Category Archives: the daily column

A little diversion into economics

First: an observation on house prices being driven by land use regulations: Rethinking Urban growth boundaries:

A related unintended consequence of urban consolidation is that ‘densification’ has often ceased to occur at its historically natural locations nearer the urban core and has instead shifted further away into less efficient locations (i.e. far away from employment and amenities). The reason for this is that the price of land is forced up so much by the growth constraint that households are unable to afford the ‘premium’ price commanded by more efficient locations, and are forced to locate instead at ‘less unaffordable’ but also less efficient locations. Essentially, budgets are squeezed so much by high land prices that households are forced to trade-off both space (smaller homes) and location efficiency (i.e. live further out).

This is happening in Sydney; closer to the city or in the east, NIMBYism and high prices to begin with leave those suburbs close and most easily commutable as medium density at best, while further out in brownfield sites like Rhodes are getting high density developments. Rhodes makes little sense; transport is severely constrained by georgraphical limitations, and it’s still a 30 minute commute to the CBD, but it’s getting two 25 storey apartment towers that would never be approved in Potts Point or Paddington because it wouldn’t be “in keeping with the character of the area”.

And second, a question regarding ratings agencies that I’ve had on my mind since before the 2008 crash – who rates the ratings agencies?

The 2008 crash might have been thought to have dented the agencies’ credibility. Enron products were still getting investment-grade ratings four days before it went bust. Freddie Mac preferred stock was top-rated by Moody’s till mid-2008. Shortly before its bail-out by the Fed, the insurance giant AIG had entered into credit default swaps to insure $441 billion of AAA-rated securities on the London market. In the FCIC’s words, ‘the three credit rating agencies were key enablers of the financial meltdown’. Moody’s comes in for particular flak. In 2000-7, it rated nearly 45,000 securities as AAA. Eighty-three per cent of the securities given that rating in 2006 were ultimately downgraded.

Not that there’s any answers on that page, but I have no idea how S&P, Moody’s and Fitch have a fig-leaf of credibility remaining, but yet governments remain hooked to maintaining the highest credit rating possible from these three agencies that utterly failed in their role as independent advisors of risk. It’s insane, and yet the circus continues.

John Gruber, arguing for Nintendo to just develop for iOS, states his admiration for Disney:

One thing that has long fascinated me about Walt Disney was that he was always looking for the next big thing, and never worried about protecting the last big thing.

This really doesn’t square with Disney’s long-term support for the Copyright Term Extension Act where Disney is constantly trying to protect their last big things. Nintendo, currently, is utterly dependent on reinventing the wheel of their existing franchises, and I suspect that is what needs to change more than any deep seated lack of progress on the hardware front.

Calvin & Hobbes Documentary ‘Dear Mr Watterson’ coming

News today of Calvin & Hobbes documentary coming – here’s the trailer:

I love Calvin and Hobbes in a way that I’m not entirely sure how to express – it’s a shame that there’s not more being made, but there were more than enough created that each time I see a strip it feels funny and fresh, and brightens my day. The artwork is superb. Looking forward to seeing the full version of this documentary.

South America: Part the First

When I first thought about a trip to South America, I had some ideas in my head about how things were – I knew it was no longer the place of the past decades, when some revolution or another would push one government out for another, be it from democracy to communist or military junta, or indeed vice versa. Hell, Brazil is right on the list of economies challenging the developed nations.

I do admit though there’s a little part of me that clung to the notion so deeply instilled by the Tin Tin comics, of all things, where one dictator was replaced by another only to himself be thrown out at the end of the day. It’d be a hell of a thing of it did happen, but let’s just say I wouldn’t mind Tin Tin’s role :-)

With this kind of context in mind, getting into Buenos Aires, I first felt a shock of the new – Ezezia Airport is very new and nicely fitted out – and then the polar opposite as we approached our hotel. In an ostensibly decent neighborhood, there was a feeling that you were in a place you didn’t necessarily want to hang out at night, judging by the sidewalks and the graffiti, which was ubiquitous. I felt a perverse thrill that perhaps trouble was bubbling under the surface…

So what did we do after putting our stuff down at 10pm? Naturally we wandered outside, assured by the nearby lights, late night pharmacy, McDonalds… And it turns out appearances are deceptive, because this was the kind of neighborhood where people were out with their kids at 11 in the evening, as others strolled to restaurants to get started on their meal.
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