I wish this was around when I was 23…

…”Venture for America“.

 

 

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“The FSOC’s decision to expand the too-big-to-fail designation to nonbank firms will be seen as the most damaging action taken under Dodd-Frank”

Instead of going away, “Too Big To Fail” is expanding:

 

It was no surprise that the Financial Stability Oversight Council (FSOC) decided last week to cite a number of nonbank firms as systemically significant, placing them in line for greater regulatory scrutiny by the Federal Reserve. What was a surprise is that — in the midst of a huge outcry in Congress about banks that are too big to fail (TBTF) — neither Congress nor the administration asked the FSOC to stop the designation process until the too-big-to-fail issue had been fully thought through. After all, by designating some nonbanks firms as TBTF — GE Capital, AIG, and Prudential Insurance are in the group — the FSOC has created a whole new set of institutions that will now be considered TBTF. [via The American]

 

America move from entrepreneurial capitalism to state crony capitalism continues step-by-step.

IMO, companies that are “too-big-to-fail” need to be broken up.

 

 

Brain Dump: Triple Entry Accounting?

Has anybody else heard about Triple Entry Accounting? I have four references: here, here, here, and here.

 

Would this really be an pro-transparency and anti-fraud control? Any accountants out there? This is outside my expertise.

 

 

Instead of non-high speed taxpayer-subsidized “high-speed rail…

…how about privately owned and operated luxury bus lines?

 

 

Travel by intercity bus is growing at an extraordinary pace: reflecting a rise in travel demand, escalating fuel prices, and investments in new routes. This confluence of factors has propelled scheduled bus service between cities to its highest level in years and has made the intercity bus the country’s fastest growing mode of transportation for the third year in the row.  “Curbside operators,” including BoltBus, DC2NY Bus, and Megabus.com, which eschew traditional stations in favor of curbside pickup and provide customers access to WiFi and other amenities, have enjoyed particular success.

The comeback of the intercity bus is noteworthy for the fact that it is taking place without government subsidies or as a result of efforts by planning agencies to promote energy efficient forms of transportation.  Instead, it is a market-driven phenomenon that is gradually winning back demographic groups that would have scarcely contemplated setting foot on an intercity bus only a few years ago. Our DePaul University study estimates that curbside operators like Megabus expanded the number of daily departures by 23.9% last year.   In the Northeast and Mid-Atlantic states, service grew at an even faster rate.[Link]

Anti-Spam Lawfare

It sounds like some Computer Scientists…

A team of computer scientists at two University of California campuses has been looking deeply into the nature of spam, and they think found a ‘choke point’ [PDF] that could greatly reduce the flow of spam…If a handful of companies like these refused to authorize online credit card payments to the merchants, ‘you’d cut off the money that supports the entire spam enterprise,’ said one of the scientists. [Link]

…has caught up to my thinking…

Often much of the cost of an information security incident falls not onto the party that is responsible for providing the Security but onto third parties. While the enterprise/individual that has the incident may incur costs, much of the cost of this InfoSec externality is put onto others (organizations/individuals/taxpayers).

What is lacking is proper incentives. By incentives I do not mean government regulations or criminal statutes.

I mean money. Getting money is a good incentive. Avoiding loosing money is a good incentive. Not having your Balance Sheet, Income Statement, and Cash Flow Statement be effected by information security loss is a good incentive.

What is needed is Information Security Lawfare.

If an organization or individual deploys information technology in such a way that normal best practices are not followed (read: Duty of Care) and is subsequently used as part of an information security incident, those effected by that information Security incident should sue for a Tort Remedy.[link]

Why leave Lawfare just to the bad guys?

“Douchebag spreadsheet manipulation is not in high demand right now…”

There is an interesting discussion of the merits/value of an MBA at Business Insider.

As a MBA holder, there is much I regret about the time and effort that went into it. The cost was partially on me, partially on my employers. I had already devoured my company’s business library and was reading/practicing other stuff myself. About 1/3 of the program has been not useful. The rest of the program gave me a broader set of business/management skill and tools which has made me more valuable. I wonder if I had a business minor as an undergraduate, if that would have been better. I imagine an MBA on my resume was a better signal then a business minor. I bet a PMP certification would have been just as good though.

FYI: The snip in the subject is from commenter “getta life”.

One Way Investment Banks looted their customer: The IPO Process

I am just capturing my comment at TDAXP:

One area in which Investment Bankers did great harm to the US Economy was in the area of handling IPOs.

Investment Bankers essentially used the process as a means of looting wealth from the entrepreneurial firms going public for the benefit of the investment bank and some its choice customers to the detriment of the Entrepreneurial Company and its founder/owners.

While I don’t know if the process started out that way, by the time of the internet boom in the mid 1990’s it was.

Here is how the looting worked.

ACME Systems is a growing Network Service Provider. The founder and the VCs decide to take the company public in order to raise cash for growth for company, to reward the founders and reward/payback the early investors and VCs.

ACME Systems hires investment bank Natas, Laab & Ikol (NLI) to help with this. ACME will pay NLI to 1) Value the company and 2) Manage the Public Offering.

NLI will get a shitload of money for this.

Preparing for the IPO, NLI determines that the ACME public offering will be 10 million shares at $20/share valuing ACME at $200 million. The source of the shares will be from the founders (some of their shares), the early investors (some of their shares),  but mostly the shares will be new shares with purpose of raising money for the company to further grow (and become profitable or more profitable.

So, IPO day occurs and lo and behold the stock price jumps up to $27/share. The business journalist and shareholder are giddy at the day one bump. By the end of the week the price is $32/share. The company is now valued at $320 million and market value increase of $120million.

This IPO day scenario happened again and again.

So, everybody was happy right? It is a good thing that the stock price jumped up so high on day one,right?

The answer is no. The founders, initial investors and the company just got looted NLI.

Besides the large pile of cash paid to NLI for their “expertise” in handling IPO, they also bought shares at that opening price and let choice customers of theirs (favorite insiders) all by shares at that opening price.

Rarely did the stock price drop after IPO day. It almost always rose. This suggests that through malice, NLI purposefully recommended an IPO price/share that undervalued the company. The $120million rise in market price – that wealth should have gone to the founders, early investors, and the cash accounts of ACME. The $120 million that should be in ACME bank accounts for growth and job creation has instead mostly ended up in the bank accounts of NLI and its favored customers.

NLI did nothing to “earn” this extra wealth. Remember, they were paid big time to manage the IPO and value the company. This extra wealth is money they looted by manipulating the process. How many companies with good ideas and products would have survived if they had more of the they should have had in order to get their product or service offering up and running? How many jobs would that have been? How much has lost by these companies not surviving because NLI pilfered from them?

I am glad NLI and real-world banks like them are going or gone. Fuck them. They are not needed anymore. Maybe in the old days, there was no other way to do IPOs. That is no longer true.

The right way to do IPOs is through an Open Auction [1] after a set time period by which firms and individuals can use their individuals skills to determine an appropriate share price. Using this Wisdom-of-the-Crowds approach a good share price can be derived and the IPO can do what it is meant to do: raise cash for the company by selling a percentage of the company at a fair price.

[1] http://www.wrhambrecht.com/ind/auctions/openipo/index.html