Seeking an apartment? There is 3-D software for that.Halstead Property, a brokerage with 1,200 agents in the New York metropolitan area, is using 3-D software to let apartment seekers take virtual walk-throughs of its listings, the Journal reports. In a sort of Google Street View for real estate, buyers may tour a property online, peer out of windows and check details from kitchen appliances to bathroom fixtures. Halstead says the software will become a feature for many of its Manhattan listings.
The cost of technology that substitutes for labor in factories has plummeted, displacing more and more workers. Chinese assembly lines today bear no resemblance to those of a decade ago. The best Chinese private companies are as capital intensive as an equivalent factory in the United States.
That’s because only about 4 percent of shale production needs $80 or more to be profitable. Most drilling in the Bakken formation, one of the main drivers of shale oil output, returns cash at or below $42 a barrel, the IEA estimates.
The investor’s biggest challenge in the U.S. is the fragmented market structure, which has driven up costs across as many as 52 trading venues, introducing a “latency overcharge,” Schanke said.
The market as he sees it “isn’t good enough for raising investor confidence,” which has been an issue in the U.S. since the financial crisis and was deepened by the flash crash of May 2010. While the solution isn’t necessarily public ownership of exchanges, he said a closer look at the existing regulation could help make markets less complicated.
“Some of the things that an exchange does are in a way a utility function,” Schanke said.
The fund in June said it supported Brad Katsuyama’s IEX Group Inc. exchange because it allows “all players to participate on the same terms.”
IEX, which the wealth fund uses for both direct and indirect trades, doesn’t pay firms to buy or sell shares, shunning a practice that many markets use to lure business from high-speed traders. It mandates a 350-microsecond delay between requests to trade and executions to prevent traders from pre-empting their moves through high-frequency maneuvers.
Photographer: Chris Goodney/Bloomberg
Norway's $860 billion sovereign wealth fund in June said it supported Brad Katsuyama's...Read More
IEX, made famous in Michael Lewis’s best-selling book “Flash Boys” could shield investors from the predatory habits of high-frequency traders, the fund said then.
What the fund needs is a way to make large trades without impacting the markets, something that Schanke said is easier to do in Europe, where rules are more relaxed.
“Trying to find liquidity without having an impact when you’re doing it is an over-arching challenge we will always have,” he said.
Group of 20 host Tony Abbott went to great lengths to keep one topic -- climate change -- off the agenda at this weekend's confab in Brisbane. There's little mystery why: While the world hails China and the U.S. for moving forward on curbing carbon emissions, Australia is backsliding by scrapping a tax on carbon and resisting pressure to expand the use of renewables.
Abbott's justification? The need for growth. In fact, Australia's prime minister wants the rest of the G-20 also to pledge to grow by an additional 2 percent or more over five years.
Group of 20 host Tony Abbott went to great lengths to keep one topic -- climate change -- off the agenda at this weekend's confab in Brisbane. There's little mystery why: While the world hails China and the U.S. for moving forward on curbing carbon emissions, Australia is backsliding by scrapping a tax on carbon and resisting pressure to expand the use of renewables.
Abbott's justification? The need for growth. In fact, Australia's prime minister wants the rest of the G-20 also to pledge to grow by an additional 2 percent or more over five years.
The headline jobs numbers look good. Nonfarm payrolls have grown at an average rate of 228,500 a month this year, reducing the unemployment rate to 5.8 percent in October from 6.7 percent in December. Such indicators, though, cover only those who are working or are actively pursuing a job -- something many have stopped doing. Yes, the Labor Department estimates that the labor force grew by 416,000 workers in October, meaning some of those workers are coming back.
...The $12.3 trillion market is also the world’s biggest for government bonds, exceeding the size of the next two nations combined and making it the haven of choice for investors seeking safety. During the credit crisis in 2008, Treasuries soared 14 percent, while both investment-grade debt andjunk bondssank.
JPMorgan & Chase Co., a primary dealer, estimates the amount of U.S. debt available to trade at one time without moving prices has plunged 48 percent to $150 million since April. The measure is based on the average size of the best three bids and offers that go through the New York-based bank’s trading desks on a weekly basis.
