Flappy Bird's Android Wear App Challenges Apple Watch

Just as Flappy Bird signalled the lopsided nature of the software market during the early months of 2014, its arrival on your Android Wear powered smartwatch points to the strengths of Google’s approach to wearables, and how it will contrast with Apple’s strategy.

To be clear, the original coder of Flappy Bird has not developed the Android Wear version. Instead, hacker Corbin Davenport has been tinkering with his smartwatch to run not just Flappy Bird, but a number of other ‘big name, big impact’ apps on the platform including Minecraft, Doom, and Windows 95 (reports Chris Chavez of Phandroid).It’s a non-trivial process, far from the one-click install available via Google Play, but it does work. This shows one of the benefits of Android as an open system. Because people know how Android works, if they want to do something with their own hardware, they can. In this case Android Wear is a powerful touch-screen computer in its own right. Why shouldn’t I be able to do whatever I want with a wrist based computer that, to stay with a classic image, is far more powerful than the computers we used to land on the Moon?

Android Wear Screens (image: Google)

Google’s vision of Android Wear is relatively clear. It is a second screen to your main Android device (be it a smartphone, phablet, or ultraportable), it will give you rich notifications you can act on from your wrist, and it will present you with relevant and timely information.

Which is all fine and good if that’s exactly what you want from a smartphone. For many that will be enough. But wearables, more than smartphones, are going to be incredibly personal experiences. Third-party software will extend functionality, and while many of those apps will fit into Google’s vision of a wearable (which in part is about pushing people to use Android for everything so their eyeballs can be sold to advertisers), the ability to push outside of that envelope – as demonstrated by Davenport’s Flappy Bird port – will be one of the key differentiators in the long-expected Android Wear vs Apple Watch discussions that will pop up later this year.

The Apple Watch (Courtesy of Apple)

Once more it comes down to Apple’s unifying and strictly implemented vision, against Google’s more accessible vision that allows far more experimentation and customisation at every level of the product chain. It’s not going to be a symmetrical fight, with Apple’s trump card coming down to fashion and status symbol, and Google playing the software card.

If you are picking up a smartwatch to be seen with a smartwatch, then the high-end Apple Watch will be your hardware of choice (with some unit prices likely to break $10,000). But if you are looking for utility, software, and a chaotic collection that you can tailor to yourself, Android Wear is looking more and more attractive.

Both sides can ‘win’, so which side are you most looking forward to?

Six China Business Law Trends for 2015

China in 2015 will look much like China in 2014, only “more” so. If you are doing business in China, you should be on your guard for the following six things in 2015.

1. China will increasingly crack down on foreigners in China without proper visas. This is more likely to impact you if you are from Africa or the Middle East, but we are hearing of increased problems for Americans and Europeans too. China’s economy is slowing and going after foreigners is a good way for the government to win friends among its own citizenry.

2. China will increase its efforts to root out and shut down illegal and unregistered foreign businesses. China has especially stepped up its enforcement against American and European companies that operate in China but have an entity in Hong Kong without one in the PRC. This has become so common that we are starting to think that Hong Kong is providing some information to the PRC. Providing jobs to Chinese citizens will not let you off the hook on this one; if you are doing business in China, you need a China entity.

3. China will increase its tax collection efforts. This has been going on for years now and if you are doing business in China already I am guessing that your response to this is “yeah, so.” In particular, China has stepped up its transfer pricing efforts and so if your China operations are not making a healthy profit, be prepared for the government to impute healthy profits to it. If you do not already have a good China accountant, get one. Now.

4. Litigation is increasing. The idea that Chinese companies and employees do not sue was never true and it is becoming even less true every year. Chinese companies are getting aggressive in threatening to sue their foreign counterparts both in China and even in the United States. If you fire or lay off your Chinese employee without first getting a signed settlement from them that actually works, your chances of being sued are great.

5. China’s crackdown on corruption, particularly as against foreigners, is real and is not going to go away. Many Chinese lawyers have become aware of the rewards offered to whistleblowers by the U.S. Department Justice and the SEC and they are hustling for clients. Are you confident that none of your employees will turn you in for a multi-million dollar reward?

