image missingTrue Value Metrics (TVM)
Meaningful Metrics for a Smart Society
image missing Navigation ... HOME
HOME
CONTEXT
ISSUES
POSSIBILITIES
HOW THE
WORLD
WORKS
ACTIVITIES
SECTORS
STREAMS
STATE
ALL THE
CAPITALS
ACTORS
PEOPLE
ORGANIZATIONS
PRODUCTS
STUFF
CONSUMPTION
PLACE
COMMUNITIES
COUNTRIES
PEOPLE
QUALITY
OF LIFE
NATURE
SOURCE of
all VALUE
ECONOMY
MONEY
LIQUIDITY
TRUEVALUE
DATA at
the CENTER
ABOUT
VISION
STRATEGY
Date: 2018-12-12 Page is: DBtxt001.php L0700-SS-BF-BANKING-FINANCE

STREAM / STRAND / STRING
BANKING AND FINANCE
BIG PART OF THE MODERN ECONOMY, AND A ROOT CAUSE OF SYSTEMIC DYSFUNCTION

Over time, a bigger and bigger Banking and Finance sector
Central Bank assets Total CB Assets -v- GDP CB Assets -v- GDP stock markets up money supply up GDP up / Profits up
Over time, more and more issues with Society and the Environment
wages flat
STOCK MARKETS
A key part of the financial ecosystem required for modern capitalism
Open L0700-SS-BF-Stock-Markets
CENTRAL BANKS
A essential part of the modern money system
Open L0700-SS-BF-Central-Banks
PERSONAL FINANCE
Not always good for the individual and the family
Open L0700-SS-BF-Personal-Finance
INVESTMENT MANAGERS
Playing a key role in guiding where investments get made
Open L0700-SS-BF-Investment-Managers
IMPACT INVESTORS
Investors interested in the impact of their investments
VENTURE CAPITAL
Source of capital for start ups and high risk high reward opportunities
GOVERNMENT FUNDING OF RESEARCH AND DEVELOPMENT
Has had incredibly important role in cutting edge science and technology
HIGH FREQUENCY TRADING
Computer enabled decision making that enables the markets to be gamed for profit
FINTECH
Computer technology being used to enhance the performance of the banking and financial systems
CRYPTOCURRENCY ECOSYSTEM
Some potential to change the way the global economy works
Deloitte-smart-cities-economies
A 2017 paper by Deloitte about smart-cities-economies
Open PDF ... Deloitte-smart-cities-economies
Wharton-2018-Sunac-Property-Co-in-China
A 2018 paper ... TPB note: Reminds me of the late 1960s in the USA when leverage enabled rapid growth and then even more rapid collapse!
Open PDF ... Wharton-2018-Sunac-Property-Co-in-China

New York Stock Exchange (NYSE) GO TOP
Dow from 1998 to 2016
An impressive increase in the index ... but what does it really mean?
In large part the profits of business increased while the wealth of society as a whole was diminishing.
This is the behavior that one must expect when the only management measure that is used everywhere is money profit performance for organizations, and money income and financial wealth for individuals.
'http://www.investmenttools.com/equities/djia__dow_jones_industrial_average.htm' Open exernal link

Dow from 1927 to 2017 adjusted for consumer prices (CPI)
The Dow index has increased by an impressive amount over the long term ... but it hardly represents any significant reality. There are only a very few large cap stocks and these are changed from time to time in a way that eliminates the failing companies. The S&P 500 is a significantly more representative index.
The Dow is already at 30000, You Just Don’t Know It
The blue-chip index is a poor measure of what investors are doing ... by JAMES MACKINTOSH Jan. 25, 2017
It’s time to ditch the Dow. After 120 years, the venerable Dow Jones Industrial Average is an embarrassing anachronism, abandoned by professionals and beloved only by a media ...
Article in the WSJ (paywall)
'https://www.wsj.com/articles/were-already-at-dow-30000-you-just-dont-know-it-1485362316'
Open exernal link

The S&P Index from 1956 to 2017

Interest Rates


CENTRAL BANKS
The banking sector is underwritten by the unusual arrangements that are Central Banks
GO TOP