That, in turn, may undermine the U.S. government’s cost to borrow if investors begin to doubt whether they will still be able to buy and sell Treasuries on a moment’s notice.
Widening Gap
Another consequence of a lack of liquidity and rising volatility was the widening of the bid-ask spread, or the difference in prices or yields between buyers and sellers.
The gap on 10-year notes reached 0.26 basis point versus an average 0.19 point this year and compares with 0.17 point over the past 15 years, according to data compiled by Bloomberg. One basis point equals 0.01 percentage point.
“You’re widening your spreads out and you invoke more of a premium in this situation,”Sean Murphy, a trader at Societe Generale SA, said by telephone from New York. Murphy, who has been trading Treasuries since 1986, said liquidity constraints on Oct. 15 were similar to what happened after Lehman failed in 2008 and Long-Term Capital Management collapsed in 1998.
Diminishing market depth and a surge in volatility were both on display on Oct. 15.
Gripped by concerns over another recession in Europe, slowing economic growth in China and the spread of the Ebola outbreak, demand for haven assets soared. Buying also picked up as bearish traders pushed back their wagers for how soon the Fed would raise interest rates in the face of a global slowdown.
‘Thin Line’
Dealers contended with the onslaught by offering fewer bonds at a given price and demanding wider spreads, which curbed liquidity and made trading more costly.
“There’s a thin line to keeping the customer happy while also giving a level that you can at least get out of without taking a big loss right away,” Jason Rogan, managing director of U.S. government trading at Guggenheim Securities LLC, a New York-based institutional brokerage, said Oct. 22. Rogan’s firm also turned off its automatic pricing on Oct. 15 because “the market was moving too fast for our prices to keep up.”
Those decisions helped to produce swings rarely seen in Treasuries as trading soared to a record. Yields on the 10-year note tumbled 0.34 percentage point to a low of 1.86 percent that day, with most of that drop occurring in a 10-minute span from 9:30 a.m. in New York, before ending the day at 2.14 percent.
No Immunity
Adjusted for current yield levels, which are close to historical lows, the magnitude of the intraday decline that day has been exceeded only once in the past half-century, according to data compiled by Bloomberg.
Falling prices and wages make it harder for borrowers to pay off their debts. Only the U.S. and Germany among major economies have reduced total public and private debt as a share of gross domestic product since 2007, according to data compiled by the McKinsey Global Institute.
Business confidence as measured by the National Industry Confederation is at its lowest level in more than a decade. Investment in 2013 amounted to 18 percent of gross domestic product, the lowest of all nations in the so-called BRICS group and less than half China’s rate, according to theWorld Bank. It hit 16.5 percent of GDP in the second quarter, the least in 7 1/2 years.
Unemployment is still high, and for every net job created under President Obama, almost three people have dropped out of the labor force completely, leaving us with the lowest labor participation rate since the Carter administration.
But a strong dollar is not just a problem for US exporters. It is particularly a problem for countries that are financed by the dollar carry trade. Multiple trillions of dollars have left the US courtesy of quantitative easing and have ended up financing all manner of trades and investments around the world. As long as the dollar is neutral or falling, that’s a good thing for dollar carry-trade investors.
If you are a Chinese businessman and you can borrow dollars (which you certainly can) and you believe that your government is going to make the yuan stronger over time, you will be able to pay back cheaper dollars and make the difference on the carry (the difference between what US bonds pay and returns that can be earned in China). But what happens if the yuan begins to fall? That trade unwinds swiftly and negatively. And it unwinds at a time that is particularly inconvenient for China. Flood the market with too much money, and inflation becomes a problem. (The Chinese are in a different phase of the monetary cycle than the US is, so the problems are not the same.)
It is not just China. Those dollars have filtered into every nook and cranny of the world; and now, if those trades are unwound, investors and most specifically hedge funds are going to have to buy dollars to unwind their trades. That will force the dollar ever higher against various currencies; and while any one currency is not significant enough to create a structural difference that can impact global trade, together they will have a significant effect.
EDF, along with Areva SA and two Chinese nuclear companies, agreed a year ago to construct the plant after the U.K. government offered to buy electricity at a price that’s almost double today’s market rate under a 35-year contract.
