Worsening financial and political turmoil in southern Europe caused a surge of interest in London property last month with buyers from Greece and Spain showing strongly among investors seeking a safe haven for their money…The number of Europeans buying property in London has grown steadily over the last year as the euro zone debt crisis has worsened but numbers spiked ahead of elections in Greece last weekend that failed to produce a government.

* * * * *

Growing interest from Greece in the last three weeks has been buoyed by buyers looking to rent out property as an investment, said Noel de Keyzer from Savills.  “There seems to be an endless flow of wealthy Greek buyers, old Greek family money, coming to London both renting and buying.”  In addition to countries afflicted by the euro zone crisis, the best London homes have attracted growing interest from Russia, the Middle East and Far East as buyers attempt to protect their assets amid the gyrations of the money markets.  Interest has pushed prices for so-called prime central London properties up by 44 percent in the last three years, more than twice the increase across London as a whole, Knight Frank said.

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• “VC returns haven’t significantly outperformed the public market since the late 1990s, and, since 1997, less cash has been returned to investors than has been invested in VC.  The majority of funds—sixty-two out of 100—failed to exceed returns available from the public markets, after fees and carry were paid.”
• “Limited Partners—foundations, endowments, and state pension fund—invest too much capital in underperforming venture capital funds on frequently mis-aligned terms. Our research suggests that investors like us succumb time and again to narrative fallacies, a well-studied behavioral finance bias.”
• “The cumulative effect of fees, carry, and the uneven nature of venture investing ultimately left us with sixty-nine funds (78 percent) that did not achieve returns sufficient to reward us for patient, expensive, long-term investing.”
• “The typical GP commits only 1 percent of partner dollars to a new fund while LPs commit 99 percent. These economics insulate GPs from personal income effects of poor fund returns and encourages them to focus on generating short-term, high IRRs by ‘flipping’ companies rather than committing to long-term, scale growth of a startup.”

In total, these findings call to mind this excerpt from Graham and Dodd’s Security Analysis:

An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.

Via Jason Zweig (via Simon Lack at the ‘In Pursuit of Value’ blog)

>>  Click here for the full interview on CNBC

In fact, today’s economic troubles are not simply the result of inadequate demand but the result, equally, of a distorted supply side. For decades before the financial crisis in 2008, advanced economies were losing their ability to grow by making useful things. But they needed to somehow replace the jobs that had been lost to technology and foreign competition and to pay for the pensions and health care of their aging populations. So in an effort to pump up growth, governments spent more than they could afford and promoted easy credit to get households to do the same. The growth that these countries engineered, with its dependence on borrowing, proved unsustainable…

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…[T]he 30-day correlation coefficient between the two stocks turned negative on April 23, when Walmex sank 12 percent, the most since 1998, on allegations described in a New York Times story that its executives bribed Mexican officials. America Movil is one of the few actively traded shares in Mexico, making it a likely recipient of money that investors pulled out of Walmex, according to Greg Lesko, who manages $700 million at Deltec Asset Management.

“As people were selling their Walmex because of this bribery scandal, the money had to go somewhere,” Lesko said in a telephone interview from New York. “It seems that money was flowing into America Movil…”

America Movil, the largest mobile-phone carrier in the Americas, was the best performer on the benchmark IPC index after the Times’s report, which the company says it is investigating. It gained 2.9 percent that day and another 10 percent since while Walmex has slumped 15 percent.

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The College Board, a not-for-profit association, calculated in a 2010 report (based on 2008 data) that a typical student who enters a four-year college at age 18 and borrows his way through earns enough by age 33 to make up for his costs, including foregone wages and loan interest.  If a bond paid for itself that quickly, the return would be between 5% and 6% a year. That’s a handsome payoff; stocks have historically returned around 7% a year after inflation. And it says nothing of college’s other benefits, such as enlightenment, fun and higher job satisfaction.

Two big caveats: The College Board math assumes everyone goes to a public college. Those usually cost less than private ones — often a lot less — and that skews returns higher. The report also doesn’t account for dropouts or extra college years. Only 56% of students who enroll in a four-year college earn a bachelor’s degree within six years, according to a report last year by the Harvard Graduate School of Education.  PayScale, a Seattle data firm, examines the links between pay and variables like colleges and majors. Its analysis, which also ignores dropouts but accounts for students who take longer to complete their degrees, finds an average yearly return of 4.4% for degrees from 853 schools. That assumes students get financial aid, as most do.

* * * * *

Until we can predict college returns more accurately, students and their families should think in terms of reducing investment risk, says Richard Vedder, an Ohio University professor and director of the Center for College Affordability and Productivity, a Washington-based advocacy group. After all, outstanding student loans now eclipse total credit-card debt, and even bankruptcy filers don’t typically get out from under their school loans.

