The tragedy of Herbert Hoover
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Herbert Hoover
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is poorly understood without considering two issues which heavily influenced his thinking. First, he was forty years old when the
Federal Reserve System was created in 1913; to him in 1929, that's still an experiment. Secondly, the use of
gold money had proven over many centuries to be the one and only defense against unrelenting pressure by governments to debase the currency. Hoover's attitudes were certainly reinforced by his own career. He became a rich man consulting and investing in metal mines. Although not born wealthy, when he left the Presidency in the depths of the depression, he moved to an apartment in the
Waldorf-Astoria.There are no other examples of such an energetic, imaginative and effective executive in the
White House.
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Hilter & Mussolini
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After leaving his meteoric twenty-year business career in boredom at its lack of challenge, he took on a monumentally successful job of administering famine relief to a European continent devastated by World War I. On occasions in the course of it, he personally confronted both Hitler and Mussolini with disdain. Franklin Roosevelt was so impressed that he suggested him as a Democratic candidate for the Presidency; Hoover declined. He was nominated at the Republican convention on the first ballot, elected in a landslide. As President, he hit the ground running, simply peppering the Congress with innovative programs and proposals. A substantial part of what would be known as Roosevelt's New Deal grew out of initiatives that Hoover had begun during his short presidency.
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Stock Market Invincible
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Under the circumstances, it is not surprising that Hoover was disturbed by the irrational exuberance of the stock market in 1927-28, undisposed to resist proposals by George Harrison of the Federal Reserve to deflate the stock bubble by tightening the money supply. Some observers feel the fatal illness of Benjamin Strong (President of the New York Branch) weakened the resistance of the Federal Reserve to this adventurism. The stance of Hoover is not now known, but it must have been a toss-up between lifetime allegiances to hard-money and resistance to government intrusion into commerce, particularly by a comparatively new agency. In any event, tightening money worked too well. The stock market tanked in October 1929 FB is shutting down in March,
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Stock Market Crash
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followed quite promptly by the whole economy. The irony is that Roosevelt proceeded to run for twenty years with the claim that the Depression was caused by Hoover's failure to restrain the 1928 stock bubbles. In fact, the befuddled Federal Reserve bounced around during Roosevelt's time in office as well, turning a recession into the deepest depression in history. When England went off the gold standard, the Federal Reserve tightened again to prevent a flight of American gold to speculators. The result was a run on the banks, so the Fed loosened again, and half of the American banking system disappeared. Following the 1929 crash, the stock market continued to go down -- for fourteen years.
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Milton Friedman
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After a while, it became clear to everyone that three things -- the money supply, the economy, and the stock market -- go up and down together. The basic question was the same as the political one -- which one goes first, and which ones follow? Although the political parties continue to spin the facts, the world of economists seems nearly unanimous that Milton Friedman and Anna Schwartz and Milton Friedman settled the matter some time ago. Their classic work of scholarship,A Monetary History of the United States 1867-1963 , traces out four American and eleven foreign examples of shifts in monetary tightness which were unrelated to the economy, and demonstrate that the economy promptly follows the direction of the money supply. Almost all of these anomalies took place during the interval after World War I, when the gold standard was temporarily suspended. Different countries returned to gold at different times, and after the 1929 crash abandoned it in different ways at different times. Since the publication of Friedman's work, independent scholars have provided over forty confirmations of the sequence, money leads, the economy follows. And politicians posture. There is a disconcerting note, however. Almost all of the examples studied by monetary scholars could be used as proof of quite a different slogan. In almost every case, a country rescued itself by abandoning the gold standard, and the sooner it got rid of gold, the better it did. That would, of course, be true, during a period of concealed deflation where exuberant economic growth exceeds the expansion of gold supplies. A serious weakness of the gold standard has certainly been identified, leading to expressions like barbarous relic and crucifixion on a cross of gold. But there is the other, time-honored, side of it; since the beginning of history, governments have been tempted to inflate the currency in order to dishonor their debts. Governments will do so again at the first opportunity. Without the discipline of a gold standard, the only dependable defense against the catastrophe of hyperinflation is now the courage of the Federal Reserve, and the rather faint hope that we have learned everything about monetary policy that is important to learn.
REFERENCES
| Herbert Hoover: The American Presidents Series: The 31st President, 1929-1933: William E. Leuchtenburg, ISBN-13: 978-0805069587 |
Amazon |
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Thirteen Sovereign States
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In the case of the American Constitution, the initial problem was to induce thirteen sovereign states to surrender their hard-won independence to a voluntary union, without excessive discord. Once the summary document was ratified by the states, designing a host of transition steps became the foremost next problem. The dominant need at that moment was to prevent a victory massacre. The new Union must not humble once-sovereign states into becoming mere minorities, as Montesquieu had predicted was the fate of Republics which grew too large. Nor must the states regret and then revoke their union as Madison feared after he had been forced to agree to so many compromises. As history unfolded, America soon endured several decades of romantic near-anarchy, followed by a Civil War, two World Wars, many economic and monetary upheavals, and eventually the unknown perils of globalization. When we finally looked around, we found our Constitution had survived two centuries, while everyone else's Republic lasted less than a decade. Some of its many flaws were anticipated by wise debate, others were only corrected when they started to cause trouble. Still, many tolerable flaws were never corrected.
Great innovations command attention to their theory, but final judgments rest on the outcome.
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Benjamin Franklin advised we leave some of the details to later generations, but one might think there are permissible limits to vagueness. The Constitution says very little about the Presidency and the Judicial Branch, nothing at all about the Federal Reserve, or the bureaucracy which has since grown to astounding size in all three branches. Political parties, gerrymandering, and immigration. Of course, the Constitution also says nothing about health care or computers or the environment; perhaps it shouldn't. Or perhaps an unmentioned difficult topic is better than a misguided one. Gouverneur Morris, who actually edited the language of the Constitution, denounced it utterly during the War of 1812 and probably was already feeling uncomfortable when he refused to participate in The Federalist Papers . Madison's two best friends, John Randolph, and George Mason, attended the Convention but refused to sign its conclusions, as Patrick Henry and Thomas Jefferson almost certainly would also have done. On the other hand, Alexander Hamilton and Robert Morris came to the Convention preferring a King to a President, but in time became enthusiasts for a republic. Just where John Dickinson stood, is very hard to say. Those who wrote the Constitution often showed less veneration for its theory, than subsequent generations have expressed for its results. Understanding very little of why the Constitution works, modern Americans are content that it does so, and are fiercely reluctant about changes. The European Union is now similarly inflexible about the Peace of Westphalia (1648), suggesting that innovative Constitutions may merely amount to courageous anticipations of radically changed circumstances.
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President Franklin Roosevelt
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One cornerstone of the Constitution illustrates the main point. After agreeing on the separation of powers, the Convention further agreed that each separated branch must be able to defend itself. In the case of the states, their power must be carefully reduced, then someone must recognize when to stop. If the states did it themselves, it would be ideal. Therefore, after removing a few powers for exclusive use by the national government, the distinctive features of neighboring states were left to competition between them. More distant states, acting in Congress but motivated to avoid decisions which might end up cramping their own style, could set the limits. The delicate balance of separated powers was severely upset in 1937 by President Franklin Roosevelt, whose Court-packing proposal was a power play to transfer control of commerce from the states to the Executive Branch. In spite of his winning a landslide electoral victory a few months earlier, Roosevelt was humiliated and severely rebuked by the overwhelming refusal of Congress to support him in this judicial matter. The proposal to permit him to add more U.S. Supreme Court justices, one by one until he achieved a majority, was never heard again.
