Mainstream Media Meteoronomics

When the weather channel of USA today discusses economics it may be time to officially replace Joe LaVorgna with groundhog Phil…

 

 

And in case you were wondering just how much the weather impacted the strong vibrant US economy…

 

 

A 3.5 percentage point plunge since the start of the year in the world’s largest ‘escape-velocity prone’ economy due to some snow…

Or in real terms a $100 billion loss in US economic growth…sounds reasonable eh?




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Embracing Inequality

From the Slope of Hope: This is one of those posts that has nothing to do with trading, the “markets”, charting, or anything else related to our efforts to claw a few dollars out of financial instruments. It’s one of those posts that may alienate some readers, deepen the commitment of others, and merely annoy some in the middle. But I have to get it off my chest, and it’s about the “diversity report” from Google that has been getting so much press this week.

In short, the tumult is centered around the fact that the breakdown of Google’s very well-paid employees with respect to gender and ethnicity don’t line up to the same breakdowns for the human race in general. Google employees were swift to chime in with their politically-correct huzzahs:

0530-dicks

So I’d like to say to this entire group, in my best George Carlin voice……….fuuuuuuuuuuuuck you!

Now, do I say this because I yearn to be in a world where high-quality tech jobs are specifically 0530-genderrelegated to young white or Asian males? Hell, no! If a black, lesbian, transgendered differently-abled senior citizen starts the next company that dethrones Facebook, I say, God Bless America and more power to them! I am all about meritocracy.

Indeed, I think the whole “bro” thing is disgusting. Arrogant young white males can be some of the biggest, most obnoxious dickheads on the planet, as this recent news offering about Snapchat’s founder quite clearly shows.

0530-raceBut what bugs me about this is twofold: first, the notion that any organization should be comprised of exactly, or even roughly, the same proportionate subgroups that make up the human race (with respect to any property, be it religion, race, age, or what have you) is utterly offensive to me. That is far more racist, ageist, or anything-else-ist that may have been reflected in the Google report.

The second thing that irks me is the entire “Gosh, we sure have a lot of work left to do, but gosh darn it, let’s make it happen!” attitude reflected in the comments above. Anyone with any sense who runs a group wants the best person for the job. Mr. Rothfuss, above, implies that since there are only 23% women on his team (in contrast with the 50% of females here on Earth) he still has a “long way to go”. Why? Do you seriously think you need to have a 50/50 split to provide the best group for your organization? Give me a break!

And it isn’t that Google isn’t already lacking in politically-correct organizations within its culture. Allow me to present this offering to you, directly from their web site:

0530-clubs

Personally, if I were running the Gayglers, I think “I’m Feeling Lucky” would be a pretty awesome club slogan. But I digress.

Am I a racist? Am I am bigot? Yes, I am. I absolutely make snap judgments about people based on their gender, their age, and their ethnic background. If by chance I am aware of their religion, I’ll have a bias based on that as well. What makes me a freak is that I admit it. And what gives me comfort is that, as the captain at the helm of my one-person juggernaut, I can actually speak honestly without having to report to HR to explain myself.

But the thing is, pre-judging doesn’t mean the final judgment. When I ran Prophet, and I was looking for a person to fill a job, I definitely had a type of person in mind. If a 60 year old black woman showed up for an engineering job (which, ummm, never happened), I’d certainly look at her resume and hear her out, even if my pre-judgment was that there’s just no way this person would be right for the post.

But the thing is, if she had the skills, I couldn’t care less about her age, her color, or any other superficial properties. She could be a green hermaphrodite, for all I care. I just want great work! I’m not rounding up members for a revived Ku Klux Klan. I just want great product!

The cold fact of the matter is that certain people tend to be right for certain jobs. The fact that are a lot of young, strong black men in the NFL isn’t an issue. The fact that a lot of women are nurses isn’t an issue. The fact that a disproportionate number of Jews are in finance isn’t an issue. I’m terribly sorry to ruin your party, folks, but these are the facts, this is the truth, and it’s honestly, truly, OK.

