hogFeast

This is typically the case in Europe, where (unsurprisingly) unions are more common. In the US and the UK, you see more militant unions, more wildcat strikes, more picketing, etc. which is why union membership went through the floor (I am in the UK, we also have unions taking positions on climate change, on Israel/Palestine, they own the party in opposition and last year the most well-funded union leader attempted to get his girlfriend a seat in the House of Lords...they are very weird). Unions develop in their own political, legal, and cultural context so, for some, strikes are very much a first resort.

They earn a fee from merchants and, despite what they say, I believe most of these companies also have products that aren't zero interest (Affirm also sells some of its loans...I have no idea about this, I have relatively good knowledge of accounting but I am not 100% on the accounting for this so I have no idea whether it actually generates income).

The fee from merchants is interesting because the claim is: the fee from merchants is going to be larger than the losses from making bad loans (and the costs of servicing). I am very sceptical of this. Management describe their underwriting model as largely using stuff like the product bought, the retailer used, the value of the order...it just sounds very suspect. And that is before you consider the valuation, the legislative risks, the interest rate risk (doing 0% loans stops making sense if interest rates rise), etc. I am in the UK and these kind of businesses usually trade at very low multiples because the regulation in the space is so high.

I would regard $10bn market cap as a pretty jazzy valuation for Affirm, the stock is at $35bn.

It is also cultural. Being openly critical of other people just doesn't fly in some parts of the world.

I don't really think there is any answer. I agree that some people communicate poorly with subordinates, I think that often people who are criticised for being too critical are just bad at communicating what they expect/want other people to do.

But I would also say that criticism doesn't work with some people. The other part of knowing how to be critical is knowing when to be critical. Some people do better when they learn it for themselves. Some people do better when they don't have someone looking over their shoulder all day. It isn't just about people being sensitive (although there is that too, and it is perfectly legitimate to be sensitive...if you grow up and a parent is on your case all the time and you grow up afraid of criticism, that doesn't mean you can't get a job and can't be managed).

Sports is probably the best example of this: some coaches don't understand this and put everyone on blast, it doesn't work, it actually makes people perform worse, nothing is going to change that (team competitive online games are also very good, I didn't play these as a kid, I did play a lot of sports, and when I started playing these in my mid-20s I was surprised that team communication was way more important than any sport I had played...I suspect most self-styled communication experts would wither under the pressure of a ranked Overwatch game).

If you word a question correctly, you can also find evidence for almost any belief with Google (it is Nietzsche, you ask Google, and Google asks you). It is actually quite bizarre to have a conversation with someone online, that person has literally no real knowledge of the topic, they pepper you with "sources" (usually those sources do not provide evidence for what they are saying, they don't know enough to know that), and then (and this is very 2020s) act outraged when you point they are wrong and have no actual knowledge of the topic beyond Google.

In my experience, these people have usually integrated Google fully into their own perception of knowledge. They view themselves as totally rational, their views are all evidence-based because they can type the magic phrase into Google and get justification...but, of course, the feeling comes before the source and they have no real understanding of what "evidence" actually looks like. It is very odd trying to have a conversation with someone who is totally irrational but believes heavily in rationality (this is the "source? source? source?" meme of Reddit).

I think this is distinct from the SO stuff. Programming languages are very explicit so it is easy to forget exactly how to do something basic if you do it infrequently (for example, I can never remember how to get an env variable in Python, I do it in every project but usually only a handful of times per project...it is easy to forget) Once you get into more complex problems, you can look stuff up on SO but you still won't be able to do it unless you actually understand what you are copying (in my experience, I have usually copied something, something is slightly different, and then I spend time going through it/reworking/understanding).

The out of pocket costs are high here because of an $8k deductible, it is a choice.

The only thing that is particularly unusual about the US is that private insurance companies are probably not very efficient (admin costs are multiples of similar mixed healthcare systems).

But if you look at healthcare spending as a % of GDP: the US has the largest public healthcare system in the world, and it has a private healthcare system that invests very heavily in people's health (I think people get confused about this because US life expectancy isn't much higher but that is largely a function of things like obesity that, ultimately, aren't solvable without people eating less...the US does very well with quality of life and difficult to treat stuff like cancer, I am in the UK and a lot of cancers are treated properly, there is just no money to do so).