Central Bank asset growth from 2006 to 2016
The total was $5 trillion in 2006, rising to almost $17 trillion 10 years later. There is more 'money' in the world today than ever before, and hardly anyone in policy making leadership positions with any idea of what this really means.
The US Federal Reserve has increased the most on a percentage basis ... in large part because its financial sector had failed in the most dramatic way.
The People's Bank of China has increased the most on an absolute basis reflecting the massive size of the modern Chinese economy on top of a massive population.
Financial Economy / Unwarranted Trust
Mid 2016 ... Central Bank Balance Sheet Assets Hit Record High!
Open file 13065
'http://inflation.us/central-bank-balance-sheet-assets-hit-record-high/' Open exernal link
.
Individual Central Bank assets as a % of GDP
The Swiss National Bank has the largest balance sheet as a percentage of GDP, with it currently up to 88.42% of GDP vs. 19.82% of GDP in May 2006.
The Bank of Japan’s balance sheet is equal to 70% of GDP vs. 24.27% of GDP in May 2006.
The PBOC’s balance sheet is equal to 52.92% of GDP vs. 56.31% of GDP in May 2006.
The US Federal Reserve’s balance sheet is equal to 25.41% of GDP vs. 6.17% of GDP in May 2006.
The European Central Bank’s balance sheet is equal to 24.99% of GDP vs. 12.52% of GDP in May 2006.
The Bank of England’s balance sheet is equal to 22.38% of GDP vs. 6.37% of GDP in May 2006.
.
Total of Central Bank assets versus combined GDP
The total assets of the world’s six major central banks is equal to 35.98% of their combined GDP, a new all-time record high vs. only 14.29% of their combined GDP in May 2006, and well above the nine year median of 26.08%!


BANK LENDING BY SECTOR
The financing of international development assistance has been both rather modest and also quite ineffective. More and better are both needed.
.
UK Bank Lending by Sector

INVESTMENT VALUATION

The Valuation of 'Unicorns'
Valuation-of-Unicorns-SSRN-id2955455-13577
... Instead, investors in these companies are given convertible preferred shares that have both downside protection (via seniority) and upside potential (via an option to convert into common shares). Second, shares issued to investors differ substantially not just between companies but between the different financing rounds of a single company, with different share classes generally having different cash flow and control rights. ...
'http://truevaluemetrics.org/investment/Valuation-of-Unicorns-SSRN-id2955455-13577.pdf'>
Open PDF ... Valuation-of-Unicorns-SSRN-id2955455-13577

OFFICIAL DEVELOPMENT ASSISTANCE
Financing international development assistance has been both inadequate and ineffective. More and better are both needed.
GO TOP

FOREIGN DIRECT INVESTMENT (FDI)
Gives access to investment funds ... but too often it is corporate colonialism
GO TOP
Segmentation of FDI fund flows
The financing of international development assistance has been both rather modest and also quite ineffective. More and better are both needed.
Remittances are one of the most important area of growth and likely one of the most efficient in terms of delivering poverty reduction at a low cost. It can also be noted that the banking sector and financial services industry charges very high prices for a service that is vital but low cost for the banks!
TPB note: My experience with FDI over a period of more than 30 years has been that much needed foreign investment crowds out local investment and skims off the most lucrative projects. Worse many foreigners have been very comfortable paying bribes in a variety of forms to local officials at all levels, including very substantial amounts to those at the very top. Bribery and corruption are one of the lowest risk behaviors for international companies because they are most unlikely ever to be caught and it reduces conventioanl commercial risks considerably!

MOVE THIS TO METRICS / ECONOMIC
MONEY
MONEY is an inadequate metric ... it changes in size over time. GDP MEASURING THE PERFORMANCE OF THE NATIONAL ECONOMY
GDP measures consumption more than anything else. There is a weak correlation between quality of life and GDP ... better measures are possible. MEASURING THE PERFORMANCE OF A CORPORATE ORGANIZATION
Open MAIN-NAV-#5

Open L0700-PBS-FC-Finance-Investment

Open L0700-PBS-FC-FINANCIAL-CAPITAL



The text being discussed is available at


TrueValueMetrics (TVM) is an Open Source / Open Knowledge initiative.
It has been funded by family and friends plus donations from well wishers who understand the importance of accountability and getting the management metrics right.
SITE COUNT
Amazing and shiny stats
Blog Counters Reset to zero January 20, 2015

CAVEAT. The information on this website may only be used for socio-enviro-economic performance analysis, personal information, education and limited low profit purposes
Copyright © 2005-2018 Peter Burgess. All rights reserved.