Tag Archives: Investopedia

A sucker is born every minute

It is a nice expression; it is one that those who live by the rules of ‘opportunity knocks‘ rely on. In slow times you need the occasional sucker to infuse the grounded capital with lose change and they are all for it. Then there is the expression of ‘there is a hustle Smurf nearby’, where the experienced player creates a new account to amass gear from inexperienced players and newbies.

It comes down to the status on how something is seen. Some Investopedia page passed in front of me this morning and woke me up instantly. It linked to Barron’s (at https://www.barrons.com/articles/microsoft-stock-videogame-streaming-cloud-xbox-xcloud-51560373000) where we see: ‘Buy Microsoft Stock Because of Its Videogame Opportunity, Analyst Says‘, the entire setting is like a rewrite of the Divine Comedy, as Inferno is all that Microsoft seemingly delivers on a whole (as I personally see it). They went from an innovative system (Xbox 360) to a flawed concept and in the three iterations we see basic shortcomings that have never been fixed over the space of 6 years.

The beginning is already fun to work with: “Microsoft stock will rally because of its strong position in the videogame industry, according to Evercore ISI” No! It does not have a strong position, Microsoft degraded from 2nd to third position, and they could end up fighting over 4th position. The strongest console of the world got surpassed by the weakest one; the Nintendo Switch system surpassed them as they truly comprehend gaming and gamers. They got there in 2 years; it took Microsoft almost 7 years to get to this stage and ending up decently below 50% of the share that Sony has with its PlayStation. Microsoft games survives through marketing and bad decisions, with the optional good decision every once in a while.

The Microsoft stage of pushing for online, whilst basic shortcomings are frustrating gamers more and more, so when we see: “Ultimately, we believe gaming can become the next major narrative as it relates to Microsoft’s long-term growth opportunity” my response is: ‘Not Really, whilst the exclusive range of games is not impressive, the shared stream (Xbox and PS4) are often shown to be PS4 gems, whilst Microsoft is merely nice (with Assassins Creed Origins being a clear exception). The PS exclusive range is still growing and whilst the larger part of Microsoft IP is done through buying software houses, it has been in history the first step towards a more complete level of failing. There are examples all over the world for over 20 years.

Then the final part: “Materne is also optimistic over Microsoft’s cloud gaming offerings, where gamers can stream gameplay over the internet. Its XCloud service is slated for release this fall“, this is not a given. Microsoft decided to stay very quiet on the entire xCloud during its E3 and in addition, it is a soon a more direct competitor to Google Stadia. With the basic failings that Microsoft has shown to have, the audience is willing to take a look at Google Stadia, new brands have that effect, and it will gnaw directly on the Microsoft slice of the gaming cake. Apple is another contender, but there are still questions on that front for now. In short Microsoft got surpassed by Nintendo Switch, it is at less than 50% of the Sony PlayStation stage and it has disappointed gamers too often in their need for online dependency, a side that gamers do not like to relate to at all. There are enough indication that the next project (Project Scarlett) is more likely than not to hold onto the flaws of Xbox One, Xbox One S and Xbox One X. Its mixed media on mentions given in E3 2018, whilst giving less or no clarity on E3 2019, loaded with one liners that are implied to be connected but are regarded to be seen as separate statements show the flaw of Microsoft to a much larger extent. So as we see that ‘Microsoft is the Netflix of gaming‘, whilst not realising that there is more to that, we might go with the quote: “Xbox Game Pass is described as the ‘“Netflix of video games” and lets Xbox and PC users play a range of Xbox One and Xbox 360 games for $9.99 per month. xCloud will essentially be an upgraded version of this pass, and will work on more platforms, so it will likely cost more than $10” (Source: Inverse)

This entire setting only works well if there is enough bandwidth, in this stage the chance of congestion grows close to exponential as there will be no solid large 5G in many places until 2022, This means that it will be select in the US, Europe and outside these two. So as such the market slice will collapse overnight, Google Stadia will have a similar issue. Yet whilst Microsoft is about the marketing Hype and WOW factor, Google has been playing a more cautious long term game; it will pay off for them. All whilst the solid information that is essential was not given at E3 merely hinted at. It implies that Microsoft has not figured out how to best maximise on the revenue (read: an implied stage to exploit gamers). That in itself is the recipe for disaster. It is like the silent ‘always online‘ push that was tried in 2012 and pushed an angry mob straight towards the Sony solution. I personally believe that Microsoft has not learned its lesson yet and will give more disappointment soon enough. that whilst the bulk of the frustration could have been avoided in more than one place and never was, that alone convinces me that Microsoft might be an option, but it will be a risky one, one that is flawed and dangerous to boot, but then some investors like the rough stuff.

