Kyle S's Comments

Paul Kedrosky: Infectious Greed : Jeb Corlis -- PoV HD Wingsuit Flying

Tue, 27 Sep 2011 13:48:30 +0000

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

Paul Kedrosky: Infectious Greed : Being a Patent Troll Now Patented

Wed, 13 Jul 2011 17:43:44 +0000

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

Paul Kedrosky: Infectious Greed : 30-Year Soars! Or Something!

Wed, 15 Dec 2010 19:05:43 +0000

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.

Burnham's Beat : Why Convertible Debt Is A Sucker's Play

Tue, 31 Aug 2010 04:15:19 +0000

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.

Paul Kedrosky: Infectious Greed : QOTD: Civilization and Famine

Thu, 26 Aug 2010 12:51:19 +0000

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

Paul Kedrosky: Infectious Greed : Wall Street's "Apocalypse Insurance" is Bad Bet

Mon, 23 Aug 2010 20:01:02 +0000

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.

Feld Thoughts : What Do You Hate The Most About Your Mac?

Fri, 13 Aug 2010 13:16:53 +0000

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...

Paul Kedrosky: Infectious Greed : U.S. Hotel Closures, 1985-2010

Tue, 6 Jul 2010 13:09:08 +0000

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

Burnham's Beat : Carried Interest Deal Cut, Let the Workarounds Begin!

Fri, 21 May 2010 16:05:25 +0000

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.

Burnham's Beat : Carried Interest Deal Cut, Let the Workarounds Begin!

Thu, 20 May 2010 19:08:33 +0000

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?

Feld Thoughts : New Orleans Rock ânâ Roll Mardi Gras Marathon

Mon, 1 Mar 2010 17:56:55 +0000

Congrats on finishing! Are you still on track to hitting all 50 states before you turn 50?

Paul Kedrosky: Infectious Greed : Books: The Greatest Trade Ever

Tue, 10 Nov 2009 20:40:02 +0000

I'm not quite sure how Paulson could have made $4bn in 2007 when his firm only made $1bn. Amazon now says the firm made $15bn in 2007, which makes more sense.

Paul Kedrosky: Infectious Greed : Updated: Usain Bolt Lights Up Berlin for WR in 200m -- 19.19s(!)

Thu, 20 Aug 2009 21:43:01 +0000

That graph also puts into perspective how impressive Michael Johnson's performance was in 1996 relative to what came before. What makes Bolt's performance so amazing is not just the speed but how quickly he accelerates considering his size. He was built for this.

Paul Kedrosky: Infectious Greed : Readings

Thu, 23 Jul 2009 18:53:50 +0000

Re the first bullet, I believe the gain is even more than Bloomberg estimates. They calculated it by taking the number of warrants Buffett has and multiplying by the difference in the strike price and today's GS share price. The black-scholes value of those warrants should be higher than the intrinsic in-the-money value because of the volatility of GS, right?

Paul Kedrosky: Infectious Greed : Eurozone/G10 Bank Liabilities Relative to GDP

Fri, 30 Jan 2009 17:01:02 +0000

Time to stock up on Ireland CDS before the government makes doing so illegal!

Paul Kedrosky: Infectious Greed : When Has Economics Been Correct on Anything Important?

Mon, 5 Jan 2009 23:13:49 +0000

They've been pretty accurate regarding Zimbabwe, not that this is some kind of monumental achievement or anything.

Paul Kedrosky: Infectious Greed : Some Madoff Must-Reading

Thu, 18 Dec 2008 17:24:54 +0000

I wonder if the timing of the blowup was fortunate for the markets in general. They've already taken such a beating this year that they pretty much shrugged at Madoff, despite the size of the scheme. What if this had happened in 2005, when Markopolous authored this document? Reading through the original doc, it's stunning that the SEC did nothing. The world would be better off if it didn't exist, and I'm not even a crazy Libertarian -- it's just that useless.

Paul Kedrosky: Infectious Greed : Zelig Does Wall Street

Tue, 16 Dec 2008 11:57:23 +0000

He didn't have a time for a stint at Amaranth in 2006?

Paul Kedrosky: Infectious Greed : Tightly-Coupled Systems, Airlines and Error

Sat, 6 Dec 2008 20:24:22 +0000

Crichton seemed to be very interested with what you call our "over-aggrandized sense of the precision with which we can safely operate human-centered systems" - most of his books use this sort of behavior as the engine for their narrative. Since you mention airplanes, I should point out that 'Airframe' was (IMHO) an outstanding novel that opened my eyes about the level of precision and quality needed in a commercial airline. As he puts it - think of a car, and then imagine that car was driven 12 hours or more a day for 30 years.

Paul Kedrosky: Infectious Greed : Nassim Taleb Gets Mad

Sun, 12 Oct 2008 18:36:07 +0000

What do you expect him to say? It bears repeating that again and again: banks believe they've figured out how to make easy money by writing out of the money puts until one day the market crashes and they all go belly up. How many more times will this happen before they'll stop doing it? As to his attitude not being helpful for policy-making - I don't agree with that at all. Physicians, who are used to attempting to fix a complex system they know they don't fully understand, operate under the dictum "First, do no harm." Is the modern financial system that much easier to understand than a human body? How do we know that by intervening blindly we will make the system better? Having read The Black Swan, Fooled by Randomness, and other Taleb writings, I think that he would not agree with the statement, "Because we don't understand the financial system, we should do nothing." Rather, he would say something like "Because we can't understand the relatively likelihood of extremely low probability events, we should act in such a way as to minimize our exposure to negative consequences from low-p events. Conversely, we should also act such that we can take good advantage of favorable low-p events." How would this translate to today's problems? I think he would argue that we should assume that most large banks are or will soon become insolvent, and plan accordingly.

Kyle S's Comments

Paul Kedrosky: Infectious Greed : Jeb Corlis -- PoV HD Wingsuit Flying

Paul Kedrosky: Infectious Greed : Being a Patent Troll Now Patented

Paul Kedrosky: Infectious Greed : 30-Year Soars! Or Something!

Burnham's Beat : Why Convertible Debt Is A Sucker's Play

Paul Kedrosky: Infectious Greed : QOTD: Civilization and Famine

Paul Kedrosky: Infectious Greed : Wall Street's "Apocalypse Insurance" is Bad Bet

Feld Thoughts : What Do You Hate The Most About Your Mac?

Paul Kedrosky: Infectious Greed : U.S. Hotel Closures, 1985-2010

Burnham's Beat : Carried Interest Deal Cut, Let the Workarounds Begin!

Burnham's Beat : Carried Interest Deal Cut, Let the Workarounds Begin!

Feld Thoughts : New Orleans Rock ânâ Roll Mardi Gras Marathon

Paul Kedrosky: Infectious Greed : Books: The Greatest Trade Ever

Paul Kedrosky: Infectious Greed : Updated: Usain Bolt Lights Up Berlin for WR in 200m -- 19.19s(!)

Paul Kedrosky: Infectious Greed : Readings

Paul Kedrosky: Infectious Greed : Eurozone/G10 Bank Liabilities Relative to GDP

Paul Kedrosky: Infectious Greed : When Has Economics Been Correct on Anything Important?

Paul Kedrosky: Infectious Greed : Some Madoff Must-Reading

Paul Kedrosky: Infectious Greed : Zelig Does Wall Street

Paul Kedrosky: Infectious Greed : Tightly-Coupled Systems, Airlines and Error

Paul Kedrosky: Infectious Greed : Nassim Taleb Gets Mad

Feld Thoughts : New Orleans Rock ânâ Roll Mardi Gras Marathon