We want to sell, taxes are too high; we work eight hours a day for the state and one hour for us.”
Caffe Orefici is among the 18,000 advertisements from businesses and individuals that have been published since February last year on Vendereaicinesi.it -- sell to the Chinese -- a website that helps Italians, stricken by the third recession in six years, attract bids for properties, products and services from Chinese suitors.
For the past 43 years, Pacific Investment Management Co. has been my home, as well as my pride and joy. With great sadness, I must bid her adieu, not because I want to leave, but because I must. It is the natural order of things for all seasons to change; for the next generation must be given its chance. A new epoch is upon us. Ashes to ashes . . . .
All those reasons -- plus truth be told, an imminent palace coup -- meant it was time for me to go.
Before I depart, however, I offer you this final Investment Outlook, my last IO for you to consider. No cats, no "Man in the Mirror," just a few thoughts for you to reflect upon as the next era -- a newer new normal -- begins.
I co-founded PIMCO in 1971, starting with a mere $12 million in assets. Who could have imagined what the company would become during the ensuing 43 years? After four decades as founder, fund manager and mostly as CIO, I guided this firm to managing more than $1.97 trillion in client assets. When I sold the 70 percent stake not held by Pacific Life Insurance Co. to Allianz SE in 2000, the company had a value of $4.7 billion.
Not too shabby a track record. I daresay I must have gotten one or two things right during that period.
Not that you would know it by the recent press coverage, nor by the whispers in the hallways of Pimco. The immense wealth I helped to create for my colleagues, partners and clients over all that time meant nothing, once Machiavelli’s stratagems were put into play.
There is a standard sequence of events for all insurrections, and this one was no different. It included the favored tactics: A public character assassination, the quiet intimations that I had lost it (erratic behavior, dark glasses at a presentation, an elegy to my cat Bob). Add to that a break with a trusted associate, which implied something nefarious about that behavior (How did Mohamed manage to resign from Pimco, yet stay employed at Allianz? I couldn't pull that one off).
These hints and allegations were easy to make, especially given my natural eccentricities. But I put this question to you: Was I so different from any other California billionaire? The TM and yoga, the occasional head stand, a well-deserved bark at a wayward underling -- these and all manner of behavior that no one ever thought about before suddenly took on all sorts of dark implications once the coup was under way. Never underestimate the impact of a whisper campaign.
On ne voit bien qu'avec le cœur. L'essentiel est invisible pour les yeux. Translation: "One sees clearly only with the heart. What is essential is invisible to the eye."
I must point out that these idiosyncrasies have been on display for decades, and were never looked on askance. At least, not while the alpha was piling up and the assets under management were rolling in.
But alas, that chapter has come to an end; it is now time to look forward. The future of Pimco is now in your hands, a dozen or so managing directors. You represent the future of the firm. You are the new BSDs, and to you I put the following questions:
• Some Pimco funds are generating what I call “perceived” alpha. This seems to be nothing more than “leverage-enhanced” beta. Discuss.
• I cautioned against the wholesale expansion into equities, as fixed income was the asset class upon which the firm made its bones, built its reputation and acquired almost all of its AUM.
How is that equity thing going? And whatever happened to thatKashkari kid? Seemed like a nice fellow.
• Many of you seemed to resent my annual compensation (Mohamed's too). I suspect you believed that a few hundred million dollars would be better placed in your collective hands.
Query: Is splitting up the big dogs’ comp among yourselves worth the fallout of a smaller asset base in the years to come? Is that in the best interests of the firm?
• Speaking of assets: Who among you is going to be the firm’s rainmaker? Which of you can raise a trillion dollars? How about a $100 billion? How will you compensate the people who raise that money? Best of luck managing the resentment for whatever compensation system you arrange.
• Many of you are in your 30s, 40s and 50s. How long do you plan to work here, and how much are you willing to sacrifice? I was married to this place, and gave it my all.
What are you prepared to give?
• Now that you have your new-found authority, what are your plans for it?
As for me, I am off to my newer new normal. There will always be a special place in my heart for Pimco. I wish all of you all of the luck in the world, as I leave you in charge of her. She’s your baby now. Try not to screw it up too badly.
