Paul Kedrosky's Infectious Greed

A venture capitalist I met recently is, I think,  the slowest VC in the world. He/she/it is decent, nice, and well-intentioned, but, by their own sort-of confession, absurdly slow at picking up shifts in the investing landscape.

For example, they only caught onto the consumer wave two years ago — This Facebook thing is going to be huge! Conversations about all sorts of technology commonplace, from flash sales, to tablets, to Twitter, mostly come as revelations, which makes for highly amusing discussion, the sorts of thing you generally only hear in La Jolla Starbucks lines.

It’s not that they’re so slow that they don’t make money. That’s naturally self-limiting. It’s just that they seem to only show up when the risk is coming off, and it’s fairly obvious that the change is already here.

Anyway, the slowest VC in the world announced to me recently that he/she/it is over the consumer thing (that they only recently discovered). They pointed to all the incubators everywhere all doing consumer stuff, all the Facebook of XYZ clones, and said, in that inimitable I-bet-I’m-first-to-think-of-this way of theirs, “I’m done with consumer investing”. They expanded, “It’s now all enterprise. We’re only interested in deals that take consumer & social technologies into business”.

There you have it then. The slowest VC in the world has figured out something that has only been obvious for years. Let the enterprise social over-fundings begin.

I know whereof she speaks:

Elif Batuman, author of “The Possessed,’’ found that her book purchasing tripled when she bought a Kindle. As she wrote in an essay for the Guardian last fall, her device encouraged a drunken rereading of the entire oeuvre of Agatha Christie, as well as more highbrow texts. “The Kindle is wonderful for drunk people,’’ she wrote, “because you can climb into bed, press one button, and ‘The Anatomy of Melancholy’ instantaneously materializes before you.’’

via With e-books on the rise, how far will transition to digital go? – The Boston Globe.

From the FT today:

“We consider less than credible a stress test that yields an outcome in which no Spanish institution will need to raise capital under an adverse situation, with unemployment at 22 per cent for almost four years now, cumulative real estate price declines ranging from 34 per cent to 60 per cent from the peak, rising interest rates, widening sovereign spreads and four years of negative GDP growth.”
- Santiago López Díaz, an analyst at Exane BNP Paribas

via Spain’s Bankia to raise €3.3bn in IPO – FT.com.

Good reading on the U.S.’s growing political monoculture in each party:

The Creation of an Endangered Species

Some quotes from a long New Yorker profile of Bridgewater and its founder, Ray Dalio. Lots of the usual unsettling stuff, but nuggets about strategy too.

To guide its investments, Bridgewater has put together hundreds of “decision rules.” These are the financial analogue of Dalio’s Principles. He used to write them down and keep them in a ring binder. Today, they are encoded in Bridgewater’s computers. Some of these indicators are very general. One of them says that if inflation-adjusted interest rates decline in a given country, its currency is likely to decline. Others are more specific. One says that, over the long run, the price of gold approximates the total amount of money in circulation divided by the size of the gold stock. If the market price of gold moves a long way from this level, it may indicate a buying or selling opportunity.

…“We are still in a deleveraging period,” he said. “We will be in a deleveraging period for ten years or more.”

Dalio believes that some heavily indebted countries, including the United States, will eventually opt for printing money as a way to deal with their debts, which will lead to a collapse in their currency and in their bond markets. “There hasn’t been a case in history where they haven’t eventually printed money and devalued their currency,” he said. Other developed countries, particularly those tied to the euro and thus to the European Central Bank, don’t have the option of printing money and are destined to undergo “classic depressions,” Dalio said. The recent deal to avoid an immediate debt default by Greece didn’t alter his pessimistic view. “People concentrate on the particular thing of the moment, and they forget the larger underlying forces,” he said. “That’s what got us into the debt crisis. It’s just today, today.”

Dalio’s assessment sounded alarmingly plausible. But when one plays the global financial markets a thorough economic analysis is only the first stage of the game. At least as important is getting the timing right. I asked Dalio when all this would start to come together. “I think late 2012 or early 2013 is going to be another very difficult period,” he said.

via Ray Dalio’s Richest and Strangest Hedge Fund : The New Yorker.

• Yoicks! RT @breakingweather: Knoxville, Iowa has a current heat index of 124 degrees. ->
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Presented without further (childish) comment: [-]

Male Organ and Economic Growth: Does Size Matter*?

Abstract

This paper explores the link between economic development and penile length between 1960 and 1985. It estimates an augmented Solow model utilizing the Mankiw-Romer-Weil 121 country dataset. The size of male organ is found to have an inverse U-shaped relationship with the level of GDP in 1985. It can alone explain over 15% of the variation in GDP. The GDP maximizing size is around 13.5 centimetres, and a collapse in economic development is identified as the size of male organ exceeds 16 centimetres. Economic growth between 1960 and 1985 is negatively associated with the size of male organ, and it alone explains 20% of the variation in GDP growth. With due reservations it is also found to be more important determinant of GDP growth than country’s political regime type. Controlling for male organ slows convergence and mitigates the negative effect of population growth on economic development slightly. Although all evidence is suggestive at this stage, the `male organ hypothesis’ put forward here is robust to exhaustive set of controls and rests on surprisingly strong correlations.

Comparing U.S. healthcare spending per capita with that of other rich countries in terms of life expectancy. It’s wildly anomalous, and not in a pretty way.

via America’s inefficient health-care system: another look « Consider the Evidence.

Some related musings here from Stuart Saniford on the increasing cost of survival.

• Tomorrow to Plateau de Beille in Tour de France should be huge fun to watch, esp finishing climb. http://bit.ly/p64xyq ->
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• [Big Picture] 2011 Tour de France, Part 1 http://dlvr.it/bL3PW ->
• Cambridge Journals has made all their academic publications available free for six weeks. PLoS effect? http://bit.ly/roAMCe ->