Financial Fitness for Girls!

Money makes women independent! The sooner the better !

We make you FINANZ fit!
Do you want to be independent?
Have your finances under control yourself?
Financial education makes you independent, strong, self-confident and confident. All characteristics of today’s girls and women.

Money isn’t everything, that’s an objection. But money has power. Above all, it also has power to change the world for the better. That is why it is so important that everyone who wants to change it for the better also has money.

Talk to your parents, nieces, aunts, uncles and teachers about money, loans, stocks and investments. We’ll help and answer questions!

We are available live to all girls and interested parties on #Weltmädchentag. On Friday October 9th at 5 p.m. we will get you FINANZ fit! With Simone Bußmann / Vermögensberatung and Dagmar Frank W-T-W Women and Finance / Founder

Woman are still underrepresented in the financial world. With only around 14% women, the financial sector in Germany is one of them. In Germany only 12% of the shareholders are female !!!! A good reason to get more young girls interested in investment and finance.

W-T-W Women and Finance – Weltmädchentag 2020 offers a cross-section of the individual financial topics: investment, stock market, economy, banking, paying with the mobile phone, overdraft facility and credit traps, practical examples. Stock market, gambling or investing? How does the stock exchange work, Starbucks, McDonalds, Adidas and Co, What are stocks? Stock trading, business, trading on the phone.

Cartoon: Isabell Hemming / www.w-t-w.org/en/isabell-hemming

Cheating with Public Money in a Time of Crisis

Mark Munn of Pennsylvania State University writes:

The jump in federal spending in response to the crisis of the coronavirus pandemic is not a new idea. Nearly 2,500 years ago, the people of ancient Athens had a similar plan – which succeeded in meeting the major threat they faced, but then tore Athenian society apart in a tangle of political recriminations after the crisis had passed.

As an historian of ancient Greece, the most telling parallel I see between current events and that long-ago past is the extreme partisan politics that befell Athens in 406 B.C.

A massive mobilization

In 406 B.C., Athens, a mega-power of the ancient Mediterranean that had built its economy on maritime trade, faccd a crisis. ,Despite recent successes in battle, deep partisan divisions over military leadership had left Athenian forces momentarily vulnerable to attack. Meanwhile, rival city-state Sparta had gained the backing of Persia and was building a navy that could challenge Athens’ control of the sea.

When the Spartans struck, they put the weakened Athenian fleet on the defensive, threatening to crush it and bring Athens to its knees.

A steel engraving of the naval battle of Arginusae in 406 B.C.

In the face of near-certain disaster, the Athenians rallied to respond, accelerating a shipbuilding program already underway by mobilizing all the resources of their Aegean empire. A new tax was passed on personal wealth, and additional money was raised by melting down the golden statues of Victory that had been dedicated on the Acropolis. The resulting coins were spent buying Macedonian pine to make oars to power the triremes, the most advanced naval fighting ships the world had yet seen.

To pull the oars, all able-bodied Athenian men, including knights who normally did not serve in the navy, were called up. Even that was not enough. The Athenians offered citizenship to all resident foreigners and slaves who were willing to serve.

In a little more than a month, the Athenians had assembled a fleet of triremes powerful enough to challenge the Spartan fleet and regain control of the sea.

An enormous battle and victory

In midsummer, 406 B.C., the Athenian and Spartan fleets met in battle in the waters between the island of Lesbos and the coast of Asia Minor. It’s known as the battle of Arginusae, after the small islands off the Asian coast that served as a base for the Athenian fleet; today they are the Turkish islands of Garip and Kalem near the city of Dikili.

Athens won decisively, killing the Spartan commander and destroying nearly half his fleet. The victory was costly: Athens lost 25 out of their 150 triremes, each with a crew of 200 men. A few of the ships were sunk close to shore, and their crews were rescued. But most of the ships lost, carrying more than 4,000 men, were adrift farther out at sea, and went down in a storm that came up in the afternoon of the battle.

Athens was saved. Sparta pleaded for peace, but Athens rejected the terms offered, confident that its navy’s proven strength required no compromises with its foe. The fleet’s commanders, eight of the 10 generals elected annually by the people of Athens, were the heroes of the day. In the elections that followed in the weeks after that battle, six of the eight were reappointed to their commands.

The remaining two generals came home to undergo a mandatory part of public service to Athens: a review of their year in office and an audit of their spending on the public’s behalf.

Rowers in a Greek trireme are carved on a monument dating to close to the time of the battle of Arginusae.

What happened to the money?

