Perry Glasser

Archive for February, 2014|Monthly archive page

BITCOIN DENOUEMENT

In Business, Economics, Economy, EDUCATION, Finance, Old Farts Financial Network, Personal Finance on February 28, 2014 at 2:43 pm
Mt Gox Depositors

Mt Gox Depositors

Mt Gox sought bankruptcy protection in Japan today. The Bitcoin exchange is no more.

Dollar$ wonders if Japan can supply sufficient protection from a mob of angry depositors carrying torches and pitchforks led by CEO Mark Karpeles’ mother. A half billion worth of the non-currency has vanished.

Poof!

 

20-Something Thinking

Dollar$ admits to little sympathy to the casual 20-Something investor who figured the Old Farts Financial Network needed some shaking up.  After all, everyone knows that sex traffickers, pornographers, drug dealers, and arms merchants in dire need of a traceless currency would never steal. They have financial rights, too! Bitcoin was a product that was needed!

The OFFN plainly did not understand how the internet is a network of stalwart enlightened libertarians.

The 20-Somethings also believed that profits of 1,000 percent in a year was the justified return to them for their courage, foresight, minor hygiene problems, and a steady diet of cold pizza and Red Bull while sitting in front of a computer screen.

Really, kids, you have to get out more.

They know for sure that to get wealthy in America today is a plausible idea and a hell of a marketing department.  Anyone knows that!  Just ask the good people  at WorldCom, Pets.com, Enron, Furniture.com, or any other get-rich- quick scheme the OFFN lived through in the past few decades. 

Could Boomers have all the good stuff because they worked for it? Why know anything when you can invent a brave, new world and hope to be the last fool out the door before the collapse.

Looks like it is too late, now.  bitcoin

 

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GAAP AND THE BUCCANEERS

In Business, Finance, Wall Street, Wall Street Journal on February 27, 2014 at 7:18 pm

buccaneerDollar$ readers know that Buccaneers are CEOs and other business leaders who freely roam the financial seas looting and plundering.
Like any good pirate, a CEO knows that rules are for other people.

According to today’s Wall Street Journal, “Last year, 542 companies said they determine compensation using financial measurements that differ from U.S. accounting standards.”

Why would anyone do that?

Bigger bonuses for top management, imbecile! Strip out operating costs and losses, and your company looks terrific–give yourself a few million of shareholder money!

PULL THOSE OARS. Aaaaargh!

Ah, to be  a Buccaneer on the high seas with a chest of ill-gotten booty!

General Accepted Accounting Principles (GAAP)???!!!!

WE DON’T NEED NO STINKIN’ RULES!

WHAT WE TALK ABOUT WHEN WE TALK ABOUT BITCOIN

In Business, Economics, Economy, EDUCATION, Finance, Wall Street on February 26, 2014 at 6:53 pm

dollar20sign1Dollar$ is unable to resist the didactic opportunity of this ongoing story, but is not sorry to hit the many points over and over again.

Citizens can recover from flu; financial ignorance will cripple a lifetime.

Dollar$ expressed doubt about the entire enterprise shortly before Mt.Gox went dark, but finds the idea that sex traffickers, arms merchants, dope dealers, and other folks who need untraceable transactions are losing money to hackers and thieves not terribly disturbing

As for speculators caught in the downdraft, what did you expect for an asset that went from $12 $1,000+?  You did not have to be born in 1600 to know it was Black Tulip Time in Cyberspace again.

Some fools never learn.

You know a news story has legs when major news outlets are paying attention, but Dollar$ notes for the record that by the time The New York Times, ABC-News, or the Wall Street Journal catch the scent of a story, it is already too late for a Citizen. That aroma they detect is the aroma of burnt arse. You’d be far better off monitoring blogs—and so we humbly offer Dollar$.

The Great Casino

Banks LOVE transactions, which means any time money changes hands, as long as they are involved. That means credit cards and checks, and for most of us that means 90 percent of what we spend.

With small fees, they will eventually will own the universe. If there are parallel worlds, they will own them, too.

Think not?

Round up some friends and invite them to play poker at that neat green felt table in your garage. I won’t tell the cops if you don’t.

Supply poker chips, artichoke dip, chill the beer, but DO NOT PLAY CARDS. (Gamble??? Have I taught you NOTHING?? Are you an idiot???)

Instead of playing in your friendly game, after every hand, no matter how large or small the pot, extract a mere 2% before the winner rakes in 98%.

After enough hands, at 2% per hand, you will have every dime in the room. You will also have the keys to the cars parked in the driveway, several deeds to houses, and most of what had been future college tuition for the children of your players.

Look. Yours is a a friendly game. Your players are losing really slowly.

