Category Archives: Finance

From Human Waste to Energy

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Heinz-Peter Mang is obsessed with turning human waste into gold. As millions of Chinese move to cities, the German engineer is convinced the country is on the way to hitting the jackpot.

A growing portion of China’s toilet waste is converted into fertilizer and biogas. In Beijing, 6,800 tons of human excrement are treated each day by some estimates: enough to fill almost three Olympic-size swimming pools.

Over the past decade, China’s economic ascent has driven millions of rural workers into its cities in the largest migration in human history. In 2013, the number of urban dwellers crossed 731 million, overtaking the rural population by more than 100 million. Some fallouts: water shortages in the North and toilet waste routed into rivers in the south.

That’s forcing city planners to get creative in dealing with toilet refuse, and drawing engineers like Mang to help refine models. The push to re-purpose feces into energy resources or fertilizer is expanding across China, and Mang is advocating for the model to be copied in other parts of the world.

Globally, a variety of techniques are used to handle human waste: some cities dump it in rivers, others choose to incinerate, and still others bury it in ditches. United Utilities Group Plc, Britain’s largest publicly traded water company, handles the sewage of 1.2 million people in Manchester and operates a sludge recycling center that runs on enough human waste to power 25,000 homes.

The world’s most populous nation scaled up a model used in farms. Originally used to keep humans from doing their business in pig troughs, today 40 million farm homes across China have a holding tank for human and animal waste that is partly sanitized by depriving the solids of oxygen. What’s left is then converted to liquid fertilizer for the farms.

What’s happening in Beijing is an industrialized, scaled-up version of that model, said Mang, who has lived in the capital for a decade. Across the city, which has seen its population double to 21 million in the past decade, the average annual amount of human waste processed will increase by 200 to 300 tons a day, said Zhang Jiang, general manager of Beijing Century Green Environmental Engineering & Technology Ltd., which operates night-soil treatment plants. Treating waste is set to be a growing area of business, Zhang said.

 

The catch-up of waste treatment from low penetration rates in China is driving “a waste revolution,” with key treatment operators likely to grow 200 to 400 percent in volume in the next five years.

Recyclig for Energy

 

 

Enigma: Women in Science Not Represented in Popular Art

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The Bechdel Tests requires a movie to have three basic elements to pass. A film must include: 1) two prominent female characters 2) who have a conversation 3) that is not about a man.

Why do relatively few women  occupy high-profile science or technology positions?  The problem may not be so much a lack of qualified women, but a question of representation instead.

Joan Clarke, the code-breaker depicted in the recent film The Imitation Game, was just one of numerous female mathematicians who worked at the U.K.’s World War II lab known as Bletchley Park. Women’s contributions to the development of the Mac were been scrubbed from the movie Jobs, and from the space mission in Apollo.

The upshot is that a perceived dearth of women in STEM professions can be partly addressed by ensuring the proper depiction of those who are already working in them.

Code Breaker Knightley in the Imitation Game

Women in Silicon Valley?

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U.S. citizens create world-beating tech sites like Amazon, Facebook and Twitter — so why can’t agencies like the IRS or Veterans Affairs do the same? The White House’s chief technology officer, Megan Smith, suggested it’s possible, provided the government can attract enough people with a high TQ, or technology quotient, to work there.

Smith points to the emergence of “innovation labs” within agencies as evidence that the government can foster the same sort of skunkworks-style thinking found in Silicon Valley, where Smith made her name as a senior Google executive.

Echoing a mantra of executives at Google X, Smith wants to find ways for the government to exhibit the sort of technological prowess that normally occurs only in wartime. She also emphasized that she and her deputy, former Twitter lawyer Alex Macgillivray, want to reduce the sort of regulatory morass that can inhibit innovation.

