Central Perk

sâmbătă, 21 septembrie 2013

Mish's Global Economic Trend Analysis

Is Risk-Free Banking Possible? What About Fractional Reserve Lending? 30-Year Mortgages?

Posted: 21 Sep 2013 08:58 PM PDT

Reader "Nate" noted that Bloomberg columnist Megan McArdle stated that banning Fractional Reserve banking won't work.

Nate asked "What would a future without fractional-reserve banking look like?"

Let's start with a look at Megan McArdle's article: Banking Without Risk Is Impossible.

The fundamental fact of a banking crisis, which is different from a crisis in any other industry, is that if people believe a financial institution to be bankrupt, it actually is bankrupt.

As Arnold Kling puts it, banks exist to reconcile the desire of households to lend short and borrow long -- we want to have bank accounts we can empty at any time we want, but we want mortgage loans that carry fixed payments and last for decades.

This creates a vulnerability at the heart of modern banks: If too many depositors try to turn their bank accounts into cash at the same time, the bank will be insolvent, because it cannot liquidate the mortgages fast enough to pay the depositors. And when are you most likely to get a flood of people trying to empty their accounts? When they think the bank is insolvent.

So why not build a banking system where this can't happen? Well, alright. How shall we do that? Are we going to forbid the structure of modern banks ("fractional reserve banking," for those who are interested in the technical term).

Leave aside the irony that outlawing a practice engaged in by millions of upstanding Americans is not, at first blush, a particularly libertarian solution.

I've heard arguments that you could fix this by allowing banks to freeze withdrawals in the event of a liquidity crisis. But I'm unpersuaded because during the Great Depression many places did freeze withdrawals. ....

Megan McArdle Wrong Twice

For starters a 100% reserve system is indeed a "particularly libertarian solution" for the simple reason fractional reserve lending is fraud.

If I lent you a house that I did not have ownership of (or rights of control to), I surely would be convicted of fraud. If I sold you 100 tons of wheat, and only had 10, I likewise would be convicted of fraud.

Reflections on "Legitimate" Right-To-Use

Some argue that as long as customers agree to these various banking schemes it is OK.

However, it's not OK because such lending is nothing more than a gigantic kiting scheme. Moreover, it affects others by cheapening the value of money, pushing up asset prices for the benefit of those with first access to money, the banks and the wealthy.

Logically, two people cannot have the right to use the same money at the same time, whether they agree to such a scheme or not!

Banks are allowed to lend money that does not exist, but if you or I did it, we would be convicted of kiting (fraud).

100% Reserve System Does Not Mean There Will Be No Loans

Megan McArdle is also wrong about lending. A 100% reserve system does not mean there will be no loans. Instead it means banks cannot make loans for longer duration than they have ownership or control of the money.

If banks want to lend money for 30 years then need to have 30-year term deposits. If banks want to lend for 5-years then they need to secure money for 5 years. Might this mean the end of 30-year mortgages?

Perhaps, perhaps not. Perhaps it just means the end of cheap 30-year mortgages. As far as I am concerned that would be a good thing. 30-year mortgages with credit created out of nowhere fueled the property bubble.

Would it mean the end of mortgages? Certainly not but 10 and 15-year mortgages would carry a far lower rate than 30-year mortgages than they do now. And why shouldn't they? Are not 30-year mortgages inherently more risky?

Checking Accounts vs. CDs

Since checking accounts represent money on demand, banks could not lend them at all in a 100% reserve system. Such deposits would indeed be risk-free. They would be fee-based, but without risk.

Want to collect interest on CDs? OK, but such deposits would no longer be risk-free.

Notice that a run on the banks in a full reserve system is not likely. 100% of demand deposits are always available. And term deposits would match term-loans and no longer.

Of course, banks can foolishly lend money and not be able to return it at the end of the period. But that is the risk people take when they lend banks money. If people do not want to take those risks, they can leave the money in checking accounts and pay a fee for storage.

For more on the case against Fractional Reserve Lending please see

Fractional Reserve Banking by Murray Rothbard.

Case Against The Fed by Murray Rothbard

Please click on the second link above and read it.

On page 46 of the book Case Against The Fed Rothbard says "By the very nature of fractional Reserve Lending, banks cannot honor all its contracts".

Does knowingly entering a contract that one cannot possibly honor, constitute fraud? Of course it does.

I have talked about these issues many times before. For a synopsis, please see Central Bank Authorized Fraud; Fractional Reserve Lending Problems Go Far Beyond "Duration Mismatch" .

Megan McArdle seriously needs to read the eBooks above, starting with Case Against The Fed.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

What Colleges Have the Highest Tuition? How To Save $244,000 On Your Education; Avoid the College Debt-Trap

Posted: 21 Sep 2013 12:29 PM PDT

The data is a bit out of date, but the US Department of Education has a College Affordability and Transparency Center where you can see the highest and lowest tuition and net tuition (including aid) of various types of two and four-year colleges.

