DJ Kentaro

Tonight I am going to see DJ Kentaro, one of the gods of the turntables.

Seth Godin blows me away every single time

Seth Godin at Gel 2006 from Gel Conference on Vimeo.

Predictably Irrational

Interview with Dan Ariely, Behavioural Economist from Duke University and author of Predictably Irrational.

How to deal with toxic assets? It depends on the next election date.

Dirk Nitzsche of City University Cass Business School makes an interesting point when interviwed on BBC World Business Report on April 21.

In Germany and in the UK:

• A bank can set up a fully owned subsidiary "bad bank" where it can move its toxic or illiquid assets.
• The bank has to pay what's effectively an insurance premium to the government, which underwrites the value of the assets in the bad bank.
• The government may have to pay the for value of the toxic assets that it has underwitten, but only if the bank "makes a claim" for the insurance it has bought from the government.
• The government has to pay nothing until the "claim" is made, which could be years from now.

In the US things are very different and more straightforward: The government, via a public-private partnership, is spending money to buy the toxic assets right now.

Question: Why are the German and British systems so convoluted and the American system so much simpler?

Answer: In Germany and in the UK there will be elections in less then one year. The system of "insurance" for toxic assets moves the government expenditure to after the election date. Or, in other words, off the balance sheet of the current government.

This is obviously not a problem in the States, where presidential elections are due in four years.

It's ironic that the German and the British government are themselves using financial wizardry to take care of their own interest first and of the economy second.

Open Source Book: 97 Things Every Software Architect Should Know

This is an open source book. It's available online, and can be also ordered in the school paper form Amazon.

I must thank Ed for the pointer.

More pay controls

More on pay controls, this time at the lower end of the scale.

Business leaders have called for a minimum wage freeze as part of measures to help private industry drive the economy out of recession.

Firms urge minimum wage freeze, BBC, 19 April 2009

Any half-decent introductory economics textbook explains that a minimum wage is at best useless and almost always bad for the emplyment and for the economy.

Dispite this, the general public, unions, and politicians want it.

Although desirable, I don't think it's politically feasible to remove the minimum wage completely. But let's hope that Alistair Darling at least does not increase it in the upcoming budget.

Cloud computing

I attended recently SPA 2009. There were some discussions and one birds-of-a-feather (BoF) session on cloud computing.

FT digital business podcast has a series of three podcast on the topic. March 24, 31, and April 8.

Guess what: Pay controls don't work!

"Lloyds and RBS to offer loans as staff bonuses", FT, April 16 2009.

See previous post.

Yale economists on the financial crisis

John Geanakoplos, Robert Shiller, and Rick Levin on the financial crisis.