Tren Griffin is a Senior Director at Microsoft, doing strategy, competitive analysis and business development, with a focus on software platforms and business models. He creates and helps execute “go to market” plans, working closely with the engineering and marketing teams. Before that, he was a partner at Eagle River, a private equity firm controlled by Craig McCaw with investments in software, communications and other technology industries including Nextel, Nextel Partners and many start-up firms. During some of this time served as an officer of portfolio companies XO Communications (VP Strategy) and Teledesic (VP Business Development).
Tren recently released his new book, Charlie Munger: The Complete Investor. The book presents the essential steps of Munger’s investing strategy, condensed from interviews, speeches, writings, and shareholder letters, and paired with commentary from fund managers, value investors, and business-case historians. Derived from Ben Graham’s value-investing system, Munger’s approach is straightforward enough that even novices can apply it to their portfolios. Not simply about stock picking, it’s about cultivating mental models for your whole life, but especially for your investments.
[3:57] What you’re looking for as a value investor
[8:42] How FOMO is hurting investors and how value investing avoids it
[13:35] If the corruption on Wall Street is impacting the Munger’s and Buffett’s of the world
[19:09] If the level of intelligence and activity on Wall Street makes it impossible for the average investor to have an edge
[24:03] Why the Warren Buffett’s of the world don’t care what the market is doing right now and in the near future
AMA 132 – The August Forecast – Technocracy Rising, The Trojan Horse Of Global Transformation with Patrick M Wood
Patrick Wood is a leading and critical expert on Sustainable Development, Green Economy, Agenda 21, 2030 Agenda and historic Technocracy.
He is the author of Technocracy Rising: The Trojan Horse of Global Transformation (2015) and co-author of Trilaterals Over Washington, Volumes I and II (1978-1980) with the late Antony C. Sutton.
Wood remains a leading expert on the elitist Trilateral Commission, their policies and achievements in creating their self-proclaimed “New International Economic Order” which is the essence of Sustainable Development on a global scale.
[5:36] Where Orwell and Huxley fit into technocracy
[10:41] Why sustainability, while it sounds good, is a dangerous road
[15:53] What’s solving our problems (hint: it’s not government, charities or communism) and externalities
[19:33] What current threats we’re facing
[24:41] The quest for immortality
AMA 131 – Red Hot Lies, How Global Warming Alarmists Use Threats, Fraud & Deception to Keep You Misinformed with Chris Horner
Christopher C. Horner is the author of “Red Hot Lies, How Global Warming Alarmists Use Threats, Fraud & Deception to Keep You Misinformed”. He also serves as a senior fellow at the Competitive Enterprise Institute. An attorney in Washington, DC Horner has represented CEI as well as scientists and Members of the U.S. House and Senate on matters of environmental policy in the federal courts and the Supreme Court.
He has been a contributor in the Washington Times, National Review Online and Washington Examiner opinion pages, a guest columnist for United Press International, Energy Tribune and Spain’s Actualidad Economica, and regularly contributed to the Brussels legislative news magazine EU Reporter. He has also written in Investor’s Business Daily’s opinion and the Wall Street Journal’s letters pages.
[5:22] England’s soaring energy prices and how many seniors are dying each winter due to the inability to heat
[10:01] The belief of environmentalists that people are the scourge of the Earth and what they’re missing
[15:37] The media’s role in the climate change debate
Jason Hartman talks with Mark Ford, an American author, entrepreneur, publisher, real estate investor, filmmaker, art collector, and consultant to the direct marketing and publishing industries.
Ford is the author of essays and books on entrepreneurship, wealth-building, economics, and copywriting. He has also written a book of poetry and a book on word use titled Words that Work.
Ford’s business writing is published under the pen name Michael Masterson. His books, Automatic Wealth and Ready, Fire, Aim, were recognized on the Wall Street Journal and New York Times Best Sellers lists.
Ford is active in real estate development both in the United States and abroad.
[3:07] The history of the financial newsletter
[10:04] Breaking down “Ready, Fire, Aim”
[13:33] His movie making ventures
[17:42] Finding your optimal selling proposition
[23:05] Real estate investing
[28:53] How we let some industries teach us terribly
AMA 129 – Thumbtack Sharing Economy, Associate Director at the White House economic adviser to Senator Mitch McConnell with Jon Lieber
Jason Hartman talks with Jon Lieber, Chief Economist & Policy Research at Thumbtack about the entrepreneurial state of the USA, the sharing economy and more.
[5:01] The ability of entrepreneurs to find ways to improve society that we didn’t see we needed
[10:31] What’s going on with governmental regulation in the sharing economy
[15:57] Why the sharing economy is helping workers and employers
[20:21] How governments create monopolies
AMA 128 – The United States Economic Status with Megan Greene, Chief Economist of Manulife & John Hancock Asset Management
Jason Hartman talks about the current state of the American economy, stock market and housing market with Megan Greene, Chief Economist of Manulife & John Hancock Asset Management.
