I find it interesting to see the debate framed in terms of huge companies battling over inventions — but to me, the much bigger concern is when giant firms rip off the smaller inventor, who often cannot afford to prosecute their claims.
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Hat tip IP Metrics
Click for ginormous chart:
Source:
An Overview of the Euro Crisis
NYT, October 22, 2011
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My Sunday Business Washington Post column is out. This morning, we look at repairing the infrastructure of the US, and the impact it could have on the ailing economy.
The print version had the somewhat alarmist (but accurate) headline The public investment we need to make now, for our competitiveness, our jobs and our safety; the online version is the brief but also accurate hedder Repairing infrastructure can help repair economy.
Here’s an excerpt from the column:
“If you have spent much time traveling around the United States, you likely have noticed that our infrastructure looks a bit worn and tired and in need of some refreshing. If you spend much time traveling around the world, however, you will notice that our infrastructure is shockingly bad. So bad that it’s not an exaggeration to declare it a national disgrace, a global embarrassment and a massive security risk.”
The Post also included a scorecard of the US infrastructure from American Society of Civil Engineers – seeing it laid out like this is very telling:
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click for ginormous version of print edition
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If we are going to be deficit spending — and that is the US history of the past 40 years — then let’s leave behind an infrastructure that the private sector can build on. That is far more productive than giving trillions of dollars to reckless bankers, tax cuts for the wealthiest Americans, or a war of choice in Iraq.
Instead, we can create a country that equals the best of Germany, Japan and China. The alternative is the sort of Austery that is leading to an entire continental recession in Europe.
The choice is ours . . .
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Source:
Repairing infrastructure can help repair economy
Barry Ritholtz
Washington Post, October 23 2011
http://www.washingtonpost.com/business/repairing-infrastructure-can-help-repair-economy/2011/10/17/gIQADkui6L_story_1.html
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From Econoshock in Belgium, comes this look at a potential Chinese hard landing:
The Top 10 of rarest things in the world ?
10. Fine German restaurants
9. Humor and self-criticism
8. Safe biking lanes in Flanders
5-7 ***
4. Proposals for public expenditures cuts in Belgium (as part of the 10Bn€ effort)
3. Reliable US statistics
2. Reliable Chinese statistics
1. Real Triple-A (AAA) countries
If you are in an inspirational mood, you may fill in the missing blanks (7-5) in “the rarest stuff on earth” list.
Last year, reliable Chinese statistics topped the list, but there are now at least 2 reliable Chinese statistics and -unfortunately- only 1 AAA country.
The two reliable Chinese statistics are : 1. Power output (electricity) 2. Money supply
Forget most of the other data in China: GDP numbers for instance are notoriously unreliable. The rumours of an economic slowdown in China have been circulating for a while. Idle buildings and capacity overhang are some of the warning signs of the Chinese economy.
But now a new and more alarming warning sign has turned on: money supply has collapsed in recent quarters. The growth of money supply is closely related with credits and hence infrastructural activity and fixed investments in general. The Chinese banks have put the brake on new loans, and as a result, activity will start to slow more markedly in coming months.
Analysts have so far stated that China will experience a soft landing. But the chart is a serious indication that there is no such thing as a soft Chinese landing.
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Source:
The myth of the Chinese soft landing
Econo Shock, October 19, 2011
Here is another view of that meteor tearing through an aurora (shown previously here)
An Amateur photographer, Tommy Eliassen, composed the image in Ifjord, Finnmark, Norway. Eliassen made the photo on Sept. 25 using a Nikon D700 with a wide angle lens and long exposures between 25-30 seconds:
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click for larger photo
Source: MSNBC
Emanuel Derman | Big Think
Author, Professor of Financial Engineering, Columbia University
October 21, 2011
Emanuel Derman: In some sense, all of finance is about imagination because finance is about saying, what should something be worth today based on what I think is going to happen in the future? Nobody knows what’s going to happen in the future. And so all financial models are specifying in some way an imagined future and then saying, if that future is true, what should I pay for something today?
And so for example, if you’re building an option model, you’re saying, what will volatility be in the future? And given my estimate of volatility in the future, I can value an option today. If you’re looking at CDO’s, which sort of came in a cropper in the big financial crisis, essentially human beings are saying, what will housing prices do in the future? What will defaults on loans be and defaults on mortgages be? And given my imagined scenario for the future, what should
I pay for something today that’s sensitive to that future behavior?
