Friday, May 26, 2017

XRated Day: Shell Game

While the substantive comments in the article are all valid (“one of the stupidest businesses in history,” 99% chance of bankruptcy, etc.) I would quibble with the “Ponzi Scheme” characterization, which I’ve seen pop up a number of times recently, but isn’t really accurate. 
In a Ponzi Scheme, cash from later investors would be used to provide returns to earlier investors, and management’s main focus would be to keep the stream of new investment coming in.
Yes, there was an investment shift after 2015 from mainstream Silicon Valley VCs to dumb(-er) foreigners (Russians, Saudis). None of that later money went into the pockets of the earlier investors. And new investment pretty much stopped after the Saudi investment. Raising dumb money after you’ve created a reputation as a hot investment is a clear signal of underlying issues, but it isn’t a “Ponzi Scheme.”

The New Class War Michael Lind, American Affairs  “Managerial elites.”
The unprecedented expansion of the global middle class Brookings. From February 2017. Everything averages out, in this best of all possible worlds.
Economic dynamism falls across the US FT. Top five for “dynamism”: Nevada, Idaho, Utah, Arizona, and Florida. From the Economic Innovation Group
Arrest made in discovery of opium poppy plants in Catawba County WBTV. An acre of opium poppies is worth $500 million