This week marks the centenary of the assassination of Archduke Franz Ferdinand of Austria – the key trigger for WWI leading to a conflict between European powers soon enough. A hundred years later, the world has similar echoes of the early 20th century with a major shift in global power once again occurring.
The power has shifted from the global North to the South with Asian countries such as China being primary beneficiaries, as opposed to Germany and Russia. The geo-political tensions are once again challenging key elements of the U.S-led international order. This is partly driven by rising economic power resurrecting nationalism and claims for resources shown by disputes between China, and neighboring countries.
It is in Asia where the most tension and insecurity lies in terms of potential for a great power war: there is focus on the Syrian conflict and rise of Islamic extremist group ISIS in Iraq. China’s rise is then unsettling the region and the world with dangers of miscalculation growing because of military build-ups. Even the Japanese Prime Minister has drawn parallels in the geopolitical landscape in Asia today and Europe in the eve of war in 1914. Philippine President compared Beijing’s track record of belligerent behavior with Germany expansionism in 20th century by questioning which point is actually the stopping point.
In Asia, the tensions between Japan and China, as well as between Taiwan and China, are potential triggers of conflict.
However, there exist differences making the war impossible. The memories of the two wars linger quite strongly; the emergence of Communism in Russia, and seeds of Nazis leading to WWII. The presence of nuclear power is a great brake on major power conflict. Both revisionist nations, China and Russia, and status-quo powers all possess nuclear power. Post war international institution presence, like the United Nations, is another determinant to stopping any major war from occurring. Lastly, there is a difference in the gap of power in the leading powers today which again has a great role to play.
Since WWI, when United States emerged as a super power, the country has gone through decline. purchasing power parity has shown that China is to become the biggest economy of the World. There are indications that U.S power will remain resilient for decades to come buoyed by factors such as the energy revolution which has far reaching consequences.
Overall, while another major war can not be ruled out, the prospect of this for the foreseeable future is not as high as it was 100 years ago.
For the first time, New York City has surpassed Moscow for the most billionaire residents, according to the latest global rich list from Hurun, a group that tracks wealth in China. According to Hurun, New York added 14 billionaires this year, bringing its total to 84. Moscow, meanwhile, lost a…
There are a number of reports around Wednesday that China’s economy, by one measure at least, is likely to surpass the U.S. in size sometime this year. The headlines will surprise many people, used to hearing China’s economy will overtake the U.S. sometime in the 2020s, or even later. On Wednesday,…
Lavrov warns West from supporting Ukrainian military action as Kiev's deadline passes for separatists to end siege of government buildings in eastern Ukraine. The White House on Monday said President Barack Obama would speak to Russian President Vladimir Putin soon, perhaps later in the day, and made clear the United…
The yuan will be able to trade as much as 2% on either side of a daily central bank reference rate, compared with the current 1%
Osper, a new UK startup, has come up with an innovative way to create a banking service than can be used by children, combining prepaid debit cards and smartphone apps controlled by both them and their parents. The approach could potentially reach a market underserved by most banks, but which may also be embraced by parents keen to educate their children early on about how to manage money.
The startup has also announced it’s closed a $10m (£6m) funding round, led by London’sIndex Ventures (which has backed SoundCloud and Etsy among others). Previously Osper had raised a seed round of £800,000 in June last year as an alumni of the Techstars Londonaccelerator. The cash will be used by founder Alick Varma to launch the service out of beta, roll out in the UK and eventually expand abroad. It’s also enrolled the backing of major UK TV celebrity, Davina Mccall.
Other investors include Horizons Ventures (Li Ka-Shing’s venture capital arm – investor in Spotify, Facebook and Skype); Peter Jackson (CEO of Travelex), and Darren Shapland (ex-Chairman of Sainsbury’s Bank); as well as the entrepreneurs behind businesses including Streetcar, Lastminute.com, Jawbone, SoundCloud, Skyscanner and Funding Circle.