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Taxes Disproportionately
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Although some of the same issues were raised by the Obama Presidency seventy years later, other more serious issues about the regulation of interstate commerce have been slowly growing for over a century. Enforcement of rough uniformity between the states rests on the ability of citizens to move their state of residence. If a state raises its taxes disproportionately or changes its regulation to the dissatisfaction of its residents, the affected residents head toward a more benign state. However, this threat was established in a day when it required a citizen to feel so aggrieved, he might angrily sell his farm and move his family in wagons to a distant region. People who felt as strongly as that was usually motivated by feelings of religious persecution since otherwise waiting a year or two for a new election might provide a more practical remedy. However, spanning the nation by railroads in the 19th Century was followed by trucks and autos in the 20th, and then the jet airplane. While moving residence to a different state is still not a trivial decision, it is now far more easily accomplished than in the day of James Madison. A large proportion of the American population can change states in less than an hour if they must, in spite of a myriad of entanglements like driver's licenses, school enrollments, and employment contracts. The upshot of this reduction in the transportation penalty is to diminish the power of states to tax and regulate as they please. States rights are weaker since the states have less popular mandate to resist federal control. It only remains for some state grievance to become great enough to test the present power balance; we will then be able to see how far we have come.
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High Gasoline Taxes of Europe
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Since it was primarily the automobile which challenged states rights and states powers, it is natural to suppose some state politicians have already pondered what to do about the auto. The extraordinarily high gasoline taxes of Europe have been explained away for a century as an effort to reduce state expenditures for highways. But they might easily be motivated by a wish to retard invading armies or to restrain import imbalances without rude diplomatic conversations. But they also might, might possibly, respond to legislative hostility to the automobile, with its unwelcome threat to hanging on to local populations, banking reserves, and political power.
It helps to remember the British colonies of North America were once a maritime coastal settlement. The thirteen original states had only recently been coastal provinces, well aware of obstructions to trade which nations impose on each other. Consequently, they could readily design effective restraints to mercantilism within the new Union. Two centuries later, repeated interstate quarrels provided fresh viewpoints on old international problems. As globalization currently becomes the central revolution in trade affairs of a changing world, America is no beginner in managing the intrigues of international commerce. Or to conciliating nation states, formerly well served by nation-state principles of the Treaty of Westphalia, but this makes them all the more reluctant to give some of them up.
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Alexander Hamilton
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This-here speaker at the Right Angle Club began a discussion of the "Fiscal Cliff" razzle-dazzle of 2012, by changing his mind about the causes of the financial crash of 2007. Originally, it seemed as though globalizing 500 million Chinese out of poverty had destabilized the exuberant American mortgage market by flooding it with cheap credit. Supplanting that idea, or perhaps only supplementing it, must now be added the overextension of national debt itself to a point of bringing national borrowing to a halt.
Early in the Eighteenth century the Dutch and English had monetized national assets through a system of national borrowing formalized by Necker in Europe, and Robert Morris and Alexander Hamilton in America. Aside from a handful, no one could understand what they were talking about. Try reading that sentence a second time.
It amounted to guaranteeing all the private credit in the banking, investment, and commerce systems, with a national debt (in the form of Treasury bonds) which monetized all the assets of the whole nation. That action more or less doubled their value, just as any bank loan is seemingly owned by two people at the same time. Carried to an extreme, it might imply that America could turn Guam and Hawaii over to China if we defaulted on our debt. That was never actually intended to happen, and it never has, because all nations now fear the deflation which could result from triggering a massive exchange of national assets. The nebulous issue of "National Sovereignty" interferes with territorial transfers by any means other than war. If one nation defaults against a second nation which is afraid to go to war, it is just the stronger nation's hard luck about the debts it has chosen to support unless a transfer of assets actually happens. The Treaty of Versailles did transfer assets to the victors, and set off World War II, although it is considered bad manners to mention it. That's a simplified view of our international financial system, which admittedly skirts uncertainty about how much national debt is too much.
In fact, no one knows how much is too much until everyone runs for the exits. Now that politicians have control of computers and "big data", a modern description places the blame on Alan Greenspan the former Chairman of the Federal Reserve. For eighteen years Greenspan produced delicious world prosperity by steadily increasing American national debt faster than the American economy was growing. Sooner or later this approach was going to uncover how much was currently too much Federal debt. With silver and gold removed from the equation, one could see that default would certainly loom whenever the size of the debt became so large it could never be serviced by the Gross Domestic Product (GDP), and possibly sooner than that, if enough people could guess what was coming. This reality might be obscured temporarily by reducing interest rates, modifying international trade balances, and inflation. When the stars were in alignment however, the system just had to collapse and start over. Because it happened gradually, perhaps it would unwind gradually. In 2007 what happened was that everybody tried to get out the door at the same time. Essentially, our two political parties made opposite assessments: the party of Hamilton -- Republicans -- announced this system was doomed, while Democrats --the party of Andrew Jackson -- announced they could stave off disaster by making the rich Republicans pay for it. Both parties were partly right but essentially wrong, and the Democrats hired a better magician.
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Henry Clay
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It will take months or even years to be certain just what strategy was pursued. It would appear the Democrats chose to repeat the performance of the Obamacare legislation, eliminating national debate by eliminating the Congressional committee system of examining details in advance of a vote. Given one day to digest two thousand pages prepared by the Executive branch, no time was allowed for public opinion to form about Obamacare. In the case of the fiscal cliff episode, Congress was given less than one day to consider 150 pages allegedly prepared the day prior to the vote. Some will admire the skill of the executive branch in orchestrating this secret maneuver, but eventually, it must become apparent that policy decisions have been transferred from the legislative to the executive branch of government. Perhaps the Congressional Republicans are as stupid as the Democrats portray them to be, but it is also possible that a decision has been made to tempt the Democratic leaders into repeating this performance several times until eventually, the public is ready to consider impeachment for it. No matter what the strategy, we are now threatened with imagining some moment when gun barrels come level and live rounds slide home. We may pass up the opportunity to criticize Henry Clay for concentrating undue power in the Speaker of the House, or to uncover the way Harry Reid was persuaded to surrender Senate power to the Executive; both miscalculations are fast becoming irrelevant in the flurry of events. We came close to borrowing too much, exceeding our means to pay it back, that's all. A New York Times editorial economist feels we can "grow" our way out of this flirtation with danger, and we all certainly hope so.
Seemingly, there are only two ways to cope with over-borrowing, once we step over the invisible line. A nation may cheat its citizens with inflation, or it may cheat foreign citizens by defaulting on their currency. We are indebted to Rogoff and Reinhart for pointing out there is no difference between inflation and default except the identity of the cheated creditor; so most politicians prefer to cheat foreigners. Either way, cheating makes deadly enemies. Two centuries ago, Alexander Hamilton suggested a third way out of the problem, which we would today call "growth". But here, cheating is pretty easy: If the limit is some ratio of debt to GDP, find a way to increase nominal GDP.
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Shale Gas and Argentina
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The most astonishing current example of the power of "growth", is shale gas. It may not be totally clean, but it is cleaner than oil or coal, and far cheaper. We suddenly have so much of it the price of energy is artificially lowered, and we talk, not merely of energy independence, but of restoring the balance of international payments by exporting it. Germany is constructing steel mills to utilize iron ingots made in America with gas instead of coal. Pittsburgh was once the center of steel production because that's where the coal was, the most expensive ingredient to transport. Suddenly it is now apparently cheaper to transport the energy source to wherever you find limestone and iron ore. JP Morgan got rich the other way, transporting limestone and iron ore to Pittsburgh, where the coal was. Russia now finds it has lost its leverage over Eastern Europe's energy supply, and the Arabs (?Iranians?) will no longer have a monopoly to provide the wealth supporting Middle-Eastern mischief. China may lose interest in Africa. And in America we may develop the courage to rid ourselves of the corn subsidies for gasoline; cutting the wind and sunlight fumbles also emerge as obvious ways to cut the deficit. That's what we mean by growth. It's so powerful it makes action by any American President seem trivial by comparison.
