..."In innovation-based economies (as the Global Entrepreneurship Monitor classifies them), what governments really need to do is to encourage people – entrepreneurs and the equity investors who back them – to take risk and ensure that failure is seen in a positive light, rather than as some kind of stigma.
The message should be: Go out and start a business, based on your best idea. Find a technology with a new application or develop a different way to make customers happy. If it doesn’t work out, you have still developed important skills and made a major contribution to society." Source: NYT
Keywords: Entrepreneurial Activity, Risk, Failure
Fascinating! The vision of self-driving, environment friendly cars has soon to be taken into account in infrastructure planning.
Keywords: Self-Driving Cars, Sensor Technology, Traffic Optimization
Keywords: Tesla, Elon Musk, Electric Car
Keywords: Microsoft, Windows, Bill Gates, Steve Ballmer
Great infographics on the Eurozone crisis:
Keywords: Eurozone Crisis, Infographics on Eurozone Crisis
Great chart! Coming years to follow.
Keywords: CPI, Inflation, Monetary Policy
.."In one category, rising inequality is being driven by top earners finding ways to extract additional income. This category includes explanations of greater inequality based on theories of managerial power (Bebchuk and Fried 2004), social norms (Piketty and Saez 2006a; Levy and Temin 2007), and how changes in marginal tax rates alter incentives for managers to seek higher income for themselves (Piketty, Saez and Stantcheva 2011). In many of these theories, top earners obtain rents in the sense that they distort the economic system to extract resources in excess of their marginal products.
In the other category, the increase in inequality has been driven by economic factors that have altered the marginal productivity of certain kinds of labor. This category would include explanations of greater inequality based in skill-biased technological change (Katz and Murphy 1992; Garicano and Rossi-Hansberg 2006; Autor, Katz, and Kearney 2006; Garicano and Hubbard 2007), greater scale (Tervio 2008; Gabaix and Landier 2008), superstars (Rosen 1981), trade or globalization (Hecksher 1931; Ohlin 1933; Stolper and Samuelson 1941). In most of these theories, the idea is that top earners have scarce and unique talents that allow them to command a premium due to the increasing value of their talents in markets of increasing size.
Our results tend to support the second broad category of explanations more than the first.".. Source: paper extract
Keywords: Inequality, Technological Progress, Globalization, Corporate Governance
Focusing only on nominal returns ignores the degrading effects of inflation, taxes, and investment expenses. And using a single asset allocation plan disregards the potential benefits of different available vehicles. Thornburg Investment Management has a study of real returns. Good stuff!
Keywords: Investment, Asset Classes, Stocks, Bonds, Real Returns
Wells Fargo Economics Group: Eurozone Recession Comes to an End; Real GDP in the Eurozone rose 0.3 percent (not annualized) in Q2, which was stronger than most analysts had expected. Growth likely will remain positive, albeit relatively sluggish, in coming quarters, August 14, 2013
..."We project that GDP in the overall euro area will continue to expand, although we expect growth will remain rather sluggish. As noted above, lending remains very weak and fiscal policy will remain restrictive in many economies. Due to benign inflation (bottom chart) and weak economic growth, the European Central Bank (ECB) has vowed to maintain an accommodative monetary policy stance “for as long as necessary.” Indeed, we believe that the ECB will maintain its main policy rate at 0.50 percent through the end of next year. The euro has edged higher against the dollar over the past month, but we look for it to depreciate modestly against the greenback in coming quarters as real GDP growth in the Eurozone lags behind growth in the United States and as the ECB maintains an accommodative monetary policy stance." Source: Excerpt Wells Fargo Economics Group
Keywords: Eurozone, Recession in Eurozone, Growth in Eurozone
"The benchmark 10-year Treasury Note yield is near a one-year high. The upward bias of late is a reminder, albeit a mild one at the moment, that the long-anticipated run of higher interest rates has arrived. All the usual caveats apply, but we’ve probably seen the bottom in rates. This isn’t the end of the world, but it's the start of a new era.
What are the implications of higher interest rates? By some accounts, the change tempts predictions of a world that’s patently unfriendly to risky assets. No doubt there’ll be times in the years ahead when that scenario applies. Then again, it's worth remembering that risky assets weren't always immune to trouble when interest rates were generally falling in years past. In any case, we’ve lived in a world where rates have been trending lower for more than three decades, and so the prospect of reversing this move conjures all sorts of dire possibilities. It would be naïve to dismiss the dark forecasts entirely, but much depends of how quickly rates rise and under what economic conditions." read more on The Capital Spectator
Keywords: Interest Rate, Treasury Yield
Remarkable contribution to end the "Great Stagnation" in the US:
Keywords: Innovation, Engineering
Keywords: Google, Google Glass
Calculated Risk provides an animated chart above of America’s population distribution by age from 1900 through 2060 (updates every seconds in five-year intervals), based on population data from the Census Bureau (actual data through 2010 and projections through 2060).
Keywords: Population, Population Distribution
Keywords: Jeff Bezos, Media, Online, Print, Washington Post
"Average time spent with digital media per day will surpass TV viewing time for the first time this year, according to eMarketer’s latest estimate of media consumption among US adults.
The average adult will spend over 5 hours per day online, on nonvoice mobile activities or with other digital media this year, eMarketer estimates, compared to 4 hours and 31 minutes watching television. Daily TV time will actually be down slightly this year, while digital media consumption will be up 15.8%.
The most significant growth area is on mobile. Adults will spend an average of 2 hours and 21 minutes per day on nonvoice mobile activities, including mobile internet usage on phones and tablets—longer than they will spend online on desktop and laptop computers, and nearly an hour more than they spent on mobile last year."
Keywords: Media, Online, Internet, Print, Digital, TV
Fang, Lily H., Ivashina, Victoria and Lerner, Josh, The Disintermediation of Financial Markets: Direct Investing in Private Equity (August 2013). NBER Working Paper No. w19299. Available at SSRN: http://ssrn.com/abstract=2308268
"One of the important issues in corporate finance is the rationale for and role of financial intermediaries. In the private equity setting, institutional investors are increasingly eschewing intermediaries in favor of direct investments. To understand the trade-offs in this setting, we compile a proprietary dataset of direct investments from seven large institutional investors. We find that solo investments by institutions outperform co-investments and a wide range of benchmarks for traditional private equity partnership investments. The outperformance is driven by deals where informational problems are not too severe, such as more proximate transactions to the investor and later-stage deals, and by an ability to avoid the deleterious effects on returns often seen in periods with large inflows into the private equity market. The poor performance of co-investments, on the other hand, appears to result from fund managers’ selective offering of large deals to institutions for co-investing."
Keywords: Private Equity, Private Equity Intermediates
Overblown story No. 1: Student loans now exceed credit card loans
Overblown story No. 2: The recovery is being driven by part-time jobs
Overblown story No. 3: The pension crisis
Keywords: Recovery, Job Creation, Pension Obligation, Student Loans
Creative Destroyer 1: E-Cigarettes
Creative destroyer 2: Cancer Immunotherapy
Creative Destroyer 3: LEDs
Creative Destroyer 4: Alternative Capital In The Reinsurance Market
Creative Destroyer 6: Software-Defined Networking
Creative Destroyer 5: Natural Gas Engines
Creative Destroyer 7: 3D Printing
Creative Destroyer 8: Big Data
Keywords: Creative Destruction, Innovation
We believe that some more very powerful destroyers could be imaginable. What about robotics in agricultural base work or companies like Apple and Google going into banking?
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