L'Information est d'Or

To celebrate my 100th post on this blog, what would be more appropriate than to write about the great economist Paul Samuelson who died last week? So what did Samuelson actually do? I could not write any better than Paul Krugman, who was a fellow economist at MIT (they actually shared the same desk at one point), and who describes in his NYT blog what his great contributions to economic science have been: "1. Revealed preference : There was a revolution in consumer theory in the 1930s, as economists realized that there was much more to consumer choice than diminishing marginal utility. But it was Samuelson who taught us how much can be inferred from the simple proposition that what people choose must be something they prefer to something else they could have afforded but don’t choose. 2. Welfare economics : What does it mean to say that one economic outcome is better than another? This was a blurry concept before Samuelson came in, with much confusion about how to think about in...

Aujourd'hui, j'ai pris l'iDTGV pour la premiere fois. Intrigue par ce nouveau concept (est-ce simplement du marketing?) , je demande a une employe de la SNCF: qu'est ce que c'est que l'iDTGV? Elle me répond que c'est comme le TGV normal - même train, même service, mêmes destinations - mais le prix est plus bas. En somme, me dit elle, c'est le "low cost" du TGV. Eh bien non, car les couts (rames, trains, personels, gares, commercial) sont les mêmes. C'est simplement un "low price"! Si la politique tarifaire de l'iDTGV est meilleure que celle du TGV, pourquoi ne pas la faire aussi profiter au TGV normal? Je me demande qui a trouve ce concept économiquement idiot. Cyrille

Interesting comparison of Google and Apple's mobile OS strategy in AppleInsider. While Apple's strategy is established and clear (integrated platform, tight control and brand management), Google has still to find a winning formula. Comparison of business models with technical presentation

Willem Buiter of the Financial Times seems to beleive so in the following article: Time for the ECB to get serious about the overvalued Euro Also an interesting question is should the ECB intervene on the FX market? What's sure is that no other Central Bank has any incentive to devalue the Euro.

From Yoram Bauman , sooo funny (and true :)

The World Economic Forum (WEF) released a new ranking of the most trade-friendly economies. Those are the countries that should benefit most from a World recovery when it occurs. The top ten is composed of financial centres - of which openess is a raison d'être - like Singapour or Hong Kong and North European countries - which have long had a tradition of trade - like Danemark or Sweden. It is interesting to note that 7 out of 10 most trade-friendly economies are European. It is good news for Europe. Or could it be a natural bias from an institution based in Europe (Geneva)? I have noticed with a lot of amusement that when the Indian Economic Times covered the story, they have put a picture of Russia (Moscow I think) to present Norway :) http://economictimes.indiatimes.com/articleshowpics/4750684.cms The full ranking is the following: 1. Singapore 2. Hong Kong 3. Switzerland 4. Danemark 5. Sweden 6. Canada 7. Norway 8. Finland 9. Austria 10. Netherlands

This is a historic decision by the Central Bank of Australia. They decided today to increase their policy rate from 3% to 3.25%. Since the begining of the financial crisis, this is the first bank to make such a move. They will likely be followed by other Central Banks, although maybe with a significant delay. This decision is proof that what used to be the biggest risk - deflation - is now beaten and we can start looking forward. The massive monitary response (lowering of interest rates, quantitative easing and stimulus packages) has worked but we now need to start looking at how to manage the adverse consequences: a monetary policy too accomodating and huge debt. It will be a fine and difficult tuning for central bankers to stop monetary easing at or after there are clear signs of recovery and impending inflation. Some economists, like Paul Stiglitz beleive that we are not out of the woods yet. They invoke the fact that: - unemployement is big and rising, putting a drag ...

Free is a fantastic success story, one of my favourite in business. Their model is based on innovation in products and simplicity in marketing. http://m.lesechos.fr/high-tech/020157066642.htm

Interesting debate about the performance of economists and the state of this science. It makes me all the more excited at starting my economics degree at the Toulouse School of Economics next week. Original article by Paul Krugman, Princeton economist and response by Bob Eisenbeis, member of the U.S. Shadow Financial Regulatory Committee and former Executive Vice President and Director of Research at the Federal Reserve Bank of Atlanta. The two articles have been copied one after the other below for your convenience. September 6, 2009 How Did Economists Get It So Wrong? By PAUL KRUGMAN I. MISTAKING BEAUTY FOR TRUTH It’s hard to believe now, but not long ago economists were congratulating themselves over the success of their field. Those successes — or so they believed — were both theoretical and practical, leading to a golden era for the profession. On the theoretical side, they thought that they had resolved their internal disputes. Thus, in a 2008 paper titled “The State of Macro” ...

