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America’s long-running economic expansion

Originally published at economist.com on Thursday, 14 December 2017, 3:50:08 pm UTC

THERE is often more fakery than truth in a tweet from President Donald Trump. But on one subject he is broadly right. America’s economy is in good shape. Business confidence is high. Jobs are plentiful. Last month non-farm companies added 228,000 workers to their payrolls. The unemployment rate is 4.1%, the lowest figure for more than a decade. The availability of jobs is drawing more of the working-age population into the labour force. Wages are growing in real terms with some of the biggest gains going to low-paid workers.

Mr Trump over-eggs things, of course. He claims each good jobs report and each new peak in the S&P 500 as his own achievement. In fact, he was lucky in his inheritance. The market has risen by 25% since his election, but is up by 195% since 2009. The unemployment rate fell from a peak of 10% to 4.7% under Barack Obama and then to 4.1% on Mr Trump’s watch. His administration says that a mix of deregulation and corporate-tax cuts will spur sustained GDP growth of 3...


Bitcoin is a speculative asset but not yet a systemic risk

Originally published at economist.com on Thursday, 14 December 2017, 3:50:08 pm UTC

FINANCIAL markets rarely miss opportunities to make money. That is as true of cryptocurrencies as anything else. Trading in bitcoin futures began on the Chicago Board Options Exchange this week; CME Group will launch its own futures on December 18th (see article). That has given a further boost to the digital currency’s price, which is up by 1,550% this year. Such phenomenal returns are drawing in waves of speculative money. But is there a fundamental case to invest in bitcoin?

The usual tools of finance are no guide. An equity is a claim on the assets and the profits of a firm; a bond entitles the investor to a series of interest payments and repayment on maturity. Bitcoin brings no cashflows to the owner; the only return will come via a rise in price. When there is no obvious way of valuing an asset, it is hard to say...


Film remakes that should stay on the storyboard

Originally published at economist.com on Thursday, 14 December 2017, 3:50:08 pm UTC

ORIGINALITY is hardly the hallmark of today’s film industry. The biggest film of 2017 at the American box office is a remake of “Beauty and the Beast”; it will be surpassed by “The Last Jedi”, which opens this week and is the squillionth episode of the Star Wars saga. The ten highest-grossing films in Hollywood this year are all sequels or remakes.

As the film industry struggles to reverse a decline in box-office receipts (see article), it will keep returning to the comfort of the familiar. Franchises like Star Wars will steamroller on. Remakes are trickier. Well over 100 are thought to be in the works, from “Private Benjamin” to “Fantastic Voyage”. Some will get a 2018 twist: the mark in “Dirty Rotten Scoundrels”, a 1980s comedy about two con artists, is a tech billionaire. But not all. The following projects are rumoured to be under way in...


Regulators should reject Perry’s plan for coal in America

Originally published at economist.com on Thursday, 14 December 2017, 3:50:08 pm UTC

WINTER is coming to America. That simple statement of fact ought not to send shivers down policymakers’ spines. But Rick Perry, the energy secretary, sees it as a call to arms. To defend Americans from blizzards, polar vortices and other treacherous weather which, he says, threatens the country’s electricity grid, he proposes throwing a multi-billion-dollar lifeline to struggling coal-fired and nuclear plants if they can keep emergency fuel on standby for 90 days.

On December 8th the Federal Energy Regulatory Commission (FERC) was given a 30-day grace period to decide whether to support Mr Perry’s plan. It should refuse to do so, or substantially amend it. His scheme is a confection of bad policy, faulty economics and thinly disguised patronage. But it also raises a genuinely difficult question: how to keep grids working smoothly in an era of cheap natural gas, which is hard for baseload power plants to compete with, and renewable energy, which is dependent on the vagaries of the...


What to do about China’s “sharp power”

Originally published at economist.com on Thursday, 14 December 2017, 9:03:21 am UTC

WHEN a rising power challenges an incumbent one, war often follows. That prospect, known as the Thucydides trap after the Greek historian who first described it, looms over relations between China and the West, particularly America. So, increasingly, does a more insidious confrontation. Even if China does not seek to conquer foreign lands, many people fear that it seeks to conquer foreign minds.

Australia was the first to raise a red flag about China’s tactics. On December 5th allegations that China has been interfering in Australian politics, universities and publishing led the government to propose new laws to tackle “unprecedented and increasingly sophisticated” foreign efforts to influence lawmakers (see article). This week an Australian senator resigned over accusations that, as an opposition spokesman, he took money...


A Spreadsheet Way of Knowledge

Originally published at capitalmusings.com on Friday, 24 October 2014, 8:52:52 pm UTC

In honour of Spreadsheet Day and the 35th Anniversary of Visicalc, Steven Levy republishes a piece from 1984, where he described how the spreadsheet was changing the business world. The piece foreshadows the rise of modern Silicon Valley: “Entrepreneurs and their venture-capitalist backers are emerging as new culture heroes, settlers of another American frontier.” The […]


Ebola’s Economic Fallout Can’t Be Quarantined in Africa

Originally published at capitalmusings.com on Wednesday, 22 October 2014, 1:40:57 am UTC

As the IMF decreases its growth forecast for sub-Saharan Africa to 5.0% from 5.5%, Bloomberg drills down on the details, covering everything from tourism impact to companies with direct exposure in the region. Companies mentioned include: Resolute Mining (RSG), Dangote Group, Intercontinental (IHG), Marriott (MAR), Nestle (NESN), Diageo (DGE), SABMiller (SAB), and MTN Group (MTN). […]


Is great TV doomed to be niche?

Originally published at capitalmusings.com on Monday, 25 August 2014, 9:18:15 pm UTC

As some viewers may be aware, summer is when the networks (even the internet ones like Netflix) are taking breaks from their anchor programming. We thought these doldrums were a good time to revisit some of the media industry’s inflection points as a way to put our era’s media disruption into historical context. The late […]


Black Swan Seed Rounds

Originally published at capitalmusings.com on Tuesday, 29 July 2014, 6:07:37 am UTC

Sam Altman, the newly appointed President of Y-Combinator, describes the contrarian nature of his black swan seed rounds. He writes, “The most striking observation is that, in my experience, the ‘hot seed rounds’ that everyone is fighting to get in are anti-correlated with very successful investments. […] The hotly-competed seed investments I’ve made have underperformed. […]


First mention of Apple Computer in 1978

Originally published at capitalmusings.com on Wednesday, 2 July 2014, 5:09:34 pm UTC

An article from The Wall Street Journal in 1978 describes how investors are using computers to manage their portfolios. One of the brands available? Apple Computer. WSJ: April 17, 1978: Apple Computer?