Given that both The Economist and The Wall Street Journal have covered the impossibility of pension funds achieving their expected returns, this reality cannot be a surprise to anyone in a leadership role. [...] Here's problem #1 in a nutshell: the average public pension fund still expects to earn an average annual return of 7.69%, year after year, decade after decade.

This is roughly triple the nominal (not adjusted for inflation) yield on a 30-year Treasury bond (about 2.65%). The only way any fund manager can earn 7.7% or more in a low-yield environment is to make extremely high risk bets that consistently pay off. //&! Millennials are first gen to have earned less in their 20's than previous gens. - bit.ly/2a9M98K

Not since the 1860s have the UK worker experienced falling real earnings over a ten-year period. [...] credit helped the country along for decades.

The idea is that if stocks are rising, bond yields should be climbing too. Here's how to reconcile it. The answer is central banks. If rates are going to stay lower for longer; if more rounds of quantitative easing are coming; if new ways of easing are coming -- the rates should be going down and stocks moving higher. [...] It's about dividends paying more than bonds. 90% of the bond market universe is near 2% or lower. //&! http://www.zerohedge.com/news/2016-07-12/germany-about-sell-zero-coupon-10-year-bonds-first-time-ever //&! http://www.zerohedge.com/news/2016-07-13/we-just-found-out-who-has-been-buying-all-these-record-low-yielding-bonds - When your nation's bonds are trading with a record low 28bps negative yield (10Y JGBs), everything else in the world (aside from Swiss 10Y) is a relative 'value'...

via Keister Report - https://youtu.be/fbh3rndGDN8 // a Italian banking crisis could topple them. that is why they (their economist) called for a EU bank bailout (shore up). //&! IMF Warns Of "Global Contagion" From Italy's Bank Crisis; Forecasts Two-Decade Long Recession - http://bit.ly/29sFINn - [...] "Unless asset quality and profitability problems are addressed in a timely manner, lingering problems of weaker banks can eventually weigh on the rest of the system," //&! http://www.zerohedge.com/news/2016-07-09/charting-epic-collapse-worlds-most-systemically-dangerous-bank //&! Analyst Warns Deutsche Bank's Problems May Now Be "Insurmountable" - http://bit.ly/29LwUjv - [...] we believe DBK is still over 40x levered. [...] Seeking outside capital is also likely to be difficult as management would likely find it hard to offer any type of return on new capital invested. //&! its known balance sheet - http://bit.ly/29usGKG - 1.74 trillion balance sheet!

"With foreign exchange risks, even if the value of the overseas property rises, any gains will be eroded if the country's currency depreciates against the Singapore dollar," Mr Tok explained. // Chinese (and Asian) love their Betongold (most likely to be around 50% of their portfolio). Now in the hole because GBP lost 10%. But doesn't account for Yuan depreciation/devaluation.

// housebuilding shares hammered. property funds close redemption possibility bc of too much redemption - bank run - funds have to sell some investments at a loss to repay investors. // what is weighting UK economy is too much debt to gdp (bank bailout), consumer credit (boe sounded alarm bells before brexit vote) and too much leverage. //&! Planet Ponzi Paperback (2012) by Mitch Feierstein //&! UK better out w problems of PIGS, Italy, and banking problem.

The financial crisis of 2006/7 turned into a recession prolonged by a failure to manage monetary demand efficiently to achieve target inflation. With the failure of Lehman Bros interbank markets froze and banks stopped commercial lending. Since then a mixture of quantitative easing and distortingly low interest rates has only managed to create the illusion of a boom as bubbles have developed in property and other asset prices.

Flaunting your wealth. No connection w your culture and heritage. [...] also land taxes based on property value make it not affordable for some ... [...] Chinese love their property, half of their wealth/portfolio ... // http://www.theglobeandmail.com/report-on-business/top-business-stories/canadian-house-prices-from-overvaluation-to-downright-zany/article30535075/ &! http://www.cbc.ca/news/business/canada-banks-mortgage-1.3643793 - Canadian banks could survive a 25% house price decline, Moody's says. Banking system would be fine even if Toronto and Vancouver see a crash, ratings agency says.

the odds of another crisis are higher than a rally to fresh records. [...]
“The 2009-2015 rally originated from two main drivers: a massive stimulus, and credit expansion in China,” said Goette, who’s a partner at his firm in Zug, Switzerland and helps oversee 1 billion Swiss francs ($1 billion).

“European earnings have not followed suit so far. Skepticism regarding central-bank operations has started to emerge.”

Australia - http://i.imgur.com/bOhBdBS.png

Blanchflower: Global economy "feels a little bit like 2008" Interest rates will likely fall further in Britain and remain at near record low levels until 2021, [...] Blanchflower described the backdrop to the committee's decision in March 2009 to cut rates to 0.5% as catastrophic. He said the MPC at the time had wished to avoid a death spiral. Britain was plunged into its deepest-ever recession in 2008 as confidence in banks collapsed and investment dried up. "We cut rates in November 2008 by 150 basis points (1.5%). It was clear that we should have cut by more but didn't because of the panic that it might have caused," he said. "It was absolutely clear that this (the financial crisis) was something we had not seen in a generation. We learned that the scale of the shock was enormous." [...] mortgage rates are 31% lower than before the crisis, while savers may have lost £106bn due to record low rates. //&! bbc.in/1YeqV87 &! bbc.in/1LGOxAf - central banks understated deflation pressure!

