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Friday, September 16, 2016
Sapphire Ventures has closed on a $1 billion fund to invest in privately held start-ups, easing fears about a downturn in the venture capital industry.
Sapphire Ventures, a venture capital firm in Palo Alto, Calif., with more than $2.4 billion in assets under management, has only one investor, the business software maker SAP. Sapphire Ventures was the corporate venture arm of SAP, and it has operated as a stand-alone firm since 2011.
For the last year, investors have worried that the venture industry had become overheated and that there would be a freeze in fund-raising. But like Sapphire Ventures, several firms have raised more than $1 billion this year, giving them firepower to write big checks for start-ups, whose valuations peaked around the end of 2015.
Last month, Technology Crossover Ventures announced a $2.5 billion fund. Earlier this year, Kleiner Perkins Caufield & Byers raised $1.4 billion across two funds and Andreessen Horowitz raised $1.5 billion. Founders Fund also raised $1.3 billion, Accel Partners garnered $2 billion and Norwest Venture Partners raised $1.2 billion.
In the United States alone, the venture industry raised nearly as much money in the first half of 2016 as it did in all of 2015, according to data from Thomson Reuters and the National Venture Capital Association.
Sapphire Ventures invests in start-ups that are past their earliest stages, and 38 of the companies that it has put money into went public or were sold since 2011, including the online storage company Box, the wearables maker Fitbit and the mobile payments company Square.
Thursday, September 15, 2016
2016’s already a record year for country downgrades—watch out for more: Fitch
With over three months to go, 2016 looks set to be a record year in terms of the number of sovereign downgrades by Fitch Ratings.
Twenty countries have had their ratings cut so far this year by the major ratings agency. So far, this matches the tally for the whole of 2011 and the most since Fitch started record keeping in 1994.
Furthermore, the number of countries on "negative outlook" — at risk of downgrade — outstrips those on "positive outlook" across the world. In developed markets, for instance, Belgium, Japan and the U.K. are on negative outlook by Fitch.
At a conference in London Tuesday, Fitch's head of sovereigns said that developed countries, particularly European ones, faced unfavorable debt dynamics despite low funding costs.
James McCormack highlighted that real gross domestic product (GDP) growth in the U.K., France, Spain, Portugal, Italy, Greece and Canada was lower than the real effective interest rate, posing challenges to repayment of debt. Meanwhile, Japan, the U.S., France, Spain and the U.K. have primary deficits (defined as the fiscal deficit, which is the difference between government revenue and expenditure, minus interest payments).
Among the challenges facing Europe included "austerity fatigue," euroskepticism (criticism of the European Union or membership of the euro zone), high levels of migration and security concerns, McCormack said.
The U.K., meanwhile, faced a weaker growth outlook and prolonged legal and regulatory uncertainty after its vote to leave the European Union in June. Fitch downgraded the country to AA with negative outlook from AA+ immediately after the referendum.
Tuesday, September 13, 2016
Stories Going Beyond The Mainstream
"Teacher Seeks Pupil"- Ishmael
Without Gorilla Will There be Hope For ...?
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Earth's Future At Risk As Great Apes Face Extinction
Four out of six great apes one step away from extinction – IUCN Red List
Today’s IUCN Red List update also reports the decline of the Plains Zebra due to illegal hunting, and the growing extinction threat to Hawaiian plants posed by invasive species. Thirty eight of the 415 endemic Hawaiian plant species assessed for this update are listed as Extinct and four other species have been listed as Extinct in the Wild, meaning they only occur in cultivation.
The IUCN Red List now includes 82,954 species of which 23,928 are threatened with extinction.
Mammals threatened by illegal hunting
The Eastern Gorilla (Gorilla beringei) – which is made up of two subspecies - has moved from Endangered to Critically Endangered due to a devastating population decline of more than 70% in 20 years. Its population is now estimated to be fewer than 5,000. Grauer’s Gorilla (G. b. graueri), one subspecies of Eastern Gorilla – has lost 77% of its population since 1994, declining from 16,900 individuals to just 3,800 in 2015.
Realty Check: The Whole Economic System Is On Welfare
Central Banks = Welfare for the Wealthy
Future Grid Electricity Cannot Rely On Intermittent Renewables
The Fed’s Only Escape Is to Trash the Dollar
Monday, September 12, 2016
Friday, September 9, 2016
The Marginal Buyer Holds The Pin That Pops Every Asset Bubble
So it's important to watch him very closely
Q: How much is my house worth?
A: Whatever the highest bidder is willing to pay for it.
The Housing Market: Poised For Another Crash?
Those of you who took an introductory Economics class in high school or college may remember learning that prices are set "at the margin". That's a fancy way to say that prices are set by the person (or people) willing to pay the most.
This person willing to pay top dollar is called the "marginal buyer". Most of us don't really think about him much, but he (or she) is very, very important.
Why? Because the marginal buyer not only determines price levels, but also their stability and degree of volatility. The behavior of the marginal buyer, as well as the degree of competition for his/her "top dog" spot, sets the prices of nearly every asset class held by today's investors.
Imagine for a moment an auction room, filled with people holding their bidding paddles. A rare Picasso painting is brought to the block. Paddles all around the room compete furiously as the auction starts; but as the bid price rises higher and higher, fewer and fewer paddles participate in the bidding. Pretty soon, it's down to just two bidders dueling back and forth with one another. Then, after a stunningly high bid of $106.5 million dollars, no more paddles are raised. The marginal buyer has been found. No one is willing to outbid his price. (For the record, this is exactly what happened back in 2010 when Picasso's Nude, Green Leaves and Bust came up for sale.)
This example contains several important elements for price-setting. First: the marginal buyer's last bid is what ends up setting the final price. And second: the intensity of competition determines how high the marginal buyer's bid will go (if no one else was willing to offer more than say, $10 million, it's unrealistic to expect that the marginal buyer would have still put in a bid as astronomically high as $106.5 million).
Now imagine what would have happened if our marginal buyer above hadn't shown up for the auction. Maybe he got stuck in traffic, or decided he'd rather own a tropical island instead of a wall hanging. How much would the painting have sold for then?
It would have sold at a price lower than the losing bidder's last offer. Without our hero in the room, the losing bidder would have become the new marginal buyer. And without the threat from a competitor with deeper pockets, it's quite likely our new marginal buyer would have been able to secure the painting at a substantially lower price.
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Low Volumes Means Fewer Paddles
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