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LuckyOne

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Everything posted by LuckyOne

  1. No prenup here. We got married at 25 when I had a negative net worth and she made more than I did. We have since done a post-nup trust structure to protect our kids from either of us doing anything silly if we remarry. Things have worked out well due more to good fortune than good planning (hence my screen name) in a completely unpredictable way.
  2. Thanks. We are looking forward to moving back but with a lot of sadness as we have enjoyed our 10 years in the UK split over 3 stints. Very excited about being able to fly more as flying in the UK is just not much fun.
  3. One of the things that has changed in the last few years is that I have become a pilot and I am almost finished up with my instrument rating at which point my wife will agree to us buying a plane which will let us fly to Regina, Salt Lake City, Las Vegas, San Jose etc non-stop bypassing the ferries. The desert in Southern California with one fuel stop is an option for our winter "migration". The new place is a 15 minute drive from the airport where we will keep our plane, 5 minutes from downtown, 7 minutes to my mom and 25 minutes to the charity that we support quite materially.
  4. Thanks. I have always held a basket of currencies so CAD / GBP movements don't impact me that much.
  5. We have waited 5 years and have run out of patience. The madness will end but probably in a much more damaging and widespread ways than places like California where prices dropped by 50%, inventory passed to stronger hands and prices are now up 20% so still 40% below peak. If prices fall back to unramped levels and the UK re-asserts its sovereignty and redefines its relationship with Europe, we will be back in a flash.
  6. Vancouver Island. It is a small, ungated estate of about 40 detached, semi-detached and terraced houses in the 2,200 to 2,600 sq ft range. We are buying into the last phase. The product is pretty homogeneous so it is very easy to work out that prices have been pretty flat since 2009 on a price per square foot basis. The tax assessed values are transparent to real estate agents and we know that we are buying at very close to tax assessed value on a price per square foot basis.
  7. Canada is overpriced. The UK is even more overpriced. We have to live somewhere and prefer to buy than to rent despite the relatively low current opportunity cost of capital and even lower rental yields. We have chosen to move back to Canada from Surrey for financial as well as family reasons. We would have preferred to stay in the UK and spend more on airfares had house prices made sense to us. The house that we have bought in Canada is much less than we can afford because I think that the market is expensive. We timed an upgrade of our home in California pretty well during the California crash. Central bankers are telling us, as explicitly as they can, that they are going to dilute the store of value function of money. I am listening to them. I have no idea whether this will turn out to be a good idea in the long run but it the least worst option available to me in my opinion.
  8. We have given up waiting for reality to return in the UK and are moving back to Canada next summer. Our new home is being built at the moment. Canada's housing is much cheaper in absolute terms on a like for like basis than the UK so I will have a much smaller dollar amount at risk in Canada than the UK even if the percentage risk is higher. The quality of the housing stock in Canada in terms of square footage and plot size is much higher. The quality of the construction and materials was much higher in the UK than in Canada until about 10 years ago when Canada started to catch up quickly.
  9. The trick is for the healthcare system to be well defined and designed. In the Swiss case, they have mandatory private health insurance with 3 risk pools (0-18, 19-25, 26+). If the health insurance scheme is well defined and designed, it will cover the additional living / medical costs of people with genuine disabilities.
  10. http://www.nbcnews.com/business/2-800-month-every-adult-it-could-happen-switzerland-8C11354757 There have been a lot of Negative Income Tax / Citizen's Income threads on this site. It seems that the Swiss are going to vote on implementing the idea. Milton Friedman is my favourite economist. I think that Switzerland is the most democratic nation on earth. It will be interesting to see what happens here.
  11. The easiest thing for them to do is to exchange Sterling for US Dollars, Euros, South African Rand, Australian, New Zealand and Canadian Dollars, Korean Won, Japanese Yen, Angolan Kwanzas, Mozambican Meticals, Brazilian Reals, Indian and Pakistani Rupees, Israeli Shekels, Sudanese and Egyptian Pounds etc. There is absolutely no requirement for them to invest their surpluses in the currencies in which they were earned. The same applies to the Russians, Brazilians, Indians, Japanese, Koreans, Germans, Saudis, Qataris etc. I think that the false comfort gained from the assumptions about the way that surpluses are invested locally is driving the London market higher amongst a group of quite naive people. Eventually house sellers will learn the lesson about the very effective transformation opportunities that the foreign exchange market offers and come to understand that their houses make up a tiny fraction of the global investment opportunities. Everyone knows about the surplus investment errors made during the petrodollar surplus recycling of the 80s and the yen surplus recycling errors of the 90s. It is naive to expect that the same errors will be made on the same scale in the 2010s.