But while Smith’s words will be welcome to the tech sector, where she and Macgillivray are held in very high regard, there is still the stubborn reality of government. Even as Smith cited issues like patents, copyright and net neutrality as top priorities, a visit to the websites for those topics feels like tumbling into an internet time warp. If the arrival of the smartest minds from Silicon Valley can’t help the Patent Office implement a rational search function, what hope is there of remaking the rest of the federal bureaucracy.

Women in Tech:  Megan Smith is an entrepreneur, tech evangelist, engineer, and connector. At Google[x], Smith works on a range of projects including co-creating/hosting SolveForX. For nine years prior she led Google’s New Business Development team managing early-stage partnerships, pilot explorations, and technology licensing for Google’s global engineering and product teams. She led the acquisitions of Keyhole (Google Earth), Where2Tech (Google Maps), and Picasa, and also led the Google.org team transition to add more engineering with Google Crisis Response, GoogleforNonprofits, Earth Outreach/Engine, and increased employee engagement. Prior to joining Google, Smith was CEO and, earlier, COO of PlanetOut, the leading LGBT online community, where the team broke through many barriers and partnered closely with AOL, Yahoo!, MSN, and other major web players, and was early at General Magic and Apple Japan.

Women in High Tech

Subprime Loan Bundling, Again?

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Is securitizing sub-prime auto loans a disaster in the making?  Across the country, there is a booming business in lending to the working poor — those Americans with impaired credit who need cars to get to work. But this market is as much about Wall Street’s perpetual demand for high returns as it is about used cars. An influx of investor money is making more loans possible, but all that money may also be enabling excessive risk-taking that could have repercussions throughout the financial system, analysts and regulators caution.

In a kind of alchemy that Wall Street has previously performed with mortgages, thousands of subprime autoloans are bundled together and sold as securities to investors, including  insurance companies and hedge funds. By slicing and dicing the securities, any losses if borrowers default can be contained, in theory.

Led by companies like Santander Consumer; GM Financial, and Exeter Finance, such securitizations have grown 302 percent, to $20.2 billion since 2010.  And even as rising delinquencies and other signs of stress in the market emerged last year, subprime securitizations increased 28 percent from 2013. The returns are substantial in a time of low interest rates. In the case of the Santander Consumer bond offering in September, which is backed by loans on more than 84,000 vehicles, some of the highest-rated notes yield more than twice as much as certain Treasury securities.

Now questions are being raised about whether this hot Wall Street market is contributing to a broad loosening of credit standards across the subprime auto industry. Companies are increasingly enabling people at the extreme financial margins to obtain loans to buy cars.

The intense demand for subprime auto securities may also be fueling a more troubling development: a rise in loans that contain falsified income or employment information.

Ms. Payne, a former administrative assistant in the New York Police City Department, has not made a single payment on a $30,770 Santander loan that was taken out to buy a 2011 BMW 328xi. Ms. Payne, who has no driver’s license, said she took out the loan so her daughter, who lives in New Jersey, could have a car. The loan has an interest rate of 11.89 percent.

Still, some credit analysts have questioned whether the market has grown too much, too fast.  Some rating firms that faced criticism after the mortgage crisis for blessing shaky investments with top ratings are taking a critical approach to subprime auto deals.

Mr. Gillock, the financial adviser in Chicago, said that no bond made up of subprime auto loans should ever receive a triple-A rating — a designation that only three blue-chip companies receive on their debt offerings.

The financial crisis provided an opportunity for subprime auto loan securitizations.

With the once-enormous market in mortgage-backed securities largely frozen, investors looked for new opportunities. One bright spot was auto lending. Even in the depths of the recession, people needed cars and were willing to pay steep rates for a loan.

Sub-prime bundled auto loans may be the perfect example for anyone who thinks a big fine changes the culture of an investment firm.  It has all the problems the subprime mortgage loans had in 2005.

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Doomed to Repeat History?

 

Compromise on Greece?

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DIrk Kurbuweil:  Angela Merkel, it is often said, has a terrific feel for her people. That’s why she is revered by German voters and that’s why she wins elections. But what is true in Germany does not apply in Greece. The Tsipras in elections one week ago is also a defeat for the German chancellor. The Greeks have elected a radical government in order to free themselves from German pressure.

