Don't hate the strong dollar

1 big thing: Don't hate the strong dollar

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Bonus: The stock-market boost

The race to hand out credit scores

2. The race to hand out credit scores

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Who's really spending longtermist billions

3. Who's really spending longtermist billions

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Building of the week: The Gasworks, Dublin

It's been a pretty calamitous week, especially in the U.K. and Florida, so I'm going to try some counterprogramming today and look on the bright side of the strong dollar. That said, even NASA is worried about calamity; I'll talk about that, too.

The whole thing, including an examination of financial inclusion in credit scoring, is 1,435 words, a 5.5-minute read. 

Thanks to Kate Marino for editing this week, and Elizabeth Black for copy-editing.

National

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Stay on top of the latest market trends and economic insights

Axios Markets

The ultimate billionaire tax dodge

1 big thing: The ultimate billionaire tax dodge

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2 big things: America's newest deep-pocketed lobbyists

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The attraction of ESOPs

3. The ESOP alternative

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The rise of the six-figure salary

4. The rise of the six-figure salary

5. The royal recession

6. Building of the week: Ingalls skating rink, Yale

I have actionable content for you this week, at least if you're a billionaire looking to offload your company without paying taxes. Also: ESOPs, six-figure salaries, the Queen, and more. All in 1,294 words, a 5-minute read. 

Thanks to Kate Marino for editing and Elizabeth Black for copy editing this newsletter.

When giants enter consumer finance

1 big thing: When giants enter consumer finance

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Why big IPOs are still happening

2. Why big IPOs are still happening

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How Barbados took advantage of rising yields

3. How Barbados took advantage of rising yields

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4. Building of the week: 1425 Valley View Drive, Racine

Sometimes, the biggest new competitors in finance aren't VC-funded startups — they're massive public companies. This week, I look at how Apple and Goldman Sachs are faring in consumer finance. 

Also in the 1,379 words, a 5-minute read: Where the IPO market is still open, Barbadian financial engineering, and an oversized Frank Lloyd Wright residence on sale for less than $1 million. 

Thanks to Kate Marino for editing this week, and Elizabeth Black for copy-editing. 

How financial engineering saves the oceans

Why there aren't enough workers

1 big thing: Why there aren't enough workers

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The workers who haven't come back

2. The workers who haven't come back

The pandemic isn't over

3. The pandemic isn't over

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Immigration isn't helping

4. Immigration isn't helping

The paradox of entrepreneurship

5. The paradox of entrepreneurship

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Missing moonlighters

6. Missing moonlighters 

Teens to the rescue?

7. Teens to the rescue?

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I hope you're having an excellent Labor Day weekend. To mark the occasion, I tapped Axios' brightest minds to weigh in on the subject of the great American labor shortage, in a newsletter whose 1,169 words should take you about 4.5 minutes to read. 

Axios Markets will be taking Labor Day off; we'll be back on Tuesday. 

The energy tragedy was avoidable

1 big thing: The energy tragedy was avoidable

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The problem of indolent retail shareholders

2. The problem of indolent retail shareholders 

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Bonus chart: DWAC's share price

When antiquities looters get caught

3. When looters get caught

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4. Building of the week: Balmoral Castle

I've tried to keep queen-related content to a minimum in this newsletter.

In 1,335 words, a 5-minute read, I cover the energy infrastructure investment that wasn't, the retail investors not voting their shares, and the former Louvre director who's been arrested on charges of money laundering.

Many thanks to Kate Marino for editing this newsletter and to Elizabeth Black for copy-editing it.

A 1,260-pound spacecraft, traveling at 13,680 miles per hour, obliterated itself on Monday by smashing — deliberately — into an asteroid moonlet called Dimorphos.

Why it matters: The $324.5 million program, known as DART, is just part of the broader NASA project known as "planetary defense" — which, even now that DART is largely over, will continue to be funded to the tune of $142.7 million per year.

Yes, but: The $142.7 million is $55 million more than NASA asked for; Congress is telling NASA to hurry up and spend more money, more quickly, to reach its mandate of identifying 90% of near-Earth objects greater than 140 meters in diameter.

The big picture: This is the sort of spending that governments are supposed to be bad at.

A 2010 report by the National Research Council (NRC), with the wonderful title "Defending Planet Earth," admits that the roughly 100 lives per year lost on average to asteroid impacts is probably "trivial in the general scheme of things."