  12. I have never thought of fascism as being about left or right. There have been left wings fascists and right wing fascists through history. Fascism is really statism carried to its extreme. Across Europe, statism seems to be overwhelming liberty and we are running the risk of "soft" fascism becoming "harder" over time. Liberal / "progressive" parties in the West have actually become quite regressive and do not support the liberal ideas that you described above (classic John Stuart Mill stuff).
  13. Scaling employees' incomes to profitability helps them act as part owners because they have similar interests to the owners. Treating them as part owners only works well if there is a platform for them to make their views known (to either management or the owners if they are separate) on anything to do with the business in an unrestricted way including involvement in revenue, capital spending and expense budgets. To the McDonalds example, the bonus structure is poorly designed if it is based on staffing costs. It should be based on same store sales increases and net profit. I would rather have a 20% revenue increase and a 10% staffing cost increase than a 5% revenue drop and a 15% reduction in staffing costs. In the long run contented employees who feel that they are part owners will lead to more long run growth than an alienated workforce who feel that they are treated as commodities. Privately held companies are more able to think in the long term than publicly traded companies.
  14. Markets can only be free if they are fair. Capitalism is all about free and fair markets. As soon as any economic agent (be it labour, capital or management) acquires monopoly or other special powers, markets cease to be free and fair and capitalism descends into corporatism. Governments have the responsibility to keep markets free and fair. Removing barriers to entry and other monopoly powers is a critical function of government. Zero hours contracts are the result of corporatism with government collusion and not free and fair markets. Employers have near monopoly powers in their relationship with their employees at the moment. Governments have the responsibility to remove monopoly powers. Workers' Councils in Germany with their board representation are a very good way to ensure that capitalism doesn't descend into corporatism. There are also legislative alternatives. Beating people who have no ability to compete is not capitalism it is bullying, corporatist fascism. As a capitalist, I have no interest in beating people who cannot compete. As I have said before, a difference between a corporatist and a capitalist is enlightened self interest. In the businesses that I own (boring light industrial and business applications), employees keep 20% of the profits. This is mostly self funding as all employees are motivated to sell (even if it isn't their job) to increase revenues and understand that 20p out of every 100p that they spend comes out of their own pockets which contains costs. I know that I am much better off under this compensation structure than I would be under a zero hours regime for some of the less skilled labour.
  15. In a free market, people should have the right to associate. That balances out the power between labour and capital if people choose to join unions and see them as being effective. In a free market, if labour demands too great a share of production, the producer collapses. In a free market, if owners and / or managers are ineffective, the producer collapses. In a free market, employers should have the right to hire people who are not part of a union. That balances out the power between unions and owners. It also allows members to leave unions if union management is ineffective. In a free market, excess labour means lower wages and worsening conditions. It is government's responsibility to impose society's view of fairness on owners. They have done so with the national minimum wage. The should do so with unfair zero hour contracts. This is how the current almost pure monopoly power relationship between the McDonalds worker and McDonalds can be made more even. Monopoly powers are not a characteristic of a free market. In my view, the prime responsibility of government is to destroy monopoly powers. Unfortunately, they seem to grant them instead. In a corporatist world, governments and owners act together to ensure outsized returns of power in the former's case and money in the latter's case when capital is in the ascendancy. As capital is in the ascendancy at the moment, governments have allowed wages and conditions to be worse than they would otherwise have been. In a corporatist world, governments and labour act together to ensure outsized returns of power in the former's case and power and money in the latter's case when labour is in the ascendancy. When labour is in the ascendancy, governments have allowed wages and conditions to be better than they would otherwise have been. People are voting with their wallets in favour of a corporatist world rather than a capitalist world as all they want is low prices and ignore all of the other consequences (everything from zero hour contracts to the hollowing out of the high street).
  16. They will probably lose out at some stage, they just haven't thought it through. Corporatism doesn't universally benefit the owners of capital even though it does at the moment. If capitalists succumb to the siren songs of corporatism at the moment, they will be its victim when the corporatist regime changes, which it will. The best protection is to act as a capitalist at all times. A true capitalist would design a zero hours contract much more along the lines that alexw suggests with compensation for being on standby with no promise of work and no demand for exclusivity or punishment for turning down an offer for hours. Capitalists understand and live by the concept of enlightened self interest. Corporatists only understand maximising self interest at the cost of all else.
