Capital Markets in the Information Age: P2P Lending

The information age has been bring about changes in the capital markets, I earlier showed crowd funding, now comes a variant, P2P lending

Writes Alex Daley at the Casey Research

It's a new idea but is based on the familiar technologies of the Internet; it's known as peer-to-peer (P2P) lending. The premise is simple: cut the bankers out of the loan market and keep the difference for yourself by making loans directly to other consumers.

I know, that sounds rather risky. When I see my neighbor pull up in his driveway with a shiny new car that I can guarantee costs more than his annual salary, the idea of loaning money directly to other consumers seems a little crazy. However, that's where the real innovation lies. With peer-to-peer lending, an individual investor doesn't make a single $10,000 loan. Instead, he can buy 400 different loans, taking only $25 of risk per loan, for example. Services that offer this option pull together large numbers of investors, who each take a small slice of large numbers of loans, thereby distributing risk much like an index fund. The result is usually a steady and expected rate of return after fees and defaults.

And there are plenty of defaults. Consumer credit is a risky space, after all. With peer-to-peer lending one can choose among unsecured loans only. However, despite what you may have gathered from your last attempts to find a parking space at Home Depot on a Saturday, the majority of people are good. And those good people have a tendency to pay back their loans. As an investor, these P2P services allow you to pick loans by risk category. Credit scores, debt-to-income ratios, income verification, and all the familiar tools of the professional lender are there, allowing you to make decisions about what kind of loans to buy and which to avoid.

This allows individual investors to tailor a portfolio to their own risk tolerance. Whether selecting all the individual loans by hand, or using the bulk investing tools each of the suppliers provide, a portfolio can be built in a variety of ways: from only investing in "A" grade loans with single-digit interest rates and predictably low defaults, to debt-consolidation loans for consumers with much lower credit scores, paying much higher interest but coming with significantly higher defaults as well, and everything in between.

Read more here

The above represents changes in the investment sphere (perhaps some of these companies will be publicly listed someday), as well as, changes in the social dimensions which should impact the political economy: The growth of P2P lending and Crowd Funding will eventually reach a tipping point where it will be seen or becomes a threat to the establishment. And that threat will be met with a feedback mechanism: response-counter response feedback by political authorities and the markets.

Nonetheless the internet has been providing the platform to expedite dramatic and rapid innovation based transformations.

Japan’s Speech-jamming gun and Censorship

From My Fox Orlando, (hat tip Bob Wenzel)

Japanese researchers have invented a speech-jamming gadget that painlessly forces people into silence.

Kazutaka Kurihara of the National Institute of Advanced Industrial Science and Technology, and Koji Tsukada of Ochanomizu University, developed a portable "SpeechJammer" gun that can silence people more than 30 meters away.

The device works by recording its target's speech then firing their words back at them with a 0.2-second delay, which affects the brain's cognitive processes and causes speakers to stutter before silencing them completely.

Describing the device in their research paper, Kurihara and Tsukada wrote, "In general, human speech is jammed by giving back to the speakers their own utterances at a delay of a few hundred milliseconds. This effect can disturb people without any physical discomfort, and disappears immediately by stopping speaking."

Question is who benefits from this invention, will it be the public or political authorities? Since National Institute of Advanced Industrial Science and Technology is a public research institution and Ochanomizu University is a public national university for women, round 1 goes to the politicians.

How the Web Nurtures Underground Economies

Through Anonymous Web Proxy Servers.

From author Bill Rounds (howtovanish.com), [hat tip Charleston Voice]

Communist Cuba is a great example of how this is being done. It has a thriving market for goods and services, even though strict regulations prohibit entrepreneurship, because the citizens find ways to exercise their enterprising minds. A site similar to Craigslist, called revolico.com, allows Cubans to exchange everything from baseball equipment to their place in line and they love their hawaladar. For the good of the people, the site is blocked by the government. But the site thrives nonetheless. How do the Cubans get around the repressive and immoral policies of their overbearing government? They use anonymous web surfing practices.

