Facebook announces own currency

Facebook has recently announced that it will be launching its own currency, with the promise of it being fully operational by 2020. This currency is not exactly classifies as a cryptocurrency, due to the fact that the value of Libra will be backed by a reserve. This is unlike regular cryptocurrencies, whose value is determined by the supply of the currency and other forms of cryptocurrency in the market as well as their individual demands. 

This financial platform is intended to also be regulated by a federation of companies and non-profit organisations through a Swiss foundation.The currency is quickly gaining traction, with investors minimum contribution being $10m. Some companies that have currently invested in this Facebook currency are Visa, MasterCard, PayPal, Uber, Spotify and some venture capital firms such as Andreessen Horowitz. 

Facebook is intending to have this currency be distributed through some existing apps such as Facebook Messenger or WhatsApp. These apps could make it hard to integrate a secure type of funds exchange, and would not provide a viable platform for many businesses to feel comfortable doing business …

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Ed Harrison – talking about banks & conflicts of interest

An excellent analysis of the issue with banks being bailed out, banks get into trouble and they are rescued (bailed out) or they default and creditors take a hit. However, often times the sovereign gets into trouble as well. Does the Sovereign then privatize assets or default themselves? Assets such as the banks fall into the hands of foreigners at that point – as we have already seen with Bank of Ireland.

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The Economic Naturalist, Robert H. Frank (book review)

Robert H. Frank of Cornell University wrote a great book called ‘The Economic Naturalist, why economics explains almost everything‘, it has been an absolute winner of a read, and kindly Robert (Bob) took a phone call from me to talk about his book (more on that later).

Regarding the book, it is excellent if you are not actually into economics, because it takes everyday things and tries to use economic foundations for explaining them, the questions are simple every day occurrences and the answers are often surprising!

Here are a few simple examples, ‘why are cans of fizzy drinks round and milk bottles are square’, ‘why do animal rights activists throw paint at women in fur but not bikers in leather’, ‘why do taxi drivers stop working early on rainy days’, ‘why are plane tickets purchased at the last minute more expensive’, and many …

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Sovereign Wealth Funds to the Rescue

Sovereign Wealth Funds were a topic of this blog last year and they are coming to general attention again. A Sovereign Wealth Fund or SWF are (for the most part) the surplus money that developing countries have, sometimes this is due (like in the middle east) to oil revenues, other times (like China) its from industrial output, but in any case it is a fund which is owned and controlled by a countries government, some people are quite sceptical of them claiming that they can interfere with markets on different levels even as far as being the cause of geopolitical risk .

Since last year many of the banks that should have gone out of business are still treading water thanks to these funds, they have been the healing salve to the wounds of the sub prime mortgage fiasco. Citibank and Merrill Lynch were both saved by SWF’s. (China and Abu Dhabi). Maybe this is a signal that capitalism is working but for some countries such as France they are an unwelcome guest, Sarkozy recently promised to protect France from …

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