The Champions of the 401k Lament the Revolution They Started “Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket.” --Eric Hoffer. | "The most radical revolutionary will become a conservative the day after the revolution." --Hannah Arendt | "Could you have ruined yourself somehow?" --Hannah and Her Sisters [more inside]
The World's Largest Hedge Fund Is Building an Algorithmic Model of Its Founder's Brain - "Mr. Dalio has the highest stratum score at Bridgewater, and the firm has told employees he has one of the highest in the world. Likewise, Bridgewater's software judges Mr. Dalio the firm's most 'believable' employee in matters such as investing and leadership, which means his opinions carry more weight. Mr. Dalio is always in search of new data with which to measure his staff. He once raised the idea of using head bands to track people's brain waves, according to one former employee. The idea wasn't adopted." [more inside]
This Is Your Life, Brought to You by Private Equity [The New York Times] Since the financial crisis, the private equity industry has become hugely influential. As part of our series on what that means, here’s how the industry’s influence plays out in your daily life. [more inside]
The economic geography of a universal basic income - "An underdiscussed virtue of a universal basic income is that it would counter geographic inequality even more powerfully than it blunts conventional income inequality. By a 'universal basic income', I mean the simple policy of having the Federal government cut periodic checks of identical dollar amounts to every adult citizen, wherever they may live. Importantly, a universal basic income would not be calibrated to the local cost of living. Residents of Manhattan would receive the same dollar amount as residents of Cleveland. But a dollar in Cleveland stretches much farther than the same dollar in Manhattan..." [more inside]
Tyler Cowen is an economics professor and chairman / general director of the Mercatus Center at George Mason University. Since April 2015, he has been hosting "Conversations with Tyler", lengthy, one-on-one podcast interviews with "thought leaders from across the spectrum — economists, entrepreneurs, authors and innovators. All have one thing in common — they are making an impact on the world because of their ideas." His latest is with Steven Pinker. [more inside]
AT&T Agrees to Buy Time Warner for More Than $80 Billion [The Washington Post] “AT&T’s ambitious move to acquire Time Warner for more than $80 billion, which the Wall Street Journal first reported could be announced as soon as Saturday, would singlehandedly turn America’s second-largest wireless carrier into a content powerhouse and one of the most prominent TV, film and video-game producers in the world. AT&T and Time Warner did not immediately respond to requests for comment.” [more inside]
Wells Fargo Fined $185 Million for Fraudulently Opening Accounts [The New York Times] “For years, Wells Fargo employees secretly issued credit cards without a customer’s consent. They created fake email accounts to sign up customers for online banking services. They set up sham accounts that customers learned about only after they started accumulating fees. On Thursday, these illegal banking practices cost Wells Fargo $185 million in fines, including a $100 million penalty from the Consumer Financial Protection Bureau, the largest such penalty the agency has issued. Federal banking regulators said the practices, which date back to 2011, reflected serious flaws in the internal culture and oversight at Wells Fargo, one of the nation’s largest banks. The bank has fired at least 5,300 employees who were involved. In all, Wells Fargo employees opened roughly 1.5 million bank accounts and applied for 565,000 credit cards that may not have been authorized by customers, the regulators said in a news conference. The bank has 40 million retail customers.” [more inside]
"The reason your neighborhood increasingly resembles a hometown mall is because somebody’s banker prefers it that way," writes Patrick Clark at Bloomberg.com. [more inside]
From deities to data - "For thousands of years humans believed that authority came from the gods. Then, during the modern era, humanism gradually shifted authority from deities to people... Now, a fresh shift is taking place. Just as divine authority was legitimised by religious mythologies, and human authority was legitimised by humanist ideologies, so high-tech gurus and Silicon Valley prophets are creating a new universal narrative that legitimises the authority of algorithms and Big Data." [more inside]
How big data increases inequality and threatens democracy - "A former academic mathematician and ex-hedge fund quant exposes flaws in how information is used to assess everything from creditworthiness to policing tactics, with results that cause damage both financially and to the fabric of society. Programmed biases and a lack of feedback are among the concerns behind the clever and apt title of Cathy O'Neil's book: Weapons of Math Destruction." [more inside]
