Change You Can Believe In, Hungary Edition. 07/24/2011
![]() Flag of Hungary Or, what comes around, goes around: Please reference "Hungary Destroys All Monsanto GMO Maize Fields" as well as the links regarding the investigations by the SEC. The latter is likely just theater to appease the locals (U.S. citizens and farmers); the former has teeth. Nevertheless people globally have had enough of the atrocious behavior and products (pesticides, herbicides, genetically modified whatnots, carcinogens) from Monsanto and some other similar companies, and their enabling politicians. And, some international governments, fortunately, are responding accordingly. Add Comment The AAA Rating Bubble 07/16/2011
The chart provided by Financial Times yesterday regarding a "AAA Bubble" is mostly self-explanatory, although the article has some good off-links. And, for those who want a refresher on credit ratings, a good starting point is this Wikipedia article. ![]() Depiction of the Devil via Codex Gigas The allegedly intentional misdirection of language in Silver Lake/Skype’s employees’ stock options agreement demonstrates the lengths that some firms and managers go to apparently cheat other people, clients and employees. For further reading about the behavior of aforementioned companies and managers, reference some of the links below. Nevertheless, there are a couple of lessons that may help to mitigate perpetuation of unethical behavior by certain parties and individuals: Lesson 1: The Devil is in the Details (ideally have an attorney vet one’s important agreements, or read thoroughly and ask questions) Lesson 2: Asynchronous communication: unethical behavior that becomes transparent to more ethical employees, potential employees, and limited partners (public pension fund managers, foundations, etc.) generally ultimately wields a high cost to the alleged perpetrators (e.g., Enron, Lehman, Allied Capital, et al.). ............................................................................. "Brian O'Shaughnessy." Luxembourg | LinkedIn. O’Shaughnessy is an alumnus of NYU and Merrick College holding a degree in “political science.” Currently Head of Global Communications at Skype and formerly worked for Google, who self proclaims not to do evil. One wonders about the opinions of his alma maters and former employers regarding the option agreement topic. Web. 07 July 2011. <http://lu.linkedin.com/in/brianoshaughnessy>. Davidoff, Steven M. "A Clash Between Venture Capital and Private Equity - NYTimes.com." Mergers, Acquisitions, Venture Capital, Hedge Funds - DealBook. 06 July 2011. Web. 07 July 2011. <http://dealbook.nytimes.com/2011/07/05/in-silicon-valley-a-culture-clash-sullies-a-romance/>. Salmon, Felix. "Downgrading Skype and Silver Lake to ‘Evil’ " Wired.com. 25 June 2011. Web. 07 July 2011. <http://www.wired.com/epicenter/2011/06/skype-silver-lake-evil/>. Salmon, Felix. "Skype’s Options Plan and Silicon Valley Norms | Felix Salmon." Analysis & Opinion | Reuters. 07 July 2011. Web. 07 July 2011. <http://blogs.reuters.com/felix-salmon/2011/07/07/skypes-options-plan-and-silicon-valley-norms/>. Remember the Good Old Days of LBOs? 07/05/2011
Remember the good old days of leveraged buyouts (LBOs)? You know, buy control of a company by using a pile of debt, firing a lot of employees, and selling some hard assets. Then, use the cash flow to pay capital providers and financial sponsors of the transaction through principal payments, interest and special dividends. In the medium- and long-term, this behavior tends to destroy (read: bankrupt) companies due to reasons such as not adequately investing in maintenance and human capital and necessary SG&A. Now, apply the old LBO model to a sovereign nation and what do you get? [Well, besides the decline and fall of the Roman Empire.] You get a lot of debt, misallocation of taxpayer dollars to things like subsidies (corn, sugar, etc.), excessive global military presence, and lack of infrastructure maintenance. That said, an article titled “Life in the Slow Lane” by The Economist (April 30, 2011) indicates a red flag of not maintaining one’s infrastructure. I suppose this is another data point that complements our blog from March 2011 titled “Remember the Off-Balance Sheet Shenanigans of Enron?” | Blogentary
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