Google Launches Venture Capital Firm

Google has launched a new Venture Capital firm called Google Ventures.  Google says that this new venture firm will fund startups in many different industries, and will do many different types of funding from seeding to full partnerships.  They also say that they will fund and partner with companies that already have other partners.  This seems like an interesting way for them to have exposure to new growth and ideas, while not necessarily acquiring new companies.  It also means that some very lucky businesses will get backing from Google's empire.  I imagine that claiming that Google is a main supporter of your company will go pretty far in helping you make business deals just about anywhere.

Check it out.  The site is pretty simple for now, but I wouldn't put it past them to add more features in the future: http://www.google.com/ventures/index.html

Tijs Limburg
Chairman and CTO of DMX - Digital Media eXceleron, Inc.
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The "Don't Tread on Me" Flag: The First Navy Jack is enjoying renewed popularity these days thanks to an order from the Secretary of the Navy that directs all U.S. Navy ships to fly the First Navy Jack for the duration of the War on Terrorism.

Once Again, Democrats are Failing as Regulators

So they go out and stir up a frenzy about AIG, which I am sure every American and Non-American alike has now heard.  But the dirty secret always follows, and unfortunately never gets heard by the general public who continue to vote in these people who are asleep at the switch or so happy-go-liberal they just can't help themselves to the spending banquet table enough to realize they continue to sign away everything - or they just don't care.

The dirty secret: The 'Spendulus Bill' was signed after being written behind closed doors with no opposition input.  A clause was inserted that protected businesses recieving government TARP funds from being held liable for paying bonuses to executives and employees that had already been contracted.  And yet now all these Dems come out, including Obama - who was so gung-ho happy to sign the bill he must have forgotten to read it, and villanize the replacement CEO for AIG for paying the bonuses (guaranteed there would have been lawsuits if they didn't pay them, they were contracted).  All while putting a cover of 'rage' and other rhetoric over the fact that they - the Dems - allowed it!  If AIG had more say - which they don't because they now have a major position owned by the government - they should sue the government and keep those bonuses in the pockets of those who recieved them.  I for one would much rather have that $150 million dollars spent by even the most pompous of executives before allowing it to be spent by Frank & Co. 

And the really bad part of it for AIG stems from this statement by  Barney "the-man-who-always-has-something-to-say" Frank: "I think the time has come to exercise our ownership rights."

May the Capitalism we knew and enjoyed Rest In Peace.  All I can hope for is an advancement to Pure Capitalism.  Come on Ben Bernanke, you're our only hope.

See the article for more details:

Democrats' Tacit Bonuses Approval May Undercut Rage (Update1)

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By Ryan J. Donmoyer

March 18 (Bloomberg) -- The outrage expressed by President Barack Obama and Democrats in Congress over $165 million in bonuses paid to American International Group Inc. may be undercut by their tacit approval of the payouts only a month ago.

The $787 billion economic stimulus bill approved by Congress Feb. 13 and signed into law by Obama three days later contains language that effectively authorizes bonus arrangements at companies receiving taxpayer bailouts as long as they were in place before Feb. 11.

The provision, on page 404 of the 407-page law, carves out those arrangements from new restrictions on pay at bailed-out companies that took effect with Obama's signature. Now Obama and many of the same lawmakers who voted for the law, such as New York Senator Charles Schumer and Banking Committee Chairman Chris Dodd, are demanding AIG employees surrender their bonuses.

Dodd told CNN today he put the provision in the final version of the stimulus measure at the insistence of the administration, which was worried about lawsuits if existing compensation contracts were revoked.

"The administration had expressed reservations," Dodd told CNN. "They asked for modifications. The alternative was losing the amendment entirely."

The provision has proven awkward for Democrats who have led expressions of outrage in Congress this week, because most of them voted for the stimulus last month. No House Republicans and only three Senate Republicans voted for the stimulus measure.

