★ We have different kinds of challenges on the government side. One is a little more philosophical in nature: We tend to think the future is indeterminate. But it used to be seen as a much more determinate thing and subject to rational planning. If it’s fundamentally unknowable, it doesn’t make sense to say anything about it…
…”To put it in mathematical terms, we’ve had a shift from thinking of the world in terms of calculus to statistics. So, where we once tracked the motions of the heavenly bodies and could send Voyager to Jupiter over a multiyear trajectory, now we tend to think nature is fundamentally driven by the random movements of atoms or the Black-Scholes mathematical model of financial markets—the random walk down Wall Street.
You can’t know where things are going; you only know they’re going to be random. I think some things are true about this statistical view of the future, but it’s extremely toxic for any kind of rational planning. It’s probably linked in part to the failure of state communist central planning, though I would argue that there is something to be said for some planning over no planning. We should debate whether it should be decentralized or centralized, but what the United States has today is an extremely big government, a quasi-socialist government, but without a five-year plan, with no plan whatsoever.”
-A Conversation with Peter Thiel, via cdixon
Source: cdixon
Tracking Paulsons Success In A Weak Market: Hedge fund manager John Paulson has profited more than anyone else from the financial crisis. His $3.7 billion payday in 2007 broke every record, and he made it all by betting against homeowners, shareholders, and the rest of us.
Source: portfolio.com
There is a lot of talk these days about this new tech bubble we are seeing. The NYTimes wrote an article today comparing it to what we saw 10 years ago. I think the piece overlooks a fundamental difference between today and what we experienced a decade ago.
During the 1999 tech bubble, there was a rush for internet start-ups to IPO. By going to the capital markets, they were spreading the risk of their businesses to institutional and individual investors who were willing to buy their publicly traded equity. These investors could be large mutual funds, very sophisticated hedge funds, or your retired middle class neighbor from suburbia. This led to a Nasdaq composite high of about 5048. Today it is trading at about 2750.
Considering this, today the few internet start-ups with high valuations are still held privately or traded in a secondary market. The only risk takers are large institutions and wealthy individuals. The risk hasn’t leaked into the public markets where anyone investing their life saving is at risk. If this current tech bubble were to pop, the only parties at risk are the ones who can afford to lose. Once the risk flows into the public markets, we are looking at a different animal and this conversation will definitely take a different tone.
Chris Dixon also had an interesting response to this NYTimes article.
Source: krluna
Debt Ceiling: No End in Sight?
There’s down to the wire, and then there’s this. Ben Smith, senior political writer for Politico.com,discusses the continued intransigence in the debt ceiling negotiations in Washington, and the various plans being crafted in the Republican and Democratic camps.
♫ NPR Planet Money #235: A Giant Stone Coin at the Bottom of the Sea »
…”A few months back, we bought a tiny gold coin. The idea was to understand gold and its role in the history of money. That coin got us thinking about this really basic question: What is money? The question led us to Yap: a tiny island in the middle of the Pacific Ocean, where for hundreds of years people used giant stone discs as a form of money. As it turns out, those stone discs say a lot about the meaning of money. If you don’t believe us, just ask Milton Friedman.”
Visualizing Economics: Another stock graph similar to Exponential Growth Rate of US Stocks since 1871, except this one is plotted on a semi-log scale to help illustrate the price movement of S&P Composite Index.
For example, the percent change in the index’s value during the 1990s “Internet Stock Bubble” (a little over 250%) was similar to the price change during the 10-years preceding the 1929 Stock Market Crash.
Source: visualizingeconomics.com
What Is Kiva? Direct loans to Low-Income Entrepreneurs
Kiva’s mission is to connect people through lending for the sake of alleviating poverty. Kiva is the world’s first person-to-person micro-lending website, empowering individuals to lend to unique entrepreneurs around the globe.
- The people you see on Kiva’s site are real individuals. When you browse entrepreneurs’ profiles on Kiva, choose someone to lend to, and then make a loan, you are helping a real person make great strides towards economic independence and improve life for themselves, their family, and their community. Throughout the course of the loan (usually 6-12 months), you can receive email journal updates and track repayments. Then, when you get your loan money back, you can relend to someone else.
- Kiva partners with existing microfinance institutions. In doing so, we gain access to entrepreneurs from communities world-wide. Our partners are experts in choosing qualified entrepreneurs. That said, they are usually short on funds. Through Kiva, our partners upload their entrepreneur profiles directly to the site so you can lend to them. When you do, not only do you get a unique experience connecting to a specific entrepreneur on the other side of the planet, but our microfinance partners can do more of what they do, more efficiently.
- Kiva provides a data-rich, transparent lending platform. We are constantly working to make the system more transparent to show how money flows throughout the entire cycle, and what effect it has on the people and institutions lending it, borrowing it, and managing it along the way. To do this, we are using the power of the internet to facilitate one-to-one connections that were previously prohibitively expensive. Kiva creates an interpersonal connection at low costs due to the instant, inexpensive nature of internet delivery.
Median & Average Sales Prices of New Homes Sold in U.S. 1963-2008 (Annual): A graph showing the median and average sales prices of new homes sold in the United States between 1963 and 2008 (not adjusted for inflation).