[4:06] If high frequency traders really bring liquidity into the market
[10:57] The cure all for our economic inequalities, and why you’ll never see it come to fruition
[13:10] Why we may not want to be relying on housing for our economic revival
Paul Mladjenovic is a CFP, national seminar leader, author and consultant. Since 1981, his specialties have been investing, financial planning and home business issues. Paul has written Stock Investing For Dummies (all four editions), Zero-Cost Marketing, Precious Metals Investing For Dummies, the Job Hunter’s Encyclopedia and the latest book, Micro-Entrepreneurship For Dummies.
[4:11] How living in a communist country helped him in investing in a capitalist market
[10:41] What he’s seeing now that concerns him
[18:07] How you need to do some diversifying in more than just your stocks
[26:27] The $50/month investing plan that will make you much better off in the long term
[30:58] The pension danger
[33:51] If the dollars reign as the reserve currency is in jeopardy
[38:08] Why you should own at least some gold
Jason Hartman talks with Alvin Roth, Craig & Susan McGaw Professor of Economics at Stanford and author of “Who Gets What and Why”
[5:28] – what aspect of the real estate market surprises him the most
[11:45] – The market of organ donation
[16:24] Repugnant Transactions
[20:51] Government’s role in contracts
[24:56] Signals and two kinds of messages we send
Jason Hartman talks with John Gaver, editor and publisher of Action America and author of “The Rich Don’t Pay Tax! … or Do They?”
[5:11] What the left is doing that’s making people vote with their feet
[11:15] What data to look at that isn’t corrupted by politicians and economists
[15:52] Discussing the concerns of a national sales tax
[21:40] Who a flat tax would hurt the most (it’s not who you’d think)
Jason Hartman talks with Salvatore Buscemi, author of The Art of the Raise about different deal structures in real estate investments.
[5:08] Importance of not investing based on personality
[10:03] What you need to do before you even set foot in a deal
[15:21] How different needs in investors change the investment strategy
[27:05] What Jason thinks nobody ever reads
[35:11] Why you need to know the other investors in the deal
Jason Hartman discusses 3 different strategies for investing in real estate, what an executive flip is, how to not get caught in the fools game, the difference between an investment and a speculation, the bubble of 2005 with David Wood, from Amplified Living.
[5:30] “I prefer the high end flips because i think the people who are going to buy a million or 2 million dollar house, often lack vision.”
[10:07] “If you’re buying real estate with a long term vision of having complete financial freedom, then the money coming in you shouldn’t be spending.”
[21:02] – Everything about real estate investing involves disciplines
[26:57] – “And i find kindness is one of the great methods of negotiation”
Mark Everson is currently a Republican presidential candidate for the 2016 election, as well as the former Red Cross CEO and former Commissioner of the IRS, about the current race and how stands out in a field as large as this.
[4:24] I would suggest to you that we’ve lost this traditional approach to our nation
[9:55] Some of the Republicans would knee jerk, just defend Wall Street. I’m not doing that
[14:49] People tell me stories, people have the insurance but they’re not using it!
Aaron Clarey is the author of 5 books, his most current being Enjoy the Decline of America. He also an economist, running the blog Captain Capitalism. He talks with Jason about the USD status as the world’s reserve currency, the current environment of political correctness, how the old economic building block of society is failing us and more.
[6:25] – “pursuing such socialist and parasitic policies are not good at all for any country and should never be repeated again”
[10:15] – “we no longer value a child or the family as the basic building block of the economy”
[15:05] – if you want to nail it down to one thing, it’s unfunded liabilities
[22:30] – they don’t know that by voting Obama in twice that they have fundamentally shifted the tenor of the United States.
Mentioned in this episode:
Nathan Jaye is the founder of Ziprz and contributor to the CFA Institute Magazine. In an article, Nathan interviewed Tom Brown, the global head of investment management at KPMG on some of the interesting financial changes we might see in the next decade and a half. Jason invites Nathan on the show to talk about the article he wrote and to discuss why millennials are not a fan of Wall Street.
[2:40] Nathan talks about the past financial crisis in 2008.
[4:00] Why do millennials not relate to Wall Street?
[7:05] Wall Street’s business model wants to ‘sit down and talk about it’ and many millennials who are used to making purchases on the internet do not like that.
[9:05] Nathan and Jason talk about robo advisers.
[11:15] Technology will affect the way we traditionally bank.
[15:45] We’re slowly starting to see changes in technology-incorporated clothing.
Mentioned In This Episode:
It’s my pleasure to welcome Nathan Jaye to the show. He is founder of Ziprz and contributor to the CFA Institute Magazine and I recently read an interesting Business Insider article that he wrote, which is talking about the future of the finance industry, the investment industry in 2030. You know, there’s been a lot of talk automation in every area of our lives. Let’s look at the future of our investment world and what it would be like in the networked economy in which we live. Nathan, welcome, how are you?
Great, thanks so much for having me.
Yeah, it’s good to have you on the show. As Yogi Berra said, the future ain’t what it used to be.
Well, that’s so true. That’s so true and I think this story line is getting a lot more attention these days. Recently The Economist came out with a special report on technology and banking and how the interactions are changing the landscape and the article I wrote for CFA Magazine had to do with a report by KPMG last year, I believe, going very in depth into all kinds of changes in the investment management business.
Okay, so talk about some of those changes if you would. I mean, so you based off largely off the KPMG report, but you know, what are their and your visions of the future for this.