I know what it’s like to be excluded. I know what it’s like to be left out. Most of us have been there at one time or another. And I don’t want that for anyone. I think denying someone an opportunity based on anything other than their skills is immoral. And equally immoral is actively seeking out and hiring the “disadvantaged” or “under-represented” simply to meet some kind of quota or corporate goal. It’s an injustice to any other candidates that are better-qualified for the task at hand.

I’ll close by saying this: I’m not a big fan of hypocrisy either. And since Google seems to be donning its halo and noting how, Obama-style, We Can Do Better, I just thought I’d leave this offering of articles to show how progressive and fair-minded Google is with respect to women. Because their leadership certainly seems to like them. A lot.

Google Boss Enjoys $15 Mil Manhattan Sex Penthouse

Google Chief Still Creeping on Models (And Recording Them!)

How Google’s Top Couple Turned into a Tangled-Up Cheating Foursome

Meet the Google Founder’s Mistress

The Many Women of Eric Schmidt’s Instagram




via Zero Hedge http://ift.tt/1ixuPTt Tim Knight from Slope of Hope

Abenomics Suffers Crippling Blow: Economy Sputters As Inflation Soars, BOJ QE Delayed Indefinitely

Following last night’s record plunge in Japanese retail sales, tonight was another slew of crushingly bad data for Abe and his motley crew of money printers to reflect on. First Household Spending cratered 4.6% YoY – its biggest drop since the Tsunami (and markedly worse than expectations which were bad enough due to the tax hike repurcussions). Then, Industrial Production tumbled 2.5% MoM – its biggest drop since the Tsunami (considerably worse than the 2.0% drop expected and the slowest YoY growth in 8 months). While this would typically be the kind of bad news that is great news for QQE-hopers, it was disastrously capped by a surge in Japanese CPI (well above BoJ target 2% levels) crushing moar-easing hopes as Barclays see no further easing in 2014 (and even Goldman pushes any hope off til October at the earliest).

 

First Houshold spending missed and plunged…

 

Then Industrial Production missed and plunged…

 

And then inflation took off – as Goldman so handily exposes below, adjusted for the tax-hike, this was a major spike in inflation…

 

We accordingly revise our outlook for the BOJ’s next easing action to October 2014, from July 2014 previously.

and then Barclays gets even more bearish…

  • BARCLAYS SEES NO FURTHER BOJ EASING IN 2014 IN ‘BASELINE’ VIEW

Goldman sounds glum, having already given up on the J-Curve…

We get the impression the correction is larger than the government anticipated, but in line with our expectations. With domestic demand likely to fall, we see external demand leading growth in FY3/15. We highlight risk factors in the form of protracted weakness in China and other Asian economies and a decline in corporate Japan’s structural export capacity.

Time to stock up on Depends…Time to blame El Nino again

The reaction so far…




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China’s Housing Bubble Desperation In Six Words: “Buy One Floor, Get One Free”

Having gone from the sublime (zero-money-down mortgages for Chinese homes) to the ridiculous (when China’s largst property developer says “the period in which everybody makes money out of property is gone,”) the latest desperate act of a dying Chinese property bubble is stunning. As WSJ reports, Season Joy City (a remote suburb of Beijing) offers not only a party bag of bonuses to lure potential buyers; but the development’s big selling point is “buy one floor, get one free.” The government’s reluctance to bail the nation out may soon be tested as Barclays notes “this downturn is more serious than in 2008.”

 

As we ironically noted previously –  “please take this home: it’s free.”

But the biggest draw is a “zero down payment” scheme, available for a two-and-a-half-week period only. At first sight this seems to go against government regulations, brought in to keep house prices under control, which stipulate a minimum 30% down payment on ordinary residential purchases.

 

Zero down payment schemes have popped up around China as developers go to ever greater lengths to shift apartments, but Season Joy City may have the distinction of being the first to try it in Beijing, said Tang Li, an analyst at North Square Blue Oak, an investment bank.

 

“They will help homebuyers to apply for this consumer loan that they can use as a down payment,” said Mr. Tang. “It’s very difficult to judge whether this is in line with the regulations or not. So far there’s been no punishment from the government.”