Closed Doors

"The fact is that the bill the president signed, which protected the AIG bonuses and others, was written behind closed doors by Democratic leaders of the House and Senate," Iowa Republican Senator Charles Grassley said in a statement today.

"There was no transparency, so the only way the public will ever know who added the language to protect bailout company bonuses is if someone from the small group of Democrats in the room says so," Grassley said.

Schumer yesterday sent a letter to AIG Chief Executive Edward Liddy warning him to return bonuses or face confiscatory taxes on them. The letter was signed by Senate Majority leader Harry Reid and seven other senators.

Brian Fallon, a spokesman for Schumer, said the senator "supported a provision on the Senate floor that would have prevented these types of bonuses, but he was not on the conference committee that negotiated the final language."

Final Negotiations

Dodd spokeswoman Kate Szostak said yesterday the exception to Dodd's executive-compensation restrictions was added during lawmakers' final negotiations with the Treasury Department over the stimulus.

She rejected Republicans' suggestions the date was included to exempt the AIG bonuses. "Senator Dodd was completely unaware of these AIG bonuses until he learned of them in the past few days," said Szostak. "To suggest that the bonuses affecting AIG had any effect on Senator Dodd's action is categorically false."

Other Democrats who voted for the stimulus bill have ramped up criticism this week of AIG's bonuses, including Massachusetts Representative Barney Frank, the chairman of the House Financial Services Committee, who told reporters, "I think the time has come to exercise our ownership rights."

House leaders including Speaker Nancy Pelosi and Majority Leader also criticized AIG.

To contact the reporter on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net

Last Updated: March 18, 2009 19:25 EDT

Tijs Limburg
Chairman and CTO of DMX - Digital Media eXceleron, Inc.
Get eXcited!
www.dmxed.com

Blogs:
http://phystrings.blogspot.com/
http://getoutofthedark.blogspot.com/

The "Don't Tread on Me" Flag: The First Navy Jack is enjoying renewed popularity these days thanks to an order from the Secretary of the Navy that directs all U.S. Navy ships to fly the First Navy Jack for the duration of the War on Terrorism.

Frank Seeking Redemption?

Is Barney Frank seeking redemption?  Did anyone notice how quiet it has gotten around the SEC since Christopher Cox was removed and Schapiro was instated in his place.  Looks like both congress and the Fed want to restore some order to trading and reverse one of the worst decisions of the decade.

 

To me the uptick rule is more important in today’s style of market trading than it was for the first 50 years of its existence.  That’s because before April of 2001, stocks used to trade in ‘spreads’ or fractions.  Depending on the market and period of time, those fractions were either 1/8ths or 1/16ths (12.5 or 6.25 cents respectively).  So a stock could not price at, say, $10.30, or $20.22 like they can now.  The closest you could come to those prices would be 10.25 or 10.375 and 20.25 or 20.125 on an 1/8ths market.  So you already had some spread control over prices of short sales.  Because of the price spreads, getting your short pressure in on a trade was much harder and took much more patient trading than it does now.  Add in the fact that you had to wait for an uptick to place an order, and you are talking about a large difficulty, as the only way a uptick could occur would be for the price to increase 12.5 or 6.25 cents so that a uptick trade could execute.

 

Today, our markets trade on a point basis of 100, so we can trade in cents.  Now, an uptick occurs at any cent value above the current trading price.  So shorting is much easier.  Take away the uptick rule, and now shorters can add hundreds of thousands of dollars worth of pressure at ANY price tick, up or down!  Meaning that if a short position trader thinks that the price has hit a peak, they can buy in at any price even if the prices are continuing downward.  And then once the stock does fall sharply, as long as it falls past the price of their last buy in price they have made money on all of their positions.  That is something a short trader couldn’t do over a year ago.  So it’s no wonder shorters are adding massive amounts of downward pressure to stocks as they fall.  They can make hoards of money that weren’t possible to make a year ago, and even especially 9 years ago.