As Athens was preparing for battle, all the generals were entrusted with extraordinary amounts of money to finish and outfit ships, to hire and provision crews and more, all at top speed. In the haste to get the job done, not all the money was accounted for.

This was an opening for partisan prosecutors to investigate. One popular politician, a watchdog of the people’s money, filed charges of financial wrongdoing against one of the fleet’s generals.

The investigation revealed deeper evidence of financial abuse and mismanagement involving other generals as well as the original one accused. All the generals who had commanded during the battle were summoned back to Athens so their accounts could be audited. Four of the remaining six returned home; the other two chose not to return, fearing the consequences that awaited them at home.

An attempt to turn the tables

The generals faced prosecution from political opponents, including men who had served as ship captains during the battle and therefore would know about financial malfeasance in the preparations. If convicted, the generals faced having all their property confiscated and their Athenian citizenship revoked – changing them from national heroes to complete outcasts.

Together, the generals decided to defend themselves by attacking: They accused two of their most prominent opponents, popular political rivals who had been officers under their command, of failing to carry out their duties of recovering the shipwrecked crews. It was a serious charge, alleging responsibility for most of the battle’s casualties, that could have rendered the accusers ineligible to prosecute the generals.

The generals’ strategy backfired. Such serious new charges meant the whole matter was referred to the full Athenian assembly, the sovereign decision-making body of 5,000 to 6,000 Athenians. There, the two accused officers defended themselves against charges of dereliction of duty by producing the generals’ own report from after the battle, which made clear the storm – not human negligence – had made the rescues impossible.

That outraged the Athenians, who were angry at the generals for so transparently trying to escape their own accountability that they would accuse their officers of capital crimes. What began as an investigation of financial wrongdoing had become a contest over blame for the loss of life after the battle. The mood of the assembly determined the outcome, which was that all the generals were responsible for failing to save their men after the battle. The surviving records say nothing about the outcome of the charges of financial wrongdoing.

The verdict called for capital punishment: All six generals who had returned to Athens were put to death by hemlock poisoning.

A private grave relief in memory of an Athenian marine who died at sea; the date is uncertain but most likely from a decade or more after the battle of Arginusae. Athens, National Archaeological Museum, no. 752/Mark Munn, CC BY-ND

Everything began with enormous spending in response to an urgent crisis. Actions that seemed necessary at the peak of the emergency ended up as cover for misappropriations of public money.

But once the crisis passed, people saw those actions in a different light. Those who were found to have used the panic of the moment as an opportunity for personal gain ultimately paid the highest price. No doubt part of the reason they were judged so harshly was because so many of their fellow citizens had been forced to sacrifice their lives in a battle that enriched the powerful few.

Savings Problem in US and Its Impact on Retirement

The retirement disconnect is highlighted in a new survey from the Transamerica Center for Retirement Studies, which includes responses from 4,550 full-time and part-time workers between the ages of 18 to 65+. Overall, some 59% reported they were “somewhat” or “very” confident that they will be able to retire comfortably.

To maintain this comfortable living standard, more than half think they’ll need at least $1 million saved by retirement, and 29% believe they’ll need $2 million. Those targets have increased in recent years, according to Transamerica—the typical savings goal was just $600,000 in 2011.

So how much have these workers got socked away? Overall, the typical worker savings account held $63,000. That’s up from $43,000 in 2012, but also far from what’s needed for a $1 million retirement. Even among baby boomer households, the group closest to retirement, the median account held just $132,000.

Given these relatively meager savings, you may well wonder how workers can still be so optimistic about their golden years. Part of the reason is the long-running bull market, which has led to a gradual recovery from the financial ravages of the recession. Some 56% of those surveyed say that they have bounced back fully or partially; 21% say they were not impacted by the downturn.

It’s also likely that many workers simply don’t understand what it will take to meet their goals. More than half (53%) say they “guessed” when asked how they estimated how much they need to save for retirement. Two-thirds acknowledged they don’t know as much as they should about retirement investment. And just 27% say saving for retirement is their greatest financial priority vs. “just getting by” (21%) and “paying off debt” (20%). The typical worker saves just 8% of salary, while most experts recommend 15% or more.

This savings shortfall was a focus of studies presented at the Retirement Research Consortium held recently in Washington. Following up an earlier study that found that roughly half of Americans die with $10,000 or less in assets, professors James Poterba of MIT and Harvard’s Steven Venti and David Wise looked at possible reasons that the money ran out. Perhaps retirees spend their money too quickly, or perhaps they have few assets to begin with.