The big failures, I think, are failures of imagination, not of mathematics. The big mistakes are when you don’t’ think of something that does come to fruition eventually.
When I was in graduate school, I went to see a movie the night before my qualifying exams called, “Bedazzled” with Peter Cook and Dudley Moore. It’s about 40 years old, but I think it was remade a few years ago. Dudley Moore – I think they’re both dead now, Dudley Moore and Peter Cook – he was a short-order cook at a Wimpy’s in London and he’s in love with the waitress that serves him. Peter Cook plays the devil and offers him seven chances to seduce the waitress in exchange for his soul. And so he agrees. And then he tries to specify the circumstances under which he will be with the waitress. And so the first time, he says something like, he’d like to be in a fancy castle in Oxfordshire and with her and both of them in love with each other and both of them wealthy. And the devil snaps his fingers, and there they are in this castle and they’re around the billiard table and they’re in love with each other, but she’s married to the owner of the castle and he’s just a guest. And she has scruples, so she’s not willing to get involved with him.
And in every scenario he tries of these seven scenarios he gets it wrong. In the last one he asks if they can both just be somewhere quiet with nobody to interfere with them and nobody talking, and they make them both nuns in a sort of Trappist monastery.
And so his imagination can never specify precisely enough the future that he’d like to have. And I think that’s sort of what goes wrong with a lot of financial models. You can’t really write down one short description of all the things that markets may do in the future.
As MIT economics professor and former IMF chief economist Simon Johnson points out, the official White House position is that:
(1) The government created the mega-giants, and they are not the product of free market competition
(2) The White House needs to “regulate and oversee them”, even though it is clear that the government has no real plans to regulate or oversee the banking behemoths
(3) Giant banks are good for the economy
This is false … giant banks are incredibly destructive for the economy.
Do we need the Too Big to Fails to help the economy recover?
The following top economists and financial experts believe that the economy cannot recover unless the big, insolvent banks are broken up in an orderly fashion:
In addition, many top economists and financial experts, including Bank of Israel Governor Stanley Fischer – who was Ben Bernanke’s thesis adviser at MIT – say that – at the very least – the size of the financial giants should be limited.
Click to enlarge graphic:
Source:
Google and Your Memory
Online Colleges
September 19, 2011
According to a Global Investment Strategy Special Report, the Occupy Wall Street movement symbolizes the fact that political extremism is rapidly becoming mainstream.
But is it really extremism?
Consider the following, from BCA:
The Occupy Wall Street movement is rooted in the secular decline of the American middle class. Judging from the GINI coefficient, the distribution of income is more unequal in the U.S. than OECD countries in general. Moreover, real wage growth in the U.S. has stagnated since 2000, while education and healthcare costs have soared. High education costs have serious social repercussions since they are a strong drag on upward class mobility.
While it is currently impossible to boil down the Occupy Wall Street movement to a single issue, it is a symptom of deepening social strife, political polarization and spreading discontent in the U.S. These are ingredients that, if left unchecked, can lead to potentially radical shifts in policy made to score political points with the extremes, rather than to address underlying economic problems. Both the extreme right and left of the political spectrum will be energized by genuine social discontent – which can nonetheless translate into completely opposing policy preferences – leading to further political polarization. If the clash between left and right intensifies, policy making will become even more difficult. This would mean a heightened political and policy risk premium on equity prices among all G7 markets.
"Markets can remain irrational longer than you can remain solvent." —John Maynard Keynes
After 3 quarters in a row that averaged just 1.2%, Q4 GDP grew 2.8%, a touch below expectations of 3.0% BUT Nominal GDP grew well below forecasts. Because the price deflator was up just .4% vs the estimate of 1.9%, Nominal GDP was up 3.2% vs the estimate of 4.9%. Personal Consumption rose 2.0% vs the forecast of 2.4%. Fixed Investment rose 3.3% helped by a 5.2% increase in equipment and software spending and residential construction rose by 10.9%. Trade was a slight drag on GDP growth and government spending was as well led by a 12.5% decline on national...
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