And then there is the really desperate…

Season Joy City offers a party bag of bonuses to lure potential buyers. The development’s original selling point was “buy one floor, get one free.”

 

When China Real Time visited last week, helpful sales assistants also offered to throw in kitchen fittings and four air conditioning units for nothing.

As developers are desperate to avoid cutting prices..

All this is to avoid cutting prices, which developers could fear could tank public faith in the housing market and ultimately pummel sales further. Instead, they resort to ingenious “promotions,” throwing in freebies worth thousands of dollars and even whole free rooms rather than slashing prices outright.

And it is not likley to end well…

It’s very clear that developers are in a hurry to sell,” said Rosealea Yao, a Beijing-based analyst at research firm Gavekal Dragonomics. “Developers in the suburbs always see the biggest decline in sales and prices [during a downturn].”

If the property sector is in deep trouble, it’s going to affect a whole lot of industries and that will drag down the entire economy,” said Liu Qinglong, assistant sales manager at the development. “I think in the future the government will set up a long-term mechanism to ensure steady growth of property market.”

Barclays is less sanguine than your average Wall Street silver-lining hunter…

The downturn this time is more serious compared to 2008 and 2011,” said Barclays Bank analyst Alvin Wong.

 

 

The very fact that the PBOC had to provide that window guidance means there is a problem,” said Xiang Songzuo, chief economist at Agricultural Bank of China Ltd., using industry jargon for central bank jawboning. “Now, what you’re hearing from banks’ local branches is that ‘we just don’t think the property is worth that much money anymore.'”

 

 

“I don’t believe that the local governments will be allowed to reverse the home purchase restrictions.”

As WSJ concludes, with buyers standing on the sidelines and some developers starting to sound desperate, the government’s ability to support the market may soon be put to the test.

What can possibly go wrong?




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Dear Japanese Pensioners: You Are The New Proud Owners Of Global Junk Bonds

With leverage rapidly rising while credit spreads approach record lows, high-yield bond markets have long since lost any sense of sanity with regard to forward-discounting… but that hasn't stopped the world's biggest bond managers (and now Japan's pension fund GPIF because as they say "now they have a chance to chase higher returns without taking on much risk") from diving in while the water is warm. With the smell of risk essentially removed from any and every market, why not pile into the riskiest credits, gain some extra yield (for free) – what could go wrong?

As the WSJ reports, among the 10 largest U.S. bond funds at the end of 2013, the four with the fastest growth in assets since 2008 held an average 20% exposure to junk bonds and the massive and always controversially-political GPIF has decided that selling bonds when they lose thir investment grade rating means a big loss of potential to profit and despite expectations for wider spreads, has decided to increase its exposure to BB or lower-rated bonds. Market, meet bag-holder… The Japanese Pensioner.

 

As we have noted before, credit no longer follows fundamentals…

 

Japan's Pension fund is getting set to load up on junk…

GPIF only investing in overseas debt rated investment-grade reduces chances to gain higher returns, fund official says in minutes of March 27 investment-committee meeting released today.

 

GPIF official responding to question from investment-committee member on why fund has decided to buy bonds rated BB or lower

 

GPIF official: Fund’s external managers often say that even if a security is downgraded to BB or lower, some regain their BBB rating, so selling them when they lose that rating means a big loss of potential to profit

 

GPIF official also says that until recently the fund had been really strict about investment grades; now they have a chance to chase higher returns without taking on much risk by diversifying their assets, and so will add high-yielding bonds to asset mix

 

Investment committee member: GPIF results for 5 yrs through Dec. 2013 have been good but environment was supportive as interest rates were low and credit spreads narrowed

 

Rates are more likely to rise than fall in next 5 yrs and credit spreads will probably widen, so GPIF needs a structure that takes into consideration rising interest rates: committee member

And the world's largest bond managers are already bloated… (via WSJ)

A handful of managers have elbowed their way to the top of the bond-fund world by loading up on riskier debt.

Among the 10 largest U.S. bond funds at the end of 2013, the four with the fastest growth in assets since 2008 held an average 20% of their investments in bonds rated below investment grade, also known as junk bonds, according to an analysis by The Wall Street Journal.

