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Entrepreneurial Edge - In a Recession, Angel Investors Are a Little Less So - NYTimes.com
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One company that received help from the Maverick model is Voice
Genesis, which developed an application that allows cellphone users to check
e-mail and reply by voice transmission rather than text. Voice Genesis raised
$1.65 million from venture and angel investors in 2004 and 2005, according to
its founder, Mark J. Marriott. He credits Mr. Dilts, who arranged angel
financing, with “advice that was absolutely key to my success in raising
capital.”Still, most angel capital groups do not charge entrepreneurs sizable fees.
The Angel Capital Association,
which includes more than 330 groups in the United States and Canada, stipulates
that fees for applicants be nominal and charges for presenting to investors be
$500 or less.The Pasadena Angels, for example, a
nine-year-old group of 105 members who examine 250 applicants a year and have
backed 60 companies with investments of $1 million or more, charge “no fees to
entrepreneurs for applying, presenting or mentoring,” said Joe Platnick, a
Pasadena Angels director. The group covers its expenses partly by charging
$1,000 a year in membership dues. Pasadena Angels recently helped back Jirbo.com, a Los Angeles company that
develops game applications for iPhones, with $5 million.With or without fees, with or without the recession, angel groups continue to
see a flood of entrepreneurial applicants. Maverick Angels examines 80 proposals
a month. The New Vantage Group in
Vienna, Va., which manages accounts for several angel funds, receives more than
100 applicants a month, closely screens eight to 10, and invests $250,000 or
more in some 24 companies a year.
Expert Failure - Freakonomics Blog - NYTimes.com
Soul searching continues among macroeconomists who failed to predict the economic crisis. One culprit behind the great macro-flub: the "Control Illusion," in which economists are blinkered by overconfidence in computer models just because they, as Levitt recently wrote, "solve a problem that is really, really hard mathematically." Speaking of the illusion of control: when it comes to which experts to listen to, people seem to value confidence over expertise. (HT: The Morning News)
InfoViewer: The recession tracks the Great Depression
Green shoots are bursting out. Or so we are told. But before concluding that the recession will soon be over, we must ask what history tells us. It is one of the guides we have to our present predicament. Fortunately, we do have the data. Unfortunately, the story they tell is an unhappy one.\n\nTwo economic historians, Barry Eichengreen of the University of California at Berkeley and Kevin O'Rourke of Trinity College, Dublin, have provided pictures worth more than a thousand words (see charts).* In their paper, Profs Eichengreen and O'Rourke date the beginning of the current global recession to April 2008 and that of the Great Depression to June 1929. So what are their conclusions on where we are a little over a year into the recession? The bad news is that this recession fully matches the early part of the Great Depression. The good news is that the worst can still be averted.\n\nFirst, global industrial output tracks the decline in industrial output during the Great Depression horrifyingly closely. Within Europe, the decline in the industrial output of France and Italy has been worse than at this point in the 1930s, while that of the UK and Germany is much the same. The declines in the US and Canada are also close to those in the 1930s. But Japan's industrial collapse has been far worse than in the 1930s, despite a very recent recovery.\n\nSecond, the collapse in the volume of world trade has been far worse than during the first year of the Great Depression. Indeed, the decline in world trade in the first year is equal to that in the first two years of the Great Depression. This is not because of protection, but because of collapsing demand for manufactures.\n\nThird, despite the recent bounce, the decline in world stock markets is far bigger than in the corresponding period of the Great Depression.\n\nThe two authors sum up starkly: "Globally we are tracking or doing even worse than the Great Depression . . . This is a Depression-sized event."
Too-bullish markets | Happy days are here again | The Economist
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But the financial markets were remarkably sanguine ahead of the results of the
stress tests of American banks (published after The Economist went to
press). By the close of trading on May 4th, the S&P 500 index had regained
all the losses it suffered earlier in the year. -
This economic optimism has largely been justified by the data, notably by the
purchasing managers’ surveys of both manufacturing and services. In truth, the
data suggest only that the economy is contracting at a slower pace than before.
Nevertheless, the figures seem to point to a deepish recession, rather than the
rerun of the Depression that was feared a few months ago. - 3 more annotations...
The Candy Man Can - WSJ.com
Consolidation by industrial giants such as Hershey's and Mars has long since driven most regional bars out of existence, and a much smaller number of national brands has emerged. But brands like Snicker's continue to be marketed as "satisfying" (read: filling and nutritious) snacks. Nor is it any surprise that retail candy sales have been strong during the current recession. Candy bars remain an incredibly affordable luxury, products that simultaneously deliver a sugar high and a nostalgic buzz, by reminding consumers of the innocent pleasures of childhood.\n\nBut the broader lesson of the candy-bar boom is that American eaters, faced with a broken economy, still turn to quick caloric fixes. One need look no further than the modern fast-food industry, which is thriving in much the same way as Depression-era confectioners. While most companies are reporting staggering losses, McDonald's saw a 5.4% sales spike in January, largely due to its Dollar Menu: It now features a host of items, ranging from the McDouble cheeseburger to the McChicken sandwich.
InfoViewer: Why the 'green shoots' of recovery could yet wither
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The world economy cannot go back to where it was before the crisis, because that
was demonstrably unsustainable. It is at the early stages of a long and painful
deleveraging and restructuring. Fortunately, policymakers have eliminated the
worst possible outcomes. But there is much more yet to be done before fragile
shoots become healthy plants.
