Sunday, March 22, 2015

Drones and privacy A looming threat - The Economist


A looming threat 

Mar 19th 2015, 22:32 BY K.K. | WASHINGTON, DC
UNMANNED aircraft, otherwise known as drones, are becoming common. Many are familiar with America’s use of armed drones in Pakistan, Yemen and elsewhere, but drones are increasingly being used by other parts of the government, as well as by companies and individuals. Drones can be far cheaper to operate than anything that requires an on-board pilot, and they are handy for making maps and taking pictures and videos. The FBI uses a small fleet of drones for law-enforcement surveillance. Customs and Border Patrol uses them to monitor the American border with Mexico (though the programme was recently found to be ineffective and expensive). Commercial drones are now regularly used for real-estate photography and to monitor oil and gas pipelines, among many other applications.
The proliferation of drones—which include both small fixed-wing aircraft and small rotorcraft with multiple propellers—raises some vexing public-policy questions. In an effort to safely integrate drones of all sizes into American airspace, the Federal Aviation Administration (FAA) is now figuring out how to regulate the small ones (ie, less than 55 pounds). As drones acquire so-called “sense and avoid” technology to automatically avoid collisions, the FAA and the aviation industry more broadly must parse thorny questions about how to either prevent accidents involving flying robots or assign liability in the inevitable event of one.
But questions of air safety are relatively straightforward compared to another broad set of concerns that drones raise: how do they impact privacy? At issue is the way some drones can loiter overhead for long stretches, engaging in what is called “persistent surveillance”. As drones—and other airborne surveillance platforms, such as circling manned aircraftand lighter-than-air craft—become cheaper and more effective, persistent aerial surveillance could become the norm, and no privacy or transparency measures currently exist in the law. So figuring out how to protect privacy without pre-empting innovation is as tricky as it is necessary. On February 15th, the same day the FAA announced its new proposed rules for small drones, Barack Obama published a memorandum calling on government agencies to study the matter. The president also called on an agency in the Commerce Department to examine the privacy implications of drones used by individuals and corporations.
The current state of the law—both legislation and court decisions—is poorly suited to deal with persistent surveillance. This is because privacy law is tailored to questions of whether one is in public—an open field—or in a space where one has a “reasonable expectation of privacy”. The Supreme Court has, at times, expanded such spaces, for instance finding in 1967 that the FBI cannot eavesdrop on conversations in telephone booths without a warrant. But in this era of “big data”, the line between public and private can no longer be delimited by physical boundaries.
Complicating matters, there is no clear line between episodic surveillance—a snapshot—and persistent surveillance, even though the effects are profoundly different. As Justice Sonia Sotomayor pointed out in a 2012 case, incremental observations by the government may not violate a person’s privacy, but the sum total do. It’s the difference between a snapshot and an overhead video that shows the comings and goings of everybody in a city over the course of a week. In such a video, a so-called “pattern-of-life” emerges. Any still frame from the video might be a defensible incursion on privacy, yet the whole video is something more than the sum of these parts.
What are the dangers of such videos? Plenty of similar information is available from mobile-phone records, which track the physical position of their users. Indeed, many technologies, from mobile telephony to e-mail, have been widely adopted before their impacts on privacy could be parsed by either consumers or regulators. But therein lies the value of regulating drones. As Ryan Calo, a University of Washington law professor, optimistically suggests, drones may serve as a “privacy catalyst”. Once regulators assess the ramifications of persistent aerial surveillance, he argues, they may then turn to the privacy implications of a whole host of other gadgets and innovations.
Discussions about privacy often involve the question of why it is something worth protecting. People tend to invoke Louis Brandeis and Samuel Warren’s definition of privacy in 1890 as the “right to be let alone”. But this view does not fully capture the purpose of privacy in modern society. A better explanation comes from Julie Cohen at the Georgetown Law School, who argues that “the liberal self and the liberal democratic society are symbiotic ideals.” So persistent surveillance—whether through monitoring internet browsing habits or from a drone overhead—undermines the formation of liberal individuals in the way that an over-reliance on GPS undermines the formation of a sense of direction. This is because pervasive surveillance tends to shape the actions, thoughts and personalities of those being observed. Such changes happen gradually, even imperceptibly. But ultimately excessive surveillance encourages people to behave predictably. To oversimplify her argument, democracy needs privacy to breathe.
It is worth noting that not all persistent drones are a threat to privacy—NASA’s Global Hawk Earth science missions, for instance, are exactly what they claim to be: new tools for studying hurricanes and other natural phenomena. But it is essential that these questions about drones and privacy are being asked now. This is because the “reasonable expectation of privacy” test depends on whether technologies are already widely adopted. If no restrictions are put in place and persistent drones become more common, then the legal system allows the fait accompli to stand.
It is unclear whether Mr Obama is serious about addressing the privacy concerns raised by drones. His February memorandum had large carve-outs for “law enforcement or national security” that could undermine his attempts to address “privacy, civil rights, and civil liberties concerns”. However, if he is serious, restrictions on persistent surveillance would be a fine place to start.

