Sunday, June 24, 2018
Saturday, June 23, 2018
EUROPE HAS TRAIN WRECKS, TOO | Mauldin Economics
EUROPE HAS TRAIN WRECKS, TOO | Mauldin Economics
...A 2015 OECD study said developed-country workers could on average expect governmental programs to replace 63% of their working-age income. Not so bad. But in the UK, that figure is only 38%, the lowest of all OECD countries. ...
...To this point, UK retirees have had a kind of safety valve: the ability to retire in EU countries with lower living costs. That option may disappear after Brexit....
...Spain has 1.1 million more pensioners than just 10 years ago, and as the Baby Boom generation retires, it will have even more. Unemployment as high as 25% among younger workers doesn’t help, either. has 1.1 million more pensioners than just 10 years ago, and as the Baby Boom generation retires, it will have even more. Unemployment as high as 25% among younger workers doesn’t help, either.
...he US is in “better” shape, mainly because we control our own currency and can debase it as necessary to keep the government afloat. US Social Security checks will always clear even if they don’t buy as much. Spain doesn’t have that advantage if it stays tied to the euro currency. That’s one reason the eurozone could eventually spin apart.
...some governments pay retirees more than they made while actually working. This OECD chart shows pension benefits as a percentage of working wages. It is more than 100% in Croatia, Turkey, and the Netherlands, and above 90% in Italy and Portugal.
...in both the US and Europe. We think a growing number of people can spend 35–40 years working and saving, then stop working and go on for another 20-30-40 years at the same comfort level, all while fewer workers pay into the system each year. I’m sorry, but that is magical thinking at its worst.
...when Franklin Roosevelt created Social Security for people over 65, life expectancy was roughly around 56. US retirement age would now be around 82 if the retirement age had kept up with life expectancy.
...A 2015 OECD study said developed-country workers could on average expect governmental programs to replace 63% of their working-age income. Not so bad. But in the UK, that figure is only 38%, the lowest of all OECD countries. ...
...To this point, UK retirees have had a kind of safety valve: the ability to retire in EU countries with lower living costs. That option may disappear after Brexit....
...Spain has 1.1 million more pensioners than just 10 years ago, and as the Baby Boom generation retires, it will have even more. Unemployment as high as 25% among younger workers doesn’t help, either. has 1.1 million more pensioners than just 10 years ago, and as the Baby Boom generation retires, it will have even more. Unemployment as high as 25% among younger workers doesn’t help, either.
...he US is in “better” shape, mainly because we control our own currency and can debase it as necessary to keep the government afloat. US Social Security checks will always clear even if they don’t buy as much. Spain doesn’t have that advantage if it stays tied to the euro currency. That’s one reason the eurozone could eventually spin apart.
...some governments pay retirees more than they made while actually working. This OECD chart shows pension benefits as a percentage of working wages. It is more than 100% in Croatia, Turkey, and the Netherlands, and above 90% in Italy and Portugal.
...in both the US and Europe. We think a growing number of people can spend 35–40 years working and saving, then stop working and go on for another 20-30-40 years at the same comfort level, all while fewer workers pay into the system each year. I’m sorry, but that is magical thinking at its worst.
...when Franklin Roosevelt created Social Security for people over 65, life expectancy was roughly around 56. US retirement age would now be around 82 if the retirement age had kept up with life expectancy.
Friday, June 22, 2018
The Term Sheet | Newsletters - Lux Capital partner Renata Quintini
The Term Sheet | Newsletters
...
...
One thing about moonshot investing is that you know the market is there. If you cure cancer, are people going to buy the drug? Yes. If you figure out completely autonomous transportation, will people use it? Yes. |
So the market risk is close to zero. That leaves a big technical risk, I'm not underestimating that. But then you ask — What changes in science and technology would actually make this breakthrough possible? |
Before investing, we ask ourselves three questions. The first is "why now," which is critical for deep tech investing. It's a combination of either platform changes or a new sequence of discoveries — a big change that opens up a bunch of new experiments that weren't possible before. |
The other thing we spend a lot of time thinking about is whether this is feasible in the time frame that is conducive to venture capital. If a founder says they'll spend 15 years developing something, it doesn't work for the model. |
And the third question you ask is, "Given your timeline of development, how does a business stack on top of that?" It's really fun to invest in these types of companies because you have people who know the science deeply and they're missionaries. They're more purpose-driven than opportunistic. |
Thursday, June 21, 2018
Wednesday, June 20, 2018
Tuesday, June 19, 2018
Trump's trade war is undercutting his hopes for the dollar
Trump's trade war is undercutting his hopes for the dollar
...“The president wants to be in a strong position, look strong, act strong and show no signs of weakness, but at the end of the day he faces an election and that’s not the case in China,”
...“The president wants to be in a strong position, look strong, act strong and show no signs of weakness, but at the end of the day he faces an election and that’s not the case in China,”
Sunday, June 17, 2018
The Pension Train Has No Seat Belts | Mauldin Economics
The Pension Train Has No Seat Belts | Mauldin Economics
In describing various economic train wrecks these last few weeks, I may have given the wrong impression about trains. I love riding the train on the East Coast or in Europe. They’re usually a safe and efficient way to travel. And I can sit and read and work, plus not deal with airport security. But in this series, I’m concerned about economic train wrecks, of which I foresee many coming before The Big One which I call The Great Reset, where all the debt, all over the world, will have to be “rationalized.” That probably won’t happen until the middle or end of the next decade. We have some time to plan, which is good because it’s all but inevitable now, without massive political will. And I don’t see that anywhere.