Anonymous web surfing is generally done by using proxy servers. Proxy servers allow the proxy computer, outside of Cuba and not subject to Cuban government regulations, to do the web surfing for the Cubans. The ISP registers that they have visited the proxy server, not the sites visited by the proxy server on their behalf. And, because there are many thousands of servers available at any moment, some of which have never been used before as a proxy, it is far more difficult to restrict access to proxy servers than to individual websites. This way, the web surfing activity of individual Cubans is made anonymous to those who are watching them.

Cubans using anonymous proxy servers for anonymous browsing which don’t disclose their IP address to the websites that they visit, nor the fact that the proxy server is even surfing for someone else, make it that much harder for a repressive government, like Cuba, to discover which citizens are visiting a site and then prevent them from visiting the site.

Cuba is not the only example. China, Iran, and many other countries have seen their citizens utilize proxy servers to spread information and ideas. I am sure that governments are not done trying to prevent their citizens from accessing information, sharing information, or associating with others through the internet, but I am also sure that there will always be those who circumvent limitations placed on them through the use of anonymous web surfing techniques. Some people might want to seek residency in another country that is more free and allows for more privacy.

Rapid innovation and accelerating diffusion of technology usage has been eroding the political framework of the 20th century. Also these have been fostering economic activities that goes beyond the clutches of political authorities.

And this means that the greater the penetration levels of technology, the bigger the informal economy, as well as, greater pressures applied to existing vertical structured political institutions. Put differently, closed door political economies are incrementally being pried open by the globalization through technology.

The relationship between markets and regulations can be analogized to a “cat and mouse” game which Wikipedia.org defines as “a contrived action involving constant pursuit, near captures, and repeated escapes” where the interrelationship exists via a feedback mechanism: the markets always discovers means to skirt political shackles, and the political response to innovation would be to introduce new regulations.

Nonetheless the markets are always way ahead of and smarter than politicians, which is one fundamental reason to be optimistic despite the many challenges posed by the incumbent political agents and their lackeys.

Video: Peter Diamandis: Abundance is our future

Peter Diamandis, Founder and Chairman of the X PRIZE Foundation, an educational non-profit prize institute whose mission is to create radical breakthroughs for the benefit of humanity, in a talk at the TED explains why he thinks the world is headed for abundance.



Essentially Mr.Diamandis is banking on the explosive growth of human capital facilitated by technology (information age) through the following media

Technologies riding Moore’s Laws:
1. Infinite Computing
2. Sensor and Networks
3. Robotics
4. 3D Printing
5. Synthethic Biology
6. Digital Medicine
7. Nanomaterials
8. Artificial intelligence

Here are some noteworthy quotes

When I think about creating abundance, it is not about creating a life of luxury…it is about creating a life of possibilities. It is about taking that which was scarce and making it abundant. You see scarcity is contextual and technology is a resource liberating force. 6:34

It is not about being scarce it’s about accessibility. 8:17

By the way the biggest protection against population explosion is making the world educated and healthy 12:26

3 billion new minds would never been heard before are connecting to global conversation. What do these people want? What would they consume? What do they desire? Rather than having an economic shutdown we are about to have is the biggest economic injection ever. These people represent tens of trillions of dollars injected in the global economy 12:47

In spite of the restrictive role of governments, I share his optimism that people will find ways and means to circumvent them mostly through technological innovations.

(hat tip Professor Mark Perry)

Information Age: The Rise of 3D Printers

Casey Research’s Chris Wood writes of the prospects of 3D which is “already a $1 billion+ business”,

3D printing is simply too useful across a wide spectrum of applications to be compared to VR. It is here to stay. Going forward, the technology will displace conventional manufacturing techniques in some instances and complement them in others. Consumers will increasingly adopt it. The technology will continually be refined, while the range of usable materials will broaden. These advancements should allow us to start printing electronics in a few years… and perhaps even body parts someday down the road.