By comparison, Roulette at a Las Vegas casino rakes more than 5 percent. 220px-Roulette_-_detailThe amount dropped depends only on how many times the wheel spins. In your garage, the amount a player wins or loses in a night depends how fast new hands of poker can be dealt. Sure, a player or two will win many hands, and they may even quit winners some nights, but as long as the wheel is in motion and the cards are fluttering across the table, the house will eventually take it all.

The rake for Visa and MasterCard, depending on the merchant, is  between 2.5 percent and 3 percent. Walmart pays less—lots of volume. Mom and Pops Pottery Place pays more. The reason you can get discounted gas for cash  is that currency keep a transaction out of the hands of the bank.

And now you know why the financial regulators are sitting on their hands as the BitCoin Bubble floats away.

It ain’t their action.

BITCOIN REDUX

In Business, Economics, Finance, Personal Finance on February 25, 2014 at 12:41 pm
Better Bitcoins

Better Bitcoins

Well, that didn’t take long.

Just days ago, Dollar$ predicted the imminent demise of Bitcoin, a death to be caused by the Last Fool, and here it is, even sooner than expected. Mt. Gox is now gone, perhaps sunk forever.

Stabbing at your keyboard will not bring back a website gone dark. The money is gone.

The salient point?  A pump and dump operation for an imaginary currency can’t last a real long time. Billions of dollars have vanished with Mt. Gox.

Mountains usually do not sink; perhaps it was a mirage.

You may as well have invested in Monopoly money.

Sorry for you, really.  Keep in mind the adage: If it seems to good to be true, it probably is false.

 

WHATSAPP, DOC?

In Business, Economy, Finance, M&A, Personal Finance, Wall Street on February 21, 2014 at 1:40 pm
Reads Dollar$

Reads Dollar$

Dollar$ finds the headline of this column irresistible. Bugs Bunny is a hero. True, there are better things that need to be done, but since the mission of this blog is to be instructive, Dollar$ will instruct.

In case you were in a cave yesterday, the tech business world short-circuited over the news that Facebook dropped a cool $19 billion to buy WhatsApp, a 4-year old startup with 450 million worldwide young users.

Gen Y entrepreneurs worth a mere $2 billion have their shorts in a knot. They should. Dollar$ doubts it, but perhaps they know they know  the Spanish philosopher George Santayana who wrote

Those who cannot remember the past are condemned to repeat it.”

George Santayana

George Santayana

 The Past.

All right, class, let us review.In the Great Tech Bubble of the late 1990s, every kid in Palo Alto who could spell “electron” was certain to become a billionaire. Many achieved their goal.

But only on paper.

Accepting stock options in lieu of salary, 20-somethings got wealthy as stock prices rocketed upward. When the companies tanked, since they had been unable to exercise those options, they were left holding paper. This condition is bad, but it is worse when one has leveraged the options as collateral for buying a condo, a car, a yacht, or a private island in the Caribbean. People who lend money get testy at tales of woe about why they are not getting paid.

Problem was the companies lacked was a revenue model that supported the stock valuation.

No one built businesses. Pets.com. Furniture.com. The list of failed Dotcoms is long. They were constructing entities with the intention of being bought, a business strategy roughly the equivalent of having a daughter for the sole purpose of selling her to a pimp.

Wall Street Prognosticator

Wall Street Wizard

Wall Street Wizards went into a frenzy.  What could be more profitable than creating businesses that did no business? All that needed to be done was sell the stock. The comapnies were operated by a handful of geeks who liked working 16-hour days, ate only pizza, drank Evian water, and whose idea of relaxing was to glom M&Ms while playing Foosball. The ruling investment strategy was to buy and sell quickly. Remember day-traders? Neither does anyone else. They all boarded the trolley to the Poor House when they learned that an investment strategy designed to make a killing by selling to the bigger fool fails when the bigger fool is you. 

Today.

So Facebook has bought a few million youth, fully aware that its original subscriber base is ageing while up and coming youth are fleeing Facebook as a grim place where parents monitor their movements or a place where you can volunteer to get ads with no pesky content?

Youth needs privacy. You know, maybe messaging services that auto-destruct nude selfies. Come to think of it, quite a few politicians need that, too.

There’s Twitter, of course. Where else can you sign-up to receive endless stream of stupefying non-news and marketing?

Now we’ve got the acquisition of WhatsApp, a kind of chat mode that duplicates what every smart phone already does. Dual thumb typing is an art reaching new heights.

The Future.

  • Property values in Silicon Valley will soar until they collapse—all that money looks for somewhere to go.
  • Watch for the Wizard Dance that tells us revenue is irrelevant in this brave new world of investing.
  • Watch for mutual fund directors to expose their clients to unnecessary risk because they have to look as if they are besting averages and the only way to do that is to latch on to businesses that have no business, but have stratospheric valuations.
  • Watch for people who need their money get reamed because they have paid for professional financial management, and professionals want revenue, not your financial safety.

