Topic: Finance & Investment

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πŸ”— Renaissance Technologies

πŸ”— Companies πŸ”— Finance & Investment

Renaissance Technologies LLC is an American hedge fund firm based in East Setauket, New York, on Long Island, which specializes in systematic trading using quantitative models derived from mathematical and statistical analyses. The firm is regarded as one of the "most secretive and successful" hedge funds in the world. Their signature Medallion fund is famed for the best record in investing history. Renaissance was founded in 1982 by James Simons, an award-winning mathematician and former Cold War code breaker.

In 1988, the firm established its most profitable portfolio, the Medallion Fund, which used an improved and expanded form of Leonard Baum's mathematical models, improved by algebraist James Ax, to explore correlations from which they could profit. Jim Berlekamp was instrumental in evolving trading to shorter-dated, pure systems driven decision-making. The hedge fund was named Medallion in honor of the math awards that Simons and Ax had won.

Renaissance's flagship Medallion fund, which is run mostly for fund employees, is famed for the best track record on Wall Street, returning more than 66 percent annualized before fees and 39 percent after fees over a 30-year span from 1988 to 2018. Renaissance offers two portfolios to outside investorsβ€”Renaissance Institutional Equities Fund (RIEF) and Renaissance Institutional Diversified Alpha (RIDA).

Simons ran Renaissance until his retirement in late 2009. The company is now run by Peter Brown (after Robert Mercer resigned). Both of them were computer scientists specializing in computational linguistics who joined Renaissance in 1993 from IBM Research. Simons continues to play a role at the firm as non-executive chairman and remains invested in its funds, particularly the secretive and consistently profitable black-box strategy known as Medallion. Because of the success of Renaissance in general and Medallion in particular, Simons has been described as the best money manager on earth.

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πŸ”— 2020 Stock Market Crash

πŸ”— Finance & Investment πŸ”— COVID-19 πŸ”— Economics

The 2020 stock market crash is a global stock market crash that began on 20 February, 2020. On 12 February, the Dow Jones Industrial Average, the NASDAQ Composite, and S&P 500 Index all finished at record highs (while the NASDAQ and S&P 500 reached subsequent record highs on 19 February). From 24 to 28 February, stock markets worldwide reported their largest one-week declines since the 2008 financial crisis, thus entering a correction. Global markets into early March became extremely volatile, with large swings occurring in global markets. On 9Β March, most global markets reported severe contractions, mainly in response to the 2019–20 coronavirus pandemic and an oil price war between Russia and the OPEC countries led by Saudi Arabia. This became colloquially known as Black Monday I, and at the time was the worst drop since the Great Recession in 2008.

Three days after Black Monday I there was another drop, Black Thursday, where stocks across Europe and North America fell more than 9%. Wall Street experienced its largest single-day percentage drop since Black Monday in 1987, and the FTSE MIB of the Borsa Italiana fell nearly 17%, becoming the worst-hit market during Black Thursday. Despite a temporary rally on 13Β March (with markets posting their best day since 2008), all three Wall Street indexes fell more than 12% when markets re-opened on 16Β March. At least one benchmark stock market index in all G7 countries and 14 of the G20 countries have been declared to be in bear markets.

As of March 2020, global stocks have seen a downturn of at least 25% during the crash, and 30% in most G20 nations. Goldman Sachs has warned that the US GDP will shrink 29% by the end of the 2nd quarter of 2020, and that unemployment may skyrocket to at least 9%. Australian Prime Minister Scott Morrison has called the looming economic crisis 'akin to the Great Depression'.

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πŸ”— The Onion Futures Act

πŸ”— United States πŸ”— Finance & Investment

The Onion Futures Act is a United States law banning the trading of futures contracts on onions as well as "motion picture box office receipts".

In 1955, two onion traders, Sam Siegel and Vincent Kosuga, cornered the onion futures market on the Chicago Mercantile Exchange. The resulting regulatory actions led to the passing of the act on August 28, 1958. As of JanuaryΒ 2020, it remains in effect.

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πŸ”— Hawala

πŸ”— Finance & Investment πŸ”— Economics πŸ”— India πŸ”— Arab world

Hawala or hewala (Arabic: Ψ­ΩΩˆΨ§Ω„Ψ©β€Ž αΈ₯awāla, meaning transfer or sometimes trust), also known as havaleh in Persian, and xawala or xawilaad in Somali, is a popular and informal value transfer system based not on the movement of cash, or on telegraph or computer network wire transfers between banks, but instead on the performance and honour of a huge network of money brokers (known as hawaladars). While hawaladars are spread throughout the world, they are primarily located in the Middle East, North Africa, the Horn of Africa, and the Indian subcontinent, operating outside of, or parallel to, traditional banking, financial channels, and remittance systems. Hawala follows Islamic traditions but its use is not limited to Muslims.