Now we get to the part that Investopedia has (at https://www.investopedia.com/microsoft-s-strategy-to-become-the-netflix-for-games-4691138): “One of the things Microsoft has going for them, unlike say Amazon, Verizon and Google, is a popular gaming console and a host of already super popular games, such as the entire series of “Halo” games. At the recent E3 video-game conference in Los Angeles, the company unveiled 60 new blockbuster games for both its console and PC, including “Gears 5,” “Batman: Arkham Knight,” “Cyberpunk 2077,” and “Star Wars Jedi: Fallen Order.”” Now consider that this list of 4 only has one exclusive and for the most 50% of that list has nearly everyone desiring it on PS4 and optionally PS5 as well. The fact that ‘Batman: Arkham Knight‘ is a 2015 game giving rise to some people not doing their homework #JustSaying.

It is true Gears and Halo are Microsoft exclusives and they do have a large following, no one denies this, yet two titles don’t make for a victory (they also have the Excellent Forza IP which was oddly missing in that list).

Yet overall the entire matter of being surpassed by the weakest console is a much larger issue. The matter of change is upon them and their play is to not do this implies that there is a larger online need and the people a shivering back from that stage. They feel a little more powerless. Even as xCloud is all online, the push to completely be there will backfire, if only to be able to game when the internet congests, a part that too many have not considered to the degree it needs to be considered.

Until 5G and 5G speeds are commonplace, the gamer will be confronted with ISP’s that will react towards congestion through bandwidth throttling, when that happens, you do not want to be in a multiplayer game like Fortnite losing your connection, any promise that this will not happen is bogus from the very start. It is still a tool used, even within the last 24 hours we see throttling in combination with ISP’s all over the world, because it is a tool they need to minimise congestion. The moment throttling hits, the game is quite literally over for these players. So how often does this need to happen for people to trade in their xCloud (and optional Google Stadia) solution?

When that crystalizes in front of you, what will the losses be? I believe that there is a clear future for this kind of gaming, no one denies that, yet until there is a much stronger 5G presence, I am not sure how it will actually properly work (outside of a staged test phase). And for now that stage is for the larger global gaming population 2-3 years away.

 

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A slave to greed

It is time to take a stance a little more vocal and a little more ‘anti’ certain voices. You see, the people are being led astray, misinformed and basically lied to. It is a clever lie that some people spin, where the involved players (like in Greece) focus on one part of the story and after that story is told, those who think they are getting informed, are told a fairy tale with no concrete connection to reality or to the factual complete truth. Those advocates work from the concept of ‘in the eye of the beholder’, which sounds nice, but when you pay your electricity bill, there is no eye of the beholder, there is just the invoice!

To get this party train started, let’s take a look at the definition. We are looking at Austerity!

According to the Investopedia it is: “DEFINITION of ‘Austerity’ a state of reduced spending and increased frugality in the financial sector. Austerity measures generally refer to the measures taken by governments to reduce expenditures in an attempt to shrink their growing budget deficits“.

Whilst dictionary.com tells us “strict economy

Both apply here!

So when I am looking at an article in the Guardian by Heather Steward called ‘Austerity isn’t ‘good housekeeping’: it’s dogmatic, risky and unjust‘ (at http://www.theguardian.com/business/2015/jun/07/austerity-isnt-good-housekeeping-dogmatic-risky-unjust), it is time to get a few things out of the way. To help me, there is a source I used for part of this, which is at http://www.economicshelp.org/blog/5509/economics/government-spending-under-labour/. You see, in the time 1997 – 2010 several things happened, even though around 2007 the total debt was at a record low, the increase in spending has changed that. The debt is getting out of control, plain and simple. Governments (both sides) tend to hide behind GDP percentages to validate their spending, yet, in the previous conservative government, it was at 40% of GDP, by the time Gordon Brown was done, it was at 45% of GDP, considering that the UK GDP is decently high, that 5% amounts to a lot. Yet, that figure does not tell you the whole picture.

