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Category: economics – Page 151

Since the Reagan administration, federal agencies have been required to produce cost-benefit analyses of their major regulations. These assessments are designed to ensure that regulators are pursuing actions that make society better off.

In my experience working on the White House economic team in the Clinton and Obama administrations, I found cost-benefit provides a solid foundation for understanding the impacts of regulatory proposals. It also generates thoughtful discussion of ways to design rules to maximize net benefits to the public.

On June 7, Environmental Protection Agency Administrator Scott Pruitt proposed changing the agency’s approach to this process in ways that sound sensible, but in fact are a radical departure from how government agencies have operated for decades.

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That growth in factory worker salaries has been a double-edged sword for China. On one hand, it has increased the purchasing power of Chinese which in turn has powered consumer-led economic growth, but on the other it has made China less competitive on wages and forced companies like Foxconn to introduce more automation.

With 1 million employees and half a dozen factories contributing 4 per cent of the country’s export value, Foxconn’s expansion symbolises China’s role as tech manufacturing powerhouse.

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Yet even the U.S. is disturbingly vulnerable—and in some respects is becoming quickly more so. It depends on a just-in-time medical economy, in which stockpiles are limited and even key items are made to order. Most of the intravenous bags used in the country are manufactured in Puerto Rico, so when Hurricane Maria devastated the island last September, the bags fell in short supply. Some hospitals were forced to inject saline with syringes—and so syringe supplies started runn…ing low too. The most common lifesaving drugs all depend on long supply chains that include India and China—chains that would likely break in a severe pandemic. “Each year, the system gets leaner and leaner,” says Michael Osterholm, the director of the Center for Infectious Disease Research and Policy at the University of Minnesota. “It doesn’t take much of a hiccup anymore to challenge it.”

The epidemics of the early 21st century revealed a world unprepared, even as the risks continue to multiply. Much worse is coming.

Image above: Workers at the University of Nebraska Medical Center’s biocontainment unit practicing safe procedure on a mannequin.

Continue reading “The Next Plague Is Coming. Is America Ready?” | >

But there’s a recent lesson worth learning from. Globalization and automation caused upheaval in the manufacturing industry from the 1980s through the early 2000s, and millions of factory workers lost their jobs. The disruption to communities is still being felt, and is arguably at the root of a lot of the biggest social and economic problems of this era.

Some big ideas are starting to percolate. But less dramatic ones might work, too.

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As technology changes the way people live and work, cities are undergoing an unprecedented transformation. Those that have the infrastructure and strategy to manage this rapid technological shift are set to become the most competitive.

Globally, city economies in India, Vietnam and China have the strongest short-term momentum. The pace and scale of change in these markets is extraordinary, as they build out their skylines and infrastructure platforms to meet booming demand. While these changes present opportunities, many of these cities are facing challenges to their longer-term development prospects, with strains on infrastructure, high levels of inequality, issues around affordability, and environmental degradation.

Such rapid transformation is often eye-catching. But it is cities that are investing in a sustainable future, and laying the groundwork for ongoing success, that deserve recognition. These cities are “future-proofing” to ensure positive, long-term momentum. Key elements of future-proofing include: the ability to drive and manage technological change; infrastructure that contributes to a high quality of life; a long-term city vision; and attracting and retaining talent.

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I love clearing the air with a single dismissive answer to a seemingly complex question. Short, dismissive retorts are definitive, but arrogant. It reminds readers that I am sometimes a smart a*ss.

Is technical analysis a reasoned approach for
investors to predict future value of an asset?

In a word, the answer is “Hell No!”. (Actually, that’s two words. Feel free to drop the adjective). Although many technical analysts earnestly believe their craft, the approach has no value and does not hold up to a fundamental (aka: facts-based) approach.

One word arrogance comes with an obligation to substantiate—and, so, let’s begin with examples of each approach.

Investment advisors often classify their approach to studying an equity, instrument or market as either a fundamental or technical. For example…

  • Fundamental research of a corporate stock entails the analysis of the founders’ backgrounds, competitors, market analysis, regulatory environment, product potential and risks, patents (age and legal challenges), track record, and long term trends affecting supply and demand.A fundamental analysis may study the current share price, but only to ascertain the price-to-earnings ratio compared to long term prospects. That is, has the market bid the stock up to a price that lacks a basis for long term returns?
    .
  • On the other hand, a technical approach tries to divine trends from recent performance—typically charting statistics and pointing to various graph traits such as resistance, double shoulders, and number of reversals. The approach is more concerned with assumptions and expectations of investor behavior—or hypotheses and superstition related to numerology—than it is with customers, products, facts and market demand.

