Posts tagged finance
Nearly all of the most valuable companies throughout history were valuable through their strong network effects. If there is one motif in American economic history it is network effects. Every railroad made the railroad network more valuable, every telephone made the telephone network more valuable, and every Internet user made the Internet network more valuable. But no hedge fund has ever harnessed network effects. Negative network effects are too pervasive in finance, and they are the reason that there is no one hedge fund monopoly managing all the money in the world. For perspective, Bridgewater, the biggest hedge fund in the world, manages less than 1% of the total actively managed money. Facebook, on the other hand, with its powerful network effects, has a 70% market share in social networking. The most valuable hedge fund in the 21st century will be the first hedge fund to bring network effects to capital allocation.
I think what is most interesting about the relation between art and information is the reciprocal relation between art as rarity and information as ubiquity. It turns out that ubiquity can be a kind of distributed provenance, of which the artwork itself is the derivative. The artwork is then ideally a portfolio of different kinds of simulated value, the mixture of which can be a long-term hedge against the risks of various kinds of simulated value falling—such as the revealing of the name of a hidden artist, or the decline of the intellectual discourse on which the work depended, or the artist falling into banality and overproduction. Since art became a special kind of financial instrument rather than a special kind of manufactured article, it no longer needs to have a special means for its making, or even perhaps special makers. Indeed, curators now rival artists for influence the way DJs rival musicians. Both are a kind of portfolio manager of the qualitative. The next step after the dematerialization of the artwork may be the dematerialization of the art worker, whose place could be taken by new kinds of algorithmic functions. These would still have to produce the range of simulations that might anchor the artwork as a derivative of their various kinds of sign value.
When we started to think of a possible topic for this year’s Information Design course at IUAV, Venice (after exploring the world’s technology and networks in two consecutive editions of an illustrated Atlas of the Contemporary) we realised that in trying to understand how — and if — this crisis would have unfolded, there was a great potential for design to help illuminate this conjuncture. Given the increasing importance of economical data and the financial landscape over our lives, the lab was then established as an ongoing, real-time workshop in data-visualisation, which would track and explain the crisis that the analysts predicted for 2016. Its purpose was to better understand the broader network of causes and implications which every financial turmoil exists within, providing context to economic reports, and looking at the socio-political framework of news stories. From a design perspective, the intention was to develop new ways for visualizing financial news, in order to move from the rather bi-dimensional and dispassionate language of bar and pie charts, into a richer territory made up of maps, cartograms, illustrations and diagrams.
Everyone is talking about blockchain, the new technology in the FinTech Industry. The concept of blockchain has energized the financial services industry globally. The concept has already brought a disruption in the financial industry. LTP brings to you the overview, technology, application areas and use cases of blockchain.
Following the attack on the DAO that occurred on June 17, 2016, a pseudo-anonymous group calling themselves the Robin Hood Group (RHG) launched on June 21, a white hat attack on the DAO to secure the remaining 7.2M ether that remained in the DAO.
Austerity policies not only generate substantial welfare costs due to supply-side channels, they also hurt demand—and thus worsen employment and unemployment. The notion that fiscal consolidations can be expansionary (that is, raise output and employment), in part by raising private sector confidence and investment, has been championed by, among others, Harvard economist Alberto Alesina in the academic world and by former European Central Bank President Jean-Claude Trichet in the policy arena. However, in practice, episodes of fiscal consolidation have been followed, on average, by drops rather than by expansions in output. On average, a consolidation of 1 percent of GDP increases the long-term unemployment rate by 0.6 percentage point and raises by 1.5 percent within five years the Gini measure of income inequality
But, ‘human interfaces’ are actually quite costly to maintain. People are alive, and thus need food, sick leave, maternity leave and education. They also have a troublesome awareness of exploitation and an unpredictable ability to disobey, defraud, make mistakes or go rogue. Thus, over the years corporate managers have tried to push the power balance in this hybrid model towards the machine side. In their ideal world, bank executives would get rid of as many manual human elements as possible and replace them with software systems moving binary code around on hard drives, a process they refer to as 'digitisation’. Corporate management is fond of digitisation – and other forms of automation – because it is a force for scale, standardisation and efficiency – and in turn lowers costs, leading to enhanced profits.
It seems uncontroversial that these systems may individually lower costs to users in a short-term sense. Nevertheless, while startup culture is fixated upon using digital technology to narrowly improve short-term efficiency in many different business settings, it is woefully inept at analysing what problems this process may accumulate in the long term. Payments startups, for example, see themselves as incrementally working towards a ‘cashless society’: a futurist buzzword laden with positive connotations of hypermodern efficiency. It describes the downfall of something 'old’ and archaic – cash – but doesn’t actually describe what rises up in its place. If you like, 'cashless society’ could be reframed as 'a society in which every transaction you make will have to be approved by a private intermediary who can watch your actions and exclude you.’
According to the World Bank, corruption in the form of bribery and theft by government officials, the main target of the UN Convention, costs developing countries between $20bn and $40bn each year. That’s a lot of money. But it’s an extremely small proportion - only about 3 percent - of the total illicit flows that leak out of public coffers. Tax avoidance, on the other hand, accounts for more than $900bn each year, money that multinational corporations steal from developing countries through practices such as trade mispricing. This enormous outflow of wealth is facilitated by a shadowy financial system that includes tax havens, paper companies, anonymous accounts, and fake foundations, with the City of London at the very heart of it. Over 30 percent of global foreign direct investment is booked through tax havens, which now collectively hide one-sixth of the world’s total private wealth. This is a massive - indeed, fundamental - cause of poverty in the developing world, yet it does not register in the mainstream definition of corruption, absent from the UN Convention, and rarely, if ever, appears on the agenda of international development organisations.
David Graeber’s Debt: The First 5000 Years begins with a conversation in a London churchyard about debt and morality and takes us all the way from ancient Sumeria, through Roman slavery, the vast empires of the “Axial age”, medieval monasteries, New World conquest and slavery to the 2008 financial collapse. The breadth of material Graeber covers is extraordinarily impressive and, though anchored in the perspective of social anthropology, he also draws on economics and finance, law, history, classics, sociology and the history of ideas. I’m guessing that most of us can’t keep up and that we lack, to some degree, his erudition and multidisciplinary competence. Anyway, I do. But I hope that a Crooked Timber symposium can draw on experts and scholars from enough of these different disciplines to provide some critical perspective
What may still seem to many to be a parochial affair involving Barclays, a 300-year-old British bank, rigging an obscure number, is beginning to assume global significance. The number that the traders were toying with determines the prices that people and corporations around the world pay for loans or receive for their savings. It is used as a benchmark to set payments on about $800 trillion-worth of financial instruments, ranging from complex interest-rate derivatives to simple mortgages. The number determines the global flow of billions of dollars each year. Yet it turns out to have been flawed.