The highest costs are over $60,000 per year. And that is just tuition and books, not just room and board.

Business Insider commented on the costs in America's REAL Most Expensive Colleges.

Fast Company also commented on the sad cost situation in How To Save $244,000 On Your Education.

You, too, can experience the best that American education has to offer--without enrolling at NYU. Might I recommend that the curious would-be undergraduate or returning student check out:

Coursera, one of the three major Massive Open Online Course platforms, just announced a $43 million Series B round of funding to expand its mobile apps, API, and its "Signature Series" classes, which can be taken for a small fee and applied for college credit. The company offers free video versions of almost 400 courses created by professors from Stanford, Penn, Princeton, Yale, and other universities--in all, these courses have had about 4 million signups to date. The State University of New York, the largest public university system in the country, has a special partnership with Coursera , developing shared solutions to enable more of its students to follow flexible paths toward a degree.

Enstitute, an apprenticeship program created by two Millennials, is heading into its second successful year placing 18-to-24-year-olds with top New York City tech startups, nonprofits, and media companies. The Fellows, who pay $1500 tuition but also receive a stipend to cover living expenses, live together and complete a core curriculum and digital portfolio in addition to their hands-on experience learning business, creative, and technology skills.

General Assembly, a Silicon Alley incubator turned education provider, offers classes and workshops ranging in length from a few hours to full semesters, and ranging in cost from free to $3,500, in highly relevant areas such as business, marketing, mobile, web, and product development. They also offer networking and mentoring opportunities, and a growing online course channel.

About Coursera

The above links to Coursera, Enstitute, and General Assembly are Fast Company reports on those organizations, and well worth a look for those seeking alternatives to extremely costly education.

I also encourage readers to go to the actual Coursera site.

About Coursera®

We believe in connecting people to a great education so that anyone around the world can learn without limits.

Coursera is an education company that partners with the top universities and organizations in the world to offer courses online for anyone to take, for free. Our technology enables our partners to teach millions of students rather than hundreds.

We envision a future where everyone has access to a world-class education that has so far been available to a select few. We aim to empower people with education that will improve their lives, the lives of their families, and the communities they live in.;

We offer courses in a wide range of topics, spanning the Humanities, Medicine, Biology, Social Sciences, Mathematics, Business, Computer Science, and many others. Whether you're looking to improve your resume, advance your career, or just learn more and expand your knowledge, we hope there will be multiple courses that you find interesting.

Future of Education is At Hand: Online, Accredited, Affordable, Useful

On September 3, I wrote Future of Education is At Hand: Online, Accredited, Affordable, Useful.

Please check it out.

Avoid the College Debt-Trap

Those with money to burn may wish to go (or wish to send their children to go) to 4-year brick-and-mortar colleges for $60,000 a year plus room and board.

For everyone else who wants to avoid the college debt-trap, I strongly suggest exploring alternative approaches.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Weekly Address: Congress Must Act Now to Pass a Budget and Raise the Debt Ceiling

Featured

Weekly Address: Congress Must Act Now to Pass a Budget and Raise the Debt Ceiling

In his weekly address, President Obama says the economy is making progress five years after the worst recession since the Great Depression, but to avoid another crisis, Congress must meet two deadlines in the coming weeks: pass a budget by the end of the month to keep the government open, and raise the debt ceiling so America can pay its bills. Congress should vote to do these now, so that we can keep creating new jobs and expanding opportunity for the middle class.

Click here to watch this week's Weekly Address.

Google Authorship Troubleshooting: Article Attributed to Wrong Author

Posted: 20 Sep 2013 05:03 AM PDT

Posted by MarkTraphagen

This post was originally in YouMoz, and was promoted to the main blog because it provides great value and interest to our community. The author's views are entirely his or her own and may not reflect the views of Moz, Inc.

One of the toughest Google Authorship troubleshooting requests we get at the Google Authorship and Author Rank community on Google+ concerns misattribution of Authorship in Google search results.

Misattribution (Google Search showing an author photo of someone other than the actual author of a content piece) occurs because over the past year-and-a-half or so Google has become more aggressive in trying to attribute Authorship. In many cases, Google will take what appears to be an "educated guess" at the author of a piece.

But sometimes, the fault of misattribution is more the site's responsibility, and that's when some careful troubleshooting (ok, outright sleuthing!) can often uncover the problem.

Here's an example mystery attribution that we were able to track down and solve:

Community moderator Ann Smarty asked us to look at this result for a search for "Time-Saving Apps for Social Media Promotion":

Misattribution in Google Authorship results in Search

A very nice Google Authorship rich snippet search result, right? Only one problem. Nwosu Mavtrevor is not the author of that article! A woman named Anna Fox is, as the author box at the bottom of the article clearly displays:

Author box from a blog post

So how did Google switch authors?