 

"Who wants an index fund that yields 2%?" said Jeffrey Gundlach, whose Total Return Bond Fund at DoubleLine Capital LP has $32.1 billion under management, up 10 times from its start four years ago. Mr. Gundlach, in an interview, said investors "want exposure to these high-yield and distressed securities and they've become comfortable with what we're doing."

 

Junk bonds typically offer investors a higher interest rate, or yield, to make up for the risk of default.

 

 

Investors in junk corporate bonds like Mr. Lee draw comfort from low corporate default rates below 2%, but the chase for yield has pumped junk-bond prices up to near-record highs, leaving them susceptible to selloffs, analysts said. Mr. Lee said he is watchful for investors to pull out of the market should they sour on bond funds, as they did last summer.

What could go wrong?

"The air goes out of the balloon faster than it goes in, so we might add another percent or two of cash or Treasurys to our portfolio," he said.

 

 

"Sales of assets from any of those funds could create contagion effects on the related funds, spreading and amplifying the shock and its market impacts," the Treasury said in a September report on the systemic risk posed by large fund managers.

Well that we guess! And the good old Japanese pensioner will be wearing the "kick me" short when it's all over.




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How Britain Calculates Its Hooker “GDP Boost”: 60,879 Prostitutes x 25 Clients Per Week x £67.16 Per Visit

First it was Italy which, as we reported last week, had decided to “boost” its GDP by adding the estimated impact of cocaine and hookers. And now, riding on the coattails of this economics gimmick designed solely to make the economy appear more solvent, it is Britain’s turn, whose Office for National Statistics will also add add up the “contribution” made by prostitutes and drug dealers.

According to the Guardian “for the first time official statisticians are measuring the value to the UK economy of sex work and drug dealing – and they have discovered these unsavoury hidden-economy trades make roughly the same contribution as farming – and only slightly less than book and newspaper publishers added together.”

How big of a “contribution” by hookers and coke are we talking?

Illegal drugs and prostitution boosted the economy by £9.7bn – equal to 0.7% of gross domestic product – in 2009, according to the ONS’s first official estimate.

 

A breakdown of the data shows sex work generated £5.3bn for the economy that year, with another £4.4bn lift from a combination of cannabis, heroin, powder cocaine, crack cocaine, ecstasy and amphetamines.

Here’s the problem: since one can’t put down on their tax return form that they have paid sex or deal drugs for a living, the ONS will have to estimate the economic contribution by these illegal professions. This is how it has gone about doing it:

According to the estimates there were 60,879 prostitutes in the UK in 2009, who had an average of 25 clients per week – each paying on average £67.16 per visit.

That’s right: there is now an excel model to calculate what the hypothetical GDP boost to a nation is. Making things even more surreal, and confirming the GDP calculation is officially a statistical joke, here is how drugs are accounted for:

The statisticians reckon there were 2.2 million cannabis users in the UK in 2009, toking their way through weed worth more than £1.2bn. They calculate that half of that was home-grown – costing £154m in heat, light and “raw materials” to produce.

The models will need updating: “The ONS will work in the coming months to bring the data more up to date. The figures will then be included in the broad category of household spending on “miscellaneous goods and services” alongside life insurance, personal care products and post office charges.”

It is unclear if the ONS will pay for its agents to conduct due diligence in various brothels, or alternatively conduct “inhouse” sessions at the headquarters.

What is clear is that quite soon the largest marginal provider of “growth” not just in Britain but all of Europe will be otherwise illegal activities:

The more inclusive approach brings the ONS into line with European Union rules, and will eventually allow comparisons of the size of the shadow economy in different member states.

 

Joe Grice, chief economic adviser at the ONS, said: “As economies develop and evolve, so do the statistics we use to measure them. These improvements are going on across the world and we are working with our partners in Europe and the wider world on the same agenda.

 

“Here in the UK these reforms will help ONS to continue delivering the best possible economic statistics to inform key decisions in government and business.”

“Best possible” indeed.

Some are already using puns to justify the new methodology:

He said the ONS would attempt to “fill in the gaps” left by available studies but it would be impossible to measure illegal activities as accurately as other components of GDP. Other activities are measured using questionnaires but the response rate in the sex and drugs trades are unlikely to be high.