Growth is tepid, productivity is poor, and inflation is too low: all is not going according to policymakers’ masterplans [...] As far as the OECD is concerned, monetary policy is being forced to take too much of the strain. Its chief economist Catherine Mann made the point that lasting recovery required three things: stimulative monetary policy; activist fiscal policy; and structural reform. The OECD wants the second of these ingredients to be added to the recipe in the form of increased spending on public infrastructure, something it says would more than pay for itself at a time when governments can borrow so cheaply.

growth at all cost - is gone. // What's the math? - "Hype Smoothie" - how mutual funds and private equity value their investments?

Wohl dem, der Immobilien, Anteile an Familienfirmen oder Sammlerobjekte besitzt. Die Preise für Vermögenswerte sind 2015 so stark gestiegen wie kaum je zuvor. Schlechter sieht es für Normalsparer aus.

[ Lord Adair Turner book & Richard Koo; banks tend 2 lend 2 property & land rather than productivity/businesses. risk averse, if the family cant pay the mortgage any more, than at least u have not lost all the money! less risky! Its also partly rentier behaviour of banks. // also BOE has to be concerned about future disposable income; rent & utilities eating up 50%-75% of income thus less for consumption! ] “Landlords’ balance sheets are looking healthier than at any point since 2014, and property investors are looking at an excellent rate of return from their portfolios.” Gill warned that changes to stamp duty announced in chancellor George Osborne’s Autumn Statement and due to take effect on 1 April – people selling buy-to-let investments will pay an extra 3% – were bad news for landlords. But overall, the “consistent and developing lack of housing for across all tenures, for a spiralling population” meant the level of demand for rental properties would not reduce, he said.

"There are not perfect markets, and there is no perfect planner. [...] we will never arrive at perfect solutions. [...] market will never allocate perfectly ... [...] market will always tend to lend to property and land, and less into productive means (businesses = risk of 100 loss, land or property ... you have a loss when you sell it. << China, UK ) [...] not all credit is good credit. [...] need for macroprudential policy to dampen bubbles bc rate hikes could dampen normal non-speculative area of economy. ie loan to value limits [...] interest rate setting is blunt hammer that people though is the magic wand along the line of self-regulation, free market, neoliberalism and trickle-down [...] GFC can be traced back to the 60-70's - macroecon + micro with absurd assumptions (ie rational expectations, equilibriums, no bubbles) & math & pure theoretical base (no empirical analysis ie of what banks really do ie greed) = makes job of economist as policy advisor real easy.

[ gov is not co-owner of private property! Make away with Nurse Bursaries and other gov support for education. But support the property price! by keeping supply always lower than demand. and use policy to increase demand w subsidies! where to put their savings! & subsidy for builders ] Rising house prices across much of England mean a government scheme to help buyers of newbuild property may have made more than £200m for the Treasury in its first two-and-a-half years. The help-to-buy equity loan scheme gives buyers an interest-free loan for five years in return for a percentage stake in their property. When the home is sold, the buyer returns the same percentage of the sale price, meaning that any fall or rise in house prices affects the return. Analysis by property firm Hometrack and shared with the Guardian suggests that a surge in house prices in some areas means the total value of homes bought through the scheme since its launch in April 2013 has increased by more than £1bn.

The sudden and sizable valuation markdowns of high-flying private companies like Snapchat, Dropbox and Zenefits by mutual fund investors has been one of the biggest stories in tech, sowing fears that the market is deflating. They’ve also caused consternation among founders, who have had to defend their companies’ earlier valuations to employees.

The tourist analogy comes from Mohamed El-Erian, chief economic advisor at the German financial company Allianz and former CEO of mutual fund giant Pimco. He fleshes out his theory of “tourist dollars” in his new book, The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse, describing what happens in emerging economies like Brazil and India when investors from the developed world respond to slow economies at home by seeking more profitable climates abroad. Ranjan Roy, a former emerging-market currencies trader who now runs a tech startup, wrote a Medium post this week connecting El-Erian’s “tourist” theory to the mutual fund investors that have flooded Silicon Valley with cash in recent years. The post was pretty convincing, so we decided to see if El-Erian agreed. He does. And he worries about what those tourist dollars are doing to the locals. [...] they don’t re-up [ like VC's and real Angels would do ] [...] push to stretch for return.

[ micro/macro econ policy folly / error to promote home ownership. the only asset of UK households hold ... has to be kept afloat! by any means necessary. + Help to Buy ] The way the government intends to pay for its plans to allow social tenants in England to buy their homes is "extremely questionable", MPs say. The Commons Communities Committee criticised the funding model for the right-to-buy scheme, which will see housing associations reimbursed for selling homes to tenants at discounts. [ AND WITH THE MONEY THEY WANT TO BUILT STARTER HOMES FOR THE 30-20% of UK HOUSEHOLDS THAT CAN AFFORD A DOWN PAYMENT OF A 250-400k HOME. ] &! bit.ly/1hpXShr - PM will promise to tear up planning rules in effort to encourage developers to build more housing for first-time buyers //&! Buy to Rent w its tax breaks is a subsidy for privileged! & MPs say it should be paid for directly rather than via council house sales. Ministers say it will help create a million new homeowners by 2020.

