Tag Archives: economics

Bank Bailout, Italian Style

Posted on by
1

Italy has nationalized Monte dei Paschi di Siena, a major bank that otherwise would have gone into bankruptcy. In the process, the bank’s €26.8 billion ($32.5 billion) “nonperforming loans” will be “disposed of,” and the Italian government taxpayers will feed the bank €5.4 billion and get a 70% stake in the failing bank.

Under the bad loan disposal plan, €26.1 billion will be bundled and sold at 21% of gross book value, the vast majority to the government-organized Atlante II fund, while the bank retains 5%.

This is the third time Monte dei Paschi had gotten capital injections, and for some reason, the men of the Italian government thinks this third time will be the charm.  Of course, that’s an easy choice for them to make; it’s not their money being used in this risk.  It’s the Italian taxpayers’ money being cavalierly gambled.

No, instead the bank’s creditors and other investors should be the only ones on the hook; they’re the ones whose money is at stake, and they’re the ones whose management oversight was…absent.

The New Protectionism?

Posted on by
Reply

A deep cultural divide between the US and Europe in their approaches to Silicon Valley has thrust European officials into the role of global tech-industry cops.

Notice that.  The EU is looking to dictate to the world how other nations’ businesses must conduct themselves, whether in Europe or not.  This “thrust” is an economic matter, too, so the question arises concerning just how much culture actually plays—or is it an economic matter.  And since the economics of the thing is aimed at protecting EU companies, the underlying question comes clear: is the EU protecting against unfair practices, or is it just protecting its domestic businesses from competition, a competition EU companies lose because they can’t keep up—especially under the costs inflicted by, for instance, the EU’s own labor laws?

And this:

Just Friday, Germany approved new legislation imposing €50 million fines on social-media companies that fail to quickly remove hate speech and terrorist content—over strident opposition from and other tech companies, which advocate self-regulation to tackle those problems. That step followed the €2.42 billion ($2.76 billion) fine that the European Union’s executive arm levied this week against Alphabet Inc’s Google for abusing its dominance as a search engine.

The concept of “free” speech is dragged in through the EU’s and now Germany’s imposed limitations on that, which have economic opportunity implications far beyond the mere freedom question raised in that post.

The Republic of Korea is considering using this sort of thing nakedly for protectionism.

South Korea’s antitrust chief told the Yonhap News Agency he will examine how to curb the market clout of Google and Facebook.

No fair.  Those guys are competing too successfully.

My thought isn’t new.  Ex-President Barack Obama (D)

said the EU’s investigations into big US tech companies were “more commercially driven than anything else,” suggesting the EU was trying to help out European competitors.

It’s just becoming more obvious.

The Specialness of Snowflakes

Posted on by
Reply

The New York Times newsroom is going to walk out (as I write this) on Thursday because they don’t like the cutbacks in editors (an understandable concern, even if the newsroom denizens offered no alternative) and other personnel reductions the paper is being forced to make in an effort to reduce costs to a survivable level.  It’s their plaints, though, that drew my attention.  The copy editors group wrote a letter to Executive Editor Dean Baquet and Managing Editor Joseph Kahn in which they said in part,

You often speak about the importance of engaging readers, of valuing, investing, and giving a voice to readers. Dean and Joe: we are your readers, and you have turned your backs on us.

News flash, guys.  Baquet’s and Kahn’s readers, the NYT‘s readers, are the customers who pay around $325/yr for a subscription, or more than $500/yr for both print and online subscriptions.  You guys get paid to read your boss’ paper in order to make error corrections.

NYT reporters sent a letter to the same targets in solidarity with the copy editors.

Requiring them to dance for their supper sends a clear message to them, and to us, that the respect we have shown the Times will not be reciprocated.

Respect has to be earned, guys.  You have a legitimate beef regarding the lack of transparency in personnel moves your paper is making (another part of your letter), but respect has to be earned the same way any honest American earns it: through actual deeds.  You guys don’t get respect just because you think you’re special.  In particular, you utterly disrespect your readers—those paying customers—when you masquerade unsubstantiated rumors, which you amusingly attribute to “senior officials,” to sources who “are speaking anonymously because they’re not authorized to speak,” and the like, as fact.  And you do that while also carefully declining to corroborate those rumors with on-the-record remarks.

Question for you both—and for Baquet and Kahn—when y’all come back to work on Friday (today, as I post this): did anyone notice your absence?  Besides the janitors, I mean.  Folks like actual customers.

The Health Care Choice

Posted on by
Reply

The Wall Street Journal has the right of it, and it’s a stark one for the Republican Party and for us Americans.  The House and the Senate bills for getting rid of Obamacare and replacing it with something better are far from perfect, but they are significant improvements over the Obamacare assault on Americans’ access to health care, and on individual liberty and responsibility.  Further, the House plan has always been billed as the first part of a three-part effort at complete repeal and replacement; it’s never been claimed to be a final answer.  And the Senate bill on offer is not one, either.  Senate Republicans are well aware of this.

However, posturing Republican Senators from both the Conservative (or so they claim) and the middle regions of the party, no better than the openly kickback-demanding Progressive-Democrats of 2009 Congress infamy, are standing in the way of any progress at all.

Here’s the choice, then, with which these persons are faced: doing the deal and passing an improvement over the disaster that is Obamacare, with its growing loss of access even to health coverage plans, much less actual health care, and coming back next year for further improvement, or inflicting the continued failure of Obamacare on Americans foolish enough to have trusted these guys.

Here’s the collateral damage from failure that would be inevitable from making the wrong choice and the avoidance of which was a major motivation for electing Donald Trump: loss of control of the Senate to the Progressive-Democratic Party, and with that, loss of the Supreme Court for generations, if not permanently.  Justices Anthony Kennedy, Ruth Bader Ginsburg, and Stephen Breyer all are likely to retire in the next three years.  Justice Clarence Thomas may well, also.  The Progressive-Democrats will block conservative, textualist Justice nominations, for whom the Constitution actually matters as the supreme Law of the Land, and will get confirmed—one way or another—three (or four) Justices in the Ginsburg (“the Constitution is a living document that lives through judicial rulings rather than Art V”) or Thurgood Marshall (“I rule and let the law catch up”) mold.  This would be an even worse disaster to our Republic and to our liberty than continuance of Obamacare, which only threatens our fiscal weal.

Universal Basic Income

Posted on by
Reply

Emeritus Professor Richard Wallace, of Wofford College, is enamored of Mark Zuckerberg’s universal basic income proposal.

Here’s the quick and dirty of the thing, beginning with a quote from Wallace’s letter.

The strongest arguments for universal income center on its elimination of work disincentives by the unconditional nature of such grants.

Leave aside the fact that free money is its own disincentive to work. A UBI will only increase demand—all that seemingly added money with which to buy stuff from necessities to goodies—without increasing supply. The resulting price inflation will very quickly reduce the buying power of the UBI to the same level that the current poverty-ridden man possesses. A UBI will not make anyone better off.

On the other hand, it will make everyone, including the poverty-ridden man this is intended to help, worse off: the UBI will come out of the pockets of everyone in the form of current taxes, future taxes to pay the borrowings, and/or devalued dollars. This will reduce monies for investment and innovation, truncating economic growth and reducing economic mobility.  The latter will act to confine the poverty-ridden man to his poverty.