Well, really before we get to the future I think it’s helpful to a little bit go into the past.
Fair enough. That’s a good point. Past first, yes.
The interesting story line here is a lot of this was, at least, the soil for this was set out of the financial crisis of 2008 where Wall Street banks were really hurt in many ways, both financially and in their trust standing among their customers and among the public. At the same time the crisis didn’t touch Silicon Valley and tech companies in the same way, so they emerged from the crisis much more healthier and perhaps more confident, so what we see now at lot of the technology companies are moving into areas traditionally held by Wall Street and making different inroads with the public in those spheres.
So, in fact there’s a report recently that 71% of young people would rather go to the dentist than go to a bank branch. So, that just illustrates how the younger generation has not as much as natural affinity with traditional Wall Street and banking services. They are more used to using Apple, Google, and Amazon.
Just out of curiosity, what are your thoughts, Nathan, on why the millennial generation, why generation Y doesn’t relate to Wall Street? Did they view it as I do? That it’s the modern version of organized crime or are they just not into that sort of, I don’t know, the feel like I get when I go to financial advisers it’s always sort of this kind of good old boy type of thing of, you know, who do you know, I don’t know, that’s always how it feels to me when I sit across someone from Merrill Lynch or Ameriprise or any of those companies.
Well, that’s a good insight and I think a lot of it is that just is not the way that younger people are used to doing things. They are not used to going in somewhere, sitting down at a desk, and talking to the guy on the other side. So, while they may have ideas about organized crime and Wall Street, etc, and the background somewhere. I think a lot of this is a lot more visceral . People just – younger people just don’t do things this way. They touch things on the internet.
They use their mobile devices, they use their iPads and they correspond with technology companies in that way, they are very comfortable doing that and one of the things that the KPMG report highlights is technology, or excuse me, financial and investment companies traditionally aren’t very good at reaching younger people through technology and I’ve noticed that consistently at my work at CFA Magazine when I may be researching or looking into one investment manager or another, often they are mid-market and you look at their websites and they just look they’re built in 2003.
So, it’s not the website that the younger generation is used to and you can’t really interact with it. So, there’s this divide in terms of generations I see, in terms of what financial companies are doing with their technology and what younger people are used to and are demanding more and more.
Yeah, I would definitely see that and, you know, it seems like a lot of these financial advisers, they sort of, you know, they will bemoan the SEC and FINRA, yet at the same time, I think they use that as a sales tool. I think they actually love it secretly because, I remember one I was dealing with several years ago had, I had sold one of my companies and had a decent amount of money to invest and he’s like, let’s just meet and talk about it and I just wanted him to send me something, send me a link to something I can look at about the performance of his model portfolio and so forth over the past few years and he couldn’t send me anything.
He hid behind the typical FINRA, SEC type stuff. Oh, I can’t do that, it’s all regulated, and you know, I don’t know, I just feel like this industry has to kind of evolve and grow up. People want to see things. They want to see stuff documented. It’s always, let’s sit down and talk about it. I don’t want to sit down and talk about it. I want to see the goods, show me the charts.
Exactly, exactly, and I think they’re going to have to change or new competitors from one area or another are going to come in and make them change. Now, it’s true they have a lot of regulation to deal with that preps other industries, but you know, that’s only a excuse.
Yeah. Okay, good. What else do we need to know about the past and the present and I can’t wait to look in the future with you.
Well, I think we’ve done with the past. The only other thing I might bring up is the emergence of peer-to-peer technologies over the last, I’d say, 15 to 20 years. I mean. We are all familiar with Napster, the file sharing program that became such a hit in the late 90s and of course the traditional banks are your centralized hub for financial transactions, so we have this real c-change in terms of how correspondence between people and individual is something that we’re seeing in the last decade or two and it’s much different than the centralized way of doing business that a lot of traditional investment managers and banks are operating on.
It’s really interesting and I really can’t wait for it to see how peer-to-peer disintermediates a lot of the banks in terms of lending, things like the lending club, etc, there’s various online sites that allow peer-to-peer lending and burrowing, but how does it impact investment advice. Where does the peer-to-peer part of that come in?
Well, I’m not really familiar how it’s affecting investment advice. I mean, we have in a very large scale way there’s all kinds of chat rooms, you can get advice from anywhere now from anybody, basically. There’s almost too much advice.
Right, I agree and the old saying for that is advice is usually worth what it costs.
Yeah, no, there’s something to that. At the same time though, as you were mentioning, you had the CEO of Betterment on and interns of investment advice, I mean, it’s not necessarily peer-to-peer but the whole emergence of robo advisers is definitely changing the way we’re looking at how we get advice and how much we want advice.
Talk more about the robo advisers, using computers and algorithm to advice people. I mean, certainty the high frequency traders have taken advantage of this in a big, big way at the personal level, I mean, what is it all going to look like in 2030?
Wow. It could look a lot different. In the last few years we’ve seen the real growth of these so called robo advisers, companies like Wealthfront and Betterment, Personal Capital, and for those that don’t know, these are companies which are basically making the investment process very easy, so you select a few different priorities of yours, investment priorities and they basically put your priorities into their system and they invest your money in a different set of index funds depending on who you are and what you’re interested in.