The catch, of course, is that the average conceals massive variation — and that a large impact could pose existential risk. (Just ask the dinosaurs.)

The problem of asteroid impacts, concludes the NRC, is simultaneously “extremely important” and “extremely rare.”

Asteroid 2005 ED224, for instance, is only 50 meters in diameter — about the same size as the Tunguska event of 1908, and much smaller than anything NASA is looking for. It's the closest thing to a present risk that Earth faces, but when it passes our planet on March 11, there's only going to be a 0.0002% chance of collision.

What they're saying: Charitable foundations are necessary, wrote Stanford professor Rob Reich in a highly influential 2013 essay, insofar as they "take on the long-run, high-risk policy experiments that no one else will."

"Public officials in a democracy do not have an incentive structure that rewards high-risk, long time horizon experimentation; they need to show results quickly from the expenditure of public dollars in order to get re-elected."

Between the lines: The best-case outcome of the planetary defense budget — essentially a billion-dollar insurance policy of unknowable utility — is that it's wasted and never needs to be put to the test.

If it does get put to use, the politicians who funded it will almost certainly all be long dead. And yet, those same politicians, over the past decade, have joined forces across the aisle to provide the planetary defense project with a nine-figure annual budget.

The bottom line: The longtermist project in philanthropy is dedicated to the proposition that wealthy individuals can and must step in to protect the planet from risks that governments are too myopic to address.

The DART program stands as an implicit rebuke to that thesis — especially since there is no chance that it would have ever been funded via private philanthropy.

The billion-dollar insurance policy is proof that governments can support high-risk policy experiments.

Aerospace

Stock market

A 1,260-pound spacecraft, traveling at 13,680 miles per hour, obliterated itself on Monday by smashing — <a class="gtmContentClick" data-vars-link-text="deliberately" data-vars-click-url="https://www.axios.com/2022/09/26/nasa-dart-asteroid-mission" data-vars-content-id="8e39ecdf-98d2-4c47-8aa7-c4243ca55634" data-vars-headline="Who&#x27;s really spending longtermist billions" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/09/26/nasa-dart-asteroid-mission" target="_self">deliberately</a> — into an asteroid moonlet called Dimorphos.Why it matters: The $324.5 million program, known as DART, is just part of the broader NASA project known as &quot;planetary defense&quot; — which, even now that DART is largely over, will continue to be <a class="gtmContentClick" data-vars-link-text="funded" data-vars-click-url="https://docs.house.gov/meetings/AP/AP00/20220628/114966/HMKP-117-AP00-20220628-SD004.PDF" data-vars-content-id="8e39ecdf-98d2-4c47-8aa7-c4243ca55634" data-vars-headline="Who&#x27;s really spending longtermist billions" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://docs.house.gov/meetings/AP/AP00/20220628/114966/HMKP-117-AP00-20220628-SD004.PDF" target="_blank">funded</a> to the tune of $142.7 million per year.

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Credit bureaus want to score more Americans, by incorporating non-credit sources — timely rent payments, for instance — into their calculations.

Why it matters: A lot of for-profit companies have joined the bureaus in this space, invariably proclaiming high-minded ideals of financial inclusion. But as Stanford sociologist Barbara Kiviat tells Axios, "access to credit is the same thing as enabling people to become indebted."

How it works: Lenders like to lend to people they can trust to repay them in full and on time. One way of predicting such behavior is to look at how assiduously previous loans have been repaid. Another way is to look at a history of on-time payments for anything from rent to utilities to Netflix.

One such program, Experian Boost, has signed up 8.6 million Americans. In the same vein, Esusu, which works with landlords, claims a 100% success rate in getting a credit score for people who previously didn't have one.

Other credit-building companies, like TomoCredit and X1, make short-term loans underwritten against wealth or income rather than repayment history. Those loans then build a credit history, which becomes a credit score.

By the numbers: Compared to someone with "very good" credit of between 740 and 799, someone with "fair" credit — between 630 and 689 — has to pay substantially more interest on their loans. The credit risk means higher rates of about half a point on mortgages, three points on auto loans, and seven points on credit cards.

The catch: If a "credit invisible" person then ends up with a credit score that's very low, that can be worse than having no credit score at all, says Chi Chi Wu of the National Consumer Law Center.

Having bad credit can double your car insurance rate — but in most states that allow insurers to use credit scores, the law specifically says that people without a credit score can't be penalized.