This is an industry barely into its infancy. It's a situation not unlike that with the personal computer thirty years ago, when only Steve Jobs, Bill Gates, and a few other visionaries foresaw that the PC could become an essential household appliance.

I earlier posted a video of 3D Printing here

As part of the “smart manufacturing” or one of the 3 forces that will underpin the information age, I’d conjecture that 3D printing will herald the evolving trend of mass customization or the emergence of Prosumers where 3D printing will likely bring some, if not many, aspects of (personalized or custom based) manufacturing to the households. In short, some things will be produced at home, when or as needed. [possibly even body parts as pointed out, e.g. printing of kidney]

Again forces of decentralization driving structural changes in the way we live at work.

Mobile Internet: Welcoming Dr. Smartphone?

I think the major springboard in the next wave of advances in the technology sector will be in the applications aspects of the mobile internet platform.

Aside from games, mobile health services along with Mobile banking and mobile commerce are likely the high growth areas to watch.

In terms of healthcare here is a clue where application development trends are headed for, from Reuters

Tired of long waits at the hospital for medical tests? If Korean researchers have their way, your smartphone could one day eliminate that -- and perhaps even tell you that you have cancer.

A team of scientists at Korea Advanced Institute of Science of Technology (KAIST) said in a paper published in Angewandte Chemie, a German science journal, that touch screen technology can be used to detect biomolecular matter, much as is done in medical tests.

"It began from the idea that touch screens work by recognizing the electronic signs from the touch of the finger, and so the presence of specific proteins and DNA should be recognizable as well," said Hyun-gyu Park, who with Byong-yeon Won led the study.

The touch screens on smartphones, PDAs or other electronic devices work by sensing the electronic charges from the user's body on the screen. Biochemicals such as proteins and DNA molecules also carry specific electronic charges.

According to KAIST, the team's experiments showed that touch screens can recognize the existence and the concentration of DNA molecules placed on them, a first step toward one day being able to use the screens to carry out medical tests.

As I have been saying, the information or digital age will change or reconfigure the way we do things.

Sunshine Industry: Video Games Media

One of the likely fastest growing applications of the information age would probably the video game industry.

From the Economist, (emphasis added)

OVER the past two decades the video-games business has gone from a cottage industry selling to a few niche customers to a fully grown branch of the entertainment industry. According to PricewaterhouseCoopers (PwC), a consulting firm, the global video-game market was worth around $56 billion last year, and has grown by over 60% since 2006, when the Nintendo Wii console was launched. The gaming industry is more than twice the size of the recorded-music industry, nearly a quarter more than the magazine business and about three-fifths the size of the film industry. PwC predicts that video games will be the fastest-growing form of media over the next few years, with sales rising to $82 billion by 2015. The biggest market is America, whose consumers this year are expected to spend $14.1 billion on games, mostly on the console variety. Consoles also dominate in Britain, the fifth-largest gaming market. In other parts of Europe, and particularly Germany, PC games are more popular. China has overtaken Japan to become the second-biggest market, and is one of the fastest-growing, with sales rising by 20% last year.

How will the growth of video games be facilitated?

Again from the same article, (bold emphasis mine)

Now the ever-increasing computing power of mobile phones has put the means of playing games into the pockets of people who would never think of spending hundreds of dollars on a dedicated console or a PC. The simple games that came pre-loaded onto the mobile handsets of a decade ago have evolved into a subset of the industry in its own right, appealing to a more casual crowd who play them on trains, in airport departure lounges or while waiting for the washing to finish. Today’s smartphones pack far more computing power than the original PlayStation, and games are a big part of their appeal: the two most popular kinds of software on Apple’s App Store are games and entertainment.

