* Posts by Tim Worstal

975 posts • joined 12 Feb 2008

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Tim Worstall: Metals, mining and my heavyweight book

Tim Worstal
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Re: Would like to come but ...

I'm told that there will be video. So you will get to see my impression of Magnus Pyke on speed (not a good impression mind....)

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Tim Worstal
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And for completeness, the technical word for such mining is "feltching" and one who mines in that manner is a "feltcher". Amazing what you can learn by reading histories about the love life of our Own Dear King, Eddie VII.

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Tim Worstal
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Re: This book going to be on Kindle?

Yep, be coming out on Kindle at a reasonable price. $6.99 probably, whatever that becomes in sterling. £4 or so? There will be an alert here to let you know when it's available. Around and about the week of the talk....

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Tim Worstal
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Made oi laff, but then I am fully in touch with my inner child.

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EU parliament pushes for Dodd-Frank style conflict mineral laws

Tim Worstal
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Re: Ask Tim

Several times in fact. Haven't seen the version they did vote for here. Wouldn't surprise me if it was the worst and most expensive.

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Well YES, Silicon Valley VCs do think you're a CRETIN

Tim Worstal
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Re: Re This whole discussion

Err, what?

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Tim Worstal
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Re: Confession

I wouldn't...no one else has :0)

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So why the hell do we bail banks out?

Tim Worstal
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Re: @Tim

Well, without limited liability there'd be no shareholders. Everyone would be a partner (there is actually one bank still without limited liability. But it's necessarily small sa it can't get capital from hundreds of thousands of people). Investment banks, up to the 1980s, were in fact such partnerships. Goldman still was until, umm, late 90s, mid 00s?

Without said limited bit having a stake in a bank would be like being a Lloyds name in the 70s and 80s. And people have learnt that lesson, unlimited liability when it's not actually you running the risks.....

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Tim Worstal
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Re: But uncle Tim, I want to hear them pigs squeak!

I can't recall which bank did this (maybe Credit Suisse?) but a bloody good idea. When bonus time came around everyone's bonuses were paid in those securitised mortgage loans that had fucked up big time.

Did rather concentrate minds.....

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Tim Worstal
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Re: Why not nationalise all the banks?

"It's like it's ALWAYS better for private industry to run things than the public sector unless the public sector in question is somebody else's."

Well, yes, that fits quite neatly into my explanation. The French politicians couldn't give a rat's arse about the British unions, capitalists, politics, voters and so on. Because none of them have any influence over whether a French politician gets elected or not. So, a state run company from outside the polity under discussion might well be able to run a company on efficiency lines.

The end result of this is that the French should run the British trains and the Brits the French ones. Odd, but a logical end stage of the argument.....

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Tim Worstal
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Re: And the Perpetrators

The loons and moths thing was to refer more to the Positive Money, Anne Pettifor wing rather than anything else. Perhaps also the Austrians calling for 100% reserve banking.

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Tim Worstal
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Re: So many wrong ideas to make it sound we can do nothing

Well, yes, except in the S&L thing real crimes were committed. You know, stealin' 'n'stuff.

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Tim Worstal
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Re: Why not nationalise all the banks?

It is, in theory, possible for a public sector company to be as efficient (and even, in theory, more) as a private sector one. That isn't, generally, how it works out though.

I've always rather liked the left wing argument about why British Leyland etc failed. Because the management was crap. Well, OK, so I'm not sure I believe that but let's accept it. That means that you're saying that public sector companies end up with crap management. Which could be one reason why they don't do so well.

Another argument often heard is that public sector companies are able to take optimal, not merely profitable, decisions. An example often given was that there's public benefits, public goods, from water and sewage supply. Thus government should run them because only government would provide the larger, optimal, level of investment rather than merely the profitable one.

Which is OK as an argument. Except reality: when the water companies were privatised the investment rate went way, waaaay, up. Because under government control they'd been deliberately underinvesting in order to keep public borrowing down.

But the real argument is that public sector companies are going to be run by politics and politicians. The concerns of politics and politicians don't notably include efficiency. Making sure that my political friends get their share (whether Tories with capitalists or Labour with unions etc) comes rather higher up (err, lower down?) that Maslow's Pyramid for a politician. So, public companies are run for political reasons, not efficiency reasons.

Please do note that this entirely allows such political running of companies to be "better" if that's the way you want to describe it. Fairer, more democratic, whatever. It's just that they're most unlikely to be as efficient given that efficiency isn't the driving concern in how they're run.

