a growing level of federal debt would also increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage its budget, and the government would thereby lose its ability to borrow at affordable rates. It is possible that interest rates would rise gradually as investors’ confidence declined, giving legislators advance warning of the worsening situation and sufficient time to make policy choices that could avert a crisis. But as other countries’ experiences show, it is also possible that investors would lose confidence abruptly and interest rates on government debt would rise sharply. The exact point at which such a crisis might occur for the United States is unknown, in part because the ratio of federal debt to GDP is climbing into unfamiliar territory and in part because the risk of a crisis is influenced by a number of other factors, including the government’s long-term budget outlook, its near-term borrowing needs, and the health of the economy. When fiscal crises do occur, they often happen during an economic downturn, which amplifies the difficulties of adjusting fiscal policy in response.
If the United States encountered a fiscal crisis, the abrupt rise in interest rates would reflect investors’ fears that the government would renege on the terms of its existing debt or that it would increase the supply of money to finance its activities or pay creditors and thereby boost inflation. To restore investors’ confidence, policymakers would probably need to enact spending cuts or tax increases more drastic and painful than those that would have been necessary had the adjustments come sooner.”
via The short-term risks of growing national debt – CSMonitor.com.
Is “conscious capitalism” the future of venture capital? It is if you ask Silicon Valley lawyer John Montgomery, who’s launching a column on the topic for peHUB. For those unfamiliar with the term, Montgomery lists three key principles of conscious capitalism: Recognizing that a company has a higher “meta-purpose” than just generating profits, delivering value to a wide swath of stakeholders beyond just the traditional management and shareholders and viewing the CEO as a “steward” who must work for the benefit of all those stakeholders.
via Is ‘conscious capitalism’ the future of venture capital? (Morning Read) « MedCity News.
CUPERTINO, CA (The Borowitz Report) – At a much-anticipated press conference at Apple headquarters, company founder Steve Jobs defended the performance of the new iPhone today, telling reporters that “it works great except for the ‘phone’ feature.”
Mr. Jobs downplayed the problems with the iPhone, noting that many consumers own iPhones for months before realizing that the device contains a phone.
“The most important features of the iPhone, like the app that gives you a robot voice, work better than ever,” Mr. Jobs said.
The Apple founder said that the company would be offering a fix to consumers who actually want to use their iPhone as a phone: “It’s a special attachment that allows you to plug your iPhone into a landline.” More here.
The Los Angeles Times says Andy Borowitz has “one of the funniest Twitter feeds around.” Follow Andy on Twitter here.
via Andy Borowitz: Apple Says iPhone Works Perfectly Except for “Phone” Feature.
Recently the UK Telegraph quoted Sir Ronald Cohen, known as the ‘father’ of the venture capital and private equity industry in the UK, declaring that entrepreneurship should be harnessed as an agent of social change. Speaking to Harvard business students he advised the next big thing in the business world is social finance. If I had been leaving Harvard in 2010, this would be the area I would want to be going into, he added.
“I think societies everywhere will come to the conclusion that an important part of the capitalist system is having a powerful social sector to address social issues, because government doesn’t have the resources.”
Ronald Cohen has already played a major role is the growth and development of a social finance infrastructure in the UK. He seems poised for another great roll forward.
Fortunately Cohen is not alone. Here are quotes from Judith Rodin, President of the Rockefeller Foundation in her speech: Innovative Philanthropy for the 21st Century: Harnessing the Power of Impact Investing.
At the Foundation, we also see an unfolding tale of two globalizations. One generates
substantial progress for many. Another leaves many more by the wayside – families and
populations that fall further behind as the pace of change quickens.
Although philanthropists can only muster billions of dollars against the trillions of dollars of
social needs, private investors like you in this room manage more than $100 trillion in for-profit capital markets. So we no longer ask ourselves, ‘why isn’t there enough money to solve social problems? Instead we ask, How can we tap into these enormous private capital flows to create both financial profit and social return?
via Is Social Finance the ‘Next Big Thing’? – Al Etmanski.
Private-sector companies have ready access to a gargantuan capital market of tens of trillions of dollars globally. Nonprofit organizations, by contrast, are crippled by capital-raising efforts that are minuscule, inefficient, and badly organized. As a result, nonprofits that have developed solutions for critical and growing challenges—in fields like education, health care, housing, economic development, and environmental sustainability—often struggle to grow.
This is a problem with a solution that is entirely within the power of our legislatures. Like the private sector, nonprofits need investors who take risks in pursuit of financial return.
We might call this approach “dynamic deductibility.” Here’s how it would work.
via How nonprofits could access needed capital. – By Douglas K. Smith – Slate Magazine.
Star economist and doomsayer Nouriel Roubini thinks inflation’s coming, and it’ll be a big 1970s-style problem. Star investor John Paulson sees it right around the corner and thinks he can make money on it. Bond king Bill Gross has flipped and flopped and again flipped on it. Historian Niall Ferguson believes it will last for years, and there’s nothing we can do about it. New York Times columnist Paul Krugman thinks inflation is a much less pressing danger to the economy than the anti-inflation hawks. Uber-investor George Soros thinks that so many other people are worried about inflation that he’s betting on a bubble in gold driven by inflation fear.
