Tag: Investment

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VCs shun SA

Venture Capitalists have an eye on long-term safety of investments. Political upheavals, unrest or instability can deter investments as much as risks to the safety of the workforce. The abbreviation “SA” in Germany has at least 2 meanings. (1) Historically, it refers to the “Sturmabteilung”, which was important in the rise of the Fascist movement and Nazi-terror in the 1920s, 1930s. Foreign investors were right to shun away from investments during the rise of the Fascists in Germany as a total loss of the investment was to be expected. (2) In 2026-8 the abbreviation “SA” in Germany stands also for “Saxony-Anhalt”, one of the Federal States of Eastern Germany, formerly the GDR between 1949-1990.
The “Wallstreet Journal”, which is read by many international investors showed on its title page of WSJ 2026-9-7 a report by Bertrand Benoit on the disastrous election in Saxony-Anhalt giving the extreme right-wing party AfD close to an absolute majority of votes. The abandoned investment by Intel into a chip-production near the capital of SA, Magdeburg, has been in retrospect a rather wise investment decision. The internationality of the employees, who build and operate such plants, might have contributed to them feeling rather unsafe in a hostile environment towards foreign workers.

intel processor logo

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Climateflation

Central banks have started to deal with the impact of climate change or inflation, short “climateflation”. New and additional inflationary pressures originate in climate change and global warming and they necessitate a closer scrutiny. Heat waves, like 2026-6 in Europe, or earlier ones have created an upward pressure on prices. Loss of agricultural production can be severe due to weather extremes which occur more often and with greater intensity. Such extended hot and dry climates reduce the production of crops and spikes in prices that only reluctantly return to average levels shall cause price inflation (climateflation). These are the short term impacts.
The medium run impacts alter price relations and valuations of in sectors like housing and infrastructure. Badly isolated stocks of housing, schools or hospitals depreciate valuations and the heavy investments needed for isolation of roofs, walls and widows as well as heat pumps to produce cooling shall be in very high demand, which makes price increases more likely across the construction sector. As we expect new devices to be “AI-intelligent”, “mem-flation” will be pushed up as well. These factors can give a push to some economies which are producers of the products in high demand and able to expand production rapidly as well. Just importing higher numbers of air-conditioning systems from other countries shall worsen trade balances.
The major challenge, however, remains our inaction to stop global warming to avoid additional economic and human losses related to climateflation.

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Long run

The future orientation is a principal component of any investment. If a society stops investing its impeding its own ability to adapt and grow. Investment costs today will likely generate returns in the medium or long run. A caveat applies. Some investments may cause long running liabilities, like nuclear energy. The choice of which investment to choose, therefore, is crucial. The investment in people is likely to have a positive return in the long run because it remains an investment that has a high potential to adapt to changing circumstances rapidly. Training as scientist allows to do both fundamental research or to choose an applied field with little reorientation. A focus on the long run has advantages of likely stable returns if previous forecasts in what to invest were correct and reliable. This is the point where besides the difficulty to make good (technological) choices, probabilities enter the equation. The longer the time horizon, the greater the probability that relevant changes, which impact the future returns, shall occur. At best, some of these may cancel out each other in the long run. The potential that some risks are “too big to fail” does not mean that shall not occur (zero probability does not exist in technical nor human decisions. A sound theory of social investment would be a great step ahead for humanity in the 21st century. (Image: Ostend street art 2026-6) 

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Time and money

In the English-speaking world, most people will be familiar with the expression “time is money”. In times of working for money as pay, rather than growing your own crops, we calculate hourly, monthly or yearly salaries. Time is a habitual point of reference in production systems and calculations of economic growth. Inflation and depreciation speak to value over time, just as investment and returns accrue over time. For comparisons of different investments the chosen horizon becomes a decisive factor. Of course, in the long run we are all dead, but in the meantime time matters a lot, doesn’t it? Take out a loan and you realize how much time will matter, suddenly. Now, let’s turn around the causality, Money is time or can be buy time with money? For many processes this seems to be the case. With money you can buy time off working, or pay somebody to do work instead of doing the work yourself. You can “win time” or gain more free time this way. However, towards the end of your life, money might no longer suffice to buy you time before death even with lots of disposable income or cash. From a philosophy of science perspective, we might even question the concept of time-linked causality altogether. The relationship between time and money gets even more interesting if. we take intergenerational considerations into account like inheritance and environmental heritage. … and “the times are a changing”.  