The internet has played a crucial part in the rise of video games, enabling developers to get their products into their customers’ hands without the need for traditional shops or publishers. That has allowed small, independent developers to compete with the big firms who might spend tens of millions of dollars on developing a single title and as much again on marketing it. As a result the industry is becoming increasingly fragmented as its markets become more differentiated.

The internet has also become a games platform in its own right, making the hobby truly sociable by electronically linking gamers the world over. Millions of people spend many hours each week playing and working (sometimes the distinction is not clear) in virtual places such as “World of Warcraft” and “EVE Online”. Hundreds of millions more play free, simple, sociable games on Facebook, such as “Lexulous”, which is a bit like Scrabble, and “FarmVille”, a game with an agricultural setting. Increasingly the games themselves are free, but the virtual goods available in these online worlds—a stable for one’s electronic horses, say, or a particularly pretty shirt for one’s digital alter ego to wear—cost real money.

The internet will likely remain a hub for the introduction of many innovative applications due to its largely free market setting.

And video games, mobile commerce, mobile banking and digital healthcare or telemedicine are likely major growth application areas for consumers that will be powered by the rapidly exploding mobile internet platform as manifested by tablet sales.

Shale Oil Discoveries Goes International, Easing Peak Oil Concerns

Last week, Argentina and China reported major Shale oil discoveries

From Presstv.com

Argentina's YPF oil and gas company has announced a historic oil discovery in the country's southern province of Neuquen, Press TV reports.

Yacimientos Petroliferos Fiscales (YPF) new finding includes 927 million barrels of recoverable oil and natural gas, of which 741 million barrels is shale oil.

“They [YPF] have an important discovery, and they have to expand it. The major challenge is to develop the technology and raise the capital in order to produce at reasonable prices,” Daniel Gerold, an energy market analyst told Press TV.

From Independent.co.uk

The shale gas revolution spread to China yesterday as Royal Dutch Shell struck the rock-based fossil fuel while drilling, heralding the country's first commercial production.

In a joint venture with its local partner, PetroChina, Shell has drilled two wells and discovered a good flow of gas.

"It's good news for shale gas," said Professor Yuzhang Liu, vice president of Petrochina's Research Institute of Petroleum Exploration and Development. Shale gas is fraught with controversy because it is extracted from the rock with blasts of sand, water and chemicals through a process known as hydraulic fracturing, or fracking, that has been linked to earthquakes and water pollution.

However, the discovery of vast quantities of the gas in countries such as the US, Poland and the UK has the potential to provide a relatively cheap, secure source of energy.

In April, the US Energy Information Administration estimated that China may hold 1,275 trillion cubic feet of shale gas, 12 times its conventional gas reserves and almost 50 per cent greater than in the US.

With the spate of Shale oil discoveries which should be expected to increase, as I previously wrote,

Eventually the growth of the industry will likely reach a scale enough to incentivize a structural change or reconfiguration in the distribution of demand.

This implies an easing of relevance of peak oil.

From Platts.com,

The debate over whether the world's reserves of hydrocarbons have now peaked and are in decline has lost relevance over recent years as new technology allows oil companies to find and exploit new hydrocarbon sources, the CEO of Repsol Antonio Brufau said Tuesday.

Brufau said progress made in exploring and developing ultra-deepwater areas, unconventional oil and gas sources and the move into remote areas such as the Arctic, have been key to growing global reserves of oil and gas.

"The speed at which technology changes and its consequences have taken us largely by surprise. The peak oil debate, for example, has lost a great deal of its relevance in the past three years," Brufau told the World Petroleum Congress in Doha.

"The possibility that usable resources under commercially viable terms will run out is no longer a concern in the short or medium term," he said.

(Hat tip Professor Mark Perry)

Video: The Rocketeer Goes Live

I recall a 1991 film the Rocketeer which, according to Wikipedia.org,

tells the story of stunt pilot Cliff Secord who discovers a jet pack that enables him to fly. His heroic deeds attract the attention of Howard Hughes and the FBI, as well as sadistic Nazi operatives.