So, imo, the US is more expensive than similar systems like Germany. But incomes in the US are much higher, people are willing to spend more (particularly on quality of life stuff like joint replacements), and a lot of the additional cost is not in treatment but admin. Maybe moving to a public insurance system would help but look at France: public healthcare system, and doesn't spend that much less than the US (and in the US, public healthcare prices are cheaper than private but private does subsidise the public...and the gap isn't huge)...doctors don't work for free, medicine isn't free, nurses aren't free, you just pay the same but in taxes (btw, I think a public healthcare system would reduce costs by removing admin...would they like it when they couldn't get a knee replacement? No. Would they like it when a parent got cancer or their kid has a rare type of epilepsy and they can't get medicine? No...there are trade-offs, fully public healthcare systems generally do not perform as well as mixed systems like Germany or Netherlands...making insurers non-profit might be a good first step).

Because the purpose of a govt is to make laws for everyone. The tyranny of the majority is just tyranny in the end (this is what authoritarian govts, ironically, fail to understand about democracy...debate and disagreement seems weak and decadent to them, it is not, I think that US politics has relatively weak controls on lobbying but the perfect outcome is not a ban on lobbying...most successful authoritarian govts operate by claiming to represent the voice of "the people"). And btw, this is how US politics is designed, the people who created the US constitution were very aware of how democracy ended the first time.

Yes, that is correct. I am not 100% sure on this topic but I believe it is Denmark and Sweden, of the Nordics, that signed up in 1992 to Maastricht which would mean eventually joining. But, in both cases, they haven't done so because it isn't popular (Denmark failed a referendum in 2000).

And their choice is not to peg to an economic region that is nothing like their own (although tbf, this is true of Germany/Netherlands/Austria/etc. too). The EU is not inevitable. The distortion to financial markets is not worth any political benefit (this has been true of the EU since its inception, first Germany and France were in crisis, then 2008, then debt crisis...what a mess).

I am a reasonably large Charlie Munger fan (read all the bios of him and Buffett, read the Bevelin books, read Poor Charlie's) but the guy has the most phenomenal blind spots of any person alive because, bluntly, he isn't that well-read. He has read very deeply in one area (if you look at his book recommendations, it is like the Amazon best sellers for rich elderly people who went to college in the US, studied sciences but never really thought about anything else) but he appears unaware of the limits of knowledge, and is exceptionally superficial about stuff like politics (the stuff with the UCLA dorm also highlights this, he has written a lot of sensible stuff, and a lot of stuff that would do well in standup).

Plato wrote about all of this stuff, he was of the same opinion (philosopher kings), and then spent most of life finding out why that didn't work (and was, as a result, sold into slavery towards the end of his life). This came up again in the Enlightenment. The perceived fault of democracy is the strength: it is strong because "everyone takes turns". You significantly reduce your upside, but you significantly reduce your downside too. The US has benefitted hugely from founders who not only understood democracy well, but understood the problems with dictatorship.

Also, it is worth saying that LKY's son now runs the country. It isn't a democracy, are we seriously saying that the country was scoured for the best people and it just turned out the best guy was the son of the last guy? Seriously? LKY's achievements were great, he was a great leader but there is a lot wrong with the country (it runs on slave labour) and has the highest level of political weakness possible (China is a perfect parallel: Deng was a great leader, but he didn't solve any of political issues and assumed the CCP would always lead by consensus, Xi has made himself permanent leader...this is why you have a balance of powers/strong constitution, this is exactly why).

Most of Eastern Europe is depopulating. Bratislava is nice but Munich or Paris is nicer because you can earn more money there.

It varies the same as in the US. In the US, housing in Detroit is very cheap but few people want to live there. In Europe, housing in Bratislava is very cheap but few people want to live there.

