Updates from McKinsey

The rise and rise of the global balance sheet: How productively are we using our wealth?
Net worth has tripled since 2000, but the increase mainly reflects valuation gains in real assets, especially real estate, rather than investment in productive assets that drive our economies.
By Jonathan Woetzel, Jan Mischke, Anu Madgavkar, Eckart Windhagen, Sven Smit, Michael Birshan, Szabolcs Kemeny, and Rebecca J. Anderson – We have borrowed a page from the corporate world—namely, the balance sheet—to take stock of the underlying health and resilience of the global economy as it begins to rebound from the COVID-19 pandemic. This view from the balance sheet complements more typical approaches based on GDP, capital investment levels, and other measures of economic flows that reflect changes in economic value. Our report, The rise of the global balance sheet: How productively are we using our wealth?, provides an in-depth look at the global economy after two decades of financial turbulence and more than ten years of heavy central bank intervention, punctuated by the pandemic.

Across ten countries that account for about 60 percent of global GDP—Australia, Canada, China, France, Germany, Japan, Mexico, Sweden, the United Kingdom, and the United States—the historic link between the growth of net worth and the growth of GDP no longer holds. While economic growth has been tepid over the past two decades in advanced economies, balance sheets and net worth that have long tracked it have tripled in size. This divergence emerged as asset prices rose—but not as a result of 21st-century trends like the growing digitization of the economy.

Rather, in an economy increasingly propelled by intangible assets like software and other intellectual property, a glut of savings has struggled to find investments offering sufficient economic returns and lasting value to investors. These savings have found their way instead into real estate, which in 2020 accounted for two-thirds of net worth. Other fixed assets that can drive economic growth made up only about 20 percent the total. Moreover, asset values are now nearly 50 percent higher than the long-run average relative to income. And for every $1 in net new investment over the past 20 years, overall liabilities have grown by almost $4, of which about $2 is debt. more>

Highly Integrated Led Driver Design for Automotive Displays

By Szukang Hsien – Displays are ubiquitous in modern cars, from instrument clusters to center stack touchscreens, head-up displays, rear-seat entertainment, and more. It is estimated that there are up to 12 displays per vehicle in today’s automobiles. The vast automotive display market is dominated by TFT-LCD technologies while OLEDs may play a significant role in the future. For TFT-LCD panels, a majority is still white LED edge-lit displays, which need precise, constant current sink to drive these LEDs.

The display receives power through multiple rails while the video signal receives power through the gigabit multimedia serial link (GMSL). It converts serial LVDS data to a parallel interface in RGB format. A high-voltage buck converter provides the main 5V or 3.3V rail, which feeds the rest of the low-voltage circuits while the high-voltage LDO provides the always-on power to the MCU. The LED driver is usually directly connected to a car battery, which is needed to support lower battery voltage for start-stop systems as well as cold-crank conditions. more>

‘Buy Now, Pay Later’: Banking on Global Financial Innovation

The new credit payment is the latest Fintech disruptor. Can established legacy banks adapt to keep up with the increased e-commerce demand and the red-hot tech services?
morganstanley.com – The latest Fintech sounds simple enough: Buy a product, take it home, set up payments after. However, the changes this innovation may bring to the financial sector are anything but. In fact, “buy now, pay later” (BNPL) platforms—adopted, so far, mainly by app-loving Millennials and Gen Z—are changing how people shop and spurring financial institutions to keep up.

BNPL is one of the fastest-growing e-commerce segments in Europe and Australia, and it is expanding across the U.S.

“We do expect BNPL to grow faster than traditional credit cards in Europe,” says Giulia Aurora Miotto, a Morgan Stanley European Equity Analyst. “And we think this adds up to the trend of Fintechs slowly ‘skimming the cream’ off different banks’ businesses in Europe.”

That means potential disruption for legacy financial services companies, which must compete to offer similar services to existing customers, while adapting to (and adopting) this type of retail-financing Fintech to grow their customer base. more>

Should humans try to modify the amount of sunlight the Earth receives?

By Daniel Ross – Desperate times call for desperate measures, as the saying goes. As scientists, policymakers and politicians keep one increasingly startled eye on climate change’s ticking clock and the other on the ongoing, upwardly mobile trend in greenhouse gas emissions, it’s no wonder possible solutions that have been long dismissed as fringe slices of science fiction are making their way into the mainstream.

Enter center stage geoengineering, a hitherto black sheep of the fight against global warming.

