Niels' eclectic Blog

Thatcher's funeral

noreply@blogger.com (Niels) — Mon, 08 Apr 2013 15:11:00 +0000

Maggie Thatcher, one of the most controversial politicians of the recent decades, has died today. Already, my facebook wall and my twitter feed are filled with heated discussions and lots and lots of below the belt jokes.

Coincidentally, I actually used Maggie Thatcher as part of my motivation for a paper I presented at the Economic History Society Annual Conference last Friday.

Apparently, Margaret Thatcher will not have full-fledged state funeral. At Thatcher's own request, there will no public lying in state.

Maybe she was afraid of the line of argumentation put forward a couple of years ago by Frankie Boyle:

P.S. No, That Cher is not dead yet (follow the link for another link a spotify soundtrack for the occasion).

The Cypriot Drama: A better solution, but too late

noreply@blogger.com (Niels) — Mon, 25 Mar 2013 12:22:00 +0000

The Cypriot Coat of Arms...
for a change.
Source: Wikipedia

Oh boy, what a cliffhanger it was in Cyprus over the past few days. But I must say that the route taken in the end is a magnitude better than the one the Cypriot government wanted to take last weekend. The rich investors were bailed in, while the poorer depositors are to remained unscathed.

Recap

So let's recap. Cyprus' banking system is broke and someone needs to pay for the losses, since the Cypriot government does not have sufficient resources. Indeed, the government itself needs help to finance its expenditures over the next couple of years as well.

So the EU and the IMF offered the Cypriot government a long-term loan (from the ESM) at low interest rates to the tune of €10 billion (10,000€ per Cypriot citizen!). The remainder that was needed for the banking system, roughly €5.7bn was to be obtained by bailing in depositors at all Cypriot banks.

Those with less than 100k in their bank accounts were supposed to pay 6.75%, and those with more than 100k in their bank accounts were supposed to pay 9.99%. In return they would receive shares in the banks.

The idea to touch deposits below 100k, which are supposed to be secured by a promise of the Cypriot government to protect them, was almost certainly made upon the insistence of the Cypriot government, which tried to rescue the tax-haven business model of the Cypriot banking sector by not discriminating significantly against the richer depositors (the number "9.99%" alone tells volumes; it's like in a store where you want to avoid setting a price at 10, because 9.99 looks a lot better psychologically).

The EU/IMF negotiators, for their part, were insane to even agree to that demand by the Cypriot government in the first place (the backtracking which happened afterwards didn't make things better).

It was no wonder that commentators and citizens of Cyprus were up in arms, and it should have been immediately clear that deposits below 100k are not to be touched, unless you want to increase the risk of bank runs throughout Europe and (what I believe is much more dangerous at this point) popular unrest.

A big fat NO! But then what?

After several days of wrangling within Cyprus and an extension of the bank holidays, for some strange reason the Cypriot parliament even bothered to vote on the measure to bail-in depositors, including those with less than 100k on their account. The proposal got exactly zero votes. Mind you, that was five long days after the Cypriot government had negotiated with the EU and the IMF, and even after the EU and the IMF urged the Cypriot government to exempt those with less than 100k on their account.

To me that behavior seemed like an attempt to shift blame for the entire situation onto the EU and the IMF. Worse still, it seemed like the Cypriot government and parliament did not have an alternative plan. There is a quote attributed to a member of the Troika negotiating team which seconds this."The Greeks wanted to cheat on you all the time, but they knew what they wanted. The Cypriots are leaving us really confused."

The Cypriot finance minister was urged by his parliament to make trips to Moscow, which yielded nothing. It is also rather puzzling to me, that the Cypriot government consider chaining itself to a dictatorship rather than to becoming dependent on help from a group of democratic countries. Even with all the democratic deficits the EU decision-making has, it is still light-years ahead of Russia.

In the meantime banks remained closed an citizens could only withdraw limited amounts from their accounts (but they still could withdraw money, it wasn't a complete freeze at the very least).

Then the ECB imposed an ultimatum that it would cut off liquidity funding to insolvent Cypriot banks, unless a solution with the EU/IMF would be found that repaired the banks' health. Whether this ultimatum was productive or counterproductive is debatable, but it certainly helped to focus Cypriot policymakers attention on finding a solution fast and on finding a solution with the EU/IMF, rather than with Russia.

While the Cypriot government frantically drew up alternative plans (some including the nationalization of pension funds) and passed legislation that would allow it to restrict capital flows (essentially giving the government the tools to prepare for the worst), the shutdown of banks brought economic life to a halt. Shutting down the payments system is something you'd really want to avoid (and now, Bitcoin would not have been the answer ;) ).

Cliffhanger

Throughout these days communication between the Cypriot government and the EU/IMF was worryingly inexistent. Other than EU leaders sending threats to Cyprus, not much cooperation was apparently ongoing. I haven't heard reports of a similar breakdown in communication at previous rescue attempts in the Eurozone. This made last night's negotiations between the Cypriot government and the EU/IMF the more of a cliffhanger.

It was also a cliffhanger, because the options were extremely limited, if Cyprus was to be kept within the Eurozone. Actually, the lack of alternative options on how to distribute the losses of the banking sector was remarkable throughout these days. Everybody complained about the situation, few had workable solutions to deal with the insolvency problem of the banks. And in any case, there was no easy way out. Someone would have to bear the costs. That's one thing Sony Kapoor kept highlighting on Twitter over and over again (Btw. my favorite solution would probably have one by Thorsten Beck).

Or as Oli Rehn put it: There were no optimal solutions available, only hard choices.

The new deal

When I checked the news last night at midnight (CET), there was still no agreement and I saw this as a really bad sign. The more surprised I was when I got up and I read the news this morning.

- The EU/IMF still provides Cyprus with a loan for €10billion from the ESM at low interest rates to finance government expenditure
- Cyprus Second largest bank (Laiki bank) will be closed
- uninsured depositors at Laiki with more than 100k in their account, will face very large losses (40%+).
- insured depositors at Laiki with less than 100k in their account will have their deposits guaranteed and transferred into the largest bank of the Country (Bank of Cyprus).
- depositors at the Bank of Cyprus with more than €100k in their account, are going to be affected (up to 40% cut)
- bondholders and shareholders of both these banks will be effectively wiped out as well.
- if you had your money in any other Cypriot bank, you will not loose a cent .

This outcome is obviously much better than the initial proposal, which was a stillbirth. Uninsured creditors will finally have to bear the risk of their investments. Mind you, this is exactly the same policy that Spain has finally been adopting in the past months for its banking system, and it's a policy that should have been adopted from the start of the financial crisis (and then the weakness of the German banking system would have been much more apparent as well).

Many questions remain

We could have had this solution a week ago and it would have minimized capital flight. Why didn't we? Was the Cypriot government really believing it could somehow keep the business model of it's banking sector afloat, as most of the stuff by Peter Spiegel in the FT suggests? Both the EU and the Cypriot government must have had months of talks in advance before the fateful meeting on Friday, the 15th of March.

Another question I'm wondering is, was this enough to restore health to the Cypriot banking system? Was it really only these two banks who were in trouble? If so, the Cypriots and the EU/ECB/IMF need to communicate this much more aggressively, in order to minimize the fall-out from the expected deposit flight from Cyprus and have its banking system return to normality asap.

However, unlike most, I am not particularly worried about people running to get their money from Cyprus' bank accounts, provided that the Cypriot banks are really solvent and the ECB keeps its word. Why? This might have been a much bigger problem in 2009, but by now, the ECB has made it abundantly clear, that it will provide virtually unlimited liquidity to keep solvent banks afloat.