...we discuss the numerous public pension defaults I think are coming.
... The only questions are how serious the damage will be, and who will pick up the bill....
Demographics and Destiny
It’s been a busy news year, but one under-the-radar story was a wave of public school teacher strikes around the US. ... Pensions have been an issue in all of them.
...How can one worker support two or three retirees while still working and trying to raise a family with mortgage payments, food, healthcare, etc.?
...city and school district retirees will take major haircuts on expected pension benefits...
...A new Harvard study funded by Pew Charitable Trusts uses “stress test” analysis, similar to what the Federal Reserve does for large banks, to see how plans in ten selected states would behave in adverse conditions...
...Scenario 1 assumes fixed 5% investment returns for the next 30 years.
...Scenario 2 assumes an “asset shock” involving a 20% loss in year one, followed by a three-year recovery and then a 5% equity return for years five through year 30. So, no more recessions for the following 25 years.
...New Jersey and Kentucky state pension systems have the highest insolvency risk....fully-funded as recently as the year 2000
Friday, June 15, 2018
China Smells Opportunity in the Middle East’s Crisis – Foreign Policy
China Smells Opportunity in the Middle East’s Crisis – Foreign Policy
...In Israel, China has invested in ports and railways, and it has become a growing player in the Israeli high-tech sector. At a time when the United States and its allies in Europe, Australia, and Japan increasingly regard Chinese investment as a threat to their long-term innovation edge, Israel, without taking appropriate precautions, could become a backdoor for China to obtain the technology it needs to realize its ambitions to dominate the critical industries of the 21st century.
...For example, Beijing has given the Bashar al-Assad regime and its patron in Moscow diplomatic backingas well as consistent support in the Chinese media. Beijing has also hosted Israelis and Palestinians for a Peace Symposium. ...
...In Israel, China has invested in ports and railways, and it has become a growing player in the Israeli high-tech sector. At a time when the United States and its allies in Europe, Australia, and Japan increasingly regard Chinese investment as a threat to their long-term innovation edge, Israel, without taking appropriate precautions, could become a backdoor for China to obtain the technology it needs to realize its ambitions to dominate the critical industries of the 21st century.
...For example, Beijing has given the Bashar al-Assad regime and its patron in Moscow diplomatic backingas well as consistent support in the Chinese media. Beijing has also hosted Israelis and Palestinians for a Peace Symposium. ...
Thursday, June 14, 2018
Sunday, June 10, 2018
Saturday, June 9, 2018
Debt Clock Ticking | Mauldin Economics
Debt Clock Ticking | Mauldin Economics
...The entire world went into debt for the equivalent of tropical vacations and, having now enjoyed them, realizes it must pay the bill. The resources to do so do not yet exist. So, in the time-honored tradition of lenders everywhere, we extend and pretend. But with our ability to pretend almost gone, we’re heading to the Great Reset.
...We should also note that, through the magic of double-entry accounting, each dollar of debt liability appears on someone else’s balance sheet as a $1 asset.
...(If we could somehow make this debt magically disappear, we would also make wealth disappear,
... Institutions have rules that will make them start selling troubled bonds early. Liquidity probably won’t be there. Clearing the market will require sharply lower prices, which will create more selling pressure and eventually recession.
...The entire world went into debt for the equivalent of tropical vacations and, having now enjoyed them, realizes it must pay the bill. The resources to do so do not yet exist. So, in the time-honored tradition of lenders everywhere, we extend and pretend. But with our ability to pretend almost gone, we’re heading to the Great Reset.
...We should also note that, through the magic of double-entry accounting, each dollar of debt liability appears on someone else’s balance sheet as a $1 asset.
...(If we could somehow make this debt magically disappear, we would also make wealth disappear,
... Institutions have rules that will make them start selling troubled bonds early. Liquidity probably won’t be there. Clearing the market will require sharply lower prices, which will create more selling pressure and eventually recession.