Analyzing Health and Retirement Study data for different generational cohorts, the researchers found that how much subjects had the first year their assets were measured showed the strongest determinant of the amount of the wealth they had at the end of life. For older Americans, 52% who had less than $50,000 at the end also had that amount when first surveyed. For the younger cohort: 70% of those with less than $50,000 in assets when last surveyed also had that skimpy amount when first observed.

By contrast, those who had significant balances at the start also held those balances at the end—confirming both the persistence of wealth and, at the same time, the lack of savings progress for most Americans. Poterba offered possible reasons for this trend, including that workers may simply choose not to save; at each income level, he pointed out, there are high and low savers, so earnings aren’t the only factor.

Still, lack of wage growth, the disappearance of pensions, and the decline in 401(k) coverage among private sector workers, especially low- and middle-income households, contribute to the problem for younger Americans. This last point was emphasized by John Sabelhaus, an assistant director at the Federal Reserve, in a discussion of Poterba’s paper. Data from the Survey of Consumer Finances show that low- and middle-income workers are losing retirement plan coverage, he noted. (A similar trend can be found in the Transamerica survey, which showed that just 66% of workers were offered an employer retirement plan in 2015 vs. 76% in 2012.)

Both Poterba and Sabelhaus emphasized the importance of Social Security for Americans with few assets. Beyond that, the only solution is to save as much as you can. But there are behavioral hurdles to boosting the savings rate. In another study a team of researchers, including Gopi Shah Goda of Stanford and Aaron Sojourner of the University of Minnesota, found savers face two major mental blocks; some 90% of Americans hold one or both, which drag down retirement savings by an estimated 50%.

One of these mental blocks is procrastination—it’s hard to resist the immediate gratification you get from spending. The other hurdle, which is less obvious, involves financial literacy. Most people don’t grasp the power of compound savings. As Sojourner explained at the conference, the majority of people believe savings grow in a straight line. Only 22% understand that savings growth is exponential: as your savings compound, you earn interest on interest, which enables your savings to grow faster and faster.

In short, it can take a long time to save your first $1 million, but it’s a lot quicker to get to $2 million. If more Americans understood this, and acted on it, there would be good reason to be optimistic about retirement.

Savings?

Rethinking Economics 101

Jag Bhalla writes:  Economics is in our nature. But it is not, as most economists promote, the narrowly self-interested kind. Our paleo-economics required inalienable other-interestedness. The logic of our “natural economics” can help tame modern market errors.

There are three evolutionary ideas that economics can benefit from —evolution and economics are both in the “productivity selection” business.

First, anthropologist Christopher Boehm’s work on our evolved moral-rule processors.

Second, economist Robert Frank’s “Darwin’s Wedge” patterns that show how competition can create inefficiency.

Third, studying “objective moralities” can fix the “Naturalistic fallacy,” and describe an as yet unnamed natural principle that “survival of the fittest” must yield to.

 

  • There are many factors of competition that can create inefficiency.
  • There is a higher (yet unnamed) natural principle that “survival of the fittest” must yield to.

Rethinking Economics 101

Hunt and Gather

Financial Regulation for Crowdfunding?

Robert Shiller writes:  If one were seeking a perfect example of why it’s so hard to make financial markets work well, one would not have to look further than the difficulties and controversies surrounding crowdfunding in the United States. After deliberating for more than three years, the US Securities and Exchange Commission (SEC) last month issued a final rule that will allow true crowdfunding; and yet the new regulatory framework still falls far short of what’s needed to boost crowdfunding worldwide.

True crowdfunding, or equity crowdfunding, refers to the activities of online platforms that sell shares of startup companies directly to large numbers of small investors, bypassing traditional venture capital or investment banking.

Regulators outside the US have often been more accommodating, and some crowdfunding platforms are already operating. For example, Symbid in the Netherlands and Crowdcube in the United Kingdom were both founded in 2011. But crowdfunding is still not a major factor in world markets. And that will not change without adequate – and innovative – financial regulation.

There is a conceptual barrier to understanding the problems that officials might face in regulating crowdfunding, owing to the failure of prevailing economic models to account for the manipulative and devious aspects of human behavior. Economists typically describe people’s rational, honest side, but ignore their duplicity. As a result, they underestimate the downside risks of crowdsourcing.

The risks consist not so much in outright fraud – big lies that would be jailable offenses – as in more subtle forms of deception. It may well be open deception, with promoters steering gullible amateurs around a business plan’s fatal flaw, or disclosing it only grudgingly or in the fine print.

It is not that people are completely dishonest. On the contrary, they typically pride themselves on integrity. It’s just that their integrity suffers little lapses here and there – and not always so little in aggregate.