The UK public sector debt went in the period 2008 – 2010 from around 36% to over 65%, which is massive, this current government has been adding to that, but they are trying to stem that tide, which is not done overnight. Now this is not me blaming Labour (which is always fun), Health care spending almost doubled in real terms between 1999 and 2010, which is a Grim Reaper reality. Some were massive bungles by labour, but the added reality is that the UK population is growing old, that is just a natural part and we have always known that. So there is no blame, but it is therefore of a much higher importance to get a handle on it and none of the choices are nice ones.

You see, the source gives a possible connection, but not the reality behind it. We see the mention whether Keynesian economics are to blame, with the quote “Keynesian economics calls for counter-cyclical spending and deficits. Thus, in a period of strong economic growth, Keynesian economics would advocate balancing the budget or even pursuing a budget surplus“, but that is the problem, the politicians, in the era 1997-2004, in such a ‘good’ climate did not adhere to that. The GDP debt is evidence of that. You see, to some extent, politicians are like children, give a 17 year old boy  a credit card with one million pound, stating that he must be careful, and that person will find a reason to get the PS4, the Xbox One and get personal biology lessons at the ‘Steam and Sun Health Club’. At which point that person is feeling that the good life is here, alas, at some point the invoice is due and whilst it is not getting paid, the interest is getting paid from the credit card, dwindling reserves even further, this is EXACTLY where Greece is at!

So now to the first article as mentioned in the beginning!

the spending squeeze the Tories now hope to implement, starting in the current financial year, is intense, as the spreadsheet wizards at the Institute for Fiscal Studies made clear last week. Shortly before Osborne’s statement, Carl Emmerson, the IFS’s deputy director, warned that achieving the Tories’ planned cuts would be “anything but easy”” Here I agree, it will not be easy, it will be hard and it will be even harder on the people, the issue is however that £1.56 trillion comes with the added issue that at 1%, this bill gets an added 15.6 billion in interest, however, the interest is not 1%, it is higher, so we see that the annual cost of servicing (paying the interest) the public debt amounted to around £43bn (which is roughly 3% of GDP). In an age where some people get instant orgasms from reporting a 0.2% increase in GDP, they seem to forget that this amounts to the part that the UK is annually down 2.8% of GDP. If we act harshly (really harshly) it can be dealt with and even be reduced! Which is the real deal. That interest is benefitting banks and foreign investors. It boils down to ‘money for free’. So now we get the second quote “the belt-tightening is likely to be profoundly unfair. Osborne has repeatedly said his cuts plan will involve a £12bn reduction in the welfare bill. Since pensioners are protected, and out-of-work benefits are a relatively small part of the £250bn social security budget, much of the burden is likely to fall on low-wage workers and their children” I agree, it is very unfair, but when the economy was high, no one was shouting loudly to decrease spending as bad times are always around the corner, no one stopped Gordon Brown to give away the keys to the kingdom, which is what he pretty much did!

So, the term ‘pursuing a budget surplus’ sounds nice, but politicians will avoid bad news whenever they can, so cutting down on expenses will only be done when there is no other option, and preferably in the 11th hour, whilst there is no guarantee that there is a surplus at that point to work with!

More austerity is risky at a time when recovery appears to be fragile against a background of the bubbling Eurozone crisis” this is a clear misrepresentation. You see, the statement is true, but there is no ‘fragile recovery’ at present, Greece is making sure of that by not doing its part. Which is exactly why the UK is contemplating getting out of the EU in the first place. The bulk of the Euro nations are all not balancing their books and getting out now might be the only way to preserve the little gain the UK can get. Now we get to another ‘failed’ view. It comes from Nobel Prize winner Amartya Sen. The statement is “A nation’s debts are mainly owed to someone else within the same society – for example the pension-holders whose funds are stacked full of gilts“. Is that so Mr Sen? Well, if you did your homework on this then please elaborate where the 1.5 trillion in UK debt is? I feel 99.324% certain that a massive amount is in other hands, not in the hands of pension holders, in addition, with the annual increase of needed funds over the next two decades, that amount is about to dwindle to record lows really fast, so where is all that debt?

