January 2010
47 posts
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Private Equity And Paul Volcker Reform
As banks evolve to become government-regulated utilities, private equity firms and hedge funds will have an even harder time securing financing for their investments.
The specific points at issue are ownership or sponsorship of hedge funds and private equity funds, and proprietary trading — that is, placing bank capital at risk in the search of speculative profit rather than in response to...
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“Recession-Plagued Nation Demands New Bubble to Invest In.”
– The Onion, viaOp-Ed Columnist - Life Without Bubbles - NYTimes.com
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Apple iTablet Announcement Live via Google...
Today I will follow Apple’s iTablet announcement via Google Real-Time.
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Newsday Online Hits A (Pay)Wall
A Long Island newspaper invested €4 million to redesign its online website with content behind a paywall. They got 35 subscribers in 3 months.
The web site redesign and relaunch cost the Dolans $4 million, according to Mr. Jimenez. With those 35 people, they’ve grossed about $9,000.
Second tier newspapers’ only chance to get some subscription revenue from paying online customers...
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Rajiv Sethi: On Efficient Markets and Cognitive... →
One thing is to spot a bubble, another thing is to get the time right and profit from that knowledge: efficient market theory is off in its “the price is always right” component, but probably not in the “it’s hard to make above-average profits consistently” component.
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“We need to shrink to have a healthy venture capital business. We have an...”
– Paul Kedrosky
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Credit Expansion As Tool To Limit Social Unrest
Albert Edwards, chief strategy of Societe Generale backs up my theory of credit expansion used purposely to reduce tensions in an unequal society …
Hence, while governments preside over economic policies which make the very rich even richer, national consumption needs to be boosted in some way to avoid underconsumption ending in outright deflation. In addition, the middle classes also need...
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Treasuries Outperformed Stocks 8:1 Since 1981
Another stunning fact, courtesy of Gary Shilling
The article goes on making the bullish case for treasuries going forward as well, which I would not be so sure about.
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“Wilmustad understandably wondered how they were supposed to come up with $14...”
– The Most Stunning (and Uncommented on) Revelation in Too Big Too Fail « naked capitalism
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Go Checklists!
Applying boring checklists to the investment process works. “Airline captains”, or those investment professionals in venture capital, private equity or stock investing that adopt a checklist method in their investment decisions, have a better track record because they control better our brain biases and common misperceptions.
Sure enough, when Smart tracked the venture capitalists’...
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$16 Trillion Of Gross Government Debt Issuance In...
I had been looking for this number for a while:
The Organisation for Economic Co-Operation and Development estimates that gross government debt issuance for its member countries will stabilize at about $16 trillion this year, similar to 2009. That compares to gross debt issuance of $12 trillion in 2008 and $9 trillion in 2007.
OECD countries generate $40 trillion GDP a year, so there are...
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“How much debt can a country assume before it is pushed over the edge? It’s not a...”
– Another Gold Bull Emerges: Hermitage Capital, And The Fund’s 2010 Predictions | zero hedge
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Japan Will Be The Trigger
Japan holds 10% of the stock of US government bonds. Once the Japanese internal demand for Japanese government bonds (JGB) runs out (because population is decreasing since 2005, because their state pension system since last year has become a net seller of JGBs, and so on), they will have to sell their holdings of US treasuries possibly triggering a worrisome domino effect.
Update: SocGen...
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“Why Bernanke’s Defense of Super Low Interest... →
Thoughtful analysis on low-interest rate policy of 1996-2006
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“The Fed is going to stop the music in March. There will be a scramble for the...”
– John Mauldin - When the Fed Stops the Music
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“The policy mindset really, really matters.”
– El-Erian - Waiting for Better Times
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Wealth Concentration vs Velocity Of Money
I had never thought about a mix effect on velocity of money: wealth concentration reduces velocity of money because it shifts money from high-turning people (wage earners, that spend most of what they earn) to low-turning people (wealthy individuals that park their savings in investment funds).
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Kill The Software Patents
Patents were invented to foster innovation and protect the investments in R&D against fast followers.
The patent system applied to software is now a hindrance on the innovation process: We need an independent invention defense to minimize the damage of aggressive patent trolls - Union Square Ventures: A New York Venture Capital Fund Focused on Early Stage & Startup Investing
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“I’d like to forget it. That’s what goes through my mind. I almost didn’t do this...”
– Ted Turner on AOL-Time Warner deal
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The History Of World Population
Total world population skyrocketed, mostly due to stunning growth in Asia:
Population of Northern America and Europe stopped growing and might even decline going forward:
I am growing even more convinced that world population growth explains at least 50% of economic and social developments.
See my google spreadsheet for more information.
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“Japan’s problem is deflation, not inflation as far as an eye can see. An...”
– PIMCO - GCBF January 2010
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Google China Spy Story
The plot thickens … Google reveals attacks on human rights activists accounts and commits to a no-censorship-or-nothing policy: Official Google Blog: A new approach to China.
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“As most of the world bets on China to help lift the global economy out of...”
– Contrarian Investor Predicts Economic Crash in China - NYTimes.com
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WatchAwesome talk on how our brain works. You must watch it until the end, for a great live experiment.
Source: VS Ramachandran on your mind | Video on TED.com
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WatchThe Social Neurons
Source: VS Ramachandran: The neurons that shaped civilization | Video on TED.com
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“At some point, though, it sure would be nice to hear those experts explain how...”
– Economic Scene - If the Fed Missed That Bubble, How Will It See a New One? - NYTimes.com
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“if exit strategies proceed as planned, all U.S. and U.K. asset markets may...”
– Bill Gross - Let’s Get Fisical
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“In a new “normal” world growth will be half of what it was, profit...”
– Pimco’s Bill Gross Sees 2010 as Year of Reckoning - TIME
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Measuring entrepreneurship: a digest of... →
Yearly review of state of entrepreneurship in OECD countries. Measuring Entrepreneurship 2009 OECD Report (pdf)
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Hot Hedge Fund Trades of 2010? →
Must read piece. Notice the list of hedge funds at the bottom with links to their stock purchases (based on SEC filings collected and analysed by MFFAIS.com site
WatchOur trip to Morocco …
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“Weak sovereigns will buckle. The shocker will be Japan, our Weimar-in-waiting....”
– Global bear rally of 2009 will end as Japan’s hyperinflation rips economy to pieces - Telegraph
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Decision Tree For Sovereign Debt Analysis
Nice decision tree useful to structure an analysis of sovereign debt, via RBS and ZeroHedge
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Krugman On Why This Time It Is Different
I am afraid that Paul Krugman is right when he says that, although a few bullish news are to be expected, the economy is still fundamentally ill:
During the good years of the last decade, such as they were, growth was driven by a housing boom and a consumer spending surge. Neither is coming back. There can’t be a new housing boom while the nation is still strewn with vacant houses and apartments...