Start with a frank assessment of performance. High school students with high grades and excellent test scores are likely to go to good schools and earn high returns on their investment, says Mr. Vedder. Middling performers can reduce risk by going to low-cost state and community colleges, perhaps transferring to another school after two years if they do well.

* * * * *

PayScale’s [Katie] Bardaro says students should research carefully the pay they are likely to secure before deciding how much to spend on college. After all, tuition and fees have increased 184% in 20 years after accounting for inflation, but wages for college grads have risen just 9%, according to Labor Department data.

>>  Click here for more from Smart Money

…when the market does poorly, Mr. Buffett tends to shine. In the S&P 500′s 25 worst months since 1996, the index racked up average losses of 7.9%, according to Mr. Gambera. Berkshire went down by an average of just 2.9%.

Mr. Buffett doesn’t like leverage, scoffs at macroeconomic forecasts and loves to keep cash sitting around. He is the last person you should take advice from on how to thrive during market bacchanalia like this one. But if the past is any guide, just when Mr. Buffett seems to look most like a loser, the party is about to end.

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On a January evening, Anand is shelling betel nuts by the light of an electric lamp in Halliberu, his village in India’s Karnataka state.  As his friends gather on the lamp-lit porch to swap stories, children play in the yard, Bloomberg Markets reports in its May issue. Inside, after decades of cooking in the dark, Anand’s mother prepares the evening meal while a visiting neighbor weaves garlands of flowers.  In October, Bangalore-based Simpa Networks Inc. installed a solar panel on Anand’s whitewashed adobe house along with a small metal box in his living room to monitor electricity usage.

The 25-year-old rice farmer, who goes by one name, purchases energy credits to unlock the system via his mobile phone on a pay-as-you-go model.  When his balance runs low, Anand pays 50 rupees ($1) — money he would have otherwise spent on kerosene. Then he receives a text message with a code to punch into the box, giving him about another week of electric light.  When he pays off the full cost of the system in about three years, it will be unlocked and he will get free power.  Before the solar panel arrived, Anand lit his home with kerosene lamps that streaked the walls with smoke and barely penetrated the darkness of the village, which lacks electrification. Twice a week, he trudged 45 minutes to a nearby town just to charge his phone.

It is not just the new availability of power in places that have always been off of the grid, but also the huge decrease in effective cost for more convenient power:

In many underdeveloped regions, it hasn’t made economic sense for utilities to build the capital-intensive infrastructure required to deliver energy from traditional sources.  In parts of Africa, the poor, lacking electricity, buy power in the form of batteries, kerosene and candles; in effect, they’re paying as much as $4 per kilowatt-hour, according to Vijay Modi, a Columbia University professor who heads the SharedSolar project. That’s about 66 times what a resident of Manhattan is charged for electricity.

Simpa co-founder Paul Needham says filling the power gap will entail a transformation similar to the one in which mobile phones bypassed traditional landlines to deliver telecommunications services to vast populations in India and Africa.  “What we’re seeing is the beginning of the second great leapfrog story,” says Needham, who estimates that 1.6 billion people in the world don’t have access to electricity.  In Europe, competition from the growing renewables sector is forcing traditional utilities to become greener.

On a related note, Richard experienced first-hand how the residents of Phnom Krom, one of the poorest places in the Cambodia, are sourcing power for their black-and-white televisions.

Click here for more from Bloomberg

One of [Thiel’s] core points is that we tend to confuse capitalism with competition. We tend to think that whoever competes best comes out ahead. In the race to be more competitive, we sometimes confuse what is hard with what is valuable. The intensity of competition becomes a proxy for value.

In fact, Thiel argues, we often shouldn’t seek to be really good competitors. We should seek to be really good monopolists. Instead of being slightly better than everybody else in a crowded and established field, it’s often more valuable to create a new market and totally dominate it. The profit margins are much bigger, and the value to society is often bigger, too.

Now to be clear: When Thiel is talking about a “monopoly,” he isn’t talking about the illegal eliminate-your-rivals kind. He’s talking about doing something so creative that you establish a distinct market, niche and identity. You’ve established a creative monopoly and everybody has to come to you if they want that service, at least for a time.

His lecture points to a provocative possibility: that the competitive spirit capitalism engenders can sometimes inhibit the creativity it requires.

*****

Competition has trumped value-creation. In this and other ways, the competitive arena undermines innovation.

We live in a culture that nurtures competitive skills. And they are necessary: discipline, rigor and reliability. But it’s probably a good idea to try to supplement them with the skills of the creative monopolist: alertness, independence and the ability to reclaim forgotten traditions.

>>  Click here for more from The New York Times

Previous studies have found that migraine sufferers are actually more likely to get brain freeze than people who don’t get migraines. Because of this, the researchers thought the two might share some kind of common mechanism or cause, so they decided to use brain freeze to study migraines.