Just print money and give it to everyone by Chris Arnade: "The usual answer to why we don't do this is that it isn't politically feasible and there is no precedent. 1) That has never stopped bank bailouts, which often require a great deal of political and regulatory ingenuity to jam through. (TARP cough TARP) 2) It is a symptom of a system built by and for the bankers to benefit themselves. It is the equivalent of saying, 'We can't do it because we have never wanted to do it'. That we don't do it this way isn't just a small economic quibble with no impact. The most visceral anger I hear from voters across the country is directed at bank bailouts, which they see as evidence of a rigged system. They are right. The system is rigged in the sense that our primary method to stimulate the economy also conveniently bails out bankers." (previously; via) [more inside]
The Economic Lessons of Star Trek's Money-Free Society - "[Manu Saadia] points to technologies like GPS and the internet as models for how we can set ourselves on the path to a Star Trek future. 'If we decide as a society to make more of these crucial things available to all as public goods, we're probably going to be well on our way to improving the condition of everybody on Earth', he says. But he also warns that technology alone won't create a post-scarcity future... 'This is something that has to be dealt with on a political level, and we have to face that.' " (via) [more inside]
Vitalik Buterin invented the world's hottest new cryptocurrency and inspired a movement — before he'd turned 20 - "I think a large part of the consequence is necessarily going to be disempowering some of these centralized players to some extent because ultimately power is a zero sum game. And if you talk about empowering the little guy, as much as you want to couch it in flowery terminology that makes it sound fluffy and good, you are necessarily disempowering the big guy. And personally I say screw the big guy. They have enough money already." [more inside]
Don’t Know What To Read? Let Goldman Sachs Tell You. [Melville House] "Goldman Sachs: financial giant, hotbed of enthusiasm for subprime mortgages, and hapless recipient of your hard-earned money. Who better to tell you what to read? Well, now they are telling you what to read, in the form of a recently-published recommended book list [PDF]. We’re talking about people who incurred $550 million in fines for schemes to turn a profit on the civilization-threatening financial crisis they themselves had helped create, and the line between genius and chutzpah is notoriously hard to draw, so, yeah, I’d like to know what’s on these folks’ bedside tables."
In his follow-up to Sapiens, Yuval Noah Harari envisions what a 'useless class' of humans might look like as AI advances and spreads - "I'm aware that these kinds of forecasts have been around for at least 200 years, from the beginning of the Industrial Revolution, and they never came true so far. It's basically the boy who cried wolf, but in the original story of the boy who cried wolf, in the end, the wolf actually comes, and I think that is true this time." [more inside]
In case you were wondering about [a conspicuous lack of] the Koch Brothers' involvement in the 2016 US political elections, here is the inside scoop. [more inside]
Kennedy was right - "Much that is valuable is neither tangible nor tradable... Gross domestic product (GDP) is increasingly a poor measure of prosperity. It is not even a reliable gauge of production."* [more inside]
World After Capital by Albert Wenger [Work in Progress; GitHub; GitBook; PDF; FAQ] - "Technological progress has shifted scarcity for humanity. When we were foragers, food was scarce. During the agrarian age, it was land. Following the industrial revolution, capital became scarce. With digital technologies scarcity is shifting from capital to attention. World After Capital suggests ways to expand economic, informational and psychological freedom to go from an industrial to a knowledge society." (previously)
Is Britney Spears Ready To Stand On Her Own? by Serge F. Kovaleski and Joe Coscarelli [The New York Times] For years, the life of one of the world’s most successful pop stars has been controlled by a court-approved conservatorship, designed for people who cannot take care of themselves. [more inside]
Elizabeth Warren has a great idea for making Tax Day less painful - "She's taking on TurboTax and other predatory companies." [more inside]
Mother Jones profiles subprime lending in the used car industry:
Credit Acceptance makes its loans knowing that a large portion of its customers won't have the happy endings advertised in the promotional materials. The company operates on the assumption that it will collect only about 70 percent of the money it lends out—which means it will end up repossessing an awful lot of cars and suing those customers for the balance. As Wall Street banks clamored for more securities built on subprime auto debt, Credit Acceptance pumped out ever more paper, boosting loan volume by 23 percent in 2010 and 30 percent in 2011. (Growth has been slower in subsequent years due to increased competition, notes the company's 2014 annual report.) In the meantime, subprime lenders have boosted their average interest rate on used cars from 16 percent to nearly 20 percent annually, guaranteeing that more customers will default and end up with punitive court judgments and garnished wages.[more inside]
an introduction to fiat money (pdf) by Steve Randy Waldman:* - "Self-reinforcing bootstrap dynamics hold as strongly for a king's token as it would for any other thing, but much more stably so, since the king can reinforce and assure the stability of his token so long as he retains the political capacity to coerce or persuade payment of tax." (via) [more inside]
