serve the state whether they like it or not.
When people tried to get out of this they were then, by law, compelled to remain in the occupation that they were in. In other words, you couldn't change your job or your business.
This was not sufficient because, after all, death is a relief from taxes. So the occupations were now made hereditary. When you died, your son had to take up your profession. If your father was a shoemaker, you had to be a shoemaker.
For years, the well-disciplined Roman army held the barbarians of Germany back. Then in the third century A. D. the Roman soldiers were pulled back from the Rhine-Danube frontier to fight civil war in Italy. This left the Roman border open to attack. Gradually Germanic hunters and herders from the north began to overtake Roman lands in Greece and Gaul (later France). Then in 476 A. D. the Germanic general Odacer or Odovacar overthrew the last of the Roman Emperors, Augustulus Romulus. From then on the western part of the Empire was ruled by Germanic chieftain. Roads and bridges were left in disrepair and fields left untilled. Pirates and bandits made travel unsafe. Cities could not be maintained without goods from the farms, trade and business began to disappear.
Now, perhaps we should try and find some lessons in this tale of the monetary policies of the late Roman Empire. The first lesson, I think, must be that if war is the health of the state, as Randolph Bourne said, it is poison to a stable and sound money. The Roman monetary crisis therefore was closely connected with the Roman military problem.
Another lesson is that problems become solvable when a ruler decides that something can be done and must be done.
In the light of the above lesson in history, its worth nothing that perhaps if European leaders can solve their identity crisis and come to a conclusion on their debt issues, their problems can become solvable as well. But then again, the following statements will tell you that they still have a long way to go:
“Spain is not Greece” – Elena Salgado, Spanish Finance Minister, February 2010
“Portugal is not Greece” – The Economist, April 2010
“Greece is not Ireland” – George Papaconstantinou, Greek Finance Minister, November 2010
“Spain is neither Ireland nor Portugal” – Elena Salgado, Spanish Finance Minister, Nov. 2010
“Ireland is not in ‘Greek Territory’” – Irish Finance Minister Brian Lenihan, November 2010
“Neither Spain nor Portugal is Ireland” – Angel Gurria, Secretary-General OECD, Nov. 2010
“Italy is not Spain” – Ed Parker, Fitch MD, June 12, 2012
“Spain is not Uganda” – Spanish PM Mariano Rajoy, June 2012
“Uganda does not want to be Spain” – Ugandan foreign minister, June 13, 2012
Sources/further reading:
Ludwig von Mises
Counterargument to above
Cato
John Mauldin
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Shale Gas: What the frack[video]

Even though I'm a big believer of the US shale gas revolution, fracking might have some downsides as well. Watch this short documentary to see what I mean:



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Tuesday, November 27, 2012

IB Revenue[infographic]

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Change on a paper napkin

Carl Richard proposes the following truth around change…Incredibly simple, but true.

Via: NYT

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Futures in literature from the past

Future from the past
via: FD
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Tuesday Links

Entrepreneurshit |  Botherside of table
Food: Bone Marrow's Peculiar Appeal - Newsweek and The Daily Beast http://bit.ly/YnjIqh
The Patent Problem | Wired Opinion | Wired.com http://bit.ly/UDF3uu
An ancient civilization's wet ascent, dry demise | Humans | Science News http://bit.ly/VWpdXd
MO ALI and what we can learn about investing from his comeback TTMYGH
HP and Autonomy: Conflicting accounts | The Economist http://bit.ly/YnlCXJ
UBS’s rogue trader: Collective responsibility | The Economist http://bit.ly/YnlF5Y

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Sunday, November 25, 2012

Socrates on Happiness[video]

I never used to believe in studying philosophy, but this video changed my mind. Philosophers were thinkers and asked some of the most interesting questions about life and our existence.
Socrates was executed for his non-conformist views on life and his disbelief in the 'gods'. Perhaps there was method to this madness. Or as he said - 'An unexplained life isn't really worth living for'. 


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Friday, November 23, 2012

Which One Are You?

 

via the New Yorker

 

 

 

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Thursday, November 22, 2012

Black Friday Shopping[infographic]

Via: Reuters

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Dream Jobs[infographic]

Via: LNKD

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Thursday Links




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Tuesday, November 20, 2012

FW: Sex Sells JGBs

This is one of those so bizarre you wonder if its real things:

Apparently, according to this Bloomberg article – Women Prefer Men Holding State Bonds, Japan Ad Says — yes, it is:

Japanese women are seeking men who invest in government bonds, according to an advertisement being run by the Ministry of Finance.

"I want my future husband to be diligent about money," a 27-year-old woman says in an ad being run in free magazines promoting a fixed-rate, three-year note that Japan started selling last week. "Playboys are no good." She's one of five women featured in the page, which says "Men who hold JGBs are popular with women!!"

"Men that own government bonds are popular with the ladies!"

Source: Liberty Blitzkrieg via Zero Hedge,  and Hat tip Jim Bianco

 

Yes, its a slow holiday week . . .


View article...