Steve Wasserman’s last weekly commentary is a good capstone here:
Moody’s has issued a statement that CMBS loans are now almost as risky as in 2007 because 75% of them are interest only, and the interest only period is now 6 years, up from 2.2 years just a few years ago. In addition, they are becoming much more covenant light, and are at higher leverage. All of this is a red flag since these things create much more risk of serious problems when the recession hits. There is also a bigger concentration of single tenant properties, which, as we have seen in retail, can be deadly in a recession. Asset and sponsor quality is also deteriorating. There is now so much competition to put out loans by so many non-bank sources, that borrowers can get lenders to compete, which always means lower quality underwriting. Far too much capital chasing too few good deals.
Others will have opportunity as well—even you, if you are holding cash and in position to buy some of the valuable assets that will get “restructured” in the next few years.
Friday, June 8, 2018
San Francisco is so expensive people are leaving in droves - Business Insider
San Francisco is so expensive people are leaving in droves - Business Insider
...The National Association of Realtors reported that the salary needed to buy a home in Salt Lake City was $59,521 in the last quarter of 2017. In San Francisco, it's at least $173,783.
...The National Association of Realtors reported that the salary needed to buy a home in Salt Lake City was $59,521 in the last quarter of 2017. In San Francisco, it's at least $173,783.
Wednesday, June 6, 2018
How Venezuela’s Implosion – and Reconstruction – Will Transform South America | Americas Quarterly
How Venezuela’s Implosion – and Reconstruction – Will Transform South America | Americas Quarterly
...the crisis in Venezuela now occupies precious bandwidth when South American diplomats bilaterally engage with their U.S. counterparts, reducing the time available for other key issues.
...Around 10 percent of the population is thought to have emigrated
...With an entire generation of Venezuelans decimated by lack of schooling, malnutrition and untreated diseases once thought of as a thing of the past and a sizeable number of recent refugees unlikely to return, recovery to anything resembling pre-crisis levels is likely to take more than a decade.
...the crisis in Venezuela now occupies precious bandwidth when South American diplomats bilaterally engage with their U.S. counterparts, reducing the time available for other key issues.
...Around 10 percent of the population is thought to have emigrated
...With an entire generation of Venezuelans decimated by lack of schooling, malnutrition and untreated diseases once thought of as a thing of the past and a sizeable number of recent refugees unlikely to return, recovery to anything resembling pre-crisis levels is likely to take more than a decade.
Tuesday, June 5, 2018
Saturday, June 2, 2018
China’s SenseTime, the world’s highest-valued AI startup, closes $620M follow-on round | TechCrunch
China’s SenseTime, the world’s highest-valued AI startup, closes $620M follow-on round | TechCrunch
...Perhaps its most visible partner is the Chinese government, which uses its systems for its national surveillance system. SenseTime process data captured by China’s 170 million CCTV cameras and newer systems which include smart glasses worn by police offers on the street.
...Perhaps its most visible partner is the Chinese government, which uses its systems for its national surveillance system. SenseTime process data captured by China’s 170 million CCTV cameras and newer systems which include smart glasses worn by police offers on the street.
Immigration - Here’s Mary Meeker’s essential 2018 Internet Trends report | TechCrunch
Here’s Mary Meeker’s essential 2018 Internet Trends report | TechCrunch
- Immigration: It is critical to a strong economy, as 56% of top U.S. companies were founded by a first- or second-generation immigrant.
The Italian Trigger | Mauldin Economics
The Italian Trigger | Mauldin Economics
Briefly, my thesis is that over the next decade, we will endure increasingly damaging debt crises that culminate in a coordinated global default—“The Great Reset,” as I call it. There are limits in how much leverage the world can handle, and I think we are already beyond them. And that is before we have a global recession. The only question now is how we will manage the collapse.
...with Trump once again getting ready to impose steel tariffs on the EU and lumber tariffs on Canada, things can get even more volatile. Since lumber is basically 20% of the cost of a house, a 20% increase in lumber prices (a gift to US lumber companies) would raise housing construction cost by 4%. Cars and aluminum cans would rise in costs. Not only are the countries that are paying the tariff being taxed, US consumers will be taxed with higher prices. This is not exactly the best way to stimulate an economy.
Briefly, my thesis is that over the next decade, we will endure increasingly damaging debt crises that culminate in a coordinated global default—“The Great Reset,” as I call it. There are limits in how much leverage the world can handle, and I think we are already beyond them. And that is before we have a global recession. The only question now is how we will manage the collapse.
...with Trump once again getting ready to impose steel tariffs on the EU and lumber tariffs on Canada, things can get even more volatile. Since lumber is basically 20% of the cost of a house, a 20% increase in lumber prices (a gift to US lumber companies) would raise housing construction cost by 4%. Cars and aluminum cans would rise in costs. Not only are the countries that are paying the tariff being taxed, US consumers will be taxed with higher prices. This is not exactly the best way to stimulate an economy.
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