It is indeed unlikely.

Others are already spinning the justification:

Alan Clarke, a UK economist at Scotiabank, said that although the government would not feel the benefit of illegal work in terms of income tax take, there would be a spending boost. “A drug dealer or prostitute won’t necessarily pay tax on that £10bn, but the government will get tax receipts when they spend their income on a pimped up car or bling phone.

Others are openly scratching their head at the New Hooker and Blow Normal:

Steve Pudney, professor of economics at the University of Essex, said he was sceptical about the methods used by the ONS to estimate the size of the drugs market.

 

“In my view, the ONS estimate of the size of the drug market is unlikely to be very accurate. It rests on some heroically large assumptions which would be difficult to test, and it also uses a measure of demand that is likely to understate systematically the true scale of drug use.”

 

He added: “They are using a demand-side approach which loosely involves multiplying a survey estimate of the number of drug users by another estimate of the amount consumed by the average user.

 

“Average retail prices of drugs come from other sources – mainly police/customs/security service intelligence sources – and, multiplying this by the estimated demand, gives the size of the market in cash terms.”

What Steve doesn’t seem to get is that at this point all GDP numbers are about as made up as can be, and are merely fabricated on the spot to justify the prevailing economical narrative. Case in point: the history of Q1 2008 GDP revisions over time, as we showed earlier:

 

If nothing, it will certainly provide comedians with fresh joke fodder. This should at least boost their take home pay and result in higher disclosed taxes.

And since this is just the beginning for a world which is slowly coming to grips with just how insolvent its non-shadow economy is, we eagerly look forward to the next bold move by economist everywhere: estimating the number of undocumented drug dealer and prostitutes and adding them to the monthly nonfarm payroll total. Think of it as a Birth/Death adjustment. Only more like a Blowjob/Drugs adjustment.




via Zero Hedge http://ift.tt/1hDMc4I Tyler Durden

A Quarter Of Europeans Are At Risk Of Poverty

Wondering why the extreme left (we are not happy and need moar bailouts) and extreme right (this European ‘union’ thing is not working out so well for us) have become so euro-skeptic? Perhaps the following chart from Bloomberg Brief’s Niraj Shah will clear up any questions. The ratio of people at risk of poverty or social exclusion in the EU increased by 0.5 percentage points in 2012 to 24.8% or 124.2 million people, according to figures updated this week. The risk increased most in bailed-out nations Greece and Cyprus, where the rate rose by 3.6 and 2.5 percentage points, respectively. The Netherlands had the lowest risk at 15%.

 

 

Source @economistniraj




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Scotiabank Asks “Are Treasuries The Only Adult In The Room?”

Via Scotiabank’s Guy Haselmann,

Disparaged Treasuries are the Only Adult in the Room

Treasuries continue to do nothing wrong.  My bullish views on bonds over the past several months have been met with stern opposition; however, several are now beginning to question their defiance.  With such in mind, it is worth reviewing once again some possible explanations behind the bid.  There are many reasons to expect their strong performance to continue (particularly over the next week).  The bullets below are in no particular order.

The move below 2.5% in the 10-year has been accompanied with talk of convexity needs by mortgage servicers.  Many expect a larger trigger below 2.3%, but the recent down in coupon trade is evidence of existing duration needs.  However, it is only fair to point out that convexity flows are not what they used to be due to the rise in MBS holdings by the Fed, a decline in REIT holdings, and high premium MBS being mostly owned by the GSEs who now make fewer hedging adjustments than in the past.

A few shorter-term factors include tomorrow’s large month-end index extension of 0.12 years of the US Treasury Barclays Index and the fact that bond funds have registered their 11th consecutive week of inflows.

Looming over the market in the near-term is also next week’s ECB meeting where aggressive action is being anticipated due to well-telegraphed hints by Draghi.  His hints have lowered yields and spreads across all European fixed income markets.   Treasury (nominal) yields which have looked attractive relative to the rest of the world have been dragged even higher recently in sympathy with the move in European markets.