Two decades later, a modern day ‘Rocketeer’, monikered the Jetman, is shown in the video below flying along with jet fighters…

The accelerating pace of technological innovation has simply been amazing.

Blaming Technology to Justify Tobin Tax

The Economist writes, (bold emphasis mine)

MOORE'S Law, an observation that the "number of transistors incorporated in a chip will approximately double every 24 months", has held broadly true since the creation of the first transistor in 1947. Computing power has increased some 600-fold over the past 15 years; 2.6 billion transistors can now be crammed onto a single computer chip. This advancement has facilitated the ability to trade ever-larger volumes of shares. During the 1960s, just under 17 billion shares were traded on the New York Stock Exchange. That amount was surpassed over just four average trading days in September 2011. And while the number of shares listed has increased by some 50-fold, annual share turnover has increased from an average of 17% in the 1960s to nearly 300% between 2008 and 2011. In theory all this activity ought to lead to more accurate pricing of stocks and more efficient allocation of capital. In practice there is a lot of tail-chasing going on. That has led to calls for a tax on financial transactions, the Tobin tax, which advocates argue would be a painless way of boosting government finances.

While it may be true that technological innovations may have boosted stock market trading volumes via widespread dispersion of information, deepening connectivity, algorithm based and real time trades, growing array of trading instruments and others, it doesn’t follow that “a lot of tail chasing” or market volatilities can be blamed on technology enhancements.

This seems to be a non-sequitur used to justify taxes on financial transaction which will only lead to more government spending based debt accumulation which ironically has been the root of today’s crisis and the consequent market volatilities.

The article also excludes the effects of the intensive politicization of the marketplace which leads to massive price distortions, malinvestments and business cycles.

Beware of politically biased commentaries veiled as expert opinions.

Was Steve Jobs a “Tweaker”?

The real genius of Steve Jobs was about his tweaking, that’s according to the perceptive author Malcolm Gladwell in his latest article at the New Yorker,

The visionary starts with a clean sheet of paper, and re-imagines the world. The tweaker inherits things as they are, and has to push and pull them toward some more nearly perfect solution. That is not a lesser task.

Read the rest here

Apple Jumps Into the TV Industry

A Steve Job-less Apple won’t be inhibited from their innovative ways, they’re moving into integrating TV with their current line of products.

From Bloomberg,

Apple Inc. (AAPL) is turning to the software engineer who built iTunes to help lead its development of a television set, according to three people with knowledge of the project.

Jeff Robbin, who helped create the iPod in addition to the iTunes media store, is now guiding Apple’s internal development of the new TV effort, said the people, who declined to be identified because his role isn’t public.

Robbin’s involvement is a sign of Apple’s commitment to extending its leadership in smartphones and tablets into the living room. Before his Oct. 5 death, Apple co-founder Steve Jobs told biographer Walter Isaacson that he had “finally cracked” how to build an integrated TV with a simple user interface that would wirelessly synchronize content with Apple’s other devices.

“It will have the simplest user interface you could imagine,” Jobs told Isaacson in the biography “Steve Jobs,” released yesterday by CBS Corp. (CBS)’s Simon & Schuster.

Trudy Muller, a spokeswoman for Cupertino, California-based Apple, declined to comment. Outside of Jobs’s remarks in the book, Apple hasn’t acknowledged that it’s developing a TV set. And according to one person, it’s not guaranteed that Apple will release a television.

Until now, the company’s TV efforts have been limited to Apple TV, a small $99 gadget that plugs in to a television and gives users access to content from iTunes, Netflix Inc. (NFLX)’s streaming service and YouTube. Jobs had called it Apple’s “hobby,” rather than something designed to be a serious moneymaker.

The relentless pursuit of profits forces producers to earnestly work to satisfy the consumers, partly through innovation. If they fail, then they lose money. It’s a calculated risk for them that comes with no guarantees.