Presumably, President Obama does not welcome being upstaged by an economic force he doggedly resisted. He may seek ways to imply it was his idea all along. When that happens, rest assured that everyone else is then a fracker. But there is another alternative Presidential path, which in extreme form is emerging in Argentina without much media attention. In short, Argentina discovered signs of oil deposits but was unable to exploit them. A European oil company was enticed to develop the oil reserves at its own expense, and effectively did so in expectation of reward from the resulting oil sales. Suddenly, the Kirchner government expropriated the oil company, paying for it with Argentine bonds. The ink was scarcely dry before the Argentine government abruptly turned around and offered to buy back the bonds for 24 cents on the dollar. And unless someone is willing to send gunboats, the previous owners of the oil company are just out of luck. Appeals to the UN are futile; because on the one-nation, one-vote principle, there are more expropriator votes in the UN than potential victims. The only thing visible which could save capitalism in South America from the revolution in shale gas competition. Presumably, Argentina has lots of shale gas, but who will lend them the money to frack it?
At present, average American lifetime costs of health care are thought to be roughly three hundred thousand dollars in the year 2000 currency, per individual. Females cost more than males, mostly because they live longer. Much of the original data was produced by Blue Cross of Michigan and confirmed by two Federal agencies. Our goal is to see if it is reasonable to hope: that a "small" subsidy at birth, invested in total stock market index funds over a reasonably projected life expectancy, might (in addition to lifetime healthcare) pay whatever retirement income it is reasonable to expect over anticipated longevity. The tricky part is that good health leads to less health cost, but it also leads to higher (longer) retirement costs. This last age differential seems to be most pronounced toward the end of life. The age differential is almost enough to count on, but not quite.
Our Answer: It turns out in theory, confirmed by historical experience from the stock market, that a total subsidy of $400 at birth will just barely scrape by at 6.5%. But the transition would be such a close thing, Congress might have to increase contribution limits to impart more safety. We assume the law as presently written, using a "term insurance" approach with technical amendment. The transition would no longer be a serious issue, using a "whole life" approach, but its duration becomes so extended it might be politically unfeasible. We end up recommending: an extension of the contribution limits, then starting with the safer "term insurance" approach first. A few years to study emerging outcomes of the term approach should lead to a safer whole-life projection since assumptions would become less fuzzy. No one seriously questions "pay as you go" is more expensive. What's difficult to arrange is a transition from the more expensive to the cheaper system.
Specifically, the politically tolerable subsidy was selected to be $400, the average future life expectancy was projected to be 90, and the modal retirement age was chosen as 65. Since both theoretical projections and backward analysis of a century of Standard and Poor 500 data do confirm it is practical to expect success with this approach, a practical way to achieve it could then be offered in the present Health Savings Account, using American total stock market index funds as an investment. The biggest problem encountered would be the transition from present healthcare finance to the proposed one. A crisis might precipitate action, while a cure for cancer might make it unnecessary. The fallback position is if HSA proves not to cover all of healthcare and retirement for everyone, at least it would provide a large part of it. In that sense, it appears superior to present systems.
That is, we recognize the superiority of a "whole-life" approach, rather than the present proposal, which is based on "one-year term" coverage. However, the time periods are so long it seems unwise to commit such huge sums to untested theories for nearly a century. We feel a purely political decision would come to the same general conclusion, even though the application of many minds could undoubtedly improve on this approach. Nevertheless, we explore whole-life approaches in the hope of adding them piece-meal to a term approach, which is less comprehensive but safer to try.
Anyway, healthcare is expensive, has a fair amount of waste, and certainly costs more than it used to. No one would write a check based on such a summary, but the goal of the question is more modest. Whole-life insurance is acknowledged to be appreciably cheaper than term life insurance. So, after a few chapters on other details, we examine how much cheaper lifetime health coverage might be than year-by-year ("term") funding. Admittedly, it would introduce intermediary costs. To roll all the complexities into one monthly premium for life would indeed introduce great efficiency. It must be remembered the savings account approach captures the largest component of growth, the flexibility to begin saving at any age, and the accommodation of any variations to the duration at the other end where income is more certain.
If it's vital to recognize how much difference small differences in interest rates matter it's also important for public opinion to be in favor of price stability, remembering 1980. (That's when the Federal Reserve found it was necessary to incite a recession deliberately, in order to stop rampant inflation.) A third subtle variable of investor growth is the frequency of compounding (see below), which should match the quarterly distribution of dividends, but may not if the investor is unwary.
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Will We At Least Cure the Expensive Diseases? Several thousand diseases are currently recognized, and more can be expected to turn up. But the National Institutes of Health, largest research-funder in the world, calculates eight or ten diseases currently account for 80% of current costs. Remembering NIH also distributes 33 billion dollars a year, it seems possible for one or two of the expensive ones to be picked off by lucky research in the next decade or two. Perhaps it is possible for all ten expensive diseases to be cured in three decades. There are at least two main disappointments lurking in such projections, however.
Diseases requiring institutionalization consume more resources than other conditions.
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The first is the heaviest contributor to cost has long been the need to admit the patient to an institution. When Thorazine came along, President John Kennedy jumped the gun a little and effectively closed five hundred thousand chronic psychiatric beds. In retrospect, it might have been wiser to restrain that impulse by a quarter or a half, so we might now find fewer psychotic souls lying on sidewalk steam grates in the winter. Nevertheless, the general idea was understandable that diseases requiring institutionalization consume more resources than other conditions which might be judged more dire by a different standard than governmental cost. In a sense, institutional costs are a variable, independent of the cost of treatment. These are "low-hanging fruit", as the saying goes, and could be used up fairly quickly, except that shortening the length of stay may simply increase daily costs -- and so end up at about the same place, by adding a lot of administrative overhead. Some time ago, I wrote a little paper on the diseases afflicting the patients in bed at the Pennsylvania Hospital on July 4, 1776, the very first Independence Day. There was considerable similarity with the present, because of the tendency of leg conditions and brain conditions to require help with daily living, not because the treatment hadn't changed a lot. What with air conditioning, high-speed elevators and private rooms, daily living costs have also risen faster than the cost of living.
Quarantining contagious diseases is another costly treatment approach, similarly mixing treatment cost with the cost of daily living. An independent, less satisfactory, factor contributing to institutional cost is cultural; providers and manufacturers failing to exercise self-restraint in black-mailing helpless patients to achieve unwarranted profits. You do see some of that, particularly near vacation areas where patients are generally strangers. Perhaps we should re-classify these as vacation costs. Our culture has discovered a deeper artificial cost issue: rationing always provokes shortages, which are ultimately self-defeating in a free society. When you threaten this balance in matters of life and death, you find you get still higher costs. Perhaps someone should try reclassifying rationing costs as independent variables.
Unfortunately for prediction purposes, five or six thousand uncured conditions have a way of expanding to fill vacancies created by the diseases we cure, since everybody has to have something to die of. Generally, this transfer cost makes its appearance as a cost of lengthened longevity.
Meanwhile, improved housing does make it possible for more people to die at home, or at peace with their fate in some other location. Some houses even have elevators, and almost all apartments do. The spread of higher education makes it more expensive to provide kindly, basic care, and our instinct to use automation to replace caregivers, somewhat coarsens the substitution. Architects report it is always more expensive to build vertically than horizontally; therefore calling into question whether we have fully considered the high-rise incremental cost, or the alternate cost of moving institutions to the suburbs. In a nearby high-rise office building, I noticed the elevator shafts took up fully half of the floor space on upper floors. Someone has to commute; whose time is cheapest? Putting patients in hospices and calling it scientific care has not improved costs much, at least so far. Whatever else you might think of HIV, its swift eradication is a marvel of science, so the degree of patient clamor has to be a consideration. Copyrights and patents do run out, competition does work if unobstructed by regulation, so the prospect is for future health care to proceed through spurts of astonishment, but on balance for healthcare to get slowly cheaper, per year of added life. Much of the cost problem will nevertheless be buried in a mountain of double-talk, simply renaming retirement issues, and possibly employing some sugar-coated euthanasia.