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πŸ”— British Post Office Scandal

πŸ”— Human rights πŸ”— Computing πŸ”— Finance & Investment πŸ”— Law πŸ”— Computing/Software πŸ”— Software πŸ”— Software/Computing πŸ”— United Kingdom

The British Post Office scandal is a widespread and long-lasting series of individual miscarriages of justice which, between 1999 and 2015, involved over 700 subpostmasters being wrongly convicted of theft, false accounting and fraud when shortfalls at their branches were in fact due to errors of the Post Office's Horizon accounting software. In 2019, the High Court ruled that the Horizon system was faulty and in 2020 the government established a public inquiry. Courts began to quash convictions from 2010. As of January 2024, some victims are still fighting to have their convictions overturned and receive compensation, the public inquiry is ongoing, and the Metropolitan Police is investigating the Post Office for potential fraud offences.

The Horizon accounting system was developed by ICL Pathway, owned by the Japanese company Fujitsu. In 1999, the Post Office started to roll out the new software to its branch and sub-offices, the latter managed by subpostmasters on a self-employed basis under contracts with the Post Office. Almost immediately, some subpostmasters noticed the new system reporting false shortfalls, sometimes for thousands of pounds. The Post Office insisted that the system was robust and, when shortfalls occurred, prosecuted the subpostmasters or forced them to make up the amount. The impact of court cases, criminal convictions, imprisonment, loss of livelihood and homes, debt and bankruptcy took a heavy toll on victims and their families, leading to stress, illness, divorce and, in at least four cases, suicide. In May 2009, Computer Weekly broke the story about problems with Horizon software and in September 2009 subpostmaster Alan Bates set up the Justice for Subpostmasters Alliance (JFSA). In 2012, as a result of pressure from campaigners and Members of Parliament, the Post Office appointed forensic accountants Second Sight to conduct an investigation into Horizon. The investigators concluded that Horizon contained faults that could result in accounting discrepancies, but the Post Office insisted that there were no system-wide problems with the software.

In 2019 a group of 555 subpostmasters led by Bates won a group action brought in court against the Post Office, with the judge ruling that Horizon contained bugs, errors and defects. The Post Office agreed to settle out of court for Β£58 million. The subpostmasters' legal costs amounted to Β£47 million of, leaving them with only about Β£20,000 each. The government later agreed to supplement the settlement, as they were excluded from the compensation scheme set up by the Post Office for other victims of the scandal. The first convictions to be quashed were those of six subpostmasters who had been convicted in magistrates' courts and whose appeals were heard at Southwark Crown Court in December 2020. In allowing the appeal by 39 subpostmasters in April 2021, the Court of Appeal judges ruled that in cases that relied on Horizon data a fair trial was not possible. Further appeal cases followed.

In September 2020, the government established the Post Office Horizon IT Inquiry, chaired by retired judge Sir Wyn Williams, to look into the implementation and failings of the Horizon system that led to the prosecution of subpostmasters and termination of their contracts. Evidence was due to be heard from subpostmasters, the Post Office, UK Government Investment, the Department for Business and Trade, and others.

A four-part television drama, Mr Bates vs the Post Office, was broadcast on ITV in January 2024, after which the scandal became a major news story and political issue.

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πŸ”— Trillion-dollar coin

πŸ”— United States/U.S. Government πŸ”— United States πŸ”— Finance & Investment πŸ”— Politics πŸ”— United States/District of Columbia

The trillion-dollar coin is a concept that emerged during the United States debt-ceiling crisis in 2011, as a proposed way to bypass any necessity for the United States Congress to raise the country's borrowing limit, through the minting of very high-value platinum coins. The concept gained more mainstream attention by late 2012 during the debates over the United States fiscal cliff negotiations and renewed debt-ceiling discussions. After reaching the headlines during the week of January 7, 2013, use of the trillion dollar coin concept was ultimately rejected by the Federal Reserve and the Treasury..

The concept of the trillion-dollar coin was reintroduced in March 2020 in the form of a congressional proposal during the 2020 stock market crash.