Karabell: We Are Not In A Great Depression | Newsweek International Edition | Newsweek.com
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The only thing vaguely like the Great Depression right now is the rhetoric. Yes,
the financial implosion has led to job losses in the tens of millions globally,
and even those with secure incomes face fear and uncertainty. Credit has
contracted even as government spending has expanded, so there really is less
money to spend. Countries such as Russia and Iran, which tethered their fate to
oil prices, now falling, are facing restive populations and potential political
crises. And some parts of the world, such as Iceland, Eastern Europe, Thailand,
the coasts of Africa, and Pakistan, are already reeling from instability
aggravated by the economic squeeze.
Economist.com
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STABLE economies sow the
seeds of their own destruction. That sounds like Karl Marx but it is the basic
insight of Hyman Minsky, an economist of the mid-20th century whose reputation
is being revived. Minsky argued that the financial system played a big role in
exaggerating the economic cycle, one that was understated by conventional
theory. -
Government action is
inevitable. In conventional industries, the demise of companies leads to
“creative destruction” with capital being reallocated to more productive areas.
But in banking and finance, a crisis leads to “deflationary destruction” as
capital is eliminated. Businesses, investors and consumers lose confidence;
borrowers are unable to repay their lenders, who suffer as well. - 1 more annotations...
1. Jobs Are The New Assets - 10 Ideas Changing the World Right Now - TIME
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"Land was valuable, and capital was valuable, and labor — who cared?" says David
Ellison, a Boston-based money manager. "The attitude was, As long as I buy a few
homes and invest in a hedge fund, I'm done. I can sit in my chair and watch
football games." -
We now know how that ended up. Your portfolio is down 50%, your mortgage is
worth more than your house, and your savings account is barely visible. The job,
meanwhile, is making a roaring comeback. Not in a statistical sense, of course.
We are in a recession, after all: at 8.1%, unemployment hasn't been this high
since 1983. But in terms of the American psyche — and a household's balance
sheet — we're rediscovering the job as the most valuable asset a person can
have. - 1 more annotations...
The New Organization Model: Learning at Scale - The Big Shift - HarvardBusiness.org
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Now we have a new infrastructure, a digital infrastructure creating near-constant disruption. By freeing
people to interact and collaborate with others outside of traditional
hierarchical organizations, by reducing information asymmetries between
producers of goods and services and those who buy them, by democratizing control
over communications and media--in these and other ways our digital
infrastructure is granting new autonomy and freedom to individuals, both as
consumers and as employees. (For more about this see The Wealth of Networks by Yochai Benkler.) As a
result, individuals wield new influence with and power over the institutions
with which they interrelate -
At best what institutional leaders can do is to create the environments--the
"creation spaces"--that foster innovation and faster learning. But here's the
rub: many of these institutional leaders are caught in the mindsets of the
previous generation of infrastructures and the related assumption that scalable
efficiency is the key to success. Talent, on the other hand, is under increasing
pressure to get better faster and will either leave institutions that cannot
help them or become catalysts for change within those institutions. - 1 more annotations...
Harvard: the Inside Story of Its Finance Meltdown - Forbes.com
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Behind the scenes, though, a different story was unfolding. In a glassed-walled
conference room overlooking downtown Boston, traders at Harvard Management Co.,
the subsidiary that invests the school's money, were fielding questions from
their new boss, Jane Mendillo, about exotic financial instruments that were
suddenly backfiring. Harvard had derivatives that gave it exposure to $7.2
billion in commodities and foreign stocks. With prices of both crashing, the
university was getting margin calls--demands from counterparties (among them,
jpmorgan Chase and Goldman Sachs(nyse: GS
- news
- people )) for more
collateral. Another bunch of derivatives burdened Harvard with a
multibillion-dollar bet on interest rates that went against it. -
It doesn't feel good to be borrowing at 6% while holding assets with negative
returns. Harvard has oversize positions in emerging market stocks and private
equity partnerships, both disaster areas in the past eight months. The one
category that has done well since last June is conventional Treasury bonds, and
Harvard appears to have owned little of these. As of its last public disclosure
on this score, it had a modest 16% allocation to fixed income, consisting of 7%
in inflation-indexed bonds, 4% in corporates and the rest in high-yield and
foreign debt.
The One Country That Might Avoid Recession Is... - TIME
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Walk through São Paulo's sprawling Brasilândia, though, and you don't sense the
relentless doom and gloom gripping other cities in the world. Take Efigênia
Francisca da Silva, who exudes middle-class expectations and remains positive
despite the tsunami of bad news. Thanks to a government scheme to encourage
entrepreneurs, the once dirt-poor housewife has received some $8,000 in
low-interest bank credits in recent years and now owns three shops that sell
everything from shampoo to public-transit tickets. "I didn't have a bank account
before," says Da Silva, 37, standing beneath graffiti-covered walls and pirated
power lines. "I never had a car. I bought a Fiat Palio." Does she fear the
global recession will quash her dreams? "I trust Lula. I don't think we'll be
hit that hard." -
postideological approach
- 4 more annotations...
Job Losses Hint at Vast Remaking of U.S. Economy - NYTimes.com
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This country has never responded to a crisis by sitting on the sidelines and
hoping for the best,” the president said in an appearance in Columbus, Ohio.
“Throughout our history we have met every great challenge with bold action and
big ideas.” -
“We have to seriously look at fundamentally rebuilding the economy,” he said.
“You’ve got to use this moment to retrain for jobs.”
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