Geoengineering is a broadly encompassing term with a few close etymological cousins—namely climate engineering and climate change mitigation—along with a sizable stable of associated technologies. Some of them, like afforestation and ocean iron fertilization, fall under the umbrella of carbon dioxide removal (CDR) in that they seek to draw down carbon dioxide from the atmosphere. But these are techniques that would in all likelihood shift the climate change needle relatively slowly.

In comparison, technologies under the rubric of solar radiation management (SRM) are expected to work on a much faster timescale, and as a consequence, generate arguably the greater buzz. Solar engineering is the idea that humankind artificially limits how much sunlight and heat are permitted in the atmosphere, and includes the thinning of high-level cirrus clouds to help infrared rays more easily escape upward, along with the brightening of low-level marine clouds to help reflect sunlight back into space. more>

Updates from McKinsey

Protecting people from a changing climate: The case for resilience
Our new study lays bare the potential impact of climate risks for people across the globe—and underscores the need to protect the most vulnerable and build resilience.
By Harry Bowcott, Lori Fomenko, Alastair Hamilton, Mekala Krishnan, Mihir Mysore, Alexis Trittipo, and Oliver Walker – The United Nations’ 2021 Intergovernmental Panel on Climate Change (IPCC) report stated—with higher confidence than ever before—that, without meaningful decarbonization, global temperatures will rise to at least 1.5°C above preindustrial levels within the next two decades.1 This could have potentially dangerous and irreversible effects. A better understanding of how a changing climate could affect people around the world is a necessary first step toward defining solutions for protecting communities and building resilience.

As part of our knowledge partnership with Race to Resilience at the UN Climate Change Conference of the Parties (COP26) in Glasgow, we have built a detailed, global assessment of the number of people exposed to four key physical climate hazards, primarily under two different warming scenarios. This paper lays out our methodology and our conclusions from this independent assessment.

Our findings suggest the following conclusions:

  • Under a scenario with 1.5°C of warming above preindustrial levels by 2030, almost half of the world’s population could be exposed to a climate hazard related to heat stress, drought, flood, or water stress in the next decade, up from 43 percent today3 —and almost a quarter of the world’s population would be exposed to severe hazards. (For detailed explanations of these hazards and how we define “severe,” see sidebar “A climate risk analysis focused on people: Our methodology in brief.”)
  • Indeed, as severe climate events become more common, even in a scenario where the world reaches 1.5°C of warming above preindustrial levels by 2050 rather than 2030, nearly one in four people could be exposed to a severe climate hazard that could affect their lives or livelihoods.
  • Climate hazards are unevenly distributed.

more>

Updates from Ciena

‘Branching Out’ our learning
By Jane Hobbs & Jason Phipps – As part of the initiative to create a culture of happiness, vibrancy, and belonging, I was very excited to launch the People Promise in June 2020, a commitment that we can all make a difference, be empowered, and feel included.

Making it easier for individuals to learn and develop has always been important to us, not just about professional career growth and skill training but also on personal growth and wellbeing.

To support this, we launched this new learning experience, calling it Branch Out, as we saw the topics as a way for people to branch out their learning. Launching this platform was a powerful tool as it came at a time where it could help us cope in different ways with how the pandemic impacted our wellbeing and also still put an emphasis on having learning available 24/7 – important in Global company.

As part of the initiative to create a culture of happiness, vibrancy, and belonging, I was very excited to launch the People Promise in June 2020, a commitment that we can all make a difference, be empowered, and feel included.

Making it easier for individuals to learn and develop has always been important to us, not just about professional career growth and skill training but also on personal growth and wellbeing. more>

Related>

Can the crisis of social reproduction bring the demise of central-European illiberals?

By Weronika Grzebalska – This month, Polish protesters took to the streets after 30-year-old Izabela passed away from septicaemia in a hospital, her foetus having died in her womb. Her death came nine months after abortion in cases of foetal defects was deemed unconstitutional in Poland, under the illiberal Law and Justice (PiS) government.

Women’s rights activists fear that this cruel ruling will increasingly push medical staff to take a wait-and-see approach to women with difficult pregnancies. Population experts also predict it will further lower already falling birth rates, with surveys long reporting that Polish women are having fewer children than they would like to, due to the twin pressures of market capitalism and illiberal pronatalism.

The anti-abortion ruling exposes the cynical contradictions of illiberal family and demographic policy. This is why Polish politicians and anti-abortion advocacy groups have since tried to distance themselves from Izabela’s death, presenting it as a tragic accident unrelated to their radical agenda.