Jane Mayer takes on the Koch Brothers [1,2,3] - "For decades, billionaire libertarians Charles and David Koch have spent millions trying to reduce the size of government and slash regulations, making the brothers a target of the political Left and campaign finance reformers. But few people have dug deeper into the Koch empire and family history than New Yorker staff writer Jane Mayer, author of the new book 'Dark Money'. Among other revelations, she alleges that the brothers hired private detectives to investigate her after she published articles critical of them. We talk to Mayer about the book and about what the rise of Donald Trump means for the Kochs and their allies." (previously)
"The idea of owning a free-standing home on a quarter-acre block. It’s just not feasible."--The Guardian reports on the Death of the Great Australian Dream. [more inside]
Remember this scene in Ferris Bueller's Day off? Those were the open outcry commodity trading pits at the Chicago Board of Trade, which were founded in 1848 and finally shut down last July, replaced entirely by computers. These were four guys (and one woman) in the funny coloured jackets: An oral history of the pits. (Compiled by John McDermott for MEL Magazine, a medium publication) [more inside]
How do you make a secure record of a debt or exchange if you can't read or write? Cut a number of notches across a stick to symbolize the assets involved, then split the wood lengthwise: you now have two tamper-proof receipts, one for each party to the transaction. The split tally method formed the basis for much of European bookkeeping between medieval times and the modern era. [more inside]
Helicopter drops might not be far away - "Central banks could be given the power to send money, ideally in electronic form, to every adult citizen. Would this add to demand? Absolutely."
A Reddit thread recently broke down the exchange rate between Wizard and Muggle money, and in doing so shed some interesting light on the financial disparity between many of the characters in the Harry Potter universe. [more inside]
Blogger suggests that a win For Hillary Clinton's methods on the way to the White House is a loss for participatory democracy. Alongside the quiet rollback of Obama's ban on contributions from federal lobbyists within the DNC comes what appears to be a novel tactic to maintain control of the nomination process by the Democratic establishment or HRC: the formation of fundraising agreements between HRC and state Democratic parties. The implications for participatory democracy do not seem good given that state parties with their success financially tied to HRC's success must oversee very narrow caucuses and primaries.
In Sweden, a Cash-Free Future Nears - "Few places are tilting toward a cashless future as quickly as Sweden, which has become hooked on the convenience of paying by app and plastic." [more inside]
A Colleague Drank My Breast Milk And Other Wall Street Tales I kept the conversation light. I shared a funny story about my first day on Wall Street, when I opened up a pizza box to find condoms instead of pepperoni slices. Unwrapped. I was “the new girl,” and the guys just wanted to see me blush. I did blush, and I lived. “It’s not that bad anymore,” I said with a laugh. [more inside]
In the 2016 elections, the goal of the Koch network of contributors is to spend $889m, more than twice what they spent in 2012.
Dark Money though prominent is not confined to the political right.
How dark money affects elections.
Dark Money though prominent is not confined to the political right.
How dark money affects elections.
It was 2008, after the Lehman Brothers bankruptcy. Markets were in turmoil. Banks were failing left and right. I worked at a major investment bank, and while I didn’t think the disastrous deal I’d done would cause its collapse, my losses were quickly decimating its commodities profits for the year... [more inside]
For the Wealthiest, a Private Tax System That Saves Them Billions -"The very richest are able to quietly shape tax policy that will allow them to shield billions in income." (via) [more inside]
Venture capitalist Paul Graham starts 2016 with an essay on Economic Inequality
Since the 1970s, economic inequality in the US has increased dramatically. And in particular, the rich have gotten a lot richer. Some worry this is a sign the country is broken. I'm interested in the topic because I am a manufacturer of economic inequality. I've become an expert on how to increase economic inequality, and I've spent the past decade working hard to do it.[more inside]
A Slate piece discusses the problem with our society lionizing individuals who engage in extreme forms of thrift, and how it obscures the actual financial issues people face. (SLSlate)
The Bonds of Catastrophe - D. Graham Burnett
It is perhaps not widely understood (outside the specialized domains of risk modeling and property insurance) that the last twenty years have seen the relatively rapid growth of a new kind of financial instrument: the catastrophe bond. I aim in what follows to offer the reader a brief introduction to these innovative money-things, which sit at the precarious nexus of mathematical modeling, environmental instability, and vast sums of capital.[more inside]