central banks have few avenues left to explore to encourage investment and boost growth. Talk of an impending recession in the US, however, is creating speculation among investors that the federal reserve will put on hold its attempts to normalise rates. “The ‘fear factor’ in markets has morphed from being about an emerging market hard-landing and collapsing oil prices to being about the extent of the slowdown in the developed world and the ability of central banks to reflate asset values yet again,” said analysts at Citi in a note. //&! Yield on Japan's 10-year bonds falls below zero - bit.ly/1Leu3JC - Germany, France and the Netherlands are among the countries to see their bonds soar in value, though Switzerland (not in the G7) is the only other country to see demand outstrip supply to such an extent that the yield has dropped below zero. Bonds worth about $7tn (£4.8tn) now have a negative yield rate. //&! BOE Taper expectations go out the window till 2020 - bit.ly/1SdxUhN

Zinsen spielen bei der Geldanlage fast keine Rolle mehr. Die Ökobank GLS erwägt jetzt einen radikalen Schritt: Die Kunden sollen einen Monatsbeitrag zahlen, damit die Bank nicht in fragwürdige Geschäfte gedrängt wird.

The UK economy currently gets nowhere near its target of 2%. Inflation would decrease the value of current debts, making them less of a burden. In a world without much inflation, it is hard to get wages up. The worse case scenario is that debt costs increase, as prices and wages stagnate. [ ignoring debt and income growth - stagnation at their peril - youtu.be/KIaXVntqlUE - gov is no household budget, Steve Keen + Richard Koo ] [...] And in this age of austerity, these factors will work against governments seeking to reduce the welfare bill. Recent data shows that, in UK cities, growing numbers of low paid jobs have led to rising claims for welfare such as housing benefits, defeating the government’s aims to reduce spending.

BOJ shock decision to adopt negative interest rates, in an attempt to protect the flagging economy from market volatility and fears over the global economy. In a 5-4 vote, the bank’s board imposed a 0.1% fee on deposits left with the Bank of Japan (BoJ) – in effect a negative interest rate. The move, which follows the similarly aggressive precedent set by the ECB in June 2014, is designed to encourage commercial banks to use excess reserves they keep with the central bank to lend to businesses. //&! The Disturbing Reasons Why The Bank Of Japan Stunned Everyone With Negative Rates - bit.ly/1UvpOyO - encouraging capex, supporting existing bubbles ie equity and bonds (joining draghi). Citing examples of Sweden and Switzerland with NIRP. And ECB of combining QE and NIRP. Combating China exporting deflation. And keep the pace of JGB purchases, keeping the bubble floating. [A] "last-ditch measure"[.] [I]t may be time to panic. - 2016/2017 //&! Currency War - bit.ly/1QwOGox

All of 2015’s totals lived and died on mega-deals. Mega-deals were the reason that the total amount invested in the year was one of the highest on record, even though the actual number of deals fell. It’s the reason the fourth quarter’s venture capital total fell so sharply when mega deals declined some 45%. //&! As America faces the techpocalypse, how are things going in Europe? - bit.ly/1ndNFZt //&! If Doordash is struggling to close funding with Sequoia as a lead, how bad are things at your startup? - bit.ly/1njD8v9 - Doordash is a fundable company, just not at the prices originally discussed… and maybe not even at $600 million. //&! Asian venture capital in 2016: This could get ugly… - It has the farthest to fall, and the newest investors - bit.ly/1Pg8vla

the world’s grand experiment with debt has come to an end. And it’s now unraveling. [...] The next thing is to give money to Main Street. [...] Either way, money will be printed out of thin air and given to you. That’s what’s coming next. Possibly after a failed attempt at demanding negative interest rates from the banks. But coming it is. [...] Once people lose faith in their currency all bets are off. The smart people will be those who take their fresh central bank money and spend it before the next guy.

Der Börsen-Crash in China ist Symptom eines fundamentalen Wandels: Um den Wohlstand zu erhalten, muss die Regierung immer mehr Kontrolle abgeben. Die Allmacht der kommunistischen Partei gerät ins Wanken.

We are now in the seventh year of a cyclical recovery and bull market. Shares have tripled in that time frame. I would say this means we are much closer to the end of the business cycle than the beginning. Moreover, as Jeremy Grantham is quoted in the Business Insider piece, profits are mean-reverting and right now they are reverting from a phase that is “wildly optimistic” according to Warren Buffett. All of this is taking place against the backdrop of an economy in which wage growth is weak, household debt is still relatively high on a historic basis as a percentage of income and we have no policy room on the monetary side, with limited political appetite for policy on the fiscal side. To me, the pre-conditions for this profits recession speak to downside risk, ....

>> renewables is still about investing into the future.

Fund says governments in emerging markets should prepare now for a new credit crunch because of a 10-year corporate borrowing binge [...] “Shocks to the corporate sector could quickly spill over to the financial sector and generate a vicious cycle as banks curtail lending. Decreased loan supply would then lower aggregate demand and collateral values, further reducing access to finance and thereby economic activity, and in turn, increasing losses to the financial sector,” the IMF warns. [...] “Emerging markets must prepare for the adverse domestic stability implications of global financial tightening,” the IMF says.

