So much capital is misallocated these days, and that continues to drive down trend GDP growth – the term misallocated capital is used by economists to describe capital that is deployed without having any impact on productivity – it’s capital that is deployed unproductively Niels Jensen of Absolute Return Partners wrote about The Productivity Conundrum …
Category: 08. Financials
Nov 28
Financial cardinals needed
Of the many financial measures available, only three qualify as financial cardinals – the ones whose alarm bells must ring to prompt action in good time They are total revenue, total cost and profitability They’re ‘catch-all’ measures covering all outputs, outcomes and inputs: Total revenue covers net outputs sold and outcomes the customers took into …
Nov 27
Financial metrics are not enough
How do you know if an organisation has performed well? If it’s a private company, financial results will reflect customers’ valuations of what they were offered and translate them into revenue and profits If it’s a public sector unit, the tax-paying public will judge quality and service levels received – actual costs are …
Jun 04
Value overtakes price
In The Value of Everything by Mariana Mazzucato, Professor in Economics of Innovation and Public Value, University College, London, she firstquotes Oscar Wilde: “A cynic knows the price of everything but the value of nothing” Her whole book then questions ‘where does value come from – what creates, extracts and destroys it?’ I am no economist, so …
Mar 27
Bank Loans need Trust, Growth needs Credit
The essence of the following examples was extracted from a splendid book, Sapiens, written by Dr Yuval Noah Harari Example 1 – Loans require Trust: For most of history per capita production remained the same In 1500, global production of goods and services was equal to about $250 billion – today it hovers around $60 …
Mar 24
The need for money
Hunter gatherers had no money – they specialised in different tasks and shared their goods and services through an economy of favours and obligations A piece of meat given or free would carry with it the assumption of reciprocity – say free medical assistance or sea shells (much valued currency) for flint Local trade specialists …
Nov 07
Financial data can be ‘dangerously misleading’
Transcript of a second broadcast where the UK’s Ed Smythe is interviewed by the USA’s Real News Network GREGORY WILPERT: Welcome to the Real News Network. I’m Gregory Wilpert, joining you from Quito, Ecuador. The Bank of England has raised interest rates in the UK for the first time in a decade. The official bank …
Nov 07
UK economy depends on private debt!
N.B. This is a transcript of a broadcasted conversation between the USA’s ‘Real News Network’ and UK economist Ed Smythe G. Wilpert: Welcome to the Real News Network. I’m Gregory Wilpert joining you from Quito, Ecuador. UK households are spending more than their income at an unprecedented rate. Record-busting levels of privately held debt are also …