Rewrite the rules to benefit everyone, not just the wealthy - "If there's one thing Joseph Stiglitz wants to say about inequality, it's that it has been a choice, not an unexpected, unfortunate economic outcome. That's unnerving, but it also means that citizens and politicians have the opportunity to fix the problem before it gets worse." (via) [more inside]
The Rumpus is not of the same world as The Huffington Post, and therein lies the problem with this conversation: somewhere along the line, in an important and valuable attempt to be pay writers better, the issue of what any given publication could legitimately afford was thrown out the window. Paying writers = the right side of history, period. If you don’t have the financial backing of venture capital or a man with a lot of money, you shouldn’t even exist. Your continued dedication to existence is in fact offensive to the very writers you claim to nurture. [...] I’m sensitive to this issue as a website that was unable to pay most of its writers from our inception in 2009 until late 2013. We didn’t have the money to pay them, that’s just a fact. The money did not exist, we could not summon it from the sky; we’re lesbians, we inherently lack rich husbands. Maybe that means we should’ve given up, I’m not sure, but that makes me really frightened for the future of independent journalism by and for populations even more disenfranchised than our own. How can we advocate for both disenfranchised writers and disenfranchised publishers? Because the thing is… Not paying your writers SUCKS.- Autostraddle: The “Who Pays Writers” Conversation Needs a Little Nuance
The Future of (Post)Capitalism - "Paul Mason shows how, from the ashes of the recent financial crisis, we have the chance to create a more socially just and sustainable global economy." (previously; via) [more inside]
The Color of Debt: How Collection Suits Squeeze Black Neighborhoods — a ProPublica investigation into racial disparities in debt collection lawsuits [more inside]
Breaking the Tragedy of the Horizon – climate change and financial stability: Bank of England Governor Mark Carney warns investors face 'huge' climate change losses - "The Financial Stability Board, an international body monitoring the global financial system that Mr Carney chairs, may recommend G20 countries make it easier for investors to compare the 'carbon intensity' of different assets." [more inside]
It’s sleazy, it’s totally illegal, and yet it could become the future of retirement. Is it time to bring back the tontine? [more inside]
Adam Davidson,The V.C.s of B.C.
Through a series of incredibly unlikely events, archaeologists have uncovered the comprehensive written archive of a few hundred traders who left their hometown Assur, in what is now Iraq, to set up importing businesses in Kanesh, which sat roughly at the center of present-day Turkey and functioned as the hub of a massive global trading system that stretched from Central Asia to Europe. Kanesh’s traders sent letters back and forth with their business partners, carefully written on clay tablets and stored at home in special vaults. Tens of thousands of these records remain. One economist recently told me that he would love to have as much candid information about businesses today as we have about the dealings — and in particular, about the trading practices — of this 4,000-year-old community.[more inside]
Felix Salmon reports on the continuing saga of Cooper Union (previously on MetaFilter). With NY Attorney General Eric Schneiderman's recent intervention, the school appears ready to stop digging its financial grave, but blocks away, faculty, staff, and students believe a similar story is playing out with New York University's NYU 2031 initiative. The plan, described as "a real estate deal" in a private conversation with an NYU trustee, is the brainchild of controversial NYU president John Sexton. [more inside]
FINLAND: New Government Commits to a Basic Income Experiment - "The Finnish government of Juha Sipilä is considering a pilot project that would give everyone of working age a basic income."[1,2,3] (via) [more inside]
Big Pot: the California Democratic party added marijuana legalisation to its party platform - "Earlier this year Founders Fund, a venture capital firm co-founded by Peter Thiel, led a $75m investment round into Privateer, a private equity group focused on cannabis. It is the biggest single investment in the US cannabis industry to date: 'What Privateer is doing is looking like a Procter & Gamble or a Coca-Cola approach. The real value in the market is going to be having the Coke-calibre brand...' Meanwhile, a distinctly California-style backlash is already growing [and] the US has become an exporter of illegal cannabis to Mexico, as cultivation in the US has increased." [more inside]
"They Don’t Give a Damn about Governing... Once allied with but now increasingly hostile to the Republican hierarchy, conservative media is shaping the party’s agenda in ways that are impeding Republicans’ ability to govern and to win presidential elections."
In case you missed it Ethereum announced its first developer release a week ago. What is Ethereum? According to the video it's a "planetary scale computer powered by blockchain technology." Given the breathlessness, some skepticism is in order, but what if it purports to do on the tin is true? [more inside]