So, it really scales down the whole process, you don’t have to go in to talk to anybody, you don’t have a long conversation with the person who then decides to do with your money. Basically go online and five minutes later you’re done. So, that really appeals to younger people and also me and it kind of feels good, it feels familiar, it feels like placing an order on amazing. It feels like doing a transaction on any technology website which you’re in and your out and then you’re on to whatever else you’re doing in life.
That’s just great. I mean, you don’t have to rely on some guy who wants to pay for his golf club membership with your investment money. You’re just much ore, you’re much more empowered. I mean, this is the era of the empowered consumer.
Exactly and I think a lot of people now are questioning, you know, when I do go to a financial adviser, how much is he adding? How much value is he adding to my investments? Is this actually make a difference and we don’t really know and it should be interested in the coming years to see some studies based on how our robo advisers are preforming compared to other asset advisers.
Yeah, certainty, okay. So, what other types of changes do you see for the future?
Well, I think, for one thing, it’s just interesting again how technology is making inroads into traditional banking. I don’t think people would have predicted a number of years ago that people using Apple Pay, Apple is now getting .15% of all transactions. So, who could imagine that Apple would be getting a cut on the credit card business at this point, but there we are.
Right, the interesting part of that though is Apple Pay is just using the credit card platforms anyway. In my Apple Pay account, I just got it linked up with my American Express and my Visa and my MasterCard, of course, nobody really wants to take American Express, because they rip off the merchants, that’s another tangent, but you know, there are really, it’s just a credit card processing platform really. It’s not a disruptive – maybe that’s where it’s going, but right now, right? That hasn’t evolved to be that disruptive yet, do you think?
Well, I’d say it’s the beginning. Apple wasn’t involved with this at all, the credit card companies at their platform and they took all the profits and now just the fact that Apple is getting a share of that is a change and at the same time you see a lot of different other kinds of mobile payment systems. You have Venmo, which a lot of people are using today and quick payments, of course you had Paypal for a number of years. A small percentage of people are using Bitcoin to pay each other for different things, so you’re beginning of ways to pay each other, pay people, quickly and simply.
Sure, yeah. It’s really, really fascinating. I mean, I’m very excited about it and we’ve got to lower the friction and the cost of transferring payments in the payments industry and all of that type of stuff. It’s just going to be good for the global economy, you know? It’s going to increase the velocity of money and I think improve things. Isn’t it amazing, Nathan that we by enlarge are still paying our bills the way we did a 150 years ago. Even if we bank online, as of course, almost all of us do, you know, all they’re doing is writing a physical check and sticking it in the mail. That’s hilarious that we’re still doing that to me.
Yeah, I think what you’re saying about the velocity of money is a really interesting factor too. I mean, the more we can get money in motion and get capital to people who are going to do things with it, that’s going to change the world in very interesting ways, getting capital to people who may not have access before, but have something to offer in terms of what they want to build.
We kind of talked about some of the future of the investment industry from the individual, from the consumer side and everything there makes sense. What about the institutional side and then I want to ask you also about investment advisers, you know, if someone listening is an adviser out there, what do they need to prepare themselves for? But first the institutional part, does it change anything there?
Well, it’s a little bit more removed for the individual consumer, but what Tom Brown who is head of the KPMG Global Investments branch was saying that institutions need to get closer to their consumers, their end-consumers. Right now they do things through, the larger ones, through third parties in terms of reaching people who have money to invest their clients and he says they need to reach their consumers, they need to get closers, they need to find out who they are and they need to find out what their needs are, they need to be able to talk to their end-consumers and that’s the way they’re going to keep those consumers as their clients.
How about the advisers? I mean, Goldman Sachs, the way they do business, it’s all going to be the same for them? The big institutions?
Well, probably nothing will be the same in 2030.
So, Nathan, give out your website if you would.
Well, the website for Ziprz is Ziprz.com.
What is Ziprz exactly? I know about CFA, but Ziprz?
This is actually a clothing line, so me and another designer, fashion designer, in San Francisco are redesigning the dress shirt to do away with buttons and we have a zipper where the buttons would be, so we have fresh and familiar combination, it’s go the structure of the dress shirt, but it allows you to dress down a little bit, which is perfect for people in Silicon Valley.
Yeah, very interesting. You know, I’ve been amazed that clothing has not really modernized much at all. Of course, some of the fabrics are getting more hi-tech, which is kind of cool, but with all of this technology around us, the concept of clothing hasn’t much changed.
Yeah, we’re starting to see changes, like you say with materials and other processes, but it’s a very physical business, you can’t digitize it. So, it’s a little bit more resistant.
I know. It needs to, I think we need to design clothing more in a way that our devices work with, though, that integrate with our phones and so forth. Of course we know there’s a couple of companies doing that, but no one is doing it in a big way, you know, so. Kind of a tangent, of course, but so what are your closing thoughts here, Nathan, on 2030 and the financial and investment industry?
Well, as we’ve seen just in the last 15 years of the internet, technology has changed almost every part of our lives and there are some businesses, some sectors which are less touched than others and eventually those will be touched by technology too. So, the encumbrance are going to have to change or they will be changed from the outside by other companies, basically.