The SEC’s new rules for crowdfunding are complex, because they address a complicated problem. The concept underlying crowdfunding is the dispersal of information across millions of people. Most people, even the cleverest, cannot grasp the next breakthrough business opportunity. Those who can are dispersed.

The problem is that the promise of genuine “unique information” comes with the reality of vulnerability to deception. That’s why channeling dispersed knowledge into new businesses requires a regulatory framework that favors the genuinely enlightened and honest. Unfortunately, the SEC’s new crowdsourcing rules don’t go as far as they should.

The SEC with rulemaking for crowdfunding platforms specified that no startup can use them to raise more than $1 million a year. This is practically worthless in terms of limiting the scope for deception. In fact, including this provision was a serious mistake, and needs to be corrected with new legislation. A million dollars is not enough, and the cap will tend to limit crowdfunding to small ideas.

Some of the SEC rules do work against deception. Notably, crowdfunding platforms must provide communication channels “through which investors can communicate with one another and with representatives of the issuer about offerings made available.”

That is a good rule, fundamental to the entire idea of crowdfunding. But the SEC could do more than just avow its belief in “uncensored and transparent crowd discussions.” It should require that the intermediary sponsoring a platform install a surveillance system to guard against interference and shills offering phony comments.

The SEC and other regulators could go even further. They could nudge intermediaries to create a platform that summarizes commenters’ record and reputation. Indeed, why not pay commenters who accumulate “likes” or whose comments on issuers turn out to be valuable in light of evidence of those enterprises’ subsequent success?

For the financial system as a whole, success ultimately depends on trust and confidence, both of which, like suspicion and fear, are highly contagious. That’s why, if crowdfunding is to reach its global potential, crowdphishing must be prevented from the outset. Regulators need to get the rules right (and it would help if they hurried up about it).

crowdfunding-featured5

Can Insiders Work Around Regulations?

The systemic financial risk-taking in the lead up to the financial crisis was a product of untouchable insiders taking risks that favored the connected few. And the many still suffer. Cameron K. Murray write: Not only are there insider groups bridging Wall Street and financial regulators, but Defense Departments are a hotbed of revolving personnel into, and out of, private weapons and hardware manufacturers. At local government levels this type of revolving door of well-connected insiders is even more insidious, with land rezoning and infrastructure spending a constant battle between in the interests of the insiders and the community at large. The revolving door culture is now so pervasive that Federal Reserve Chairman Ben Bernanke, arguably the most powerful financial regulator in recent history, waltzed through the door to consult for a multi-billion dollar hedge fund with almost no media criticism. Few issues are more important than being governed in the interest of the few at the expense of the many. The economic costs of this behaviour are likely to be in the hundreds of billions of dollars annually. Yet from a standard economic viewpoint, the mechanism by which such favouritism occurs remains a mystery. To shine some light on the mechanisms in coordinating back-scratching, its costs, and potential institutional changes to combat it, I took the problem to the lab under computerised experimental conditions. While the results confirm a lot of common sense intuition, they are a leap forward in terms of our economic understanding of the problem. Regulatory capture is the name economists give to the perverse effects of the revolving door, yet its effects on behavior are not the product of a coherent theoretical framework. For regulators to act in the interests of their former, or potentially future, employers requires a level of implicit collusion that shouldn’t exist in a world of purely self-interested agents who would defect from any attempt to form a group of allied insiders. Something else must be going on. Another view in standard economics is that political favors are imagined to be auctioned by way of a lottery, where bidders devote their resources to non-productive activities, such as attending political fundraisers, up to the amount of their expected payoff from the political favor subject to the participation of others in the lottery. This is called rent-seeking. The prize of a political favour is open to anyone, and we should expect, just like we see in real lotteries, no specific entrenchment of particular interest groups and a high degree of randomness in allocation of political favors.  Back-scratching, corruption and regulation

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Devil’s Financial Dictionary: More True than Devilish?

A Credit Suisse banker flew all over the place to meet with clients. He reported:

“Never have we seen so many clients who just do not know what is happening and have cashed up.”

People cash out now because they want to wait until things are “clearer.”  What’s odd is that the market is just a few percent off its all-time high. It would be a strange bull market where so many people cashed out at the top. Normally, people rush to cash out at the bottom.

Jason Zweig’s The Devil’s Financial Dictionary makes fun reading and may be more useful than we know: it recommends speaking plainly and listening to those who speak plainly.