After all, the illiberal right in both Poland and Hungary came to power harnessing material anxieties related to the growing crisis of social reproduction—the declining ability of societies to create and maintain social bonds and provide care between and within generations. By promising to protect ‘family values’ amid the progressive decline of socio-economic security, and by offering families vital endowments, central-European illiberals have rallied even moderate voters behind their agenda. more>

So where’s Europe’s real source of strength?

By Justin Urquhart Stewart – We are all familiar with the large political behemoths that dominate our globe, not just in terms of political influence, but also through their financial strength. The United States, although having a federal structure, has power centered very clearly on Washington. The same would apply to the other superpower, namely China, albeit under a completely different totalitarian political system. As events in Hong Kong have so perfectly illustrated, any thought of an alternative political view or opinion, let alone action, will not be tolerated.

We should also mention Russia, who although no longer a superpower, is still formidable and a potentially dangerous entity. By way of illustration, the value of the entire economy of this geographical giant, as measured by its GDP (Gross Domestic Product) is less than half of that of Germany. It, too, despite nominally titling itself as a democratic nation, is quite obviously under a firm central system of Putin’s command and control.

These three, therefore, stand in great contrast to the real strength and opportunity supplied by the structure of the EU. Since its birth back in the 1950s, some have desired and dreamt of creating an alternative to the US via “a United States of Europe”, with a similar centralized strength and concentration of power in order to combat those other leviathans. more>

Updates from McKinsey

The energy transition unfolds
The transition to zero-carbon energy isn’t going to be a single shift, but a set of interrelated, system-level shifts. What will it take to get things moving quickly toward net-zero emissions?
McKinsey –  Decarbonizing the world’s economy will largely be a matter of overhauling the global energy system. And the necessary changes made to policies, technology, finance, and business models will affect the way that all individuals and all institutions produce and use energy.

Today McKinsey convened leaders from different points in the energy system to share observations on the state of the energy transition and the factors that might accelerate it. A few of the comments made during the session, edited for clarity, appear below. A full replay of today’s session can be found here.

Charting green hydrogen’s path to affordability: “The starting point is stone age: little [electrolyzer] units made by hand welding and hand cutting. The minute we are able to automate a process, with robotic welding machines and long factories assembling fast, phenomenal scale will come in. In renewable energy, the price has come down. Producers still need to bring down the cost of the electrolyzer and the balance of the system. We are very confident. … There is no reason why green hydrogen cannot end up competing with gray hydrogen. No reason whatsoever.”
—Paddy Padmanathan, president and CEO, ACWA Power

Rethinking the financial risk of new technologies: “We’ve had a long period when the perceived risk associated with new solutions for the climate problem has been higher than it really is. Now we’re starting to get to a point where that is tipping. It’s becoming obvious how carbon capture and storage, hydrogen, and direct-air capture are fitting into the climate equation. And therefore finance can start to factor them into credible transition pathways for clients.”
—Zoë Knight, managing director and group head, Centre of Sustainable Finance, HSBC more>

Updates from Ciena

How bold hardware and software innovations are changing the game in optical networking
How are hardware and software advancements helping network operators solve key challenges they face today?
By Paulina Gomez – Communications have come a long way since Western Union took the bold step of implementing the first transcontinental electric telegraph system in October of 1861. Fast forward 160 years and optical networks across the globe are what lay the foundation for modern communications and the way we live, work and play.

Keeping pace with today’s “new normal” customer demands for always-on, anywhere, reliable connectivity requires innovative technologies to deliver open, scalable, and programmable networks, that include next-gen coherent modems to drive down the cost of transport and reconfigurable open line systems, to be able to quickly adapt to changing customer requirements.  However, evolving towards a smarter optical network also requires leveraging advanced analytics with intelligent software automation to not only drive operational simplicity but also actionable insights based on what is happening in the network.

As our customers evolve to more open, programmable, and automated networks they need the right analytical tools at their fingertips to be able to extract the full value of their deployed network assets across all stages of the photonic network lifecycle. Paving the path towards a smarter optical network starts with an SDN domain controller like Ciena’s Manage, Control and Plan (MCP), that lays the foundation for multi-layer, automated, lifecycle operations. Advancements in hardware and software are also required to give more control to end-users so that they can fully operationalize and realize the benefits associated with a modernized network. Let me explain further: more>