Square’s recent troubles are not exactly a secret. The Wall Street Journal published a detailed analysis on April 21, detailing Square’s financial troubles and its rapidly shrinking cash position. Square took on a $100 million debt financing option earlier this year, but even with that option, WSJ and The Verge reported that the…
Venture capitalists are spending their money on more established companies rather thanyoung startups, according to data from the first quarter of this year. According to the latest MoneyTree report--which was put together by the National Venture Capital Association and consulting company PricewaterhouseCoopers--there were only nine seed-stage investments in the Bay Area during…
In case you needed more proof that all our jobs will one day be occupied by robots, a Hong Kong V.C. firm has just named an artificial intelligence tool to its board of directors. The company’s also insisting the tool will be treated as an “equal” to the other board members.…
Some of the biggest names in Silicon Valley have been buzzing on Twitter over the last 24 hours about reinventing retail banking with better software. “I am dying to fund a disruptive bank,” venture capitalist Marc Andreessen tweeted yesterday. Other Valley heavyweights chimed in, including Chris Dixon (a colleague at Andreessen Horowitz), Keith Rabois (Khosla Ventures),…
For a decade, starting in the late nineteen-eighties, Ramesh Ramanathan worked his way up the executive ladder at Citibank in the United States. Then he led its corporate-derivatives branch in London. In 1998, however, he quit and returned to India, his country of birth. He had a new goal: finding…
THE founders of the internet were academics who took users’ identities on trust. When only research co-operation was at stake, this was reasonable. But the lack of secure identification is now hampering the development of e-commerce and the provision of public services online. In day-to-day life, from banking to dating, if you don’t know who you are dealing with, you are vulnerable to fraud or deceit, or will have to submit to cumbersome procedures such as scanning and uploading documents to prove who you are.
Much work has gone into making systems that can recognise and verify digital IDs. A standard called OpenID Connect, organised by an international non-profit foundation, was launched this year. Mobile-phone operators have started a complementary service, Mobile Connect, which allows identities of all kinds to be authenticated from smartphones.
But providing a digital ID that will be widely used and trusted is far harder. Businesses can check their employees rigorously, and issue credentials for gaining access to buildings, computers and the like. But what about outside the workplace? Facebook, Google and Twitter are all trying to make their accounts a form of ID. But these are issued without verification, so pseudonyms are rife and impersonation easy.
Follow up of my post on BIG COMPANIES NOW HAVE A HAND IN THE COLLABORATIVE ECONOMY Here is one picture.
Please visit the souce :: http://econbrowser.com/archives/2014/09/interpreting-the-yield-curve-some-pictures Recently Jim highlighted the odd behavior of the various Treasury term premia. Here are some additional thoughts. First, from “Debt market goes off script” in the WSJ: Yields on short-term U.S. Treasury debt maturing in two to five years hit the highest level since…
Why do we say so ? Easy money policies of recent years could lead to big problems. Warning indicators like the significant number of original general public offerings of organizations that are unprofitable, and substantial degrees of financial debt issued to firms, often with weak credit score.
This is a story about ARM Holdings (ARMH), the mobile technology company. But before it gets going, here are a few things you need to know: 1. ARM is a company made up mostly of chip engineers. They design parts of chips—such as graphics and communication bits—and they design entire…
America has allowed its oil companies to export oil as announced in private letters to oil companies. This will, for sure, cause a stir in the global oil markets and lead to lower prices. Global oil prices previously soared due to the fall in the supply of oil- stoppage of oil exports by Libya, and broad turbulence in Nigeria. About 3.5 million barrels, out of the total 90 million barrels of oil consumed daily, were taken off the market. The US decision to allow the export of condensate (an extremely light oil) by two Texas companies, could have a dramatic impact if the Commerce Department provides a broader definition of what is condensate for export purposes. The type of crude oil being produced in US is too light for American refineries to process. If all of this light oil is exported, it would surpass the exports of Iraq seriously undermining oil prices.
When President Obama took office in 2009 at the height of the recession, the annual budget deficit came in at 10.1 percent of gross domestic product -- a level not seen since the end of World War II. In the five years since, the budget deficit has been sliced more…
U.S. economy added 533,000 jobs during the first three months of the year What do we need to analyse ? -To keep pace, job creation would need to accelerate in April -Watch which sectors of the economy are adding jobs. -Flirting with Full Employment -Average hourly earnings -The participation rate…
Most people that discuss the "economic collapse" focus on what is coming in the future. And without a doubt, we are on the verge of some incredibly hard times. But what often gets neglected is the immense permanent damage that has been done to the U.S. economy by the long-term…
The following are the expectations for the minutes of the January FOMC meeting by the economists at Bank of America Merrill Lynch, Citibank, Morgan Stanley, Barclays Capital, and other leading banks. http://www.efxnews.com/
If trade and financial sanctions were imposed on Russia, the cost to the UK might well exceed the cost to Russia. That is presumably why the Foreign Office wrote - in a document carelessly (or deliberately?) displayed yesterday for the lenses of photographers - that "the UK should not support…
The Feds revised their interest rate forecasts late last month hoping to normalize them faster than many market watchers would have anticipated. The new forecasts are higher, the projections having being raised for 2015-2016. This is a good move for extremely low rates can negatively affect the job hunt and the economic growth of U.S.