The US remains "on track" for an interest rate rise this year, Federal Reserve chief Janet Yellen has said. The central bank head said as long as inflation was stable and the US economy was strong enough to boost jobs, the conditions would be right for a rise. Despite expectations of a rise this month, the Fed held rates, in part due to fears about global economic growth. Ms Yellen, speaking at the University of Massachusetts, said US economic prospects "generally appear solid". Speaking a week after the Fed delayed that long-anticipated hike, she said she and other policymakers did not expect recent global economic and financial market developments to significantly affect the central bank's policy. Much recent inflationary weakness is due to special and likely temporary factors, such as a strong dollar and low oil prices, she said. //&! http://www.bloombergview.com/articles/2015-09-25/janet-yellen-s-flip-flop-confuses-markets

Number of flatsharers aged 45-54 has risen by 300% in five years, figures show, amid soaring house prices, especially in London [...] Photographer Alex Forsey, 44, is typical of the new generation of flatsharers in their 40s. He recently moved into a house in Clapton, east London, with three other people in their 20s to 40s. He said: “The most affordable one-bed flat I was shown was £1,200 a month, and it was worse than a squat. The agent tried telling me it was a bargain.” //&! ability to get interest only loan is unbelievable.

[capital efficiency?] // the other 1/4th is bidding up via credit bubble riches, diversification. other 2/4ths from planning restriction and natural biz cycle of sv //&! http://www.thebolditalic.com/articles/7266-an-open-letter-to-anyone-moving-to-san-francisco-for-a-tech-job - For context, people are right to be angry; shit is certainly fucked up. Since 2010, rents have risen by 40%, and eviction rates have risen by 38%—two rapid changes that have had very visual consequences all across the city. Much of SoMa, for instance, looks like an elephant graveyard. Sidewalks look like the surface of the moon; alleys are littered with broken glass; and streets are strewn with sleeping persons and human shit. All of this can be observed from in the shade of the brand-new office buildings and luxury condos that now line the streets everywhere east of 4th Street. [...] those who move to San Francisco and don’t engage with the community dilute and adulterate San Francisco’s sense of character.

Softening employment figures and weakening surveys on manufacturing and construction output suggested growth in the UK could slow in the second half of the year and inflation might not pick up as expected. Furthermore, problems in emerging markets could be a drag on UK growth and the headwinds from those economies were unlikely to abate any time soon, Mr Haldane added. //&! In a wide-ranging speech that called on central bankers to think more radically to fend off the next downturn – including the notion of abolishing cash – Haldane warned the UK was not ready for higher borrowing costs. He described recent events in Greece and China as "the latest leg of what might be called a three-part crisis trilogy."

Die Bank für Internationalen Zahlungsausgleich sieht Alarmzeichen für Banken in vielen Schwellenländern. Die Kreditvergabe in China, Brasilien oder der Türkei habe ein bedrohliches Verhältnis angenommen, warnt die Notenbank. // &! Die Welt steuert auf den Bankrott zu (QE trap): Eine vorläufige Antwort: Das tieferliegende Problem besteht darin, dass sich die Weltwirtschaft insgesamt auf den Bankrott zubewegt - und das wird umso schneller gehen, je höher die Zinsen sind und je niedriger die Preissteigerungsraten.

Backtests are like diet books.

youtu.be/f5_AGIMe32k // much higher $ already put ~25bps on US domestic market. // Fed is a risk manager now // labour market got a check mark, but not inflation bc of tech, stronger$ (taper anticipation), commodities lower, further deflationary pressures (retail price fighting 4 increase like4like sales), globalisation (competition), secular stagnation (continued low growth in western world, lower aggregate demand overall, lower baseline), consumer unable 2pickup where it threw in hat (deleveraging, no savings, debt overhang household, consumer). A new normal of growth of ~3% (give/take) globally aggregate & western wrld (2-2.5%, EU aggregate even lower). In this world, THERE WILL BE NO INFLATION PRESSURE (2% or higher, &3bn ppl free labour wrldwide) IN THE FORESEEABLE FUTURE AS THE REAL ECONOMY 4 EVERY DAY FOLK DOESNT REFLECT REFLATED ASSET PRICES via QE, ZIRP, credit bubbles arnd world enabled by central banks. &! youtu.be/NVa5fkz8X0o &! youtu.be/Ny3bbonX3d0 &! 1.usa.gov/1JdKZxp

- bull market in equities not reflective of real fundamentals on the side of the consumer (aggregate demand, marginal propensity to consume). can not pick up the tab. inequality also does not help.

- 6 killer apps not yet properly installed. - // and still dependent on western world demand! aggregate demand via western consumer. // credit bubble and ZIRP/NIRP/QE has run its way largely // private sector could not pick up recovery. no appetite. same for SME SMB mittelstand. excess reserves not lend out because the horse has to drink by itself, can't make the drink. // especially when it has no means to served future credit interest payment coupons and principal repayment with no income growth! for decades. // inequality huts, middle class destoryed. - Career Politicans, Fear, polarisation, inequality, gini coefficient, zeit arbeit, leiharbeit, self-employment, working conditions, ...sozialer abstieg, squeezed middle class, ... insecurity, cloudy future, richard koo: austerity isn't helping!