Merkel, of course, could simply say that she’s not responsible for the Greek people. German interests are her top priority: keeping the currency strong and ensuring that Berlin’s coffers don’t take a hit. But that’s old thinking, nation-state thinking. Merkel herself played a role in the renationalization of politics in Europe. She thought she could get by without paying too much regard to sentiment in Greece. Now, though, the Greek people are out to settle a score.

The fact is that there is a political union in Europe, even if it lacks strong institutions. It is a union being created by the people.   Greece and Germany

 

 

 

So Goes Greece, Then Spain and Italy?

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Patrick Smith writes:  t took a mere six days for the election victory of the anti-austerity Syriza party in Greece to start ricocheting around Europe like a stray bullet in a concrete bunker. And already the fight between northern Europe’s austerians and their populist opponents to the south takes on a political dimension that could transform Europe.

This is an economic confrontation only in part. Debt terms, budget ceilings, privatizations, and the like now emerge as theaters in a larger war. At bottom Europeans are in a fight over (1) the fate of their democracies and (2) the kind of democracy they want—popular or elite, Jeffersonian or Hamiltonian.

it’s a return to politics charged with class-conscious parties who think it’s time to confront political and economic elites rather than “triangulate,” as Bill Clinton famously put it and as every one of Europe’s social-democratic parties have tried to do.

The huge mass of Spaniards may look like a turning point in the months to come. Those interviewed may as well have spoken Greek when they explained to correspondents why they were there.

Spain’s weekend demonstration was the strongest manifestation yet for Podemos, the out-of-nowhere left party that is Syriza’s Spanish equivalent. Podemos (“We Can”) put its crowd count at 300,000; the police’s number was a third of that, but either way this was a very big demo.

The two parties share a common theme, and this is the key to their significance. Both dwell consistently on the question of dignity and humiliation, as in the remark of Angeles Buj, a 61-year-old who spoke to The Times in Puerta del Sol, a politically symbolic square in central Madrid. “It’s time to give some dignity back to the Spanish people,” Buj said.

The truth underlying this too-long-running crisis is this: Entrenched political cliques, often (if not usually) corrupt, and bureaucracies in Brussels and Frankfurt have drastically overplayed their hand in imposing counter-crisis strategies that effectively supersede political rights long beyond question in the industrialized nations. Nobody wins, not even creditors, unless this is corrected..

The pols to watch in the months to come are Pedro Sánchez, who leads Spain’s Socialists, François Hollande, France’s president and a mainstream Socialist, and Matteo Renzi, Italy’s premier, who, for many Italians’ money, professes left and too often governs right.

Podemos, you may recall, burst into the room with an utterly unexpected show of strength in elections to the European parliament last spring; it won 1.25 million votes and took five of Spain’s seats. The momentum since has been astonishing.

The same was said not long ago about Alexis Tsipras, Syriza’s leader, and whatever one may think of his politics he is no dope, has enviable political nous, and has put some accomplished thinkers in key cabinet positions.

From Syriza to Podemos to who knows where next—the spirit of this Mediterranean movement for a political shift leftward in Europe is spreading at ground level. As in Athens, so in Madrid and Rome?

Anti-Austerity Spain?

Misogyny in Silicon Valley?

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Computer programmer Lauren Mosenthal and her partner, Eileen Carey, came to California attracted by possibility.   The only problem with their dream is that Silicon Valley has never produced a female Gates, Zuckerberg or Kalanick. There are a few high-profile female entrepreneurs in the Bay Area, but despite the very visible success of corporate titans Meg Whitman, Sheryl Sandberg and Marissa Mayer, who signed up with companies after they took off—their numbers are relatively minuscule.