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πŸ”— Credit Unions

πŸ”— Finance & Investment πŸ”— Economics πŸ”— Business πŸ”— Cooperatives

A credit union, a type of financial institution similar to a commercial bank, is a member-owned nonprofit financial cooperative. Credit unions generally provide services to members similar to retail banks, including deposit accounts, provision of credit, and other financial services. In several African countries, credit unions are commonly referred to as SACCOs (Savings and Credit Co-Operatives).

Worldwide, credit union systems vary significantly in their total assets and average institution asset size, ranging from volunteer operations with a handful of members to institutions with hundreds of thousands of members and assets worth billions of US dollars. In 2018, the number of members in credit unions worldwide was 274 million, with nearly 40Β million members having been added since 2016.

Leading up to the financial crisis of 2007–2008, commercial banks engaged in approximately five times more subprime lending relative to credit unions and were two and a half times more likely to fail during the crisis. American credit unions more than doubled lending to small businesses between 2008 and 2016, from $30Β billion to $60Β billion, while lending to small businesses overall during the same period declined by around $100Β billion. In the US, public trust in credit unions stands at 60%, compared to 30% for big banks. Furthermore, small businesses are 80% less likely to be dissatisfied with a credit union than with a big bank.

"Natural-person credit unions" (also called "retail credit unions" or "consumer credit unions") serve individuals, as distinguished from "corporate credit unions", which serve other credit unions.

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πŸ”— M-Pesa – a mobile-phone based money transfer and microfinancing service

πŸ”— Technology πŸ”— Africa πŸ”— Finance & Investment πŸ”— Africa/Tanzania πŸ”— Afghanistan πŸ”— Africa/Kenya

M-Pesa (M for mobile, pesa is Swahili for money) is a mobile phone-based money transfer, financing and microfinancing service, launched in 2007 by Vodafone for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania. It has since expanded to Afghanistan, South Africa, India and in 2014 to Romania and in 2015 to Albania. M-Pesa allows users to deposit, withdraw, transfer money and pay for goods and services (Lipa na M-Pesa) easily with a mobile device.

The service allows users to deposit money into an account stored on their cell phones, to send balances using PIN-secured SMS text messages to other users, including sellers of goods and services, and to redeem deposits for regular money. Users are charged a small fee for sending and withdrawing money using the service.

M-Pesa is a branchless banking service; M-Pesa customers can deposit and withdraw money from a network of agents that includes airtime resellers and retail outlets acting as banking agents.

M-Pesa has spread quickly, and by 2010 had become the most successful mobile-phone-based financial service in the developing world. By 2012, a stock of about 17 million M-Pesa accounts had been registered in Kenya. By June 2016, a total of 7 million M-Pesa accounts have been opened in Tanzania by Vodacom. The service has been lauded for giving millions of people access to the formal financial system and for reducing crime in otherwise largely cash-based societies.

πŸ”— Chicken tax

πŸ”— United States πŸ”— International relations πŸ”— Finance & Investment πŸ”— Economics πŸ”— Politics πŸ”— Trade πŸ”— Automobiles πŸ”— Taxation

The Chicken Tax is a 25 percent tariff on light trucks (and originally on potato starch, dextrin, and brandy) imposed in 1964 by the United States under President Lyndon B. Johnson in response to tariffs placed by France and West Germany on importation of U.S. chicken. The period from 1961–1964 of tensions and negotiations surrounding the issue was known as the "Chicken War," taking place at the height of Cold War politics.

Eventually, the tariffs on potato starch, dextrin, and brandy were lifted, but since 1964 this form of protectionism has remained in place to give U.S. domestic automakers an advantage over competition (e.g., from Japan, Turkey, China, and Thailand). Though concern remains about its repeal, a 2003 Cato Institute study called the tariff "a policy in search of a rationale."

As an unintended consequence, several importers of light trucks have circumvented the tariff via loopholes, known as tariff engineering. Ford (ostensibly a company that the tax was designed to protect), imported its first-generation Transit Connect light trucks as "passenger vehicles" to the U.S. from Turkey, and immediately stripped and shredded portions of their interiors (e.g., installed rear seats, seatbelts) in a warehouse outside Baltimore. To import vans built in Germany, Mercedes "disassembled them and shipped the pieces to South Carolina, where American workers put them back together in a small kit assembly building." The resulting vehicles emerge as locally manufactured, free from the tariff.

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πŸ”— Peer-to-Peer Insurance

πŸ”— Finance & Investment

Peer-to-peer insurance is a reciprocity insurance contract through the Collaborative consumption concept.

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