Month: June 2010

Etymology of “thanks” and the gift economy

I love etymology and I am also interested in how publication-oriented accounting may make us more generous. So I had to check the etymology of “thank”.

Interestingly according to etymonline, it comes from the same group as “think” so thanking essentially means to give good thoughts and gratitude. In French, the translation of thanks is “merci”, which is like mercy, to spare someone.

At the time these words started to be used, we had no way to publicize “good thoughts” beyond the parties to a transaction or a family or village, but today we have the Web.

If we think about the Web version of the “thanks”, it would essentially be a written statement of gratitude for something you’ve received, possibly because you didn’t have to sacrifice anything to obtain it, or because your sacrifice in the exchange was much smaller than the other party.

These “thanks” could be aggregated in a PageRank-like “ThankRank”, which would be quite useful when we want to decide where to direct our own generosity.

Why do CUs oppose ‘Reasonable Fees’ in card payment amendment

A few days ago, Patelco sent the letter below to their members asking them to voice their opinion against the REASONABLE FEES AND RULES FOR PAYMENT CARD TRANSACTIONS amendment (original text). This campaign seems to be orchestrated at the state and national level.

What is not clear to me is why would Patelco, a credit union with less than $4 billion in assets would campaign against an amendment, which exempts card issuers with assets of $10 billion and less?

Carla Day pointed me to this article by Russell Simmons where he explains that this exemption is unpractical from an implementation standpoint.It’s odd that Simmons’ letter does not mention that he is involved in a Visa Prepaid Debit Card business called RushCard whose business model is likely to be impacted by this amendment.

What can we learn from Japan

A friend of mine sent me this 2008 video of Richard Koo from Nomura Research Institute in which he presents his theory of “balance sheet recessions”. Mr Koo has been consistent with this message, with his presentation appearing in 2009 and 2010, and consistency is something I respect.

Summary

Mr Koo makes the case that in the type of crisis we are in – one in which the private sector is not willing to borrow and are actually paying down their debt – monetary policy is pretty much useless. The only effective tool are sustained public stimulus over a long period of time, not a series of small or big ones as we come out and come back in recession. He argues that there is no need to worry about inflation and higher interest rate, even with increasing fiscal spending, the reason being that banks will be happier to lend the money to the government and earn interest, than not lend money at all i.e. destroying money.

My opinion

I agree with Mr. Koo on his analysis of balance sheet recessions. But I think there are important cultural and political parameters for his solution to be viable in each geography (US, Europe, Asia):

  1. Debts must be repayable (including the government’s). If we are in a generalized Ponzi territory where we borrow to pay interest, hoping for assets to increase in value faster than debt, then it’s game over. I have high doubts about debts being repayable, but let’s assume they are.
  2. Economic agents must convincingly show they are doing their best to pay back their debt (and not hope that somehow they will be able to have someone pay for them). If they don’t, creditors will look for the exit and grab what they can before their promises become worthless.
  3. Savers must trust the public funds allocation process. This is probably the most important and challenging part and we must be creative about this. Good options to research IMHO to re-build trust that saved money lent to the Government will not be wasted: participatory budgeting or direct lending from savers to Government with specific projects people can invest in.