The ECB could quickly announce another 3 year LTRO at low interest rates, which the Cypriot banks could then soak up; problem solved, until normality returns. Cypriot banks might even benefit from the low rates LTRO and they won't have to worry about the associated stigma, since they are already stigmatized.

What I am much more worried about, are the economic effects of this long wrangling and the long-term effects on the political economy within the European Union of this week of botched negotiation and communication to the public at large. The Eurozone really needs to find a way to explain what's happening and what the options are in simple layman terms to the public at large. This is essential to re-establish legitimacy and trust in the European project.

A first start would be to call bank depositors with more than 100k "creditors". Would the public be more forthcoming, if the policymakers announced that banks' creditors would bear the losses? I would think so.

P.S. The balance sheet of Laiki in June 2012 was roughly 180% of Cypriot GDP and that of Bank of Cyprus was about 220% in March 2012. Winding down Laiki and bailing-in creditors at Bank of Cyprus will shrink the banking sector immensely.

P.P.S. What I think is quite ironic about this entire situation is that this bailout is probably the most sensibly structured bailout to date (if compared to Ireland, Portugal, Greece), after all rich creditors are taking the full hit (and not the taxpayers in general and thus the government), whereas the Cypriot government is provided with ample funding. And even so German policymakers are still seen by many as the Nazis imposing their will on Cyprus. I hope that won't eventually backfire with German voters. Then again, Germans blame everybody else for the crisis...

P.P.P.S. Decision making during the last week reminded me a bit of this.

P.P.P.P.S Russia isn't happy about the deal. Does Cyprus have to be frightened? No, not anymore. They've got the backing of the EU and it's internal market. It's actually a chance to reduce its dependency on Russia. I'd be more worried about German/Russian ties.

P.P.P.P.P.S. Ok, so at one point Cyprus wanted to offer Russia/Gazprom rights to a gas field off the coast of Cyprus. Instead of offering it to Grazprom, have they ever considered offering it to BP or Shell, two European companies, which I'm sure could be leaned on by Eurozone officials to come to an agreement with Cyprus?! Cyprus chances of getting a better deal would be much higher with them, than with Gazprom, I suspect.

P.P.P.P.P.P.S. At the bottom of this BBC article there is a nice chart with respect to the size of the government bailouts, i.e. the money certain countries received from other EU governments as loans.

P.P.P.P.P.P.P.S. To all those making projects on the Cypriot economy. Can we please have different scenarios for: Bailout-as is, other alternative types of bailouts and (very important) leaving the Eurozone? That perspective is important.

P.P.P.P.P.P.P.P.S. (okay it's getting excessive) Here are collected views on the deal.

Bitcoin: not a safe haven for depositors

noreply@blogger.com (Niels) — Sat, 23 Mar 2013 16:12:00 +0000

Recently, there have been indications that in Spain some people are taking their deposits out of banks and convert them into Bitcoin. This seems to be fuelled by fears that a similar situation as in Cyprus might happen in Spain, that the government will simply shave off 5-10% of the deposits in order to recapitalize the banks. Before you run and convert your life savings into Bitcoin, wait a second and ask yourself: do I want to speculate with my life savings?

It's a cool technology, but it's deflationary by design

I wrote a blog post about the difference between official currencies and Bitcoin back in 2011http://blog.niels.me/2011/06/the-bitcoin-frenzy.html and upon reading it again, I must say that I still stick by the conclusions. Technologically speaking it is a sophisticated system. However, the main problem about Bitcoin is that it is deflationary by design, i.e. the the supply of Bitcoin is not flexible, indeed ultimately it is fixed (the maximum amount of Bitcoins that can technically ever be "mined" are 21,000,000 Bitcoin) and might even decrease again after all Bitcoins have been mined (if you don't remember your password, the Bitcoins you had are irretrievably lost and can never be restored).

The more people adopt Bitcoin, the higher the price will go, because ultimately supply is fixed, and thus the more it will make sense for you to just hold the Bitcoin in your pocket and not spend it. However, just holding Bitcoin in your pocket defeats the purpose of a currency to facilitate transactions and it will become useless, leading to a big fall in price (Paul Krugman and CS researchers at Stanford second this view)

The Bitcoin volatility is systemic

Now, until we hit that 21,000,000 Bitcoin limit it might still take a couple of years, maybe even decades (it depends on the amount and the speed of the computers mining Bitcoin). Until then, unless the number of users stays relatively constant the value of Bitcoin will remain highly volatile. By that I mean an annual fluctuation of the price with respect to real world currencies of well over +- 15%. I.e. if you buy Bitcoin today, odds are that in a year's time your Bitcoin will be worth a lot less (or more) in an official currency such as US$, as it was back then.

Care for an example? Have a look at the development price of Bitcoin in the last year:

Source: Bitcoincharts

The price of one Bitcoin increased from 5US$ to 65 US$. Wicked, isn't it? If you bought a Bitcoin back then and sold now, you could have made a profit of 1200%!

Care for another example? Ok, here's the price of Bitcoin beginning from the date I wrote my last piece (June 2011) on Bitcoin until a year later:

Source: Bitcoincharts

Ok, so you went and bought Bitcoin after you read my post at a price of 17.5US$. A year later you wanted to sell your Bitcoin and it was only worth 6.68US$. That's a loss of about 60%!

You might say, 'oh well, if I did not sell Bitcoin back then and kept it until today, then I would have made a profit of 270% after all.' That's true. But that means that your Bitcoin currency is useless as a store of value. Instead it's a speculative "investment", i.e. you're gambling.

Care for one last example? Here's the Bitcoin volatility of the last two days:

Source: Bitcoincharts

So if you bought Bitcoin 2 days ago at a price of 73US$, and you sold them today, you'd just get 66US$ for your Bitcoin. That's a loss of 9.5%. That's more than what the Cypriot government wants to use from most of its small-scale depositors to recapitalize the banks (and roughly the same amount they want from rich depositors).

If your aim is to keep the value of your money roughly stable, so you can use it in daily transactions, does converting your savings into Bitcoin look like a good idea? Probably not.

Can you make money by speculating in Bitcoin? Almost certainly. If you have money you can afford to loose and you want to become a currency speculator, go ahead, get into the Bitcoin market (while you're at it you might also want to try to speculate in the Gold, Silver or other natural resources). Otherwise, keep your hands off.

Proponents of Bitcoin have claimed that the price of Bitcoin will stabilize as more people use it. But I could not find any sound arguments for this claim throughout the Bitcoin help pages and fora, other than faith that one day supply and demand will magically find an equilibrium (it reminded me a bit of this).

Thus, there is no reason to believe that the price of Bitcoin will ever stabilize, given the way Bitcoin is designed. The more people use it the more unstable it will get. Only if the number of people using Bitcoin stays relatively constant can the price of Bitcoin stay relatively stable for a few years (until the supply of Bitcoin effectively maxes out).

In order to get rid of the deflationary bias, you'd have to design Bitcoin 2.0 with an inflationary bias into it, that also takes into account the speed at which new Bitcoins are mined. But that still doesn't solve many other problems (I will reserve those for another post).

Beware the supply deluge

So now that we've established that Bitcoin is highly volatile and a lousy place to pour all your hard earned savings into, the question is, is there a Bitcoin bubble? I'm sure there is (and so is the Economist).

The Economist

The current spike in the price is of course driven by increasing demand. A lot more people want to buy Bitcoin than there are people willing to sell Bitcoin, and the production (the supply) of Bitcoin is not keeping up with the demand either. Consequently the price rises (by a lot).

What could bring the price down again? A decrease in the demand or an increase in the supply. So let's assume that nothing happens to demand, what can happen to supply?

First, people might want to sell their Bitcoin because the price appreciated by so much. Second, more Bitcoins could be created as more people engage in mining activities. After all, the price increase made it more lucrative to mine.

