Sunday, May 16, 2010
New Pre-Paid Cellphone Plan
I have been a customer of Net10, a prepaid cell phone company that offers 10 cents a minute all the time, for nearly 5 years. I am not fond of contracts, don't need a fancy phone, don't need to use many minutes each month, and don't want to spend an extra $40 a month for the luxury of sending radio waves into my head. So, for this entire time, other pre-paid cell phone companies have been in existence with various calling rate plans, but if anyone did any research at all, they would find out that Net10 offered the best deal.
Now, Sprint is offering a new contender called Common Cents Mobile. They offer 7 cents a minute and per text message (Net10 offers 5 cents a text message), and they round minutes down! Who the hell else does that? They also offer some packages for those heavy texters ($20 a month for unlimited)
20% of all cell phone subscribers are now pre-paid users. Its about time we began to see some healthy competition. Free markets baby!
Now, Sprint is offering a new contender called Common Cents Mobile. They offer 7 cents a minute and per text message (Net10 offers 5 cents a text message), and they round minutes down! Who the hell else does that? They also offer some packages for those heavy texters ($20 a month for unlimited)
20% of all cell phone subscribers are now pre-paid users. Its about time we began to see some healthy competition. Free markets baby!
Wednesday, May 5, 2010
Greece's Excuse
Greece is the paragon of fiscal irresponsibility. They ran up debt that they couldn't afford and lied about it to the Euro Union and now it is time to pay the piper. With the requirement to fix the problem, taxes have been increased and entitlements cut. Now citizens are rioting in the streets and people have been killed. What a bunch of idiots. Gee, that's a constructive fix to the problem. Their country is about to default on its debt which will cause huge global ramifications and the only thing they are worried about is their handouts. I can see America following this same route in the not so distant future as more debt is run up and more taxes are pushed onto high earners to pay for it.
And just like in American, there is class warfare and they want the 'rich' to bail them out. During the protesting, they were chanting, "No more illusions, war against the rich." Why do so many people think that the 'rich' are the cause of their problems? How does entering a valued profession (i.e. it must be in high demand if it pays so highly) and then being responsible and saving a lot of that money for the future cause other people problems? The answer is simply that the 'rich' are scape goats (hey, scape goating worked for the Nazis). Those in a less fortunate position are jealous and are more numerous and therefore attempt to pass social policies that take more away from well off people to give to themselves. It's pure selfishness. But then again, those who want something for nothing are generally selfish people.
And just like in American, there is class warfare and they want the 'rich' to bail them out. During the protesting, they were chanting, "No more illusions, war against the rich." Why do so many people think that the 'rich' are the cause of their problems? How does entering a valued profession (i.e. it must be in high demand if it pays so highly) and then being responsible and saving a lot of that money for the future cause other people problems? The answer is simply that the 'rich' are scape goats (hey, scape goating worked for the Nazis). Those in a less fortunate position are jealous and are more numerous and therefore attempt to pass social policies that take more away from well off people to give to themselves. It's pure selfishness. But then again, those who want something for nothing are generally selfish people.
Sunday, May 2, 2010
Cheating in 2000 Olympics
So it took 10 years to figure out that the Chinese had cheated in the 2000 Olympics. I wrote an article a couple of years ago about the suspicions of Chinese gymnast cheating in the 2008 Olympics. So will we find out that they had cheated in 2018? It seems like a long wait.
The SEC hard at work
Doesn't it seem like that the SEC is two steps behind sometimes? Maybe it's because it's another inefficient government organization. Or maybe it's because some of the staffers they have there are serious porn addicts.
Saturday, May 1, 2010
Scape Goats
So previously, Greece was attacking everybody's favorite villains, Wall Street banks, for causing their debt problems. This is a very false assumption.
How do credit default swaps cause instability in Greece? Take a horse race analogy for example:
When you go to a horse track, you research the horses, you've seen how it has performed in the past, but more importantly, you compare relative performance. This horse may be good, but another horse may be better. However, when you place your bet on the third lane, your bet does not alter the performance of the horse in that lane! This is the same concept of credit default swaps.
From the book, Getting Started in Hedge Funds:
Still not convinced? Read Swaps Not Responsible for Crisis, Greece Is and CDS not cause of Greek debt woe. In this second article there is mention of AIG causing a problem with CDS contracts, but the difference is that they took the other side of the trade with other firms, as insurance policies (first person). CDS contracts on Greece debt are third-party deals. CDS spreads on Greece debt are just contract prices that firms must pay to enter into default protection and simply reflect how risky Greece bonds have become.
How do credit default swaps cause instability in Greece? Take a horse race analogy for example:
When you go to a horse track, you research the horses, you've seen how it has performed in the past, but more importantly, you compare relative performance. This horse may be good, but another horse may be better. However, when you place your bet on the third lane, your bet does not alter the performance of the horse in that lane! This is the same concept of credit default swaps.
From the book, Getting Started in Hedge Funds:
If these men and women were so powerful that they could control currencies and markets, wouldn’t they do so all the time so that they could always make money? No matter how much or how little money one has, no one likes to lose it. If the funds could truly control currencies or manipulate the markets, these massive losses would not have occurred.... The Economist magazine believes the reason hedge funds [and Wall Street Banks] catch flak for all of the world’s financial crises is ignorance.
