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Larry Summers on innovation economy
Larry Summers on the future of innovation, and what are the challenges faced by the US from China and India, and how the US should respond.
Innovation and Economic Growth from Innovation Economy on Vimeo.
Mass got a GOP
A Republican won a special election for Ted Kennedy’s old Senate seat in Massachusetts. Scott Brown’s victory, in a state that has not elected a Republican senator for Congress since 1972, was a huge upset for the Democrats and came after Barack Obama had thrown his full weight behind the Democratic candidate in an effort to get out the vote.
The Democratic defeat was widely interpreted as a repudiation by independent voters of many of Mr Obama’s policies, one day before the first anniversary of his inauguration. See article from Economist and from NYT.
BYD to enter the US market
The electronic car made by Chinese firm BYD, which is invested by Warren Buffet, is scheduled to enter the US auto market second half of this year. The car sells for $40,000…still too expensive.
Snapshot of China’s Wind Power Industry
China is trying hard to restructure its domestic economy and in the process it may produce overcapacity in new areas if the infrastructure of delivering and using these alternative energy sources are not in place in time (reports WSJ):
Beijing has big plans for wind power as a renewable energy of the future, but China may already have too much of a good thing.
At home, China's power-transmission infrastructure can't handle the intermittent electricity supply already being generated from wind. It is estimated that 30% of last year's wind-power supply went unused.
Despite that bottleneck, Beijing wants more. The government hopes to see 100 gigawatts of wind-power capacity installed in China by 2020, a more-than-eightfold increase from 2008, making wind the third most important source of power in China behind coal and hydroelectric. Even by next year, the amount of wind-power equipment being made will be twice what the nation can install, according to the central government.
That has implications abroad. Foreign rivals are raising concerns that Chinese producers will export their excess capacity at cheap prices. Wind power was one of the industries cited last week by the European Chamber of Commerce in China as likely to stir trade tensions.
The Chinese companies have already proven to be formidable competitors. Domestic producers have seen their Chinese market share blossom to nearly 60% collectively. That's largely at the expense of foreign players like Vestas Wind Systems, Gamesa and General Electric, which were dominant there just five years ago.
Critics suggest an implicit "Buy China" policy has helped the domestic players, but it's clear, too, that they have competed strongly on price. Data from analysts IHS CERA show Chinese equipment suppliers sell their turbines for almost two-thirds of the price of foreign competitors.
Not surprisingly, the number of players in the wind-power equipment sector has mushroomed, drawn to the sector by talk of greater reliance on renewable energy. Four companies accounted for more than 90% of the wind-turbine-manufacturing market in 2004. Now, 12 industry leaders account for about the same proportion, according to IHS CERA. Around 70 smaller firms are also active.
As local players duke it out, consolidation is likely in the near term. That will likely benefit the domestic industry leaders: Sinovel Wind, Xinjiang Goldwind Science & Technology and Dongfang Electric.
All this is happening in a market that is already uncertain as governments debate climate-change initiatives. Potential problems have already marred a United Nations wind-power credit program, for example.
The world may want China to commit to a greener future, but it's rapidly finding out that the push can come with some unwanted side effects.
Linkedin vs. Facebook
Compare Linkedin with Facebook. The former has a lot to improve.
More importantly, the amount of time people devote to LinkedIn is a fraction of the time people spend on some other social sites. Visitors spent about 13 minutes on average at LinkedIn during October, while Facebook users logged about 213 minutes and MySpace users spent 87 minutes, according to research firm comScore, which measured the behavior of global users 15 years and older.
Read full text here.
Bubble warning
Economist magazine warns against asset bubble, especially in emerging markets.
THE effect of free money is remarkable. A year ago investors were panicking and there was talk of another Depression. Now the MSCI world index of global share prices is more than 70% higher than its low in March 2009. That’s largely thanks to interest rates of 1% or less in America, Japan, Britain and the euro zone, which have persuaded investors to take their money out of cash and to buy risky assets.
For all the panic last year, asset values never quite reached the lows that marked other bear-market bottoms, and now the rally has made several markets look pricey again. In the American housing market, where the crisis started, homes are priced at around fair value on the basis of rental yields, but they are overvalued by almost 30% in Britain and by 50% in Australia, Hong Kong and Spain.
Stockmarkets are still shy of their record peaks in most countries. The American market is around 25% below the level it reached in 2007. But it is still nearly 50% overvalued on the best long-term measure, which adjusts profits to allow for the economic cycle, and is on a par with two of the four great valuation peaks in the 20th century, in 1901 and 1966.
Central banks see these market rallies as a welcome side- effect of their policies. In 2008, falling markets caused a vicious circle of debt defaults and fire sales by investors, pushing asset prices down even further. The market rebound was necessary to stabilise economies last year, but now there is a danger that bubbles are being created.
December employment update
The most recent job picture from NYT. It looks like some people's hope that employment will have a sharp recovery was temporarily put on hold.