Will Support-Environments Become Friendlier to Medical Cost-saving? In my opinion, improvements in the supporting environment hold at least as much promise as medical research itself, for making medical care cheaper. Improved support systems could also make medical care more expensive. Medical research is somewhat force-fed at the moment, in the hope of breakthroughs which may emerge from expanding chromosome and protein chemistry. Changes in architecture, infrastructure, clothing technology, and similar drab subjects are probably due for a major upheaval from advances in electronics, which have so far neglected such prosaic matters. My own insight into such matters was advanced by seeing how greatly medical efficiency has been enhanced by widely-denounced advances in finance and banking. How much a one percent change in interest rates can affect medical costs, barely scratches the surface of what can potentially happen. If people can commute to work in half the time, or must commute in twice the time, makes all the difference in the hidden costs of healthcare. When the millennial generation gets back on its feet, they will be more surprised than we will be, at how much they can accomplish with comparatively prosaic advances.
Frequency of Compounding and Depositing. A feature of compounding is, the more frequently you compound and the more frequently you deposit, the faster it grows. That is, if you pay $365 at a dollar a day, it will grow considerably faster than if you deposited $365 on December 31, but less than if you had deposited it all on January 2 of the same year. If you compound the money in a similar manner, it gets another boost. Most stock dividends are issued quarterly but on dates of the company's choosing. Once the money is invested in an index fund, the bulk of it compounds nearly continuously, but the dividends compound a little less than quarterly. Overall, an index fund indexes a little oftener than quarterly, but quarterly is easier to show on a graph. That's an appreciably better return than annual compounding, which is often how the results are shown in publications. Just who profits from these subtleties is not commonly revealed but is something to keep in mind. With a single deposit of $400 at birth, the compounding frequency, often left unclear, is generally assumed to be quarterly. In actual practice, fresh deposits extend from age 20-65, somewhat at the whim of the depositor's trips to the bank. The expenses of doing it are a negative factor, so at least you should inquire about these two features when comparison shopping. Of course, the bank may change its frequencies over long periods of time.
We next show the single-deposit for escrow accounts, which guarantee long-term rates to a fund which guarantees not to withdraw until the end, modified by the frequency of compounding. The following graph shows what is possible from the multiple-deposit, which reaches its extreme with depositing the annual limit of $3350, modified by starting at different ages. More probable actual results lie somewhere between these two examples.
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And then, who knows? Somebody with a bomb may blow us all to cinders, taking our premises with it. Predicting future revenue might prove easier than predicting future costs, and force us to cut our suit to fit our cloth. That probably leads to rationing, so it's a last resort. But it ignores the central fact that "costs" respond quickly to available reimbursement.
What emerges is that small variations in the frequency of compounding, plus small variations in investment income, plus small variations in longevity -- combined -- are somewhat within our control, and collectively make an enormous difference. But fundamentally it was the increase in longevity which put this new vision before us. It will be up to financiers and politicians to make this vision come within our grasp, or oppose it, fighting it every inch of the way. But it was fundamentally the medical profession, responding to the tub-thumping of that Rainmaker, Abe Flexner, who made it even seem possible in our lifetimes.
Quick Analysis of Financial-Industry
Big-Data Analytic Needs
DRAFT George Fisher July 24, 2017
Abstract
Databricks intends to create a Finance Vertical position to support the Sales and SA teams when working with financial-industry organizations. This article attempts to describe the structure of the worldwide financial industry, who the major players are and what their needs might be in the context of Apache Spark and Databricks offerings.
Contents
1 Executive Summary 2
2 Introduction 2
3 Risk Mitigation 3
4 Opportunity Discovery 5
5 Finance-Industry Sponsored Kaggle Contests 6
6 Spark and Finance on YouTube 11
7 APPENDIX 15
1 Executive Summary
The opportunities in the finance sector lie on a wide spectrum: at one
end are the quant funds for whom large-scale analytics are the entire
business, at the other, are traditional depositories for many of whom a
daily batch cycle and a quarterly book closing have long sufficed.
Quite often both extremes exist in the same company.
For this entire spectrum the easy-to-use, streaming, multi-source,
big-data analytics offered by Databricks can offer advantages.
Perhaps with quick adoption by the quants and slower adoption by the others. Early adoption may involve a lot of discovery but a growing collection of proven use cases will ease later sales.
1
.
streaming will supplant batch
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predictive analytics will replace BI
.
easy multi-sourcing can unite stove pipes
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pooling can dramatically reduce operational complexity and cost
In addition, in the larger companies, the pressure to comply with data-
related regulations company-wide has become almost overwhelming and
nearly all are struggling with multitudes of incompatible systems that
A spark might unite.
2 Introduction
The finance industry is vast, far too large and diverse to make a
comprehensive enumeration of all the functions performed or of the firms that perform them. The Economist Intelligence Unit [14]
might be a good source, to begin with for such a survey.
The Appendix of this report contains lists of the major financial organizations grouped by function starting on page 15.
The questions of interest to Databricks are (1) which finance firms are
most likely to benefit from the manipulation and analysis of large
datasets and (2) what are the types of manipulation and analysis of
interest?
The two main concerns for the finance industry are:
.
Risk Mitigation
.
Opportunity Discovery
1 I wonder if the entirely cloud-based solution offered by Databricks
does not leave a lot on the table given the pervasiveness of
proprietary datacenters in this world. IBM mainframes, at that.
3 Risk Mitigation
[7]
Simply put, risk mitigation means don’t lose money, don’t go out of business and don’t go to jail.
Risk Categories
1. Business Risk Risks undertaken by the business
itself to maximize share- holder value and profits. For example: the
cost to launch a new product. Risk mitigation takes the form of
competent management controls.
2. Exogenous Risk Political upheaval, natural
disaster, economic disrup- tion. Insurance is the most-common risk
mitigation tool in these cases.
3. Financial Risk Financial risk arises from
volatility in equities, deriva- tives, currencies, interest rates etc.
In the case of financial firms these risks are also Business Risks
since finance is the business.
.
Market
Risk
Changes in prices, their magnitude, direction and volatility.
.
Credit Risk
The effect of counter-party default or the repercussions of providing
services to bad actors.
.
Liquidity
Risk
The inability to make timely payment. Margin calls often precipitate
this when illiquid securities cannot be sold or col- lateralized.
.
Operational Risk
Failures of judgment, integrity, controls, proce- dures or technology.
Cyber Security
An aspect of Operational Risk that gains clar- ity at senior levels
with every report of the losses incurred and chaos engendered by
widespread sophisticated hacking.
Financial-firm financial-risk mitigation is a field of study unto
itself. For example, there is a rigorous, multi-partFinancial Risk Manager (FRM) Certification [5] created by Global Association of Risk Professionals (GARP).
4. Regulatory Compliance While perhaps not a risk per
see this is a huge concern to financial firms, particularly since the
Financial Crisis of a decade ago and the rules promulgated as a
response.
For example, one of the main tenets of BCBS 239 [15] is that all
‘material risk data’ must be automatically aggregated and analyzed across the entire banking group on a near-real-time basis while facing severe economic stresses. Multitudes of incompatible systems are a huge barrier.
[11]
4 Opportunity Discovery
If Risk Mitigation is Operations, Opportunity Discovery is Research
& Devel- opment.
An inexhaustive list:
•
F
undamental
Analysis
The study of the financial characteristics of in- dividual firms,
seeking undiscovered value. Warren Buffett is the world’s most-famous
fundamental analyst.
