Paul Kedrosky's Infectious Greed
Musing about technology, finance, venture capital, & the money culture with Paul Kedrosky
by pk
9 Mar 2010 at 4:17pm
Exxon forced to buy oil assets previously deemed unattractive in its quest to replace reserves (Source) Caveat venditor, caveat emptor and muni rate waps (Source) The carried interest debate for VC/PE is over. Change the law. (Source) Service sector accounted for all net job growth in high-income countries between 1995-2005 (Source) Rick Bookstaber accuses top hedge funds of a gold pump-and-dump (Source)
by pk
9 Mar 2010 at 2:46pm
Most of you will have seen the instant-classic graph of synchronized Edmonton washroom breaks during the gold medal men's hockey match at the Vancouver 2010 Olympics. But those damn Canadian's weren't just adjusting their urination habits for hockey -- it was affecting tax preparation too.
by pk
9 Mar 2010 at 2:38pm
Dogs and mountains and skiing: This brief video made me happy today:
Danger On The Mountain from Walker Parks on Vimeo.
by pk
9 Mar 2010 at 11:18am
Canada Posed To Scrap Impediment to U.S. Venture Investment (Source) Public Pensions Are Adding Risk to Raise Returns (Source) East Europe Leads Stock Gains Since Post-Lehman Low (Source) Fannie Mae Mortgage-Bond Spreads Fall to Record (Source) S&P Rally Slowed by Fastest Cash Depletion Since 1991 (Source) Chilean quake moved entire city 10-feet west (Source)
by pk
9 Mar 2010 at 10:53am
Two-part interview with the estimable James Montier, ex- of SocGen and now of GMO. Smart guy. Good musings. Worth reading.
Part 1 Part 2
by pk
9 Mar 2010 at 10:47am
A year ago, most public ?death care? companies were reporting mysterious drops in the number of funerals they were performing, but now things have improved and some are seeing growth close to long-term trends.
... Houston-based SCI was so puzzled by the downturn that it hired outside consultants to find out why. The research is not complete, so the company won't release it yet, but chief executive officer Tom Ryan told a recent conference call with analysts that there appear to be two major factors: medical advances, and a dip in the number of births between 1929 and 1936, the deepest years of the Depression.
More here.
by pk
8 Mar 2010 at 9:15pm
From Michael Cembalest at JPMorgan, the case for commercial real estate:
THE STOCK ARGUMENT FOR COMMERCIAL REAL ESTATE
One CEO panelist whose company runs 20 mm sq ft of retail also owns 30 mm sq ft of office space. He?s optimistic: he notes the smaller oversupply problem compared to prior recessions, and faster speed of price adjustments. For the most part, I agree. The first two charts below show that compared to two prior cycles, less commercial property was added, and that the pipeline as a % of the existing stock is low (exception: Madrid). The third chart shows the rapid speed of price declines this time around, compared to the 1991 real estate recession. So both arguments are supported empirically.
Some context, however: in the U.S., over-supply conditions of the early 1990s were a by-product of changing tax rules. The 1981 Economic and Tax Recovery Act allowed the use of accelerated depreciation on commercial property, and the offset of active income with passive losses. This created a building glut, then rendered useless when the 1986 Tax Reform Act scaled back these tax advantages. As a result, we wouldn?t expect the same degree of over-supply today. But still, the combination of price declines already in place, a slow but gradual economic recovery and a smaller supply overhang argue for some property exposure in portfolios. Another positive: for better or worse, the vast majority of maturing commercial real estate loans were rolled in 2009, whether owed to banks, insurance companies, or CMBS trusts, and often without new equity contributed.
Intriguing stuff.
by pk
7 Mar 2010 at 1:06pm
A few links from my weekly Weekend Reading column at TheStreet:
The Swap Contracts That Swallowed Your Town (NYT) The re-rise of Steve Cohen and his SAC (Bloomberg) Dot-com bust ripples still felt 10 years later (S.F. Chronicle) Social spending around the world (OECD) On the ease of overstating the fiscal stimulus in the US, 2008-9 (NBER) Is It Real, or Is It Randomized?: A Financial Turing Test (arXiv) Germans to debt-ridden Greeks: Sell the Acropolis. And a few islands. (CSMonitor) Flinty truths for California (FT)
by pk
6 Mar 2010 at 7:54pm
John Mauldin's latest (and also available here) about his experience at Singularity U:
I, Robot
I think the positive [Singularity U] surprise takeaway (for me at least) was how far we have advanced in artificial intelligence and especially robotics. Artificial intelligence has been promised to us for decades, and has been a disappointment for so long that I have consigned it to the dustbin of my research. Ditto for robots. I mean, seriously, if the Roomba (a glorified vacuum cleaner) is the best we can do after decades of work, how are AI and robots going to change the world? This is hardly the world that I grew up reading about in Isaac Asimov's brilliant I, Robot sci-fi series some 40 years ago.
