Venture Capital bloggers have a uniquely targeted audience of entrepreneurs interested in what they have to say. These Venture Capitalists write about technology, entrepreneurship, investing, the computer industry, and their random exploits.
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Non-Monetary Utility and the WSOP Bubble [Paul Kedrosky's Infectious Greed]
My trader friend Jeff is still hanging in at the current World Series of Poker no-limit hold'em event in Las Vegas. Matter of fact, he is almost in the money -- only a few more people need to to get knocked out before everyone remaining is guaranteed at least $21,0000.
He comments here on the behavior a nearly broken bubble induces:
If I were playing optimally, I'd go crazy here trying to rob people. Unfortunately, I suffer from a common amateur drawback--making the money has too much non-monetary utility to really risk it.
A great observation: Making it into the money has far more utility than does the money itself.
According to the NY Times late tonight, discussions among senior U.S. government officials have heated up with respect to the U.S. taking over mortgage giants Freddie Mac and Fannie Mae. The structure being contemplated is a conservatorship, which is permitted under a 1992 law, and is one that would essentially wipe out the two firms' respective equity, while allowing their loans to be managed.
Strikes me this is officially crunch time. To put it in Seuss-ian terms, if Little Cat Z is anywhere in the neighborhood he needs to know Things 1,2, and 3 haven't finished the job, and so he should take the Voom out from under his hat. 'Cause we may have gotten the pink cat ring out of the bath, but the resulting pink snow is now everywhere and getting deeper by the minute.
Somewhat more seriously, four things:
As the Times points out tonight, most people have no idea the capital at risk here. A 10% decline, say, in Freddie/Fannie assets would be roughly the same -- $150-billion -- as another Iraq war.
By taking on the companies' liabilities the U.S. government's total obligations would soar from $9-trillion to $14-trillion, almost certainly forcing U.S. rates much higher.
It has always been a canard to say that the companies have the regulator-required capital. Because they do, but the levels are so low as to be meaningless when looked at from a leverage perspective.
Most of the loans on Fannie/Freddie's books were done before 2006 and are solid. And even the super-squirrely ones in 2006 and later are worth something, especially with insurance, so try hard not to be terrified by the total numbers involved here. This is going to be a wild ride, assuming a conservatorship happens, but total losses could end up being far less than the doomsters think.
You Need Uplifting? I Got Uplifting [Paul Kedrosky's Infectious Greed]
I have of late,—but wherefore I know not,—lost all my mirth, forgone all custom of exercises; and indeed, it goes so heavily with my disposition that this goodly frame, the earth, seems to me a sterile promontory -- Hamlet, Act II, scene ii (287-290)
A few people I talk to, myself included (and I talk to myself on a regular basis), have been feeling off lately. Blame markets. Blame a persistent feeling that the planet is running down, like an old watch. Blame too much iPhone news. Go with whatever explanation works for you. I'm fine with it.
Anyway, I felt much better tonight after watching a stranger dance badly with other strangers all around the world. See if it cures what ails you. And be sure to watch it in high quality.
I don't know if it's the $5/gallon gas prices, but freeway life here in southern California has become more surreal of late. Granted, traffic volumes are down, at least a little, so freeways are no longer in that perpetual state of criticality where a butterfly crossing through the 3 lane causes a 4-mile backup.
But that said, stranger things are going on. Yesterday I saw no less than three warnings about people walking on the I-5 freeway -- which is a 10-lane high-speed monstrosity -- and just now I saw this in a live CHP incident report near me here in La Jolla:
Incident: 0912 Type: Traffic Hazard Location: SB I5 AT LA JOLLA VILLAGE info as of: 7/10/2008 8:21:01 PMADDITIONAL DETAILS 7:57PM MAN A RIDING BIKE IN THE FAST LANE
Someone is bicycling in the dark in the fast lane of a freeway? Dear God, people. I know gas prices are high, but this is getting deranged.
