Cullen O. Roche of Orcam Financial Group, LLC describes very well the Fiat monetary system, focusing on the US system. A must read for non financial experts to get a better understanding of the system.
"This paper provides a broad understanding of the workings of a modern fiat monetary system that is applicable to countries that are autonomous issuers of currency in a floating exchange rate system. The paper is broken down into 6 sections which I would recommend reading individually for ease of digestion and understanding." SSRN
Keywords: Monetary System, Fiat Money
"This paper studies the relation between the going public decision and employment growth experienced by IPO firms. We find that a typical IPO firm in our sample hires twice more employees around its IPO than during its life as a private firm. The number of employees increases by 31% during the two-year period around the IPO. Evidence shows that the most likely channel through which IPO firms increase their employment levels is the relaxation of their financial constraints, allowing firms to access both equity and debt markets resulting in better funding of their growth opportunities and an increase of the firm’s human capital. We also examine the relation between employment growth and firm performance: IPO firms with greater employment growth exhibit better performance and lower delisting probability. Overall, these results highlight the importance of the IPO event and access to public capital markets for job creation by US firms." Source: SSRN
Keywords: Initial Public Offering, IPO, Employment
Keywords: US Economy, Immigration
..."The share of households projecting the economy will get better rose to 37 percent in November, the highest since March 2002, according to a survey accompanying the Bloomberg Consumer Comfort Index. That propelled the survey’s monthly consumer expectations gauge to 4 from minus 7. Jobless claims fell last week, while the index of leading economic indicators advanced in October, other reports showed"...read more
Keywords: US Economy, US Consumer Confidence, US Housing
Keywords: Investing, Speculation
"The re-balancing of China's economy will offer opportunities in various sectors and benefit small-and medium-sized enterprises. However, direct access to SMEs for international investors is often difficult. Private equity is well placed to benefit from this opportunity, and provides access to small companies (70% of deals were done were < usd 50mn in the last 5 years) not available through public equity markets." Source: SSRN
Keywords: Private Equity, China, Chinese Private Equity Market
Further China PE market information:
China Europe Mergers & Acquisitions:
A prominent transaction example:
Dr. Thomas Jordan points out in his speech that the long-term restructuring of public finances remains unsatisfactory in many countries and that it would be disastrous for the long-term future of the global economy if the time slot opened up by monetary policy would not be used by politics.
Keywords: Role of Central Banks, Monetary Policy
The evolution of the role of the Fed during various financial crises, a new St. Louis Fed working paper:
Carlson, Mark A. and Wheelock, David C., The Lender of Last Resort: Lessons from the Fed's First 100 Years (November 7, 2012). FRB of St. Louis Working Paper No. 2012-056A. Available at SSRN: http://ssrn.com/abstract=2173391
Keywords: Monetary Policy, Fed, ECB
"The US and Europe economic surprise indices have diverged dramatically recently. After the weakness in new orders during the summer, economists have lowered expectations for the US, but were since consistently surprised to the upside. In Europe the falling sovereign borrowing costs made some forecasters more sanguine about prospects for a recovery, which did not materialize. Instead the Eurozone saw consistent deterioration in the "core" economies." Source: Sober Look
Keywords: US Economy, European Economy, Economic Indices, Economic Surprise Index
from bubbles to "free lunches" through appreciation to defaults.. interesting new paper ... where are various markets in right now?