For consumers this means more choices and access to products at lower prices.

That’s the beauty of free markets.

Celebrating Heroes of Capitalism: Apple's Steve Jobs

Apple's founder Steve Jobs passed away today at age 56.

Although I have not had the opportunity to patronize Apple's marvelous products such as the iPhone wireless handset, iPad tablet or iPod digital music player or MAC or Macintosh computers, I recognize Mr. Steve Job's immense and revolutionary contributions in bringing about transformative technology-based personalized connectivity through his magnificently consumer directed innovative ways.

As the Bloomberg aptly describes

Jobs proved that complex technologies could be designed into simple, beautiful products that people would find irresistible

For Mr. Jobs, the consumer was king. And because of this, Mr. Jobs, through Apple, has been reciprocally rewarded by the markets (see AAPL's chart here).

Mr. Jobs' personal net worth according to the same Bloomberg article was at least $6.7 billion as of September 6, mostly from his Disney (Pixar) stake [$4.4 billion] and from Apple [$2.1 billion].

The following video is a short tribute to Steve Jobs. [hat tip Russ Roberts]

Thank you Steve. RIP.

Information Age Investing: Entrenching Technology Sector Leadership

Bespoke Invest shows us some very important developments in the US stock markets during the recent sharp volatility: Technology Sector’s market leadership has been intensifying

Bespoke Invest writes

As shown, the Technology sector, which was already the largest sector in the index, has seen the biggest gain in weighting since the bull market peaked. On April 29th, Tech had a weighting of 18.07%. As of now, its weighting is 19.06%. The gain in Tech is even more impressive because the only other sectors that have seen increases in their weightings since the bull market peaked are non-cyclical in nature (Cons. Staples, Utilities, Health Care, Telecom).

Additionally, the technology sector has been outpacing the industrials.

Again from Bespoke Invest

While Industrials have been slumping, the Technology sector has been ramping. Although there have been numerous calls to avoid the sector during this downturn, Tech stocks have been handily outperforming the market. In fact, heading into today, Technology was the least oversold of the ten sectors.

My thoughts

Recent volatility has been proving to be more of a shakeout than a genuine inflection point.

The underlying change of market leadership or divergent actions in the sectoral performances, which reveals of an ongoing rotation towards the technology sector, shows that this has not been a debt deflation driven financial market sell down, as global central bankers have been applying aggressive activists measures.

The gap in the market cap weighting of the technology and other sector has been widening. In the Philippines, the Mining sector has been assuming this role.

As I have been saying, as the information age deepens, the pie of the technology sector relative to the economy will continue to expand.

Global production process will continue to lengthen or experience enhanced specialization as more technology products and services will be offered and provided to the marketplace. Competition led innovation will be the major driving force for this dynamic.

People hardly notice that the internet search industry is one big example of this ongoing dynamic.

The technology market leadership dynamic will continue to be reflected on prices of technology equities, which should be expected to have a greater share in the US equity market’s sectoral weightings as time goes by.

Essentially, a bet on the information age should translate to a bet on the technology sector.

But as caveat, since policies of central bankers have led to periodic bubble cycles, the capital intensive technology sector could be in a formative bubble cycle process. Although I guess this has yet to reach a maturity phase.

Of course, US treasuries are the ultimate bubble in the US, which I think is in a near maturity or blowoff phase. The global bond bubble applies to many developed economies based on the 20th century designed welfare system.

And so goes the US treasury securities and other bond bubbles (EU, Japan), so with the US dollar and the US dollar system.

I’d stick to precious metals and the technology sector.