Saturday, March 21, 2015

China will not thank perfidious Albion for joining its new bank - Financial Times

March 18, 2015 at 2:59pm
http://www.ft.com/intl/cms/s/0/870e470a-cbc1-11e4-aeb5-00144feab7de.html#axzz3UhmLHn6Y

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Jamil Anderlini in Beijing

All of Beijing’s diplomatic dealings with Britain start from a position of injured pride

The UK’s decision to join China’s new alternative to the World Bank has disrupted London’s “special relationship” with the US and left seasoned Sinologists and diplomats scratching their heads.
What does Britain possibly hope to gain by signing up to an institution so clearly aimed at challenging the US-led postwar global order?


The most convincing answer seems to be UK chancellor George Osborne’s desire to place the City of London at the front of the queue of European cities hoping to become offshore financial centres for China and the renminbi.
In private conversations last week, Treasury officials gloated about how the move gave London an advantage over Frankfurt in the race to attract Chinese business.
But following the decisions this week by Germany, France and Italy to join the bank, it is unclear how much of a first-mover advantage Britain has got.
Mr Osborne’s explanation that the UK wants to join China’s Asian Infrastructure Investment Bank to ensure it is ethical, transparent and efficient is unpersuasive.
For one thing, it is doubtful that China would change the way it operates the AIIB just to please the UK.
In acknowledging Britain’s “application to join” the bank last week, Beijing said it would consult more than 20 other countries that have already signed up and get back by the end of March with a decision on whether the UK is allowed into the club.
It is inconceivable the UK would have risked public rebuke from Washington only to be turned down in its attempt to join the new bank. But the lukewarm Chinese response does suggest a misjudgment of what might be gained from this move.
In the case of New Zealand, until this week the only other “western” country to join China’s AIIB, the motivation is clear and rational.
Wellington is pursuing a traditional “vassal state” policy vis-à-vis Beijing in order to secure its supply of dairy products to the growing Chinese middle class, by far its biggest single market.
The Kiwi kowtow appears to have worked quite well but British attempts to curry favour are met with a very different response. One prominent Chinese commentator who works at a top government think-tank in Beijing said in international organisations Britain acted as “America’s thug for hire”.

Europeans defy US to join China-led development bank
France, Germany and Italy have all agreed to follow Britain’s lead and join a China-led international development bank, according to European officials, delivering a blow to US efforts to keep leading western countries out of the new institution.
Continue reading
To understand the sentiment behind such remarks, British policy makers need a clear understanding of history and the way it is taught and viewed in China.
Very few British adults have a working knowledge of the opium wars, the history of gunboat diplomacy or the legacy of Britain’s “unequal treaties” and colonial subjugation in China.
In stark contrast, every single Chinese primary school student can rattle off a long list of national humiliations suffered at the hands of barbarian invaders, led by the UK and later Japan.
Several weeks ago in a village in rural China, a seven-year-old boy accosted a Financial Times reporter and demanded to know why he had burnt down the Summer Palace in Beijing.
All of China’s diplomatic dealings with Britain start from this position of injured pride, so acts of apparent British goodwill are often greeted as a cunning ploy or with a special contempt reserved for a weak, failed empire.
The UK’s historical handicap when it comes to China appears poorly understood by modern British politicians.
Perhaps this is partly because old-fashioned Foreign Office Sinologists are often sidelined in favour of salespeople who can rack up investment and trade deals.
But even if Britain’s actions are viewed from a purely commercial perspective, they still do not seem to make much sense.
London is one of the world’s top financial centres and Chinese financial flows will naturally gravitate there no matter what her majesty’s government does to “accommodate” Beijing.

Q&A: the Asian Infrastructure Investment BankThe Asian Infrastructure Investment Bank is one of four institutions created or proposed by Beijing in what some see as an attempt to create a Sino-centric financial system to rival western dominated institutions set up after the second world war.
Continue reading
The same goes for Chinese trade and investment, which soared spectacularly even in the 18-month period when Britain was in diplomatic deep-freeze following Prime Minister David Cameron’s public meeting with the Dalai Lama.
Both measures have carried on growing roughly as before, even after the series of conciliatory moves the US is so unhappy about.
Perhaps there is a more prosaic and petty explanation for this latest move.
Late last year, as China prepared to unveil the new AIIB, several European countries including Luxembourg and Germany came quite close to signing up to the bank — a move they thought would help them to promote their own financial centres to the Chinese.
They decided against it then, in part because of perceived opposition from the US and UK.
Maybe by allowing them to believe there was a united front against joining the AIIB, perfidious Albion was able to get one over on its European rivals, if only for a few days and even if the prize was not really worth the effort.

