Entrepreneurship News Round-Up: Week of 6/29/2009

Posted by: Thom Ruhe on June 29, 2009 Source: e360 Blog

Barry Ritholtz on the Big Picture blog delves into a new article in "Scientific America" titled The Neuroscience Science of Bubbles and Busts. The article, which he calls "fascinating stuff," is a look at the “worst economic crisis since the Great Depression,” from the perspective of understanding how financial markets work relative to how people make decisions about money, and specifically the "Money Illusion," that results from most people not accurately realizing how inflation affects everything from home values to the price of milk.

In international news: Yves Smith says the Chinese Banking System is "veering out of control" struggling to absorb $1T of new lending issued since December.

Jeff Cornwell of the Entrepreneurial Mind blog links to a new study suggesting that taxes may be a contributing factor to the failure of small businesses in addition to decreasing the number and rate of entrepreneurial start-ups in an economy.

74 Comments

Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Employment said...; I don't believe that the Chinese Banking System is veering out of control
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; http://www.playedonline.com/category/Strategy/1.html said...; Barry Ritholtz suggested rightly about the Scientific America...i agree with him...
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Sports Equipment said...; That is some 'fascination stuff'

Barry was definately right when he said the financial market work relative to how people make decisions with money. I totally agree with Barry.

Anyways, great post and I look forward to seeing more.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Sports Equipment said...; Nope I doubt the Chinese Banking System is veering out of control. We don't know it for certain though. Btw nice article.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; David said...; "specifically the "Money Illusion," that results from most people not accurately realizing how inflation affects everything from home values to the price of milk." That is so true - people do not have financial education and they live their lives like the latest trend shows them to - they belive when the price of their house get bigger, the value gets higher, but this is all false information. People live by these false standards and thats why the economy is were it is. Lets hope that the education provided by current times will make our world more powerful in the future.

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Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Collingwood Homes for sale said...; Thanks for the update. The economy is slowly starting to pick up but the U.S. dollar has dropped considerably since this update in June.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Koh Samui Holiday Villas and Homes said...; Barry Ritholtz right on the article in "Scientific America" titled The Neuroscience Science of Bubbles and Busts. The article shows clearly how financial things are at the moment. And it will come much worse. A finacial crash is inavoidable.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Max Alli said...; We really need to watch the Chinese banking system because if its busts, the recoil and effect on the United States will be substantial.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; organic clothing for babies said...; A little late, but I just got the chance to read the Entrepreneurial Mind article, and I appreciate the organic thinking. But I think taxes are a small part of the picture in a startup. There are so many risks that add into the success equation, blaming taxes is kind of like blaming the wall for hitting you when you walk into it.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Hotels in Kampala said...; No wonder investors are getting all jeery about the Chinese economy now ; reducing Bank lending would actually be a good thing to rein in bad loans and bad debts. The Chinese govt already stopped giving subsidies to Manufacturers making it only worthwhile for the large industries to survive. Competition is strife in the China, and what we need is manufacturers of good quality products, not cheap junk. The only way this can be achieved is to stop encourgaging everyone to start up another business of selling an item already manufactured by a dozen firms. Quality preceds Quantity in the end.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Anti Aging said...; I hope the Great Depression is soon over.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; arief said...; Taxes are needed to develop the country. The problem is how much taxes will be burden to each of entreprenuer. it's better to make a group of entreprenuer or company and grab the taxes based on the omzet of the company
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Koh Samui Villas said...; While China was also hit by the worldwide downturn, it has bounced back faster than economies elsewhere. Beijing hopes cooling the pace of lending will keep its economy growing without creating inflation and overheating. Other nations are counting on that growth and a healthy demand for their goods for their own recoveries. So nothing wrong there.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Acai Berry Diet said...; Hahaha! It all comes around full circle, doesn't it? Now the Chinese Banking System is going to over extend itself and will crumble into ruins. Does no one ever learn from our mistakes?
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Real Estate Foreclosures said...; The Chinese have a different form of government than us. Their banking system is based on a different economic philosophy and quite frankly, I think they will be OK.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; free online games said...; I have read the article "worst economic crisis since the Great Depression" too, it was quite interesting.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; LG View said...; The Crisis touches everyone all around the world. Thats sad :(
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; RC Helicopters said...; I'm a Chinese,I knew that the Chinese Banking System is not veering out of control !!
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Tilføj link said...; I think it will come back!
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Fish Oil said...; At the end of the day, the real problem is greed. We're into this mess because of greedy wall street bankers and we have to find an effective solution. They're like a double edged sword, we need them and we hate them!
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Gezonde Voeding said...; Yesterday, when I'm in my class at Monday, my lecturer said that Taxes are supporting a new or a starter Entrepreneurship in order to decreasing rate in economy. So, i agree if you said Taxes may be a contributing factor of the small businesses.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; SamuiPeter said...; The global economic contagion has spread to China, sending shudders around the world. Chinese leaders are worried about domestic social unrest, while U.S. leaders are worried about whether China will continue loading up on Treasury securities as our budget deficit explodes. Yet one of the few bright spots is the surprising strength of China's banking system. Remember when that system seemed on the verge of collapse? That's where the banks stood until the reforms of the past 10 years. But now the picture is completely different. As former World Bank official Pieter Bottelier, now a professor at Johns Hopkins, notes, "The irony is that 10 years ago, China's banks were among the weakest in the world and today they are among the strongest, however primitive their system."
Regards
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Aspect Investments said...; The Ritholtz article is a good example of how people do not realise how inflation eats away at your money if you leave it in a bank. For example, here in the UK a couple of years ago you were getting around 5% on your savings. Inflation at that time was running at about 3.5%, so in real terms you are getting 1.5% on your savings. If you are lucky you can now get 3% on your savings, but inflation is around 1%, so although you are getting less interest on your money, you are better of now than you were 2 years ago. You should always be aware of the rate of inflation compared to interest rates, or your money could be worth a lot less in the future than it is now.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Rob said...; "people not accurately realizing" this was pure ignorance and a lack of financial responsibility. We lent hard, it had to end somewhere...
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Audiobooks Online said...; taxes may be a contributing factor to the failure of small businesses ? Well that's kind of shocking?

