Category Archives: Economy

In 1939, I didn’t hear war coming. Now its thundering approach can’t be ignored

BOOK REVIEW

Don’t Let My Past Be Your Future, Author: Harry Leslie Smith.

By Harry Leslie Smith – Because I am old, now 94, I recognize these omens of doom.

Chilling signs are everywhere, perhaps the biggest being that the US allows itself to be led by Donald Trump, a man deficient in honour, wisdom and just simple human kindness. It is as foolish for Americans to believe that their generals will save them from Trump as it was for liberal Germans to believe the military would protect the nation from Hitler’s excesses.

Britain also has nothing to be proud of. Since the Iraq war our country has been on a downward decline, as successive governments have eroded democracy and social justice, and savaged the welfare state with austerity, leading us into the cul de sac of Brexit. Like Trump, Brexit cannot be undone by liberal sanctimony – it can only be altered if the neoliberal economic model is smashed, as if it were a statue of a dictator, by a liberated people. more> https://goo.gl/HaqHQ7

Are Index Funds Evil?

A growing chorus of experts argue that they’re strangling the economy—and must be stopped.
By Frank Partnoy – Index funds have grown exponentially since John Bogle founded Vanguard in the mid-1970s.

The top three families of index funds each manage trillions of dollars, collectively holding 15 to 20 percent of all the stock of major U.S. corporations. Best of all for their investors, index funds have consistently beaten the performance of stock-pickers and actively managed funds, whose higher fees may support the Manhattan lifestyle of many bankers, but turn out not to deliver much to customers.

Concerns about the potential dangers of shareholder diversification first surfaced back in 1984, not long after index funds themselves did. Julio Rotemberg, then a newly minted economist from Princeton, posited that “firms, acting in the interest of their shareholders,” might “tend to act collusively when their shareholders have diversified portfolios.” The idea, which Rotemberg explored in a working paper, was that if investors own a slice of every firm, they will make more money if firms compete less and collectively raise prices, at the expense of consumers. Knowing this, the firms’ managers will de-emphasize competition and behave more cooperatively with one another. more> https://goo.gl/AWXivG

Updates from GE

Sea Change: GE’s French Wind Turbine Factory Will Power Germany’s Renewables Revolution
By Tomas Kellner – GE is a relative newcomer to offshore wind. The company explored the field a decade ago and returned to the industry in 2015, when it acquired the energy assets of Alstom, and built its first wind farm in Long Island Sound near Block Island, Rhode Island, last year. As the inaugural offshore wind farm in the United States, the project made a splash even though it holds just five turbines. But Merkur, which will have 66 turbines, is a much bigger beast. “This one is special,” says Pascal Girault, who runs the Saint-Nazaire plant. “Everything is big.”

Girault spent the early part of his career managing supply chains for the car industry, but ramping up production for Merkur is no Sunday drive. Workers in Saint-Nazaire make generators and assemble nacelles for the 6-megawatt GE Haliade turbine. The nacelle is the casing on top of the tower that shelters the generator and other equipment. It includes some 30,000 components.

Adding to the task’s complexity, the composite blades for the machines’ 150-meter-diameter rotors come from GE’s LM Wind Power factory in Spain. The steel segments for the tower are being made in Germany and China. U.S. and European companies supply electronics and mechanical components for the converter and generator. “The scale and the speed of the project are challenging,” Girault says. more> https://goo.gl/GSScqV

Is America Headed for a New Kind of Civil War?

By Robin Wright – The more relevant question after Charlottesville—and other deadly episodes in Ferguson, Charleston, Dallas, St. Paul, Baltimore, Baton Rouge, and Alexandria—is where the United States is headed. How fragile is the Union, our republic, and a country that has long been considered the world’s most stable democracy?

The dangers are now bigger than the collective episodes of violence. America’s stability is increasingly an undercurrent in political discourse.

Based on his experience in civil wars on three continents, Keith Mines cited five conditions that support his prediction: entrenched national polarization, with no obvious meeting place for resolution; increasingly divisive press coverage and information flows; weakened institutions, notably Congress and the judiciary; a sellout or abandonment of responsibility by political leadership; and the legitimization of violence as the “in” way to either conduct discourse or solve disputes. more> https://goo.gl/W6awUm

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How Trump v Kim can wreck the world economy without a shot being fired

By Larry Elliott – The assumption underlying the muted response is that there will be no war between the US and North Korea, nuclear or otherwise, and that the smart investment play is to buy into any dips.

The markets are part right. It still looks unlikely that Trump will sanction a pre-emptive strike. Kim knows that, which is why he would be dumb to up the ante by aiming some missiles into the sea off Guam first.

But the financial markets – and the broader global economy – could still turn nasty in an repeat of what happened 10 years ago even without a shooting war.

For a start, the world has never really recovered from the last crisis. Growth rates have been weak and have only been possible because years of low interest rates and quantitative easing have encouraged consumers and businesses to rack up large amounts of debt. As the economist Steve Keen notes in his new book Can we avoid another financial crisis (Polity), many countries have become what he calls debt junkies.

“They face the junkie’s dilemma, a choice between going ‘cold turkey’ now, or continuing to shoot up on credit and experience a bigger bust later.”