What makes me think that supply could increase? Hmmm, what about an improvement in the mining technology that increases the mining efficiency by a factor of 1000.

Imagine current mining technology to mine Bitcoin at the speed of 1. Now imagine a new technology that increases the mining speed to 1000. That won't make mining 1000 times faster than before, because of the way Bitcoin is devised, but it will still be a gigantic improvement in mining technology.

And this is exactly what is around the corner. It's referred to as the ASIC mining technology (Check out the speed comparisons). So far only relatively few of them are online, but in the next days and weeks more of them will become available. You can already see the first hints effects of them coming online.

Source: Bitcoin.sipa.be

This chart shows you the technology in place to mine new Bitcoin. As you can see, since the first major spike and crash in July 2011, the mining efforts had stagnated for quite some time. Can you see the uptick taking place right now? That was most certainly caused by the recent price increase.

Now imagine that people are currently investing in the new ASIC technology and voilá, you'll have a large spike in mining and thus the supply of Bitcoin. Given the magnitude of the technological change, I believe that supply will outstrip demand for Bitcoin and lead to another crash in the price of Bitcoin. As a matter of fact, if I could find a way to short Bitcoin, I would.

Use Bitcoin for speculation or transactions. Otherwise stay away.

Nobody in his right mind would want to hold Bitcoin for extended periods, expecting it to be worth roughly the same in 3 years time. Only speculators will hold it for some time betting on appreciation.

The other use I can see is for people who need to transfer money anonymously and do not want to hold Bitcoin. E.g. someone buys Bitcoin and uses this to pay another person, which then immediately sells the Bitcoin again. They only hold Bitcoin for a very short time, reducing the risk of volatility (This kind of use is very attractive for illicit activities and money laundering purposes, thus it's no surprise the governments are moving against it).

Thus, if you are worried about your savings in a European bank account, I'd keep it there rather than speculating with Bitcoin. If you're still afraid, go out buy a house you can live in or go do a Master's degree. But engaging in Bitcoin speculation is not the solution to your problem.

P.S. Please let me reiterate that I think the technology behind Bitcoin is fascinating, but it's deflationary structure and the resulting inherent volatility make it useless for general adoption. I'm not against virtual currencies per se. On the contrary, I think they are fascinating and worth exploring further. Maybe an improved Bitcoin 2.0 will do the trick.

House of Cards Review

noreply@blogger.com (Niels) — Fri, 22 Mar 2013 13:20:00 +0000

Source: Wikipedia

Here comes an unrestricted recommendation for the Netflix-only series "House of Cards".

We signed up to Netflix last weekend and we finished watching the 13 episodes of the first season last night (God bless Netflix for releasing the entire first season at the same time!).

It's a series about political intrigues going on in Washington D.C., in particular that of a MacBeth-ishly ambitious Congressmen (the epic Kevin Spacey!) and his equally ambitious wife, who runs an NGO. Together they scheme like Iago from Othello, playing other people for friends, just to drop them whenever they do not need them anymore.

If you liked The West Wing you will also love House of Cards. The acting and the dialogues are not quite as good as the West Wing, but it makes up for it with a good narration, lovable and hatable characters (I even ended up sympathizing with the bad guy *gulp), and a lot more suspense, since one episode directly builds on the other (West Wing episodes tended to be rather disjointed). The West Wing also had an optimistic undertone to it, whereas House of Cards is certainly grim.

Anyway, sign up for Netflix for their free trial month and enjoy the show - it's worth your time (We might even keep our subscription because we like the quality of the Netflix service).

Here's the trailer, which starts out with one of my favorite quotes from the series.

Best of Tweets - Feb '12

noreply@blogger.com (Niels) — Tue, 19 Mar 2013 10:46:00 +0000

Here are the most interesting links I tweeted in the last month. With apologies for the delay and the scarce updates. I'm trying to finish up a thesis :-)

Dataism: the dominant philosophy at the moment.

Babysitting the Economy: a baby-sitting co-op that went bust can teach us something that could save the world. (by Paul Krugman from 1998!)

The Tyranny of Political Economy: The excessive focus on vested interests can easily divert us from the contribution that policy analysis and political entrepreneurship can make. The possibilities of economic change are limited not just by the realities of political power, but also by the poverty of our ideas.

How to Master Your Life: The secrets to love, life and happiness can be unlocked with three simple words: Play. The. Sims.

Interview with Luis Garicano: On the state of the Spanish economy and how to return to growth.

The information revolution gets political: We are only just beginning to comprehend the effects of the information revolution.

Prospects for the European Idea: "What Europe needs now are not doubters but standard-bearers, not ditherers but people who are prepared to knuckle down, not those who simply go with the flow but active players."(Speech by the German President Gauck on Europe).

The Cypriot Drama

noreply@blogger.com (Niels) — Mon, 18 Mar 2013 15:15:00 +0000

Source: Wikipedia

The decision on Friday night by the Eurozone members and the recently elected Cypriot government to tackle the country's banking problems is intriguing. It's essentially about the distribution of losses, like much of the financial crisis.

What's the problem in Cyprus?

The problem is essentially, that Cyprus has an enormous banking sector (Assets are 7 times it's annual GDP) - much bigger than in any other Eurozone country. And these Cypriot banks had lent quite a lot of money to the Greek companies and individuals and the Greek government.

And you surely remember the bailout of Greece last year, in which the Greek government defaulted on the money private banks and other private financial institutions had lent it. So, if the Cypriot banks had lent the Greek government 100€ in the first place, they only got about 30-50€ back after the Greek default cum bailout.

Add to that all the loans the Cypriot banks had given out to ordinary greeks, which might not be able to pay back either due to the grim economic situation, and you can see that Cypriot banks faced huge losses.

That's the main problem: the losses of the Cypriot banks. And the question is, who pays for those huge losses?

Who pays for the losses?

The easiest thing to yell would be, "Let those damn banks fail! They made bad investments, they should bear the risk." Fine, but it's not that easy.

Lets have a look at a stylized banks' balance sheet. The right side tells you where the money comes from the banks are working with (Liabilities), and the left side tells you what the banks are doing with the money (Assets). The total of both sides always has to be equal.

Where the money is invested (Assets)	Where the money comes from (Liabilities)
Cash	Depositors
Loans	Bondholders
Government bonds	Reserves
Other Investments	Shareholders (Capital)

Now imagine, the (Greek) government bonds and some of those loans on the left hand side evaporate. Since the two sides always have to be equal, we need to attribute the losses to the right hand side. Yes, somebody has to pay for those losses. The question is, who should pay for the losses?
"Let the bankers' pay!" Fair enough! So, as you can see on the liability side, the bank has accumulated reserves in case something goes wrong. The bank can reduce its reserves by the same amount it had to reduce the government bonds and loans.
But what if, the losses are so large that the reserves are not enough? Well then, "let the banks' owners, the shareholders, pay!" Fair enough, let's wipe out the capital of the shareholders.
But what if that is still not enough to cover the losses from the greek government bonds and the loans to greek companies and individuals? Who pays for the losses then? This is where we essentially were last Friday.

