In the US the tax deductibility of child care expenses for children up to twelve whose parents are working is worth about 20-35 percent of the expense. Australia is struggling to legislate a deduction. This is a crucial question for working women. Deductibility of Child Care Expenses
A program in Haiti, supported by the Gates Foundation among others, is showing the way. In the US, it is still politically incorrect to say that this kind of education is what we need. Yet clearly there are jobs in this country. It’s the match between trained employee and job that is missing. Secretary of Education Duncan traveled to Haiti last November. Clearly he is aware of this answer. Dial Up Degrees Make Sense
Why turn money down? And can public and private mix. While some Silicon Valley entrepreneurs talk about moving their businesses to a boat off the California coast to avoid taxes, others are dipping into the national coffer to help get off the ground. What are the tradeoffs? Myths of the Start up
The Women’s Entrepreneurship Initiative is encouraging small businesses in Saudi Arabia. Background information is provided in an IFC report.
The WEI gives an overview of the current climate and possible issues. Saudi Arabian Initiative
While a nightmare for numismatists, digital money makes payments faster, reduces the size of informal economies and makes flows of money more transparent. Even small increases in digital-money usage promises big benefits for governments and businesses, the report insists.
But that is not the most interesting part of the report. Generally speaking the countries that are best prepared for digital money tend to use less cash. In Belgium 93% of all consumer spending is by digital means, according to a report from Mastercard, another financial-services firm. Belgium also ranks highly on the Citi’s digital-money readiness index. Yet Citi’s report shows that even if a country is prepared to move to digital cash, its people may resist (see chart). For instance, although Germany’s digital money readiness is high, the “cashless intensity” of its economy is relatively low.
It is not just Germans love cash and coins: in Australia there are 166 ATMs per 100,000 people, according to World Bank data. Other countries, such as Finland, where there are only 35 ATMs per 100,000, are more high-tech financially. Venezuelans favour digital money due to security concerns and Argentinians because of inflation, whereas people in Japan are typically leery of credit-card debts. Japan, though miles more prepared for digital money than Venezuela, is actually a more cash-intensive economy than the Bolivarian Republic.
That cultural variety is rather nice. Moving to a cashless economy is sensible, at least in purely economic terms. Countries with big black economies and endemic corruption probably should not be sentimental about their dosh. But others’ attachment to their specie and notes should be welcomed. It can prompt public discussion about national heroes—see the debate last summer about who should be emblazoned on British money. And in some countries banknotes are little pieces of public art (see the lovely Swiss franc or the New Zealand dollar).
The Wolf of Wall Street, Martin Scorsese’s new film about the machinations for Jordan Belfort played in a brilliant turn by Leonardo di Caprio, is too long. What is missing from the reviews is the fact that Goldman Sachs looks just like this fun house mirror.
For investors who can’t get into Goldman deals and brokers who don’t have the right resume for firms like Goldman, what better choice than a small firm that does the same thing but welcomers all comers.
That story is the real story of the film. Where can the little guy go to make money the way Goldman does? Getting a 25% return on investment regularly.
Jordan Belfort, founder of the firm. was “able to gather in the sales force and promise them riches beyond belief,” says Ira Sorkin, a well-known white collar criminals’ lawyer.
Joel M. Cohen, a partner at Gibson, Dunn & Crutcher says, “It was about pushing stock to unsuspecting investors with all kinds of hard-sell tactics to get people to buy stuff that wasn’t suitable for them.”
Mr. Belfort and his employees ran a classic pump-and-dump scheme, The sales force would pitch customers on the stock, helping drive up the price and creating an economic gain for the company insiders. After the price rose to a certain level, the brokers would dump their holdings on the market, causing the stock to collapse.
Mr. Coleman, the F.B.I. agent, said the big break in the case came when Mr. Belfort set up offshore corporations and bank accounts to smuggle cash out of the United States. That allowed the government to go after him for money laundering, gaining leverage in the longer-running investigation into the pump-and-dump scheme.
Switzerland is a major character in the film. When the signatory on a bank account dies, they arrange for Belfort to immediately come to Geneva and forge documents.
Mr. Belfort’s cooperation with the FBI helped him avoid a lengthy prison sentence. Another factor that reduced his jail time was that he was considered a drug addict. A judge sentenced Mr. Belfort to four years in prison, though he ended up serving only 22 months.
After writing a memoir and signing a movie deal, Mr. Belfort is now portrayed on the big screen by Leonardo DiCaprio.
That is “an interesting way to end your career,” Preet Bharara, the United States attorney in Manhattan, said. “Do the bad guys always win?”
Co-authored with Akerlof, this is perhaps the most relevant paper Yellen wrote for understanding what she’s likely to do at the Fed, not least because it’s so recent. The paper is a critique of an argument made by Robert Lucas, the Nobel laureate who turned macroeconomics on its head with his mid-1970s critique of Keynesianism. Lucas was not only skeptical of the prescriptions traditional Keynesians proposed for combating economic downturns, such as fiscal stimulus. He also thought that they would be pointless even if they worked. The idea is that downturns are followed by upswings of equal size, and so the ebbs and flows of the business cycle sum to zero in the long run. If that’s true, Lucas theorized, then the net cost of recessions and booms is zero, and so policies to stabilize the economy and end recessions are unnecessary.
Akerlof and Yellen think this gets it all wrong. For one thing, being unemployed during a downturn is worse than being unemployed during a boom. “Weeks of unemployment are likely to be more onerous in a trough than in a boom,” they write. “Employment is correspondingly more beneficial in a bust than in a boom. Estimates of the welfare losses from the business cycle due to this latter effect alone are an order of magnitude greater than Lucas’s estimate.”
What’s more, Lucas’s central assumption, that booms and busts cancel each other out with or without stabilization policies, is wrong. Akerlof and Yellen quote a paper by their Berkeley colleague Brad DeLong and Summers to this effect: “…successful macroeconomic policies fill in troughs without shaving off peaks.” If that’s true, then stabilization can make income higher and unemployment lower if you look at both recessions and downturns. If that’s true, it’s hard to argue it’s not worth it. Stabilization by Yellen and her husband, George Akerlof
Willy Sutton robbed banks because “that’s where the money is.” Jamie Dimon is even better at that, the New York Daily News suggests. Can the US press call citizens attention to the outrageous and not socially useful position banks have now attained?
Like Willy Sutton, Jamie Dimon, the Chairman and CEO of JP Morgan Chase, knows where the money is. But certainly the press is waking up to the fact that the Too Big Too Fail Banks no longer serve as useful function, except to provide big bucks to a very few people. The Daily News in New York is commendably pounding on Dimon.
Edward Snowden has effected a significant change in US attitudes toward privacy. He even made a dent on policy. But he cannot come home. Should this be the fate of whistleblowers?
Erik Brynjolfsson, a management professor at MIT and a co-author, with Andrew McAfee, of the new book The Second Machine Age, calls this new approach to problem-solving “combinatorial innovation.” It’s his belief that invention and scientific progress typically come not from entirely new ideas, but from the right combination of existing ideas. What science and engineering companies need, therefore, are smarter ways to collect and grade all these potential idea combinations—the way Quirky uses in-house experts to advise on, tweak, and build promising ideas, rather than trying to turn every doodle into a new product. “There are a ton of potential ideas out there, and the bottleneck is being able to evaluate and consider them all,” Brynjolfsson told me. “The great thing about digital technology is that it’s easier than ever to get lots of eyeballs looking at our biggest problems.” Inspiration and Perspiration
