I’m Not a “Linkfest” Kind of Guy, But…

Here are some articles I’ve seen over the last few days that warrant a read:

1. Bagehot’s Lessons For The Fed, Wall Street Journal, 4/25/2008. Stanford University’s Ronald McKinnon shares some pearls of wisdom from the legendary UK economist and scholar Walter Bagehot’s  body of work.

Bagehot called a seizing up of internal markets “a
domestic drain” (of gold), and the flight of capital abroad “an
external drain.” He wrote that “The two maladies – an external drain
and an internal – often attack the money market at once.” And what, he
asked, should be done when this happens?

“We must look first to the foreign drain, and raise
the rate of interest as high as may be necessary. Unless you can stop
the foreign export, you cannot allay the domestic alarm… . And at
the rate of interest so raised, the holders – one or more – of the
final bank reserve must lend freely.

“Very large (domestic) loans at very high rates,”
Bagehot advised, “are the best remedy for the worst malady of the money
market when a foreign drain is added to a domestic drain. Any notion
that money is not to be had, or that it may not be had at any price,
only raises alarm to panic and enhances panic to madness. But though
the rule is clear, the greatest delicacy, the finest and best skilled
judgment, are needed to deal at once with such great and contrary
evils.”

The punch line:

To repeat Bagehot’s Rule: “very large (domestic) loans at very high
rates are the best remedy for the worst malady of the money market when
a foreign drain is added to a domestic drain.” The Fed, and the U.S.
government more generally, have so far got it only half right.

Here was a lead-in to a post I had written back in December of last year:

I’ve been one of those on the stagflation
bandwagon, deeply concerned about the weakness of the dollar, the
likelihood of the Fed continuing to reduce rates in the face of locked-up credit markets,
rising food and energy prices and persistent and rising deficits. This
is a toxic macroeconomic cocktail I’ve written about and which has been
the source of much worry.

I’m firmly in Walt’s camp. We’ll see if the Fed and the Treasury are listening.

2. Horatio Alger Multiplied by 1.3 Billion, New York Times, 4/26/2008. Joe Nocera penned a very interesting and informative article about the spirit of entrepreneurship that has been released in China, chronicling the rapidity of its impact on both China and the world. It reminded me a bit of yesterday’s post on entrepreneurship in the U.S. These are the words of a very successful Chinese entrepreneur who started with $31 and now runs a large consumer electronics company:

“My mother and father went through the Cultural Revolution,” Mr. Feng said. “They had no chance.”

He
continued: “When I was in grammar school, the Cultural Revolution
ended. When I graduated from university in 1992, that was the year of
real reform. Deng Xiaoping
encouraged students to go into business and become entrepreneurs.
Before then, if you wanted to be an entrepreneur, you would sink like a
stone. But after that, anyone could be an entrepreneur.”

Joe made the following observation during his recent trip to China:

But look at what else happened: motivated by the prospect of wealth,
people started companies. And as those companies succeeded, millions of
new jobs were created. In Shanghai — a place with more entrepreneurial
energy than any place I’ve ever visited, including Silicon Valley in
the 1990s and Houston during the 1980s oil boom — you can practically
see wealth being created before your very eyes. If Shanghai doesn’t
make you a believer in the power of capitalism to improve lives,
nothing will.

We are just at the beginning of a massive, global entrepreneurial wave. And amidst all of the fear, confusion and uncertainty, the prospects are bright for a better world created by the passionate, the driven, the risk-taking entrepreneurs in every corner of the globe.

3. The Best Game Ever, Sports Illustrated, 4/25/2008 issue. This is an excerpt from a new book by Mark Bowden of the same title. While the book is a chronicle of the great 1958 Super Bowl championship game between the Colts and the Giants, there is a powerful vignette about one of the stars of the game, Raymond Berry. It is a story of passion, raw intensity, brutal focus, self-motivation and unparalleled drive in the face of huge obstacles that ultimately culminates in legendary success. It is an inspirational tale for anyone who thinks they aren’t good enough, big enough, fast enough or something else that others deem as important. It is about the refusal to accept one’s perceived limitations. It is really a story about succeeding, regardless of context. Trying out for a team, interviewing with a company, building a start-up; anyone pursuing these goals would benefit from the lessons of Raymond Berry. I think I’ll have my son’s read this one.