Competition Fueled Global Stock Exchange Automation

Transition to electronic trading in global stock exchanges only gained traction after the derivatives exchanges gave them a challenge

Professor Michael Gorham of the Illinois Institute of Technology narrates (World Federation of Stock Exchanges) [bold emphasis mine]

As we have seen, the early pioneers of electronic derivatives trading created brand new exchanges starting in the mid 1980s. It took almost another decade before existing floor-based exchanges began fully converting to screens. Aside from the fact that conversions from floors to screens met stiff resistance from member-owners whose livelihoods were threatened, derivatives trading, especially in financial products, was still in its infancy and many countries did not yet have derivatives exchanges. New Zealand, Sweden, Switzerland, Germany, South Africa and China all had no derivatives exchanges. So during the mid 1980s and early 1990s, all these countries created new derivatives exchanges, and they were all electronic right out of the box.

Stock exchanges, on the other hand, were relatively mature institutions, and most countries of any size already had one or more stock exchanges and were not generally building new ones. And given the natural resistance of member-owners, the existing stock exchanges, just like the existing derivatives exchanges, were not likely to quickly convert to screens. Consequently, early electronic activity on the securities side was carried out on an experimental basis, typically only for stocks that were relatively inactive. So in figure 6.2, we see that except for the isolated event of the Cincinnati Stock Exchange becoming electronic in 1980, it was not until 1989 that stock exchanges began to start converting to electronic trading in earnest

Some observations;

Most stock exchanges being monopolies or oligopolies have been slow to adapt to changes.

It took the introduction of derivative markets which threatened to compete with these traditional exchanges to prompt the latter to automate.

Nevertheless automation revolutionized trading. It facilitated increases in transparency, enabled outsourcing of traditional functions such as trading floor operations, product development, marketing, legal, regulatory and often clearing and settlement, which has contributed to the precipitous decline in the cost of trading, promoted direct access to exchange matching engines, introduced new order types, and fuelled a leap in merger and acquisitions activities.

Automation has been a significant part of financial globalization which means that the trend for stock exchanges here (in the Philippines) and abroad will likely incorporate new trading platforms/services.

For instance, the Philippine Stock Exchange has derivatives on the pipeline (via Red Hat) and has seen participation in new Exchange Traded Funds (ETFs) traded offshore, e.g. for ASEAN, the FTSE ASEAN Index Series and iShares MSCI Philippines Investable Market Index Fund (EPHE)

Deep and sophisticated capital markets are prerequisites to progressing market economies.

Will We be part of the 100 years old Club?

Will we live to be 100 years old?

Me, no. Maybe for you and the younger generation the chances are likely a yes.

The rapid advances in technology will likely enhance this process. Futurist Ray Kurzweil predicts that man may reach immortality by 2045. It’s an incredible, fascinating and optimistic thought.

Nevertheless, the Economist projects there will be more than 1 million centenarians by 2100, they write

MOST countries celebrate the survival of a citizen for a century with a letter from a president or monarch, or even some cash. This is just about feasible at the moment, when centenarians are still comparatively rare, but it will not be the case for much longer. The chart below, drawn from UN data, shows projections for the five countries that will have more than a million centenarians by the end of the century. China will get there first in 2069, 90 years after its one-child policy was implemented.

I don’t know how the UN came up with these projections.

What I know is that:

The US has the most centenarians 70,490 as of September 2010. Japan has 44,449. (Wikipedia.org) Following charts from Google's Public Data

Life expectancy has been expanding as more people have been enabled to trade freely.

Trade brings about the innovation in technology which has vastly contributed to this extended lifespan. Of course increasing wealth from trade has also been a factor.

Yet if people will indeed grow older as the UN or Kurzweil predicts, then there will be further strains on current Bismarckian government welfare system. This means radical changes will confront the current governments founded on the industrial age society.

Also despite longer lifespans which should add to the global population, I don’t believe in the Malthusian crap about “peak” resources. Under free markets, people’s ingenuity will prevail.

At the end of the day, the sustainability of longer lifespans will ultimately depend on the state of free markets and economic freedom.

Video: The Role of Glass in the Information Age

I saw this fantastic Corning video ad at the Mises Blog.

