Thoughts from the Frontline - Scotland Allowing 16-year- olds to vote in the election

What’s on Your Radar Screen? By John Mauldin | Sep 14, 2014

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.

BlackRock Money Market Funds Refuse to Lose Value - Bloomberg View

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:



BlackRock Money Market Funds Refuse to Lose Value - Bloomberg View

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 Most Profound Revolution in World Affairs in Almost Four Centuries (from Bloomberg 8 Sept. 2014)

Toxic Stew of New Technology, Old Hatreds in World Crises - Bloomberg (excerpts)

...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.”...

VW Says: Stay Just Three Years Behind

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.



VW Says Fuel-Cell Cars Doomed to Struggle Beyond Japan - Bloomberg

If one ever doubted the ability to accurately focus most marketing studies on any longer-term basis...

EU Bets a Billion on Fantastic Voyage Exploiting Graphene - Bloomberg



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 the Institute 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

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).

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.



What does a “good” Chinese adjustment look like? | Michael Pettis' CHINA FINANCIAL MARKETS