With low interest rates, old workers delay their retirement holding onto their job as the investment income from fixed income products is too meager to sustain them, this, in turn, crowds out the youth from employment opportunities.
Even companies are reducing their investment in the economy for they can not comprehend the true level of economic growth in the country i.e, growth in the absence of an extraordinary macroeconomic policy. People are also taking up heavy debts to buy back their stocks or to pay dividends due to the low cost of financing. While this improves the price-earnings ratio, it can stunt growth oriented capital projects.
With the labor supply demand mismatch, there is an increasing wage inflation: those employed are earning more, while those unemployed aren’t getting jobs. In the medium term this can lead to higher levels of inflation as can also be seen by the CPI indications.
Finally, unconventional monetary policy of recent years has encouraged significant bouts of capital misallocation, resulting in crowded trades, correlated risks and the overly stretched valuations seen in markets today.
These in turn, are increasing systemic risk, raising the potential for a violent capital unwinding.
Thus, fiscal initiatives, at this point, would perhaps be more beneficial to the economy than the current policy of zero-interest rate.
On Tuesday, Federal Reserve Chair Janet Yellen promised the House Financial Services Committee "a great deal of continuity" in monetary policy as she fills the shoes of Ben Bernanke. However, Yellen is not Bernanke. And depending on her read on the economy, she will use her powers to influence…
I will let you guess where we are in this "cycle". Within a fractional reserve banking system, if the Federal Reserve decreases the discount rate and the rate is lower than the long bond rate by enough of a spread, the banks get motivated to borrow at or close to the discount rate and loan…
U.S. Treasury yields and other interest rates increased in the months leading up to the Federal Reserve’s December 2013 decision to cut back its large-scale bond purchases. This increase in rates probably at least partly reflected changes in what bond investors expected regarding future monetary policy. Recent research on this…
This past week marked the annual gathering of bankers, financial officials, and other economic experts hosted by the Kansas City Federal Reserve Bank in Jackson Hole, Wyoming. On Friday, Fed Chair Janet Yellen and European Central Bank head Mario Draghi both spoke; in a slow week for the markets, these…
Prior to the Fed's monetary stimulus at the start of financial crisis in 2008, the Fed held around $900 billion assets. Today the Fed's assets are $4.1 trillion and rising, but at a tapering pace.
At Morningstar, AQR Capital’s leader presents Fama and Shiller’s arguments and says he’s ‘learned to live with my schizophrenia’
“I’m not a super-hardcore efficient marketer,” says Cliff Asness of AQR Capital.
Cliff Asness created a “watershed moment in the hedge fund industry” when he brought his sophisticated hedge fund strategies into the mutual fund space in 2011, said Scott Burns of Morningstar in introducing Asness last week.
Asness created a similar moment in his morning keynote speech at the Morningstar Investment Conference on Friday, exploring whether the markets are efficient in his trademarked sophisticated manner, bolstered through the display of high-end research and peppered with humor. He began by apologizing for “talking about theory at 8:00 a.m.” to a receptive audience before presenting his take on why the Nobel prize committee was correct in awarding its economics prize last year to two men who sit on opposite ends of the efficient market theory: Eugene Fama of the University of Chicago and Robert Shiller of Yale (Asness also made sure to honor the sometimes overlooked third winner of the prize last year: Lars Hansen, also of Chicago.).
“Gene and Bob are on opposite sides of the efficient market hypothesis,” Asness said, before disclosing that he’s “not exactly unbiased,” since he not only was a student of Fama’s at Chicago but his teaching assistant as well for two years, and that “along with Jack Bogle he’s one of my investing heroes.” But his bias, he said, was “at least in both directions.” He also noted that his Ph.D dissertation at Chicago for Fama argued in favor of the price momentum strategy — “that it worked” — but that Fama was gracious and supportive despite their differing beliefs.