 

To me it is no surprise the markets are way off their highs.  The SEC let it happen.  Take a look at a chart from the day that the SEC undid the uptick rule, and the markets have had a hard time trading above the closing value of that day, July 6^th 2007.  And volatility has been enormous.

 

I’m glad they are finally revisiting the idea of reinstating the rule.  I think the only reason we did not have a “crash” last year was because in September, shorting bank stocks was completely banned for a few weeks, allowing banks to refinance some much needed cash positions through increased stock sales.  If you consider it, many companies fund expansion through stock sales.  If the stock price continues to be compressed downward due to shorts, companies will find it hard to fund expansion, and will begin to cut back.  Which is what has happened.  Maybe Bear Stearns would have been able to refinance with the help of stock sales to shareholders.  But when the stock declined basically to $0 in a week’s time, that would be impossible, as was proven.  And no wonder it could decline so fast – uptick rules had been removed, so you could continue borrowing stock (shorting) and selling it lower the whole way down.

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=a6pBZZrZtxm4&refer=home

 

Tijs Limburg

Jim Cramer not a Conservative - But Rethinking Support for Obama

All,

 

There has been an interesting development on Wall Street lately, and it is interesting to me because I remember watching an episode of Jim Cramer’s “Mad Money” last summer where Jim told us he was supporting Obama, even though he agreed with McCain on Nuclear Energy policy.

 

It seems from his recent statements he is completely reversing that support:

 

This from Monday’s edition of RealMoney:

 

“I don't know about you, but I felt it this weekend. I felt it with friends at dinner on Friday. I felt it during my walk on Saturday and my dinner with friends at Blue Smoke on Saturday night.

I felt it when someone whispered in my ear before the Van Morrison concert that I was right and we elected a Leninist. I felt it at brunch on Sunday, and I felt it as I watched Slumdog Millionaire Sunday afternoon. I felt it when I tried to go to sleep on Sunday night.

I felt the prices, the screen, the action, the sense of a vortex down that can't be stopped, of stocks going worthless, of savings being tattered, of equities without bottom, but this time in slow motion, not like 1987…”

Wow.  A Leninist?  That is a freakish notion.

It doesn’t stop there.  Take a listen to what he said recently on Today (He sounds as sane and reasonable as I have ever heard him sound):

http://www.msnbc.msn.com/id/21134540/vp/29478113#29478113

And I like how he doesn’t let Erin Burnett get away with her ‘happy talk’.

And then this from his show a few days ago:

http://www.wowowow.com/post/jim-cramer-barack-obama-mad-money-amateur-hour-our-darkest-moment-video-226443

I love the fact that he actually has a quote from Lenin that sounds so close to what Obama said last week to back up his comparison.

I’ll let this speak for itself, from the Wikipedia article on Leninism:

 

In his pamphlet What is to be Done? (1902), Lenin argued that the proletariat can only achieve a successful revolutionary consciousness through the efforts of a vanguard party composed of full-time professional revolutionaries. Lenin further believed that such a party could only achieve its aims through a form of disciplined organization known as democratic centralism, wherein tactical and ideological decisions are made with internal democracy, but once a decision has been made, all party members must externally support and actively promote that decision.

 

This may go down as one of Jim’s better judgments.  Last September I felt that the capitalist system we had known since the 1940’s had gone, and that we would need to come together and create a new one, because luckily, capitalism has a way of destroying itself and creating itself anew.  Now I wonder if that will be possible to do in the time-span we would all like it to occur.  The question I have is: Are we in for a 1982 deep recession and relatively quick recovery, or an 1870’s depression with a recovery period after 5 years, or a 1930’s Great Depression which took well over a decade to correct.  My one hope left is that Ben Bernanke can master a recovery on his own – as the sole student of the Depression – as it looks like the new administration and new congress will not be able to help.  Will Uncle Ben be the Morgan or the Eccles of 2009?

 

Tijs Limburg