It is all well and good for a single-purpose robot to be designed to make a spot weld on a car, but a general-purpose robot seemed a long way off. As far as AI goes, I am reminded of the old joke about a young geek who specializes in AI sitting at a bar, and this gorgeous blond comes up to him and they begin to talk. One thing leads to another and they end up in her room, where he proceeds to spend the entire night telling her how good things are going to be. AI has been a lot of talk for decades, and as with our geek, not much more.
The robotic sessions were led by Dan Barry, a three-time astronaut and veteran of many space station adventures (as well as appearing on Survivor!). What I saw onscreen and heard about has made me rethink my doubts about robotics. There are significant strides being made in mobility and utility in robotics. I saw robots walking on four feet through very difficult terrain, on ice, and up stairs. Robot "hands" are a lot further along than I had thought. Mobile robots on wheels, and walking balanced on two feet, are working today.
The ability of robots to recognize their surroundings, to differentiate between a table and a glass on the table (which is a very difficult thing to program), to pick up the glass, etc. is advancing at a fairly good pace. Dan is an enthusiastic advocate, and it was easy to get infected with his vision, but I can see a robotics industry in the 2020s actually having some significance in the US and world economy. We explored all manner of potential uses for robots, some with more economic potential than others. I am often asked where the jobs of the future will come from. It may be in robotics.
by pk
5 Mar 2010 at 8:15pm
Lines of software code in various manufactured products:
Air Force F-22 Raptor: 1.7 million
F-35 Joint Strike Fighter: 5.7 million
Boeing?s 787 Dreamliner: 6.5 million
Typical Mercedes/BMW/etc: ~100 million
More here.
by pk
5 Mar 2010 at 2:55pm
Saudi Arabia's natgas shortgage (FT)Bill Gates and our innovation addiction (Grist)Spot versus forward prices in oil (Reuters)The rise of religious ETFs (FT)Baltic ice traps ships and thousands of passengers (LL)Where's the current bubble? (Bogle)New York and Las Vegas from the air (BP)
by pk
5 Mar 2010 at 2:42pm
Andy Xie taking the U.S. to task for the wrong guiding metaphor in thinking about its sputtering economy:
The Americans liken an economy in a slide to a car with a dead battery: it can be jump-started with a forceful enough push. But there's no sound logic behind such thinking. After a big bubble bursts, an economy suffers a terrible misalignment between supply and demand. Through high prices, a bubble diverts investment and labor to needed activities. It takes time for an economy to normalize. The bigger the bubble, the longer it takes to heal.
The argument to "stimulate until prosperity returns" is popular because it doesn't hurt anyone in the short term. When a central bank prints money, its nasty consequence -- inflation -- takes time to show up. When a government spends borrowed money, repayment is in the future. Nobody feels the pain now. Indeed, when debt is sufficiently long-dated, nobody alive need feel the pain. So analysts who advocate stimulus are popular with politicians because it sounds like a free lunch. Japan's tale is just a nice story that seems to support the argument.
...The crisis happened because financial professionals had incentives to bet other people's money in a game they could not lose. With so many getting in on the act, the liquidity they threw into the trades made them effective, turning bankers into heroes, but only for a while.
The crisis showed that their behavior was indeed rational: while the losses to shareholders and taxpayers surpassed all the accounting profits that Wall Street reported during the bubble, those who made the trades are still rich, because they paid themselves bonuses in cash, not derivatives.
...Reform, not stimulus, is the solution. Only by limiting financial speculation can the foundations be laid for a healthy recovery, and to prevent another crisis.
More here.
by pk
5 Mar 2010 at 12:22pm
Jon Stewart on ChatRoulette is wildly funny -- and entirely Not Safe For Work. Or minors. Or the easily offended. You've been warned.The Daily Show With Jon StewartMon - Thurs 11p / 10cTech-Talch - Chatroulettewww.thedailyshow.comDaily Show
Full EpisodesPolitical HumorHealth Care Reform
by pk
4 Mar 2010 at 4:31pm
I always enjoy Marc Faber's musings, but sometimes he says things that I can't imagine that even he believes:
...in 10 years time, between 30 to 50 percent of tax revenues will be spent on interest payments on the government debt
Really? Because I don't buy it. Debt markets will be in full uproar long before then. How does he think that the U.S. could ever get to 50% interest service burden without a full-on crisis?
More here.
by pk
4 Mar 2010 at 4:24pm
Boone Pickens talking up natural gas, and talking down our governmental indifference to natural gas for transportation fuel: "We're the dumbest people in the world".
Newsfeed display by CaRP