Inflation may be running now at a rate of 2 percent a year—as low as it’s been since the mid-1990s (and before that, the early 1960s)—but investors and pundits are already in the throes of a full-scale inflation war. It’s a raging debate about where the economy is heading—and maybe about how we can stop it from getting there.
We’ve been conditioned to divide economic forecasters into the “bulls,” who think the economy will boom, and the “bears,” who think it will crash. But this is a new kind of battle. Call it “Bear vs. Bear.” It’s between two kinds of worriers: One group thinks that we’re headed for an extended period of inflation, and another that believes we’re a lot more likely to have a deflationary double-dip recession.
via Bear vs. Bear | The Big Money.
Is democracy the next big business opportunity? Last week, Omidyar Network gave MySociety $575,000. Today, Scytl, a firm which makes internet-based voting technology, has raised $9.2 million investment funding.
The Barcelona-based company says its technology has been used by 13 of the 16 national governments which have tried electronic public voting, including U.S., France, Norway, Bosnia-Herzegovina and Australia.
Specifically, a Florida county used it in 2008, it’s powered two local authority elections in the UK and several Catalan agencies are using it.
Scytl’s offerings include remote internet voting, tools to facilitate voter engagement in city council politics, election management software and systems to facilitate parliaments’ and assemblies’ own voting, as well as commercial elections in businesses.
The funds are led by Balderton Capital along with previous Scytl investor Nauta Capital. Balderton’s partner Bernard Liautaud joins Scytl’s board.
via Internet Voting Firm Scytl Gets $9.2 Million Funding | paidContent.
BY NOW it is hard for authors to stand out in the growing library of books on the causes and consequences of the financial crisis. Anatole Kaletsky manages to do so, thanks largely to the breathtaking ambition of “Capitalism 4.0”, and partly to the unusual optimism that infuses it.
As the book’s subtitle suggests, Mr Kaletsky, an editor at the Times who worked at The Economist in the 1970s, argues that the financial crisis marks a transformation in modern capitalism, one from which a new, improved version will evolve. He regards it as a turning point equivalent to the Napoleonic wars, which augured the beginning of the classical era of laissez-faire (or Capitalism 1.0); the Depression (which spawned the government-heavy era of Capitalism 2.0); and the stagflationary 1970s (from which rose the free-market Capitalism 3.0).
Like the changes that have gone before, capitalism’s latest transformation will alter the relationship between markets and governments and between politics and economics. It is the ability to adapt that secures capitalism’s survival. Version 4.0 will be as different from the recent free-market fundamentalism as Reaganomics was from the New Deal.
via New capitalism: Magic by numbers | The Economist.
John Bloom, RSF’s Director of Organizational Culture, will speak in Sonoma, CA, on Friday, July 23rd, about his recently published book, The Genius of Money. John’s book is a collection of essays and interviews about “reimagining the financial world.” The discussion, organized by Praxis Peace Institute, will take place at Murphy’s Irish Pub (464 First St. East) in Sonoma from 4:30 – 6:30, and attendees are encouraged to come for dinner. While the event is free, Praxis requests that all guests RSVP to firstname.lastname@example.org or 707.939.2973 so that the appropriate number of seats will be reserved. Each person will be responsible for the cost of their own meal, and John’s book will be available for purchase.
via John Bloom Discusses “The Genius of Money” Next Week in Sonoma | RSF Social Finance.
General Electric today announced the creation of a new $200 million fund to stimulate new electrical “smart grid” ideas and detailed plans for a massive rollout of electric car charging stations.
GE, one of the world’s biggest companies with a large stake in the electricity utilities, made the announcement at an event that also featured venture capitalists who are teaming up on the $200 million fund.
GE Chairman and CEO Jeff Immelt said the goal is to marry the creative, entrepreneurial creativity of the venture capital community with GE’s ability to deploy systems on a global scale.
“We can get things going with massive distribution,” he said. “We have 50.000 sales people and 50,000 engineers.”
Paul Koontz of Foundation Capital said the role of venture capitalists will be to “bring entrepreneurial DNA to this effort.”
Venture capitalists see great opportunities to make money by finding new ways to generate, transmit and store energy, as well as to encourage efficient use by consumers.
Ray Lane, of venture firm Kleiner Perkins Caufield & Byers, likened the opportunity to a “slow, fat rabbit” that’s easy to seize.
Electric-car charging stations, envisioned as a vital extension of a “smart” power grid, are being rolled out as carmakers ranging from Tesla to Nissan to General Motors prepare production of more all-electric cars. Coulomb Technologies, a Silicon Valley startup, is also
developing an electric-car charging station.
via GE teams up with venture capitalists for $200 million ‘smart grid’ fund – San Jose Mercury News.