Friday's Situation
So the following was the situation on Friday, when Eurozone leaders and the Cypriot government got together: - Capital (shareholders!) and reserves will be wiped out by the losses (that's around 15.1€ bn) - the banks need up to an additional 14.8€ bn or so to pay for losses and to get recapitalized - and this is what the banks have left as liabilities: Depositors: 106.8€ bn Bondholders: 1.7€ bn Other liabilities: 2.7€ bn (Source: ECB - January 2013 Data)
So the question is, where do the 14.8€ billion come from to pay for the losses and the recapitalization of the banks?
From the Cypriot government? The government already has debts of 15€ bn and thats over 80% of GDP. If the government were forced to take on another 14.8€ bn, Cyprus debt to GDP ratio would skyrocket to 160%, making it the next candidate for massive uncertainty, austerity and an eventual default. No good. Especially since the economy of Cyprus had been holding up reasonably well, so far.
From other European governments? Should German, Spanish, Italian, Irish, Portuguese, etc. taxpayers rescue Cypriot banks, which are known as being a tax heaven that attracted quite a substantial amount of non-EU money?
Although the "Russian money" problem is a bit blown out of proportion, (Russian and non-EU money is just between 20-25% of all deposits) one can probably understand, why many European citizens are not too keen on using their money for other countries' banks in the first place, and even less so if they have a dodgy reputation. One the other hand, the Eurozone created the European Stability Mechanism to help in just exactly these situations, when banking systems need to be recapitalized, so this would be the time to use it...
From the bondholders? As you can see, the bondholders just amount to 1.7€bn and that's a good start, but that wouldn't be enough.
From the Depositors? They are the only ones pretty much left (unless Russia, China, Gazprom or whoever step up and offer to lend the necessary billions for free). Technically, depositors and bondholders are more similar than one might think.
As a depositor you lend your money to the bank (it even becomes the banks money, not yours!) and you get an interest rate in return. So, effectively, depositors "invest" their money in the bank. Shouldn't they bear the risk of their investment?
The thing is that, for deposits up to 100,000€, within the Eurozone there is such a thing called "deposit insurance". It's essentially a promise by the (Cypriot) government that in case a bank loses a lot of money, that small depositors will not have to bear any losses. And this makes sense since many people don't bring the money to the bank in order to invest, but to keep it safe (safer than in cash and under your mattress) and to be able to make payments easier.
The proposed solution
The proposed solution is to bail-in depositors, i.e. to make depositors bear part of the losses and turn them into shareholders. The idea has been to:
- charge everyone 6.75% of their deposits if they have less than 100.000€ on their account. - charge them 9.99% if their deposit it larger than 100.000€. - in return, they will become the new owners (shareholders) of the banks. So, essentially the depositors do not give any money to the government. It goes straight bank into their bank to restore its health.
But this is not the only thing. As far as I can tell, bondholders will also have to pay (according to the WSJ). Additionally, other Eurozone Countries (via the ESM) and the IMF plan on lending the Cypriot government even more money than is obtained through this bail-in of depositors and bond-holders. According to some accounts up to 10€ bn.
So this is really a joint Cypriot-IMF-European operation, with many people holding the tab, not just one group. And it is an operation that avoids that the Cypriot government bears the brunt of this all at once, leaving the country in economic shambles.

Then, what's the fuss?
Whenever there are losses to be distributed nobody wants to have them, obviously. No matter how you distribute them between the creditors and the taxpayers, someone will be unhappy. Nevertheless, how you distribute the losses matters.
The critical point is that according to this preliminary plan, depositors with less than 100,000€ on their accounts are being bailed-in. This is problematic for two reasons.
First, it does not particularly discriminate in favor of the poorer individuals in a society. In percentage terms, the richer depositors are bearing only a slightly larger share of the costs than the poorer ones (6.75% vs 9.9%).
And second, it effectively means that the promise of government deposit insurance for deposits below 100,000€ is worthless. Citizens in other European countries may start to wonder, whether something similar could happen in their own country. And then we might have these dreaded bank-runs again, which you really want to avoid.
Many are complaining that the bondholders are not being asked to pay up. It seems like they will be, but as mentioned above there are just not very many of them (and we don't even know who and where they are). That's why depositors are now next in line.

Why are they touching deposits below 100,000€?
That's the question everybody is asking themselves. Many blame the German Finance Minister (the natural reaction I would say) for forcing this on Cypriots. But the accounts of the crisis talks from last Friday that are starting to emerge suggest a different picture.
Sure enough, the German Finance Minister and those of a few other countries, as well as the IMF and ECB made the distribution of part of the losses to Cypriot banks' depositors a pre-condition for additional outside help, as they feared they would not get any help approved by their home parliament.

But apparently, the IMF and the German Finance Minister wanted only those with deposits over 100,000€ to be bailed-in with up to 30% of their deposits. Those with less money in their accounts were to remain unscathed. And indeed, the ECB reiterated today that it does not mind the structure of the depositor bail-in, as long as the total contribution stays the same.

This is where it becomes intriguing. If it was really the Cypriot government that wanted to avoid a higher levy rate than 10% on the "rich" depositors, then the government wanted to send a signal to outside investors, that they were not being specifically targeted. In other words, the government is trying to maintain the confidence of foreign bank depositors by making the less well off depositors pay a significant share of the costs (the Cypriot government is now vehemently denying these reports).

If this is true, I am surprised that Eurozone leaders agreed to this, since the abandonment of the 100,000 limit for deposit insurance creates massive uncertainty with small depositors. Something you certainly do not want to have for economic and political reasons (Maybe that's why they are shifting the blame on Cyprus now? Then again, an EU official was insane enough not to rule out future depositor haircuts)

In any case, nothing is set in stone yet. The Cypriot parliament still needs to pass a corresponding law that puts the first stage of the plan - the bail-in of depositors - into effect. Hopefully they can come up with a different structure on the bail-in that leaves the smallest depositors virtually unscathed.

Summary

As you can see, the situation is not as straight forward as saying the depositors should not pay, let somebody else pay. If you are in favor of keeping all depositors unscathed you have to come up with an alternative plan on where to get the money from. Merely screaming "No!" is not enough. It does not solve the distributional problem at hand.

Also, the Cypriot Drama shows that confidence matters a lot in the Eurozone Crisis. Who could have thought that tiny Cyprus, which has barely a million inhabitants (and 1/10 of the GDP of the region of Barcelona), could cause such a stir? Now imagine what would happen if Cyprus left the Euro. Yes it's small, but it's part of the whole.

In this Cypriot sub-crisis you can also see the effect of direct contagion from countries defaulting on their commitments. Greece had to default and it sunk Cyprus' banking system. Now imagine Italy defaulting on part of its debts and imagine what will happen to Italian but also to German or French banks...not pretty.

The costs of this crisis need to be share by both creditor and debtor countries. It's neither entirely the fault of one or the other. In the end Eurozone countries need to realize that they are all in the same boat and they need to solve the problems together not individually. Recent moves towards a banking union go in the just this direction, but a much faster implementation is needed.

P.S. "Other Liabilities" of Cypriot banks have been omitted from this discussion, since I could not attribute them to either depositors or bondholders. P.P.S. Btw. Denmark bailed in both bondholders and depositors of two mid-sized banks in 2011. In previous crises this had also been done in other countries. P.P.P.S. Here's another good FAQ on the Cyprus and how it got into this situation. P.P.P.S. One thing that went completely under over the Cyprus coverage was the fact that both Portugal and Ireland had their bail-out terms eased. P.P.P.P.S. Oh, what happens if no-one pays?
In the end, somebody will have to pay, one way or another. Someone's debt is always sombody else's loan or investment. If the Eurozone leaders and the Cypriot government are unable to agree on an orderly process to determine who bears the losses, then the banks will collapse and this process will become uncontrollable and much more problematic. The payment system in Cyprus will break down. People will not be able to make payments to each other for several days or weeks. Many people will have their money frozen in the failed banks, without much prospect of accessing it anytime soon and they will probably not get all of it back either. Some estimates suggest that if this happens, depositors will be forced to pay up to 30% of their deposits (the Cypriot President even speaks of up to 60%). Not the 6-10% suggested now. Add to that on top a collapse of the real economy, with lots of unemployment etc., and not to speak of contagion effects in other European countries, as people elsewhere might get worried, that similar things will happen at home as well. Now you can probably understand, that leaders are so desperate to avoid a disorderly collapse. [Update:] Barry Eichengreen wrote a paper in 1991 about the Capital Levy in Theory and Practice! He finds that the levy should actually not have too many negative consequences on the economy as a whole. However, he points out that its implementation in democratic societies is complex, especially when no capital controls are introduced. [Update 2:] What would you do? Check out this text-based game where you can decide on the fate of the Island of Cyprus, er, the Island of Surpyc.

