Monday, November 26, 2007

On my other blogs

General Partners v Limited Partners

But they are exporting it all
It’s like yesterday once more
Who wants to change

Tech trends and business ideas

Now how do you counter that?
Looks like UN meeting
A phone is a phone is a phone
Shedding P in API

Angel 4 Angels

Get a load of “The New Normal”
Are you sure?
Early Stage Boards


Detroit would love this

You know what’s the problem if you grow big? You can’t talk straight.

Under threat from Google’s ever growing storage infrastructure, Microsoft looks as far as Siberia to set up its data centers. The pretext according to Birger Steen, head of Microsoft's Russian and CIS business unit, is that the site was attractive because of it stable power supply, but the promise of keeping 10,000 servers cool by opening a few windows also factored into the choice. Recently Microsoft placed a great accent on climate profile while choosing Chicago for its mega center.

“If local communities are hoping these giant centers will create a lot of new jobs, they'll probably be disappointed” says Nick Carr. He puts the hires between 35 to 50.

Now that’s something Detroit would love to ape…. Who knows? GM, Ford and Chrysler might even consider change in business models :)

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Saturday, November 24, 2007

That sinking feeling

If there is one math that nobody seems to get right, it’s the quantum of losses from sub-prime mortgage fiasco. Not just that nobody knows how much, they don’t really know who should bear it. The estimates vary between $100 -$400 billion.

“What were they smoking?” asks the cover of the current issue of Fortune magazine. Underneath the headline are photos of recently deposed Wall Street titans, captioned with the staggering sums they managed to lose.

The answer, of course, is that they were high on the usual drug — greed. And they were encouraged to make socially destructive decisions by a system of executive compensation that should have been reformed after the Enron and WorldCom scandals, but wasn’t. Should the ongoing election campaign make corporate governance a central issue? It had better.

In fact, according to Fortune, Merrill Lynch made its biggest purchases of bad debt in the first half of this year — after the subprime crisis had already become public knowledge.

Now the bill is coming due, and almost everyone — that is, almost everyone except the people responsible — is having to pay.

The losses suffered by shareholders in Merrill, Citigroup, Bear Stearns and so on are the least of it. Far more important in human terms are the hundreds of thousands if not millions of American families lured into mortgage deals they didn’t understand, who now face sharp increases in their payments — and, in many cases, the loss of their houses — as their interest rates reset.

“And then there’s the collateral damage to the economy”, says Paul Krugman in NYT.


Friday, November 23, 2007

Look who's shorting the dollar...

Gisele Bundchen, the world's richest model has reportedly reacted in her own way to the sliding value of the US dollar - by refusing to be paid in the currency. Ms.Bundchen is said to be keen to avoid the US currency because of uncertainty over its strength. The Brazilian, thought to have earned about $30m in the year to June, prefers to be paid in euros instead.

And we thought, it’s only the currency traders that had an "outlook" on the dollar…!


Tuesday, November 20, 2007

Looking the other way - it's ok, dude...

Often we are forced to face bitter sides of life that we can’t wish away. We hate it, yet we’ll have to live with it. Having to put up with a foul mouthed coach, taking a long distance flight with a co-passenger having body odor or even worse, say, closer home to be around 24x7 for an aged someone that needs help even to lift a finger.
Everyone is in denial about something; just try denying it and watch friends make a list. For Freud, denial was a defense against external realities that threaten the ego, and many psychologists today would argue that it can be a protective defense in the face of unbearable news, like a cancer diagnosis.

You can look the other way for some time, alright. But you can’t live in denial forever. Eventually you’ll fess up and crash. In the modern vernacular, to say someone is “in denial” is to deliver a savage combination punch: one shot to the belly for the cheating or drinking or bad behavior, and another slap to the head for the cowardly self-deception of pretending it’s not a problem.

Yet according to Ben Carey in this NYT article, recent studies from fields as diverse as psychology and anthropology suggest that the ability to look the other way, while potentially destructive, is also critically important to forming and nourishing close relationships. The psychological tricks that people use to ignore a festering problem in their own households are the same ones that they need to live with everyday human dishonesty and betrayal, their own and others’. And it is these highly evolved abilities, research suggests, that provide the foundation for that most disarming of all human invitations, forgiveness.

In this emerging view, social scientists see denial on a broader spectrum — from benign inattention to passive acknowledgment to full-blown, willful blindness — on the part of couples, social groups and organizations, as well as individuals. Seeing denial in this way, some scientists argue, helps clarify when it is wise to manage a difficult person or personal situation, and when it threatens to become a kind of infectious silent trance that can make hypocrites of otherwise forthright people.
Do you feel a bit comfortable looking the other way now...?

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Sunday, November 18, 2007

Wiggle room

The liquidity crisis fueled by subprime debacle and the big write downs by Investment banks have this unexpected fallout – Private equity firms reneging on deals.

For the last few months, private equity firms have repeatedly broken their word when breaking a deal, trying to place blame on big, bad investment banks that they said were holding them hostage by threatening to withdraw financing.

It was an easy narrative to follow, but it obscured the truth: Private equity firms, widely hailed as the “smart money,” made some lousy deals in the second half of this year, and some are now having a bad case of buyer’s remorse. They have been more than happy to break the deals and let the banks be the fall guys.

To be fair, the banks cut some pretty lousy deals themselves and have been applying pressure to their clients. But if you have spent time with buyout bosses, you know it’s hard to pressure them into doing something they don’t want to do in the first place.
But as Dan Primack says here, if the same deal revisits, the bankers will be bending over their back to do it if the fee on offer goes up. He says “Revenge is sweet, but an extra $100 million is sweeter”.

Yeah, aren’t bankers coin operated...? You bet.


Thursday, November 15, 2007

Risk Management, er...., what...?

Every time I come across the expression “Risk Management”, I crack up.

To me “Risk is Risk” – there’s no fuckin’ managing it. Either you take risk or you don’t. You can have a string of controls, accountability and reporting protocols. You can deploy whistle-blowers. But that’s not risk management. Risk begins where all control ends. It’s in the unknown where Risk lay. All you know is that the cookie can crumble either way and you can't do a thing about it.

So I go if you think you can control the unknown, you can say you are managing risk. But that leads to another question – if you can control the unknown, where’s the risk?

What got me started…? This.

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Tuesday, November 13, 2007


Investors' appetite for U.S. assets will eventually dwindle and the United States must reduce its budget deficit to prevent major economic damage, says Alan Greenspan.

President Bush - "If people would look at the strength of our economy, they'd realize why, you know, I believe that the dollar will be stronger.

We have a strong dollar policy, and it's important for the world to know that. We also believe it's important for the market to set the value of the dollar relative to other currencies," says the President.
Will you buy the ex-fed chairman or the current president...?