Completely Unwoven: Business, Economics, and Tax Policy 4.0

[St. Clown]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

Yeah, but my costs will go up eventually because of their idiocy.

Or they simply keep the current foreign content the same while reducing their older catalog of American content. There's more than one way to meet a requirement like that.

[FreshFish]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

this doesn't address the primary debt markets, only the secondary markets.

Where is your evidence for this statement? who do you think were the primary buyers of short-term corporate debt if not money market funds in the first place???

There's no need to [necessarily] think that the sky will be falling simply based upon this article, but it's a rule that's due attention, and I'm sure more than a few economists will be watching the debt market numbers, both primary and secondary, to see if the rule has anything more than a marginal effect on that market.

The rule already is having way, way more than a "marginal effect" in some parts of the economy (aside: don't you work for a Trust-administration company? you'll see it in the money market asset allocations among the clientele). Several big-name investment managers have already announced that they are switching to government-only money funds as a result of this rule. That is a lot of money that will no longer be part of the demand for short-term corporate debt. Supply won't (initially) change, which means that price "must" fall as a result, and since yield is the inverse of price, yields "must" rise, inevitably increasing the cost of short-term non-government borrowing (and short-term borrowing costs for states and municipalities as well).

and this is a huge market. You need to meet payroll next Thursday but your biggest customer won't be paying for his purchases until the Wednesday after that. So you need a six-day loan. Multiply that by how much and it is not trivial. Our economy depends a very great deal on short-term non-government debt to smooth over month-to-month fluctuations in cash flow, and the ripple effects will be significant and, of course, unanticipated.




BTW, you are correct in that this rule is directly and overtly in response to the liquidity squeeze in 2008. Money-market fund investors became panicked that their fund held now-worthless paper and stampeded for the exits all at the same time. Several money market funds had to suspend redemptions. Part of this rule involves "liquidity gates" that were put in place explicitly to limit similar potential runs in the future.

[St. Clown]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

Where is your evidence for this statement? who do you think were the primary buyers of short-term corporate debt if not money market funds in the first place???

Investment banks and large brokerage houses are usually the primary purchaser. They get in first on almost all assets and create the first wave of secondary market transactions. Companies like Fidelity Funds, Janus Funds, etc. that market these MMFs to the general public are making their purchases on the secondary market, generally before the smaller players have a chance at them and often for either a better price or discounted fee ratio than you or I could secure.

The rule already is having way, way more than a "marginal effect" in some parts of the economy (aside: don't you work for a Trust-administration company?

Yes, I do work for a trust admin company, but not everyone who works for such a company is an investment manager or account manager. I make application corrections and translate money geek speak into tech geek speak for new application development. I'm a business systems analyst and therefore not given much in terms of client data in order to prevent accidental client data leaks. It's a separation of duties thing.

you'll see it in the money market asset allocations among the clientele). Several big-name investment managers have already announced that they are switching to government-only money funds as a result of this rule. That is a lot of money that will no longer be part of the demand for short-term corporate debt. Supply won't (initially) change, which means that price "must" fall as a result, and since yield is the inverse of price, yields "must" rise, inevitably increasing the cost of short-term non-government borrowing (and short-term borrowing costs for states and municipalities as well).

and this is a huge market. You need to meet payroll next Thursday but your biggest customer won't be paying for his purchases until the Wednesday after that. So you need a six-day loan. Multiply that by how much and it is not trivial. Our economy depends a very great deal on short-term non-government debt to smooth over month-to-month fluctuations in cash flow, and the ripple effects will be significant and, of course, unanticipated.

Yes, some big players are moving out of the market, which will likely lead to other smaller players filling the void. We don't yet know the change in demand at the consumer level for these products, only whether or not the established players want to deal with the added responsibility of actually pricing their product - something every corporate, municipal, and state bond fund managers do daily, along with every equity fund manager, too.

BTW, you are correct in that this rule is directly and overtly in response to the liquidity squeeze in 2008. Money-market fund investors became panicked that their fund held now-worthless paper and stampeded for the exits all at the same time. Several money market funds had to suspend redemptions. Part of this rule involves "liquidity gates" that were put in place explicitly to limit similar potential runs in the future.