On windows and water taps in the UK

noreply@blogger.com (Niels) — Wed, 06 Feb 2013 10:27:00 +0000

A sash window (you slide
the lower part up) with a view
of Whitechapel - my former home

Sometimes I am incredibly struck by the slow diffusion of innovation. My favourite example, and that of many other Germans in the UK, is that of the poor quality of windows in the UK.

Most windows in residential properties tend to be poorly fitted single-glazed, sash windows. They barely insulate the room and lots of heat gets lost in the winter, driving energy bills into eye-watering territories.

Indeed, we once had a friend over in our apartment and he asked us, whether we could close the window because he felt a cold air current. Unfortunately we could not close the window any further. It was already closed. The window just lets so much air in and out...and we consider our windows to be of the better quality types by London standards.

There are numerous disadvantages to these traditional sash windows they have over here (ever tried to clean one without leaving the building?!). I'm absolutely baffled that these windows are still so incredibly prevalent in the UK. Why are modern double (or even triple!) glazed windows, that are well fitted, not the norm? After all, winter returns to this island with an astonishingly regular precision: every single year!

Either people here are naturally more resistant to being cold inside the apartment, or energy costs must have been ridiculously cheap on this island, so that for a long time it really didn't matter how much you had to heat the home.

Now I ran across just a similar case. Today I saw that Dyson, a British company famous for their vacuum cleaners, just launched a water tap that also has an in-built hand-drier. I think it's a pretty nifty and useful invention, as it saves space in public bathrooms.

In the meantime, most of the water taps I have encountered in the UK look like this:

I had never seen one of these before coming to the UK.

Yes, that's a tap for hot (left) and for a tap for cold (right) water. In order to get water at room temperature you have to scoop water from the cold tap to the hot tap - with your hands. And yes, this particular water tap is property of the LSE - one of the most prestigious universities in the world. And yes, LSE has incredibly crappy windows throughout as well. I do not wanna know how much money is wasted on heating as a consequence.

Why do sensible technical innovations sometimes spread so slowly? I can see no network or monopolist effects at work here...Any ideas?

Best of Tweets - Jan '13

noreply@blogger.com (Niels) — Sun, 03 Feb 2013 11:18:00 +0000

Here come the most interesting links I tweeted in the past month:

Near misses - why they are some of the most under-appreciated events of our lives.

Isaac Asimov on online and life-long learning - back in the 1980s; what a visionary!

The secret about storytelling: it's the editing.

Have we solved too big too fail? No it's worse than ever...

Why moonshots matter - an interview with Google's Larry Page.

Brexit, voice and loyalty - an excellent take by Harold James on the UK referendum.

Interview with Kim Dotcom - a sensible interview with the founder of Mega(upload), about privacy and encryption on the internet.

"Greek and Spanish flee to Germany in Job Hunt"

noreply@blogger.com (Niels) — Wed, 16 Jan 2013 21:50:00 +0000

The new poster child for Spanish immigration to Germany

Welcome to the Bundesliga, Pep!

P.S. I ruthlessly stole this idea from Sander
P.P.S. Here's some more info on actual immigration figures from Reuters.
P.P.P.S. Image source: Wikimedia Commons
[Update: P.P.P.P.S. This is epic: "Guardiola is to Bayern what Obama was to America in 2008: The personification of hope"translated from Spiegel (in German)
P.P.P.P.P.S. I hope the Bayern officials will have patience with him to do his job properly. Let's not forget the other two would-be Messias Bayern hired not so long ago: Louis van Gaal & Jürgen Klinsmann. They both didn't last more than a year and a half at Bayern...]

My alcohol & sweets moratorium

noreply@blogger.com (Niels) — Tue, 08 Jan 2013 17:44:00 +0000

Just to clarify: these are self-imposed resolutions ;)

I have only one New Year's Resolution: to finish up my PhD by spring of this year.

Also, as of today I committed myself to not drinking alcohol (not that I have been a binge drinker) and to not having sweets (unless as a dessert) until I have submitted my thesis.

I know, negative incentives fly in the face of behavioral scientists, but with me they have worked quite well in the past. And hey, it's a public announcement, so that'll help. Additionally, there are only few things that will get me to work inhumanely hard as the prospect of being able to go to Gelatorino in springtime again.

Anyway, I hope my dear friends and blog readers will support me. If you don't see me with a beer at the weekly seminars you'll know it's because of this moratorium. In case you see me with a beer (or Twix) in hand you are herewith allowed to take it from me for your own benefit :)

P.S. If you're still looking for a New Year's Resolution, you might wanna consider taking into account the tips by the "Nudge Unit" of the UK government.

Best of Tweets - Dec '12

noreply@blogger.com (Niels) — Sun, 06 Jan 2013 13:10:00 +0000

Here come the most interesting links I tweeted in the past month:

How (cost) effective is Israel's Iron Dome Missile defence system - not very.

Kate Middleton's pregnancy: 10 stories I don't want to read - me neither.

How to spot a cartel - if prices are too stable something might be fishy.

Roman Krznaric on The Art of Living - the importance of history.

How to Avoid Work - A 1949 Guide to Doing What You Love

Mass killings are not a good argument for gun control

The freedom of an armed society - guns in the public sphere inhibit free speech

The Grand Finale of our UKBA saga

noreply@blogger.com (Niels) — Fri, 04 Jan 2013 12:17:00 +0000

After over a year of wrangling with the UKBA, we finally have got what we sought: Acácia's residence card, which confirms her right to live in the UK with me. Of course, it didn't go about without a minor drama.

You probably know the entire story by heart now. The UKBA accusing us of a scam marriage and denying entry to Acácia. When we were in the UK and we first applied for a residence card they didn't like our German insurance. Then when Acácia wanted to travel they didn't send back Acácia's passport until the day before the scheduled travel. After coming back for a trip to Mexico we learned that they had refused to give Acácia a residence card because they didn't like the German insurance and they don't consider their public health insurance system (the NHS) as being comprehensive. So we reapplied back in October with private health insurance (WPA XS Health Insurance) and now we've got it.

The Certificate of Application

At first it seemed like this time the entire application process might go smooth. We sent in our application (remember everything goes by post...you never get to see or speak to your case worker) at the beginning of October. Just a few weeks later we got the Certificate of Application, which we didn't even get the first time around.

On the 20th of November we requested Acácia's passport back (by email), because we wanted to spend Christmas in Germany with Acácia's and my family - yes, her parents came all the way from Brazil to spend a week with us.

On their website the UKBA promises to send back the passport within 10 working days. When the passport didn't arrive within ten working days we called the UKBA on the 4th of December. The lady from the help center told us that the passport had not yet been sent and we should wait another week and then call again. So we did wait but no passport arrived.

We called the UKBA again on the 13th of December, a week before our scheduled flight. This time the UKBA refused to provide any information with respect to the passport, not even whether it was already sent or not. The person even claimed that they could not access the system with our information anymore because of a system update. We should just sit an wait (or send another e-mail). Acácia even talked to the UKBA person, who had helped us the last time we asked for Acácia's passport back. But even she would not do a thing this time.

What did we do? We contacted our local MP and someone from the German embassy, explaining to them our situation and hoping that they could somehow get in touch with the UKBA regarding this. And, indeed, both the MPs office and the German embassy contacted the UKBA! To them the UKBA promised that Acácia's passport would be sent by the 17th of December (three days before our departure).