So, I mean, you think of auto industry, Apple, there’s rumors that Apple is getting into making cars themselves and then if you bring it back to investment, the investment business, but the focus on the interview here is about them – for instance, Ali Baba, the giant Chinese Amazon, so to speak, they’ve launched their own investment business now and they’ve had huge success. So, in China, they are an investment player now and that’s just, you could say a clue as to what may happen here in the west or other countries.
Fascinating. It’s an amazing time to be alive. Nathan Jaye, thank you so much for joining us.
My pleasure, Jason.
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The Federal Reserve’s third round of Quantitative Easing, that massive stimulus program intended to boost the economy in the years following the housing collapse of 2008, officially ended in October 2014. But as the dust settles, some financial experts point out that it may have been banks and stocks that benefited most.
The much-publicized housing bubble burst with a vengeance in 2008, sending the US housing market into a massive collapse that rippled out into the entire economy. Recession quickly followed, with all major sectors of the economy struggling to gain traction in the years following the housing crash.
To boost the recovery and get more money flowing into the economy, the Federal Reserve, arbiters of US money matters for nearly a century, initiated several rounds of “quantitative easing,” a plan to pump money into the economy and keep interest rates low by buying up massive amounts of mortgage backed securities and other bonds.
The latest and most ambitious of these, dubbed QE3, began in 2012 and involved buying a staggering $85 billion in securities and bonds each month, with no clear end date in sight. By early 2014, the Fed began hinting at a possible taper off of QE3 while keeping an eye on the performance of key economic sectors like employment and housing. Finally, after months of scaling back $10 billion at a time, QE3 was declared done at the end of 2014.
In all, QE3 turned out to be the biggest stimulus boost in US history. It added $3.5 trillion to the Fed’s ledgers and inspired imitators in other regions of the world, particularly the European Union. Thanks to the stimulus, US interest rates stayed at or near historic lows for much of that time, which was intended to encourage consumer confidence and boost sales of houses and other large purchases.
Not surprisingly, market watchers feared that the end of QE3 would see a steep rise in interest rates as well as inflation. That hasn’t happened. But while most financial experts acknowledge that the Fed’s ambitious plan did what it set out to do, others point out that QE3 actually provided its biggest boost to the banks and the stock market.
As QE3 was getting underway in 2012, financial and money management experts at The Motley Fool among others argued that although the intent of QE3 was to help borrowers get good rates on loans and encourage borrowing, banks themselves were reaping the benefits of the Feds’ bond purchases, but weren’t passing those benefits on to consumers. While interest rates did in fact stay low, banks were still charging the same fees for originating loans and other financial products.
While banks continued to originate mortgages, they didn’t hold them – they sold the majority of those loans off into the bond market, benefiting from differences between the bond yields and actual mortgage rates.
Now, it turns out that QE3 may also have played a role in the stock market’s surging recovery. According to a recent article from Business Insider, financial analyst Byron Wien of The Blackstone Group notes that the market’s rally since the housing recovery began has been boosted by a large shot of QE3 money.
According to Wien, the Fed contributed nearly $3 trillion toward the overall $13 trillion surge in stocks from 2009 to 2014. And now that QE3 is over, investors look toward a future without that so-called “easy money.”
The Fed’s foray into bond buying established connections with banking, stock markets and even international money markets, where it affected exchange rates and foreign monetary policies. Though the outcomes have largely defied the most pessimistic of predictions, questions still linger about whether the bold plan of QE3 gave a jumpstart to the economy as a whole, or to big money sectors like banking and stock trading. (Top image:flickr/EGlobeTravel)
Read more from The American Monetary Association:
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The biggest players in the US banking industry have been on the hot seat ever since the housing collapse of 2008 exposed a number of misleading, predatory and downright illegal practices perpetrated both at home and abroad. Now, as another round of penalties come down on five of the country’s leading financial institutions, one senator is questioning whether these banks can be trusted to handle their clients’ hard-saved retirement money.
The housing collapse of 2008 came about as a direct result of bad banking practices, which contributed to the housing bubble that later burst so spectacularly and left millions of homeowners in default or foreclosure. In the years leading up to the crash, banks large and small had been making loans with wild abandon, often to extremely unprepared borrowers.
Using a variety of hard sell and misleading tactics, mortgage lenders enticed buyers with no-down, no- interest or interest only loans that stated out with low monthly payments hat swiftly ballooned into larger ones that these homeowners couldn’t repay. Many claimed that they didn’t even understand the terms, and others said they were misled by bank officials.
As lawmakers and financial experts picked up the pieces after the crash, the nation’s biggest financial institutions – JP Morgan Chase, Citigroup, Bank of America, Barclays and several others in varying combinations – became the target of a string of criminal and civil investigations and lawsuits.
A wide range of malfeasance was unearthed in those actions, ranging from the famed “roboosigning” controversy in which foreclosure actions were slipped through with false signatures to accusations on the international front of manipulating the LIBOR exchange rates that drive world currency exchanges.