•
Macro
The study of economy-wide signals. George Soros’ famous short of the UK
Pound is an example [12]. The ‘Big Short’ of 2007-2008 is another [22].
•
Relative
The study of relative movements of securities. Long/Short hedge funds
are an example.
•
T
ec
hnical
Analysis
The study of trendlines.
•
Quantitative
Analysis
The intersection of big data and machine learn- ing. Jim Simons’
Renaissance Capital [16] is the most successful example I know of but
there are many others; some are listed in the appendix be- ginning on
page 17. Some Kaggle contests focused on this, see Section
5.
•
Product Development
Swaps are an example of building a product to meet very specific
customer needs. Even more sophisticated products are possible with
analytical support using all available data.
•
Customer Enhancement
Using machine learning to reduce customer churn; using predictive
analytics for product-customer targeting; consis- tent customer support
across multiple access channels; etc. . . . using Ama- zonian
techniques in a banking environment to take on the characteristics of
the fintechs.
•
Cost Control
Route optimization for filling ATMs; redundant process identification;
risk reduction not just as a regulatory requirement, but as a cost
saver and a profit enhancer
•
Risk System Integration
The regulators are forcing the larger firms to create “living willsâ€
which has resulted in a much better understanding the the numerous
piece parts. The Basel risk data requirements are now forcing a
near-real-time integration of numerous disparate systems. This seems
like fertile ground for innovation both for compliance and to build
upon the results.
5 Finance-Industry Sponsored Kaggle Contests
Over the past several years a number of financial firms have sponsored
Kaggle contests. Someone at these firms thought that these subjects were worth paying for crowd-sourced analysis and was willing to go to the considerable trouble of setting up and monitoring a contest with thousands of participants lasting three months or more.
Two Sigma is a quant fund, listed in the appendix on pages 17 and 23.
The challenge was to predict daily price changes. (In this contest I
earned a Kaggle Silver Medal for coming in 37th out of 2,070
contestants. [9])
Opportunity
Di
sco
v
ery
Improve credit risk models by predicting the probability of default on
consumer credit.
Risk Mitigation
Improve the quality of information within transaction data.
Risk Mitigation
Predict which customers will leave an insurance company in the next 12
months.
Risk Mitigation
Given a dataset of 2D dashboard camera images, State Farm is
challenging Kag-
guess to classify each driver’s behavior. Are they driving attentively,
wearing their seatbelt, or taking a selfie with their friends in the
backseat?
Risk Mitigation
Santander (Spain-based bank) is challenging Kagglers to predict which
products their existing customers will use in the next month based on
their past behavior and that of similar customers.
Opportunity
Di
sco
v
ery
Santander Bank is asking Kagglers to help them identify dissatisfied customers early in their relationship.
Risk Mitigation
, Opportunity Disco very
Using terabytes of noisy, non-stationary data Winton Capital is looking
for data scientists who excel at finding the hidden signal in the
proverbial haystack, and who are excited by creating novel statistical
modeling and data mining techniques.
Opportunity
Di
sco
v
ery
Using a customers shopping history, can you predict what insurance policy they will end up choosing?
Opportunity
Di
sco
v
ery
Claims management may require different levels of the check before a claim can be approved and payment can be made. With the new practices and behaviors generated by the digital economy, this process needs adaptation thanks to data science to meet the new needs and expectations of customers. Kagglers are challenged to predict the category of a claim based on features available early in the process.
Risk Mitigation
, Opportunity Disco very
The life insurance application process is antiquated. Customers provide
extensive information to identify risk classification and
eligibility, including scheduling medical exams, a process that takes
an average of 30 days.
The result? People are turned off. That's why only 40% of U.S.
households own individual life insurance. Prudential wants to make it quicker and less labor intensive for new and existing customers to get a quote while maintaining privacy boundaries.
Opportunity
Di
sco
v
ery
Predict a transformed count of hazards or pre-existing damages using a
dataset of property information. This will enable Liberty Mutual to more accurately identify high-risk homes that require an additional examination to confirm their insurability.
Risk Mitigation
Fire losses account for a significant portion of total property losses.
High severity and low frequency, fire losses are inherently volatile,
which makes modeling them difficult. In this challenge, your task is to
predict the transformed ratio of loss to the total insured value. This will
enable more accurate identification of each policyholders risk exposure
and the ability to tailor the insurance coverage for
their specific operation.
Risk Mitigation
The Benchmark Bond Trade Price Challenge is a competition to predict the next price that a US corporate bond might trade at.
Opportunity
Di
sco
v
ery
Determine whether a loan will default and the loss incurred. We are
building a bridge between traditional banking, where we are looking at
reducing the consumption of economic capital, to an asset-management
perspective, where we optimize on the risk to the financial investor.
Risk Mitigation
Develop models to predict the stock market’s short-term response following large trades. Contestants are asked to derive empirically
models to predict the behavior of bid and ask prices following such
“liquidity shocksâ€.
Modeling market resiliency will improve trading strategy evaluation
methods by increasing the realism of backtesting simulations, which
currently, assume zero market resiliency.
Risk Mitigation
, Opportunity Disco very
Bodily Injury Liability Insurance covers other peoples bodily injury or death for which the insured is responsible. The goal of this
competition is to predict Bodily Injury Liability Insurance claim
payments based on the characteristics of the insureds vehicle.
Risk Mitigation
Allstate is currently developing automated methods of predicting the cost, and hence severity, of claims. Kagglers are invited to create an algorithm which accurately predicts claims severity.
Risk Mitigation
6 Spark and Finance on YouTube
•
Apache Spark on IBM z Systems Demo for Finance
https://www.youtube.com/watch?v=yw0dQFMyxFQ
References to IMS, CICS, and VSAM make me think this is Spark on an IBM
mainframe. Considering the fact that IBM mainframes are still quite widely used, this might be worth understanding.
Opportunity
Discovery
, Risk Mitigation
•
Using Spark to Analyze Activity and Performance in High Speed
T
rading En
vironmen
ts
https://www.youtube.com/watch?v=zdz9Cj1-hjA
Corvil: Irish data monitoring and analytics for financial data using
Spark. Non-intrusive low-latency electronic trading monitoring,
regulatory compliance through the use of streaming telemetry.
Risk Mitigation
•
Spark in Finance Quantitative Investing
https://www.youtube.com/watch?v=WPc-DoSeCpU&t=7s
Reading historical and live tick data, determine a trend and propose
trades.
Opportunity
Disc
o
v
ery
•
Financial Modeling Using Apache Spark
https://www.youtube.com/watch?v=jCXOa6doXEs
Blackrock mortgage analysis of mortgage data. Using Spark, Scala, and D3
to visualize a large loan-level mortgage dataset, extract distributions and cluster boundaries. Also, use K-Means to reveal similar borrower groups and corresponding discriminant attributes.