Keen says the countries to watch out for have two characteristics: they already have high levels of personal debt and have relied substantially on credit as a source of demand in the past five years. Australia, Canada, South Korea, Sweden and Norway are all on his list of candidates to be future debt zombies. But so is China. more> https://goo.gl/f7WBnq

These 5 Countries Are Killing It in the Battle Against Climate Change

By Raya Bidshahri – When it comes to climate change, government leaders and politicians must begin to think beyond their term limits and lifetimes. They must ask themselves not how they can serve their voters, but rather how they can contribute to our species’ progress. They must think beyond the short term economic benefits of fossil fuels, and consider the long term costs to our planet.

Climate change is considered one of the greatest threats to our species. If current trends continue, we can expect an increase in frequency of extreme weather events like floods, droughts and heat waves. All of these pose a threat to crops, biodiversity, freshwater supplies and above all, human life.

Here are examples of a few countries leading the way.

Denmark: Considered the most climate-friendly country in the world, Denmark is on the path to be completely independent of fossil fuels by 2050.

China: Home to the world’s biggest solar farm, China is the world’s biggest investor in domestic solar energy and is also expanding its investments in renewable energies overseas.

France: Thanks to the production of nuclear energy, representing 80 percent of nationwide energy production, France has already reduced its greenhouse gas emissions.

India: The nation is on the path to becoming the third-largest solar market in the world. Solar power has become cheaper than coal in India.

Sweden: Sweden has passed a law that obliges the government to cut all greenhouse emissions by 2045. With more than half of its energy coming from renewable sources and a very successful recycling program, the country leads many initiatives on climate change. more> https://goo.gl/PPrn3b

Updates from Autodesk

Autodesk Highlights Next-Gen Storytelling & Collaboration Tools at SIGGRAPH 2017
Autodesk – Leading up to SIGGRAPH 2017, Autodesk released a series of updates for its media and entertainment tools, including Autodesk Media & Entertainment Collection, Autodesk Maya, Shotgun, Arnold, Autodesk 3ds Max, and Autodesk Flame. Engineered to streamline and accelerate production on films, TV shows, games and immersive experiences, the new releases include improvements and user-requested enhancements that connect creative workflows and teams, helping them bring engaging stories to life for a worldwide audience.

“The continued growth of AR and VR and steady flow of new productions from Netflix, Amazon and others, mean animation and VFX houses are in more demand than ever. We’re focused on helping our customers create, connect and compute faster and more efficiently so they can balance their increasing project loads with tighter schedules and budgets,” Chris Bradshaw, Senior Vice President, Media & Entertainment, Autodesk, stated. “Everything we’re showing at SIGGRAPH streamlines production and equips artists with the tools to handle nearly any creative scenario.” more> cadinnovation.com

The Psychology of a Nuclear Standoff

By Tom Jacobs – The “nuclear taboo” has held for 70 years for two reasons, according to Jacques Hymans: “the enormity of the decision of use nuclear weapons,” and the unpredictability of the consequences of doing so. Nevertheless, he warns, these are dangerous times.

New nuclear states have always been highly interested in trying to use their weapons as means of compellence, i.e. threats to get some benefit. New leaders have also had such tendencies. This is understandable, because it takes time and experience to accept the counterintuitive reality that the biggest bomb in the world is mostly useless as a military weapon, and therefore also useless as a means of compellence. So, history teaches us that both the U.S. and North Korea at present are liable to try to push their nuclear luck. That makes for a dangerous situation.

The chances are higher that the U.S. will launch first. But this would be a terrible humanitarian catastrophe and the U.S. would lose Asia politically for a hundred years. more> https://goo.gl/CtHxCU

A decade after the crisis’ first tremor, are we ready for another?

By David Wessel – It was 10 years ago, on Aug. 9, 2007, that France’s BNP Paribas suspended withdrawals from three funds that held U.S. mortgages, a move seen in hindsight as the first tremor of the global financial crisis that shook the world economy.

So this seems a good moment to ask if we are ready for the next financial crisis. The short answer is: No.

Dodd-Frank created a way to “resolve” (that is, wipe out the shareholders, convert some debt to equity and sell off the pieces) of any future Bear Stearns, Lehman Brothers or AIG so that the Federal Reserve and other agencies don’t have to improvise the way it did in 2008 and we don’t suffer the aftershocks of a Lehman-style bankruptcy. This “orderly liquidation authority” is under assault from Republicans in Congress. My bet is that it will survive, but we really won’t know how well this new mechanism works until it has been tested.

The politics of responding to an economy-shaking financial crisis are never easy: What’s needed to protect the economy from another Great Depression will never be popular politically because it looks like bailing out the very folks who created the problem in the first place. more> https://goo.gl/btZKrd

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TV’s Ad Apocalypse Is Getting Closer

By Derek Thompson – Before getting to the future, let’s start with the present of television. Pay TV—that is, the bundle of channels one can buy from Comcast or DirecTV—is in a ratings free fall among all viewers born since the Nixon administration.

This has created a business crisis for entertainment companies like Disney. Old Disney’s television strategy was: Focus on making great content and then sell it to distribution companies, like Comcast and DirecTV. This worked brilliantly when practically the entire country subscribed to the same television product.

Thanks to virtuous cycle of bundling, separating content and distribution used to be the obvious play for Disney

But New Disney is looking for a fresh play. Now that young households are cutting the cord, it wants to own both content and distribution.

There aren’t many great examples of legacy media empires successfully transitioning to the digital age without a few disasters along the way, or at least a long period of readjustment. Just look at American newspapers, or the music labels at the beginning of the 2000s. more> https://goo.gl/jfcC64