Arte-non-Vi

Tag: Markets

  • What the experts KNOW

    The notion of originality, innovation and the oft-used “paradigm-shift” challenges all of us.

    None more-so than the “experts” within an industry. Not unlike those Generals and the last war… or those Teachers that have “seen it all before”

    As we move in to the “Apple rumour season”, It seems appropriate to look back at some expert reviews and consider what value and meaning “expert analysis” and “market responses” have within the life-cycle of any innovation..  I know what Steve would have said……

    The iPhone

    “Apple will sell a few to its fans, but the iPhone won’t make a long-term mark on the industry.” – Matthew Lynn, Columnist at Bloomberg   [Ouch – Ed]

     

    “This is not a great phone. It’s an interesting design.” – Rob Enderle, Analyst with the Enderle Group

     

    “That virtual keyboard will be about as useful for tapping out emails and text messages as a rotary phone. Don’t be surprised if a sizable contingent of iPhone buyers express some remorse at ditching their BlackBerry when they spend an extra hour each day pumping out emails on the road.” – Seth Porges, CrunchGear

     

    “I’m more convinced than ever that, after an initial frenzy of publicity and sales to early adopters, iPhone sales will be unspectacular.” – David Haskin, Computerworld
    “Implementing a cellphone is absolutely more difficult than anything Apple’s done to date. Go out and buy an iPod and hold it at waist level and drop it. That’s the end of the iPod. I don’t think Apple’s going to be a big player in this at all.” – Edward Snyder, Analyst with Charter Equity Research
    “There is no reason to have an 8GB iPod on the phone. Give us a 2GB capacity so we can put our favorite stuff on it and listen when we want, cut the price to $299 and you may have something.” – Todd Sullivan, Seeking Alpha

     

    “[The iPhone] will have very little impact on the business community.” – Avi Greengart, Analyst with Current Analysis

     

    “Sales for the phone will skyrocket initially. However, things will calm down, and the Apple phone will take its place on the shelves with the random video cameras, cell phones, wireless routers and other would-be hits.” – Michael Kanellos, Editor at CNET

    [Source: TUAW]

  • Fact vs Faith…

    Facts versus faith.

    Joshua Gans – I was asked to write an opinion piece about Kevin Rudd’s essay in The Monthly on the GFC which, by the way, should stand for Great Fracking Complacency. It is in today’s Age and my opinion and disappointment speaks for itself. (Others seem more willing to carry ideological baggage than I am).

    Forget ideology common sense should prevail

     

    Joshua Gans

    The Age, February 5, 2009

    The global financial crisis is an opportunity for reform, writes Joshua Gans.

    AS AN academic, I am a big fan of frameworks, philosophy and a sense of history. This is our bread and butter. They discipline us in being consistent and testing our assumptions against facts. And when I think of what I want in a leader, it is someone who can demonstrate that they can rise to that level. Our most recent example is Barack Obama, who is one of the greatest expositors and, potentially, implementers of collectivist theory and practical compromise that I have seen.

    It was with that hope in mind that I read our Prime Minister’s essay in The Monthly, which was billed as a higher-level piece reflecting on those intellectual values in the context of an unprecedented economic event. And as a person who is generally a supporter of this Government, I knew that reflection was missing and I had hoped it would fill the void between the various actions this Government is taking and an underlying set of values. I am sorry to report that it fell far short of that hope. And it did so for several reasons. The most important of these is the dressing-up of what we are seeing as a flashpoint in the battle of ideologies. Rudd uses the term “neo-liberal” to describe the old and “social democrat” to describe the new. In neither case do we know what it all means. It seems to mean unbridled faith in markets versus a concern for public goods and the role of government. But is this a conflict we are seeing in Australia?

    Economically, two things have come home. First, unchecked and unregulated financial markets can suck up energy and spew out distress. Second, that distress can spread from a single economy to economies that have had what appeared to be appropriate checks and balances.

    While these challenge blind-faith adherence to markets, they do so not from a new ideology but to convince those denying the theory of market failure that such failure is a fact. They do not tell us that we need to be any more concerned about social equity or the role of government in, say, building infrastructure. There is a debate there but a financial meltdown does not give rise to ideological victory.

    Rudd does better in the parts of the essay that eschew ideology and concentrate on past governmental failures. The fact that Howard and Costello rested on the laurels of economic fortune and did nothing to pay premiums on insurance against financial shocks and global recession is where Rudd has stronger claims. But that is a story of blindness to evidence and a lack of rigorous economic thinking, rather than ideological failing. After all, Howard presided over the largest growth in the size of the government and a set of irresponsible handouts at the end of office that burned any buffer for this crisis. If neo-liberalism means something, it surely is not that.

    However, it is there that Rudd is somewhat exposed. I can vividly recall this time last year when fellow columnist Christopher Joye and I raised the problems in the mortgage-backed securities market

  • The Failure of unregulated markets

    The failure of unregulated markets.

    [HT: Simon Johnson] MIT’s Daron Acemoglu has written one of the best essays on the financial crisis and what it means for economics that I have read. He argues, convincingly, that forgetting about what drives economic growth when formulating policy is a big mistake. Importantly, it has been all too easy to forget about how important institutions are in advanced economies as we trotted along with seeming economic prosperity for a decade.

    The same economic and financial changes that have made our economy more diversified and individuals firms better insured have also increased the interconnections among them. Since the only way diversification of idiosyncratic risks can happen is by sharing these risks among many companies and individuals, better diversification also creates a multitude of counter-party relationships. Such interconnections make the economic system more robust against small shocks because new financial products successfully diversify a wide range of idiosyncratic risks and reduce business failures. But they also make the economy more vulnerable to certain low-probability, ‘tail’ events precisely because the interconnections that are an inevitable precipitate of the greater diversification create potential domino effects among financial institutions, companies and households. In this light, perhaps we should not find it surprising that years of economic calm can be followed by tumultuous times and notable volatility.

    Acemoglu also warns against the twin dangers in reactive policy. First, there is some necessarily reallocation that lies at the heart of the crisis and many bailout policies are halted that process. Second, that there is a danger this may reinforce views that the market is working for the privileged. Both of these will undermine moves towards a sensible regulated market outcome in the future.

    I can’t do justice to the essay in this post but I commend it to anyone who is thinking about the long-term policy ramifications of the current mess.

    [Core Economics]