And always watch for the ghost of Santayana. That’s the one laughing loudest.

BITCOIN, HUMAN TRAFFICKING, AND DRUG CARTELS

In Economics, Economy, Finance, Political Economy, Politics, Wall Street on February 19, 2014 at 4:21 pm

bitcoinYou’re seeing stories about Bitcoin because Wizards are spraying their shorts at the notion of an unlimited commodity that in a few years went from being worth pennies to being worth thousands of dollars. This is better than selling bootleg whiskey in 1924. No risk, no capital investment, no violation of the law (yet). It’s just a great system designed to lubricate the finances of exporting and importing stoned teenage-girls across international borders, bribing officials, and laundering profit from all manner of illegal activities.
Totally untraceable.
Why else design it that way?
Now that Swiss banks are playing ball with the IRS, someone had to step up, right?

bitcoin

Bitcoin Value in 2 Years

Transactions & Ledgers.
The vast majority of transactions in the financial world are accomplished by ledger entries. Your credit card, your debit card, and even you checkbook are instructions to financial institutions to debit one account and credit another. Cash money is only for poor people and criminals.
Financial institutions get rich by charging by the transaction. They rarely engage in a business that has risk to it. Suppose you were playing a game where you push money at someone at  the other side of a table, and then they push it back at you.  If there is a bank nearby, also suppose that they take $.02 out with each push. Maybe they supply the chairs and the table. It does not matter how much is in the pot, with enough transactions, eventually the bank has it all.
Great business, right?
Your stock broker moves shares from one ledger to another ledger when someone buys (and someone sells) stock, and takes a few dollars for the work, a small commission. With a gazillion transactions per hour, no one on Wall Street is complaining, mind you. Leave it to the Buccaneers to undertake real risk.

Different ledgers have different rules on how they can be credited or debited. Your bank charges for your checking account and your savings account. The Fed has an account for you—it has your Social Security number on it, for example. Everyone has rules.
Except Bitcoin.

Problem
All transactions leave a digital or paper trail. That’s a good thing. It’s a rule. Your bank sends you check images: with the right app, you scan a check and make a deposit. Money needs to leave tracks, otherwise it has a habit of vanishing.
So who wants or uses cash?
Why, anyone who wants no paper trail, of course.buccaneer
• Drug dealers.
• Sex traffickers.
• Diamond smugglers.
• Bribe-takers.
• Bribe-givers.
• Ali-Baba, the Forty Thieves, and their partners in the Oil Cartel.
If you are none of these things, the Bitcoin news is mildly interesting.
But it ought to alarm people.
Money is the lubricant sloshing around the engine of Finance, and the finances of Sin are now available in digital wallets.

Solution: Enter Bitcoin.

Citizen

Citizen

Technology innovations are disruptive when they displace old technologies by being faster, easier to operate, or more rich with desirable features.
Bitcoin’s desirable features are unquestionably a great boost to crime. Even Bitcoin says why.
Buccaneers and Wizards pay HUGE bonuses to freshly minted Wizards to envision means to skirt pesky regulations designed to protect Citizens, the schmucks like you and me who sleep the sleep of the righteous.
The last time the financial community looked the other way at an financial innovation, a few boy-geniuses invented swaps, which were really complicated insurance derivatives but were called “swaps” so they would not be regulated as part of the insurance industry. O, the cash they generated!
When the scheme collapsed, they damn near bankrupted the world economy–and no one has seen the inside of a prison for impoverishing municipalities, bankrupting Iceland, and putting millions of retirees at risk.
So, yeah, shit like this matters.

Currency.

Bitcoin is a free-floating currency backed by no government. The value of a Bitcoin is determined by supply and demand.gold-300x202
Yes, yes, yes, this is also true of every other currency ever since countries the world over abandoned hard metal backing (Remember gold? How about silver?) Dollar$ notes that American currency is now a Federal Reserve Note, which means that if the US needs more, it prints it without any pesky limit determined by the quantity of gold in Fort Knox (reputedly empty by some accounts).
Dollar$ is not among the loons who think the gold is long gone, but Dollar$ notes that it does not matter f it is there or not. Whatever weight of gold is in our national piggybank, the amount of currency in circulation is far, far more.
Should this shortfall of metal make you nervous, do not journey to Kentucky to present your Federal Reserve Note to ask for its value in gold. That will get you a one-way ticket on the train to Looneyville Station
What you’ve got in your hot little hand, Bunky, is currency backed by nothing more than a solemn promise, the “full faith and credit” of the United States, a country sure to pay off as soon as it takes care of the national debt.

Nationa Debt Right Now

Buying Bitcoin

Bitcoin doesn’t even have a promise behind it. Your dollars may not be worth the paper they are printed on, but your Bitcoins are worth less.