Mike
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Charms said...; When one looks over the bubbles of the last 100 years its fascinating that virtually every time people have the mindset that this time its for sure, this time there will be no drop. Only to be proved wrong. With the dot-com and housing busts looks like the 21st centry will be no different.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; title company said...; I'm so sick of the boom bust cycles created by the Fed. It's pretty obvious when you follow the money whats really going on. Great post though thanks!
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; watch ufc 109 said...; The post on the 1T debt that the Chinese banks have assumed is quite interesting! The chinese bubble is about to burst..
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Holiday Travel said...; I don't thing so. Chinese Banking System is unpredictable, and I don't believe him
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Education Resources said...; Small businesses can often help themselves to reduce their tax liabilities through creative accounting and proficient accountants should give professional advices and help business owners save on taxes.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Bathroom Suites said...; I don't think its any great surprise that taxes play a significant part in the failure of many small businesses. Payment flexibility is what is needed IMHO
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; private sale said...; great article,it is indeed the worst economic situation since the Great Depression, financial markets have really lost steam
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; eiwitdieet said...; I agree with Barry Ritholtz, he stand in the right place and we have to support him. Who else?
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Bokep said...; I agree with Jeff Cornwall post on "taxes linked to small business"
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; real estate said...; Barry Ritholtz's article makes me wonder whether we are entering uncharted waters.

The world is now so interconnected and things can happen so fast that potentially at least the chances of a game changer of a depression looms large.
Similarly perhaps the tools to fix these things can also operate faster in the new world order.

<p>Australian <a title="real estate" href="http://www.propertynow.com.au" target="_blank">real estate</a> agent</p>
<p>Coffs Harbour. NSW.Australia</p>
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; real estate said...; Barry is right in saying that the old ideas of Milton Friedman do not hold water as opposed to modern behaviourist views.

People don't make informed rational judgements when buying car or homes even when we think we are. We can control but not obliterate the emotional component of the market and that's the part that creates booms and busts

Andrew
Coffs Harbour.Australia.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Nilesh said...; There are very few professionals like who possess high ranks in a company and are blessed with leadership qualities.So entrepreneurship for a person a responsible role.