Most of the suits pressed against the banks have resulted in a series of multimillion-dollar fines and a few criminal cases against individuals. And the ongoing scandals did lead to the enacting of the Dodd Frank Wall Street Reform and Consumer Protection Act in 2010, which imposed tighter standards on mortgaged lenders and, indirectly, on borrowers as well.
But throughout all the investigations, charges, hearings, lawsuits and regulation, the banks involved have been allowed to continue conducting business largely as usual, with no interruption in the usual services they provide.
That may change, though, if US Senator Elizabeth Warren (D-Mass) has her way.
At issue are the most recent charges of manipulating international monetary exchange rates leveled against JP Morgan Chase, Citigroup, Bank of America, Barclay’s and the lesser-known UBS AG.
As a recent article from Business Insider reports, four of the five have already pleaded guilty to criminal charges of illegally tweaking international exchange rates, while UBS AG is expected to do the same in the coming weeks.
But although these banks have been fined a total of nearly $6 billion, they’ve been granted waivers from the Securities an Exchange Commission that allow them to conduct their usual securities based banking activities -with the notable exception of handling retirement pensions and plans. They need to apply separately to the US Department of Labor to request exemptions for managing those kinds of accounts.
In the past few years, workers in a all kinds of industries and businesses have seen their pension plans mismanaged, whittled away, or outright eliminated, thanks to bad judgment and shady practices on the part of both employers and the banks and institutions tasked wit handling those plans.
That’s why Senator Warren is calling on the Department of Labor to conduct public hearings before granting these banks any kind of waivers to conduct business involving pension plans and retirement funds.
It’s a move in support of the individual consumer, the worker hoping to have funds to live on after retirement. Given the past track record of these banks where responsible handling of client interest is concerned, and the SEC’s record of granting easy waivers, the call for Labor hearings is also a call for greeter accountability.
The provisions of the Dodd Frank Act and its creation, the Consumer Finance Protection Bureau, are largely aimed at protecting mortgage applicants from the kinds of bad baking that created the collapse – not pension holders. Hearings would shed light on these banks’ practices in the pension plan arena – and might create better protections and more accountability there too.
Bailouts of banks “too big to fail” and the willingness of the SEC and the Department of Labor to grant them waivers to do business as usual don’t provide much incentive for these institutions to clean up their acts. And that may mean they just shouldn’t be trusted with anyone’s retirement savings. (Top image:Flickr/KevFoster)
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The Silk Road, that ancient and mystical trade route that brought Asian silks and spices all the way to Europe, has long been the subject of story and song. But now, a new initiative by the Chinese government aims to revive the Silk Road’s storied route in a bid for Eurasian supremacy that both challenges the West and promises to open new doors for investors around the globe.
Chinese president Xi Jianping announced the New Silk Road Initiative in 2013 – an ambitious project that would create an unprecedented economic corridor that would eventually link Asia, Europe and Africa, with benefits for all the countries and regions along the route.
Among the key parts of the proposed plan: high speed railroads, massive infrastructure repair and development, pipelines and other conduits for energy, new distribution and shipping facilities and an array of support facilities all along the Road.
But the plan doesn’t stop there. China’s initiative also calls for a maritime version of the Silk Road – shipping lanes that would connect China with the Mediterranean Sea and Persian Gulf via the Indian Ocean.
To prepare for the New Silk Road initiative, in 2014 China established the Asian International Infrastructure Bank, an institution dedicated to providing startup money for the project. China itself put up $40 billion to launch the bank, and quickly began recruiting other members from the global community.
In less than a year, the AIIB has gathered significant support. Most Western European countries are on board, along with many in Asia and even the World Bank itself, all drawn by the promise of economic benefits not just for the region but also for the world, far into the future. For all these areas, the New Silk Road promises to pump new money into local economies, improve rural conditions, advance education and create jobs. It appears to be a win win situation for all parties.
But not everyone is on board – and some economists and global market watchers fear that China’s move to create such a multinational initiative is the opening salvo in a war for supremacy in Eurasia. China is already a leader in foreign investment and gold trading, and some worry that its dominance will eventually dethrone the US dollar as the standard for global currency trading.
That means the New Silk Road plan promises major changes in the geopolitical landscape of the whole region, as other countries jockey for their own dominance in a new world of global trade opportunities.
Needless to say, the US has not signed on as a member of the AIIB. When the New Silk Road project was originally announced, the US actively opposed it – but later reversed its rhetoric to say that it endorsed it all along. But now a number of America’s NATO partners have jumped on board, along with key allies in the region Australia, South Korea and New Zealand.
In order to maintain influence in the region, the US has proposed its own version of a multinational trade alliance, calling in the Trans Pacific Partnership. But while the proposed pact claims to be “trans pacific” it excludes both China and Russia, both of which have a strong presence in the Pacific region.
India, too, is coming up with its own trade initiative that would expand development and increase trade throughout Eurasia. Plus, plans for involving Iran in the new economic corridor would violate US-led sanctions against that country.
As a recent article from Business Insider points out, China’s plan is a game changer, unprecedented in scope and ambition. But regardless of the stance taken by US officials, the New Silk Road will need US-made technology and equipment, as well as an international team of experts in many fields. That means new opportunities for investment and entrepreneurship in areas all along the corridor.