Here’s what it says about uncertainty:

“Certainty, n. A state of clarity and predictability in economic and geopolitical affairs that all investors say is indispensable – even though it doesn’t exist, never has and never will… Whenever turmoil or turbulence becomes obvious, pundits proclaim again for the umpteenth time that ‘Investors hate uncertainty’… “Uncertainty is the most fundamental attribute of financial markets… hating the unknowable is a waste of time and energy. You might as well hate gravity or protest against the passage of time.”

“Cynic, n. A blackguard whose faulty vision sees things as they are, not as they ought to be.”

A broker:  “a negotiator between two parties who contrives to cheat both.”

“Day trader, n. See IDIOT.”

An anecdote about an English proverb“to sell the bear’s skin before one has caught the bear,” which is an apt description of selling a stock short. (You sell the stock first and hope to buy it back later at a lower price.

“PAREIDOLIA, n. The compulsive human tendency to see patterns or meaningful trends in random events and images.”

Fancy words may be a coverup. They hide thefts, lies, cons and ulterior motives. Speak plainly and seek those who speak plainly to you.  Quantitative easing, we now know, is printing money.Skinning a Bear?

End Kickbacks in the Annuity Business?

Kickbacks are prevalent in the annuities industry in the US.  Senator Elizabeth Warren wants to clean up the business..

Her report examines responses from 15 leading annuities providers to letters sent by Senator Warren earlier this year, highlights the ways that annuity companies can incentivize agents to put their own interests ahead of their clients.

Overall, thirteen of the fifteen companies investigated admitted to offering kickbacks either directly to agents, indirectly through third party gift payments, or both. Two of the fifteen leading annuities providers indicated that they refuse to provide non-cash direct or indirect kickbacks, suggesting it is straightforward – though uncommon – to build a successful advising business without offering such inducements.

“Companies shouldn’t be allowed to offer expensive vacations, prizes and other kickbacks to agents in exchange for selling costly, second-rate investment products to unsuspecting customers,” Senator Warren said. “This investigation highlights the need for a strong Conflict of Interest Rule to protect the savings of families trying to save for retirement and to ensure a level playing field for companies and advisers who want to do right by their clients.”

Key findings of the report include:

• The vast majority of companies investigated admitted to providing rewards and inducements, such as expensive vacations and other prizes, to annuity agents in exchange for sales.
• Annuity companies also create conflicts of interest and evade some existing restrictions by offering perks and inducements to annuity sales agents through third party marketing organizations.
• Current disclosure rules are inadequate to ensure that customers are informed about the incentives agents receive for selling them specific financial products.
• Existing rules and regulations to deter conflicts of interest are completely inadequate.

Because of loopholes in the law, it is perfectly legal for some advisers to steer customers into complex financial products that will earn the highest rewards, perks and prizes for the advisers – even if they are bad options for their customers. Research suggests that this loophole costs Americans an estimated $17 billion every year. In order to protect consumers from these types of abuses, the Department of Labor has proposed a draft rule to put an end to these conflicts of interest by closing these loopholes.

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High Water Women Explores Impact Investing

Can women be the new Trojan horse?

In a fascinating program focused on Impact Investing, Hugh Water Women, a New York based group of hedge fund women leaders, took a two-pronged approach to women and investing.

Panel discussions explored how women treat finance and how, if we are empowered, we can impact change for the good.

Why do women lack confidence about finance?  Several insights that emerged were particularly interesting.

1. Women know more than they think they do.  (Cororlary: Men know less than they think they do and also act ‘as if’ easily)

2.  Failure is acceptable in men and not in women.

3.  Women are more risk averse, but this can be positive in terms of performance, personal or corporate.

4.  Chinese women are as successful in finance as Chinese men.  They are highly educated and may benefit from the one child policy.

Impact Investment stories were told by the Cordes Foundation.  Setting Impact and Portfolio objectives were detailed by representatives of the MacArthur Foundation, Anthos Asset Management, Ceniarth and Treehouse Investments.

Breakout sessions combined representatives of law, government and financial institutions.

US Trust, Goldman Sachs and Credit Suisse among others focused on how the mainstream is joining the Impact Investing movement.

The afternoon breakout sessions included such topics as education, the environment, and personal investing.

The complexity of women’s position in the financial world was clearly presented.

Women’s priorities: making a better future world, providing young people with the education and health benefits they need to thrive, may well come to the fore as women take positions on corporate boards, invest in other women and generally gain power.

This is where the Trojan horse comes in:  women will gain position through the gender equality battle.  When they achieve power, are they prepared to fight for what’s good  for the future?

High Water Women