Headaches like migraines are difficult to study, because they are unpredictable. Researchers aren’t able to monitor a whole one from start to finish in the lab. They can give drugs to induce migraines, but those can also have side effects that interfere with the results. Brain freeze can quickly and easily be used to start a headache in the lab, and it also ends quickly, which makes monitoring the entire event easy.

The researchers brought on brain freeze in the lab by having 13 healthy volunteers sip ice water through a straw right up against the roof of their mouth. The volunteers raised their hands when they felt the familiar brain freeze come on, and raised them again once it disappeared.

The researchers monitored the blood flow through their brains using an ultrasoundlike process on the skull. They saw that increased blood flow to the brain through a blood vessel called the anterior cerebral artery, which is located in the middle of the brain behind the eyes. This increase in flow and resulting increase in size in this artery brought on the pain associated with brain freeze.

When the artery constricts, reining in the response to this increased flow, the pain disappears. The dilation, then quick constriction, of this blood vessel may be a type of self-defense for the brain, the researchers suggested.

*****

If other headaches work in the same way, drugs that stop these blood vessels from opening up, or that could make this blood vessel constrict could help treat them, the researchers say.

>>  More from Fox News

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The Chinese city of Chongqing accumulated tens of billions of dollars in liabilities during Bo Xilai’s term as local Communist Party chief, as it juiced growth that helped launch the former high-flyer’s campaign for a top political post.

A Wall Street Journal analysis of Chinese rating-company reports shows that 10 major investment vehicles the city used to fuel its growth accumulated more than 346 billion yuan ($54 billion) in liabilities, as it recapitalized banks and built highways, bridges and other projects that boosted growth and helped attract global companies looking for an entry into China’s booming inland markets. In 2007, when Mr. Bo became Chongqing’s party chief, its top post, those vehicles had total liabilities of 162 billion yuan.

Those debts likely represent only part of Chongqing’s obligations, analysts say, because state-owned enterprises and property developers have liabilities of their own. The figures also exclude a number of smaller investment vehicles.

“I don’t think it would be a stretch to say that Chongqing local government, state-owned enterprises and state-owned developers collectively owed 1 trillion yuan at the end of 2011,” says Victor Shih, an expert on China’s local-government debt at Northwestern University. That estimate, based on Mr. Shih’s own look through the records of Chongqing’s financing vehicles, would put local-government debt in Chongqing at 100% of gross regional product, far higher than the 22% level for China as a whole, according to numbers from China’s national audit office.

Whether it is shoppers at the company’s malls, subscribers to its television and broadband services or home buyers at its apartment complexes, Lippo Group continues to see strong growth and expects it to continue for the next five years as wealth spreads to the Indonesian archipelago’s far-flung islands.

“We are entering a golden era where consumers are just starting to enjoy more than just the basics,” Mr. Riady said in an interview Monday. “It’s propelling consumer sales to amazing new levels.”

Indonesia’s increasingly confident consumers are a primary reason why its gross domestic product rose 6.5% last year and could climb around the same pace this year. Unlike many of its Asian neighbors, Indonesia isn’t dependent on exports for growth, so it has been able to shine while other Asian economies have struggled as their customers in the U.S. and Europe suffered.

*****

If measured by the number of people that make at least $3,000 a year, Indonesia’s middle class made up 50 million of its nearly 250 million people in 2009, and that will triple to 150 million by 2014, according to investment firm PT Nomura Indonesia.

Motorcycle sales, for example, jumped to more than eight million last year, more than double the level five years earlier.

Middle-class spending will continue to climb, and power the Indonesian economy over the next five to 10 years, says Fauzi Ichsan, senior economist at Standard Chartered Bank in Jakarta. Indonesia’s population is young, with a median age of 28.2 years, according to the CIA Factbook. That means a growing percentage of the population will be in the working and spending periods of their lives relative to those who are retired.

>> Click here for more from WSJ.com

While good demographics are an important ingredient for strong economic growth, they are insufficient on their own for the long-term.   Governments must pursue sound/stable policies and have fiscal discipline.  While we are dubious about the accuracy of the credit rating agencies, this downgrade by S&P is an indication of trouble for India.  It will take political will to address the fundamental issues (sound familiar?):

The clouds gathering over India’s economy darkened on Wednesday when Standard & Poor’s cut its outlook on India’s long-term debt to negative and warned of a possible credit downgrade, a surprise move that challenges the nation’s image as a surging economic force.

S&P highlighted what it said was political gridlock that will prevent the Congress party-led government of Prime Minister Manmohan Singh from carrying out reforms to rein in its fiscal deficit. The party, hobbled by scandals and infighting in its coalition, has been unable to push through changes that would attract fresh investment, increase productivity and curtail spending on welfare and subsidies.