The next statement is a view that I oppose “a report from the International Monetary Fund, rarely considered a hotbed of fiscal recklessness, warned about the risks of trying to tackle a country’s debt burden too quickly“, what is too quickly? You see 1.5 trillion is not going away overnight, it will take 2-3 decades to truly slim it down, so for the next generation, someone is walking away with £43bn a year, so we should get the debt down soon, preferably by a lot because the annual interest bill is around 7% of the received revenue in 2014, that whilst George Osborne spent 15% more than received, so to cut back on that increasing debt austerity seems to be the only answer.

Now we get the next issue “Paying them down rapidly distorts the economy too much to be worth the risk“, the risk to whom? To banks not getting ‘free’ money? Debt is a kicker, it always has been it has never been different. We will never be completely out of debt, but the debt at present is unacceptably high. You see a debt driven economy is based on the illusion of never ending growth. How did that work out in 2004 and 2008? In that light, how is it working out for Greece? They can no longer pay their bills. Whatever they get now in bail-out will be swallowed by debts and interests before Q3 ends. So, when I read “Debts should be “reduced organically through growth, or opportunistically when less distortionary sources of revenue are available”, the IMF’s researchers argue“, I am reading more misinformation. The theory sounds nice, but in the time when there was the option of surplus NOT ONE government created surplus. President Clinton was the only one who got a true surplus, after that due to circumstances the US could not foresee, the debt went completely out of control. In reflection on Austerity, Germany did tighten the buckle and got part of its debt down, which is why they are in a better position at present.

So this is the first article, Heather Stewart is not stating anything untrue, but the article is missing a lot and some of these points I very much disagree with (figure me, disagreeing with a Nobel prize winner, whilst I have no economy degree).

Now let’s have a go at the second Nobel Prize winner. In this case Joseph Stiglitz, recipient of the Nobel Memorial Prize in Economic Sciences and the John Bates Clark Medal. The article that in centre of this is ‘Greece’s creditors need a dose of reality – this is no time for European disunion‘ (at http://www.theguardian.com/business/2015/jun/05/greeces-creditors-need-a-dose-of-reality-this-is-no-time-for-european-disunion). The first paragraph is the very notion of the beginning of my disagreement. “Athens has met its creditors’ demands more than halfway“. And we care….why? Why is Athens not meeting those demands 100% of the way? You see, Greece took the debt, it went back to the markets and sold 5 billion more in bonds (I still have not figured out the name of the idiot allowing for that act of stupidity). Greece vowed to make payments again and again, yet at present the already deferred TWO payments. Now, let me be frank. They were allowed to do that! The rules were there and they played by the rules, yet we all know that Greece is out of money, there are no more options. This will be the first time that a nation goes extinct through economic inaction! Even when Syriza won, instead of going after their predecessors, instead of sitting down and getting to the tax evaders, we see (at http://www.thetimes.co.uk/tto/news/world/europe/article4358352.ece) “The country’s financial crimes police, the SDOE, had begun shredding scores of documents linked to cases of corruption. What remained was stuffed in bin bags and discarded outside the bureau’s headquarters in Athens, in public view” the title ‘Greece shreds files on tax cheating by rich and powerful‘ Kostas Vaxevanis reported this on February 19th 2015. So, why was there no prosecution here? The entire debacle on tax evasion has been treated like a joke by 4 previous administrations, so as they cut their own jugulars, why allow for just a half way approach? So far this Greek administration has not done anything to give ample faith that there will be any level of resolution. Then we get “Greece has made clear its willingness to engage in continued economic overhaul, and has welcomed Europe’s help in implementing some of them“, is that so? So far there has been no overhaul at all, the public sector cuts were undone by rehiring. Greece needs to lower its cost by a massive amount. In all that time, which of the over 2000 of wealthy Greeks ended up in court for tax evasion (from Swiss bank accounts), perhaps one? Oh the Journalist Kostas Vaxevanis ended in the dock too, a massive miscarriage of Justice as I see it!