Opportunity
Disc
o
v
ery
•
Estimating Financial Risk with Spark
https://www.youtube.com/watch?v=0OM68k3np0E
VaR with Monte Carlo using market risk factors explained by Cloudera
Risk Mitigation
7 APPENDIX
Global Financial Services Companies by Revenue
[20]
|
Berkshire Hathaway
|
Conglomerate
|
210.8
|
United States
|
|
AXA
|
Insurance
|
147.5
|
France
|
|
Allianz
|
Insurance
|
140.3
|
Germany
|
|
ICBC
|
Banking
|
134.8
|
China
|
|
Fannie Mae
|
Investment Services
|
131.9
|
United States
|
|
ING
|
Banking
|
130.0
|
Netherlands
|
|
BNP Paribas
|
Banking
|
126.2
|
France
|
|
Generali Group
|
Insurance
|
116.7
|
Italy
|
|
China Construction Bank
|
Banking
|
113.1
|
China
|
|
Banco Santander
|
Banking
|
108.8
|
Spain
|
|
JP Morgan Chase
|
Banking
|
108.2
|
United States
|
|
Socit Gnrale
|
Banking
|
107.8
|
France
|
|
HSBC
|
Banking
|
104.9
|
United Kingdom
|
|
Agricultural Bank of China
|
Banking
|
103.0
|
China
|
|
Bank of America
|
Banking
|
100.1
|
United States
|
|
Bank of China
|
Banking
|
98.1
|
China
|
|
Wells Fargo
|
Banking
|
91.2
|
United States
|
|
Citigroup
|
Banking
|
90.7
|
United States
|
|
Prudential
|
Insurance
|
90.2
|
United Kingdom
|
|
Munich Re
|
Insurance
|
88.0
|
Germany
|
|
Prudential Financial
|
Insurance
|
84.8
|
United States
|
|
Freddie Mac
|
Investment Services
|
80.6
|
United States
|
|
Banco Bradesco
|
Banking
|
78.3
|
Brazil
|
|
Lloyds Banking Group
|
Banking
|
75.6
|
United Kingdom
|
|
Ita Unibanco Holding
|
Banking
|
70.5
|
Brazil
|
|
Zurich Insurance Group
|
Insurance
|
70.4
|
Switzerland
|
|
Aviva
|
Insurance
|
69.0
|
United Kingdom
|
|
Banco do Brasil
|
Banking
|
69.0
|
Brazil
|
|
MetLife
|
Insurance
|
68.2
|
United States
|
|
American International Group
|
Insurance
|
65.7
|
United States
|
|
China Life Insurance
|
Insurance
|
63.2
|
China
|
|
Mitsubishi UFJ Financial Group
|
Banking
|
59.0
|
Japan
|
|
Legal & General Group
|
Insurance
|
56.9
|
United Kingdom
|
|
Dai-ichi Life
|
Insurance
|
56.5
|
Japan
|
|
Barclays
|
Banking
|
55.7
|
United Kingdom
|
|
Aegon
|
Insurance
|
55.2
|
Netherlands
|
|
Deutsche Bank
|
Banking
|
55.0
|
Germany
|
|
UniCredit
|
Banking
|
54.2
|
Italy
|
|
CNP Assurances
|
Insurance
|
53.2
|
France
|
|
BBVA
|
Banking
|
52.1
|
Spain
|
|
Credit Agricole
|
Banking
|
51.2
|
France
|
|
Ping An Insurance Group
|
Insurance
|
51.1
|
China
|
|
National Australia
|
Banking
|
49.2
|
Australia
|
|
Commonwealth Bank
|
Banking
|
47.8
|
Australia
|
|
Intesa Sanpaolo
|
Banking
|
47.7
|
Italy
|
|
UBS
|
Investment Services
|
47.7
|
Switzerland
|
|
Sumitomo Mitsui Financial Group
|
Banking
|
47.3
|
Japan
|
|
Westpac Banking Group
|
Banking
|
43.9
|
Australia
|
|
Bank of Communications
|
Banking
|
43.5
|
China
|
|
Credit Suisse Group
|
Investment Services
|
42.5
|
Switzerland
|
|
MS&AD Insurance Group
|
Insurance
|
42.2
|
Japan
|
|
Royal Bank of Scotland
|
Banking
|
42.1
|
United Kingdom
|
|
Goldman Sachs
|
Investment Services
|
41.7
|
United States
|
|
People’s Insurance Company
|
Insurance
|
41.3
|
China
|
|
Tokio Marine Holdings
|
Insurance
|
39.4
|
Japan
|
|
Royal Bank of Canada
|
Banking
|
38.3
|
Canada
|
|
ANZ
|
Banking
|
37.5
|
Australia
|
|
Manulife Financial
|
Insurance
|
37.3
|
Canada
|
|
Sberbank
|
Banking
|
36.1
|
Russia
|
|
State Bank of India
|
Banking
|
35.1
|
India
|
|
Talanx
|
Insurance
|
34.9
|
Germany
|
|
Power Corporation of Canada
|
Insurance
|
34.2
|
Canada
|
|
Swiss Re
|
Insurance
|
33.6
|
Switzerland
|
|
American Express
|
Financial Services
|
33.4
|
United States
|
|
Allstate
|
Insurance
|
33.3
|
United States
|
|
Mizuho Financial Group
|
Banking
|
32.8
|
Japan
|
|
Old Mutual
|
Investment Services
|
32.2
|
United Kingdom
|
|
Morgan Stanley
|
Investment Services
|
32.0
|
United States
|
|
Standard Life
|
Insurance
|
31.2
|
United Kingdom
|
|
Sompo Holdings
|
Insurance
|
30.9
|
Japan
|
|
TD Bank Group
|
Banking
|
30.6
|
Canada
|
|
China
|
Banking
|
28.4
|
China
|
|
China
|
Banking
|
27.9
|
China
|
|
Bank of Nova Scotia
|
Banking
|
27.6
|
Canada
|
|
Onex
|
Investment Services
|
27.4
|
Canada
|
|
China
|
Insurance
|
27.3
|
China
|
|
Mapfre
|
Insurance
|
27.1
|
Spain
|
|
Standard Chartered
|
Banking
|
26.9
|
United Kingdom
|
|
Dexia
|
Banking
|
26.6
|
Belgium
|
|
Hartford Financial Services
|
Insurance
|
26.4
|
United States
|
|
Travelers Cos
|
Insurance
|
25.7
|
United States
|
|
Commerzbank
|
Banking
|
25.5
|
Germany
|
|
Aflac
|
Insurance
|
25.4
|
United States
|
|
Shanghai Pudong Development
|
Banking
|
25.4
|
China
|
Major
Stock Exchanges
[21]
|
New York Stock Exchange
|
United States
|
New York
|
|
NASDAQ
|
United States
|
New York
|
|
London Stock Exchange Group
|
United Kingdom
|
London
|
|
Japan Exchange Group
|
Japan
|
Tokyo
|
|
Shanghai Stock Exchange
|
China
|
Shanghai
|
|
Hong Kong Stock Exchange
|
Hong Kong
|
Hong Kong
|
|
Euronext
|
European Union
|
Amsterdam, Brussels, Lisbon, London, Paris
|
|
Shenzhen Stock Exchange
|
China
|
Shenzhen
|
|
Toronto Stock Exchange
|
Canada
|
Toronto
|
|
Deutsche Brse
|
Germany
|
Frankfurt
|
|
Bombay Stock Exchange
|
India
|
Mumbai
|
|
National Stock Exchange of India
|
India
|
Mumbai
|
|
SIX Swiss Exchange
|
Switzerland
|
Zurich
|
|
Australian Securities Exchange
|
Australia
|
Sydney
|
|
Korea Exchange
|
South Korea
|
Seoul
|
|
OMX Nordic Exchange
|
Sweden
|
Stockholm
|
|
JSE Limited
|
South Africa
|
Johannesburg
|
|
BME Spanish Exchanges
|
Spain
|
Madrid
|
|
Taiwan Stock Exchange
|
Taiwan
|
Taipei
|
|
BM&F Bovespa
|
Brazil
|
So Paulo
|
Quant
F
unds
[13]
•
D. E. Shaw (New York, NY)
•
Renaissance Technologies (East Setauket, NY)
•
Morgan Stanley PDT (New York, NY)
•
Point72 Asset Management (SAC Capital)
•
AQR Capital
•
Two Sigma Investments (New York, NY)
•
Citadel (Chicago, IL)
•
Jane Street Capital (New York and London)
•
RG Niederhoffer
•
Jump Trading
•
KCG Holdings
•
Bridgewater Associates
•
Hudson River Trading
•
Man Group AHL
•
Highbridge
•
Millennium/WorldQuant
•
Winton
•
Bluecrest
•
Ellington Capital
•
Tower Research Capital
•
Parametrica Global Master Ltd
•
Camox Ltd
•
Voloridge Trading
•
Senvest Partners Ltd
•
BlackRock European Hedge
Credit
Card Issuers
[1]
1. Visa - 323M Cardholders
2. MasterCard - 191M Cardholders
3. Chase - 93M Cardholders
4. American Express - 58M Cardholders
5. Discover - 57M Cardholders
6. Citibank - 48M Cardholders
7. Capital One - 45M Cardholders
8. Bank of America - 32M Cardholders
9. Wells Fargo - 24M Cardholders
10. US Bank - 18.5M Cardholders
11. USAA - 10M Cardholders
12. Credit One - 6M Cardholders
13. Barclaycard US 418K Cardholders
14. First PREMIER Bank (subprime)
15. PNC
Mortgage Risk
[10]
Prior to the financial collapse of 2007-2008 mortgage, securitization was the hot thing. Many institutions and individuals got burned and a
residual fear of securitization remains.
