Into the Light

By |2018-01-29T12:51:11-04:00January 29th, 2018|Categories: Global Market Update|Tags: , , |

What’s the underground economy? Photo: Melony Candia. Source: Morguefile The informal economy is the cash economy. It’s the economy of under-the-table transactions, of digital currencies and returning favors. Sometimes it’s unsavory, sometimes not. If you read a new book that you like and loan it to a friend, that’s informal activity. No money changes hands. This is perfectly legitimate. But sometimes informal activity is sleazy: cash payments for goods or services so sellers can avoid reporting what [...]

Looking for Risk in All the Wrong Places

By |2017-11-16T15:00:42-04:00November 15th, 2017|Categories: Global Market Update|Tags: , , , |

Can Artificial Intelligence really manage risk? Source: Wikipedia There’s a new application for Artificial Intelligence. It’s called regulatory technology, or “regtech.” It takes the rulebook of a supervisory agency, like the FDIC, and translates it into a computerized logic engine. The regulators evaluate the logical consistency of their rules, and the banks structure and label their data to be queried. This allows the regulator to look for broad patterns in the data that might not be immediately [...]

Apocalypse Now

By |2017-11-16T14:57:37-04:00November 14th, 2017|Categories: Global Market Update|Tags: , , |

Are we regulating local retailers out of existence? Photo: Jonny. Source: Granola Shotgun There’s a recent story about a family in California that bought an old fire station for $250,000 with a view toward converting it into a bakery and micro-brew pub. This could be a very attractive retail business that would help revitalize a blighted part of their town. They were surprised to learn that they would have to spend almost $350,000 on sidewalks, curb-cuts, parking, [...]

A Regulatory Pendulum

By |2017-02-23T10:22:33-04:00February 21st, 2017|Categories: Global Market Update|Tags: , , |

How much regulation do we need?   Photo: Arnaud Clerget. Source: Wikipedia After the financial crisis, Congress enacted new regulations on the financial system. The concern was that big banks had gotten us into an awful mess through their reckless lending, so we needed to put new rules in place to make sure they never did that again. Dodd-Frank has been in effect for over six years now, and it’s reasonable to ask if anything has changed. [...]

Puzzling Out Productivity

By |2016-11-17T15:42:12-04:00September 7th, 2016|Categories: Global Market Update|Tags: , , , |

How can we get the economy moving? Photo: Doug Tengdin When people think of productivity they usually think about getting more done during their work-time, about working harder or smarter or more focused. But when we talk about productivity in the economy, we think about how much workers can get done within the structure of their jobs. Productivity is important. Economic growth is determined by labor growth times productivity growth. That’s all there is to it. So [...]

Good, Bad, or Indifferent

By |2016-11-17T15:53:24-04:00April 14th, 2016|Categories: Global Market Update|Tags: , , , |

Are you a good person? Photo: Joe Murphy. Source: Pixabay Most folks think they are. In fact, ask a group to raise their hands if they’re more ethical than average, and almost all the hands will shoot up. Part of this is personal bias—we think we’re better than average at most things. But ethics is particularly important: so much of our economy depends on trust. From Enron to Bernie Madoff to the Panama Papers, that trust has [...]

Standing on Principals

By |2016-11-17T16:01:14-04:00January 25th, 2016|Categories: Global Market Update|Tags: , , |

Do we have too many principals? Principal-Agent Illustration. Source: Wikipedia. 40 years ago we didn’t. That’s when several researchers described the “agency problem,” where principals own the assets, but agents make the decisions. This can lead to conflicts, like when executives decide commercial air travel is too inconvenient, so they buy a corporate jet instead. Who decides whether the jet is a productivity tool or a luxury? When executives use corporate resources for cushy perks, it’s bad [...]

The Twilight of the Masters

By |2016-11-17T16:22:59-04:00March 30th, 2015|Categories: Global Market Update|Tags: , , |

Image Source: Business Insider Whatever happened to the “Masters of the Universe?” I’m not talking about comic book characters. In the early ‘80s, interest rates spiked, following inflation. Long-term bonds yielded 15%. Bond traders reigned supreme. The hubris of the bond market’ culture was immortalized in Tom Wolfe’s novel, The Bonfire of the Vanities. Massive trading floors at big investment houses buzzed with phone conversations, shouted orders, and thousands of small rotating electric fans continually dissipating waste [...]

Sharing Uber Alles?

By |2016-11-17T16:31:31-04:00December 23rd, 2014|Categories: Global Market Update|Tags: , , , |

What is Uber? Uber is part of the “sharing economy.” It’s an app-based livery service. Folks ask for a ride on their smartphones, and drivers pick them up and drop them off where they ask. Uber drivers are like taxi drivers, except they’re independent. They can their car—or not, however they wish. The price of the ride is set by an algorithm that takes into account how many people want rides, how many drivers are available, and [...]

Inside/Outside/Upside Down

By |2016-11-17T16:34:29-04:00November 12th, 2014|Categories: Global Market Update|Tags: , , |

Do you know what insider trading is? Are you sure?Insider trading is illegal. It’s part of our regulatory landscape. If you’re a corporate insider and have material, nonpublic information about a company’s prospects, you’re not supposed to profit from that information. This applies to insiders and anyone to whom they’ve provided information. […]