[ game of chicken ] [ can private sector carry forward the little bit of recovery/growth the western world got in a rising interest rate world, that will eat away spending bc of higher repayment rates amid little to no wage growth !!! ] [W]arned developing countries to brace themselves for possible financial turbulence when the US Federal Reserve starts to raise interest rates. It could come as early as Thursday when the Fed concludes a policy meeting. A new report from the World Bank says there will probably be a modest impact on developing countries. But it also warns there is some risk that it could be worse. The Bank says it is possible that there would be sufficient disruption to capital flows into developing countries to harm economic growth and financial stability. //&! bit.ly/1QhP6Of //&! youtu.be/G8lCqhCbrA4 //&! youtu.be/KH1UlvgXqTE = bond sell-off move in anticipation of Taper. //&! strength of dollar added already 25bps - youtu.be/zWrxFszwrsQ &! youtu.be/lpTkQqEQmE4

B Round! doubling down on (to a certain point) proven ideas as they move to make themselves solid/viable (building business model & continued growth if not even putting some more gasoline on the fire with a B Round - allocation of resources). thus there is competition thus bidding up in a private market. BUT BUT also reflects the rising cost! Rising cost to grow, the war for talent to scale, and the cost in said hubs/ecosystems where the talent are already working on scaling other companies, where rent is sky high and space rare to expand office, ops, ramp up head count, ... // why, on a side note!, ? because global ZIRP, NIRP, QE, hunt for yield, FOMO, property speculation, alternative asset management and allocation (newly minted paper millionaers) have bid up prices in metropolitan and hot cities by credit bubbles around the world. bc financial markets are global, thus your allocation/diversification is global, not limited where ur home addr is. adding to volatiliy too bc of froth!

Relying too much on the wrong instrument, monetary policy, unconventional QE2 & 3 >> little domestic positive impact but spilled over much across the world! // consequences now seen (1) taper tantrum late 2014 & then summer 2015; china slow-down/equity crash & taper anticipation moves followed up by pulling money out of emerging/developing markets! financial market are divergent from domestic business market. cycles shifted apart slightly. investor, business, financial market & consumer confidence are not linked as tightly before! // financial markets are now global, business markets itself not as much! money can be pulled out digitally in an instance. // no net-positive 4 whole world. selfishness. long-run danger. unintended consequences, unknown unknowns. // global sub-optimal monetary policy // global system (monetary system) broke // uncertainty, unknown of taper. timing debate. game of chicken. volatility bc of lots of froth, distortion! // &! youtu.be/SZe3issLIb8

The privatization couldn't have come at a more opportune moment. Even Nobel laureate Paul Krugman, an early Abenomics cheerleader, said this week that he's "really, really worried" about Tokyo’s chances of ending a two-decade slump. The hope is that the listing, which will be targeted at individual Japanese, will encourage households to invest more of their savings. Perhaps more important, it could enliven the country's stagnant banking sector. Japan is among the developed world's most overbanked nations, with more than 100 sleepy regional players (84 of which are publicly traded) servicing 126 million people. Thanks to the Bank of Japan's zero-interest-rate policies, profit margins are shrinking even faster than the population.

Brazil faces its deepest recession in 25 years, policy drift and now a reputation deficit that threaten to undo years of prosperity and social gains. [...] even years on, with the economy set to shrink by two percent this year, and unemployment and consumer debt spiking, Brazil looks more likely cast as the leader of submerging markets and the sick man of the BRICS, the club of outsize developing nations -- Brazil, Russia, India, China and South Africa -- once touted to lead world growth.

At the heart of China's problem is the "impossible trinity" of international macroeconomics. The impossible trinity - or trilemma - is the idea that it is impossible for a country to have three things at the same time: a stable currency, the free movement of capital (i.e. the absence of capital controls) and independent monetary policy. A country can instead choose just two of the options from this policy suite. The UK, in common with most developed economies, has free capital movement and an independent monetary policy - but not a controlled exchange rate. The Bank of England sets interest rates at a level it thinks is right for the UK economy and - as capital can flow into and out of the UK at will - the exchange rate is determined by the market. [...] But the bigger criticism is usually over the nature of the post-2009 stimulus package [...] But, for all the criticism, the counterfactual is rarely stated. What would global growth have looked like without it? [//+ deflation factors]

Like London, property prices in New York have gone turbo-ballistic, as global capital in search of a safe haven has rocketed in. Property has ceased to be somewhere you live, and become a commodity. Apartment blocks are the new safety deposit boxes - often standing owned but empty. Handy for the portfolios of the super-rich, but for the rest, whose wages have stagnated while rents have risen, it's a disaster.

After 15 years of staggering declines, the cost of building a company in San Francisco is rising sharply // prohibitive! diluting too much too early. // China and other BRIC paper millionaers divesting into property speculators, around the world. every city that has seen substantial price appreciation +10-20% over last +5 years // hot money from monetary policy, excess reserves, flushing around the globe //

>> what if rise of the banks (deregulation, easy credit, global financial markets - arbitrage, and making money with money) fuelled the growth of the last ~25-30 years. // min 47 3 asset bubbles popped // USA - 40% of corporate profits came from 10% of corporate sector (banks) // 30% of MIT grads went to banks instead of real world engineering and manufacturing. // underwater private sector! via credit bubble: student loans (now 1trn and still rising in USA and UK, future disposable income/discretionary spending lower than babyboomers because of wage stagnation, no wage growth) credit cards, mortgages, heloc (home equity line of credit) --- all will have to focus on paying back debt. // 2015 - us student loans 1.25trn - bit.ly/1KJ29uc + auto loans << bubble to eventually pop when collateral is falling! ie stagnant wages for 10 more years. and more and more cant repay their student loans. // 1:12:00 Bubbles move on; dot.com, real estate (property) & commodities, China,