The result is that for jumbo and subprime mortgages, the originators are now holding many more of the loans. This reduces the systematic
risk but an unanticipated consequence is that Fannie Mae and Freddie Mac [3] are
now holding 50% of $11 trillion outstanding in the middle market.
Therefore the US government has undertaken a huge amount of default and
interest-rate risk.
Insurance Companies by Premium Income
[8]
Property/Casualty Insurance
|
State Farm Mutual Automobile Insurance
|
62,189,311
|
|
Berkshire Hathaway Inc.
|
33,300,439
|
|
Liberty Mutual
|
32,217,215
|
|
Allstate Corp.
|
30,875,771
|
|
Progressive Corp.
|
23,951,690
|
|
Travelers Companies Inc.
|
23,918,048
|
|
Chubb Ltd.
|
20,786,847
|
|
Nationwide Mutual Group
|
19,756,093
|
|
Farmers Insurance Group of Companies
|
19,677,601
|
|
USAA Insurance Group
|
18,273,675
|
Life Insurance/Annuities
|
MetLife Inc.
|
95,110,802
|
|
Prudential Financial Inc.
|
45,902,327
|
|
New York Life Insurance Group
|
30,922,462
|
|
Principal Financial Group Inc.
|
28,186,098
|
|
Massachusetts Mutual Life Insurance Co.
|
23,458,883
|
|
American International Group
|
22,463,202
|
|
Jackson National Life Group
|
22,132,278
|
|
AXA
|
21,920,627
|
|
AEGON
|
21,068,180
|
|
Lincoln National Corp.
|
19,441,555
|
|
Homeowners Insurance
State Farm Mutual Automobile Insurance
|
17,516,715
|
|
Allstate Corp.
|
7,926,984
|
|
Liberty Mutual
|
5,993,803
|
|
Farmers Insurance Group of Companies
|
5,284,511
|
|
USAA Insurance Group
|
5,000,407
|
|
Travelers Companies Inc.
|
3,305,427
|
|
Nationwide Mutual Group
|
3,249,456
|
|
American Family Insurance Group
|
2,609,366
|
|
Chubb Ltd. (4)
|
2,485,193
|
|
Erie Insurance Group
|
1,471,544
|
Private
P
assenger Auto Insurance
|
State Farm Mutual Automobile Insurance
|
39,194,660
|
|
Berkshire Hathaway Inc.
|
25,531,762
|
|
Allstate Corp.
|
20,813,858
|
|
Progressive Corp.
|
19,634,834
|
|
USAA Insurance Group
|
11,691,051
|
|
Liberty Mutual
|
10,774,426
|
|
Farmers Insurance Group of Companies
|
10,304,622
|
|
Nationwide Mutual Group
|
7,640,558
|
|
American Family Insurance Group
|
4,005,549
|
|
Travelers Companies Inc.
|
3,896,786
|
|
Commercial Auto Insurance
|
|
|
Progressive Corp.
|
2,625,929
|
|
Travelers Companies Inc.
|
2,124,182
|
|
Nationwide Mutual Group
|
1,735,614
|
|
Zurich Insurance Group
|
1,624,621
|
|
Liberty Mutual
|
1,604,461
|
|
Old Republic International Corp.
|
1,123,042
|
|
Berkshire Hathaway Inc.
|
951,775
|
|
American International Group (AIG)
|
867,567
|
|
Auto-Owners Insurance Co.
|
739,495
|
|
Chubb Ltd.
|
695,210
|
|
Commercial Lines Insurance
|
|
|
|
Chubb Ltd.
|
16,528,891
|
|
Travelers Companies Inc.
|
16,463,566
|
|
Liberty Mutual
|
15,056,251
|
|
American International Group (AIG)
|
13,144,961
|
|
Zurich Insurance Group
|
12,554,597
|
|
CNA Financial Corp.
|
9,763,122
|
|
Nationwide Mutual Group
|
8,335,275
|
|
Hartford Financial Services
|
7,679,737
|
|
Berkshire Hathaway Inc.
|
7,650,236
|
|
Tokio Marine Group
|
6,256,196
|
|
W
orkers’ Compensation Insurance
|
|
Travelers Companies Inc.
|
4,467,425
|
|
Hartford Financial Services
|
3,324,361
|
|
AmTrust Financial Services
|
2,972,901
|
|
Zurich Insurance Group
|
2,851,695
|
|
Liberty Mutual
|
2,481,479
|
|
Berkshire Hathaway Inc.
|
2,479,354
|
|
State Insurance Fund Workers’ Comp (NY)
|
2,437,325
|
|
Chubb Ltd.
|
2,368,918
|
|
American International Group
|
2,345,247
|
|
State Compensation Insurance Fund (CA)
|
1,638,849
|
Global Asset Management Firms by Revenue
[18]
|
BlackRock
|
United States
|
4,890
|
|
The Vanguard Group
|
United States
|
3,149
|
|
UBS
|
Switzerland
|
2,716
|
|
State Street Global Advisors
|
United States
|
2,460
|
|
Fidelity Investments
|
United States
|
2,025
|
|
Allianz
|
Germany
|
1,949
|
|
J.P. Morgan Asset Management
|
United States
|
1,760
|
|
BNY Mellon Investment Management
|
United States
|
1,740
|
|
PIMCO
|
United States
|
1,590
|
|
Credit Agricole Group
|
France
|
1,527
|
Global Investment Banks by Revenue
[2]
|
JPMorgan
|
3,361
|
|
Goldman Sachs
|
2,858
|
|
Bank of America Merrill Lynch
|
2,684
|
|
Morgan Stanley
|
2,501
|
|
Citi
|
2,378
|
|
Barclays
|
1,884
|
|
Credit Suisse
|
1,760
|
|
Deutsche Bank
|
1,387
|
|
RBC Capital Markets
|
994
|
|
UBS
|
904
|
|
Wells Fargo Securities
|
871
|
|
HSBC
|
793
|
|
Jefferies LLC
|
750
|
|
BNP Paribas
|
619
|
|
Lazard
|
565
|
|
BMO Capital Markets
|
448
|
|
Nomura
|
445
|
|
Mizuho
|
435
|
|
Sumitomo Mitsui Financial Group
|
413
|
|
Evercore Partners Inc
|
407
|
Hedge Funds By Assets Under Management
[6]
|
OrgCRD
|
PrimaryBusinessName
|
May2017AUM
|
|
110814
|
NOMURA ASSET MANAGEMENT CO., LTD.
|
367.6
|
|
105129
|
BRIDGEWATER ASSOCIATES, LP
|
239.3
|
|
158117
|
MILLENNIUM MANAGEMENT LLC
|
207.6
|
|
158319
|
SAMSUNG ASSET MANAGEMENT COMPANY, LTD.