Despite that discouraging fact, the two women spent their 20s deep inside the valley’s bro community—a culture that has been described as savagely misogynistic. In inverse ratio to the forward-looking technology the community produces, it is stunningly backward when it comes to gender relations. Google “Silicon Valley” and “frat boy culture” you’ll find a financing system that rewards young men and shortchanges women.

Shanley Kane is a young tech industry observer and founder of Model View Culture, an acid-penned, widely read website on which she routinely exposes and excoriates the white brogrammer establishment. In an interview with MIT Technology Review in December, she said venture capitalists talk about the need to get 10-year-old girls into science in order to bring up the numbers of women they will fund, but don’t fund the ones already in the industry. “We are not getting hired, and we are not getting promoted, and we are being systematically driven out of the industry,” she said.  Women in Silicon Valley

Where Are the Women in Silicon Valley

Equity Capital Requirements for Banks?

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The New York Federal Reserve comments:  Do riskier banks have more capital?  Banking companies with more equity capital are better protected against failure because they can absorb more losses without becoming insolvent.  How has the relationship between capital and risk evolved over time?

There is not question that banks’ capital policies have become more precautionary in recent years. The Federal Reserve has implemented annual supervisory stress tests which are explicitly designed to remain well-capitalized even under severe macroeconomic downturns.  Improved risk management, greater awareness of downside risks and changes in supervisory practices have also had an impact. Equity capital should be the focus.

Banking

No New US Sanctions Against Iran?

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Obama has succeeded in persuading the US Congress and other interested parties that Netanyanhu is wrong about Iran.  We have to worry about our long term relationship with the country.  To impose new sanctions as the US thrashes its way through complex negotiations on nuclear materials and nuclear weapons would be a big mistake.

A President who had his legs chopped off six months ago is walking again.

Iran and Sanctions

 

North Sea Oil and Sanctions?

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RWE has agreed to complete the sale of North Sea gasfields to a Russian billionaire — with the proviso that the German utility will buy back the UK assets in the event of sanctions against the oligarch.

RWE’s €5bn deal to sell RWE Dea, the German group’s oil and gas arm, has been held up by opposition from the UK government following US and EU sanctions on Russia’s financial services, defence and energy sectors.

As part of a revised transaction, Russian businessman Mikhail Fridman’s investment fund LetterOne Group will keep Dea’s North Sea gasfields separate from the unit’s remaining energy activities for a number of years.  The UK business will be operated by Dea but monitored by a separate governing entity, which will be a private foundation registered in the Netherlands.

The Netherlands foundation will assume full control of Dea’s North Sea business if sanctions on Luxembourg-based L1 or its owner are imposed. Sanctions would also oblige RWE to buy back the UK business if the sanctions were imposed within one year of the deal being completed, which is due to happen in March.

RWE’s shares were up 4.5 per cent to €23.51 in Frankfurt on Friday.

L1 announced last March that it was buying Dea, which pumps oil and gas in the UK, Germany, Norway, Denmark and Egypt, for €5.1bn.

Although the deal was approved by the German government, Britain’s energy secretary Ed Davey blocked the transaction, in a sign of how private Russian companies with no connection to president Vladimir Putin were falling victim to deteriorating relations between Moscow and the west over Russia’s intervention in Ukraine.

RWE and L1 sought assurances from the UK that it would not seize control of RWE Dea’s North Sea assets if Russian companies were targeted by additional sanctions.

The deal will be carried out at almost the same price agreed last year, despite the collapse in the oil price. RWE and L1 said the value of RWE Dea had been adjusted from €5.1bn to €5bn to account for “developments relating to certain exploration and production licenses”.

The UK accounted for about one-fifth of Dea’s natural gas production in 2013, but less than two per cent of the unit’s crude oil production that year.

Mr Fridman attracted some of the most high-profile names in the energy business to advise him on his oil investments, including former British Petroleum chief executive Lord Browne.

RWE’s profits have been badly squeezed by Germany’s shift to renewables, and the company has responded by cutting operating costs and capital expenditure, and putting RWE Dea up for sale.

North Sea Oil