Yeah, Bear Stearns' shenanigans with the Fed and DTCC had a cascading effect on trade settlement - not just FRB trades, and locked down a lot companies from getting their cash while others relied upon their cash reserves for temporary floats. People wouldn't believe what a single large entity engaging in dirty pool could do to everybody else, even those who didn't have any pending transactions with that bad actor.

[Kepler]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

Two dumb questions from an econ rockhead:

1. What was the ostensible rationale for the exemption of US government securities?

2. If "the market-based value of fund assets" is only now being mandated for the valuation of portfolio securities, what the heck were they using before? Wish fulfillment?

Here is the way my friend the Econ PhD - Lawyer - Neurological Basis of Psychology polymath answered me. (My boy's wicked smaht and he should post here; too bad Penn sh-tcanned their hockey program in the 70s):

I can only guess on this one. The unit value (price, basically) of a money market fund is supposed to stay at $1.00 because a dollar is a dollar always. If they are going to let the "market-based value of fund assets" determine the unit price, it sounds like they are going to drop the pretense that money in money markets is invested in something completely safe and acknowledge that the money is still being invested in something with some risk and let the unit price float accordingly. If they are only doing that for non-governmental securities, that's just part of the whole "the US government can/will never default on any obligation because we're America dammit" mentality.

I like how they use the word "gate" in this press realease. What they mean is "steel cage door" but "gate" sounds prettier. They are going to give the funds the legal OK to lock people's money inside the fund when everyone is trying to pull their money is out during a panic run on the fund. In practice, that probably means letting the Illuminati cash out first while trapping inside the dumb money who didn't know that the sh@t was about to hit the fan. Presumably, if lots of people want to get out of a fund and not many want to stay in or get in, the floating unit price would plummet to reduce the imbalance. "You want to take a dollar out? OK, here's 50 cents" "You feeling lucky? Dollar bills are on sale today for just 50 cents" That kind of thing.

My Vanguard 401k used to give me lots of stock/bond/money market choices. Then in the last year or so they reduced the choices drastically to stock and bond funds which are all losing money or just barely making money (while at the same time being very risky). My money market was the only way of avoiding that and now . . .

[SJHovey]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

I'm going to change the subject here, a bit, only because I don't know where else to post this, so I'm going to post this is the "Business policy" thread.

Is anyone else really creeped out by this?

I know the wellness programs have been around for awhile (thankfully I'm nearing the end of my working career, not just starting). But his video is just plain disturbing to me. It feels like the kind of video that would be shown playing in A Clockwork Orange or the original Total Recall, where we would all just sit there and giggle to ourselves over the ridiculousness of a world where that would be permitted to happen. Now we've got the friggin' Canadians doing it to us.

In the last year Aetna apparently saw a massive payoff once they implemented this, and businesses are nothing if not sheep.

[dxmnkd316]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

I'm going to change the subject here, a bit, only because I don't know where else to post this, so I'm going to post this is the "Business policy" thread.

Is anyone else really creeped out by this?

I know the wellness programs have been around for awhile (thankfully I'm nearing the end of my working career, not just starting). But his video is just plain disturbing to me. It feels like the kind of video that would be shown playing in A Clockwork Orange or the original Total Recall, where we would all just sit there and giggle to ourselves over the ridiculousness of a world where that would be permitted to happen. Now we've got the friggin' Canadians doing it to us.

In the last year Aetna apparently saw a massive payoff once they implemented this, and businesses are nothing if not sheep.

Two words:
*******k. No.

[Kepler]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

I'm going to change the subject here, a bit, only because I don't know where else to post this, so I'm going to post this is the "Business policy" thread.

Is anyone else really creeped out by this?

I know the wellness programs have been around for awhile (thankfully I'm nearing the end of my working career, not just starting). But his video is just plain disturbing to me. It feels like the kind of video that would be shown playing in A Clockwork Orange or the original Total Recall, where we would all just sit there and giggle to ourselves over the ridiculousness of a world where that would be permitted to happen. Now we've got the friggin' Canadians doing it to us.

In the last year Aetna apparently saw a massive payoff once they implemented this, and businesses are nothing if not sheep.

It would be creepy but I have a feeling it's just a way to rip off stupid bosses and managers. Hawthorne Effect, anyone?

Also, I want to see what my "personality-matched life coach" is like.