|
182.2
|
|
148826
|
CITADEL ADVISORS LLC
|
152.7
|
|
143161
|
APOLLO CAPITAL MANAGEMENT, L.P.
|
125
|
|
140074
|
PICTET ASSET MANANGEMENT SA.
|
122.8
|
|
110997
|
NIKKO ASSET MANAGEMENT CO LTD
|
120.6
|
|
282598
|
VANGUARD ASSET MANAGEMENT, LIMITED
|
120.2
|
|
111128
|
THE CARLYLE GROUP
|
101.9
|
|
106661
|
RENAISSANCE TECHNOLOGIES LLC
|
97
|
|
144533
|
KOHLBERG KRAVIS ROBERTS
|
90
|
|
168122
|
ANNALY MANAGEMENT COMPANY
|
87.9
|
|
152719
|
ALPHADYNE ASSET MANAGEMENT PTE. LTD.
|
84.6
|
|
133720
|
PINE RIVER CAPITAL MANAGEMENT L.P.
|
82.8
|
|
159732
|
TPG GLOBAL ADVISORS, LLC
|
79.5
|
|
138111
|
BALYASNY ASSET MANAGEMENT L.P.
|
75.1
|
|
144603
|
EASTSPRING INVESTMENTS (SINGAPORE) LIMITED
|
74.5
|
|
155587
|
FIELD STREET CAPITAL MANAGEMENT, LLC
|
63.3
|
|
107580
|
BLACKSTONE ALTERNATIVE ASSET MANAGEMENT LP
|
62.3
|
|
148823
|
BLUECREST CAPITAL MANAGEMENT LIMITED
|
62.2
|
|
142979
|
BLACKSTONE REAL ESTATE ADVISORS L.P.
|
60.1
|
|
160795
|
APG ASSET MANAGEMENT US, INC
|
59.3
|
|
130074
|
ARES MANAGEMENT LLC
|
58.4
|
|
136979
|
BLACKSTONE MANAGEMENT PARTNERS L.L.C.
|
57.4
|
|
161600
|
AGNC MANAGEMENT, LLC
|
56.9
|
|
129612
|
FORTRESS INVESTMENT GROUP
|
56.9
|
|
156601
|
ELLIOTT MANAGEMENT CORPORATION
|
56
|
|
160309
|
ELEMENT CAPITAL MANAGEMENT LLC
|
55.9
|
|
139345
|
MACQUARIE FUNDS MANAGEMENT
|
54.7
|
|
160188
|
MOORE CAPITAL MANAGEMENT, LP
|
53.8
|
|
107913
|
OZ MANAGEMENT LP
|
51.7
|
|
159738
|
TPG CAPITAL ADVISORS, LLC
|
51.6
|
|
137137
|
TWO SIGMA INVESTMENTS, LP
|
49.3
|
|
152254
|
TWO SIGMA ADVISERS, LP
|
48.7
|
|
110338
|
MACKENZIE INVESTMENTS
|
48.6
|
|
156078
|
HUDSON AMERICAS L.P.
|
48.4
|
|
160000
|
LONE STAR NORTH AMERICA ACQUISITIONS, LLC
|
48.1
|
|
152175
|
CERBERUS CAPITAL MANAGEMENT, L.P.
|
48
|
|
173355
|
CANDRIAM LUXEMBOURG S.C.A.
|
47.1
|
|
156934
|
3G CAPITAL PARTNERS LP
|
46.3
|
|
143158
|
APOLLO MANAGEMENT, L.P.
|
46.2
|
|
157589
|
CAPULA INVESTMENT US LP
|
45.8
|
|
156945
|
WARBURG PINCUS LLC
|
45.7
|
|
132272
|
VIKING GLOBAL INVESTORS LP
|
43.4
|
|
160679
|
ADAGE CAPITAL MANAGEMENT, L.P.
|
42
|
|
146629
|
KKR CREDIT ADVISORS (US) LLC
|
41.5
|
|
159215
|
ALPINVEST PARTNERS B.V.
|
41.2
|
|
108679
|
D. E. SHAW
|
37
|
Largest private equity firms by PE capital raised
[17]
|
The Carlyle Group
|
Washington D.C.
|
$30,650.33
|
|
Kohlberg Kravis Roberts
|
New York City
|
$27,182.33
|
|
The Blackstone Group
|
New York City
|
$24,639.84
|
|
Apollo Global Management
|
New York City
|
$22,298.02
|
|
TPG
|
Fort Worth/San Francisco
|
$18,782.59
|
|
CVC Capital Partners
|
Luxembourg
|
$18,082.35
|
|
General Atlantic
|
New York City
|
$16,600.00
|
|
Ares Management
|
Los Angeles
|
$14,113.58
|
|
Clayton Dubilier & Rice
|
New York City
|
$13,505.00
|
|
Advent International
|
Boston
|
$13,228.09
|
|
EnCap Investments
|
Houston
|
$12,400.20
|
|
Goldman Sachs Principal Investment Area
|
New York City
|
$12,343.32
|
|
Warburg Pincus
|
New York City
|
$11,213.00
|
|
Silver Lake
|
Menlo Park
|
$10,986.40
|
|
Riverstone Holdings
|
New York City
|
$10,384.26
|
|
Oaktree Capital Management
|
Los Angeles
|
$10,147.28
|
|
Onex
|
Toronto
|
$10,097.21
|
|
Ardian (formerly AXA Private Equity)
|
Paris
|
$9,805.25
|
|
Lone Star Funds
|
Dallas
|
$9,731.81
|
In
v
estmen
t
Banking Private Equity Groups
[19]
ABN AMRO AAC Capital Partners Barclays Capital Equistone Partners
Europe BNP Paribas PAI Partners
CIBC World Markets Trimaran Capital Partners
Citigroup Court Square; CVC; Welsh, Carson, Anderson &
StoweBruckmann, Rosser, S Deutsche Bank MidOcean Partners
Globus Capital Holdings Globus Capital Banca
Goldman Sachs Goldman Sachs Capital Partners JPMorgan Chase CCMP
Capital; One Equity Partners Lazard Lazard Alternative Investments
Merrill Lynch Merrill Lynch Global Private Equity
Morgan Stanley Metalmark Capital; Morgan Stanley Capital Partners New
York
National Westminster Bank Bridgepoint Capital
Nomura Group Terra Firma Capital Partners
UBS UBS Capital; Affinity Equity Partners; Capvis; Lightyear Capital
Wells Fargo Pamlico Capital
William Blair & Company William Blair Capital Partners
F
ederal Reserve System
The St. Louis Fed is well known among economics geeks as a fantastic
source of data, analysis and commentary. [4] In fact, all the Fed banks
are avid consumers of data, analysis and risk-management metrics.
[14] The Economist of London. The Economist Intelligence Unit. https://
www.eiu.com/home.aspx
.
[15] Wikipedia. BCBS 239.
https://en.m.wikipedia.org/wiki/BCBS_239
. [16] Wikipedia. James Harris Simons.
https://en.wikipedia.org/wiki/
James_Harris_Simons
.
[17] Wikipedia. Largest private equity firms by PE capital raised.
https:
//en.wikipedia.org/wiki/List_of_private_equity_firms
.
[18] Wikipedia. List of asset management firms.
https://en.wikipedia.org/
wiki/List_of_asset_management_firms
.
[19] Wikipedia. List of investment banking private equity groups.
https://
en.wikipedia.org/wiki/List_of_private_equity_firms
.
[20] Wikipedia. List of largest financial services companies by revenue.
https://en.wikipedia.org/wiki/List_of_largest_financial_
services_companies_by_revenue
.
[21] Wikipedia. Major Stock Exchanges.
https://en.wikipedia.org/wiki/
List_of_stock_exchanges
.
[22] Wikipedia. The Big Short.
https://en.wikipedia.org/wiki/The_Big_
Short
.
Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.