Nonetheless, the growing wedge between a skilled elite and ordinary workers is worrying. ...Governments across the globe therefore have a huge interest in helping remove the obstacles that keep workers from wealth.
The answer is not regulation or a larger state. High minimum wages will simply accelerate the replacement of workers by machines. Punitive tax rates will deter entrepreneurship and scare off the skilled on whom prosperity in the digital era depends. The best thing governments can do is to raise the productivity and employability of less-skilled workers. That means getting rid of daft rules that discourage hiring, like protections which make it difficult to sack poor performers. It means better housing policy and more investment in transport, to help people work in productive cities such as London and Mumbai. It means revamping education. Not every worker can or should complete an advanced degree, but too many people in poor countries still cannot read and too many in rich ones fail to complete secondary school. In future, education should not be just for the young: adults will need lifetime learning if they are to keep up with technological change.
Yet although governments can mitigate the problem, they cannot solve it. As technology progresses and disrupts more jobs, more workers will be employable only at lower wages. The modest earnings of the generation that technology leaves behind will need to be topped up with tax credits or wage subsidies. That need not mean imposing higher tax rates on the affluent, but it does mean closing the loopholes and cutting the giveaways from which they benefit.
In the 19th century, it took the best part of 100 years for governments to make the investment in education that enabled workers to benefit from the industrial revolution. The digital revolution demands a similarly bold, but swifter, response.
Lithuania, which heavily depends on Gazprom for gas, is about to open its first LNG terminal on the Baltic coast to process gas from non-Russian sources. The government said the terminal, dubbed "Independence," played an important role in negotiating lower prices with Gazprom. Other countries are following suit: A Polish terminal is scheduled to open next year.
Marc Andreessen Worries About Startup Burn RatesWhen tech bubble dismisser Marc Andreessen worries about startup burn rates, it might be a good idea to pay attention. His venture capital firm Andreessen Horowitz has invested in more than 50 enterprise startups companies including Box Inc. He’s joining a growing chorus of venture capitalists who are sounding alarm bells over excessive spending by tech startups, writes the Journal’s Zoran Basich. CIOs who rely on startups may want to inquire about how fast they’re burning cash and make contingency plans in case they can’t raise follow-on funding.
In recent months, social-media sites have seen an explosion of online quizzes, such as those asking users to reveal what kind of cheese they might be or which "Friends" character they are. The trend has been sparked largely by a push from the New York media company BuzzFeed. Our story looks at how these quizzes have become a cheap form of modern self-analysis—a completely unscientific one, with the questions (and computer-generated results) put together by writers more interested in driving traffic than deep psychological insight. We find that in January BuzzFeed's online quiz team landed its first big hit with, "What City Should You Actually Live In?" Soon it was surpassed in February with "What State Do You Actually Belong In?" "At some point, we figured out we had told more people to move to Wisconsin than actually live in Wisconsin," said BuzzFeed's managing editorial director in charge of the quiz-creating team.
Consumers paid 106 billion euros between 2000 and 2013 to renewable energy producers, according to the nation’s four grids. To stem gains, the government cut green subsidies last month by 29 percent on average to 120 euros a megawatt-hour, according to the Economics and Energy Ministry’s website.
"...The transition, dubbed the Energiewende, has so far added more than 100 billion euros ($134 billion) to the power bills of households, shop owners and small factories as renewable energy met a record 25 percent of demand last year. RWE AG (RWE), the nation’s biggest power producer, last year reported its first loss since 1949 as utility margins are getting squeezed because laws give green power priority to the grids."
Imagine a trillion-dollar market that runs on faxes and phone calls while routinely tying up investors’ money for months before they get any return.
That’s not fiction: It’s the unregulated market for leveraged corporate loans....seeking yield...
The antiquated structure of a market that’s ballooned from a mere $35 billion in 1997 poses a growing threat, raising the odds of gridlock in a downturn when investors expect to get their money back with a click of a button. As of yet, no regulators have taken responsibility for fixing the deficiency....
Some of the worst delays in settlement times can be found in the market for new loans, where Pimco’s MacLean said it’s not uncommon for months to pass before a purchase is completed....