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Premium for silence

People are willing to pay a premium on housing prices for a more silent environment. In the study Enrico Moretti & Harrison Wheeler (2025) estimate that the construction of a silencing wall near a noisy traffic junction or road will increase prices for every decibel of noise reduction by about 3%. Distances closer to the noise shields get higher increases and this mechanism works even up to 400 meters away from the isolation. The investment in decibel noise reductions (not statistical noise) meets a willingness to pay a premium on housing prices. Investment in positive environmental effects (silence) have an obvious marketable premium value. This is most likely just the obverse effect that noise nearby housing is penalized and part of the social mechanism of gentrification. Housing prices and rental costs are known to be powerful drivers of gentrification as well.

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Marc Aurel Book 9

For students of economics or business the paragraph 10 provides an interesting precursor of the concept of capital, interest and maybe even on human capital: „Man, god, and the universe all bear fruit, each in its own due season. No matter if common use confines the strict sense of ‚bearing fruit‘ to vines and the like. Reason too has its fruit, both universal and particular: other things grow from it which share its own nature.“  (Penguin edition) There are so many examples of the fruits that have grown on the trees of knowledge that we have become accustomed to the idea and continue to reap the benefits of those vines. Of course, some of these fruits have turned out to be more of a curse than a blessing. We seem to neglect the wise judgment which Marc Aurel mentioned along with the use of logic. (Also in this version Link)

 

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Learning by using

Is learning by using different from learning by doing? In an economic model to test the employment/unemployment impact of AI in the USA, Wang & Wong (2025) suggest an important impact of employees’ productivity due to learning by using AI. In terms of the traditional language of economics the employees who use AI in their work shall have comparative advantage to those who don’t.
In a model of job search in the economy there is the additional possibility, similarly to robots previously, that certain tasks maybe influenced by the, more or less, plausible threat of an employer to replace the employee by training an AI system to perform the tasks. The credibility and acceptability of such threats are likely to impact wage claims and unemployment risks. All these effects do not happen instantaneously, but evolve over time with varying speed. Hence, calculations of effects have high error margins. The resulting model yields oscillations of “labor productivity, wages and unemployment with multiple steady states in the long run”.
Learning by using seems to be a good description of what occurs at the micro level (the employee) and at the macro level of an economic sector or the economy as a whole. Society may guide the use cases of AI just as much as the business case to use AI, for example in the creative industries as infringements of copyrights may occur on a massive scale. However, learning by using is not free of risks to society at large. Just like allowing people to use automotive vehicles has lead and still leads to thousands of deaths annually, learning by using produces external costs. Overall, this is another case for a benefit/cost analysis for businesses, the economy and society.

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Social promise

In the beginning and middle of the 2020s the social promise to younger generations has been broken. The latest figures from the USA reveal that 2 million students (WSJ 2025-6-25 A3) who have financed their studies and potential social mobility by taking out a substantial loan are very likely to default on their credits. This observation was less a surprise to labor market analysts as the stalling of student hiring in many countries has happened for several years now. The more surprising finding is that the Wall Street Journal 2025-6-25 has been reporting on this. Banks or universities who are highly exposed to this kind of risk will themselves become downgraded for their credit rating. Higher interests for universities means higher fees and higher student loans eventually. The social promise to reach higher status and earnings through higher education as the social promise of the meritocratic society becomes an illusion. Investors in student housing might also find the sector less juicy for them. Students and their parents were taken hostage by an excessive commercialization and commodification od education. Lifelong learning is a still a promising route to revitalize the social promise.

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Sunny future

The use of solar panels for energy production is a standardized process with decent returns on investment. Combined with heat pumps and the potential of decentralized energy production, storage and consumption makes jointly for reducing emissions. The planning, investment and installation with digital tools allows to reap further benefits through the ease of coordination of all processes. The « All electric society » will take hold of homes and mobility. The climate and business case for this societal change is obvious, but the risk of new forms of inequality may arise between the one able to make such transitions now and the ones without the means to shoulder investments at the same time with other budget restrictions. The change has to start in our minds first before action will follow. In any case, the solar future takes hold of more and more people. Have you checked your amount of solar energy production already today?

Solar panel energy
Screenshot
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Smart Heat Pumps

The potential to reduce CO2 emissions through the replacement of fossil fuels with heat pumps is huge. The technology is well known and has reached a considerable amount of maturity in the mid 2020s. Noise is much less an issue even at higher compression rates and during the use of booster functions to cater for peaks of hot water or home heating. Combined with solar energy the local production and consumption of energy turn each household into a “prosumer” of energy. Besides the initial investment you have to find capable technicians and enterprises that master the installation of the technology with the necessary care and ensure the adequate calculation of the envisaged energy needs of the household. Household and family size matter, and this is not easy to project into the future. Additional saving potentials can be harvested through the use of smart home applications. Switch off the heating before you leave or if a longer than previewed absence occurs. Just do it if you are away from home. Alternatively, just start the heating when you get on your way back home from work rather than at previously estimated, but fixed times. Smart technology is just perfect for such use cases.