6. The number of scams against foreign companies will increase and continue to get more sophisticated. Your defense is to conduct due diligence before doing your China deals.

Eurozone Bond Yields Fall To Their Lowest Since The Black Death

That’s a fairly apocalyptic headline there, that bond yields in Continental Europe are now at their lowest since the Black Death, 8 centuries ago, but it is a statement that is true. And our problem is that the people who run monetary policy in that eurozone don’t seem to grasp what this means. Our friends over at the Bundesbank like Jens Weidmann still are in the grip of 1930s ordomonetarism, thinking that low rates must mean a loose monetary policy. When, as we’ve found out since the 1930s this is not necessarily so at all. Low rates can actually mean that monetary policy is tight. And when that is so then we need to use that unconventional monetary policy, QE, to loosen policy otherwise we run the risk of strangling economies via a falling money supply. And what’s happening in Southern Europe? Ah, yes, that’s right, economies are being thoroughly strangled, aren’t they?

The news about rates being the lowest since the Black Death comes from Ambrose Evans Pritchard:

Bond yields have plummeted to record lows across the eurozone as deflation becomes lodged in the system and markets bet on a blitz of asset purchases by the European Central Bank this month.

German five-year yields dropped below zero for the first time ever, touching -0.007pc on the first day of new year trading, implying that investors are willing to pay the German government to store their money for the rest of this decade.

Italian, Spanish and Portuguese yields have seen spectacular drops over the past two trading days. The French state can borrow for five years at a rate of 0.13pc, and Ireland can do so at 0.32pc.

Nothing like this has been seen in European history since the 14th century, after the depletion of silver mines set off a slow monetary contraction, followed by Edward III’s default on debts to Italian banks and the Black Death soon after, compounding a deflationary collapse.

And yes, we really do have those who say that low bond yields, low market interest rates, show that monetary policy is loose. But this just ain’t necessarily so, as Scott Sumner has been valiantly trying to point out for years now:

3. But weren’t interest rates cut to very low levels?

Interest rates are a very misleading indicator of monetary policy. Both in the early 1930s and late 2008, falling rates disguised a tight money policy. The rates were actually falling for two reasons. Expectation of recession led to less borrowing and thus lower real interest rates. And inflation expectations also fell sharply.

4. But didn’t the monetary base increase sharply?

Yes, but this is also misleading for two reasons. During periods of deflation and near-zero rates, there is a much higher demand for non-interest bearing cash and bank reserves. In addition, last October 6th the Fed began paying interest on reserves, which caused banks to hoard bank reserves.

And we also have (and Sumner will forgive me for putting it this way) rather weightier evidence than just his points. Here’s Milton Friedman:

Low interest rates are generally a sign that money has been tight, as in Japan; high interest rates, that money has been easy.
 After the U.S. experience during the Great Depression, and after inflation and rising interest rates in the 1970s and disinflation and falling interest rates in the 1980s, I thought the fallacy of identifying tight money with high interest rates and easy money with low interest rates was dead. Apparently, old fallacies never die.

And yes, we are back to that old story about the 1930s and the Great Depression again. Friedman (with Anna Schwartz) definitively showed that it was the actions of the Federal Reserve, in thinking that low rates meant easy money when in fact money was tight, that turned the 1929 Crash into that Depression. And yes, it’s also true that Ben Bernanke was a scholar of those times, that Mervyn King at the BoE grokked the point, and that’s why the UK and US have had QE in a way that the eurozone has not. And, as even a casual observer will be able to note, while the UK and US economies have not had easy times of it they’ve done hugely, vastly, better than the eurozone.

What is so infinitely depressing about all of this is that we know why. We know the solution. And we’re not doing it. And thus the eurozone having the lowest interest rates since the Black Death is not a sign of hope for the future at all. It’s a signal of how badly monetary policy in the eurozone is being handled. And it’s one thing to hope for a more unified Europe (not something I do hope for but still), peace and love and understanding for all through ever closer union, but even that’s no good if the actual policies being followed are wrong, is it?