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A brief history of the Drachma

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In 1827, when the modern Greek State was created, money transactions were carried out mainly in Turkish coins, as well as in foreign currencies such as the Spanish Distilo. There was no Greek currency until 1828.
A national monetary system, based on silver, was established for the first time in 1828. This silver standard prevailed until 1832. In 1831, the currency’s convertibility into silver was suspended, and paper money was created to finance the budget deficits.
In May 1832, Otto’s monarchy succeeded democracy. Nine months later, in February 1833, bimetallism was introduced as the new monetary standard, and Otto’s Drachma was launched as the new legal tender. This was a silver currency. It weighed 4.029 grams of pure silver and was put into circulation in denominations of 0.5, 1 and 5 drachmas. In order to facilitate transactions, given the limited amount of drachmas in circulation,foreign currencies were allowed by law to circulate freely in the domestic money market.
However, the majority of these were tarnished, with a face value much higher than their
market value. As a result, Greek silver and gold coins quickly out-flowed since holders of foreign debased coins exchanged them for drachmas, which they then melted to obtain the precious metal. Thus, the drachma soon became an “ideal currency” that was used as “an accounting unit for foreign currencies and things of value”.
Growth in Greece was slow during those times due to lack of private investment capital. The first and second Independence loans contracted in Great Britain were greeted as a successful instigation of economic alliances with Western Europe, hence, an international recognition of the Struggle for Independence and of the fledgling Greek State.
However, these loans were not used for the purpose for which they had been intended, i.e. the furtherance and expansion of the Struggle for Independence. The first loan (472,000 pounds sterling) financed the civil wars of the years 1824-25, whereas the second loan (1.1 million pounds sterling) was squandered almost in its entirety abroad, either in England and America for the purchase of canons and the building of battleships – which never arrived in Greece.
Greece’s inability to repay the Independence loans destroyed the country’s reputation
as a borrower and deprived her of the European capital markets for a long period of time. The lack of money resources for the organization of the fledgling State’s domestic administration, the restoration of public safety, and the development of agriculture and commerce, created an urgent need for a new foreign loan.
However, this loan was also wasted in unproductive expenditures, such as the expenses of the Regency and the maintenance of a costly and unnecessary Bavarian army.
Overspending and over-borrowing precipitated a national bankruptcy in 1893. An English financial specialist, Edward Law, helped to save the drachma from huge depreciation and his labours kept the currency intact for 50 years. It was not until the late 1940s, after almost a decade of war and civil war, that the drachma again inflated with a vengeance. Inflation during World War II was dramatic in the extreme. In January 1941, 1 british pound was worth 1,200 drachma. By October 1944 that had spiralled to 1,219 billion drachmas. As in other countries, it required basketfuls of flimsy notes with a lot of zeros on them to buy basic provisions. A currency reform introduced a new drachma which was worth 50 billion of the old variety but nevertheless inflation continued.
Greece joined the Bretton Woods system in 1953. In 1954 the drachma was revalued for a second time at a rate of 1000 to 1 and the Finance Minister, Spyros Markezinis, dealt with the problem Alexander-fashion by chopping off three zeros. The new currency was pegged at 30 drachmae = 1 US dollar
In 1973, the Bretton Woods System was abolished and over the next 25 years the official exchange rate gradually declined due to growing urbanization and EU-fueled prosperity. Renewed inflation resulted in the exchange rate reaching 400 GRD = 1 USD and the situation was brought under control only in 1997, thanks to determined supply-side policies by the Government.
This brings us to today when most of you are probably familiar with what happened during the 2000's and the establishment of the Maastricht Treaty the Euro.
The current demise of the Greek economy is surprisingly repetitive in a historical context, or as Twain once said-"History doesn't repeat itself, but it sure does rhyme".
Sources / Further reading:
Bank of Greece
Bloomberg Echoes
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Tuesday Links


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Monday, November 19, 2012

FW: Foreign Holders of US Treasuries

Treasuries' Foreign Buying Doubles China's $123 Billion Cut

Source: Treasury data, Bloomberg

 

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Global Gay marriage laws[chart]

 

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Why I don't read fiction

I spend a lot of time on the subway, but actually kind of like it because it forces me to open and close my work hours with some reading. There’s lots of people who take transit actually. Usually in the mornings I see people talk to their friends, catch up on some shut eye, listen to music and of course I see women fixing their makeup(I’ll refrain from making judgments on whether this is appropriate or not). I’m usually one of the few who has a my tablet whipped out and as always, reading through my never ending stack of journalism and research on investing, business, economics, science, politics, profiles etc.

People often ask me why I don’t read fiction? Now that being said, I used to love fiction as a child, and my parents used to buy me lots of books and read to me as well; my favorite fiction book is still ’20,000 leagues under the sea’, but when people ask me that question, I usually flip the question back at them, and typically find the answer to be the same-‘to get away from reality and enter a world where anything could happen.’

I’ve always found it to be the case that fiction readers are the ones who tend to be disappointed with their lives and try to get away to a world they wish they could have been part of. I never read fiction because I always feel that I’m not learning anything, but perhaps that’s not my true motivation. Maybe I’ll never find out the true answer to that question, but it’s definitely something to think about.

 Why are you reading fiction?

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Monday Links




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Saturday, November 17, 2012

Saturday Links

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Friday, November 16, 2012

Brain size and diet[chart]

Via: popsci

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Friday Links




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Thursday, November 15, 2012

Stunning interactive tour of the glalaxy

Galaxy

via: FD

Sort of reminds me of this amazing video from Hitchens voice explaining how science saved his soul:
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Thursday Links



And a quick picture of the day from National Geographic:
Picture of zebras sparring, Masai Mara, Kenya
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Timeline of David Patraeus[infographic]

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Wednesday, November 14, 2012

Work-life Balance

Sad but true reality of the world today…

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Wednesday Links




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