Category Archives: Econ & Money



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Nutty, Even By Relaxed Modern Standards

TPM, With Eye on Fiscal Armageddon, Texas Set to ‘Repatriate’ Its Gold To New Texas Fort Knox.

On Friday, Gov. Greg Abbott signed legislation that will create a state-run gold depository in the Lone Star State – one that will attempt to rival those operated by the U.S. government inside Fort Knox and the Federal Reserve Bank of New York’s vault in lower Manhattan. “The Texas Bullion Depository,” Abbott said in a statement, “will become the first state-level facility of its kind in the nation, increasing the security and stability of our gold reserves and keeping taxpayer funds from leaving Texas to pay for fees to store gold in facilities outside our state.” Soon, Abbott’s office said, the state “will repatriate $1 billion of gold bullion ((As you will see if you read the article, this is malarky. There is no such $1 billion in gold from the Federal Reserve in New York to Texas.” In other words, when it comes preparing for the currency collapse and financial armeggedon, Abbott’s office really seems to think Texas is a whole ‘nother country

Just read it. And weep.

PS. Bonus crazy:

Indeed, Texas has no gold bars in the Federal Reserve’s New York vault. And what the state has is not worth a billion dollars. Instead some 4,200 gold bars bought in 2011 by the University of Texas’s endowment fund (the second largest in the country after Harvard’s) are stored in the basement vault of HSBC’s headquarters at 450 5th Avenue in New York City, just south of the New York Public Library. For the last four years, the endowment has paid an estimated $1 million per year to store their gold there. (If it had been at the New York Fed the cost would have totaled about $15,400 over that period). And the new depository law does not require the university’s endowment fund to relocate the gold to Texas.

How did UT end up holding actual gold?

In 2010 and 2011, … the University of Texas Investment Management Company’s board of directors … put nearly 5% of the then-$19 billion university and pension fund they manage into physical gold by converting options into bullion. …

When the endowment fund bought the gold, their basis for calculating a return – called their cost basis – was $1,150.17 per ounce. The fund eventually traded a third of their physical gold stake for gold futures and other equities, but never reduced their overall exposure to gold. That’s why they still own about 4,200 bars worth just under $500 million. After a significant run-up and subsequent fall in 2012, gold traded on Monday at $1,186. Over more than four years that just a 3% gain for the fund before you account for the cost of housing the gold in New York [which is $1 million / year] and the transaction costs that will be incurred if and when the endowment fund ships the bars back to Texas or sells them to a buyer. Over the same period, the S&P 500 index – a broad measure of owning stocks – gained 60%.

Posted in Econ & Money, Politics: The Party of Sleaze, Politics: Tinfoil | 3 Comments

The Past Isn’t Even Past

I remember it well:

Editor’s Preamble! Back in 1997 I gave a paper on crowdfunding – I believe the first ever proper paper, although there was one "lost talk" earlier by Eric Hughes – at Financial Cryptography 1997. Now, this conference was the first polymath event in the space, and probably the only one in the space, but that story is another day. Because this was a polymath event, law professor who’s name escapes Michael Froomkin stood up and asked why I hadn’t analysed the crowdfunding system from the point of view of transaction economics.

I blathered – because I’d not heard of it! But I took the cue, went home and read the Ronald Coase paper, and some of his other stuff, and ploughed through the immensely sticky earth of Williamson. Who later joined Coase as a Nobel Laureate.

The prof was right, and I and a few others then turned transaction cost discussion into a cypherpunk topic. Of course, we were one or two decades too early, and hence it all died.

Now, with gusto, Vinay Gupta has revived it all as an explanation of why the blockchain works.

Financial Cryptography: Coase's Blockchain – the first half block – Vinay Gupta explains triple entry.

Posted in Cryptography, Econ & Money | Leave a comment

Dangerous Radicals

I was getting annoyed at my radio this morning, as the dulcet-toned pseudo-liberals on NPR called the Greek Government “radical left”. Why is a simple request for rescheduling/partial write-off of debt repayment so radical? It is just basic neo-Keynsian economics. Fact-based and thus liberal, yes, but hardly “left-wing” much less radical.

Krugman explains. And now I understand.

Posted in Econ & Money | 2 Comments

Taking (and Giving) the Punch

Krugman: “in today’s world, the crucial credibility central banks need involves, not willingness to take away the punch bowl, but willingness to keep pushing liquor on an abstemious crowd.”

À propos the Swiss revaluation of the Franc (which triggered the bon mot quoted above), what I want to know is how many Swiss banks had hints this was coming, and how big a killing they made on the markets.

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It’s Where The Money Is


Plus, there’s no significant risk of jail.

Posted in Econ & Money, Law: Criminal Law | Leave a comment

A Mystery: Miami Property Values Seem Immune to Climate Change Risk

There’s been a lot of news recently about the dire effects climate change can have on Miami, yet not only has the risk not been priced into real estate but values are rising. What’s up? Are climate change deniers that rich, or is something else going on? Is the risk seen as so far out as to be discounted to zero?

It’s flat here, there’s a lot of coastline, and a sea level rise of only a few feet would turn Coral Gables into New Venice. Even a foot and a half — which apparently has a decent change of happening in the next decade or three — would be very bad for Miami Beach, and also for much of South Florida in that it could impact water supplies and swamp power plants.

How then to explain why none of this is priced into the real estate market? Not only are house prices mostly going up after perhaps over-reacting to the the foreclosure crisis, but so too are waterfront land prices, as evidenced by this $100 million/acre sale of the last piece of undeveloped waterfront in downtown (total price for 1.25 acres was $125 million).

Yes, it could be a bubble. Yes, it could be the musical chairs phenomenon where the buyer thinks they can flip it, or develop it, before the music stops. Or it could be that the buyers watch too much Fox News, or have their own climate scientists.

I’d really like to know what’s going on here — if only because I (co)own a house. Any ideas?

Posted in Econ & Money, Miami | 4 Comments