International banks, however, don't appear to be heavily exposed to China, at first glance anyway. Bank of International Settlements data show that their claims on Chinese banks, companies, consumers and public sector are quite manageable, though Australian and U.K. banks have extended a lot of credit in China in proportion to their total foreign assets: [...] U.K. banks' $198 billion in Chinese assets at the end of last year looks particularly threatening, especially given that HSBC and Standard Chartered both derive a significant portion of their revenue from China. This exposure is particularly problematic because a debt overhang is one of the Chinese economy's biggest problems.

missteps along the way to re-tool economy! // too much capacity build for a underperforming world and china and ASIA = NPL too.

[Private Sector could not drive recovery! Stupid. And rising (re-flating) asset prices like stocks did not inspire consumers. The reality on the ground is different than asset prices. Inflation targeting is a policy error in hindsight. Question is if policy makers (fiscal and monetary) as willing to admit this, or drag the world through another lost decade & generation!? ] Most forecasters believe consumers will spend the windfall, and thus boost the economy. But almost all of the savings from lower pump prices so far have been used to rebuild household assets and reduce debt. Consumers tend to increase their savings in tough times; they've been doing so during the six-year recovery, even as real wages and median household incomes remain flat. Lower oil prices, however, could come with a downside. As they work their way through the system, deflation could follow. Already, 10 of the 34 largest economies in the world have seen year-over-year declines in consumer prices. [

// cost of entry? // unable to make it happen? // Can't you write software from anywhere? // problem, heavily diluted early on approaching A/B, traditional shops don't like the cap table of pre-seed, angels, seed, accelerator & Micro VC's already owning ~+40% ... you come to a traditional A/B shop and not one of the existing investors is actually leading the round or committed in paper do double down? // // from a financial perspective/investment/math --- in the PRIVATE MARKET thrown under the bus by NIRP, QE, hunt for yield and FOMO (looking for their female unicorn or own Zuck) everyone can run 100 burger stands with unlimited/stellar returns in their spreadsheet model (bc cost of capital being 0 or negative). Despite the deflation of price of software & hosting (marginal cost, economics of abundance), Talent got bid up heavily (+200k/y in LA by Snapchat) in certain cities (SV, NY, London) // &! Steen Jakobsen - youtu.be/fnp5ETnKylU - min 16 avg guy does not have access to credit!

ideology/Career Politicians/Complacency/Cushy/non-ambitious/AIIB/comfortable //&! bit.ly/1cU2RVS March 2015, SELL & come back in 6 months - bloom.bg/1NTykGB //&! bit.ly/1NJvXai &! bit.ly/1VsYTEJ Outrageous predictions for 2015 were: China devalues yuan 20% [joining others in global struggle to import inflation] &! Corporate high yield market spreads double (higher refinancing cost, which zombie corporations do actually have no pants on as tide goes out) "High yield is a derivative of equity markets. If you believe equities are overvalued, so too is high yield," &! UK house prices crash (foreign hot money, speculative + shortage + Summer 2015 Crash + BOE Taper in 2015/16 = back to reality!) &! Russia defaults again // &! Fed Taper is a "margin call," [need 2 normalize despite its mandate/fundamentals not warranting a hike!] [...] a seven-year bull run 4 equities might be coming to an end [...] the rise (not value) of RMB/Yuan as it becomes free floating out of need] - cnb.cx/1MMyLSC

Gordon Chang, author of "The Coming Collapse of China," discusses the outlook for China's economy with Bloomberg's Joe Weisenthal and Alix Steel on "What'd You Miss?" // 1trn in reserves to support yuan, will need to liquidate its serserves - bond and fx // currently there is no backstop // mal-investment // time has run out since their Put post-2009 to retool economy and social safety net and health care // will be bad pull on western world, deflation, // "1930's style crash" // they have no tool left, no backstop. //

[Money has been slushing arnd in markets speculating, not investing in future & productive, added value goods. big companies are flush 2. easy credit is holding zombie corps of the last century over water. western world is persisting 2 put a banking bailout/crisis in the light of a sovereign debt crisis 2 push idealogical austerity. falling way being, never be able 2 catch up with productivity, output gap, STEM, research, future of work, smart grid & infrastructure, retooling their economy 21st century style.] // "speculation in property markets, amplified by mortgage financing, as a persistent central factor driving economic cycles." [...] the worst bubbles -- those that inflict the most economic pain -- tend to involve not just speculation, but a surge in easy lending and increasing leverage. [...] economic downturns following credit bubbles were generally worse and lasted longer. [...] danger of leverage cycle. // [ easy credit & debt fuelled recovery of assets, not fundamentals ]