...Investors committed $1.2 billion in October to fund a loan for junk-rated Huntsman Corp. For about 10 months, they didn’t receive a dime.
Salt Lake City-based Huntsman obtained the financing to help pay for its purchase of Rockwood Holdings Inc.’s titanium dioxide business. The merger has taken longer than anticipated because of an antitrust holdup....
While buyers and sellers can trade stocks and bonds among themselves, they need the approval of corporate borrowers before they can exchange loans. Clerks must then update loan documents to reflect new lenders.....
The concern is that there may be a mass exodus from mutual funds that could strain the loan market as investors anticipate rising borrowing costs and defaults. Mutual funds and exchange-traded funds settle investors’ redemption requests within three to seven days, according to Moody’s Investors Service data.
“There’s kind of a liquidity mismatch,” the University of Michigan’s Gordon said. When investors try to redeem and can’t get their money back right away, more will try to pull cash, risking a run, he said.
...There’s a lack of accountability among Americans, according to policy experts. “We keep protecting individuals from the health-care costs that come from the fact that we don’t have healthy lifestyles,” Cindy Gillespie, a senior managing director at the law and policy firm McKenna Long & Aldridge LLP. “We haven’t accepted that people have an element of personal responsibility around their health.”...
...For example, Singapore hospital wards are classified by amenities and level of government subsidy provided, according to the book Affordable Excellence, the Singapore Healthcare Story by William Haseltine, president of the consulting group Access Health International. The wards range from A, where there are private rooms and a choice of doctors, to C, where as many as nine people share a room and doctors are assigned. People in A wards don’t get a subsidy while those in C wards get 80 of their care paid for by the government....
...Thiel identifies one big problem as stagnation in energy. For centuries, we kept getting better energy sources -- first coal, then oil. That powered faster transportation, cheaper construction, bigger appliances and better materials....
...Another important Thiel point is that our public infrastructure is decaying. This is partly a result of stagnant spending, but we’re also getting less bang for our buck. ...
...Bringing down high infrastructure costs will involve taking on a lot of entrenched interests -- government contractors, property owners and unions. ...
...A third good point by Thiel is that regulation may already be slowing progress dramatically in the field of biosciences.
Scotland. What has not been widely discussed is that the voting age was changed in Scotland just a few years ago. For this election, anyone in Scotland over 16 years old is eligible. Think about that for a second. Have you ever asked 16-year-olds whether they would like to be more free and independent and gotten a “no” answer? They don’t think with their economic brains, or at least most of them don’t. If we can believe the polls, this is going to be a very close election. The winning margin may be determined by whether the “yes” vote can bring out the young generation (especially young males, who are running 90% yes) in greater numbers than the “no” vote can bring out the older folks. Right now it looks as though it will be all about voter turnout.
Sort of proof that the well-intentioned benevolence of regulators shouldn't be one-sided in its approach. If the broader market wants something that the regulators are prohibiting, the market will find a way. Highlights below:
See, the way it normally works is, if you have $10,000 in a money market fund, you have 10,000 shares each worth $1.2 When the fund pays interest, it does it by distributing shares: You had 10,000 shares, it paid 0.1 percent interest, now you have 10,010 shares each worth $1.
BlackRock's innovation is: When the fund pays negative interest, it does it by distributing negative shares. You had 10,000 shares, it paid negative 0.1 percent interest, now you have 9,990 shares each worth $1. But your shares never lost value. Some of them just disappeared is all. It's a reverse distribution.3
...The crises that dominate today’s news -- Ukraine, Islamic State, Libya, Ebola, Gaza, cyber-attacks -- are symptoms of the most profound revolution in world affairs in almost four centuries.
A toxic stew of new technologies, old hatreds, eroding boundaries, tattered alliances, environmental dangers and independent groups are making the world more interconnected and less stable at an accelerating rate, forcing the U.S. and other nations to re-invent their approaches to defending their borders, populations and economies.
“We need to look at the world as it is, not as it used to be,”
Epochal events of the past century, from two world wars and the Holocaust to the rise and fall of the Soviet Union and China’s emergence on the world stage, all have taken place within the architecture of nation-states.