The Dow had broken 17,000, the Standard & Poor's 500 Index had touched a record high and was spitting distance from crossing 2,000. Even the small-cap indexes such as the Russell 2000 and the S&P 600 have notched new highs. And the Nasdaq, up 255 percent since the March 2009…
Noah Smith and Paul Krugman have both noted the strange fact that the financial class, almost across the board, continues to argue for more austerity and a tighter monetary policy, despite the adverse effects these policies could have on the economy as a whole. This kind of blinkered thinking is…
For 29-year-old Fyodor Bagnenko, a fixed-income trader at Dragon Capital in Ukraine, selling bonds has become a lonely business. From his seven-story office in central Kiev, about 20 minutes from the barricades on Independence Square that were the epicenter of protests that triggered the worst crisis between Russia and the…
Here they are: the most important charts in the world. A lot has changed since the last time we published this collection back in July. The economic situation in Europe has deteriorated, the unemployment rate in the US has fallen below 6%, and the Fed looks poised to conclude its…
The hedge fund industry used to have humble beginnings: in 1990, it had $40 billion in assets under management. Now, its growing appeal has led to a staggering $2.6 trillion in 2013. In retrospect with the mutual funds industry and the global financial markets, this is a small figure. However,…
The European Central Bank announced some measures to ease monetary policy two weeks ago. The euro had been on a downtrend since May and by these measures the ECB increased its support to the economy.
Two weeks later, EUR/USD stabilized just above 1.35.
This week’s Eurozone economic calendar will be an important test for the euro because investors will be watching to the data in order to give confirmation on the need for additional easing.
Economists are not expecting major changes in economic activity but after the plunge in investor confidence (ZEW survey), the risk is a big disadvantage of these reports.
The rate of the EUR/USD will depend mostly on Eurozone data because the U.S. economic calendar is busy with Tier 2 economic reports. The Fed needs will probably start talking about normalizing monetary policy in September, when the central bank updates its forecasts and Janet Yellen gives a press conference.
Here’s what to look for from the Federal Reserve Bank of Kansas City’s annual economic symposium in Jackson Hole,Wyoming, which runs Aug. 21-23. -- Yellen’s keynote: The highlight will be Fed Chair Janet Yellen’s speech Aug. 22 on labor markets at 10 a.m. New York time. She’ll probably reiterate the Fed’s view…
The world’s major currencies, which had traded in a relatively stable range, are now in motion -- buffeted by different regional growth and interest rates as well as a simmering brew of geopolitical tensions. Differences are particularly noticeable between the U.S. and Europe, and how far apart currencies in those…
Though ECB cut was covered by the Press in great details but only a few analyzed the results of such measure. Only independent writer/economists talked about the potential losers and winners of the situation. In this article featured in The Telegraph , an economic writer talks about critiques the actions of…
Who would have thought that six years after the global financial crisis, most advanced economies would still be swimming in an alphabet soup – ZIRP, QE, CE, FG, NDR, and U-FX Int – of unconventional monetary policies? No central bank had considered any of these measures (zero interest rate policy,…
Runners have target times, golfers judge themselves by their swing, while Mario Draghi watches a technical measure of inflation expectations used by financial markets. Just one problem: it suggests the European Central Bank president is not achieving his objective – and that markets’ fears of eurozone deflation are mounting. Since…
Swedish-American heiress Cristina Stenbeck’s bet on the red-hot e-commerce business has caught the eye of investors, although doubters question the future of her Kinnevik group in a sector where new players emerge almost every day.
Shares in Kinnevik, which Stenbeck inherited at 24 on the sudden death of her father Jan, have more than doubled in half a dozen years and outstripped some of Sweden’s other renowned family investment firms under her leadership.
Yet some critics regard Kinnevik’s investment shift into online retailing where entry barriers are low as foolhardy. They question the team Stenbeck has built, saying that while it is strong on banking and financial experience, it lacks the operational ability to build long-lasting web businesses.
In its nearly 80-year history, Kinnevik has made a habit of leaping from one growth sector to the next.
Entrepreneurs will know that most startups are not successful most of the time. Our hiring isn’t quite right, our funds are often running out, we don’t know if we have achieved a good product-market fit, or if the pricing we decided is optimal! On an average day, an entrepreneur has his/her hands…
Five months ago, the student town of Manipal went abuzz when they realized that one of their own was the leading contender in the race for the top job at Microsoft Corp. For the next five months, it looked like their prayers would easily lead to fruition. But late last…
The plunge in emerging markets is taking a bite out of the performance of funds managed by some of the biggest names on Wall Street, including BlackRock, Brevan Howard and T. Rowe Price. Some mutual funds are already down 10 percent so far this year, thanks to declining stocks and…
Bill Gross, founder of Pimco, and its chief investment officer for the past 40 or so years, resigned last week. Rumor has it that he was but two steps ahead of a mutinous gang, swords out, planning to make him walk the plank. Gross was too quick and before the…