Apparently recent criticism of Alan Greenspan's March 17th column on risk in the Financial Times got under the ex-maestro's skin. He has responded today with a thin-skinned and consciously obscurantist defense, one that you would do well to read in its entirety. While I may yet come back and pick it apart in more detail, for now here is an amusing live visualization of his many lines of defense:

Nice figure in a current IMF paper on the global boom-bust cycle in residential real estate. Here we can compare what's been happening in a host of countries all finding real estate going off the rails at once: Denmark, Spain, the U.S. and Ireland are leading the way down. Most striking, at least to me, were the bubble-ish peaks put in in many non-U.S. countries.

This is just too easy, but it's hard not to be amused at the mortgage troubles faced by the Mortgage Bankers Association. It is being forced to pay much higher prices than it expected on its new Washington offices, and it is doing that with smaller coffers given the disappearance/shrinkage of a goodly chunk of its mortgage-making membership.

But are they feeling badly for themselves? Of course not -- because it's always a good time to buy property.

Anytime is the best time to buy," said Kieran P. Quinn, chairman of the association. "Over a 10-year horizon, [the purchase] looks great."

C'mon, its eye-rolling member companies must be thinking, save the "real estate is always a great investment" patter for the chumps buying property in places like Maricopa, Arizona.

By all accounts Yahoo's Jerry Yang is a nice guy. But he is beginning to bug me, especially with his latest "Dear Steve" note to Microsoft's Steve Ballmer.

Purportedly a calm and rational letter laying out why Yahoo continues to reject Microsoft's acquisition-related entreaties, it is mischievous and irritating. The note is replete with cute stuff and homespun dealmaking ditziness, all running over top of that Yang-ian "i love lower-case" faux familiarity.

Granted, there is no "sent from a Blackberry" lower case this time around, but there is that opening "Dear Steve". Why the we're-just-dealmaking-buds tone? In part because that's one of Yang's embarrassing tropes. He wants to seem warm and personal to his Yahooligans, a combination of Yahoo's founder and its curator, not some Microsoft-style power-mad CEO presiding over a company of fawning minions.

The trouble is, Yang is Yahoo's CEO, and this isn't about who's friends with whom in the techie schoolyard. Microsoft wants to buy his company, and while such discussions can get personal, Yang seeming more warm and cuddly than Steve Ballmer is a) not hard, and b) irrelevant and offensive. And to twist Ballmer's words on what does or does not constitute productive negotiations, as Yang does, puts the lie to the rest of Yang's happy-talk.

Nevertheless, the content of Yang's letter, most of which, unlike the tail-wagging salutation, was likely pushed on him by the board, makes clear a few things:

• Yahoo is ready to do a deal ["open to all alternative"]
• It wants more cash in the deal, or at least a higher floor on the price [that's the "more certainty" part of the note]
• It would like a higher price [the poorly worded "at a value that fully reflects the value"]

The sooner Yang stops trying to be a kinder, gentler CEO, and just gets on with getting this deal figured out -- which the above points make clear his company wants to do -- the better.

A few people are wringing their hands at news that Foundation Capital has raised a $750mm fund, using it as an excuse to wax despairingly about the disappearance of early-stage investors from the market. After all, you can't very well make oodles of $2-4mm investments from a fund that size: You'd have few hundred companies in your sprawling portfolio.

Fair enough, but that's not what's happening here. Foundation is moving more to cleantech, a capital-intensive area of venture investing requiring a large fund. At the same time, there is, if anything, too much Series A money floating around, especially in information technology. We have post-bubble money hanging around, new IT funds being raised, and angels moving up-market, most of them value-less, and most them taking a bead at Series A deals. Anyone who complains about an absence of Series A venture money needs to get out of their parents' basement more often.

The real problem isn't in Series A, it's what happening with so-called angel investors. In the same way that true entrepreneurs are often celebrated and seldom seen, true angels are often talked about but rarely seen writing gut checks. Many of them are echo-bubble babies, now pulling in their horns in the recent stock market carnage; others are moving up-market, especially in oxymoronic  "angel investing associations". Granted, sometimes such things have a purpose, but, as one entrepreneur-turned-investor put it to me recently, I became an entrepreneur/investor to avoid having to be a member of anything. Why would I start now?

A related data point: Today I had lunch with a smart, seasoned entrepreneur who told me about a 4-inch deal binder he had been forced to create for angel diligence. As I said to him: Run. Hide. Any angel who wants that much security in an early-stage deal is to be avoided like a banker.

I'm seeing more and more of this sort of thing in existing home sales listings around San Diego. Not sure if it constitutes bottoming in the local market, but it is interesting:

Sales History
Historical home sale price (1): $736,500
Prior sale date: Mar 19, 2008
Change since this sale (1): NA

Historical home sale price (2): $658,750
Prior sale date: Sep 20, 2007
Change since this sale (2): +12%

Historical home sale price (3): $840,000
Prior sale date: Jan 31, 2005
Change since this sale (3): -12%

As you can see, this house sold near the real estate peak in San Diego for $840k, and then the owners abandoned ship a scant two years later for $658,750, taking a whopping 21% drop. A few weeks ago, however, the home changed hands again for $736,500, up 12% from where it had sold back in September of last year.

Quote of the day comes from commodities markets -- lead, to be specific. Here is John Deave, a retired barrister and churchwarden in Stathern, England, talking about the spate of lead roof thefts at local churches. It is driven, of course, by high lead prices:

"Whenever I get an early morning phone call these days, I think, ‘Oh no, they’ve taken the roof again.'"

[via NYT]

Region: Some economists—you know them well—say that the stock market crash of 1929 and the more recent climb and decline of the market in the early 2000s suggest that “irrational exuberance” affects the stock market. How do you reconcile this alleged evidence of herding behavior and animal spirits with the notion of market efficiency?

Fama: Well, economists are arrogant people. And because they can’t explain something, it becomes irrational. The way I look at it, there were two crashes in the last century. One turned out to be too small. The ’29 crash was too small; the market went down subsequently. The ’87 crash turned out to be too big; the market went up afterwards. So you have two cases: One was an underreaction; the other was an overreaction. That’s exactly what you’d expect if the market’s efficient.

The word “bubble” drives me nuts. For example, people say “the Internet bubble.” Well, if you go back to that time, most people were saying the Internet was going to revolutionize business, so companies that had a leg up on the Internet were going to become very successful.

I did a calculation. Microsoft was an example of a corporation that came from the previous revolution, the computer revolution. It was hugely profitable and successful. How many Microsofts would it have taken to justify the whole set of Internet valuations? I think I estimated it to be something like 1.4.

Region: About one and a half Bill Gateses.

Fama: That’s right. And Microsoft was a good example because the worse their products were, the more money they made [laughter]. Who didn’t struggle with DOS and then the first versions of Windows?

[Emphasis mine]

Let me get this straight. The market is efficient because the stock market crashes you cite weren't perfectly efficient? Maybe I'm just slow today, but I feel like Fama has out-cuted himself here.