- Business Week: The Biofuel Bubble
Yet behind the very real innovations and investments, the brash claims and the breathless headlines, lies an inconvenient truth. Replacing petroleum with biofuels is a tough business. Even as the industry develops, many of the companies—probably most—will not survive. “We’ve seen a venture capital-led bubble,” …
These difficulties don’t mean advanced biofuels aren’t coming, or that they won’t play a crucial role in fighting climate change. But everything will happen more slowly than many venture capitalists say. And the probable winners will be those with deep pockets and patience, such as Royal Dutch Shell (RDS), BP (BP), DuPont, agriculture giant Archer Daniels Midland (ADM), or the rare startup with revenues from another business, such as making drugs. For the rest, the demonstration biorefineries now being built are more like high-stakes auditions than a step in the process of becoming commercial biofuels producers. “The business model that makes sense for most of us is demonstrating the technology and getting it into the hands of those who have balance sheets.“
- Wealth Bulletin: Charities fear their funding crisis can only get worse
Super-wealthy families and corporate donors are tightening their purse strings after years of generous giving. The three virtues – faith, hope and charity – are mutually inclusive. Where faith and hope are in short supply, charity takes a knock. If past recessions are anything to go by, there is a lag of a year from the onset of recession before charity starts to dry up. Bang on time, the process has begun.
Swiss and US foundations were devastated by the fraudulent activities of Bernard Madoff, with many forced to close their doors to the needy or trim donation packages. The Picower Foundation, America’s seventh largest philanthropic organisation, told beneficiaries in December that its grant-making would cease without delay after it lost millions with Madoff.
- Haaretz: Irrational everything
From Kahneman’s point of view, the most important moment of the recent economic crisis came when Alan Greenspan admitted at a congressional hearing that his theory of the world had been mistaken. “Greenspan expected financial firms to protect their interests, because they are rational companies and the market is rational, so they would not take risks that would threaten their very existence,” Kahneman says.
“Where did he go wrong? Because he did not distinguish between the firms and their ‘agents’ [their managers]. There is a huge gulf between the companies and their agents. Firms take the long view, while agents have short perspectives and take the short view. The compensation models of the corporation and their agents are different. The executives did not commit suicide when they took risks; it was the corporations managed by these agents that committed suicide.