Kissinger and others say that swelling urban populations, masses of underemployed youth, dwindling food and water supplies and social media’s quicksilver connections are eroding the western European, state-based system that was ushered in 366 years ago next month by the Peace of Westphalia.
“When you look at the world today, there are whole countries where there are 60 percent of the population under the age of 30, 50 percent under the age of 21, and 40 percent under the age of
18,” Secretary of State John Kerry said at the State Department in Washington on Sept. 3.
“We know that all of these young people in today’s interconnected globalized world, with the media that’s available to them -- just look at the numbers in sub-Sahara Africa of young people walking around with smartphones -- they don’t have a job, they don’t have an education, but they’re connected,” Kerry said.
“We know that all of them are, as a result, demanding opportunity and dignity,” he said. “We also know that a cadre of extremists -- nihilists, people like ISIL -- are just waiting to seduce these people into accepting the dead end.”
…“The economic system has become global, while the political structure of the world remains based on the nation-state,” … “Economic globalization, in its essence, ignores national frontiers.”...
Toyota’s fuel-cell car going on sale next year, initially in California, will cost about $50 to fill up for about 300 miles of range, Bob Carter, senior vice president at Toyota’s U.S. operations, said Aug. 12 at a JPMorgan Chase & Co. conference. The cost will eventually fall to about $30 based on Energy Department estimates, he said.
Toyota partnered with the University of California to model the specific locations that would be needed to handle a population of more than 10,000 fuel cells and believes it needs only 68 stations initially, Carter said last month. The state plans to spend $200 million to build at least 100 stations by 2024, with 40 ready by the end of 2016, he said.
“There are still a lot of questions lingering about how practical it is even though Toyota launches next year,” said Maruta, the Volkswagen spokesman. “By the time it gets very usable by the normal customers, it’s maybe still a decade or two decades away.”
Still, Volkswagen is hedging its bets. The company is monitoring Toyota’s progress with the aim of staying within no more than three years of development work behind its Japanese rival in matching its fuel cell technology, Shoji said.
Here is just a hint of what's contained in the article:
"Novalia, a Cambridge, England-based startup, mixes graphene in ink to print posters and packaging that play music. The graphene acts as a conductor, so when the image is touched, it sends a signal, via Bluetooth wireless, to a smartphone that sounds the chords. Another Cambridge company, Plastic Logic, is using it to make computer screens that can be folded like paper. Neither company receives EU graphene funding.
Four projects, receiving more than a million euros combined, are based at theInstitute of Photonic Sciences, in Barcelona. One group is making night-vision cameras with graphene. Because the material is very efficient at absorbing light, a graphene camera can “see” in the dark with more precision than other kinds of night vision, said Frank Koppens, a professor at the institute.
“Graphene absorbs light from any wavelength, and can see on the infra-red and ultra-violet spectrum,” Koppens said. “A lion or a snake can do this, but we cannot. The device takes over this capability.”
Cars installed with night-vision cameras could project the enhanced image of the road onto the windshield, so driving at night could be as safe as during the day, he said. Koppens hopes to have a prototype to show auto manufacturers within three to four years, he said."
An Eccentric Thought – Should Japan Formally Monetize Much of Its Debt
Background:
A. Japan has a stagnant economy; low or no inflation; and is talking about raising taxes on consumers; and, it has very high corporate taxes.
B. The Japanese central bank has already been buying-in substantial amounts of government debt.
Options:
1. Japan wants to grow its economy but it is actually talking about further increases to taxes to service its debt (note: most of this is principle only as interest rates are so low).
2. What would happen if Japan dropped its tax rates (sales and income) and monetized it (i.e. have the Japan Central Bank write the debt off)?
Considerations:
While in the early 1980’s US, the Federal Reserve worried about having to ‘start’ to monetize US debt to be able to fund the government, it never did so – back in the 1980’s.
Since the 2007/08 financial crisis, the Federal Reserve has essentially monetized several trillion dollars of US debt – what were the negative consequences that were feared (i.e. inflation) and what happened (i.e. no inflation).
Individuals and businesses in the US frequently resort to bankruptcy to restructure and regrow. We have countries, like Japan, having a growth deficit. Should they consider their own bankruptcy (i.e. the monetizing of substantial amounts of Japanese debt).
