Wednesday, April 25, 2012

On Yellow Metal Perils



With all the focus on the link between the price of gold and whether the US Federal Reserve will embark upon QE3, it seemed to be worth asking just what holding metal ingots is really a hedge against. The whole idea of hiding a stack of gold seems a bit dramatic, but it is a financial plan that is gaining mainstream acceptance. Everyone should have savings to fall back on in the event of a crisis. The question is whether it is actually useful to keep those savings outside of a bank, and yet then whether to convert them to the barbarous relic. 

The main criticisms of gold are that it pays no dividends, no interest, costs money to hold, and is driven by paranoia and bubbles, which is funny because given stock values, real interest rates, fund fees and the VIX, that sounds like pretty much everything these days.

The following table lays out examples of financial and economic risk scenarios some Euro area citizens could face under extreme circumstances, and compares holding gold as a mitigation...

Tuesday, April 24, 2012

Austerity backlash.

The piece that is missing from the discussion of austerity measures in Europe and in North America is one of the main factors in whether electorates will support or deny them, and in turn whether austerity will ensure the viability of currencies and global markets.

When you actually look at the size of the electorate against that of the whole population, depending on demographics, it's about a half to two thirds of the total population. The same can be said for the size of the labour force. Depending on the level of unemployment, you can shrink the labour force even further. Now, given the number of people employed in the public sector - from direct government services, to academia, military, municipalities, states and provincies, social services, and the health care system, and broader public sector agencies, boards and programs - you are looking at about one-in-five to one-in-four (%20-%25 of the labour force, or greater in some countries) whose salary is paid directly by the government.

In Canada, according to the Statscan data, it is at least %20, but that's just where it starts...

Friday, April 20, 2012

Riot season.

With the coming of the warm weather, it was only a matter of time before our nation's students again took to the streets to impress one another with the annual spectacles of marching, chanting, rock throwing and police provocation.

Students in Montreal clashed with police as part of a campaign to reduce tuition fees, probably to nothing, and presumably to ensure their undergrad degrees will be as truly worthless as they treat them.

Gold commentators get it wrong.

Another post over at Zero Hedge about gold and silver prices seems to miss the point. Barring it being declared contraband The price doesn't really matter. Holding physical metals is not a portfolio price hedge, it is a risk hedge. Think the kinds of things people keep in cottages and farmhouses in case of extreme weather events, a fairly common occurrence in which they may not be able to rely on the trappings and accoutrements of society for brief periods. In a city it seems like the end of the world, but in the country, that's just winter...

Thursday, April 19, 2012

Is there a Silicon Ceiling?

Computer World UK has a story on a Gartner survey that says Chief Information Officers are dismissed as techies without business savvy by CEOs

What's more, is the CEOs are mostly right. However, they are right in a very CEO kind of way.  The real hitters in organizations know that techies have a tremendous amount of power, but they typically are not educated to trade-on or use it effectively.

Techies can be discredited easily in political environments for this lack of savvy,  because geeks just don't understand the process-oriented view as a weakness or disadvantage. Tech people trade on skills and information, moreso than alliances and relationships, and in turn they do not value strategic advantage in the same way.

From the perspective of a CEO, she cannot rely on her technical people not to give the game away. The tech business is full of internally consistent logic, and it creates massive blind spots for the dynamic alliances and strategies that comprise how business actually works. Geeks may feel like they are a Lamborghini in a crowded shopping mall parking lot, and I'm sure it's great to be a Lamborghini, but who wins the day in business is the one who gets out unscathed and lives to race another day.

Wednesday, April 18, 2012

Don't get hopes up for high CAD, Carney

Passable article over at the Globe reporting that BoC governor Mark Carney is trying to "talk down" the loonie from being seen as a safe haven for hot foreign capital flows based on oil prices.

What he means, if not precisely is that real interest rates in Canada are still effectively negative, and he will print money to make sure that the CAD stays near parity with the USD because our exports depend on it.

Canada has no competitive manufacturing industries, and it uses its proximity to the US and periodic weakening of the dollar and commodity price controls to maintain exports. Anything below parity with USD is an opportunity, since in terms of raw purchasing power in Canada the CAD has a value of as much as, or more than the USD.

However, Canada's M2 equivalent marches exponentially alongside the US M2, and with an inevitable QE3 of some sort in the US, Canada will likely fire up the presses in unison, soaking carry traders and hot money alike.

Carney is spending more time in the press than the finance minister. Politically that must mean something.

Monday, April 16, 2012

Time to go long Apple anti-virus products.

Not a week has gone by lately without a new report of vulnerabilities or viruses affecting Apple products. It is useful to know about these things so that you can apply patches and have some faint hope of not having your data and personal information pilfered by eastern european data brokers. For more of the same, see Ars Technica for the latest.

What is more interesting is how predictable this was. Four years ago, a fellow named Adam O'Donnell published a paper in the IEEE Security & Privacy journal that provided a game theoretic model of when attackers would switch their efforts from infecting PCs to Apple...

Silly continentals hoard %35 more Barbarous Relic in eccentric hermit mountain kingdom.

The BBC is reporting that gold shipments from Italy to Switzerland have increased %35.

They then add this gem:

"Experts say improvements in the trade deficit could be a sign that Prime Minister Mario Monti's economic reforms are starting to take effect."


If by working they mean people with savings or wealth getting their money the hell out of the country before it can be seized under the aegis of wealth taxes, then yes Monti's policies are working...

Sunday, April 15, 2012

Inaugural

Thank you for looking me up. This blog, "A Sporting Interest", will take current events and somehow make them about me. It will be a general platform for half-baked ideas, self promotion, petty rivalries, and the kind of intellectual vomitorium people tend to use these things for.

Far from being objective or fair, my views on economics, arts, technology, and society can be summarized as sincerely disinterested.