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Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; mini fridges said...; I completely agree with Jeff Cornwell. Creating a new business is hard enough without having the governments tax policy going against you.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Samuinick said...; I have to agree with Employment, as former World Bank official Pieter Bottelier notes, "The irony is that 10 years ago, China's banks were among the weakest in the world and today they are among the strongest, however primitive their system."
Regards SamuiPeter
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; astoria dentist said...; the chinese will be taking over the world soon enough. Chinese teachers are already being sent by the chinese gvt to teach Chinese in place of traditional languages in american schools.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; vimax said...; China's banking system has undergone significant changes in the last two decades
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Toronto Seo Services said...; Barry Ritholtz can also be tied to business owners who have still managed to recover from the recession.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Prostate Problems said...; Jeff Cornwell of The Entrepreneurial Mind offers an important lesson for all entrepreneurs: "It isn't over until the fat lady sings."
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Christian And Individuals said...; I believe in the study about taxes being a contributing factor to the failures of small businesses. I knew of a fellow businessman who had to lay-off a lot of employees due to the rising taxes just to keep the costs of his products low. Eventually, he had to close shop because he also lost a lot customers because he had couldn't keep up with their requirements.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Cat Names said...; I believe that the Chinese are actually veering out control... 100% agree with you comments.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; San Diego Medical Trails said...; The fact that the price of milk could potentially double and it already hurts to know that it's almost 4 dollars now scares me to death.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Discount Hotel Rates said...; This economic crisis is controlled by the real owners of this country. If we are 700 billion dollars in debt, why didn't anyone speak up when we hit 200 billion. This economic crisis is just another excuse for people to use their laziness as a scapegoat. The same wind blows on us all, its how we set our sail!
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; lice treatment said...; countries from all over the were affected by this crisis..
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Bluesdude said...; The Barry Ritholtz blog - the Big Picture - is a must-read blog for any U.S. based Entrepreneur. And if you ever get the chance to hear him speaking live I recommend it. His insight is outstanding.
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Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Max said...; Great article. Although the economy seems to be getting better, it also still has alot of work to do. We are not the only country that is struggling right now.
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Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Dheen said...; Money is always interesting to talk about. But people doesn't reliaze how inflation will be effected to everything aspect. So we should be smart to think about our money. Make a decision to take an investment should do in right way. Great post. I will back for another post. Thank's
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; pro razor scooter said...; The chinese banks are pretty unpredictable. So we'll see.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; touring caravan insurance said...; If you compare the inflation rate with the current earning of majority of people, then we can imagine, how seriously people are affecting day by day.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; New Business Grants said...; Somehow, the Chinese have a way of surprising us. Most of the successful businessmen here are Chinese. They must have something in mind when they are thinking of absorbing $1T of new lending.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Wilfried said...; Many experts around the world think that only a global regulation of financial markets will perhaps, one day, stop the many abuses of the banks and financial markets, whose only watchword is profit at any price. I agree.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; gnomes said...; China banking system will find its way, more than a billion of its people can and will support it in the years to come..They ought it to themselves
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Joomla Web Development said...; About Barry Ritholtz on the Big Picture blog, and the "Money Illusion", le plus intéressant est de comprendre comment des êtres parviennent à être aveuglées par le profit, au point d'en négliger les relations humaines.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Hockey Equipment KYG said...; I've actually been seeing a lot of buy outs in sports companies in recent years. In some cases they keep the brand names of the competitor, but they are essentially operating under the same roof. There used to be 6 big hockey companies that manufactured equipment now those 6 have morphed into about 2. Those 2 now own what is left of the other 6. This happened right before we had the recent economic troubles, so I am thinking maybe some companies weren't doing so well and may have been suffering from the money illusion you mentioned above.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Living online said...; A battery of cointegration and causality tests confirms the general finding that taxes can have significant influences on entrepreneurship, but they are likely to be ineffective tools for generating meaningful changes in entrepreneurial activity.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; GoogleKeywordTool said...; Higher taxes, more government regulation, not allowing businesses to go bankrupt, the cost of two wars and a host of other government related circumstances are the prime reason for the economic downturn.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; DigitalWM - Classificados & Hospedagem said...; I don't really agree with Yves Smith who said that the Chinese Banking System is "veering out of control" struggling to absorb $1T of new lending issued since December.
Well, I don't know where he took his statistics from.
We all know that the Chinese economy is growing at about 9 to 10 percent for many years and it is considered as the economic wonder of the world.
However, it's true that Politics can affect the Economy.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Taxi to Heathrow airport said...; I disagree that the Chinese Banking System is out of control, because in China communist government never make this type of financial crises.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; pocket folder said...; Chinese banks are best option, i think this is the time to take benefit out of it.....!
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; masaze plzen said...; @ above comment:

I wouldn't put my money in Chinese bank. Economy might be very tricky and shady in non capitalistic countries.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Slogans said...; China has a strong management system. I don't think the Chinese banking system will get out of control easily.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; used cisco c3550 said...; I think Swiss banks are nice option to keep your money safe.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Robert said...; China has become new economic power today. Let's learn from china what the best from it.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; obrazy said...; Yes, right, no offense, but if you feel so confident bout Chinese banking system then go ahead and place your $$ in a Chinese bank. I would rather go for a time-proven and stable Swiss one.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Pet Cat Sitting & Dog Walking in Cupar, Fife said...; The financial sector's vested interests have had too much of a monopoly for too long. Better regulation and more control of earnings is definitely required.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; <a class="url fn" href="http://http://www.naymz.com/matthew_proman">Matt Proman</a> said...; Not everything is good about the rise of China. As you can see, their pollution is worst than any other countries and they are over populated.
Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Melanie said...; Ok, lets have a look at the crisis. We in Germany pay a lot of taxes: But today our politicians discuss to put them higher. What will be the effect: In my opinion, people will spend less money on consum-goods - as a result of this, small and middle bussiness have no more chance to continue and will close. = Less jobs, less money, more problems... and so on. I think we will go into hard times.

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Re: Entrepreneurship News RoundUp Week of 6292009: July 31, 2010 @ 12:00 AM; Electronic said...; The Money Illusion is real and its cost effective.

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