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The Crisis Reaches the Master Class

chicago dyke's picture

Or rather, those who supposed they were in the Master Class and are finding out that wasn't so true after all. I don't know much about economics. Maybe Forbes does, though. I read this with great interest, for all I probably didn't understand it. Here's my dramatic oversimplification/reaction:

Taxation, and regulation, of the superwealthy and large corporations, is an essential good for society. Without it, "the economy" is little more than a gambling exercise played by the very rich for the even richer, and everyone with less than $100m is left out in the cold, to suffer and die after slaving their lives away, the better to hand over 90% of what they produce to those who produce nothing. Ahem, the *unelected, un-transparent, unregulated* "those who produce nothing."

Taxation is good. Because it swells government coffers, and pays for programs and development from which everyone can benefit. The internet wasn't developed because some VC firms thought it would be a great thing to invest in. Initially, what got the Internet ball rolling was... government research money. We could be heavily taxing the rich right now, and using that money for research and development into alternative energy technology, or technology that can help us restore the environment and deal with a changing climate. Etc. Anyway, this is me laughing at a bunch of VC suits I used to hang with. HA-ha! 5%? I guess you guys aren't the superbrain masters of the universe after all. Seems I'm not the only one who "doesn't know much" about High Finance.

...sorry for the flappity posting habits of late. Life sucks. And then you have to share a computer with a really shitty connection. And then you die.

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herb the verb's picture
Submitted by herb the verb on

Many interesting quotes there!

While the current economic "situation" uncovers the "bezzle" (that part of "embezzlement"), that quantity of the economy that is illegally skimmed off the top, it also apparently shakes out the less straightforward "boozle" (that part of "bamboozlement"), the quantity of the economy tied up in bullshit and hype. It's all legal, but it's still a bullshit con game.

The b*zle abides, and when they go up, we are down right?

I love this quote from that article:

"Until recently VCs have been able to keep the cash coming despite dismal performance because of the long-shot nature of their business: Investors know that one Google or YouTube could make them millions even if most other bets bomb.

The venture industry promotes that spin. Christopher Douvos is a manager in Palo Alto, Calif. with the Investment Fund for Foundations, an $8 billion investment pool headquartered in West Conshohocken, Pa. He sees the sales pitch of venture capital as “lottery slogans with an Ivy League veneer.” Instead of saying, “Hey, you never know” or “You’ve got to be in it to win it,” the industry talks about “asymmetric outcomes” and “optionality,” he says.

Then this one:

"Research firm Private Equity Intelligence unearthed other dismal figures: Menlo Ventures’ 1999 fund had a –13% annual return as of the end of 2007. Menlo Managing Director H. DuBose Montgomery says the 1999 fund “has not completed its performance cycle and has several promising portfolio companies with large revenues, which are still private.""

H. DuBose Montogomery, a name you can trust....

Submitted by lambert on

This paragraph jumped out at me:

All that money has enriched DFJ’s partners: In the last ten years they’ve likely earned tens of millions in annual fees.

Lots of DFJ’s investors, though, are still waiting for their payoff.

Same deal with the infestment banks, and the insurance companies that Head Villager Obama wants to keep in business so badly -- it's the fees. See Nouriel Roubini on the financial food chain. I think Stirling would call these fees rents. The polemic on this needs to sharpen; I think it's the common denominator in a lot of our problems -- parasites seeking fees/rents/commissions/percentages. That's what privatization is all about, of course.

Submitted by jawbone on

When did the MCM* allow even a hint of such problems onto its pages or airwaves???

Kudos to Lambert--and all those DFH's in econ writing and blogs who were trying to warn the world long before the actual meltdown of The Big Shit Pile.

Oh, and what did the candidates say about these issues during the primary? Hillary had HOLC....

Slightly OT: Does anyone know where there's a good timeline of the break out of the The Big Shit Pile into our consciousness?

*MCM--Mainstream Corporate Media