Summary:
We appear to be in a different economy and long ago the US recognized that rather than debtors’ prison, it was better to restore economic vitality. Yes, other policy changes (i.e. reduced government spending may be very important) may be vital; but, take the burden of taxes off of individuals and businesses.
There is some controversy about whether it is true that the nominal lending rate should be broadly equal to the nominal GDP growth rate. In fact most studies of developed countries suggest that over the medium and long term this is indeed the case. UBS tried to show that this was not applicable to China and did a study several years ago showing that among developing countries this relationship didn’t hold. Their studies suggested that among developing countries nominal lending rates had on average been around two-thirds on nominal GDP growth rates (although China, at around one-third, was still well below anyone else’s at the time).
note (BB): interesting to think about the above re: the latest changes to European ECB rates with no growth in Europe.
...I contend that Xi and Li are the most radical leaders of the Chinese nation since Deng Xiaoping, with the emphasis being on Xi. He is shaking up the current power structure by going after some of the entrenched leaders for corruption. He has earned rebukes from a former president for his actions in op-eds in the Financial Times. This is extraordinary pushback and clearly shows that what is happening is beyond the normal regime-change shakeups we have seen in China.
for more, see: http://blog.mpettis.com/2014/09/what-does-a-good-chinese-adjustment-look-like/
“We looked at New York really heavily,” he said yesterday in an interview. “We wanted to open there. I’ve got some good chef mates in the business in New York and they all said the same thing: If you can’t be union-free, don’t touch it.
As Maudlin writes in his letter
to readers of “Thoughts from the Front Line” of Sept. 1, 2014
"…
This article from this week’s
Economist frames the story:
Over the past
few decades it has become clear that innovation – more than inputs of capital
and labour – is what drives a modern economy. In the developed world, the
application of technological know-how and scientific discoveries by companies,
institutions and government establishments accounts for over half of all
economic growth. Because of its seminal influence on wealth-creation in general
and employment in particular, the manner in which innovation functions –
especially, the way it comes and goes in Darwinian bursts of activity – has
emerged as a vital branch of scholarship.
What
researchers have learned is that waves of industrial activity, first identified
by the Russian economist Nikolai Kondratieff in 1925, have a character all of
their own. Typically, a long upswing in a cycle starts when a new set of
technologies begins to emerge – eg, steam, rail and steel in the mid-19th
century; electricity, chemicals and the internal-combustion engine in the early
20th century. This upsurge in innovation stimulates investment and invigorates
the economy, as successful participants enjoy fat profits, set standards, kill
off weaker rivals and establish themselves as the dominant suppliers.
Over the
years, the boom peters out, as the technologies mature and returns to investors
slide. After a period of slower growth comes the inevitable decline. This is
followed eventually by a wave of fresh innovation, which destroys the old way
of doing things and creates conditions for a fresh upswing – a process Joseph
Schumpeter, an Austrian economist, labeled “creative destruction”.
Back in the
late 1990s, Babbage noticed that the waves of innovation had begun to speed up
(see “Catch the wave”, February 18th 1999). The industrial waves Kondratieff
observed in the 1920s came every 50-60 years or so. By the late 1990s, fresh
ones were arriving twice as often. Fifteen years on, their frequency appears to
have doubled yet again. Waves of new innovations now seem to be rolling in
every 10 to 15 years.
I think those waves are going to
come at us even faster in the next 20 years, resulting in what I call the Age of Transformation. Literally, our
lives will be transformed, and at an ever-increasing pace of change. The Gartner Group has developed a cool
paradigm that they call the “hype cycle.” They basically see every technology
through the lens of five different phases in this hype cycle: the innovation trigger, the peak of inflated
expectations, the trough of disillusionment, the slope of enlightenment, and
the plateau of productivity.
For the past 20 years, Gartner has produced an annual update
of various hype cycles that provide
snapshots of the progress certain technologies have made during the previous
year, where on the innovation cycle they currently reside, and how long they
will take to reach maturity (if ever). This year’s collection (published on
August 11) assesses the prospects of some 2,000 technologies, grouped into 119
aggregated areas of interest.
The chart below is the most
recent hype cycle, published by the Gartner Group last month. See if you can
find a few new technologies that you didn’t know even existed.
