If Facebook and Twitter are guides, AI will not only increase the misinformation in social media, it will make it seem more authentic, with obvious implications for the divisiveness of our society.
Data showing that the lower economic strata has fared somewhat better than the middle class as a result of the high inflation ands tight labor market of the past few years. However, the overall impact on inequality in the U.S. has been marginal. Furthermore, the relative gains of the lower class may well be temporary as the economic trends reverse.
The development of comprehensive regulation of cryptocurrencies by the UK and the European Union has two consequences: First, it adds legitimacy to cryptocurrency by misleading many investors to mistake this regulation for increased safety in crypto investments. Second, it places increased pressure on the U.S. to develop crypto regulation since crypto exchanges and investors will migrate to locations with these regulations.
Shedding employees is the knee-jerk response to profit declines for most established companies. However, the high-tech industry is still in its infancy and future sources of earnings are relatively unknown. There is a danger that reducing staff too quickly in order to meet the expectations of short-term investors will also reduce the competitiveness of existing and future development of new products and services.
Correcting Poor Investor Decisions: Another way to view this decline in valuation is as a correction of the overvaluation that led to the overinflated valuation in the first place, a common occurrence with internet-based technology. The fact that we have seen this before in the dot.com bubble does not speak well of the decision-making process of venture capital firms and other investors. #fintech #valuation #internet #investments #decisionmaking #investmentdecisions #financialbubbles
The immense decline in the valuation of FinTech companies, pegged at around 50%, reflects the overly optimistic assessment of the firms' future profitability, especially in the outlook for future revenues. This is a chronic problem in the valuation of newer high-tech companies where little or no performance data exists. The same problem occurred during the dot-com period in the late 1990s.
The era of the Great Exasperation arrives for investors
This article lays out the changes in the investment climate brought out by recent changes in economics, economic policy, and the difficulty of finding investment strategies that work in the new environment. Many of the trends he identifies are sure to be with us for the medium term. One result is to undermine the tools that investment managers have used for decades and that generated acceptable risk/reward returns. The end of this era undermines many of these tools as well as the underlying premises. Investment professionals may be better off changing investors' expectations than attempting to use old tools in the new environment.
Krugman argues that inflation fears have been overblown and that there is evidence that inflation is subsiding. His argument is that the Fed is overreacting by signalling that it intends to continue to aggressively raise interest rates raising the prospect of an unnecessary recession. However, this mornings U.S. jobs report shows gain of 372,000 in non-farm payrolls, exceeding economists’ estimates for a 275,000 increase. The unemployment rate remains unchanged at 3.6%. This report may undermine Krugman's analysis and give a green light to the Fed's view that the economy is overheated and inflation may be incorporated into people's expectations, triggering a self-sustaining inflation. The bottom line is a likely hefty rise in interest rates later this week (0.50% and possibly 0.75%). The risk will then shift to to a recessionary outlook. With all the political and economic problems facing the world, a recession in the world's largest economy would be pouring gas on a fire. #ezrazask #inflation #economicpolicy #federalreserve #employment #politicaleconomy #recession #stagflation
Central Banks and the Fight to Curb Inflation
European and US central banks have jointly stated that fighting inflation is their top priority and they will follow a high-interest rate and tight monetary policy, partly in recognition that they overshot their long-lasting easy money policy. However, it is easy to state a policy but may be difficult to follow, especially if the economies go into a dive. Based on their past record of accomplishment it is possible that the banks will cave and compromise on their strategy