When the passport didn't arrive on the 18th (the UKBA usually sends stuff with an overnight service), I called the UKBA in the afternoon, just to ask whether the passport had been sent off. At first the UKBA guy declared he could give us no information whatsoever. However after a bit of sweet talk and mentioning the UKBA's promise to send it off by the 17th, he "rebooted" his system, checked on the system, called a colleague, and then confirmed that "something" had been sent to us.

On the 19th of December, the day before our flight, we got Acácia's passport back. The interventions by both the MP and the embassy seem to have helped.

Well, but that was only the passport and not the residence card. The story continues.

We got back from Germany on the 2nd of January. At the border we encounter a grumpy official who doesn't have a clue about the European Family rules and the UKBA's own system. He barks at us that we already had our chances to regularize her status and that since we have had our passports sent back, we had withdrawn our application. We firmly told him that this wasn't the case and so an and so forth.

So he storms off to his office to check on us, leaving us in the "detainee box" for 15 minutes. When he comes back he behaves like a dog with the tail between his legs. He waves us over, stamps another 6 months entry clearance into her passport and lets us go without a word.

Today, over a year after we first started the process to enter the UK together, a package from the UKBA arrives and it finally contains Acácia's residence card, dated January 2nd, 2013. It is valid for five years.

The Residence Card

The sheet on which the residence card comes when the UKBA doesn't have your passport

The accompanying explanations

The moral of our UKBA saga

We're not quite sure what to make of our experience. But this is probably our advice: Know your rights inside out, the government bureaucrats often don't know the rules themselves (sad but true!) and make as much noise as you can. Unfortunately, it seems to be the only way to obtain your rights.

P.S. The applications did not cost us a dime besides mailing costs (thanks to European law). Nevertheless it was a process that wasted lots of taxpayers money and cost us (and I assume the UKBA officials themselves) lots of time and nerves. My heart goes out to all brits who have non-EEA family members who need to fork out over 500GBP per application.

P.P.S. If you're going through the same process make sure to check out not only the UKBA website's section for EU citizens (we know them by heart by now), but also the immigration boards forums for EEA-route applications.

P.P.P.S. A big thank you to all friends and family (and blog readers!), who have followed our UKBA saga from beginning to end and have supported us throughout. Last but not least thanks to our local MP Karen Buck, and the German embassy!

Behind the scenes of the Big Bang Theory

noreply@blogger.com (Niels) — Sun, 16 Dec 2012 10:57:00 +0000

Currently, there are two series I'm absolutely addicted to. One of them is The Big Bang Theory.

It took me a while to appreciate the show - at first I thought it was totally bonkers - but actually it's quite the opposite. I think you need to know quite a bit of science to appreciate many of the jokes.

By now, I absolutely adore the show. I can't quite pin down what it is, but the characters play a huge role in this. It's about highly intelligent people, who are incapable of dealing with the most mundane social problems. I guess, anybody at University can relate to that theme.

Anyway, it turns out there are great behind the scenes videos on YouTube, which I feel compelled to share.

This is a great 20 min behind the scenes, explaining all the characters. For those who know the show... check out Bernadette's real voice!

Here's an intriguing behind the scenes of the set:

Here's also a tour of the set with Raj and Howard and make sure you don't forget to watch the Flash Mob.

P.S. The theme song is actually one of Canada's most loved bands...The Barenaked Ladies!
P.P.S. My favorite character is definitely Sheldon! Mind you, the actor impersonating Sheldon - Jim Parsons - is turning 40 next year; I thought he was in his late 20s.
P.P.P.S. Mayim Bialik, the actor impersonating Amy - Sheldon's girlfirend - actually has a PhD in Neuroscience; just like her character in the series.

Best of Tweets - Nov '12

noreply@blogger.com (Niels) — Sat, 15 Dec 2012 15:03:00 +0000

Here come the most interesting links I tweeted in the past month:

Why political journalists can't stand nate Silver - The limits of journalistic knowledge.

What if you weren't with your husband/wife/partner? - Tim Minchin sings the answer.

The world's poorest president - Jose Mujica of Uruguay

The fetish for physical goods ignores real work

A high five to Licia Ronzulli for her stance on children in the workplace

Stuff white people like when it comes to economic development

and an op-ed in German:

"Hochachtungsvoll" ist heute hart an der Beleidigungsgrenze - on the art of choosing the right greeting in an e-mail.

Barcelona GSE London Reunion

noreply@blogger.com (Niels) — Fri, 02 Nov 2012 12:37:00 +0000

This is a shout to all the Barcelona GSE Alumni and friends out there. It's time to have a pint and reconnect with each other. So we are organizing a get-together for Barcelona GSE Alumni & friends. It'll take place on

Thursday 22. November 2012 @ 19:00

at the Old Bank of England

194 Fleet Street, EC4A 2LT, London

The nearest tube stations are Temple (District & Circle) and Chancery Lane (Central). All alumni from the Barcelona GSE are most welcome - the more the merrier! Here's the corresponding facebook event.

See you there - it's worth it just for the pub.

Best of Tweets - Oct '12

noreply@blogger.com (Niels) — Thu, 01 Nov 2012 10:38:00 +0000

Here come the most interesting links I tweeted in the past month:

Dark Social - No, Facebook and Twitter do not make up most of the social interaction on the web. It's still direct interaction via e-mail, skype, gchat, etc.

The Self destruction of the 1 percent - a beautiful article about how the 1% of the Venecian elite caused their own downfall by trying to hold on to their privileges too hard.

10 genres of Metal music in 3 Minutes - yes there's actually a noticable difference between Heavy Metal, Melodic Metal, Dark metal, etc.

Happiness Is Equality - How a good measure of equality (not perfect equality) tends to increase happiness in life

Monopoly is theft - The origins of the famous board game

and last but not least:

three great Dilbert comic strips: On Bullshit & On Opinions and On real change in institutions.

The UKBA saga: Episode 4

noreply@blogger.com (Niels) — Wed, 24 Oct 2012 11:20:00 +0000

Brilliant Cover!

If you thought that Acácia's and my saga with the UK Border Agency was over, you've been mistaken.

A brief recap

Acácia (Brazilian) and I (German) got married in October 2011 and Acácia decided to come to live in London with me (nice one!). EU law (basically) states that within the EU she has the right to live in the same place as I do. We applied for a UK family permit, which was denied because they suspected a scam marriage. We reapplied successfully and once we came to London (in Jan/Feb 2012) we applied for a 5 year residence card for her. A few weeks later, I requested my passport back so I could travel to the US, so they sent back the entire application citing not sufficient evidence that we were living jointly in the UK and that we had comprehensive health insurance. So we reapplied with more supporting material. In the summer of 2012 we had to travel and it took the UKBA over a month to return Acácia's passport. In the end, the passport arrived the day before our flight - and after being on the phone with them for numerous hours to put pressure on them.

Fighting with Embassies

So in June we travelled to Brazil and Peru for a birthday and a kick-ass wedding, where I had the honours of being the best man (btw. Peruvian food rocked my world). We came back into the UK without a problem, after all Acácia's family permit was still valid. Brilliant!

In July we had to travel to Mexico for another wedding, via Canada. And this is where the fun started. Acácia's family permit had expired by then, but according to the UKBA rules, that is not a problem, as long as I am still living in the UK.

Acácia had to apply for a transit visa to change planes in Canada (I'm never booking a flight via Canada again...such a nonsense transit rule) and for a tourist visa to Mexico. Oh boy, did we have a hard time convincing them that Acácia was not overstaying her "supposed" visa (the family permit) in the UK. The Canadians rejected her first visa application (claiming she was residing in the UK illegally) and the Mexicans did not even want to accept her application (the Mexicans wanted to see a residence card, which is only optional to have, but not mandatory according to UK immigration rules).