Friday, March 20, 2015

Warren Buffett Tells You How to Turn $40 into $10 Million - Motley Fool Australia

http://offers.fool.com.au/warren-buffett-tells-you-how-to-turn-40-dollars-into-10-million-nav/?source=atsfbfba0040001&utm_source=facebook&utm_medium=sponsoredsocialpost&utm_campaign=buffettinvest_clicks&&utm_content=outrageousbuttrue

By Patrick Morris
Warren Buffett is perhaps the greatest investor of all time, and he has a simple solution that could help an individual turn $40 into $10 million.
A few years ago, Berkshire Hathaway CEO and Chairman Warren Buffett spoke about one of his favorite companies, Coca-Cola, and how after dividends, stock splits, and patient reinvestment, someone who bought just $40 worth of the company's stock when it went public in 1919 would now have more than $5 million. 
Yet in April 2012, when the board of directors proposed a stock split of the beloved soft-drink manufacturer, that figure was updated and the company noted that original $40 would now be worth $9.8 million. A little back-of-the-envelope calculation of the total return of Coke since May 2012 would mean that $9.8 million is now worth about $10.8 million.
The power of patience
I know that $40 in 1919 is very different from $40 today. However, even after factoring for inflation, it turns out to be $540 in today's money. Put differently, would you rather have an Xbox One, or almost $11 million?
But the thing is, it isn't even as though an investment in Coca-Cola was a no-brainer at that point, or in the near century since then. Sugar prices were rising. World War I had just ended a year prior. The Great Depression happened a few years later. World War II resulted in sugar rationing. And there have been countless other things over the past 100 years that would cause someone to question whether their money should be in stocks, much less one of a consumer-goods company like Coca-Cola.
The dangers of timing
Yet as Buffett has noted continually, it's terribly dangerous to attempt to time the market:
"With a wonderful business, you can figure out what will happen; you can't figure out when it will happen. You don't want to focus on when, you want to focus on what. If you're right about what, you don't have to worry about when"
So often investors are told they must attempt to time the market, and begin investing when the market is on the rise, and sell when the market is falling. 
This type of technical analysis of watching stock movements and buying based on how the prices fluctuate over 200-day moving averages or other seemingly arbitrary fluctuations often receives a lot of media attention, but it has been proved to simply be no better than random chance.

Investing for the long term

Individuals need to see that investing is not like placing a bet on number 32 on the roulette wheel, but instead it's buying a tangible piece of a business.
It is absolutely important to understand the relative price you are paying for that business, but what isn't important is attempting to understand whether you're buying in at the "right time," as that is so often just an arbitrary imagination. In Buffett's own words, "if you're right about the business, you'll make a lot of money," so don't bother about attempting to buy stocks based on how their stock charts have looked over the past 200 days. Instead always remember that "it's far better to buy a wonderful company at a fair price."

Be your own Warren Buffett

If you're interested in creating your own version of this story, it's essential to find investments that stand the test of time. To help out in your search, for a limited time we're sharing the names of two ASX companies that meet the stringent criteria our analysts require when seeking out incredible long term investing opportunities. Our analysts are calling it "Warren Buffett's Greatest Wisdom", and thousands of investors have already capitalised on similar research we've released. Make sure to access your free copy today by clicking here now.

Wednesday, March 18, 2015

China’s money magnet pulls in US allies - FINANCIAL TIMES

http://www.ft.com/intl/cms/s/0/cd466ddc-cbc7-11e4-aeb5-00144feab7de.html?siteedition=intl#axzz3UhmLHn6Y

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Gideon Rachman

Diplomatic debacle over AIIB will make America look isolated and petulant
The story of the Asian Infrastructure Investment Bank is turning into a diplomatic debacle for the US. By setting up and then losing a power struggle with China, Washington has sent an unintended signal about the drift of power and influence in the 21st century. 
As soon as China made clear, back in 2013, that it intended to establish the bank, the US set about persuading its allies to boycott the new institution. The Americans argued that the new Beijing-backed bank might follow less scrupulous lending standards than the World Bank on issues such as clean government and environmental standards. 


