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Notes From the Fieldby Martin Weil

Archive for the ‘Economy’ Category

June 28, 2014

The Pitchforks Are Coming

Hedge fund colleague forwards this cautionary piece from Seattle tech billionaire Nick Hanauer.

Unless our policies change dramatically, the middle class will disappear, and we will be back to late 18th-century France. Before the revolution.

And so I have a message for my fellow filthy rich, for all of us who live in our gated bubble worlds: Wake up, people. It won’t last.

June 19, 2014

Gamechanger from Tesla?

 

Patents are completely out of control in the US. According to many commentators, the proliferation of patents in the US is no longer a sign of economic development but a blight on progress. Several years ago The American Life did an excellent podcast on patent trolls, companies expressly set up to buy patents for the sole purpose of suing other companies for perceived infringement. Where once patents were intended to protect the rights of investors of actual inventions, today anything can be patented, even the idea of something yet to be invented can be subject to patent. Companies like Google and others have been known to pay billions of dollars to buy up patents simply as a preventative measure against being sued in the future.

Into this mess, where Congress has only recently once again failed to legislate serious patent reform, enters Elon Musk of Tesla who with one executive decision may have changed the landscape.

Tyler Cowen comments “I believe that this announcement will be discussed in business schools for years to come much like Henry Ford’s announcement of the $5 a day wage.”

Yesterday, there was a wall of Tesla patents in the lobby of our Palo Alto headquarters. That is no longer the case. They have been removed, in the spirit of the open source movement, for the advancement of electric vehicle technology.

Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.

When I started out with my first company, Zip2, I thought patents were a good thing and worked hard to obtain them. And maybe they were good long ago, but too often these days they serve merely to stifle progress, entrench the positions of giant corporations and enrich those in the legal profession, rather than the actual inventors. After Zip2, when I realized that receiving a patent really just meant that you bought a lottery ticket to a lawsuit, I avoided them whenever possible.  …

Technology leadership is not defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor, but rather by the ability of a company to attract and motivate the world’s most talented engineers. We believe that applying the open source philosophy to our patents will strengthen rather than diminish Tesla’s position in this regard.

May 29, 2014

Good News, Less Good News

Stephanie Pomboy reports in Barrons that US household net worth has rebounded sharply from the depths of the financial crisis. Since March 2009, US household wealth has increased an astonishing $20+ Trillion and now sits at an all time high.

In the less good news, the WSJ, reporting on the same data, agrees with Pomboy that the majority of this wealth increase has gone to the already wealthy while the middle class has seen little of the gain.

Holdings of stocks and bonds as a share of overall net worth, at 35%, is at the highest level since the dot-com bubble burst in 2000, Fed data show. That means that even as wealth increases, it’s increasingly going to the affluent.

In addition to the affluent, much of the wealth surge is going to older Americans. Both groups are less likely to spend their gains and more likely to save, Mr. Emmons said. Meanwhile, sheer demographics—the retirement of the baby boomers and America’s aging population—are increasing the ranks of the nation’s savers.

The upshot: While American households overall are getting wealthier, the benefits for the economy may prove limited until such improvements reach more people

Thus it seems the US economy may be stuck in slow until both the middle classes and younger earners, who spend a far greater percentage of their incomes and wealth, receive a larger share of economic growth.

May 28, 2014

Offered Without Comment

New York City mommies with money to burn are hiring professional organizers to pack their kids’ trunks for summer camp — because their darlings can’t live without their 1,000-thread-count sheets.

Barbara Reich of Resourceful Consultants says she and other high-paid neat freaks have been inundated with requests — and the job is no small feat.

It takes three to four hours to pack for clients who demand that she fit all of the comforts of home in the luggage, including delicate touches like French-milled soaps and scented candles.

At $250 an hour, the cost for a well-packed kid can run $1,000.

From the NY Post. Pointer by Tyler Cowen

April 14, 2014

An Insurance Company with an Army

It is not the first time this observation has been made of our US Federal Government.  See chart of Federal outlays below. (from Vox)

4-7-14tax

February 18, 2014

A New “Gold” Rush

The highest housing rental prices in the US are not to be found in New York, DC, Los Angeles or San Francisco. They are in Williston, North Dakota, according to a recent survey.  A 700 sq ft apartment in this town of 30,000 rents for an average $2400/mo. This the result of the astonishing oil boom following rapid advances in “fracking” technology.

November 29, 2013

Midnight in L.A.

la-fi-mo-black-friday-midnight-madness-2013112-001

The Oaks Mall, from today’s LA Times.

November 25, 2013

Quick – where in the US can you find a 0.6% unemployment rate?

N Dakota employment

 

Williams Co, North Dakota, thank you very much. And that is point 6 percent, not six point zero percent. This is all due to mining employment and the new petroleum fracturing production technologies that have created an “Oil Rush” in the region. Unemployment is down dramatically across the entire state. According to 361 Capital, Williams County had a per capita personal income of $116,978 in 2012, versus $39,523 in 2007.

October 9, 2013

Headlines I Never Thought I Would See In Print

“5 countries with bonds safer than Treasurys” is today’s lead article at Marketwatch.

For over a hundred years Wall Street has marketed one assurance to its customers above all others.

The line: That U.S. Treasury bonds, the IOUs issued by Uncle Sam to pay for national debts, are utterly without risk of default. …

According to the International Monetary Fund (IMF), the U.S. government’s net debt is now 89% of gross domestic product. By contrast, Germany—often thought of as Europe’s most financially sound nation—has net debts of only 56% of GDP.

But if you want really, really safe, you should look a little further north of there—or a long way south. Scandinavian countries, and the Antipodes, have the best financial picture of all.

New Zealand’s net debt is just 29% of its economy, and Australia’s is just 13%, according to the IMF.

I imagine the list of countries with safer sovereign debt will get considerably longer if the US should wander into the dreaded default option. Yes, the US still benefits from the “exorbitant privilege” of being the world’s reserve currency and a safe haven in times of crisis. But privilege comes with responsibility. And the US is instead behaving like the spoiled child who owns all the toys. At some point our diffident behavior regarding our financial obligations will have a material cost. If the US is no longer capable of acting as the responsible senior party to the global financial marketplace, certainly there are other countries who would happily step forward.

September 29, 2013

Reasons To Be Optimistic

The WashPo’s Wonkblog writes that household formation is on a steady rise. If sustainable, this is hugely inportant for the US economy. Back before the financial crisis, my former economics professor, Ed Leamer, presented a paper to the gathering at Jackson Hole claiming that as goes housing construction, so goes the US economy. This was not, and is still not, conventional wisdom. But Ed knows his data and if home building is rebounding, then I suspect a stronger recovery may be around the corner. This is also the position taken by Goldman Sachs, as I learned from a breakfast meeting this week.

Supporting the potential of economic Deleveraging-800x565growth, along with new household formation, is the continuing decline in private debt ratios. These have been steadily improving since the financial crisis and look to be headed back to the more normal levels last seen in the 1980s and early 1990s.

 

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