Gold reaches $1000 per ounce for the second time in 2 years. Unfortunately, gold is a weak indicator of inflation. A historical analysis by Erik Dellith shows that the correlation between gold and inflation is only around 0.15. The table below proves that this correlation changes with time: Correlation Results of Monthly Changes Dates & Correlations Period 1: 8/76 - 6/82 Headline CPI [SA] 0.17 Headline CPI [NSA] 0.18 Period 2: 6/82 - 4/01 Headline CPI [SA] 0.07 Headline CPI [NSA] 0.03 Period 3: 4/01 - 9/06 Headline CPI [SA] 0.23 Headline CPI [NSA] 0.16 SA: Seasonally Adjusted NSA: Not Seasonally Adjusted The author concludes that The data suggest that the yellow metal reflects inflation -- although not very strongly -- mostly when prices are rising at a rapid pace. The relationship weakens significantly during times of moderate inflation.

Excess leverage was at the root of the current economic crisis. This chart shows that debt is still increasing because of huge government spendings. We have a long way to go back to more sustainable levels... Source: John Mauldin's newsletter

The current rally is the biggest since World War II. A lot of good news are now priced in. Although the long-term outlook is still positive with the global economy getting out of recession, there is now significant risk of a short-term bear market. One could benefit from a pull-back by buying "short ETFs" like Lyxor Short CAC40 (code=SHC on Euronext Paris) or short commodities like ETFS Short Crude Oil (code=SOIL on LSE)

Today's chart presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / gold ratio or the cost of the Dow in ounces of gold. For example, it currently takes 9.8 ounces of gold to "buy the Dow." This is considerably less that the 44.8 ounces it took back in 1999. When priced in gold, the US stock market has been in a bear market for the entire 21st century and is currently trading 78% off its 1999 highs. The recent five-month rally, however, has the Dow (priced in gold) putting in a significant test of resistance of an accelerated downtrend that began in mid-2007.

We already knew that bankers had been greedy and sometimes thieves. Well, we now learn through the expenses scandal uncovered by The Telegraph, that politicians have been as much greedy. Indeed, British members of parliaments have used expenses claims to make up huge salaries at the expense of the taxpayers. The difference between bankers and MPs is that bankers could blame an inadequate and inefficient regulation whereas MPs can't pass on the blame to anybody because they make up the rules that they live with. Shoking! An example of cover-up in video

Total has sacked several hundreds of employees (up to 900 according to some reports) for participating in a strike. This is outrageous behaviour on behalf of an international company. Let's boycott them! Link to the BBC news story

25 Billions dollars in cash and no dividend, why? http://www.istockanalyst.com/article/viewarticle/articleid/

http://m.ft.com/cms/s/0/71520770-4a2c-11de-8e7e-00144feabdc0.html?catid=2&SID=bf897f14bae9c5102c8ac3f2bf14958f Cyrille http://cyrilleuk.blogspot.com Sent from my iPhone

The financial crisis is likely to have lasting impact on defence budget and strategies in countries like the UK. Not only the current budget deficits mean that some countries have to reduce their defence spending immediately, but this reduction may be sustained for a long period because as countries de-leverage, GDP growth is likely to stabilize at a lower level than before the crisis. This will require to rethink defence spending and strategy within the European Union. National armies in the EU can be divided into several groups: - UK and France, the two main forces, have nuclear deterrant and ability to deploy troops overseas. - Italy, Germany and Spain have limited armies, only able to operate within an international coalition structure - Smaller countries rely on International coalitions like NATO to defend themselves The inevitable reduction in defence spending should be seen as an opportunity to reorganise EU defence in a more efficient way via specialisation: - Joint UK/France n...