China’s New Silk Road won’t be finished in a year – or even ten. But just as that ancient road lured explorers in search of treasures from exotic lands, this new version holds its own promise of riches on the road that never ends. (Top image:Flickr/ju-x)
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As far back as 1990, financial experts were predicting that in the not too distant future, investment and money management would be aided by sophisticated computer technologies. Flash forward a couple of decades, and that future is here.
Robotics experts predict that by 2025, robots and other kinds of “smart” digital technology will have achieved processing power equal to that of the human brain: an achievement of true artificial intelligence that promises to change our world in countless ways. Among them: investing, financial services and the global money markets.
The use of automated technologies in banking and finance isn’t new, of course; ATMs, so common now that we don’t even remember what the letters stand for, complex spreadsheet and asset management software, and even ebanking have been around for so long that these technologies are simply a part of everyday financial management for everyone from individuals to big corporations.
But true artificial intelligence takes those functions much farther, with the promise of making financial dealings of all kinds faster, cheaper and more accurate – as well as more user friendly. But experts warn that there are downsides to the onrush of AI technology, too.
What is artificial intelligence? It’s computing technology that’s several generations removed from simple automation. AI refers to the ability of a computer to understand questions, provide answers and offer options based on available information. With rapid advances in computing speed, AIs can sort information, make decisions based on branching options, and handle complex sequences o tasks in the same ay every time, removing the risk of human error.
The power of this kind of “smart” computer was once a novelty, trotted out to amuse and astound people with feats like beating a chess master at his game, writing poetry or predicting the future. But behind the scenes, supercomputers have been directing missiles, assisting in surgeries and medical research – and even acting as monitors and companions for the elderly.
Now, advances in artificial intelligence and other digital technologies affect just about every aspect of human life. Robots routinely assist nurses in hospitals. Artificial animals have been developed to move just like living ones, capable of traveling where humans can never go. AIs enable space probes to land on comets and visit Pluto.
These technologies also help to move money all around the globe. From the early days of ATMS and electronic transfers, financial experts now envision a world in which virtual financial advisors help with investment management and conduct transactions. Digital currencies can be kept and tracked in virtual “wallets” for transactions conducted at any hour, from anywhere.
AI technology will help investors calculate risk, make adjustments based on current conditions, and evaluate new opportunities. On the real estate front, these technologies let potential homebuyers take virtual tours of properties they’re interested in, “decorate’ them at the click of a mouse, and complete the purchase all in one interface.
It’s obvious that in a world where AIs are assuming more and more tasks normally carried out by people, some jobs filled by people would no longer be heeded. In this brave new world, financial planners, investment advisers, real estate agents and a variety of other professions would disappear.
Losing human jobs to technology is only one of the risks of runaway AI technology that worry many economists and market watchers. A world increasingly reliant on AI technology could be crushed if those systems were hacked or if they failed. And the increasing use of AI technology for military and defense purposes raises the specter of a global disaster arising from a system failure or other glitch.
Still, the shadow side of the advancing wave of AI technology is, as Jason Hartman points out, more of an opportunity, rich with benefits, than a threat. AI applications have the potential to revolutionize the way we do business and live our lives. And if you own a smartphone, use a GPS or boost your fitness regimen with a Fitbit, you know the AI revolution is already underway. (Top image: Flickr/ju-x)
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Ever since the great housing collapse of 2008, legislators and regulators have tried to scale back – or even eliminate – federal mortgage megalenders Fannie Mae and Freddie Mac. But as new regulations n private lenders, the agencies everyone loves to hate just keep on ticking.
Fannie Mae and Freddie Mac collectively account for the majority of residential home loans serviced in the US. But even as their much publicized troubles fuel calls for their demise, financial experts worry: if they’re gone, will the scandal ridden private lenders be able to step up?
Fannie Mae (real name: the Federal National Mortgage Association) is an old lady now – and one with a colorful past. Fannie Mae was first created in 1938 as part of President Franklin Delano Roosevelt’s post-Depression New Deal. Fannie’s original mission was to help boost home ownership by providing local banks with federal money to finance home mortgages.
Fannie Mae would do this alone as a government backed entity for the next thirty years. But in 1968 Fannie Mae was restructured, splitting into two separate entities: a new version o Fannie Mae that was placed into private ownership to keep it off federal budget rolls, and a new entity, the Government National Mortgage Bureau, or Ginnie Mae, which remained under government ownership. It dodged the post crash chaos and is still the only home loan agency that’s fully backed by the US government.
Freddie Mac, or the Federal Home Loan Mortgage Corporation, came along in 1970 and was originally intended to be a competitor of Fannie Mae, in order to create a more robust secondary mortgage market and remove Fannie’s monopoly. But as the housing market balloon swelled and eventually burst in 2008, Fannie and Freddie both faced the same troubles.
Facing massive losses after the housing crash, they were bailed out by the government to the tune of $188 billion and eventually placed into conservatorship under the regulation of the Federal Housing Finance Agency. They’re still under that conservatorship today. But both Fannie and Freddie continue to originate the mortgage-backed securities that back home loans serviced by a host of private lenders such as banks, credit unions and other kinds of financial institutions.
