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Meaningful Metrics for a Smart Society
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Date: 2017-11-23 Page is: DBtxt001.php L0M00-FINANCIAL

FINANCIAL METRICS
Peter Drucker famously said you manage what you measure ... I say you had better measure the right things

STOCK MARKET INDEXES
The United Nations does a lot of 'big picture' metrics ... but much less about management metrics suited to making better decisions

New York Stock Exchange (NYSE)
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.
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 singificantly more represeantative index.
The Dow ... We’re Already at Dow 30000, You Just Don’t Know It
The blue-chip index is a poor measure of what investors are doing
By JAMES MACKINTOSH Updated Jan. 25, 2017 2:06 p.m. ET
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 ...
'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

THE FINANCING OF THE BANKING SECTOR
The financing of the banking sector is underwritten by the unusual arrangements that are Central Banks

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.
'http://inflation.us/central-bank-balance-sheet-assets-hit-record-high/'
Open file 13065 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
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.
Open exernal link

INVESTMENT
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

THE FINANCING OF INTERNATIONAL DEVELOPMENT ASSISTANCE
The financing of international development assistance has been both rather modest and also quite ineffective. More and better are both needed.

FOREIGN DIRECT INVESTMENT (FDI)
Gives access to investment funds ... but too often it is corporate colonialism
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!

UNITED NATIONS and MANAGEMENT METRICS
The United Nations does a lot of 'big picture' metrics ... but much less about management metrics suited to making better decisions

SDGs - SUSTAINABLE DEVELOPMENT GOALS
SDGs - SUSTAINABLE DEVELOPMENT GOALS
The 17 Sustainable Development Goals were launched by the United Nations in 2015 together with more than 120 indicators of progress as a replacement fore the NDGs. An important criticism of the SDGs is that they represent discontinuity from the MDGS to the SDGs and too much of an opportunity to lose much of the momentum that was in place for the MDGs. For more on this, see the link ...
Open L070-METRICS.SDGs

MDGs - MILLENNIUM DEVELOPMENT GOALS

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SDGs - SUSTAINABLE DEVELOPMENT GOALS





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The text being discussed is available at



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