It would be nice if we could just
sit back and let growth happen. But as it turns out, our government seems to be
doing its best to retard growth. The bureaucracy of government has become what
Newt Gingrich calls “the prison guards of the past.”
In field after field, regulators
feel the necessity to control the spread of technology in ways that are
consistent with the past they seem to want to perpetuate. Neither Newt nor I are
against reasonable regulation (it is a requirement for civilization); but
regulation run amok kills growth and jobs, and in the case of one federal
regulatory body, it is killing people. (Warning: this hits one of my personal
hot buttons.)
This week I was confronted with a
single FDA bureaucrat slowing down a new medical technology by what may be five
months. Doesn’t sound like much time, does it? Except that this is a technology
that will literally save millions of lives per year. Not improve life,
understand: save lives. As in life or death. (Given the provision that the
technology must be proven to work as we expect it to.) Rather than focusing on
what we can do to move this crucial innovation along as fast as possible, the
regulator is forcing this company to spoon feed him information that has
already been provided in multiple forms. Because he evidently didn’t have the
time to read the massive amounts of information provided, he simply came up
with a bogus reason to excuse his inaction and delay further progress. The fact
that the lives of fathers and mothers and daughters and sons and spouses and
friends will be lost evidently doesn’t bother him.
I wish I could say it was just
this one instance, but we all know that this sort of thing happens many dozens
of times a year. The entire process of drug approval is broken. It is rigged to
benefit Big Pharma and largely prevents small startups from succeeding by
dramatically increasing costs beyond what is necessary.
If I could wave a magic wand and
change just one thing in our government, it would be to replace the FDA. Not reform it – I don’t want to tinker at the
margins. We need an FDA for the 21st century. I’m not advocating some wild west
scenario either – of course we need a regulatory process for the medical field,
but not one that is killing what should be the leading new technology in the
United States, not to mention delaying lifesaving and life-enhancing
technologies that are so needed. The majority of biotechnological research is
done in the US; but under the current regulatory regime, it is increasingly
likely that the early benefits will not be enjoyed by us, and that jobs that
should be created here will be shipped offshore.
Energy should not be the leading
job producer in the US – that should be new health and wellness technologies. I
am watching some of the most promising new technology companies involved in
extending life and healing bodies go shopping for venues outside of the US
because the regulatory process is so onerous and time-consuming that the
scientists literally don’t feel they can wade through it and don’t want to
wait.
By the time they can get a
process or drug approved, they are already three iterations beyond the original
process for which their applications were filed. The field is literally moving
that fast. We are going to be shipping jobs – high-paying, rewarding jobs –
overseas, along with the new technologies. Dear gods, Japan and other
forward-thinking countries are way ahead of us in the regulatory process. This
is just wrong on so many levels.
Much of the US regulatory process
is actually a fence-building program to protect the current workers or
companies in a field. To use a rather odd example, why do some states feel that
a nail technician needs to have a license that requires a 750-hour training
program (at considerable cost) to learn something that every teenage girl knows
how to do by the time she is 13 or 14? Seriously, do you need 750 hours of
training (that you have to pay for) in order to be able to do a manicure for
which you get paid 20 or 30 dollars?
As I probably don’t have many
manicurists among my readers, I have hopefully not offended too many of you.
But what if I started talking about your profession? Just saying! Many regulatory regimes are simply barriers
to entry for new competition. Current participants basically capture the bureaucracy
they deal with in order to ensure their own positions…
…The original point I was trying
to make is that the main driver of growth is not monetary policy,
notwithstanding the current fetish for dissecting every utterance of the
Federal Reserve. More important is US fiscal policy. Even more important is US
regulatory policy. I think we have to mention our educational system (which is showing signs of being increasingly
broken and inadequate for the 21st century) somewhere around here. But it’s
crucial that the natural innovative drive that is inherent not just in US
entrepreneurs but everywhere in the world is nurtured and encouraged.
That
is not to say that monetary policy
is not important. Get it wrong and we all lose. We all become poorer for the
impediments to growth misguided monetary policy can create. Burdening a country
with too much debt and crowding
out productive investments in the process is likewise destructive….