For the moment we are expecting oil producers to start to minimize their loses by producing even more oil. The oil crisis has just begun. // // &! DeMark compares China to the start of the Great Depression in the US, and when applying the 38.2 Fib retracement levels which have been breached, now expects even more pain for Chinese stocks - bit.ly/1NJdISb // // &! THINGS WERE TOO FAR AWAY FROM REALITY - Many indicators confirm that last week was remarkable and historic. Record after record was set, including the largest daily move, the biggest intra-day reversal and the most harrowing intra-day air pocket. - bv.ms/1O45W2i - legitimate questions about the robustness of the global economy [ contagion & overshoot - hubris and panic alike, good news gets washed down w bad news, extreme volatility still break markets, contagion still real & ppl are leveraged again (were complacent, institutional! investors!) ] market craziness. [ irrational exuberance that were equities ]. &! bv.ms/1UnLeMV

could see liquidity squeeze. have global credit bubble. Chinas own (2009-Put) did pop, probably just this Summer '15! // may lead 2 zombie banks, if they werent already if it werent 4 PBOC with huge amounts of NPL also within shadow banking system. bit.ly/1FaVAZt policy response could be 2 double down on usual mis-guided measures 2 keep status quo. extend & pretend. // World is still flush, thus currently moderate signs of impact of China slowdown - bit.ly/1EuMVXe - will take time. // &! leverage / margin trading was/is at new highs comparable to 2007 on both side of Pacific (USA/China) - bit.ly/1IxyRXD - so the hurt was/will be big! BIG! underwater. talk abt manufactured balance sheet recession // &! Willem Buiter: Only "Helicopter Money" Can Save The World Now - bit.ly/1Et5Bq5 - major blast of fiscal spending by PBOC in some months when the hurt cant be ignored any more. Will wait too long, will drag everyone else down. & bit.ly/1NYB5nQ &! youtu.be/3wvQDxJPhQ4 - Jim Rogers.

Private Debt/household debt 2 GDP exceeding 1.5x/150% spells trouble. Chinas pace of Private Debt expansion through credit was unprecedented in % terms compared to any other recent credit bubble (China Put, 2009) on.ft.com/1Ixhw1a // Could now spell balance sheet recession (underwater, servicing debt for worth(less) asset ie stock (+margin trading) or property (inland or overseas)) thus deleveraging of private households. --- Metropolitan property markets across the world have been flooded with speculative money from China & BRIC! Just look at last chart of % of household debt increase bit.ly/1va3oaw Its Russia, China, Brazil, ... // And China banking system & shadow banking system could sit on a lot of NPL coming 2016. Zombie banks in China, ups! PBOC commanded to lend post-2009! // &! bit.ly/1KWkTQY // &! youtu.be/-3aBjFo2Fh4 - Steve Keen (Mar 29, 2015) 'with bad models you can't see shocks coming!'

youtu.be/-HHJ3q2TxEQ (2014) // Unable 2 sustain long-term economic growth! Next headwind (ie China, Summer pop 2015) could put it back into the ringer! No internal resilience long-term. Gross gov debt still rising & budget (tax income) short-fall enlarged than it would be otherwise. // & talking Schuldenbremse/compulsory budget surplus proposal >> Rising private debt 2 make up of the short-fall of public spending, that is what its institute of fiscal studies has been saying ever since Tories came into Office with its austerity agenda. // The next downturn (private debt rise stop & focus on servicing it/deleveraging + gov keeping austerity agenda) will be even steeper & harder! // On path of stagnation, of western world; how u serve that debt in New Normal of <~2% growth p/a & <2% inflation & <2% inflation expectations!? // &! youtu.be/-3aBjFo2Fh4 // youtu.be/WSfe6uyO5yE & youtu.be/4TTuPwIzFC0 - China "Crash." &! on.ft.com/1Ixhw1a 'Crazy China Crash Possible w contagion'

"Profits are privatized while losses are socialized. How we got here, and how we can get out of this situation." // min20 - UK debt2GDP 2008, +100% Debt on Banks Balance Sheet, ~100% Household Debt, +100% Nonfinancial institutional/corporate Debt, <50% Gov Debt ( bit.ly/1u6QiLP ) risen to <80% Gov Debt2GDP bc of Bank Bailout. ( gross national debt has been rising, unable to pay down because of lack of growth, turning Japan - bit.ly/1f7UNyp ) // It is still a banking crisis. Especially in Europe. Not a sovereign debt crisis. Greece situation made much worse because of austerity. // min 32 - talks about China! China's Assets and Liabilities. 70% of global consumption is US/EU. [but shifting!] From CDO example, China correlates with US/EU vice versa! Chinese property bubble & equity bubble, came 2 an end this Summer 2015! The crisis began w banks & will end w banks! The crisis is still with us. The banks, stupid! // investment banking bust bc of low yields across all public asset classes

Draghi Put &! bit.ly/1fQ2lcq // &! bloom.bg/1Euf6peh // &! Mark Blyth Mackenzie Lecture 2015 – Austerity and the Politics of Money - youtu.be/B6vV8_uQmxs --- u cant make them lend (banks) 2 businesses (productive investment, closing productivity & output gap) particularly in a deflationary world with secular stagnation tendencies/signs, with non-existent inflation expectations! liquidity trap! dont get into higher growth path/gear! and infrastructure bonds (= Eurobond) on EU level wont help very much. !New Normal is lower yield avg across assets (public) & economic growth average p/a of abt 1.2-1.4% Add demographic bubble/ageing population = less consumerism, less disposable income/discretionary spending on aggregate, Piketty (book) removed technology as growth multiplier in some chapters & then you really come to <2% p/a long-run growth predictions for EU/western world. <2% growth p/a at >90% debt2gdp u have a problem! == Rechtsruck &or Anti-Austerity. Political tail-risk!