YellowBot - Local Search that Works [Venture Chronicles]
Over the years I have been thoroughly unimpressed with Yellowpages.com for local search, yet in a display of cognitive dissonance I keep using them when I need to find a local business. Almost every time I give up and Google, which itself is okay but not great for local search. The yellowpages.com categories are confusing, their notion of local doesn’t map to mine (they returned South El Monte for something… that’s LA), the reviews are practically non-existent, and the interface is confusing.
So yesterday I need to find an appliance parts store and after yet another frustrating experience with yellowpages.com, I ended up googling and by chance found local search engine YellowBot.com. What a pleasant surprise.
The interface is smart, using tags and skipping categorization altogether while instead relying on good search. I searched on a couple of different business types and in each case the list of returned items was pretty damn good. The review data is spotty but that’s not surprising, it looks early stage, but in some categories it’s not bad. I have two standard searches that I use to test local search, “pizza” and “car wash” and in each case I was impressed with the results.
I haven’t tried the mobile version yet but suspect it will be similarly useful.
Over the years I have been thoroughly unimpressed with Yellowpages.com for local search, yet in a display of cognitive dissonance I keep using them when I need to find a local business. Almost every time I give up and Google, which itself is okay but not great for local search. The yellowpages.com categories are confusing, [...]
What a crock of shit. Apparently the 12 CEOs of U.S. airlines who are signatories of this open letter to the public really believe that every time a futures contract is traded it goes up in value… unlike their stocks. After billions of taxpayer dollars bailed these airlines out following 9/11, they have done nothing to restructure and reinvent U.S. aviation, instead relying on the same old excuses about why they can’t compete. Now it’s oil and sensing an opening in favorable public sentiment, the airlines are now playing victim and blaming crude oil speculators for their latest round of problems.
A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.
[From Recession Watch: Oil! Airlines Issue Open Letter Asking You To Help Them Lobby Congress]
It’s dishonest and duplicitous to the highest degree when airlines ask the public to regulate commodity prices and then immediately suggest they they themselves should have minimal regulation. If I lobby Congress for anything it is going to be limits on $15 surcharges, late and cancelled flights, redemption fees for frequent flier award tickets, and generally pissed off employees.
What a crock of shit. Apparently the 12 CEOs of U.S. airlines who are signatories of this open letter to the public really believe that every time a futures contract is traded it goes up in value… unlike their stocks. After billions of taxpayer dollars bailed these airlines out following 9/11, they have done [...]
I've heard from several people that NetNewsWire on the iPhone is awesome. While I'm not a Mac user, I'm anxiously awaiting my new iPhone (Ross promises that I'll have it - along with Exchange sync - on Monday). In the mean time, I'm psyched that my friends at NewsGator have once again harnessed the software wizardry of Brent Simmons to create a fully-features RSS Reader - based on NetNewsWire - that runs on the iPhone. If you have an iPhone you can get it for free at the AppStore now. I know I will on Monday.
I'm Adequately Capitalized, and So's My Wife [Paul Kedrosky's Infectious Greed]
As I have said before, [Fannie and Freddie] are adequately capitalized, holding capital well in excess of the OFHEO-directed requirement, which exceeds the statutory minimums.
I love the expression "adequately capitalized". It's one of those magnificent sweet nothings that regulators and investors say in defense of a credit-troubled company. It is popping up all the time in discussion of the current troubles with mortgage finance cesspools Freddie Mac and Fannie Mae. But what does it really mean?
It is also an expression you can trace through history, right back through the S&L crisis through the wonders of Google News. You'd be amazed at how many companies were adequately capitalized, right before they were not.
Here is a timeline of "adequately capitalized" in the news over the last 28 years. It's goes in and out of vogue at some entertaining times, as you'll see if you click on the figure.
Adventures in SoCal HELOCs [Paul Kedrosky's Infectious Greed]
My brother Rich's song Turn Off My Heart premired on MTV's Real World show last week. Since then, he is up to the #4 unsigned artist on MySpace for the Folk Rock segment.