Eventually, even Weasels will be so embarrassed by the excesses of Bitcoin, that our elected officials will bring pressure to bear on a system sure to damage us spiritually and financially if left untrammeled.

MERGER AMONG THE WALKING DEAD

In Business, EDUCATION, Finance, M&A, Politics, Wall Street on February 15, 2014 at 1:28 pm
DOLLAR$ MINION

DOLLAR$ MINION

A few of my minions urged Dollar$ to write more often about the corporate-financial scene.

Be careful what you wish for. If your eyes glaze, blame the minions.

The Big News last week was an M&A story. Comcast and Time-Warner Cable are seeking to merge.

This is yet another example of The Zombie Theory of Enlightened Managerial Practices.

The ZTEMP works like this: stitch together the parts of several corpses hope lightning will strike to animate the new entity.

Hey, if it worked for Dr. Frankenstein, who is to say the Wizards at Morgan Stanley or Goldman cannot work the same magic?

Investment bankers are spraying their shorts dreaming of the coin to be made. Dollar$ looks for the cost of Manhattan bedbug havens to soar this bonus season. Cocaine may be in short supply. The waiting list for a new Lamborghini may grow to beyond a year.untitled

However, for those of us who think of the tube as a cost center rather than a profit center, it may be educational to consider what will be going down.

The two companies are expecting regulatory resistance because the resulting entity will be HUMONGOUS. Congressional Weasels (so coy they are disguised as marmosets) will grunt their solemn grunts about protecting the peoples’ interests; then they will step aside to let the deal go down.

Who is kidding whom? We all know that cable TV is already a monopoly in most places, and we all accept exorbitant cable bills and packages that disallow subscription by station. Packages are how cable providers optimize receipts by forcing us to pay for several steaming portions of fried garbage along with a few ounces of steak.

But the industry is among the walking dead because more and more people no longer do their viewing via cable. Both Comcast and Time Warner Cable seem not to have noticed the internet. More and more of us binge watch only what we want after legal (or illegal) downloads from services that cost $100/year (or are free) instead of $100/month.

So when Dollar$ reads that Comcast will pony up $45 billion for the acquisition of about 11 million TW subscribers, dumping 3 million of them to satisfy charges of monopolistic practices, netting about 8 million subscribers, he thinks short this stock!

For the match-challenged Dollar$ reader, to break even Comcast needs to recoup about $5,500 per subscriber. With the average consumer cable bill just under $100 per month, or about $1100 per year, Comcast needs to squeeze 5 years of receipts out of its new subscribers.

On Wall Street, five years is a glacial epoch. Comcast will try to do it in three, and they will fail, because to do it in three they will have to raise subscriber rates.

But the more they raise rates, the more subscribers will say “Take this cable box and shove it,” before turning to the Internet to view the shows they want, when they want, for free or at a price point that approaching zero.

Zombies may walk on Wall Street, but only because Buccaneers operate the strings of soon-to-be dead marionettes.

TERROR INVADES THE BOARDROOM!!!

In Business, Economics, Economy, Political Economy, Politics on February 8, 2014 at 11:38 am
Texas%20Chainsaw%20Massacre%20The%20Beginning%20Chainsaw%20Replica%20big

Domestic Policy Tool

Dollar$ advises its friends that upcoming alleged news stories of how the Affordable Care Act is causing unemployment should be taken with the same seriousness as the shrieks of terror at a showing of the Texas Chainsaw Massacre. It’s not reality, folks: it’s theater.

Expect to see a lot of this baloney.

The Affordable Care Act, despite being the law of the land, tested and passed by the Supreme Court of the United State, endured two years of delay and hysteria. Lacking any shred of a political or social agenda that advanced us all, a determined, well-funded minority embraced denial as a political tactic.
 
Why allow reality to define politics?

National budgets and judicial appointments were held hostage before the ever-indignant Right awakened to the fact that the ordinary decency of most Americans would not tolerate casting their less fortunate neighbors over the side of the ship of state. No amount of divisive propaganda would have us turn on each other.

Having failed at persuading Americans to vote against their own best interests, the War against Obamacare has now adopted a new strategy.

The Blue Meanies are noting that—gasp!—THE AFFORDABLE CARE ACT WILL CAUSE UNEMPLOYMENT!!!

Not by eliminating jobs, silly!  But because low wage earners may seize on their newfound and hard won security to tell exploitive employers Take this job and shove it!

The possible fallout from the ACA unleashes terror in the boardroom.

How can we maximize profit unless our employees are coerced into working????

Employers who rely on a low-paid labor force may have to:

• compete for workers with higher wages;

• offer jobs with clearly demarked promotion paths;

• justify executive wages that are 400 — 500 times those of line workers.

O where will it all end ?????