Some thoughts:

Resources are finding wider applications or use in the rapidly innovating technology sector.

Glass could play an enlarged or a more substantial role in the information (digital) age, as portrayed by the video ad.

As an investment theme, the glass industry could signify a 'pick and shovel' play on the technology industry.

Video: Incredible Technology 3D Printer

With a secret powder and binder materials, 3D printers can replicate tools or other objects. (hat tip Don Boudreaux)

This is simply amazing

Video: Consumer Surplus From Internet and Mobile Technology

Consumer surplus, according to Wikipedia.org, is the "difference between the maximum price a consumer is willing to pay and the actual price they do pay. If a consumer would be willing to pay more than the current asking price, then they are getting more baenefit from the purchased product than they spent to buy it they are getting more benefit from the purchased product than they spent to buy it." (italics added; hat tip Professor Russ Roberts)



The video shows how people tend to see consumer surplus from modern technology powerful enough for them to 'refuse' a ($1 million) monetary offer in exchange for withdrawing access to these technologies. [my guess is that polls aren't taken seriously]

Yet, ironically, the same people in the video would wait for falling prices from new innovative products in order to adapt to them.

Also, the video shows the vital role played by the "rich" in the diffusion of these newly discovered technologies into society, or how the rich, as buyers of the first order, creates incentives for producers to mass produce for widespread use.

The beauty of laissez faire capitalism.

Huge Rare Earth Metals Discovery in the Pacific Seabed

For the many who believe in various “Peak” theories—seen as the shrinking of “finite” supplies of specific natural resources/commodities (e.g. oil, copper etc…)—their fundamental error has been to ignore the laws of economics and human ingenuity.

This also applies to entities who operate under such premises and think that they can monopolize or control supply of natural resources by restricting trade. This applies particularly to rare earth metals.

The BBC.co.uk reports,

Japanese researchers say they have discovered vast deposits of rare earth minerals, used in many hi-tech appliances, in the seabed.

The geologists estimate that there are about a 100bn tons of the rare elements in the mud of the Pacific Ocean floor.

At present, China produces 97% of the world's rare earth metals.

Analysts say the Pacific discovery could challenge China's dominance, if recovering the minerals from the seabed proves commercially viable.

The British journal Nature Geoscience reported that a team of scientists led by Yasuhiro Kato, an associate professor of earth science at the University of Tokyo, found the minerals in sea mud at 78 locations.

"The deposits have a heavy concentration of rare earths. Just one square kilometre (0.4 square mile) of deposits will be able to provide one-fifth of the current global annual consumption," said Yasuhiro Kato, an associate professor of earth science at the University of Tokyo.

The minerals were found at depths of 3,500 to 6,000 metres (11,500-20,000 ft) below the ocean surface.

My comments

One, China’s apparent monopoly on rare earth metals will be challenged by such findings.

Two, the laws of economics work: High prices translates to profitable opportunities for the market to discover alternative sources of supply

Three, innovative technology trends help underpin such supply sourcing. Yes, the above development points to seabed mining as the next major frontier in resource exploration.

Fourth, prices founded on current (‘peak’ and monopolists) premises will likely be affected.

So far, the REMX (Market Vectors Rare Earth ETF) have been on a downswing, along with a major US rare earth producer Molycorp [MCP] even before the news was released (maybe the market has anticipated this).

Yet aside from the above the dynamics of supply-demand balances, there is also monetary factor to always consider. So while prices of rare earth may be pressured by supply side discoveries, continuation of policies of inflationism may partly offset such declines.

Like any endeavor, there will always be naysayers or detractors (or perhaps defenders of the current monopolists)

From the same article,

The prospect of deep sea mining for precious metals - and the damage that could do to marine ecosystems - is worrying environmentalists.

Are these environmentalists really working to “save” the environment? Or are they there to promote vested interest groups or simply advancing the cause of etatism?