Enjoy.

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COMMENT:

AUTHOR: anonymous

EMAIL: anyone@anywhere.com

URL: 

DATE: 04/26/2008 06:16:11 PM

Great blog.  I enjoyed it.  Thanks.  However, the “Best Game” may have been a super game, but it was not the Super Bowl.  The first Super Bowl was in 1966.  

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COMMENT:

AUTHOR: Bill aka NO DooDahs!

EMAIL: nodoodahs@aol.com

URL: http://billakanodoodahs.com

DATE: 04/26/2008 06:26:52 PM

So there’s nothing happening in the blogosphere that’s worth linking to? Only in mainstream media?  Odd considering Monitor 110’s “new information dissemination cycle,” isn’t it?

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COMMENT:

AUTHOR: Roger

EMAIL: roger@informationarbitrage.com

URL: http://www.informationarbitrage.com

DATE: 04/26/2008 08:28:37 PM

Anonymous, correct indeed. Thanks for the clarification. I have changed it in the post.

Bill, are you kidding me? Wake up on the wrong side of the bed? Someone pissed in your cornflakes? Did you just start reading me yesterday? I link all over the blogosphere and you know it. Either you completely misunderstood me (hard to believe) or are being a wise-ass (more likely). For avoidance of doubt, I merely meant that I generally don’t do the Barry Ritholtz/Paul Kedrosky linkfest-type gig (eg. “here is a bunch of relevant content you should look at”) as part of my repertoire. I generally write longer, thematic pieces that contain relevant links within the body of the post. But you already know this.

Roger

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COMMENT:

AUTHOR: Bill aka NO DooDahs!

EMAIL: nodoodahs@aol.com

URL: http://billakanodoodahs.com

DATE: 04/27/2008 07:44:13 AM

Rog, let me try again for a “first comment.”

I’ve been reading and commenting pretty much since day one you went online, and I haven’t read EVERY post of yours over the years, but pretty much damn near ñ and you know it.  I was DEEPLY curious about what you might include in your first “linkfest.”  I know you own pieces of companies that monitor the “long tail” of the internet, so I was hoping to see what you might have dredged up from there.  I was deeply disappointed because it was only three links, and only MSM content. 

Significant disagreement with your comment in one point.

You rarely link outside of MSM, and VERY rarely link to non-VC-related blogs.  Your usual links are (1) internal links here, (2) WSJ, (3) FT, (4) NYT, (5) websites of companies being discussed, and (6) VC blogs, with an occasional Bloomberg news article thrown in.  I value your analysis of the material, which is why I come here, and have been coming here since day one, but you certainly DON’T link “all over the blogosphere,” and when you do hit a non-VC blog, it’s usually Salmon at Portfolio or Ritholtz, although I think you pinged Financial Crookery once last month. I know this, because I’m a long-term reader.  YOU know this as well, you don’t go “deep tail” on your links, they’re pretty much all MSM links.  

That’s why I was so intrigued by the possibility of a “linkfest” from you - the dichotomy of your usual MSM-only linking pattern with your businesses monitoring the non-MSM.  Kinda-sorta like the introspective lyrics of Townsend sung by the flamboyant Daltry, you know?

Personal note.

I’ll try to rein in my personality when commenting here in the future.  I apologize for offending you, and will edit 2-3 times before leaving comments again.

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COMMENT:

AUTHOR: Roger

EMAIL: roger@informationarbitrage.com

URL: http://www.informationarbitrage.com

DATE: 04/27/2008 08:26:30 AM

Bill, thanks for the clarification.

Please, do not edit your comments. Just because I might get irked is no reason for you to rein it in.

I now understand where you are coming from. When I say I “link all over the blogosphere,” it is really with respect to single-stock posts (NTDOY, SNE, MSFT, ERTS, etc.). And since I haven’t done that lately, you are certainly correct in saying that my more links are largely to MSM sources where I am providing my own commentary. I have been more on a markets-kick lately and less of a single-stock kick (at least publicly), which is the reason the link patterns you cite.

I think you make an excellent suggestion. Sometime soon I’ll pen some single-stock or sector posts with more of the interesting, non-traditional sources you are alluding to. That will hopefully scratch the itch you’ve got.

Rog

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