  • For example, the US 10yr yield is 70 basis points higher than the French 10yr, while the US5yr is only 6 basis points lower in yield than the Spanish 5yr.   The Japanese 5yr and 10yr notes yields are 0.17% and 0.56%, respectively, compared to 1.49% and 2.42% (note: all comparisons are nominal yields).

I’ve also written about what Pimco calls the “New Neutral”.  Basically, if the neutral nominal fed funds rate is closer to 2%, rather 4%, than Treasuries remain inexpensive.

It is possible that low global yields are a sign that expectations of future growth and inflation are falling Several weeks ago, I wrote that maybe it was “time to reverse the causality”, where, “rather than assuming that stronger growth will bring higher yields, maybe investors should start asking whether exceptionally low global bond yields are saying something about the long-run state of the globalized economy and/or inflationary expectations (deflation)”.

  • Many new headwinds have arisen in the form of Japan’s consumption tax, China’s attempts to reign-in its massive credit bubble, foreign central bank rate hikes, poor developed world demographics, globalization, Russian sanctions, and higher food and energy prices.  There is also Fed policy where:  QE= risk on.  Ending QE = risk off.

There are several other factors that are unquantifiable, yet whose aspects are compelling enough to deter Treasury shorts and motivate others to cover underweights.

  • The foremost factor is the markets persistent focus on a note that I wrote on March 28th about the changing incentives to corporate DB pension plans. I stated that rule changes will create strong demand for long end Treasuries causing them to trade with commodity like characteristics.  I stated that the bottom line was, “The rule changes to the PBGC means that going forward, private DB plan managers will be driven less by their role as a fiduciary trying to ‘maximize return per unity of risk’, but rather by decisions based more by funding status and regulatory incentives that encourage LDI”.
  • Chinese buying of US Treasuries is another compelling, yet unquantifiable, argument and possible source of demand.  My colleague John Zawada first began discussing this topic last week with a similar story that printed in yesterday’s Financial Times.  According to the Treasury Department, Chinese official holding fell by about $40 billion since last November, but ‘Belgium’ holdings increased by $200 billion.  It is thought that a big foreign investor (China?) has merely switched its custody service to Euroclear which is based in Brussels. The intentional devaluation of the Renminbi this year has resulted in a larger current account, so it makes sense that the ‘extra’ dollars would flow into Treasuries.
  • The FT reported (via Wrightson ICAP analysis) that the drop in official Chinese holdings as a percentage of FX reserves fell from 37% to 32% since November.  However, if you associate the increase in the ‘Belgium’ official holdings to China, then the percentage remains the same at 37%.

“If you’re always trying to be normal, you will never know how amazing you can be” – Maya Angelou




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I Want My Children to Go Cold and Hungry

By: Chris Tell at: http://ift.tt/146186R

Maybe I’m peculiar, which is entirely possible, but I cherish the memories of adventures I had and times spent in awkward situations; the times spent pushing my own personal limits, times when I’ve often been very, very uncomfortable.

It’s rare to remember a 5-star hotel no matter how nice it is, but I will always remember that night spent sleeping in a public bathroom when a storm blew our tent away and drenched our belongings.

I will not forget spending the night freezing my tail of in 12 inches of snow, in a tent, deep in the mountains of Eastern Europe after I’d train hopped and jumped off at the wrong location.

I vividly remember sleeping huddled to a backpack on an Indian train… huddled because if I let it go it would be stolen in the blink of an eye.

I’ll always remember positioning myself in front of my wife when being held up by pirates on the Mekong. It doesn’t matter where we’ve been, or where we’re going but what we’ve learned that matters most. What we take away from our experiences and what we do with that.

We don’t become educated by having it easy and we don’t learn perseverance and dedication by sitting on the sofa.

There is a reason I cart my children to all sorts of countries and expose them to different cultures. There is a reason my wife and I home schooled our children for many years.

We expose our children to everything from drug addicts, to world business leaders, to prostitutes, orphans and everything in between. Always in a controlled environment, but ensuring that the world is in front of them, the good, the bad and the ugly.