Amid calls for ways to impose better oversight on mortgage lending and protect consumers from becoming victims of predatory lending practices, lawmakers from both parties began to explore ways to phase out Fannie and Freddie. Possible scenarios included greater privatization, complete dissolution, and tighter regulation.
But in the meantime, new laws targeting the banking industry and private mortgage lenders were tightening mortgage lending standards and making it harder for marginally qualified buyers to get mortgages.
In the scandal ridden years after the crash, virtually all of the nation’s leading banks fell under investigation for charges of fraud, misrepresentation and other illegal activities. So the Dodd Frank Wall Street Reform and Consumer Protection Act became law in 2011, ushering in a number of new rules that banks and other private lenders had to follow in order to avoid penalties.
The new regulations included the creation of the Consumer Federal Protection Bureau, which promptly imposed the Qualified Mortgage Rule on new loans serviced by most banks and other institutions. In order to avoid penalty and major losses, banks had to ensure that the mortgages they serviced conformed to the tighter standards of the QMR, which included such things as higher credit scores, a stricter debt to income ratio, and larger down payments for home purchases.
But the new regulations meant many potential buyers couldn’t qualify for a mortgage, which threatened to stifle the already struggling housing market. In a time when home ownership was already at the lowest rates in over two decades, the new regulations designed to restore order in the housing market appeared to be stifling it instead.
In the meantime, Fannie and Freddie instituted new policies of their own, restructuring the loan securitization process and relaxing down payment and credit score requirements for mortgages they sponsored. These were steps aimed at supporting a housing recovery facing a slowdown because of the very regulations aimed at preventing another crash.
With the mortgage lending industry in flux and would be buyers locked out of the lending process, Fannie Mae and Freddie Mac continue to dominate the US home loan landscape And although they’re still in the crosshairs of legislation aiming to reform the mortgage markets, they won’t be going away any time soon. (Top image: Flickr/futureatlas)
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Computers that move at the speed of the human brain. A world where every human being can know anything, anywhere, any time. Data streaming through a trillion sensors to connect the whole world. Though these things sound like part of a science fiction movie about the far future, that future is now.
Experts from a variety of fields including economics, robotics and psychology predict that those extravagant predictions of a sci fi future will become everyday reality in just one short decade. From modest beginnings in single computer chips, the digital revolution is expanding exponentially – and it has the potential to reshape life as we know it.
Robotics experts have long predicted that robots and other kinds of artificial intelligences will achieve the level of human intelligence, and that milestone is expected to come within the next decade. By 2025, a computer costing just $1000 will be abl3e to process data at 10,000 trillion bytes per second. If that sounds stunning, consider that it’s the speed at which the human brain already works.
Armed with that new level of intelligence, robots and other kinds of smart technology will play a much larger role in complex fields like medicine, with the potential to revolutionize healthcare. With greater precision and wider application, AIs could push health care costs down and give ordinary people far greater control over their own health.
These technologies are already in use in healthcare settings ranging from the operating room to assisted living facilities. Robots perform routine nursing tasks such as dispensing medicines and delivering meals, act as companions and monitors to the frail elderly, and conduct diagnostic exams. All these applications could streamline the healthcare industry and substantially reduce costs.
This brave new world of 2025 is also one of global connectivity and shared knowledge – the Internet of Everything. Within a decade, the world will be connected by a network of over 100 trillion networked devices. And those devices all have multiple sensors, working ceaselessly to collect data from multiple sources. The result? A multi-trillion dollar economy driven by an unprecedented flow of data from all over the world – and beyond it.
This massive, ceaseless flow of data collected by and streaming from cheaply produced and easily available devices could create a world of “perfect knowledge” in which anybody could in theory find out anything, anywhere, any time. For the first time in human history, knowledge is available to anyone who seeks it.
That puts unprecedented power in the hands of individuals rather than the gatekeepers society designates, such as schools, publishers and government entities. People who can’t afford expensive educations can learn from anywhere. Anyone with an idea can share it – and it becomes harder to hide institutional blunders and abuses from a watching world.
This world of perfect knowledge driven by the Internet of Everything also brings that knowledge and connectedness to virtually every corner of the world, creating new opportunities for people in impoverished and isolated areas of the world to connect with others and create new things.
Without realizing it, we’ve already stepped into that future world. Smart technologies, virtual reality applications and robotic assistance for a variety of tasks are relatively commonplace today. But those applications and many others are developing at exponential rates – and could do so virtually indefinitely.
That’s the prediction at the core of Moore’s Law, coined by Intel CEO Gordon Moore nearly half a century ago to describe what happens to computer transistors over time. According to Moore, the number of transistors that could be placed on a computer microchip would double every year – and that the trend would continue indefinitely.
Since then, Moore’s Law has been used in a broader way to describe the exponential growth of all kinds of industries and enterprises such as the current digital revolution, which is characterized by dramatic increases in power along with a corresponding decrease in cost, just as Moore predicted.
As Jason Hartman points out, we’re living in the most exciting time ever, a time when change is the only constant. And as digital technology advances at light speed in every area, change is coming faster and faster, with the potential to transform life as we know it in just ten short years. (Top image: Flickr/ju-x)
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