Similarly, having bad credit is worse than having no credit when you're applying for a job.

Having a subprime credit score also exposes people to some of the most predatory lenders in the industry.

The other side: "I have yet to see anyone go from credit invisible to a bad score," says Maitri Johnson, who oversees programs at TransUnion that incorporate rent payments into credit scores.

The big picture: All of these programs, so far, are opt-in. People who pay their rent on time are the people who try to improve their credit scores, or get a brand-new score that's reasonably healthy. People who don't, generally don't.

The risk is that as these programs become embedded into credit bureaus' methodology, data on things like rent and utility payments will be automatically reported, much like data on loan repayments are today.

At that point, the programs "may replicate and entrench the social and economic disadvantages that lead some people to have fair and poor credit scores," write law professors Pamela Foohey and Sara Sternberg Greene in a recent article.

Existing programs to credit more Americans are, so far, opt-in.

Credit

Credit bureaus want to score more Americans, by incorporating non-credit sources — timely rent payments, for instance — into their calculations.Why it matters: A lot of for-profit companies have joined the bureaus in this space, invariably proclaiming high-minded ideals of financial inclusion. But as Stanford sociologist Barbara Kiviat tells Axios, &quot;access to credit is the same thing as enabling people to become indebted.&quot;

Kim Kardashian was fined $1.26 million Monday for touting crypto schemes — even as much more high-profile pitches from the likes of Matt Damon and Larry David have gone unpunished. The seeming double standard is a function of a subtle yet crucial distinction in securities law.

Why it matters: Celebrity crypto endorsements drew millions of Americans into the crypto market at the beginning of this year, just before prices cratered.

The TV ads, which cost up to $6 million each, aired thousands of times and reached millions of viewers. Almost everybody who bought crypto at those levels ended up losing money.

A single post on Kardashian's Instagram page, by contrast, for a coin almost no one had heard of, might have caused losses for anybody who bought that coin after seeing the ad. But the number of such people — and the total aggregate losses — were tiny in comparison to the industrial-scale ad campaigns from the big crypto platforms.

What they're saying: Announcing the Kardashian settlement, SEC chair Gary Gensler attacked celebrity endorsements more generally:

"This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors."

Between the lines: Gensler's bluster notwithstanding, legally speaking, it's fine for celebrities and influencers to endorse investment opportunities, including crypto investments. Where Kardashian crossed the line was when she endorsed a crypto asset security.

The height of the crypto advertising boom was the 2022 Super Bowl, where companies like FTX and Crypto.com spent untold millions touting their websites as a place to buy crypto — and, implicitly, to get rich doing so.

Kardashian's relatively low-budget 2021 Instagram post, by contrast — she was paid just $250,000 for it — touted an actual coin, EthereumMax, that the SEC has determined qualifies as a security. That brings it under SEC jurisdiction, which is much stricter than the FTC regulations governing most advertising.

How it works: If you're endorsing a company, the only rules that apply are the relatively lax ones from the FTC. If you're shilling a security, then disclosing that you were paid — as Kardashian did with an #AD hashtag — is not enough; you also need to disclose how much you were paid.

The bottom line: If you're going to tout crypto, tout a crypto company, not a coin.

Why Kim Kardashian got fined and Matt Damon didn't

If you're going to tout crypto, tout a crypto company — not a coin.

Photo illustration of Kim Kardashian and Matt Damon side by side with only Damon backed by graphic lines

Photo illustration: Annelise Capossela/Axios. Photos: Axelle/Bauer-Griffin/FilmMagic,  Daniele Venturelli/WireImage via Getty Images

Cryptocurrencies

U.S. Dollar Index

The strong dollar might not actually be &quot;wreaking havoc&quot; around the world, as <a class="gtmContentClick" data-vars-link-text="some" data-vars-click-url="https://twitter.com/BW/status/1575447717861548034" data-vars-content-id="dc198841-bcab-4ca9-863d-4c906599dbc3" data-vars-headline="Don&#x27;t hate the strong dollar" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://twitter.com/BW/status/1575447717861548034" target="_blank">some</a> <a class="gtmContentClick" data-vars-link-text="headline writers" data-vars-click-url="https://fortune.com/2022/09/07/us-dollar-price-wreaking-havoc-across-pretty-much-every-country/" data-vars-content-id="dc198841-bcab-4ca9-863d-4c906599dbc3" data-vars-headline="Don&#x27;t hate the strong dollar" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://fortune.com/2022/09/07/us-dollar-price-wreaking-havoc-across-pretty-much-every-country/" target="_blank">headline writers</a> would have you believe. Why it matters: Large swings in the dollar — in either direction — tend to destabilize corporate and central bank strategies. Stability and predictability are good things. Still, the strengthening greenback is welcome news to many constituencies.