Keywords: Bubble Economics, Investment Cycles
"Private equity critics claim that leveraged buyouts bring huge job losses. To investigate this claim, we construct and analyze a new dataset that covers U.S. private equity transactions from 1980 to 2005. We track 3,200 target firms and their 150,000 establishments before and after acquisition, comparing outcomes to controls similar in terms of industry, size, age, and prior growth. Relative to controls, employment at target establishments declines 3 percent over two years post buyout and 6 percent over five years. The job losses are concentrated among public-to-private buyouts, and transactions involving firms in the service and retail sectors. But target firms also create more new jobs at new establishments, and they acquire and divest establishments more rapidly. When we consider these additional adjustment margins, net relative job losses at target firms are less than 1 percent of initial employment. In contrast, the sum of gross job creation and destruction at target firms exceeds that of controls by 13 percent of employment over two years. In short, private equity buyouts catalyze the creative destruction process in the labor market, with only a modest net impact on employment. The creative destruction response mainly involves a more rapid reallocation of jobs across establishments within target firms." Source: NBER
Keywords: Private Equity, Employment
"Direct real estate is the largest asset class without readily available prices. The market capitalization is comparable to that of equities and fixed income, and much larger than that of other alternative asset classes like private equity or hedge funds. Nevertheless, because of the missing price information, it is difficult to estimate the market risk of direct real estate. We propose a simple methodology that uses data on indirect real estate to provide a better understanding of the real estate market risk. Our model uses widely available data and solves the problems posed by the appraisal and transaction-based indices, as well as by the hedonic approach, which are difficult to implement in practice. In particular, we use data on Real Estate Investment Trusts (REITs) returns, determine their factor exposures to other asset classes, and delever these exposures according to REITs’ balance sheets. We find that the existing direct indices understate real estate market risk. Indeed, using data from the UK, the volatility of the real estate asset class that our model entails is almost three times that of appraisal-based indices, and two times that of transaction-based ones. In addition, the correlations to other asset classes are materially different and higher, which is important in a portfolio context. We argue that these findings can have important empirical implications, as they can be useful for practitioners aiming at achieving a simple, transparent and more accurate risk management of their portfolios. Moreover, our findings can help to better understand extreme risks in the real estate market, which have a high impact on the overall economy, as was observed in the recent financial crisis." SSRN
Keywords: Public and Private Real Estate, Real Estate Risk
Best Wishes, George
Keywords: Central Banking, Central Bank Independence
Keywords: Technology, Entrepreneurship
Things go into the right direction:
Labour costs have to adjust if you take a look at productivity differences among EU countries:
Keywords: EU Labour Costs, EU Productivity
A 2009 survey (see below) showed that "building wealth" is an important objective for entrepreneurs. Private equity offers an excellent opportunity for entrepreneurial managers to achieve such goal.
Wadhwa, Vivek, Holly, Krisztina, Aggarwal, Raj and Salkever, Alex, Anatomy of an Entrepreneur: Family Background and Motivation (July 7, 2009). Kauffman Foundation Small Research Projects Research. Available at SSRN: http://ssrn.com/abstract=1431263 or http://dx.doi.org/10.2139/ssrn.1431263
"Entrepreneurs are among the most celebrated people in our culture. Celebrity entrepreneurs such as Steve Jobs, Bill Gates, Sergey Brin and Larry Page, often grace the covers of prominent publications. These company founders and innovators fuel economic growth and give the nation its competitive edge.
However, very little is known today about the backgrounds, life histories, motivations and beliefs of these entrepreneurs. So myths and stereotypes prevail. The commonly held belief is that entrepreneurs are young, lightly-educated, childless unmarried workaholics. They are perceived to come from rich families and graduate from elite colleges.
But is this true?
This research answers some of these questions. This is based on a survey of 549 company founders in 12 high-growth industries.It finds that most founders came from middle-class or upper-lower-class backgrounds, are well-educated and married with children. The strongest motivation for starting a company was to "build wealth". Other popular motivators included capitalizing on a business idea; the appeal of a startup culture; a desire to own a company; and a lack of interest in working for someone else."
Keywords: Entrepreneur, Entrepreneurship
..."The key reason jobs will almost certainly grow at at least a tepid rate is monetary policy. Ellis Tallman and Saeed Zaman have shown in research for the Cleveland Federal Reserve bank that the kind of objective economic conditions that existed in 2009 would have justified a federal funds rate of minus 5 percent—if such a thing were possible. But it’s not possible for the Fed to set nominal interest rates below zero, and the Fed hasn’t been willing to try to raise its inflation target to reduce real interest rates. Consequently, with interest rates stuck at zero, we got exactly what you would expect in a country where the central bank sets rates five percentage points too high—soaring unemployment and a sluggish recovery."
Kewords: US Economy, Economic Growth, Monetary Policy
Countercyclical monetary policy.. proof of concept has to follow.
Philippe Aghion CERGE-EI Lecture "Monetary Policy, Liquidity and Growth" 11 June 2012
Manufacturing in the US grew in October at its slowest pace in more than three years and appears likely to act as a drag on overall growth in the final months of 2012. Markit said its U.S. Manufacturing Purchasing Managers Index fell to 51.0 this month, below a preliminary estimate of 51.3 and September’s reading of 51.1. Today’s graphic shows how key economies performed in October based on Manufacturing PMI. see graph
Keywords: Global Manufacturing Activity, Manufacturing in World Regions
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