Do you see the difference? Fundamental analysis is rooted in SWOT: Study strengths, weaknesses, opportunities, and threats. Technical analysis dismisses all of that. If technical jargon and approach sound a bit like a Gypsy fortune teller, that’s because it is exactly that! It is not rooted in revenue and market realities. Even if an analyst or advisor is earnest, the approach is complete hokum.

I have researched, invested, consulted and been an economic columnist for years. I have also made my mark in the blockchain space. But until now, I have hesitated to call out technical charts and advisors for what they are…

Have you noticed that analysts who produce technical charts make their income by working for someone? Why don’t they make a living from their incredible ability to recognize patterns and extrapolate trends? This rhetorical question has a startlingly simple answer: Every random walk appears to have patterns. The wiring of our brain guarantees that anyone can find patterns in historical data. But the constant analysis of patterns by countless investors guarantees that the next pattern will be unrelated to the last ones. That’s why short term movement is called a “random walk”. Behaviorists and neuroscientists recognize that apparent relationships of past trends can only be correlated to future patterns in the context of historical analysis (i.e. after it has occurred).

Decisions based on a technical analysis—instead of solid research into fundamentals—is the sign of an inexperienced or gullible investor. Some advisors who cite technical charts know this. Technicals have no correlation to long term appreciation, asset quality or risks. They only point to short term possibilities.

The problem with focusing on short-term movement is that you will certainly lose to insiders, lightning-fast program traders, built in arbitrage mechanisms and every unexpected good news/bad news bulletin.

If you seek to build a profit in the long run, then do your research up front, enter gradually, and hold for the long term. Of course, you should periodically reevaluate your positions and react to significant news events from trusted sources. But you should not anguish over your portfolio every day or even every month.

  • Know your objectives
  • Set realistic targets
  • Research by reading contrarians and skeptics (They help you to avoid confirmation bias)
  • Study comparables and reason through the likelihood that another technology or instrument poses a threat to the asset that interests you
  • Then, invest only what you can afford to lose and don’t second guess yourself frequently
  • Dollar-cost-average
  • Revaluate semi-annually or when meeting with direct sources of solid, fundamental information

Finally, if someone tries to dazzle you with charts of recent performance and talk of a “resistance level” or support trends, smile and nod in approval—but don’t dare fall for the Ouija board. Send them to me. I will straighten them out.

Who says so? Does the author have credentials?

I originally wrote this article for another publication. Readers challenged my credentials by pointing out that I am not a academic economist, investment broker or financial advisor. That’s true…

I am not an academic economist, but I have certainly been recognized as a practical economist. Beyond investor, and business columnist, I have been keynote speaker at global economic summits. I am on the New Money Systems Board at Lifeboat Foundation, and my career is centered around research and public presentations about money supply, government policy and blockchain based currencies. I have advised members of president Obama’s council of economic advisors and I have recently been named Top Writer in Economics by Quora.

Does all of this qualify me to make dismissive conclusions about technical analysis? That’s up to you! This Lifeboat article is an opinion. My opinion is dressed as authoritative fact, because I have been around this block many times. I know the score.

Related:

Philip Raymond co-chairs CRYPSA, hosts the Bitcoin Event and is keynote speaker at Cryptocurrency Conferences. He sits on the Lifeboat New Money Systems board. Book a presentation or consulting engagement.

We shouldn’t underestimate the powerful attraction of a ‘sustainable blue economy’, which – I firmly believe – will feed and support the lives of our children and those who come after them. Getting it right – whether through aquaculture, offshore energy, green shipping or ecotourism – is vital not just for SDG14, but for the future of the global commons, and for humankind itself. To do this we must move with purposeful steps. Here are five that could be taken immediately.

Curtail subsidies

Let us stop throwing good money after bad, and resolve to prohibit subsidies that support harmful and illegal fishing. A critical opportunity to eliminate them is looming at the 2019 ministerial meeting of the World Trade Organisation. It must not be missed.

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From the figures above, the past year has highlighted how pretty much anything can be put on the blockchain as a way of raising capital. But as it provides access to greater liquidity to investors rather than a conventional equity investment, it’s also demonstrating how a tokenized world is steadily being seen as the norm.

As Krauwer states, though, for an actual token economy to emerge, buyers would need insight in what they buy. “Token owners would need to know how they can keep track of the underlying asset. In addition, they would need a way to store their tokens and trade them with others.”

Not only that, but sellers would benefit from such a platform that would capture their assets in a token and connect them with possible buyers. Additionally, providing some type of quality assurance on top of the tokens would help too.

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