But it was also pretty clear that this was a power struggle. The World Bank is based in Washington and its president has always been an American. The AIIB, a potential rival, will be based in Shanghai and China is the leading shareholder.
Initially Japan, South Korea and Australia decided to stand aside from the AIIB, as did all the big European nations. But the news that Britain now intends to join the new bank as a founder member looks like opening a decisive crack in the anti-AIIB front. 
I spent last week in South Korea and most analysts there believe it is only a matter of time before the Seoul government signs up. Australia is already reconsidering its position and other large EU states are likely to follow Britain’s lead. At that point, the only significant holdouts would be Japan and the US. That would look very bad for America. Rather than rallying its friends in a principled opposition to a flawed venture, the AIIB episode will make the US look isolated and petulant.
The story will be all the sweeter for China because it has had a bad couple of years in its developing struggle with America for power and influence in Asia. By taking an increasingly aggressive stance in territorial disputes with its neighbours, it had inadvertently managed to strengthen America’s position as a series of countries — including the Philippines, Japan, Australia and India — moved to bolster diplomatic and security ties with the US.
But China seems to have learnt from this experience. In recent months it has been less overtly confrontational towards its neighbours and instead stressed its desire to build economic ties — including a new Silk Road of trade and infrastructure through Central Asia, matched by a “maritime silk road” across the seas of Southeast Asia. The AIIB could play a big role in financing these initiatives. 
The hope is to persuade Asian nations that, rather than facing a threat from the rise of China, they stand to benefit from its growing wealth. Most of China’s neighbours — as well as the British, who have their own hopes for attracting Chinese investment — seem to have concluded that it would be foolish to miss out.
The big question . . . is whether America’s military muscle will ultimately matter more than China’s economic might
The AIIB episode demonstrates that, in the struggle for influence in Asia, China’s strongest card is its growing economic power. America’s strongest card, by contrast, is its military might and its network of security treaties. The countries caught in between face a dilemma. Japan, Australia, the Philippines and South Korea all have security treaties with the US. But every one of them now does considerably more trade with China than the US. 
South Korea, for example, relies on American power to ward off North Korea and perhaps, one day, as a hedge against China itself. But China now takes more than a quarter of South Korean exports compared with about 12 per cent that go to America. 
As a result, the South Koreans are frequently pulled in two directions. The AIIB is one example. Another is a fierce debate in the country about whether to accede to a US request to install an anti-missile system that might be useful defending against the North — but which the Chinese see as a threat to their own security.
The AIIB episode will only increase American and Japanese incentives to conclude negotiations on the Trans-Pacific Partnership, a trade agreement that would bring together 12 Pacific nations, but which rather pointedly does not include China. Once again, the Americans argue that this is a question of maintaining standards of economic openness rather than any effort to build an anti-Chinese bloc. But even some of their allies do not wholly buy this argument and some mutter that it is a bit peculiar to build a new trade agreement that excludes China, the leading trading power in the Asia-Pacific region. 
The big question in this Asian arm-wrestling match between the US and China, is whether America’s military muscle will ultimately matter more than China’s economic might. The answer will vary issue by issue. But, in general, the more a country feels threatened by China, the more it is likely to lean towards America. That is why Japan is likely to be the last big Asian holdout against the AIIB. By contrast, if China is sensible enough not to show its fists too often, it has a good chance of seeing its economic might gradually translate into increasing political and diplomatic weight — even with close allies of America. 
There was a time when the world was said to bow down before the mighty dollar. But the story of the AIIB suggests that these days, even many of America’s closest allies, have renminbi signs in their eyes.

Tuesday, March 17, 2015

More Sex—and 7 Other Benefits for Men Who Share in the Housework - TIME

http://time.com/3732185/men-at-home/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A%20timeblogs%2Fcurious_capitalist%20%28TIME%3A%20Business%29

March 5, 2015
    

8 reasons why it's good for men to embrace their inner feminist.

As Sheryl Sandberg likes to say, if a woman can’t find a partner, she should consider another woman—for the sake of equality, of course. Study after study shows that same-sex couples are more egalitarian, meaning they split chores, decisions and finances more evenly than the rest of us.
Us hetero gals aren’t so lucky, at least not yet. While the men in our lives may want to be all 50/50 when it comes to work and chores (and indeed, some of them are) it just doesn’t usually happen that way in practice. Gender roles run deep, and women still do the vast majority of the domestic work.
But if 2014 was the year of the female protagonist, then this will be the year of male feminist as icon. I’m not talking about men marching down Fifth Avenue (though I’d welcome it) but subtly adapting to the way things ought to be: New research shows there are more stay-at-home dads now than ever; and men of all walks are demanding more in the way of work-life balance, even if it means ridicule from their peers (or ignorant talk radio hosts).
Men are suiting up for more than just the rec football league—they’re suiting up in the kitchen. And if they’re cooking, it means they’re probably cleaning too, which would explain why proud fathers and sensitive betas are suddenly dominating the ad world, too. (Swiffer? A guy’s gotta mop the floor. Nissan SUV? It’s for shuttling kids to soccer practice, obviously.)
Now they’re entering the feminist Public Service Announcement circuit, which typically gets very active around this time of year. (It’s Women’s History Month, after all.) There is a new film, The Mask You Live In, that tackles our narrow definitions of masculinity. (It’s available for screenings in schools). There is a three-day conference—the first ever to take on “masculinities studies”— in New York City the first weekend in March. There is a campaign from the United Nations, He for She, to engage men on the topic of gender equality. You may remember the rousing opening speech to the campaign, from non-man but one of that gender’s favorite people, Emma Watson.
And now there is Lean In Together, a partnership between Sheryl Sandberg’s women’s nonprofit, LeanIn.org (where, in full disclosure, I am a contributing editor) and the NBA, to encourage men to support women at home and work. As Sandberg and business professor Adam Grant put it in a New York Times op-ed, the final in a four-part series on women and work, “equality is not a zero-sum game.” In other words: It’s good for men, too.
It’s easy to understand how women benefit from men doing their share both at home and at the office. When men chip in at home, women thrive at work (and feel less resentful and guilty). When men advocate for female colleagues in the office, women rise up. Yet beyond the obvious—that, uh, it’s the right thing to do—how do men benefit from the extra effort?
From raising healthier daughters to more sex at home, here are eight reasons why men supporting women is actually good for men.