Do Not Fear The New Year's Baby

Meanwhile, in one of many alternate futures…

Babies have received shots at birth for centuries. No-one thinks twice when an additional one is added to the usual vitamins and vaccines.

But when parents start disappearing, fear spreads among some communities.

Many of the missing are suspected of anti-Authority views. Others were model citizens, but who knows what goes on behind closed doors?

But we hear interwebs talk of babies made into listening devices using nanotechnology.

Families trying to refuse post-natal injections are overruled for “public health reasons.” And their names are added to lists.

After all, if you have nothing to hide, you have nothing to fear

Payday Loan Cap; Britain Bans Credit For The Poor

Payday Loan Cap; Britain Bans Credit For The Poor

The UK has brought in caps on the amount of interest and fees that payday loan companies can charge to borrowers. This is, of course, in the name of protecting the poor from the rapacious capitalist b…..no, the not very nice capitalist people. The actual effect is, of course, simply to ban some poor people from being able to borrow money. Quite why this is a useful goal of public policy hasn’t been adequately explained by anyone. It is still true though, for this is always the effect of fixing prices as any first year Econ 101 textbook will tell you.

A cap on the cost of payday loans has come into force aimed at preventing debts spiralling out of control.

Fees and interest paid by customers using payday lenders will now be limited, lowering the cost of borrowing for most people.

The new rules also mean those who cannot afford to repay their debt on time will never pay back more in charges than the sum they initially wanted to borrow.

For all high-cost short-term credit loans, interest and fees must not exceed 0.8% per day of the amount borrowed.

Before the rules Britain’s biggest short-term lender Wonga’s annual interest rate was 5,853%.

The Financial Conduct Authority (FCA) said the move will ensure proportionate charges – and make credit much cheaper.

Martin Wheatley, chief executive of the FCA, said the payday loan cap will “make the cost of a loan cheaper for most consumers.

Well, no, not quite. It will make the cost of a payday loan cheaper to those who can get one and will make the price infinite to those who cannot get one as a result of this change.

There’s three points, one simply mathematical, one of detail, and then of course the larger economic point.

That first is that these loans are designed to be for a week or two, for a month maybe. Until the next paycheck that is. And as such using the APR to calculate the interest rate simply isn’t really valid. Because using the APR assumes that such a loan is being rolled over at the end of each week or month. These loans just don’t work that way making that calculation method a nonsense.

The second, in detail, is that there’s simply a cost to lending someone some money. Forget interest for a moment, don’t even think about default rates and the rest. Someone, somewhere (or something, maybe an algobot) has to decide whether this particular person is good for £100 or whatever for a week or two’s time. Making that decision, collecting the information to do so, just costs money. This is why your bank charges you a £35 arrangement fee on your overdraft. One part of the thrift store network in the US tried a zero interest and no calculation for default loan system a few years back and found that just administration costs meant a 280% APR even as a non-profit.

And that cost has to be paid by the borrower or there won’t be anyone willing to lend money to them. We can all argue about how much that cost should be, £5 maybe, £10 possibly, but it’s going to be a large percentage of a £100 loan. That’s what really makes these loans look so expensive. Simply that lending small amounts of money on a short term basis is expensive in terms of the simple fixed costs of lending small amounts of money for short periods of time.

And then there’s the larger economic point. Price fixing, the fixing of the price for anything, always goes wrong. Before this price fixing the market was in balance. Those who wanted to borrow money at these prices could do so, those who wished to lend money at these prices were also doing so. That price was therefore the market clearing price. So, in we come to change that price by law. We are obviously going to end up with a price that is not the market clearing price (for if we did set the price at the market clearing one then why the heck are we bothering?). If we set the price above it then there will be more people willing to supply but fewer willing to borrow. And if we do as is being done, set that price below the market clearing price then there will be a reduction in the number of people willing to lend at these new, lower, prices. Which means, inevitably, that some people who wished to borrow at the old prices will not not be able to borrow at all.

The end result of which is that, inevitably and without any doubt whatsoever, the payday loan cap will ban credit for some of the poor.