The flyby shot with the balloons is simply incredible. You forget how fast they are going until you see something like that.

So could the owner of this patent sue Intellectual Ventures for infringement?

I thought QE2 was supposed to push down long term interest rates. I'm no bond market junkie but my understanding is that has happened. If that's the case, my question is why are 30 year mortgage spreads gapping out? And I guess that is what Paul is asking as well.

Bill, you don't propose an alternative in your post but I assume you have one in mind (more specific than "equity") - something like convertible preferred with a liquidation preference?

Separately, I have never understood why an early stage investor would demand any partial "refund" of their financing (whether interest payments or preferred dividends), as both consist of the return of, not on, invested capital until the company starts to pick up traction.

I've worked in many "hard asset" liquidations and even then no creditors are ever happy. I can't imagine what a liquidation of a startup whose assets consist primarily of ideas in programmers' heads would be like.

Which ones? My guesses: corn, wheat, soybeans, rice... barley? Sorghum? I wouldn't think poultry or livestock but I could be wrong.

Of course, by hedging this "disaster risk" one must contract with a counterparty, thereby taking on counterparty credit risk. What's to guarantee put writers will be around to pay up at the end of the day? For those of us who lack Goldman's clout, the "next AIG" might not end so fortuitously for us.

I hate the Mac version of Excel. I am a pretty hardcore Excel user due to my job in finance and despite best efforts I am not able to work nearly as effectively on my Mac as on my thinkpad. It's a shame, as I prefer the Mac in pretty much every other area, but Numbers is a sad cartoon compared with Excel and the Mac version just doesn't get as much TLC from Microsoft...

Condo conversions? I'd bet on some sort of residential real estate cause.

Bill - thanks for the response. I am stil not convinced, however. For a more articulate version of my thoughts, check out James Kwak:http://baselinescenario.com/2010/05/21/carried-in... . He cites one of your old posts in his argument.

Bill -
I am not in PE so this comes from my relatively naive perspective. That said, I disagree with your assertion above:

The fundamental problem for the government is that carried interest isn’t given to VCs by GPs for the hell of it, it is given to them because the VCs are investing all of their intangible assets (reputations, track records, networks, etc.) into each deal. LPs have traditionally valued these intangible assets enough to give VCs a 15–35% ownership stake in the partnership

I'm no LP, but if I were, I would want the GPs I invest with to have their incentives aligned with mine. Thus, 2+20 (rather than, say, 4% of AUM) makes sense as a compensation scheme because it more or less aligns GP compensation with LP returns. The "20" is just a form of compensation for performing the job of "venture capitalist."

Investment bankers, traders, and consultants "invest... all of their intangible assets (reputations, track records, networks, etc.) " into the deals they do as well, and often receive performance based compensation. That compensation varies with the success or failure of the "investment of their intangible assets" (as you phrase it) and yet it is nonetheless taxed as ordinary income and not a capital gain.

Maybe I have a naive view of LPs. My operating assumption is that they care about their GPs making less money for poor returns and more money for superior returns. I don't think they care a whit about what tax treatment their GPs receive. Am I wrong?