1. Sex. You’ll Have More of It.
Call it the economics of choreplay: women are turned on by the idea of a man with his elbows up to suds. Sure, maybe they have a Mr Clean fetish, or maybe they’re just freaking exhausted, and not having to do the dishes for one night might put her in the mood. These days, women are the primary or co-breadwinners in two-thirds of American households, yet only 9% of dual-income marriages share childcare, housework and breadwinning evenly. Which means that when the first shift (work) is over, the second shift (home, dinner, laundry, dishes) begins. Which puts this next statistic into context: When couples share chores and breadwinning more equally, divorce rates go down. Men who share in dishwashing and diaper changing have happier wives, and more stable marriages.
When marriages are happy, couples, ahem, have more sex. So, the laundry: strip down and toss it in.
2. Your Daughters Will Have Higher Self-Esteem.
Engaged fatherhood is good for all kids: tots of more involved dads are better off cognitively, emotionally, socially and, ultimately, educationally and economically. But fathers have a particularly measurable impact on girls, whose self esteem develops —and then often falls—as early as middle school. Daughters with active fathers have more autonomy. They are more empowered. And if they watch their dad do chores, they’re actually more likely to aim higher. As Sandberg and Grant write, a study by a University of British Columbia psychologist found that when fathers shouldered an equal share of housework, their daughters were less likely to limit their aspirations to stereotypically female occupations (like nurse or teacher). “What mattered most was what fathers did, not what they said; no amount of saying ‘you can do anything’ is as compelling for a daughter as witnessing true partnership between her parents,” they write. For a girl to believe she has the same opportunities as boys, it makes a big difference to see Dad doing the dishes.”

3. You’ll Breed Feminist Sons.
And that will start the cycle over, as studies have found that boys who grow up in more equal homes are more likely to create equal homes as adults. As Sandberg and Grant point out, the flip is true too: sons reap rewards when their mothers have meaningful roles at work.

4. You’ll Be Happier.
This one’s for dads: Employed fathers who spend more time at home with their kids actually feel greater job satisfaction and less work-life conflict, according to a recent study. They’re also less likely to consider quitting their jobs.
5. You’ll Live Longer.
Caring for kids has been shown to make men more patient (ha!), empathetic and flexible, as well as lower their rates of substance abuse. Fatherhood has also been linked to lower blood pressure and lower rates of heart disease. But also: there’s longevity, even if you don’t have kids. Studies have found that there’s a longevity boost for men (and women) who provide care and emotional support to their partners.

6. You’ll Be More Successful At Work.
Know this, male bosses: diverse teams perform better. And when it comes to women specifically, here are a few attributes: they put in more effort, stay longer on the job, take fewer unnecessary risks, and collaborate more. (It’s no surprise, perhaps, that successful venture-backed start-ups have more than double the median proportion of female executives to failed ones.) But this isn’t just about women: companies that have family-friendly work environments are actually more productive, and higher employee retention.
7. Your Company Will be More Profitable. 

Companies with more women in leadership perform better — full stop. Twenty-five percent of U.S. GDP growth since 1970 is attributed to women entering the paid workforce, and economists estimate that bringing more women into the workforce could raise GDP by 5%.

8. You’ll Get a Free Pass to the Revolution.And free passes rock.
Jessica Bennett is a contributing columnist at Time.com covering the intersection of gender, sexuality, business and pop culture. She writes regularly for the New York Times and is a contributing editor on special projects for Sheryl Sandberg’s women’s nonprofit, Lean In. You can follow her @jess7bennett.

Sunday, March 15, 2015

U.S. Attacks Britain Over Support For China-Backed Bank - Financial Times

http://time.com/3743845/us-uk-china-bank-criticism/

March 13, 2015
    
Kim Kyung Hoon—ReutersU.S. President Barack Obama gestures next to China's President Xi Jinping during the APEC leaders' meeting at the International Convention Center at Yanqi Lake in Beijing on Nov. 11, 2014.

