Economic innovation for a bright new world
The State of Debt
Friday - August 05, 2011.
This from a New York Times article: For years, the American financial sector borrowed and borrowed. Its obligations rose even more rapidly than consumers’. Both sectors were far more aggressive borrowers than the federal government. Now that has reversed. The Federal Reserve reported this month that the outstanding debts of both the financial sector and households fell in 2010, as they had in 2009.
Now if our government would get its act together of what its role is in a free-market (not free-for-all) economy, the trending would work out just fine.
Check out the article here
.We fail because we lie
Tuesday - August 02, 2011.
The silly political rambling about our national debt and the raising of our debt ceiling compounds the realization that our government too has failed, along with our economy and our financial systems. Our systems fail, not our tactics.
We need to treat our country more like a company, and our country lacks a viable business plan, a binding compass. We need to stop lying to ourselves to prevent us from reaching our full economic potential.
Read the complete article...
Crazy Capitalism
Friday - July 22, 2011.
- An article by the Mises Institute from 2009 about Crazy Capitalism reminds me how the economic geniuses we elect are often not. No Greenspan, free-markets are not a free-for-all. Capitalism without a merit based arbitrage is a bold lie. [Links: Mises Institute
]
My book
Wednesday - June 22, 2011.
The introduction to my book could not have been better written than by an article of July 16, 2009 in The Economist titled “What went wrong with economics”. The crux of which reads:
Welcome to the mission of my upcoming book. [Links: The Economist
]
A broader change in mindset is still needed. Economists need to reach out from their specialized silos: macroeconomists must understand finance, and finance professors need to think harder about the context within which markets work.
Welcome to the mission of my upcoming book. [Links: The Economist
]Bullish on the U.S.
Tuesday - June 07, 2011.
BlackRock, a $3 Trillion investment firm and a LP in Venture we have met with is bullish on the U.S.
We agree with Chief Equity Strategist Bob Doll that U.S. entrepreneurial capacity will continue to lead the world, despite the way we see a subprime financial system, or socialistic capitalism, suppressing innovation. Apple and Facebook are great examples of custodians of innovation that have escaped the wrath of Venture Capital and grown dramatically despite (not because of) the traditional playbook of Venture Capital.
I agree with Bob on some of the economics he mentioned, but remain a staunch critic of the deplorable and suppressive role of a defunct financial arbitrage. With a new financial system guiding innovation we could be doing a lot better. Yet our cultural capacity to innovate, despite the flawed economic principles of our financial system, escapes and keeps rising above its arbitrage. But looking inwards, as we have found out, is clearly not part of the interest or risk analysis of many financiers.
Interesting points:
Read the full article here: [Links: The Wall Street Journal
]
We agree with Chief Equity Strategist Bob Doll that U.S. entrepreneurial capacity will continue to lead the world, despite the way we see a subprime financial system, or socialistic capitalism, suppressing innovation. Apple and Facebook are great examples of custodians of innovation that have escaped the wrath of Venture Capital and grown dramatically despite (not because of) the traditional playbook of Venture Capital.
I agree with Bob on some of the economics he mentioned, but remain a staunch critic of the deplorable and suppressive role of a defunct financial arbitrage. With a new financial system guiding innovation we could be doing a lot better. Yet our cultural capacity to innovate, despite the flawed economic principles of our financial system, escapes and keeps rising above its arbitrage. But looking inwards, as we have found out, is clearly not part of the interest or risk analysis of many financiers.
Interesting points:
- U.S. productivity is "OK and better than lots of other places. Over the next 20 years, the U.S. work force is going to grow by 11%, Europe's going to fall by five, and Japan's going to fall by 17.”
- Half of the 2009 stimulus program was "true stimulus" for the economy. What about the rest? “Call your congressman and find out”
- “We face formidable long-term structural problems that make the U.S. less attractive than it otherwise might be.”
- In 1995 the U.S. produced roughly 25% of the world's goods and services and in 2010, after 15 years that included a tech bust, a terrorist attack and a housing bust that triggered a financial crisis, the U.S. was still producing that same 25% of global GDP
Read the full article here: [Links: The Wall Street Journal
]Financial crisis inevitable
Tuesday - May 31, 2011.
- Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, said another financial crisis is inevitable because the causes of the previous one haven’t been resolved. Amen Mark, as long as our financial systems are not free-markets and therefor by definition unflattened, the risk of implosion of a financial system eleven times the size of production remains severe. [Link: Bloomberg]
The stock market is not a free-market
Wednesday - April 06, 2011.
Afraid of Apple's impact on the stock market will be too large the Nasdaq re-balanced its 100 index. So much for a free-market system that is supposed to be self-regulating. Shares themselves are a short-seller derivative of a company's value, and an index is nothing more than a derivative of a derivative. I pity the fool who invests in them.
Do you really need more proof that stock markets are artificial markets, of which you or "the market" have no control?
Consumer debt down to $11.4 Trillion
Tuesday - February 15, 2011.
U.S. household debt — at well over $11 trillion — is still way higher than it was before things got crazy a few years back, according to numbers from the New York Fed
. The decline in household debt has been driven largely by a fall in mortgage debt — which in turn has come largely from write-downs banks are taking on bad mortgages.US World Debt
Thursday - February 03, 2011.
This map
shows leading foreign holders of United States Treasury Securities (at end of period - Nov 2010). Grand total: US $4,346.8 Billion.A clear signal as to why the government should stick to doing what it does best, govern the creation of new free-market systems, rather than infuse inefficient economic market constructs with more money and regulations. Because only efficient public markets can drive the recovery of the United States and wipeout this massive debt.
World Economies
Sunday - January 30, 2011.