The one part I do agree with is the dangers of Greece exiting “I believe such views significantly underestimate the current and future risks involved“, this is true, but Greece can no longer be trusted to do what they stated to do and as such, some of the players prefer to get out, before the total debt grows with another 20% which is basically no more than a year away. There is not concrete evidence that the economy will truly pick up and those who have enabled this debt driven event are not held to account either (that small matter of a massive amount of Greek bonds on the market).

Then the last part “The ECB president Mario Draghi’s confidence trick, in the form of his declaration in 2012 that the monetary authorities would do “whatever it takes” to preserve the euro, has worked so far. But the knowledge that the euro is not a binding commitment among its members will make it far less likely to work the next time“, yes, how did it work? By spending a trillion or more one areas that are still not recuperating and will need at least a decade to regain the trillion that was spent in under a year? How is that anywhere near a workable solution?

In all this, whatever should work might have worked to a degree if politicians would control their budgets and that financial institutions would not be as greed driven as they are, which is why it all failed. When we see the quote “16 banks in five years to the end 2014 reveal £30bn increase in payouts, fines and legal bills on previous five-year period to end 2013” and this is linked to a total of well over £200bn. Lloyds alone got £117m in fines, how is this linked? Well, such losses means no taxation in the books as profits are gone, whilst many involved walked out with enough money (read: bonus) to pay their full mortgage in places like Golders Green.

Mr Stiglitz never lies or misinforms, but his view is incomplete. It is very dependent on the people involved doing the right and the correct thing. Politicians and bankers tend to be not those kind of people, Greece has shown it, Gordon Brown has spent it now the Conservatives need to repair the damage, Prime Minister Tsipras is ‘forced’ to play a high stakes game, whilst those involved are no longer willing to give leeway. In my view, that game should never have been played in the first place. By setting austerity, whilst going after the Greeks and their wealth benefitting from all this was perhaps one of the few acts that could have opened wallets all over the place, that act was never done, which is why many see that meeting half way is not really an option.

Austerity might seem unfair, and it is not fair on the payers at present, but someone opened a tap whilst the bulk of those knowing what was going on should have spoken out, and spoken out very loud. This was not done, so behold the consequence of that little caper.

There is one gem in his article at the end that is part of the entire Euro mess, which is fun as I have raised it a few times over the last few years. Not bad for a person devoid of an economics degree!

He states: “Europe’s leaders viewed themselves as visionaries when they created the euro. They thought they were looking beyond the short-term demands that usually preoccupy political leaders. Unfortunately, their understanding of economics fell short of their ambition; and the politics of the moment did not permit the creation of the institutional framework that might have enabled the euro to work as intended. Although the single currency was supposed to bring unprecedented prosperity, it is difficult to detect a significant positive effect for the Eurozone as a whole in the period before the crisis. In the period since, the adverse effects have been enormous

This is true, the one part I have an issue with is ‘Europe’s leaders viewed themselves as visionaries when they created the Euro‘. I think Europe’s leaders had nothing to do with that part. I have always viewed this change as an essential; step by the US. Their benefit of trade with a single currency was titanic in proportions, in addition, the US would keep its option to float the currency as any economy tends to do in times of hardship, whilst the nations that are part of the euro are part of a collective, which removes the option of floating a currency. This was centre in the additional growth (or diminished fall) for the US, yet, even they did not bank on the credit swap meltdown, which did hurt them. The US is getting better, but their 18 trillion in debt is choking them, even with the option to float the dollar, the Euro in the massive debt it is, can only remove the debt by paying it, which is strangling France and Italy. The UK is dealing with it, and the Euro is hurting them, but not as much as being part of the Euro is. Which is just my view on it all.

As I stated in the beginning, the articles are incomplete, misstated, not by inaccuracies, but by incompleteness, which is why people have the skewed view they seem to have at present. In the austerity path, which is unfair to some, we need to add the legal premise and the legal definitions as well as legal obstructions to remove the option of overspending to the degree that was done, we need to make sure that the law will not allow for such overstretching ever again, when that is done, we will return to times when there is hardship, but when there are good times we will all feel it too, in my view, the push of the financial sector to remove the season of ‘financial winter’ resulted in the banks getting by and the rest suffering, this must never be allowed ever again!

 

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