In a rare public spat between the two allies, an Obama aide has criticized the U.K's stance toward Beijing


The U.S. government has expressed its disapproval of the U.K.’s application to become a founding member of the $50 billion Asian Infrastructure Investment Bank (AIIB), the first G7 country to do so since the institution was launched last year to provide funds for infrastructure in the Asia-Pacific region.
“We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power,” a senior Obama administration official told the Financial Times on Thursday. The statement marks a rare breach in the “special relationship” that has long defined U.S. – U.K. relations.
Washington officials view the Beijing-led institution with suspicion, fearing it will not meet the standards of governance and safeguards set by the Washington-based World Bank and the International Monetary Fund (IMF), and the Japanese-backed Asia Development Bank.
The White House has been lobbying its allies not to join the AIIB, concerned that China is trying to extend its reach in the region and that the bank could end up being overly influenced by Beijing foreign policy if it has veto power over decisions.
Meanwhile British Chancellor George Osborne, the driving force behind the U.K.’s decision to join the bank, said in a statement that Britain should be involved early on to promote “closer political and economic engagement” with the Asia-Pacific region and encourage the two regions “to invest and grow together.”

Tuesday, March 10, 2015

Top City financiers warn investors over Grexit chaos - Financial Times

http://www.ft.com/intl/cms/s/0/f3cf544c-c199-11e4-8b74-00144feab7de.html?siteedition=intl#axzz3TyS4PYAi

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March 9, 2015 9:17 am

Top City financiers warn investors over Grexit chaos

Patrick Jenkins, Financial Editor
Author alerts

Investors are underestimating the chaos that a Greek exit from the eurozone could trigger, many of the City of London’s top financiers have warned.
The immediate financial fallout from a possible “Grexit” has been mitigated over the past couple of years, as banks have shored up finances and cut exposures. But according to a poll of the FT City Network — the Financial Times’s forum of chairman and chief executives from across the banking, insurance, investment and broader business communities — markets are too sanguine about the knock-on risks.


Disintegration of both the eurozone and the EU are the biggest threats, the forum warned. “Neither the eurozone, nor perhaps even the EU itself could survive a stampede out the door,” said Xavier Rolet, chief executive of the London Stock Exchange.
Tidjane Thiam, chief executive of insurer Prudential, said: “Financial markets seem remarkably relaxed about a potential Grexit; they believe that either it will not happen, or it will not matter. That belief deserves to be challenged.”
Grexit would “accelerate a dismantling of euroland”, warned Robert Swannell, chairman of Marks and Spencer. It would be a “signpost for others to follow in times of distress”, echoed Sir Roger Carr, chairman of BAE Systems.
Although Greece has struck a deal to extend its current €172bn bailout by four months, Athens is rapidly running out of cash to pay its debts. There is little sign that creditor countries, led by Germany, are willing to release rescue funds without politically difficult economic reforms.
If Greece was forced to default on some of its debts, it could rekindle massive bank withdrawals, which hit €12.8bn in January. Eurozone officials have long feared that a bank run could lead to an “accidental” Greek exit, because the European Central Bank could be forced to cut off emergency loans to insolvent banks. Without the ECB assistance, Athens would be forced to print its own currency to restart its financial sector. 


Monthly debates on topical issues by an invitation-only panel of more than 50 of the City of London’s most influential individuals
Read the full transcript of this month’s debate here 
Read previous debates here
Although Greek markets have been volatile, the yield on 10-year government bonds is now back below 10 per cent, following the bailout extension deal. Other government bond yields across the eurozone periphery have moved to record low territory, with Italy’s and Spain’s 10-year yielding just 1.35 per cent and Portugal’s 1.87 per cent. 
Two members of the FT City Network — M&S’s Mr Swannell and Stephen Hester, head of insurer RSA — described Greece’s continued position within the eurozone, or indeed the project as a whole, may be akin to “an emperor with no clothes”.
Mr Hester was among a small minority who argued that the eurozone should take a more aggressive stance, triggering Grexit if the Greek government baulks at further reforms. “If Greece isn’t prepared to reform enough to stay in I don’t think the EU should risk the knock-on political dangers of too much compromise towards Greece that could halt reform in other member states,” he said.
Describing the situation as a tragedy, Helena Morrissey, who heads fund manager Newton as well as trade body the Investment Association, said reforms that created mass unemployment were “surely a pyrrhic victory”.

Monday, March 9, 2015

Why Finance Is Still a Problem - TIME

http://time.com/3736713/american-finance-problem/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

    
Elizabeth Renstrom for TIME

Inequality, tepid job growth, lack of innovation are partially the result of finance's warped incentives


Warren Buffett warned investors that bankers were still up to their old tricks in his recent investor letter. Vanguard founder Jack Bogle is writing about how high fee mutual funds are ripping off investors and endangering retirement security. And Fed Chair Janet Yellen is touting new, tougher capital rules for “Too Big to Fail” banks. Despite the recovery and strong jobs numbers last week, the re-regulation of the financial sector isn’t yet finished. But a deeper worry, and one that’s taking center stage amongst academics, is the fact that finance has yet to be re-moored to the real economy. That may be dampening the recovery for many.

A growing slew of research, including several just-published papers, has found that over a multi-decade period, the rise of finance is associated with lower capital investment in the real economy, greater inequality, and the demise of more productive industries. Brandeis International Business School professor Stephen G. Cecchutti, and Enisse Kharroubi, a senior economist at the BIS, recently published a paper entitled “Why Does Financial Sector Growth Crowd Out Real Economic Growth?”