*****

The shift by S&P is a startling turnabout for a nation that until recently was a darling of foreign investors. As European governments struggled with ratings downgrades that drove up their borrowing costs, India, with its strong growth and young population, has been seen as an attractive destination for investors looking for better returns.

But India’s economic growth slowed to 6.9% in the year that ended March 31 after back-to-back years of 8.4% expansion. Last week, the central bank cut a benchmark interest rate for the first time in three years in a bid to stimulate business spending.

*****

Commerce Secretary Rahul Khullar said in an interview on Wednesday that India faces a huge challenge securing the tens of billions of dollars in foreign capital it needs to finance its current-account gap. He said European banks that have traditionally financed Indian debt could cut back lending amid the Continent’s economic woes, raising pressure on India to attract other foreign capital.  “That’s the real problem,” Mr. Khullar said. “Where is the capital going to come from?”

India has frightened foreign investors with tax proposals that would increase capital-gains liabilities for foreign companies—in some cases with retroactive effects potentially back to 1962.

Net foreign capital investment in India dropped to $387 million in March from $7.2 billion in February after the government unveiled the proposals. So far in April, there has been a net outflow of about $27 million.

India’s budget deficit, a concern noted by S&P, touched 5.9% of gross domestic product in the year that ended March 31, wider than the government’s 4.6% target. The government spends about $57 billion a year on major subsidies to ensure low prices of fuel, fertilizer and food-grains, an effort to insulate impoverished consumers from rising global commodity costs.

>>  Click here for more from WSJ.com

This ability to hyper-focus on one stream of sound amid a cacophony of others is what researchers call the “cocktail-party effect.” Now, scientists at the University of California in San Francisco have pinpointed where that sound-editing process occurs in the brain—in the auditory cortex just behind the ear, not in areas of higher thought. The auditory cortex boosts some sounds and turns down others so that when the signal reaches the higher brain, “it’s as if only one person was speaking alone,” says principle investigator Edward Chang.

These findings, published in the journal Nature last week, underscore why people aren’t very good at multitasking—our brains are wired for “selective attention” and can focus on only one thing at a time. That innate ability has helped humans survive in a world buzzing with visual and auditory stimulation. But we keep trying to push the limits with multitasking, sometimes with tragic consequences. Drivers talking on cellphones, for example, are four times as likely to get into traffic accidents as those who aren’t.

Many of those accidents are due to “inattentional blindness,” in which people can, in effect, turn a blind eye to things they aren’t focusing on. Images land on our retinas and are either boosted or played down in the visual cortex before being passed to the brain, just as the auditory cortex filters sounds, as shown in the Nature study last week. “It’s a push-pull relationship—the more we focus on one thing, the less we can focus on others,” says Diane M. Beck, an associate professor of psychology at the University of Illinois.

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In presentations Tuesday and Wednesday at the annual Society of Automotive Engineers World Congress, senior auto-industry executives in charge of technology strategy, research, and regulatory issues delivered the same message: Barring an unforeseen breakthrough that significantly drops the cost of automotive batteries, fully electric cars and plug-in hybrid vehicles are likely to remain confined to a niche of under 10% of the market through 2025 and beyond.

“By 2025, we see battery electric vehicles still with too long a payback, and inadequate range,” said Joseph Bakaj, vice president for powertrain engineering at Ford Motor Co.

Sam Winegarden, executive director of powertrain-engine engineering at General Motors Co. made a similar point with a chart comparing the amount of energy delivered by a given volume or mass of fuel. On his chart, lithium-ion batteries, used in electric cars such as the Nissan Leaf and GM’s plug-in hybrid Chevrolet Volt, were ranked close to zero compared to gasoline and diesel fuels, which delivered the most energy for the least amount of weight and cost to the consumer.

“The rumored death of the internal combustion engine is premature,” Mr. Winegarden said.

*****

Robert Bienenfeld, senior manager for environment and energy strategy at Honda Motor Co.’s U.S. arm, said that by 2025, a customer who buys a plug-in hybrid could wait 10 years to recover the added upfront costs, compared with a 2025 car outfitted with a more efficient gasoline engine and transmission. The payback for an all-electric car would be even longer.

“Long term it’s hard to see how (government) incentives address this in any sort of sustained way,” he said.

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Brin warned there were “very powerful forces that have lined up against the open internet on all sides and around the world”. “I am more worried than I have been in the past,” he said. “It’s scary.”

*****

He said he was most concerned by the efforts of countries such as China, Saudi Arabia and Iran to censor and restrict use of the internet, but warned that the rise of Facebook and Apple, which have their own proprietary platforms and control access to their users, risked stifling innovation and balkanising the web.

“There’s a lot to be lost,” he said. “For example, all the information in apps – that data is not crawlable by web crawlers. You can’t search it.”

>>  Click here for more from The Guardian