The issue with housing is that rates are very low but there are parts of Europe, just like in the US, that have been performing well economically so low rates just pour fuel on the flames (without really helping the parts that aren't doing well). This also applies to some countries, like Denmark, that have pegged their currency to the EUR (I have no idea how the Demark peg is sustainable, it makes no sense, they had strong growth, unemployment below the natural rate/serious supply issues pre-Covid, and negative interest rates...this is not a good idea, because their mortgage market is heavily securitized the impact of this likely won't come out for years i.e. when the people who have invested in the covered bond market come to pay out to retirees, and those people find out they don't have enough to retire ever).

Overthinked and overengineered describes Monzo very well. Their business model isn't really banking but coming up with ways to extract money from investors, so this kind of overengineering is a strong business move for them.

Richard Werner is a bit nutty but his work does have value. He takes a heavily heterodox position on interest rates, some of this is him being misleading in order to be controversial. But his points about the impact of interest rates on bank profits are very trenchant (and btw, the reason why he is a bit nutty is because his professional experience was Japan in the late 80s/90s, that scenario tested all the assumptions about macro and found a lot of them were false, his book Princes of the Yen is good...although, again, very heterodox).

Chairman McChensey Martin (who served in the late 60s when all this started to blow up) used to say that the Fed is independent within government. So the Fed is able to develop policy independently but doesn't have room to actually run counter to whatever the Executive is doing.

I don't think the impact is necessarily elections anymore, if it ever was. But the Fed was supporting bond auctions through 2020. I don't think it will stop them raising rates but it has stopped them raising rates fast enough imo.

You also have government guaranteed mortgages. This is probably the most unusual aspect of the American home market in comparison to other markets...it is essentially publicly owned (the only place that has a similar structure is Denmark, and even then there is no Freddie Mac/Fannie Mac...just a large secondary market for resi mortgages) and makes mortgages very cheap with little rate risk (I am in UK, 30yr fixed mortgages are unheard of, the most you can get is 5yr fixed and it costs 200bps more than a 30yr fixed in the US).

Just a broader comment: the main financial argument against home ownership is really the size of the deposit. If you are paying 25% down (this is now standard where I am in the UK, we went from 120% mortgages to 75% mortgages in the last ten years...and house prices kept rising, so the upfront cost of housing is way way way up) then it may be close for some people. But you add in the security, the potential for capital growth...it is attractive financially (and I wouldn't say this is true in the UK, downpayments are too high, mortgage rates are too expensive and come with massive interest rate risk...it isn't worth it on a pure financial basis).

I can't see myself every buying a house because I just don't like having a lot of stuff, it tends to worry/distract me. But I think it is unfortunate that housing has become associated with this "I got mine" mentality. Germany is a nation of renters, it has led to levels of wealth inequality higher than the US because all that value from rising property prices has gone into the pockets of a few large corporations (the median net financial wealth of a German citizen is EUR20k, about the same as Greece...and they have one of the highest per capita rates of billionaires). Maybe we can tax rising property values more efficiently but the US model (essentially, publicly guaranteed mortgages) works quite well too.

To explain more about the logic used by the guy you replied to...

...the problem is people think: interest rates go up, economy slows down, we can never raise interest rates. This logic takes on a life of its own.

The US economy was in this position in the late 60s: the Fed was under pressure to accommodate govt financing, they raised rates in 1959 and were blamed for causing a recession that influenced the outcome of the 1960 election, in 1967 they attempted to raise rates briefly but did so at the wrong time...eventual result (combined with some unfortunate timing with oil price changes) is rates never rise, inflation does, serious problems.

When the discussion moves to this point, and we have been moving this way for years, I think it is a sign that something has gone quite wrong. And that expectations around interest rates and Fed behaviour are actually adding volatility and uncertainty, not reducing it.

You are quite correct though. Rising interest rates are not bad. It is just the price of money. Falling interest rates can be just as bad too, but the problems are usually subtle (i.e. financial repression, which is what is happening now, no-one will realise what has happened until they try to retire in 20/30 years and realise they can't). Public policy has moved to this risky stage where people blame everything on politicians...the result is, unfortunately, inevitable.