The answer: because finance looks for quick growth rather than long-term rewards. And because finance wants to invest in industries like real estate and construction where there are tangible assets to be collateralized, rather than intangible assets like the ideas and intellectual property that typically power more productive sectors like, say, technology, pharmaceuticals, or advanced manufacturing. What’s more, the disproportionate pay of bankers (they still make about three times what their similarly well-educated colleagues in other sectors do, even post crisis) continues to lure talent away from areas that create more and better jobs for the population as a whole. “When I was at MIT many years ago,” says Cecchutti, “everyone wanted to work in cold fusion or recombinant DNA. By the 1990s, nobody wanted to do that.” Solution? “I think we should take some proportion of the smartest people in the room and make sure they don’t go into finance,” says Cecchutti, only half joking.
Part of the problem with the rise of finance is that it encourages the culture of shareholder value over all else. That means CEOs focus more on buoying stock prices rather than making the best long-term decisions. The effects can be seen in the fact that since the 1980s, share buybacks and dividend payments have increased in direct proportion to a decrease in productive capital investment, according to a recent Roosevelt Institute paper entitled “Disgorge the Cash: The Disconnect Between Corporate Borrowing and Investment.”
What’s more, says JW Mason, a Roosevelt fellow who authored the paper, the low interest rates that have prevailed particularly since the 2008 crisis have sped up the trend as firms actually borrow money at lower rates to do more buybacks, rather than invest in the real economy. (The later is, by the way, what the Fed’s easy money policy was intended to encourage.) In fact, business investment dropped 20 % since 2008, as almost all borrowing went back to investors in the form of such payments. “It may be that we need to move to a more active control of investments to make sure that useful projects get funded,” says Mason, who says a kind of “World Bank for the US” might be one answer.
All this dovetails with the country’s inequality problem, which is an issue that will be big in the 2016 election cycle. As Wallace Turbeville, a Demos fellow who has done yet another influential paper on financialization points out, both the Republican and Democratic positions on inequality are lacking. Conservatives believe in bootstrapping, and liberals in redistribution of wealth. But if the very structure of our capitalism is designed to reward mainly elites (something Thomas Piketty’s best seller Capital in the 21st Centurypointed out so well last year), then no amount of redistribution or hard work can fix the problem.

We need to fix the structure of capitalism itself and, in particular, figure out a way to make it work better for the masses. Turbeville has some of his own ideas about how to do this, including incentivizing long-term share ownership over high-speed trading, and limiting the use of derivatives. I hope that the economic debate in the primary season will be filled with many more.

Saturday, March 7, 2015

Mark Zuckerberg Has Advice for Young People Who Want to Change the World - TIME

http://time.com/3735363/mark-zuckerberg-young-people/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

March 6, 2015
    

The Facebook founder and CEO knows experience isn't everything

Advice is a valuable commodity when it comes to learning leadership. But according to Mark Zuckerberg, sometimes listening to yourself is the most important advice.
The Facebook CEO held a town hall-style question and answer session at Mobile World Congress in Barcelona on Mar. 4, where he addressed topics such as his hiring practices, the ideal team size and working with Sheryl Sandberg.
But one of the most insightful moments from the Q&A came when Zuckerberg was asked what advice he had for young people with world-changing ideas. The 30-year-old billionaire said, “The most important thing is to just have faith in yourself and trust yourself. When you’re young, you hear that you don’t have experience to do things, that there are people that have more experience than you. [But] I started Facebook when I was 19.”

“Don’t discount yourself, no matter what you’re doing,” he continued. “Everyone has a unique perspective that they can bring to the world.”

Thursday, March 5, 2015

8 Outstanding Google Tools You Should Know About - TIME

http://time.com/3722820/8-outstanding-google-tools/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

March 2, 2015
    

Which of these tools and resources can give you the competitive advantage?


While approximately 101 percent of this article’s readers routinely use Google to find everything from business plan templates to the best places to buy chinchilla food, Google’s moved well past the search niche. In fact, chances are Google offers up a few services you’ve never heard of that might be beneficial to your business. Here are just a few:

1. Google Trends

What it is: A site to discover how popular certain searches have been on Google historically, as well as what’s popular right now.
Why it’s useful: Want to be ahead of the social media zeitgeist? This is a great place to start. It’s a feature-packed site; you can survey trending YouTube videos as well.
Pro tip: Use the optional forecast checkbox to anticipate whether interest in a particular topic is expected to rise over time.

2. Google Cloud Platform

What it is: A platform that allows you to build applications, host websites, analyze data, and much more, via Google’s scalable infrastructure.
Why it’s useful: Similar to Amazon Web Services, Google Cloud Platform is an easy way for entrepreneurs to focus on building their concept, as opposed to worrying about the backend layer. Customers include little-known startups such as Best Buy, Snapchat, Coca-Cola, and Sony Music.
Pro tip: You can get $300 in credit towards a 60-day free trial. Even better: The trial is entirely free; you won’t be billed unless you decide to keep your account after the trial.