There's also an entirely different line of argument. Which is that a monopoly, whether private or public, will be equally inefficient. That it's competition that drives efficiency. And there's no point at all in turning a public monopoly into a private one (and if you do you're going to have to be very careful indeed with regulation, like water, a natural monopoly for an area, or the Grid). Here the argument isn't that the private monopoly will work better, but that if you've got a public company "competing" in a market then the competition is at a disadvantage simply because they don't have that state support. Thus you want to chuck everyone into the private sector so that you do in fact have proper competition.

TL:DR version: public companies could compete but practical experience tells us they don't.

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Tim Worstal
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Re: Why not nationalise all the banks?

You've noted that most of the public utilities are in fact in private hands? In the UK they most certainly are.....

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Tim Worstal
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Re: Wrong question

About a third of new French morgages are variable rate. About 0.5% (with current rates this low, that's a lot) cheaper.

I was a bit too strict above. A free market will provide fixed rate, it'll just be more expensive than variable rate. Someone, somewhere, has to take the risk of rates changing in general and if it's the bank they'll charge more.

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Tim Worstal
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Re: Wrong question

Fixed rate loans have never been a feature of the British market. In the US, only exist because of Freddie and Fannie. 25 year fixed rate just isn't something an unadorned market will provide. Waaaay too much risk in it for the lender.

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Tim Worstal
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Re: @Tim

Trading while insolvent's an interesting one. Because the audotirs of a couple of the banks did go to the BoE.

"Excuse me, but we think that if you're not going to provide liquidity support then the bank might be insolvent. And we'd need to provide a note to the accounts stating that."

"If you add such a note to the accounts then the bank will be insolvent. So, yes, we will provide liquidity support."

No note to the accounts because not insolvent because liquidity support promised.

True story dat.

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Tim Worstal
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Re: Lehmans

UK Lehmann, yes, illiquid not insolvent. But US? Not so sure.....

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Tim Worstal
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Re: Fractional reserve

50% is way too high. 6, 7% is enough. People jsut don't turn up demanding all their cash that often.

Speculation? This is the "ring fencing" that everyone is talking about. Can't use retail deposit money to finance investment banking.

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Tim Worstal
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Re: Longer Term Impact

The proper answer is that it has. Without it we'd have had deflation, we haven't, it's worked. But let me come back to this as a full piece in a couple of weeks.

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Tim Worstal
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Re: Longer Term Impact

In the provision of liquidity two things:

1) The amounts provided aren't the sort of amounts that would impact upon future inflation. Just not economically significant at that level. It's that the central bank can, theoretically, print any amount that is important (and one eurozone problem is that the central banks cannot, only the ECB can). Further, when the liquidity crisis is over, the banks hand the cash back, reclaim their security and the central bank cancels the new money. So, no permanent increase in money supply.

2) QE is a bit different. M4 is the money supply that matters for inflation reasons. This includes all bank credit created by the banks. There's usually a decent link to M1 (base money or cash) and M2 (M1 plus central bank deposits by banks) and that connection is V, the velocity of the circulation of money. Normally reasonably static is V. But it drops horribly in a recession brought on by financial panic or crash. So, QE creates vast new amounts of M1 and or M2, but it doesn't make all that much difference to M4. Or, rather, given that V has fallen, it stops M4 shrinking and us then getting deflation. And this is why to do QE rather than anything else. Because it's reversible (at least in theory). So, as V rises to more normal levels we can draw that M1 back out of the system (by selling off the bonds bought with it) and cancel it thus preventing V's rise from setting off a massive boom in M4 and inflation.

All of that's not quite right in proper technical terms but it's a reasonable trot through the logic of it all.

An awful lot of people don't like QE but has been a remarkably successful policy. UK and US would have been more like Spain and Portugal (but not as bad as Greece) without it.

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Tim Worstal
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Re: And the Perpetrators

Re both of the above comments (sorry, top two)

Because being venal, stupid, lax, greedy, incompetent, misguided and plain flat out wrong simply aren't crimes.

Thankfully, or I'd be in a hell of a lot of trouble.

A great deal more sympathy with the idea that rather more should have been fired. But criminal proceedings? What was there being done that was actually criminal? By the laws as they were at that time which is the only way you can charge someone with anything?

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Tim Worstal
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Re: Maybe another reason?

We have the deposit insurance. Up to €100k, part of being in the EU. Similar in the US. And the banks (and thus us, the depositors) do get charged for this at about market rates. The bank levy isn't charged upon deposis that are covered by this scheme either: it's made very clear the difference.

