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.
A New York man has filed suit against Facebook claiming he owns 84 percent of the world’s largest social network. Paul D. Ceglia, the man behind the lawsuit filed in the Supreme Court of the State of New York, claims Facebook owes him damages relating to a 2003 contract between Ceglia and Facebook founder and CEO Mark Zuckerberg. The purported contract asked Ceglia to develop and design a Website “similar to a live functioning yearbook with the working title of ‘The Face Book,'” according to the Wall Street Journal.
The contract reportedly states that Zuckerberg would pay Ceglia $1000 plus 50 percent ownership in the company. Ceglia would also get an extra percentage point every month after January 1, 2004 until the work was completed.
One problem with Ceglia’s claim that his contract dates back to 2003 is that Zuckerberg hadn’t even registered Facebook’s original domain, thefacebook.com, until January 11, 2004, according to journalist David Kirkpatrick’s well-researched book, The Facebook Effect. However, Kirkpatrick’s book does say that Zuckerberg started developing Facebook at some point between late 2003 and early 2004.
Although it’s unclear how convincing Ceglia’s purported evidence is, he has managed to have the judge hearing the case issue a temporary restraining order against the transfer of Facebook’s assets.
via Man Claims 84 Percent Ownership of Facebook – PCWorld.
The U.S. trade deficit jumped unexpectedly in May to the highest level since November 2008, prompting some analysts to cut their second-quarter economic growth forecasts sharply and economists to warn of rising risks of a double-dip recession.
The Commerce Department said Tuesday that the trade gap rose to $42.3 billion in May, up nearly 5% from April’s $40.3 billion. Economists had expected the May deficit to dip slightly to about $39 billion as oil prices were lower and retail sales fell that month.
But American purchases of foreign-made computers, machinery and particularly household goods, notably from China, increased significantly in May. Analyst Diane Swonk attributed much of the surprising import gains to stockpiling by retailers and producers who are fearful of a potential trade war with China.
via Trade deficit jumps: Surprise jump in U.S. trade deficit stokes fears – latimes.com.
saving more. consuming less. Paying down debts. Making sacrifices. Most Americans have not experienced austerity in a long time, so the decade ahead may come as a shock. Expect continued high unemployment, slow wage growth, the possibility of social and political unrest, higher taxes, cuts in government services. Hope for moderate inflation to help reduce public and private debt loads. And be happy if all that is the only price this country must pay as part of the financial hangover from the party that began in 2001.
Photograph by Stu Rosner
As the United States recovers from the “Great Recession,” economic stimulus has so far masked the austerity ahead. The U.S. government, like others around the world, has solved the post-housing-bubble banking crisis by issuing debt—in effect trading one set of problems for another to create what Cabot professor of public policy Kenneth Rogoff calls “an illusion of normalcy.”
via The United States bubble economy and lessons from Japan | Harvard Magazine Jul-Aug 2010.
The economy is still in the gravitational pull of the Great Recession and all the booster rockets for getting us beyond it are failing. The odds of a double-dip are increasing.
In June the nation added fewer jobs than necessary merely to keep up with population growth (private hiring rose by 83,000 after adding only 33,000 jobs in May). The typical workweek declined. Average earnings dropped. Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year.
So what are we doing about it? Less than nothing. The states are running an anti-stimulus program (raising taxes, cutting services, laying off teachers, firefighters, police and other employees) that’s now bigger than the federal stimulus program. That federal stimulus is 75 percent gone anyway. And the House and Senate refuse to pass another one. (The Senate left Washington for the July 4th weekend without even extending unemployment benefits for millions of jobless Americans now running out.)
The second booster rocket – the Fed’s rock-bottom short-term interest rates – are having almost no effect. That’s because jobs and wages are so lousy that consumers don’t have enough money to buy much of anything, making small businesses bad credit risks and causing big ones to sit on the huge pile of cash they’ve accumulated.
Wall Street and the other biggest global banks, meanwhile, are making piles of money betting against government debt all over the world. These were the same banks and financiers, remember, that were bailed out by government not long ago. But now they’re demanding fiscal austerity, and politicians are once again doing their bidding – cutting deficits in every rich economy that should now be doing the reverse.
The people who are suffering the most from the failure of public officials and the greed of large bankers are the least able to endure it.
via Robert Reich: Slouching Towards a Double-Dip or a Lousy Recovery at Best.