3. Google Wallet

What it is: Google Wallet makes it easy to pay–not just online, but in stores too–and it works with any debit or credit card.
Why it’s useful: Paying is made not only seamless: it’s so mobile-friendly that you can make payments while you’re waiting in line.
Pro tip: Owe a colleague money for dinner last night? In Gmail, there’s a new-ish “attach money” icon that will let you send money quickly and easily using Google Wallet.

4. YouTube Trends Dashboard

What it is: A handy tool to figure out what’s trending on YouTube.
Why it’s useful: What are women aged 65 watching? What are men ages 25 to 34 in Cincinnati sharing most often? With the Trends Dashboard, you can tap into the zeitgeist quickly and easily.
Pro tip: Compare the “Most Shared” (across Facebook and Twitter) with “Most Viewed” to get a sense of what content gets viewed often but shared infrequently.

5. Google Bookmarks

What it is: Using the easy browser bookmarklet, save shortcuts to your favorite webpages and navigate to them in seconds, from anywhere.
Why it’s useful: We don’t rely on bookmarks as we used to a decade ago, but they’re still a great way of keeping track of critical links you might need later.
Pro tip: Export your bookmarks with just one click to an HTML page, which you can embed into an external-facing website, style with CSS, or simply share as an email attachment.

6. Google Career Search

What it is: As you might expect, you can use this tool to land a job at Google.
Why it’s useful: Tired of the entrepreneurial life? If you’re looking for something more stable, you can’t do much better than Google.
Pro tip: You can use your Google profile information to help you find jobs relevant to your background.

7. Google Keep

What it is: Google Keep lets you easily jot down whatever’s on your mind via a beautiful, simple interface.
Why it’s useful: Share any one individual note with a collaborator, create to-do lists, drop an image into notes as needed, and organize notes using eight color options.
Pro tip: Don’t want to forget to do something? No problem: You can easily turn any note into a date or location-activated reminder.

8. Display Benchmarks Tool

What it is: Find out how your display advertising campaigns are doing compared with industry averages.

Why it’s useful: Looking to get an understanding of how different ad sizes and formats typically do in head to head competition? This tool lets you get updated industry benchmarks on what’s working and what isn’t.

Wednesday, March 4, 2015

Mark Zuckerberg Doesn’t Want All the Credit for Bringing the Internet to More People - TIME

http://time.com/3728715/zuckerberg-internet-org-facebook-mwc/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

March 2, 2015
    
David Ramos—Getty ImagesFounder and CEO of Facebook Mark Zuckerberg speaks during his keynote conference during the first day of the Mobile World Congress 2015 at the Fira Gran Via complex on March 2, 2015 in Barcelona, Spain.

"It's really important not to lose sight of the fact that people driving this are the operators"

Mark Zuckerberg kept a low profile Monday during his Mobile World Congress keynote about Internet.org, Facebook’s project to spread Internet connectivity to underserved areas with wireless carriers’ help.
The Facebook founder downplayed his company’s role in Internet.org, instead urging the audience to recognize the work and investments of mobile carriers. Zuckerberg delivered his keynote alongside executives from three global telecommunications companies.
“While it’s sexy to talk about [Internet.org’s Internet-beaming] satellites, the real work happens here, by the companies. It’s really important not to lose sight of the fact that people driving this are the operators,” Zuckerberg said. “Too often Internet.org is conflated with Facebook.”
People in the parts of the developing world where Internet.org’s appis available get access to Facebook, Google search and some other services for free. But the end goal is to convince these users to eventually purchase data plans from wireless carriers — and so far, Internet.org has been successfully driving new smartphone use.
“It Colombia, it’s very encouraging to see about 50% more people in three weeks in our network as new data users,” said Mario Zanotti, senior EVP of Latin America at telecom company Millicom. “In Tanzania, we have seen a ten-fold increase in the number of smartphone sales since we launched the [Internet.org] campaign. So it’s pretty impressive numbers.”
Despite Zuckerberg’s efforts to highlight the work of Internet.org’s carrier partners, it’s hard to see the project being successful without Facebook’s involvement. Zuckerberg’s company has largely spearheaded the organization’s efforts, while its offerings in the Internet.org app, like Facebook Messenger, are a big draw to attract users.
However, some mobile carries could be worried that Facebook might cannibalize their voice and texting plans with its own services. Last year, Facebook acquired chat app WhatsApp, which became popular as means of avoiding wireless carriers’ texting fees.

“This is a point of tension between operators and Facebook in particular. It’s a consideration for any company to be careful to deliver the ‘key’ to the competitor,” said Jon Fredrik Baksaas, CEO of telecom company Telenor. “You really want to watch that ‘key’, and you want to control how that ‘key’ develops. That’s where the disruption comes.”