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Reddit: Gonna SCRUB these TROLLS right outa my hair

Tim Worstal
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"Sounds like a reasonable policy. But beware the repeated use of "safe" and "safety" - here used as in the loony lexicon of US campus madness - where "safe" means "safe from being exposed to new ideas, facts or anything outside my comfort zone". Urgh."

Yeah, don't forget this is being brought in by Ellen Pao. You know, the lady who sued the VC firm because they were sexist and didn't promote her. And then lost the case on all and every count? Pao that is, not the VCs?

It's going to veer a lot closer to that university definition than it does to actual incitement to violence, that's fer sure.

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All hail Mad Frankie Maude, noble Lord of Cabinet Office Axemen

Tim Worstal
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I know one person who was a likely Labour peer this time around if they'd won. That alone was worth seeing them lose....

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Why Joe Hockey's Oz tax proposals only get five out of 10

Tim Worstal
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Re: Err... Worstall missed the plot (as usual)

Well, that sorta works in the US tax system but it most certainly don't in Dear Old Blighty. Because we don't have the adjusted basis (nor the step up) for inheritance tax.

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Tim Worstal
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Re: I so want Tim Worstall . .

As it happens, as to spoken accents, we're not that different. Indeterminate English BBC I suppose....there's a couple of bits of me around on iPlayer and NPR if you're really, really interested (or entirely bored of real life).

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Tim Worstal
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"A mining company based in Australia selling ore mined in Australia to China would normally mean that the sale took place in Australia and will be taxed as such. How does one come to the conclusion that the Chinese get to tax it?"

On exactly the same basis that Joe Hockey is arguing that something designed by Americans in America, built by Chinese in China (an iPhone for example) should have the profit taxed where it is sold in Oz.

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Tim Worstal
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Re: Err... Worstall missed the plot (as usual)

" In order for the share value to go up the money does not need to be repatriated."

That's what I said. If the money is to be paid as a dividend then it gets taxed. Even if it doesn't, and the stock price rises, then the stockholder still pays CGT when they sell the share.

"We might argue that they'll never bring the money back onshore, but this means that the capital value of the company increases. So when shareholders sell stock (the only way they can cash in, as dividends aren't being paid from those profits not repatriated), then they'll pay income or capital gains tax on that increase in value."

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Tim Worstal
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Re: Politicians don't do delayed gratification

Well, yes, quite.

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So what would the economic effect of leaving the EU be?

Tim Worstal
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Re: Will Tim nail his colours to the mast...

Short answer: No

Long answer: No way.

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Tim Worstal
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Re: "how stupid will British economic policy be if it does leave the EU?"

OK, that's one for the little list then.

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Tim Worstal
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Human rights aren't EU

The Human Rights Act, the European Court of Human Rights, this is nothing to do with the EU. Or at best, something only partially. They actually come from the Council of Europe (which is not the same thing as the European Council).

You must be in the Council of Europe to be in the EU but everyone in Europe other than Belarus is in the Council of Europe. That's why there are judges from Russia, Azeribaijan and so on who rule at the ECHR on your human rights in Blighty.

Leaving the EU doesn't change those rights one iota.

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The BIG stretch: Software and flexing your firm's size

Tim Worstal
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Re: Other software, other bounds moved?

Obviously only part of the story. But then that's true of any economic policy, theory or even analogy. The world's a complicated place and we can only explain certain aspects of it with any one policy, theory or analogy.

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Facebook echo chamber: Or, the British media and the election

Tim Worstal
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Re: @AC (the fucking idiot) @fruitoftheloon

And, err, was there actually a deficit in 1997? I seem to recall that if there was it was pretty small. Or was it even a surplus? Certainly it was nothing like 30%.

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Hey! Want a FREE TOASTER that makes BITCOIN? What? You DO?

Tim Worstal
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Well, yes, but in politics everyone already knows you're being economical with the actualite.

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HP lifts lid on Autonomy lawsuit claims, but Lynch cries BOLLOCKS

Tim Worstal
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There's no one at all in The City who ever really believed Autonomy's accounts. Nothing specific, just a whiff to them.

And HP's bankers would have known this.

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Australia cracks tech giants' tax dodge code

Tim Worstal
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The essential concept of corporation tax is that it is paid where the value is added. Not, not at all, where the goods are sold.

So, Oz can come up with new ideas, sure, but only by changing the basis upon which everyone's working with corporation tax.

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Why OH WHY is economics so bleedin' awful, then?

Tim Worstal
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Re: Plenty of outsiders predicted the crash

"To this day, the very idea of sub-prime lending baffles me. That no one took a bullet for it baffles me more."