A parent recently argued with me that I was damaging my kids by exposing them to poverty when taking them to a Burmese refugee village in Northern Thailand. This parent lets her kids watch gratuitous violence on television and play graphic video games, which make me want to vomit, and does it without a thought.

The television, iPad, Xbox,… these have replaced the real world as parenting “tools”. Is it not better that we see the effects of violence together with the humanity in it, rather than on a screen where the connection is lost, completely misused and the message given a far more dangerous one? In my view you can’t intelligently grapple with the world’s complexities if you’ve little to no connection to them.

This sort of exposure provides an education not easily achieved elsewhere. Kids are not shy and will question everything. This is as it should be, and is an attribute sadly lost on many grown adults.

It has always been my policy to invite questions and answer them as honestly as possible. This is how we learn.

As a grown adult, a professional investor, entrepreneur and owner of multiple businesses, it’s always been my job to ask questions. The more the better. There are no dumb or wrong questions. Kids know this, yet adults often forget it. Pride gets in the way. Fear of looking stupid, being thought ignorant.

Our brains need to be stress-tested regularly. A brain is a muscle and it atrophies just like any other muscle if left to vacuous use. Did you know that it takes just two weeks for a muscle to atrophy. Two weeks! Poof…flat like a car tire.

When you’re pushing yourself to explore new ideas, new environments and new cultures you’re much more likely to be uncomfortable. It is when we’re uncomfortable that we are forced to exercise our brain. Ideas and skills bring wealth.

Wealth is not money. Only poor, ignorant people think wealth is money. I need my kids to be using their brains vigorously, to be generating ideas, to be problem solving consistently and to be collecting a body of knowledge to be tapped at every turn. I need my kids to be uncomfortable.

This was one reason I bought my son a second hand piece of furniture. It is why I’m not going to send my kids direct to University when they finish schooling. There is a difference between education and schooling.

I recall an instance some years ago when living in Phuket, Thailand. For a family outing we had ventured down to Patpong beach to shop for an art piece. A large oil painting that now hangs on our wall. Now, Patpong is littered with hookers and men too eager to be hooked. Unsurprisingly, drug use is common. If I had to sleep with some of the creatures that grace these places I’d probably take drugs, too!

Patong Lady Boys

Witnessing a particular tourist in the street, who was clearly stoned out of his mind, my daughter questioned me:

“Why has that guy got bleeding feet daddy?”

“Because he’s stepping on broken glass honey and has no shoes on.”

“I know, but he seems weird, he doesn’t seem bothered by it and he’s got a weird sort of smile on his face.”

“Yes, honey he’s on drugs and the drugs mess with his brain telling him not to worry about the glass.”

“That’s dumb Dad.”

“Yes, it is.”

You see you don’t need to threaten kids with finger raised to stay away from drugs. I believe it’s better to let them come to that conclusion all on their own, with a safe, steering hand. This is why I expose my kids to all manner of things many would consider crazy.

Kids are like onions, occasionally smelly, they actually don’t snap and break like carrots all that easily and there are many layers to them. You can’t appreciate how many layers there are unless you begin peeling. Sometimes when you peel the layers back you weep.

We recently spent a few days camping. No big deal. It rained and we could have packed up, hiked out to the car and driven home to a hot shower and warm bed. But what does that teach you?

Instead we targeted the “problem”, coming up with ideas on how to solve the problem of not bringing enough warm gear and experiencing rain. Needless to say we had an awesome time. In the pouring rain, while we were cold and wet, missed sleep and could have easily given in, we had a very close bonding and memorable experience where many of our “problems” were tackled.

It is my dream for my children that they do something cool, possibly life-changing, and certainly inspiring, if only for themselves. That is where fulfillment comes.

Getting there, however, is never, ever a walk in the park. It will take perseverance, possibly ridicule, missing out on more “fun” things, it will take time, something we all wake up every morning with the same amount of. How we spend that time defines who we are. It cannot and should not be taken lightly.

I’ve had the incredible fortune of having built multiple businesses myself, made and lost money, made and occasionally lost friends, and always been educated by the experiences.