Sweeping shifts in world economies, according to a study by Euromonitor:
: • By 2017, China will become the world's largest economy, surpassing the United States • By 2012, India will overtake Japan to be the world's third largest economy • By 2012, Russia will surpass Germany to be the fifth largest economy in the world • Mexico also enters the top 10 by 2020, overtaking Italy.What recovery
Thursday - January 27, 2011.
- U.S. economic recovery is a joke in my opinion, capitalism applied incorrectly - wait for my book. In the meantime head over to read
Michael Psaros’ comments.
Infectious Stupidity
Monday - January 24, 2011.
I am told some Limited Partners in Venture listen to a fellow called Paul Kedrosky, an economist (and fellow at the Kauffman Foundation
) who has also captured the hearts and minds of hungry Venture Capitalists chasing them. I like Paul’s Infectious Greed blog
and sincerely enjoy his observations on a broad range of subjects. But economists are like forensic pathologists; great for finding the effect of death but inexperienced in the cause and conviction of the perpetrator. Cause establishes effect, not the other way around. Or put differently, deep hindsight rarely yields productive foresight - especially in the innovations business.
And so, a good economist is respected in the way we have to respect world renowned forensic pathologist Henry Lee
, understanding and clearly communicating of his role as a scientist and leaving the conviction of the crime up to those who can trace the events, establish motive and analyze reason. With that in mind you may be just as surprised as I was to have an intelligent guy like Paul on his Twitter account from my analysis of why funds smaller than $250M make no sense, allegedly refer to me as “asshole”, “tourist” and “idiotic” (see screenshot) to a VC that had sent it to him. Clearly I have hit a nerve, with Paul’s counter arguments to the article lacking. The deeper I dig into Venture Capital the stronger the odd protectionist behavior proves we have not seen the bottom of that dysfunctional barrel yet.
One would expect a more appropriate and susceptible attitude of VCs and those who advise them towards self improvement, considering the negative absolute IRRs and deplorable creation of Social Economic Value that has turned Venture Capital into the public disgrace of innovation and entrepreneurialism.
For the sake of a healthier financial system that can truly drive innovation and produce healthy returns for Limited Partners I will continue to hold those who benefit from its dysfunction responsible. With arguments.
Can we really blame the economy?
Friday - October 08, 2010.
Read the complete article...
The crucial difference between derivative and value
Wednesday - September 15, 2010.
Read the complete article...
Saving Silicon Valley
Wednesday - July 28, 2010.
Read the complete article...
Don't bite the public hand that feeds you
Tuesday - May 25, 2010.
Read the complete article...
Predicting the future is why macro matters
Tuesday - January 05, 2010.
Read the complete article...
Capitalism Without Merit Is a Bold Lie
Tuesday - December 15, 2009.
Read the complete article...
How to remove the systemic risk of our economy
Thursday - September 10, 2009.
Read the complete article...
The economy is not the problem
Friday - March 06, 2009.
Read the complete article...
Markets don't exist
Tuesday - October 28, 2008.
Read the complete article...
Cheating platforms, bad for our country
Monday - July 28, 2008.
Read the complete article...
Marketplace rules: look, don't touch
Sunday - March 16, 2008.
Read the complete article...
The Long Tail Continues
Thursday - July 21, 2005.
At The Long Tail Churchill Club event this morning Chris Anderson (Wired Editor in Chief and writer for the Economist), who claims ownership of the term, discussed his research and his upcoming book about The Long Tail. His speech reiterated some well understood findings at Amazon, Netflix, Rhapsody (all of which have been mentioned here before) as well as some esoteric analytical findings in which academia make an attempt to approximate the outcome of Long Tail markets with formulas. The Q&A session lead us into some of the business impacts of Long Tail markets. First he agreed with us, no business should create a Long Tail without a Torso. Second, new search technology customized to every individual usage (vertical search) is essential. Third, new "Taste-makers" of the world or micro-celebrities, vocalized by blogging about niche expertise, will fuel and direct the trust in The Long Tail. Meritocracy with democratic production. Interesting example mentioned was Lego, the toy company that changed its conservative marketing strategy (Pareto based) into a community marketing strategy, realizing better segmentation and margins can be derived from its very loyal community that continues to grow.
Our stance: Long Tail markets can succeed if:
1) The Torso exists and is successful in drawing the crowd
2) Long Tail demand is fed through Long Tail supply, creating a free-market
3) Arbitration is "owned" by the marketplace (not the company)
4) The marketplace offers sufficient transparency, to allow for discovery, not just search
5) The business behind the marketplace makes money on distribution (not aggregation)
6) The marketplace offers integrity, in pricing, use and abuse prevention
Read on for more information on The Long Tail in this blog series...
Our stance: Long Tail markets can succeed if:
1) The Torso exists and is successful in drawing the crowd
2) Long Tail demand is fed through Long Tail supply, creating a free-market
3) Arbitration is "owned" by the marketplace (not the company)
4) The marketplace offers sufficient transparency, to allow for discovery, not just search
5) The business behind the marketplace makes money on distribution (not aggregation)
6) The marketplace offers integrity, in pricing, use and abuse prevention
Read on for more information on The Long Tail in this blog series...
No Long Tail without a Torso
Friday - June 24, 2005.
Investors are getting flooded with Long Tail startups. The Long Tail is the well documented phenomenon in which Amazon.com makes more money in selling books that are not(!) in the top 10,000 and creates controversy about traditional sales principles. Hundreds of examples exist before the introduction of the internet. But the Long Tail really only exists when there is a body attached to it. You go to Amazon because you find the most well known books, then you'll explore its creative variety. The body represents the highly targeted top quality that draws in the audience in the first place. So stop pitching Long Tails, where you rely on some undefined creative variety. Focus on making your numbers in the identifiable market, then benefit from the Long Tail to expand your selection beyond the traditional and constricted marketplace.