BTW, the music on that ad is what is played at the FEMA death camps.

[dxmnkd316]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

It would be creepy but I have a feeling it's just a way to rip off stupid bosses and managers. Hawthorne Effect, anyone?

Also, I want to see what my "personality-matched life coach" is like.

BTW, the music on that ad is what is played at the FEMA death camps.

Bender is my power animal.



ETA: And yes, definitely the Hawthorne Effect. This is such a load of garbage, gobbledygook, and outright lies.

[FadeToBlack&Gold]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

I'm going to change the subject here, a bit, only because I don't know where else to post this, so I'm going to post this is the "Business policy" thread.

Is anyone else really creeped out by this?

I know the wellness programs have been around for awhile (thankfully I'm nearing the end of my working career, not just starting). But his video is just plain disturbing to me. It feels like the kind of video that would be shown playing in A Clockwork Orange or the original Total Recall, where we would all just sit there and giggle to ourselves over the ridiculousness of a world where that would be permitted to happen. Now we've got the friggin' Canadians doing it to us.

In the last year Aetna apparently saw a massive payoff once they implemented this, and businesses are nothing if not sheep.

Not at all surprising. Internal "quit smoking" and "lose weight" support groups have been around for years, in addition to healthcare surcharges for "lifestyle choices". Companies can't explicitly fire you for failure to participate, but you can guarantee that your healthcare costs are already a silent factor in layoff decisions.

[Bob Gray]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

Obama's leveraging this country to the hilt for a weak economic recovery plays out in many ways, including this one at the Fed:
https://finance.yahoo.com/news/the-f...21801977.html#

[unofan]

Obama's leveraging this country to the hilt for a weak economic recovery plays out in many ways, including this one at the Fed:
https://finance.yahoo.com/news/the-f...21801977.html#

The federal prime rate is the rate charged to banks to lend them money overnight, it's not the rate given to banks to store money at the Fed.

And the only way the Fed loses any money on the quantitative easing bonds is if it paid more than face value, in effect giving itself a negative interest rate, or if it sells them at a loss rather than letting them simply mature.

In other words, sounds like the author has an existing beef with the Fed and is twisting things to drive clicks to his sponsored blog post.

[FlagDUDE08]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

BTW, the music on that ad is what is played at the FEMA death camps.

So you finally admit they exist?

[dxmnkd316]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

Kep, did you see this:

http://gawker.com/two-problems-with-...ome-1779646932

UBI article on Gawker. I haven't read it myself, but I thought you'd be interested.

[Kepler]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

Kep, did you see this:

http://gawker.com/two-problems-with-...ome-1779646932

UBI article on Gawker. I haven't read it myself, but I thought you'd be interested.

It's really short, go ahead and take the 4-paragraph plunge. :-)

Those are two problems. I'm a big Means Testing guy myself, but the author doesn't give one of the most important aspects of making it universal: that eliminates most of the bureaucracy of proving you come in under the income limit. One of the big problems with social programs is the administrative costs balloon. A simpler system with fewer conditionals can hold costs down. But the other reason to make it universal is that people aren't generous: they won't support a program that is purely charitable, doubly so if the money is going to people with a different skin color. Monkeys are like that.

It also will not end social programs of last resort, for the same reason that having an income doesn't reduce your need for insurance. Bad things can still happen to people: cataclysmic events that cost far more than the UBI. Just as we still need emergency rooms, we'll still need certain types of social programs for people who for whatever reason can't afford the point of sale cost of necessary goods. It will, however, reduce these programs significantly.

So the author's two points those are valid concerns, and there are other things like the free rider problem. We just need to have a grown up conversation about what kind of a country we want. I am, for instance, willing to let a few million rapscallions rip the system off if it keeps one hundred million people out of poverty and on the road to fulfilling their potential. I believe in the long run UBI will pay for itself a hundred times over with the reduction of crime, the improvement of the workforce, the decrease in the need for social programs that do not address the perpetuation of poverty.

Oh, and it's good morally, too.

[joecct]

Re: Completely Unwoven: Business, Economics, and Tax Policy 4.0

Now THIS is a gas tax hike!!

http://www.ctvnews.ca/mobile/busines...b93254eb5fa1fe

1 gal = 3.785 liters