We prepared elaborate dossiers explaining European and British immigration rules to both the Canadian and Mexican Embassies (shouldn't they know themselves?!) and eventually we got the visas. Hallelujah! Off we went for two weeks to Mexico...what a splendid country!

Rejected residence card application

When we came back to the UK we explained our situation to a friendly immigration officer. That we're married and both living in the UK with me going for a PhD and Acácia working, but that the family permit had expired and that a decision on her residence card had not been made yet and that we didn't even get a certificate of application despite requesting one (we did not have to show him any documentation). The immigration officer asked us to take a seat and he went to a back office.

This is what the "Code 1A" looks like.
Source UKBA guide for employers (p. 40).

After 20 minutes he came back telling us that while we were in Mexico our application for a residence card had been rejected. You can imagine how our jaws dropped, when he uttered those words. WTF?! And what was he gonna do now? Refuse Acácia e-entry into the country? Fortunately that did not happen. He said he'd admit Acácia on a discretionary Code 1A stamp, which allows her to stay and work in the country for 6 months. In that time we should set things straight and send off another application for a residence card he said. Fair enough.

So we got home, where we saw the rejection letter for the residence card. The application was denied because we supposedly didn't have "comprehensive health insurance".

Both Acácia and I are entitled to public health insurance (the NHS) and on top of that I have German health insurance, which would kick in for her the moment she got unemployed. These were not good enough for the UKBA. Most "impressive" is the fact that for the UKBA the public NHS health insurance does not count as comprehensive health insurance (mind you, about 90% of Britons are exclusively insured in this public system...do all of them not have comprehensive health insurance according to the UKBA?!). What the UKBA wanted to see was a private health insurance contract (but not even in their rejection letters do they state this clearly).

However, if I were working instead of studying, no such private health insurance would be required and entitlement to treatment in the public NHS system would be sufficient for the UKBA. The fact that Acácia is working does not make a difference. Does this make sense to you? No it doesn't. And neither does it to the European Commission, which is about to sue the UK because of this discriminatory practice.

Btw. the refusal letter further stated that Acácia should prepare to leave the country and if she did not do so soon, she would be deported. That's really not a nice thing to read... Fortunately the letter also stated that we can either go to court against the decision, or just reapply for a residence card.

Travelling without a valid family permit and a rejected residence card

We decided to reapply, but not straight away. We needed Acácia's passport to travel to a wedding in France (yeah, lots of weddings this year - we're loving it!). So when we came back to France it was the same procedure at the border. We explained our situation to the immigration official, he asked us to take a seat and went into a back office. After 20 minutes he came back and said that he had read the scanned correspondence between us and the UKBA (ah, that's why they go into the back office!) and that he was gonna admit Acácia on a new Code 1A. So Acácia would get to stay and work for another 6 months from that point in time. Hurray! The immigration official actually said that he had to grant her entry since I was European and we were married.

Another application

Last week we finally sent off yet another application for a residence card. We actually had to wait a couple of weeks after our trip to France to send it off, because it took us a while to get private health insurance. Private health insurance plans in the UK require you to be registered in the public NHS system for 6 months before you can sign up with them...

I'm wondering, whether the UKBA will find anything else they are gonna deny this application for. We'll find out...in about six months.

The good and the bad

The bad of our ordeal is certainly the fact that the UKBA tries to reject applications on whatever ground they can and we still don't have that silly residence card and have to spend even more time and money in this bureaucratic maze. We're basically back to where we were in Februrary. Mind you, we have a friend, who's in the same situation, who can't be bothered any more and just keeps applying for regular 6 month visas, because it's less hassle. In any case, god bless The Economist (UK edition) for this week's title (see above) and cover story - maybe that'll change some minds within the UK government.

The good is that we had plenty of experience travelling in and out of the UK without any of the silly documentation the UKBA wants to make you believe that is necessary (in particular the family permit). Also, the immigration officials at the border were always courteous and constructive. We're gonna travel for Christmas again, and we're not the slightest bit worried they won't let Acácia in, even though she won't have a valid family permit. Also, this episode makes us appreciate the European Union so much more. How they lower silly barriers between countries and how they actually fight governments violating citizens' rights. You can't imagine how proud I was, when the EU was awarded the Nobel Peace Prize!

tl;dr (= too long, didn't read)

The UKBA denied our application for Acácia's residence card, because they want me (as a student) to buy private health insurance, even though we are members of the public health insurance (the NHS). We are now re-applying once more after getting that private health insurance.

Economic History links

noreply@blogger.com (Niels) — Thu, 11 Oct 2012 09:16:00 +0000

Information flows within academic departments tend to be rather limited. Especially if you're starting your PhD it can be daunting finding out about the important conferences, journals and job listings, etc. I keep finding out about them, even after more than two years into my PhD.

That's why I started to compile a couple of lists, to make the lives of Econ (History) PhD students a bit easier. They are work in progress and will improve over time (thanks to all those who contributed so far!).

I've compiled a list of conferences and workshops that take place on a (somewhat) regular basis so you can have an idea what's actually out there (there isn't just the EHS and the EHA conferences).

There is also a list with respect to Journals (if you are thinking of publishing) and another one for grants & jobs (if you need some cash).

The idea is to have these lists on the department's webpage, eventually. In the meantime I have published them here. Any additional input is most welcome!

P.S. Complementary information (such as about Econ History Blogs & Economic History Centers around the world), can be found here.

The Chavez Bonus

noreply@blogger.com (Niels) — Tue, 09 Oct 2012 10:27:00 +0000

How does Hugo Chavez remind people that it pays to vote for him? By releasing the year-end bonus payments in early October already!

In the following letter (in Spanish) -- the veracity of which I cannot confirm -- it is being announced by the Venezuelan government Department of internal affairs and justice, that the government notaries and registrars (SAREN) that their year-end bonuses will be as high as 30% of their basic salary, and that these salaries will be paid out on friday the 5th of October, just two days before the Venezuelan presidential election of 2012...

The letter actually also makes a direct reference to the election in the last paragraph. It reads that "the government is confident that this incentive will help to get our commander [Hugo Chavez] reelected on October 7th 2012."

Source: Oskar Gómez via FB.

I've always wondered how free and fair elections in Venezuela are and why he keeps on getting re-elected with huge margins. While there might be no vote rigging or other manipulations at the ballot box, Hugo Chavez seems to have the entire government apparatus at his disposal. That's quite convenient if you want to dole out a few extra "incentives" to the people.

P.S. Venezuela launched a satellite into the earth's orbit - just a few days before the election. Coincidence?!
P.P.S. It was launched in China by a Chinese Rocket
P.P.P.S. And it's also likely that the satellite was largely Chinese in origin. But hey, it's got the name of Venezuelan independence hero!
P.P.P.P.S. Here's a Guardian article lauding Chavez rule and trying to explain why he's so popular at home (he's supposedly managed to reduce poverty) and unpopular elsewhere (mainly in the US who supposedly wants the oil).

Best of Tweets - Sep '12

noreply@blogger.com (Niels) — Mon, 01 Oct 2012 10:04:00 +0000

Here come the most interesting links I tweeted in the past month:

How Draghi got his way: Inside the Euro rescue plan - The intriguing story of the ECB fighting for being able to buy an unlimited amounts of bonds of struggling Eurozone countries. It reads like a thriller.

Why financial ideas give birth to legends - how many people jumped off skyscrapers during the Great Depression? Only one.

The weatherman is not a moron - what really goes into predicting the weather, fascinating NYT article!