Princeton University is so rich it has become a perpetual motion machine — an institution that can operate with no outside financial support whatsoever. That's the claim made by Malcolm Gladwell, in a recent newsletter, and opposed by Harvard economics professor John Campbell, in a letter to The Browser.

The big picture: Gladwell is broadly correct. Campbell's quibbles might change the exact numbers, but Princeton really does seem to have reached the point at which it's capable of funding itself in perpetuity, even without research grants or tuition income.

Why it matters: A handful of ultra-rich universities increasingly resemble hedge funds with a nonprofit educational arm attached. Critics like Gladwell say that endowments have become so huge that Princeton and its ilk no longer need to beg for money from alumni; that such donations would almost certainly be better spent at almost any other nonprofit; and that even charging tuition seems unnecessary at this point.

State of play: Princeton's endowment hit $37.7 billion in 2021, or $4.5 million per student. The school's entire annual operating expense that year was $1.86 billion, which is less than 5% of the value of the endowment.

The endowment will probably decline in value in 2022; such are the markets. But over the long term, it's reasonable to expect the endowment to continue to grow more quickly than the university's expenses.

Princeton's historical investment returns alone have been significantly higher than the rate of inflation in tuition and other education costs — that explains why proceeds from the endowment account for an ever-greater share of spending every year. On top of that, Princeton continues to be very good at persuading its alumni to continue to donate generously to the fund.

By the numbers: Princeton made an astonishing 46.9% investment return in 2021 — a number most hedge funds would covet. Andy Golden, the president of Princo, the university's money-management arm, made $7.2 million last year, vastly more than the $1.1 million earned by Christopher Eisgruber, the university president.

Unlike most hedge funds, however, Princeton — a tax-exempt nonprofit — pays only a small 1.4% excise tax on its investment returns. It has lobbied hard against paying even that much. 

The bottom line: Princeton could indeed operate indefinitely without any tuition fees or research grants — not that it will ever have to.

In a virtuous cycle, its wealth allows it to attract the best researchers, who in turn make it a center of academic excellence — that attracts even more money from funders, current students, and alumni.

Princeton isn't free — but it could be

The university is so rich it's become a "perpetual motion machine"

Illustration of a large pile of money with a graduation cap on top.  

College

Princeton University is so rich it has become a perpetual motion machine — an institution that can operate with no outside financial support whatsoever. That&#x27;s the <a class="gtmContentClick" data-vars-link-text="claim" data-vars-click-url="https://malcolmgladwell.bulletin.com/princeton-university-is-the-worlds-first-perpetual-motion-machine" data-vars-content-id="ef2e1b31-f6f1-487d-a049-6f370377e527" data-vars-headline="Princeton isn&#x27;t free — but it could be" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://malcolmgladwell.bulletin.com/princeton-university-is-the-worlds-first-perpetual-motion-machine" target="_blank">claim</a> made by Malcolm Gladwell, in a recent newsletter, and opposed by Harvard economics professor John Campbell, in a <a class="gtmContentClick" data-vars-link-text="letter" data-vars-click-url="https://thebrowser.com/letters-to-the-editor/" data-vars-content-id="ef2e1b31-f6f1-487d-a049-6f370377e527" data-vars-headline="Princeton isn&#x27;t free — but it could be" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://thebrowser.com/letters-to-the-editor/" target="_blank">letter</a> to The Browser.The big picture: Gladwell is broadly correct. Campbell&#x27;s quibbles might change the exact numbers, but Princeton really does seem to have reached the point at which it&#x27;s capable of funding itself in perpetuity, even without research grants or tuition income.

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Princeton isn't free — but it could be

Why Kim Kardashian got fined and Matt Damon didn't

Don't hate the strong dollar

Who's really spending longtermist billions

The race to hand out credit scores

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Markets Weekend: No calamity

🍏 Markets Weekend: Apple money

🐑 Markets Weekend: Fleeced

⚡ Markets Weekend: We lost our chance

🧑🏼‍✈️ Markets Weekend: Labor daze