fallacy of composition problem // short-term profit seeking and rent-seeking behaviour, underinvestment, no productive investment - especially long-term. // this underinvestment - public and private sector + market forces and technological progess will level the world and the China/Asia/LatAm rises up to the western world level while western world stays stagnant (loss of standard/quality of living competitively) because of being behind - software is eating the world, 3D printing, uncompetitive manufacturing and heavy industry/goods because of higher energy prices because of lack of investment in energy storage systems that are realized right now and backing off in investment in renewable energy and energy efficiency schemes (especially UK budget2015), automation, robotics, lack knowledge workforce to fill future digital/STEM/knowledge jobs, because of low social mobility, student debt, cuts in education - vocational - professional, as well as giving up on child poverty targets.

faith in capitalism can only be sustained, according to Adam Smith, if we can better ourself (vs winner takes all) & talent diversion into Finance, not Climate Change, STEM, education, sw, hw & rogoff/reinhart called 4 fiscal stimulus in 2014. &! its a banking problem, not overspend, its corporate state (Tories) PR and spin doctors, manufacturing consent, propaganda/populism! change conversation away from banks! // youtu.be/a-8ySh6nUsA // &! The Austerity Delusion - youtu.be/NQGCoiakycQ // &! Is Austerity a Dangerous Idea? - youtu.be/2v8m-J8sgik // &! youtu.be/JQuHSQXxsjM // &! Mackenzie Lecture 2015 - youtu.be/B6vV8_uQmxs // &! After the Financial Crisis: How to Tell the Forest from the Trees - youtu.be/V3FPmu2_J_0 // &! Book Panel 2013 - youtu.be/Xz4FW8GDwG4 - "debt gets cured by growth." & austerity is ideological war on welfare state & class // &! youtu.be/iM2cnMhJZyg // &! youtu.be/in5M65566iw // &! What I Learned and (Un-Learned) at the Financial Crisis - youtu.be/lhldDOp77QA /

mi 32 - lack of adoption of SV model: no politics, execution, results driven, value creation, accepting Failure as outcome (culture of Stigma in EU and Germany) // min 36 - oh hi there world - buy into the company! a partner, strategic joint venture. shared economic interest, own platform by publishers! // miss-allocation of capital ! // hard things about hard things - Pivot, layoff vs running out of money not finding product/market fit & traction // early on its only hunch & gut based. // #TOA15: ¨Are the Germans Unable to Disrupt?¨ with Christoph Keese (Axel Springer SE) - youtu.be/YyuJmAtZQis - its abt value creation, value add, redesigning of value, chains, product, data. Big corps cant disrupt itself. especially not by committee. Legacy companies unlikely 2 survive bc of patterns 2 stick 2 the conventional & fail than fail with unconventional & look like a fool (risk aversion, Failure in the public eye). Book "Silicon Valley: Was aus dem mächtigsten Tal der Welt auf uns zukommt"

When China sneezes, the world just might catch a cold [...] The difference between now and then is that a lot of developing nations and global markets have braced themselves against the risks of a currency crisis, making a full-scale Asian Contagion unlikely. [...] “In a nutshell, no one can or should rule out a crisis, but we believe that the risk has fallen from a few years ago.” [...] Financial markets depend on good information. When it’s lacking, investors flail. They assume the best when they’re bullish and the worst when fear gets the best of them. That helps explain the eruption over China, a nation that remains opaque despite having the world’s second-biggest economy. Facts as basic as its GDP are hard to pin down: Officially it grew at 7 percent in the first and second quarters—suspiciously, precisely the rate Li predicted for 2015. Some outsiders put growth at closer to 5 percent based on data such as electricity consumption and rail cargo.

Fitch Ratings said in a note Wednesday that while pessimism on China’s short-term outlook is “overdone,” there is still the potential for a “prolonged period of lower growth,” with expansion well below 7 percent. [...] Things are looking gloomier elsewhere. Brazil’s economy, Latin America’s largest, contracted 1.9 percent in the second quarter from the previous period, the government reported on Friday. That’s worse than the 1.7 percent median estimate of economists surveyed by Bloomberg. [...] “The basic assumptions about global growth are suffering, and the epicenter is China,” // lots of hot money on the hunt for yield found its way to emerging market and developing market! period, didn't stay in UK, US, Europe. Period. That is something policy makers accepted. financial market is global, not local. BOE ZIRP NIRP QE can not be contained within UK. Period. Same with Chinese newly minted property/paper millionaires put their money in London & else. LatAm into Miami and Co property.

it is a repricing. a correction. prices got too far away (reflation of equity & co through ZIRP, NIRP, QE, speeches, plus hunt for yield & FOMO). It just happened to be China being the trigger, the wake-up call - very loud wake-up call - bc of its economic size and heft. (taper talks 2015 that made equity already nervous, and bond holders too, was too timid). Reality check. // Was it justified, yes. // In the long-run, we are all dead. And in the long-run things will, eventually, correct itself. // People may take now into account a new normal, lower interest rate environment, lower global growth, lower yields, lower inflationary pressures, lower dividend payments, more work that corporates (crony capitalism) need to do to squeeze out that earnings growth especially in the western world. inequality - low wage growth/stagnation - less discretionary spending on non-essential items (in the western world). & "realization that policy tools were less effective". &! bv.ms/1NFsFUn