Still not convinced? Read Swaps Not Responsible for Crisis, Greece Is and CDS not cause of Greek debt woe. In this second article there is mention of AIG causing a problem with CDS contracts, but the difference is that they took the other side of the trade with other firms, as insurance policies (first person). CDS contracts on Greece debt are third-party deals. CDS spreads on Greece debt are just contract prices that firms must pay to enter into default protection and simply reflect how risky Greece bonds have become.
Proportionate to Earnings
People treat wealth as a matter of fact, as if it is just a state of nature; you are born either a cat or a dog. They refer to the 'wealthy' as some privileged class as if those people took no action on their part to earn that status (I am not referring to the wealthy who were born wealthy, but those who get regarded as wealthy through the tax code - those earning high salaries). Consequently, the populist masses who are not in the same situation, despise these people. They want for them to pay higher taxes and complain that even the high progressive tax system of the US is not enough. It is obvious these populists want the 'elite' to earn the same salaries as them, even though it is likely their education, experience, position, and hard work to get there is the cause of this discrepancy in earnings.
America, once regarded as the land of opportunity, meant that if you wanted to have a better life, own a nice home, go on more vacations and have more toys, you could work to attain it. The system is not entirely defunct, but the treatment towards people who make it is viewed negatively and punished through the tax code. Those who have not achieved this elite status take comfort in their friends who are in the same situation and readily complain of those wealthy people who are taking advantage of them or have it so easy, how ever they justify such conclusions. If any of them defect and make it to a higher status, their old friends can no longer sympathize with them and secretly despise their new found status. It's like the old saying goes, misery loves company.
Populists complain that paying X amount of dollars for a product or tax is a higher percentage of their income and it is not fair that a 'wealthy' person pays the same amount and it is such a smaller percentage of their income. But obviously, isn't that the whole point of working hard to become 'wealthy'...? So that the relative cost of products or taxes is not as taxing on one's finances? These populists want to undermine the whole point of striving to earn more so that one can afford more. Otherwise, why bother getting a better paying career if the relative burden of things is going to stay the same?
Take downtown parking for example. I am not aware of a downtown city where it is not expensive to have the wonderful privilege of leaving one's car on the street. Populists will complain that it is unfair to them because only well off people can afford it. But there is only a limited number of spaces, and they have to be rationed somehow! The capitalist system is very efficient for problems like this, and the cities benefit greatly from those high parking fees. I would suspect their solution would be some sort of price discrimination, like everything else going back to the previous paragraph, but so far they have not offered a solution to the problem where costs would not be raised overall. As an aside, why encourage more auto use if there is already an over saturation? When some people cannot afford something, it encourages a cheaper option like mass transit.
For populists, the new American ideology is not about attaining a higher status, but about depressing the status of others.
America, once regarded as the land of opportunity, meant that if you wanted to have a better life, own a nice home, go on more vacations and have more toys, you could work to attain it. The system is not entirely defunct, but the treatment towards people who make it is viewed negatively and punished through the tax code. Those who have not achieved this elite status take comfort in their friends who are in the same situation and readily complain of those wealthy people who are taking advantage of them or have it so easy, how ever they justify such conclusions. If any of them defect and make it to a higher status, their old friends can no longer sympathize with them and secretly despise their new found status. It's like the old saying goes, misery loves company.
Populists complain that paying X amount of dollars for a product or tax is a higher percentage of their income and it is not fair that a 'wealthy' person pays the same amount and it is such a smaller percentage of their income. But obviously, isn't that the whole point of working hard to become 'wealthy'...? So that the relative cost of products or taxes is not as taxing on one's finances? These populists want to undermine the whole point of striving to earn more so that one can afford more. Otherwise, why bother getting a better paying career if the relative burden of things is going to stay the same?
Take downtown parking for example. I am not aware of a downtown city where it is not expensive to have the wonderful privilege of leaving one's car on the street. Populists will complain that it is unfair to them because only well off people can afford it. But there is only a limited number of spaces, and they have to be rationed somehow! The capitalist system is very efficient for problems like this, and the cities benefit greatly from those high parking fees. I would suspect their solution would be some sort of price discrimination, like everything else going back to the previous paragraph, but so far they have not offered a solution to the problem where costs would not be raised overall. As an aside, why encourage more auto use if there is already an over saturation? When some people cannot afford something, it encourages a cheaper option like mass transit.
For populists, the new American ideology is not about attaining a higher status, but about depressing the status of others.
Saturday, April 17, 2010
Friday, April 16, 2010
Unemployment Insurance
Economists have known since the beginning that unemployment insurance promotes unemployment. Even the liberal Krugman acknowledges this.
The attitude is, why work when you can get a reasonable amount of money for doing nothing? An article by Stossel sums it up with his take on French entitlements in America. This is why unemployment insurance should be limited to 3 months during boom periods and perhaps 6 months during recessions. Obama and friends are probably kicking themselves in the asses by continuing to extend these benefits because unemployment will remain high for a much longer time period, which makes them look bad.
The attitude is, why work when you can get a reasonable amount of money for doing nothing? An article by Stossel sums it up with his take on French entitlements in America. This is why unemployment insurance should be limited to 3 months during boom periods and perhaps 6 months during recessions. Obama and friends are probably kicking themselves in the asses by continuing to extend these benefits because unemployment will remain high for a much longer time period, which makes them look bad.
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