Step one in our investigation was to do a quick on-page search to see whether Mr. Mavtrevor's name appeared anywhere on the same page as Ms. Fox's article. In the majority of mis-attribution cases it turns out that Google grabbed the displayed author from that author's name appearing somewhere on the content page.

Sure enough, there was Mr. Mavtrevor, early in the post's comment thread:

Blog comment box

But out of all the commenters on that page, why did Google latch on to his name for attributing authorship to the page? His comment isn't even the first one in the thread.

Perhaps Mr. Mavtrevor has claimed Authorship for the same domain. So our next step was to search for him on Google+. Thankfully he has a rather unique name, so we quickly located his Google+ profile.

Sure enough, Mr. Mavtrevor has the netmediablog.com site listed in the Contributor To section of his profile links:

Google+ Contributor To links

The Contributor To section of a Google+ profile is where Google looks for content that the profile owner claims to have authored. The other half of the required two-way linkage is a link back from that domain to the same Google+ profile.

So why has Mr. Navtrevor put Netmediablog in his Contributor To links? Because he legitimately is an author there!

Blog post by Nwosu Mavtrevor

Mystery solved! Er...not so fast...

Normally at this point, I would declare case closed and ask my Mr. Watson to write it up in his journal. But there's more to this case.

Usually a misattribution like this where two people have linked their Contributor To to the same site occurs when the page author does not have a clear byline on the page. Google's recent Authorship FAQ recommends "[s]howing a clear byline on the page, stating the author wrote the article and using the same name as used on their Google+ profile." Doing that usually clears up most misattribution problems of this type.

But not in this case. Ms. Fox has a byline at the top of the article, and the name exactly matches her Google+ profile name:

Anna Fox byline

So what gives now? How could Google possibly misattribute this article when it appears that every clue to its real authorship is right there on the page?

The answer was just a click away.

Page vs. domain authorship

Google allows for there to be a "default" Authorship for a site. Usually this is the Authorship profile (if any) associated with the home page of the domain.

When we clicked on Anna Fox's byline on her article, instead of going to a unique author page for her as we expected, the link takes us to the blog's home page. And the source code for the home page shows that Mr. Mavtrevor has his authorship markup on it, and thus is seen as the default author for site.

So it was our conclusion that Google followed the byline link to the home page and picked up the authorship attribution from there.

An ounce of prevention

Let's get to some practical takeaways from this investigation that can help prevent Authorship misattribution, particularly for multi-author sites.

1. Give each author on your site a unique author page. Most up-to-date Wordpress themes and frameworks (such as Genesis) include the option to set up unique author pages (under the Users tab). These templates automatically create a byline on each page created by a certain author, and the byline automatically links to that author's author page. When this is the case, each author only needs to link to her or his Google+ profile once from their unique author page (and of course, link back from the Contributor To section of their G+ profiles) and they are done. Google will follow the links from their bylines to their author pages to their G+ profiles.

If your site doesn't have such a theme, you should consider coding in author pages that are linked to by each author's content.

2. Make sure each author's byline name exactly matches her or his Google+ name. As mentioned above, Google now recommends that as a best practice. In most cases where we've seen misattribution just adding the byline name (in the form "by firstname lastname"), and placing it at the beginning of the content, are enough to correct the problem. The only reason that didn't work in our test case above was the fact that the byline linked to the site's home page.

3. Avoid using domain authorship attribution. Even though many themes and plugins (such as the popular Yoast SEO Plugin) offer the option to set up authorship for the home page/domain, we now recommend against using it. Google recently made clear that Authorship should only be applied when "[t]he URL/page contains a single article (or subsequent versions of the article) or single piece of content, by the same author. This means that the page isn't a list of articles or an updating feed." In addition, they noted that, "Authorship annotation is useful to searchers because it signals that a page conveys a real personâ€™s perspective or analysis on a topic. Since property listings and product pages are less perspective/analysis oriented, we discourage using authorship in these cases"

Since home pages, and about pages and such don't fit the descriptions above, authorship is not intended for them. My concern in light of these guidelines is primarily with watering down one's Author Rank (if and when that becomes a reality). But in terms of our present topic, I also believe that refraining from attributing authorship to a homepage or entire domain will help avoid misattribution issues of the type we saw above.

Conclusion

Google Authorship is an evolving product. It has already gone through some major changes since the summer of 2011 when it first went public. We can expect that as time goes by Google will get better and better at correct author attribution. In the meantime, though, it is best to be vigilant for misattributions of your content, and to employ a triage similar to the one we walked through in this post when they happen. Follow the best practices we outlines above, and there's hope that you'll head those issues off before they happen.

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Updates For Easier Pinning & Your Pinterest Recommendations

Here at Pinterest...

We've updated the Pin It button. If you pin while browsing your favorite websites, blogs and online shops, you'll notice an easier way to choose the image you want and edit pin descriptions. More details and how to install it are all on our blog.