  17. You are quite right. The contracts are asymmetrical, unfair and not negotiated in good faith. Labour and capital have both been guilty of these sins at different times in history. We are at the stage (which will change as it always does) where capital has much more power than labour and all but the most ardent capitalists are sliding into a corporatist morass. As structured (with implicit approval from the political class), zero hour contracts are another example of corporatism arising from state granted monopoly powers which is very different to capitalism which calls for free competition without any asymmetrical powers.
  18. The Germans and Japanese have been quite clever in diversifying their global manufacturing base. Less than 100% of cars sold by German brands are made in Germany. Less than 100% of the components of cars made in Germany are made sourced in Germany. While they aren't perfectly diversified, losses to German brands will be less than perfectly correlated to an appreciation of the DM and will be model dependant. The Mercedes ML's price in the UK for example is much more dependant on the USD / GBP exchange rate than the EUR or DEM / USD exchange rate
  19. I have often wondered whether the collapse in the velocity of money is a symptom or a cause. When returns are very low, there is no opportunity cost to leaving money on deposit so we might lose some velocity because people don't feel the need to actively manage balances. I do agree that velocity is important but wonder about its correlation to the level of rates or to the expected changes in rates and whether velocity ought to be controlled for the level of rates. This is a question rather than a theory.
  20. All asset prices have risen due to the reduction in the discount rate applied to future cashflows caused by the manipulation of bond prices by central banks. This disease has spread well beyond the bond market. It shouldn't be a surprise that stocks, bond prices (prices move inversely to yields), real estate, commodities, commodity currencies etc are all moving lower simultaneously. Investors are often not that smart. The Fed recently told them that they will taper their asset purchases when the data start to look better. Surely no-one should be too surprised by this announcement. The market also knows that absent the Fed's asset purchases, the 10 year Note would yield something like 3.5% to 4% at this stage of the cycle but always thought that un-manipulated yields were further down the road than they actually turned out to be. Now that the data are starting to look better (yesterday was just another confirmation in the US) and un-manipulated yields are staring people in the face, the market is uncomfortable with holding assets at the prices prevailing just a few weeks ago. They seem to be saying that they are willing to give up 2% for 10 years and hold cash at 0% for 12 months and then reinvest the cash at 3.5% to 4% in 12 months time for 9 years (either explicitly in bonds or implicitly by buying future cashflows at higher discount rates i.e. lower prices). Tapering asset purchases will be sufficient to cause this to happen. Raising the Fed Funds / Bank Rate etc are not necessary, especially in the US where changes in longer term, fixed rates have a larger economic impact than in the UK.
  21. We are at an interesting crossroads. It has appeared that the monetary authorities have cornered fixed income markets over the last few years. They may be about to learn the same lessons that the Hunt brothers learned in the silver market in the 70s and 80s. Buying in large amounts may give the impression that you have cornered the market and gives you complete pricing power. Eventually, you find out that the market is bigger than you are and and end up in a world of hurt. It would be interesting to know the daily changes in the mark to market of the Fed, BoE etc balance sheets.
  22. The fear that financial repression will be permanent rather than temporary seems to be reaching a conclusion. TIPS / Linkers etc seem to be yielding positive real returns across shortening terms. Is this the final hurrah for the opportunity for rational real returns or the endgame for the "NIRP NIRP NIRP" crowd in real terms? If we are reaching the endgame of financial repression, which asset misallocations will hurt people the most? My guess is property investments at the wrong yield but I am willing to consider other alternatives.
  23. The two shell companies exist to comply, at the lowest cost possible, with very poorly designed laws. It is the responsibillity of the management of companies to generate the highest after tax income for their owners. It is the responsibility of governments to design laws that reflect the common good. The management of companies are really easy to understand and are quite explicit. The actions of politicians are also very easy to understand once we get beyond tribalism and accept that the political class are motivated by power and not the common good. It is the political class who are letting us down.
  24. The whole premise of your argument is that governments will give away the rights for a single facility to pump out pollutants up to a certain level twice. Governments are sometimes this stupid but not often. I personally don't see the connection between your argument and tax minimisation.
  25. If the SHIBOR moves are real and sustained, this could turn into a big, fat Chinese thread pretty quickly. The credit bubble could be about to implode violently.
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