Attempts to bail out the property market are unlikely to succeed. China’s property market is a bubble in both volume and price. Oversupply, especially in small cities, is destroying the expectation of price appreciation. Speculation cannot be revived. Household indebtedness is close to saturation. The high prices in large cities cannot be sustained by debt growth. Bailout attempts, such as eliminating purchase restrictions, will only backfire, as the restrictions do not suppress demand in the first place.
The property market could follow the example of the A-share market. Bailout attempts have less and less impact. The market eventually dies when people no longer pay attention to it.
Allowing prices to adjust is the best policy. The distortions in the economy due to the bubble shrink. The efficiency of the economy improves as a result. The improving efficiency leads to better labor income, which supports the virtuous cycle of rising wages and rising consumption.
Over the last 30 years innovation and entrepreneurship have become increasingly prominent concerns for successive UK governments. And yet our record is mixed, to say the least. The economist David Storey has calculated that we spend about £8bn a year supporting small firms in the UK. Having spent this money we should be asking: where are our Googles?
Innovation is often seen as originating from university research, which then migrates into start-ups incubated in science parks, before moving out into the wider world. There is also financial support to create geographically concentrated ‘clusters’ of networked, innovative small firms. But how many new global firms has the UK produced in recent years? A handful perhaps, ARM, Imagination Technologies, CSR, and the recently acquired DeepMind and Natural Motion are all excellent firms, but not yet at the level of Google, Apple or Cisco.
This is not just a British problem. In Europe and the US it is probably fair to say that there is not a single example of a successful cluster that has been created by government intervention.
Via a fabulous Wisconsin Youth Symphony concert.
It was on a very hot day in July 2012 that the Winklevoss twins discovered bitcoin, while partying in Ibiza. At 32 years old, the enviably athletic pair have both Harvard and Oxford on their CVs, and seem predestined for success. They famously won a $65m settlement from Facebook after claiming Mark Zuckerberg had stolen their idea for a Harvard social network, and rowed in the 2008 Olympics.
Yet their chance encounter with bitcoin in the Mediterranean was rather more serendipitous. “We were on vacation, and happened to bump into a guy who is mutual friend and he started to tell us about bitcoin,” Tyler Winklevoss explains. “We were fascinated from day one,” he says, hinting that having just abandoned five years of chasing Facebook through the courts, the time was right to start something new. “At the time we were just re-immersing ourselves inside the tech world, getting into the trenches again.”
In the face of large-scale economic shocks, enforcing debt contracts places an unbearable burden on debtors, who cut back their spending and send the entire economy into deep recession. One of the main arguments we make in our new book is that debt forgiveness makes a lot of sense when the economy experiences a large-scale negative shock that is beyond the control of any one individual.
History seems to understand this lesson well. The 48th provision of the Code of Hammurabi, written more than 3,500 years ago in Mesopotamia, states that: “If any one owe a debt for a loan, and a storm prostrates the grain, or the harvest fail, or the grain does not growth for lack of water, in that year he need not give his creditor any grain, he washes his debt-tablet in water and pays no rent for this year.” The main threat to economic activity in ancient Mesopotamia was a drought, and one of the first legal codes understood that debt should be forgiven if such a negative shock occurred.
In 1819 when agricultural prices in the United States plummeted leaving farmers overly indebted and unable to pay their mortgages, politicians ran to their defense. Many state governments immediately imposed moratoria on debt payments and foreclosures. Senator Ninian Edwards of Illinois pushed through national legislation to forgive farmers’ debt, arguing that the country should have sympathy for the farmers who, like the rest of the country, got caught up in the short-lived “artificial and fictitious prosperity.”
Jonathan Safran Foer was sitting at a Chipotle one day, when he realized that he had nothing to do while noshing on his burrito. He had neglected to bring a book or magazine, and he didn’t yet own a smartphone. “I really just wanted to die with frustration,” Foer told VF Daily.
Suddenly, the Eating Animals author (and vegetarian) had an idea: What if there were something truly good to read on his Chipotle cup? Or the bag? A few years earlier, he had met Steve Ells, Chipotle’s C.E.O., so he decided to write the executive an e-mail. “I said, ‘I bet a shitload of people go into your restaurants every day, and I bet some of them have very similar experiences, and even if they didn’t have that negative experience, they could have a positive experience if they had access to some kind of interesting text,’” Foer recalled. “And unlike McDonald’s, it’s not like they’re selling their surfaces to the highest bidder. They had nothing on their bags. So I said, ‘Wouldn’t it be cool to just put some interesting stuff on it? Get really high-quality writers of different kinds, creating texts of different kinds that you just give to your customers as a service.’”