You went to Google.com. What just actually happened? - a fascinating description on how such a mundane thing as "googling"relies on layers of different complex technologies. It really makes you marvel our modern lifestyle and the power of cooperation!

On-line education will make us rethink age grouping in schools - The internet has barely begun to touch our lives...

No queremos volver a la España de los 50 - a magnificent article about the Spanish crisis and how the potential dissolution of the Euro would throw back Spain's political system by 60 years (only in Spanish though).

Eure Internetsucht ist unser Leben - another great article (unfortunately available only in German) by Sascha Lobo about how Internet is changing society and how it leads to a clash of cultures of those that grew up with it and those that did not

Kindle touch (Wifi only) review

noreply@blogger.com (Niels) — Thu, 06 Sep 2012 02:00:00 +0000

I never quite liked the look of the regular Kindles with all the ugly buttons 'n stuff. But once the Kindle touch came to European stores this spring, I went for it.

All-right, I admit...Acacia was instrumental in me getting the Kindle cause she was sick and tired of carrying around my books from apartment to apartment (yes we do move too much) and she begged me to get a Kindle (or to give away the books...which is an unacceptable option for me ;) ).

Anyway, my parents were so kind to give me the Kindle as a birthday present and I've already used it extensively and taken it on two lengthy trips to South America. So here's my five cents on how life changed with the Kindle touch (WiFi only):

Did life change? Yes it did in about the same way the Macbook Air is an upgrade over a regular Macbook. The Kindle makes your life lighter and thus more comfortable. No, it's not a monstrous orgasm you get from using a Kindle. The reading experience is very similar to that of a book (in some ways better, in a few ways a tad worse).

Is reading comfortable? Yes, it's indeed just like a paper book. It's way more comfortable than an iPad screen (yes, even more comfortable than an iPad 3 retina-super-duper-woooha-screen).

Is the "touch" of the screen any good? Look, I was scared to death of the touchscreen. I feared it would be incredibly slow and unresponsive. It is much much better than I thought. I can type on it almost at the same speed as on my smartphone!

Do I miss flipping through the pages of books? No I don't. Only when I do research. That's when I need to go back and forth quickly. Quite frankly, that would be a major pain on the Kindle touch, that's why I never use it for research. When I read books for fun I do not miss the flipping part at all (on the contrary, it's no hassle keeping the correct page open anymore).

Does the battery really last that long? Oh my gosh -yes! It's insane. I went two months without recharging and I'm reading on it almost on a daily basis (just make sure the WiFi is turned off when you don't need it).

Is there something that surprised me (positively)? Yes! You can actually browse the Web with the Kindle (as long as there are no videos involved) and it's actually quite a decent experience for FB, Twitter and e-mail.

Is there something that surprised me (negatively)? Yes! The user interface is not nearly as well thought out as an Apple product's interface would be. Many options are "hidden" and sometimes it can get very tedious getting to where you want. When you click on a footnote it goes there but getting back is a pain. Oh, and there does not seem to be a way to change the contrast, which is a bit of a bummer. Also on rare occasions the Kindle has some kind of bug and just goes to the very first or last page of the book. Weird. I also already had a book crash...but a reboot of the entire Kindle did the trick.

What do I miss? Being able to lend e-books to or from other people.

What do I like best? I can buy new books pretty much anywhere (and yes, I have made good use of that on my travels!). Also, Acacia and I can always have both our books with us (although only one of us can read at a time, but that hasn't been to much of a problem so far). Weight is not an issue anymore - liberty! And, last but not least, old books are free thanks to Project Gutenberg!

Apple's tipping point

noreply@blogger.com (Niels) — Wed, 05 Sep 2012 17:18:00 +0000

Arg, I wish this never happened but it had to happen. Apple reached my personal tipping point. I didn't think it would come this quickly.

I always used to love Apple for the detail they put into their products. Now, however, it seems like Apple has changed strategy. Instead of keeping up the innovative pace they have decided to go on a rampage suing companies for copyright infringement. Quite frankly, the kinds of "patents" that were given to Apple seem a bit ridiculous to me. It's a bit as if Apple had a patent on how to type on a keyboard.

Apple is starting to behave like Microsoft when it realized it dominated the market for operating systems...less focus on innovation, more focus on restricting entry to the market. That makes apple a great deal less sympathetic to me.

Mind you, Apple was never shy of suing companies (such as Microsoft) for copyright infringement. However, at the moment you could get the impression that it's their primary strategy for sustaining their market position. It's all a bit ironic, given that Steve Jobs himself loved Picaso's adage: "Good Artists copy, great artists steal." His autobiography is full of examples were Jobs "stole" excellent ideas and had them replicated for Apple (some of them he stole even before they were patented...).

Apple is not gonna go down immediately, but its corporate culture and its esteem with the general public is surely taking a big hit from this...in any case Apple should focus more on this problem:

P.S. And no, Samsung did not try to pay Apple it's fine in nickels.
P.P.S. Samsung can do good ads too!

Advertising London 2012

noreply@blogger.com (Niels) — Thu, 30 Aug 2012 09:39:00 +0000

A lovely Eurostar ad for the Olympics.

I figured I'd share a couple of advertising impressions from the 2012 Olympics and Paralympics in London:

There were lots of ads telling Londoners to
plan ahead. Many decided to flee London.

Some of the tubes have been decorated by these lovely guys.

Even British Airways told Londoners to stay home and
support Team GB.

It's ok to shout at the TV!!
Probably my favorite print ad - again from British Airways.

In general I've been really touched by how much emphasis has been put not just on the Olympic games, but also on the Paralympic games here in Britain. Maybe it's because it's here that they first began and probably also because the UK has quite a lot of soldiers on active duty who have lost a limb or a sense and it's a way to celebrate them. Have a look at this great TV ad for the Paralympics on channel 4 with the title: "Meet the Superhumans". It really gets you pumped!

Best of Tweets - July '12

noreply@blogger.com (Niels) — Thu, 02 Aug 2012 13:38:00 +0000

Here come the most interesting links I tweeted in the past month:

I've changed my mind about carbon taxes - a great piece by Tim Leunig on the problems with carbon taxes. The logic of this article is transferrable to many other economic problems as well.

This much I know - Daniel Kahneman (Nobel price winning behavioral psychologist) on his pessimistic mother, the delusion of investment bankers and the need for irony.

Income and happiness are relative - Such an epic Dilbert comic.

Top five regrets of the dying - Got an important life choice to make? Try putting things into a long-term perspective.

Why do ‘experts’ always lowball clean-energy projections? Actually, the world has already made some substantial (policy) changes vis-a-vis 12 years ago.

Finance needs Stewards, not toll collectors - Too much micro-regulation of banks is not gonna do the trick.

John Cleese (a guy from Monthy Python) on creativity - Nothing will stop you being creative so effectively as the fear of making a mistake.

Olympic Special:

Ai Weiwei's review of the London 2012 opening ceremony - and how it was so fundamentally different from China's.

Danny Boyle - director of the London 2012 opening ceremony - on his vision for the ceremony.

Surreal Greek Bureaucracy

noreply@blogger.com (Niels) — Tue, 31 Jul 2012 08:24:00 +0000

The Economist just had a piece about how hard it is to be an entrepreneur in Europe as a whole. Have a look at the hoops you have to jump through in order to open an online-store in Greece.

"[...]Antonopoulos and his partners spent hours collecting papers from tax offices, the Athens Chamber of Commerce and Industry, the municipal service where the company is based, the health inspector’s office, the fire department and banks. At the health department, they were told that all the shareholders of the company would have to provide chest X-rays, and, in the most surreal demand of all, stool samples."

More here Ekathimerini.com

Please, someone, anyone, tell me that the account is not true!

HT goes to Kantoos.