I’ve also been in the enviable position of being exposed to literally hundreds of businesses, many of them start-ups or small businesses. Watching and learning along with founders and management teams has been an invaluable education for me. I’ve watched founders grow, accomplish, become wealthy beyond their wildest dreams I’ve also watched founders blow up, destroy their relationships, burn out and collapse in a smoking wreck on the footpath.

It is one reason that we invest in people before we invest in businesses. What I’ve come to know, and most of us know this internally, is that it’s truly rare to achieve something valuable without going hungry, sweating, and working hard at it.

How do you build that resiliency in a growing child? How do you show them the way the world really works? How do you do all this without breaking them, all the while installing a sense of passion, awe for our incredible world, a sense of limitless opportunities and a desire and belief that they can and indeed should build a life and world which is better for having them in it?

This is why I want my children to go cold and hungry. Is this going to make them more resilient, more entrepreneurial, more appreciative or just more grounded? I don’t know. Ask me in 10-20 years.

– Chris

 

“The difference between school and life? In school, you’re taught a lesson and then given a test. In life, you’re given a test that teaches you a lesson.” – Tom Bodett




via Zero Hedge http://ift.tt/1ix02pU Capitalist Exploits

Balling With Ballmer: Former Microsoft CEO To Buy Clippers For $2 Billion

Former MSFT CEO, Steve Ballmer, who earlier was said to have put in a $1.8 billion bid for the LA Clippers, is reported to have won the bidding war for the troubled sports team, and will shelve out a massive $2 billion: a record price for any NBA team, and four times the $550 million that was paid earlier this month for the Milwaukee Bucks. It is also the second highest price ever paid for any US sports team, only behind the $2.1 billion paid for the Dodgers in 2012.

From the LA Times:

Former Microsoft chief executive Steve Ballmer won a frenetic bidding war for ownership of the Los Angeles Clippers, with his $2-billion offer setting a record price for an NBA team, The Times has learned. Ballmer, who was chief executive of Microsoft for 14 years, was chosen over competitors that included Los Angeles-based investors Tony Ressler and Steve Karsh and a group that included David Geffen and executives from the Guggenheim Group, the Chicago-based owner of the Los Angeles Dodgers.

 

A person with knowledge of the negotiations said the Geffen group bid $1.6 billion and Ressler at $1.2 billion.

 

The sale price is almost four times the highest previous NBA franchise sale price — the $550 million paid earlier this month for the Milwaukee Bucks. It is second only to the Dodgers’ 2012 sale for $2.1 billion as the highest price for any sports team in North America.

 

The prospective sale by Clippers co-owner Shelly Sterling comes five days ahead of an NBA hearing to oust her family from ownership following a controversy in which Donald Sterling insulted African-Americans in a secret audio recording.

There appears to be one contingency: the approval of Donald Sterlin whose rant caused the forced transaction in the first place:

The tentative deal still must receive the blessing of her husband, Donald Sterling, who has waxed and waned on the question of whether he would allow his wife to sell the team he has controlled for more than three decades. The deal also needs the eventual approval of 29 other NBA owners, but is expected to clear that hurdle as long as Ballmer reaffirms his pledge to keep the team in Los Angeles and not move it to Seattle, where he lives.

As for Ballmer, he will be the proud owner of an NBA franchise for a measly 10% of his net worth:

Ballmer, 58, left the software giant in February and has an estimated net worth of $20 billion. Unlike other bidders, he did not immediately seek out partners for the purchase of the Clippers.

 

Ballmer last year joined a group, led by hedge fund manager Chris Hansen, to bid on the Sacramento Kings, intending to move the team to Seattle. NBA owners voted to reject the proposed move.

 

The businessman said in a recent interview that he had no intention of moving the Clippers. He said that the high valuations for the team only made sense in Los Angeles — the second biggest media market in the country.

Oh well, nothing like a little bidding frenzy among billionaires to change one’s mind about what a “fair valuation” is. Some of the more cynically inclined are already wondering whether the Clippers will be instantly worth $3 billion the moment Ballmer announces his retirement.

In other news: welcome to the basket bubble.




via Zero Hedge http://ift.tt/1ix04y2 Tyler Durden