Foer didn’t know what to expect, but Ells went all in. Starting Thursday, VF Daily can exclusively reveal, bags and cups in Chipotle’s stores will be adorned with original text by Foer, Malcolm Gladwell, Toni Morrison, George Saunders, and Vanity Fair contributing editor Michael Lewis. Foer says ,” Chipotle refrained from meddling in the editorial process for the duration of the initiative, which the burrito chain has branded Cultivating Thought. “I selected the writers, and insofar as there was any editing, I did it,” Foer said. “I tried to put together a somewhat eclectic group, in terms of styles. I wanted some that were essayistic, some fiction, some things that were funny, and somewhat thought provoking.”
“I BECOME A TRANSPARENT EYE-BALL,” Ralph Waldo Emerson wrote, in the most famous sentence of “Nature.” In an age of constant surveillance, that image has taken on a sinister new meaning. Transparent eyeballs regard us everywhere we go—from cameras perched above intersections, in building lobbies, and from our phones and laptops, which watch us as much as we watch them.
For those who worry about this oppressively bright light on our activities, the Fourth Amendment offers some shade, with its clear language against “unreasonable searches and seizures,” and its promise that Americans have the right “to be secure in their persons, houses, papers and effects.” Lately, judges and attorneys have been scrutinizing those words, seeking to establish just how much privacy they grant us. On April 29, two cases reached the Supreme Court, asking whether the Fourth Amendment limits the right of the police to seize a cellphone from a suspect. As our lives become ever more visible to the transparent eyeballs of the future (including—yikes—drones disguised as birds and insects), the Fourth Amendment will stand at the center of the controversy.
One theory is that the rise of twin technological forces—the social flood and the age of analytics—will (a) make the news more about readers; and (b) make news organizations more like each other.
Why should the death of homepages give rise to news that’s more about readers? Because homepages reflect the values of institutions, and Facebook and Twitter reflect the interest of individual readers. These digital grazers have shown again and again that they aren’t interested in hard news, but rather entertainment, self-help, awe, and outrage dressed up news. Digitally native publishers are pretty good at pumping this kind of stuff out. Hence quizzes, hence animals, hence 51 Photos That Show Women Fighting Sexism Awesomely. Even serious publishing companies know that self-help and entertainment often outperform outstanding reporting.
Second, we should expect—and have already seen—an expedited clustering effect around news tropes, and this clustering is making news organizations more like each other. This goes back to technology. The better publishers can see what audiences are reading, the more they will be inclined to quickly serve up duplicates of the most popular stuff. This is why we have not one BuzzFeed quiz (whose popularity in the pages of a 1950s magazine would have been mysterious) but rather 17,000 quizzes in a matter of weeks from BuzzFeed, Slate, and other publishers. Each quiz’s Facebook Like count, numbering in the tens of thousands, broadcasts to other publishers: I’m popular, make more of me! Even within hard news stories, we see clustering around headline tropes (“You Won’t Believe…”; “… in 1 Graph”; “X-Number Things You Y-Verb”) across many different sites that should ostensibly be serving different audiences. When you know what works, you do it again and again.
In most developed countries, the past decade has undoubtedly been the hardest time to build financial wealth since the Great Depression. Aspiring wealth builders have been hit with a cluster bomb of stagnating economic growth and wages, high unemployment, poor career advancement opportunities, soaring living costs, paltry fixed income investment returns, and increasingly volatile financial markets.
Unfortunately, my research has found that it will become even harder to build financial wealth in the next ten to fifteen years or so because the Global Financial Crisis is far from over despite the desperate efforts of institutions such as the media and government to convince the public otherwise. Rather than encouraging a sustainable economic recovery, central banks have created what I call a “Bubblecovery” or bubble-driven recovery by inflating a series of dangerous, but temporary growth-boosting bubbles around the entire world, from Canada to China to the U.S. stock market. The inevitable ending of this Bubblecovery will finish where the 2008 Crisis left off, causing living standards to plummet even further and depressing the value of common investments for a very long time.