Does the concept of insurance baffle you? At core it's no different: the pooling of risks.

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Tim Worstal
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Re: Greg Mankiw

"Perhaps choosing Mankiw as an example of economics views shared by a large majority of economists"

You did note that this is not a list of what Mankiw believes economists believe, but a result of a survey conducted by someone else of economists, then reported by Mankiw?

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Tim Worstal
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I was one of only two UK press reviewers of his first book, Undercover Economist. That first chapter on coffee shops and Ricardo on rent is the best pop explanation of it that you'll find. He sold 1.5 million copies of the book last I heard, moved on to wondrous things at the FT and BBC.

I am, of course, having vastly more fun here at El Reg. No. Really.

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Tim Worstal
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Re: Greg Mankiw

"In 2011 Mr. Mankiw's students at Harvard walked out of his economics class because they were fed up with his heavily biased way of teaching economics."

We've a certain amount of proof that students at Harvard aren't quite as bright as they like to think they are. That protest took place in the first semester of the introductory course. They complained that they were not being taught Keynes. Keynes is macroeconomics. A brief glance at the syllabus will show that macroeconomics is taught in the second semester of the Harvard introductory economics course.

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Tim Worstal
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Re: Nobel prize?

If you look back at my stuff here at El Reg you will be able to see that I've made that point several times. I don't keep repeating it because as a joke it has something of a limited lifespan./.....

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Tim Worstal
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Re: Sitting Ducks

There's nothing at all that says that comparative advantage has to be innate. We're all still better off if someone manufactures it.

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Free markets aren't rubbish – in fact, they solve our rubbish woes

Tim Worstal
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Re: We could have dedicated networks of rag-and-bone men

Here in Czechia we've actually got a local mayor who refuses to set up a recycling scheme. Teplice? Most, somewhere nearby here. He, most politically incorrectly, simply notes that there's a sizeable gypsy population and they do it all for us without anyone having to pay council tax.

Not entirely sure about the ethics of that but it does have to be said that it works.

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So how should we tax these BASTARD COMPANIES, then?

Tim Worstal
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Re: @Tim Worstall - "The things that actually seem to work in making the poor richer."

6.88, -6.82.

Well out there beyond Friedman and verging on Randian (but not, not an Objectivist).

"But that does, of course, still depend on people actually *having* jobs which a) haven't been "globalised" to some other part of the world "

But as above, trade doesn't change the number of jobs in a country. Just doesn't.

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Tim Worstal
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Re: Individual taxes

Yes, that is what is meant.

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Tim Worstal
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Re: Individual taxes

True, but we do execute companies. Called bankruptcy.

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Tim Worstal
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Re: Fair Tax?

In most places dividends are taxed as income.

There's two ways to do this. Tax the corporate profits in the company and then the dividends are tax free. Or, don't tax at the company level the profits that are paid out as dividends but do tax the dividends at the full income tax rate.

UK and US have hybrid systems. UK: dividends taxed in the company before distribution. But then we assume that, on the personal income tax return, they have already paid basic rate income tax. Only higher rate taxpayers then pay more income tax on their dividends.

US: Corporate income tax of 35% paid on profits that will be paid out as dividends (and those foreign profits, which haven't paid that tax, can't be used to pay dividends). The special rate of 20% (? Now? Changed recently) paid in income tax on those dividends by the recipients. The combination of the two is higher than the 39% top income tax rate.

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Apple BIGGER than the U.S. ECONOMY? Or Australia? Or ... Luxembourg?

Tim Worstal
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Re: US GDP

Strangely enough, no, that's not quite how it works.

We don't know how they're handling their sales in China yet, we'll need the dull annual report to see that probably.

"Apple takes US consumer's money and sends a small fraction of it to China to make the thing, an even smaller fraction to Cambridge for an ARM license and sticks the rest of it in Apple's offshore tax haven."

That's true for everything they sell outside the US (maybe China, we don't know). But it's not true for the US. They don';t take those foreign profits into the US, this is true. But the ones they make in the US they don't stick in foreign. They cough up the tax just like good little boys. They are, after all, the largest corporate income tax payers in the US. The rest they then pay out as dividends and stock buybacks.

They've also been very clear that whatever games they play in Ireland and Bermuda they don't play them with US sourced profits. That just gets booked like they're a simple US corporation, pays tax and then gets sent off to shareholders. Their US profits really do recycle around the US economy.

So, your statement is true of the UK consumers money, the German consumers money, but not of the US consumers.

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