“‘Your No. 1 client is the government,’ John J. Mack, Morgan Stanley MS +0.75%‘s chairman and chief executive from 2005 to 2009, told current CEO James Gorman in a recent phone call. Mr. Gorman, who was visiting Washington that day, agreed.” – Wall Street Journal, September 10, 2013.
The five year anniversary of the ‘financial crisis’ has predictably generated all manner of commentary about its presumed causes. What’s most unfortunate five years later is that ‘financial’ and ‘crisis’ are still used together. It’s unfortunate simply because despite what you read, the crisis was decidedly not financial, nor was it caused by a crackup in the housing market, nor was it caused by the failure of Lehman Brothers. read more in Forbes
Keywords: Financial Crisis, Great Depression, Government, Banking Sector, Government and Market Distortions
"Germany's agressive and reckless expansion of wind and solar power has come with a hefty pricetag for consumers, and the costs often fall disproportionately on the poor. Government advisors are calling for a completely new start."
....."For society as a whole, the costs have reached levels comparable only to the euro-zone bailouts. This year, German consumers will be forced to pay €20 billion ($26 billion) for electricity from solar, wind and biogas plants -- electricity with a market price of just over €3 billion. Even the figure of €20 billion is disputable if you include all the unintended costs and collateral damage associated with the project. Solar panels and wind turbines at times generate huge amounts of electricity, and sometimes none at all. Depending on the weather and the time of day, the country can face absurd states of energy surplus or deficit.
If there is too much power coming from the grid, wind turbines have to be shut down. Nevertheless, consumers are still paying for the "phantom electricity" the turbines are theoretically generating. Occasionally, Germany has to pay fees to dump already subsidized green energy, creating what experts refer to as "negative electricity prices."
On the other hand, when the wind suddenly stops blowing, and in particular during the cold season, supply becomes scarce. That's when heavy oil and coal power plants have to be fired up to close the gap, which is why Germany's energy producers in 2012 actually released more climate-damaging carbon dioxide into the atmosphere than in 2011." Source: Spiegel
Keywords: Energy Policy, Energiewende, Solar Power, Wind Power, Nuclear Power
as an Apple user I hoped them to come up with a smartwatch first. Advantages of such watches are obvious. They are the future.
Keywords: Smartwatch, Galaxy Gear
The beauty of owning energy transmission infrastructure are big barries to entry once the lines are established. Investment is tremendous. Only big players and governments so far play an important role:
..."Simply put, the world is going to need more transmission capabilities. The Energy Information Administration estimates that electricity demand will grow 93 percent over the next 27 years, rising from 20.2 trillion kilowatt hours in 2010 to 39 trillion kilowatt hours by 2040. Most of the growth will occur in emerging nations, where transmission and distribution networks are often inadequate, rickety and subject to failure.
While decentralized power delivered through microgrids and energy storage will likely play a fundamental role in meeting the demand for electricity in these countries, it’s a good bet that centralized power plants linking to long-distance transmission lines will be there too..
...The latest technology, meanwhile, provides distinct advantages. An HVDC transmission line carrying thousands of megawatts might lose 6 to 8 percent of its power over 1,000 miles. A similar AC line can lose 12 to 25 percent. DC lines can also better manage the variable output from renewable power plants. South Korea, China, Japan and the Scandinavian nations were early adopters of HVDC: the U.S. has projects underway as well"...
Keywords: Smart Grid, Energy Transmission
"Rule No. 1: Never lose money; rule No. 2: Don't forget rule No. 1."
"Someone's sitting in the shade today because someone planted a tree a long time ago."
"No matter how great the talent or efforts, some things just take time. You can't produce a baby in one month by getting nine women pregnant."
Keywords: Wisdom, Value Investment
Six months ago, I wrote that long-term interest rates in the United States would rise, causing bond prices to fall by so much that an investor who owned ten-year Treasury bonds would lose more from the decline in the value of the bond than he would gain from the difference between the bonds’ interest rate and the interest rates on short-term money funds or bank deposits. read more on Project Syndicate
Keywords: Interest Rate, Discount Rate
Running With The Crowd
Focusing On Recent History
Missing The Forest For The Trees
Extrapolating From Popular Success Stories
Keywords: Asset Allocation, Behavioral Finance, Bias
..."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
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