You can guarantee that if you make any comment about TfL on here, you will be dogpiled by all the Londoners explaining how their lavish subsidies are actually justified. Every. Single. Time.

I covered most of what you replied to in my answer.

It is very weird as someone who studied British economic history and privatization to see this view so commonly. I am not sure where it has come from (although tbf, the media does not report accurately on this subject).

The main benefit from privatization was a significant reduction in fares combined with massive growth in availability (people take for granted things today that were huge problems then: punctuality, safety, etc.). The rail network in the UK is publicly-owned, what is private is the franchise to operate on a certain route. The lack of investment, if any exists, has come from the govt...and I am not sure there is a lack of investment either...HS2 is going to cost £100bn...£100bn is a large number (as ever, I think people mean...London and the area around me isn't getting enough, this is also false, London receives obscene amounts of investment relative to the rest of the UK).

Also, trains in Europe aren't really cheaper. Tickets are subsidised in Europe, in the UK passengers pay. The main constituency for subsidising the travel costs of wealthy commuters is...wealthy commuters. I am not sure why that idea is inherently attractive (and again, it is worth mentioning...our safety record is best in Europe, there is no real difference in punctuality, our fares are marginally higher but the ecosystem we have is far more robust).

TfL is a great example: sucks down tens of billions in public money to subsidise the wealthiest people in the country...the North-East is still missing motorways and we are spending £20bn on the Elizabeth line...okay. The cost of a fiber roll-out for the whole of the UK is less than the Elizabeth line. The problem is that this has no end because the more infrastructure you build, the more agglomeration, the more infrastructure...London had this problem in the late 19th century with slums, the solution wasn't more density (also, we had to bailout TfL twice I believe, they are not an example of the system working, tbf there isn't a lot management can do with the workforce).

Domestic banks were not allowed to hold USD deposits (because that would have meant export earnings leaked into the Chinese money supply and the RMB would have risen), so when an exporter deposited earnings with them, they would take the dollars to the PBOC who would issue them with an interest-bearing note.

Around 2017/18, the PBOC stopped doing this and allowed domestic banks to retain and invest the dollar earnings that exporters deposited. China's money supply is not directly related to the US money supply. China's capital account is still closed. All that has changed is that the onshore dollar market has increased (the PBOC retains a huge amount of control over lending decisions, Chinese state banks are not investing in US markets, it is being retained in China).

Correct, four things can trigger a crisis...in addition to many other things.

And that occurred after the currency crisis had started (the debt swap into Eurobonds was because of the GKOs). I am not sure what the US has to do with it. I am not sure what "Soviet-era debt" has to do with it (that debt was very soft, was rolled over multiple times in the early 90s, and wasn't related to Russia's problems). I am not sure what the IMF has to do with it (the IMF came in after it started...that is why the IMF came in).

Yes, it would have...that is self-evident. The reason the peg collapsed was because the free market/floating rate was lower. The only purpose of the peg is to stop the currency going down (again, this is a weird, self-evident proof...saying that the currency wouldn't have collapsed if they had a floating rate makes no sense, it would have collapsed faster).

There is no distinction between foreign held and internal debt. The offshore debt is owned predominantly by Chinese state banks. There are a few funds that hold these bonds (Ashmore is one), but there is a massive dollar surplus within China and so all the state banks were looking for somewhere to invest money...and Evergrande created a way to do that.

It depends what you mean by currency crisis.

But yes, it has happened. Russia 1998 is the most well-known example. Everyone believed that because Russia could issue GKOs in RUB, they wouldn't blow up like Asia...they did. This also happened, to a large extent, in Mexico in 1994 (Mexico actually issued tesobonos, they were domestic currency denominated but shifted the currency risk to taxpayers, they were quite a security).

The reason why is fairly simple: it doesn't matter if the debt is denominated in domestic or not, because people buy the bonds and then hedge their currency exposure which leads (eventually) to the domestic banking system having the same synthetic position as if your debt was denominated in a foreign currency.

The slight issue with historical examples is that the situation is correlated to high levels of financial globalization, which largely didn't happen until the 90s. But because something has never happened, doesn't mean it is impossible.

The point is confused though. The causes of currency crises are changes in capital flows. That is really just saying: the reason why currencies fall is because people sell. They don't really need some "explanation", they definitely contra-indicate with stuff like domestic currency debt...but there is no universal theory possible beyond: people sold the currency (and so currency crises have happened with capital outflows for some exogenous reason, war, etc.).

Chinese state banks have substantial dollar deposits (it is largely state banks that are lending to companies like Evergrande offshore). The PBOC stopped issuing notes (and sterilising the dollar inflow) years ago, and onshore dollar deposits are above $1tn. A lot of the stuff you read about this online is exceptionally misleading (I have no idea why there is this cottage industry of "economic experts" who don't understand economics...it is parallel to the gold bug industry, it is very weird).

It can. The govt has stopped it doing so.

Yes.

There is actually a parallel effect of QE that no-one really wrote about: it causes a shortage of risk-free assets, and makes it harder for savers to fund liabilities.

I can believe that QE had a positive portfolio effect in the early 2010s. But no-one really acknowledged the downsides (it took them most of the 2010s to work out why QE "worked").

So we have the amazing situation where you will get funding for a project, but only if you promise to lose money. Investment into real assets is extremely low, chemicals and O&G are trading on mid-single digit P/E ratios, and are furiously trying to return capital...whilst we have massive shortages...it is a very unusual situation. And, imo, the cause of this is the shortage of risk-free assets (because creating this shortage, due partly to regulatory restrictions, did not mean that investors suddenly started making investments into the real economy...most couldn't...they just had to buy more "risk-free" assets from corporates who already had too much money or PE funds that were playing the capital cycle...ofc, no central banker understands that some institutions are limited, the textbook doesn't teach that, they don't understand it).

There was an article the other week from Canada about their CPI (I can't find it right now). Their CPI calculation was using prices that were half those available in stores (butter was one product, there are large variations in prices for some primary products in Canada because of producer's co-operatives particularly in dairy), and used sizes for some products that haven't existed for decades.

CPI calculations are very tricky. Deflation in telecoms, for example, has been very understated because how do you compare a data plan with a voice plan (in the UK, they had to adjust two decades of CPI numbers because of this calculation error). Imo, we place far too much reliance on CPI which is, after all, only one measure of inflation. Everyone seems to believe that prices are rising faster than CPI, and they would probably be right (I am in the UK, food prices in Canada particularly are...out of this world...particularly for meat, which seems to cost at least 3x the price here).

First really thorough analysis of this situation that I have seen. It is surprising that this observation isn't more common, it is very obvious from looking at sectoral balance sheets...but, I suppose, not many people do this (it is odd to me that what was done during the pandemic had literally never been tried before, there was no economic logic for doing so, and no economist said: hold on, is this a good idea? And still, just a crowd of nodding dogs...you can only rely on an economist for a convincing explanation of what was happened, never the future, never creativity, never analysis).

One point that I don't think is made clear. Because this problem is totally artificial, it isn't clear how you solve it. Clearly, prices are going to have to increase substantially to choke off demand. But even once you do that, there is a question in some industries of whether supply can increase at all. Some big industrials are trading on mid-single digit P/E ratios, they just can't get money (most are actually being incentivized to return this, repeat that: shortage of almost everything, the market is telling them...reduce supply urgently). There is a flood of money for "risk-free" investments and tech (read: unprofitable, never going to be profitable but has value because you might be able to convince someone that you will be profitable...eventually), everyone else is being starved to death. It is quite terrifying because the govt has managed to debauch almost every price in the economy. Nothing is working.

Organized suffering for people who have never suffered. Lack of suffering is associated with shame and illegitimacy. Showing people that you have suffered is a way to shed guilt.

I can't provide any recommendations on enclosure. I studied it at university, and can't recall what books were recommended.

But if you search for stuff about agricultural productivity, you will find lots. I believe Gregory Clark and Robert Allen have written quite a bit about this.

No idea about the Swing Riots either. I have just read about it in other books. I think Luddism is more interesting. Afaik, there was no real persistent movement like it in agriculture.