Posts Tagged ‘Cultural capital’
Investing in disruptive technology and culture

A report into the process whereby SRI venture capital developed and Siri concludes:

  • Focus resources to understand long term technology and business trends that can profoundly change the industrial world. There are organizations that pride themselves on being technology followers. The guys who bring up the rear die sooner rather than later. The corporate world is full of corporate zombies who might survive but don’t grow or build value because their management teams were too risk-averse.
  • Nothing happens as fast as people think, but then reacting is too late—competitors will have taken the high ground. Creative minds should have the freedom to explore opportunities—false starts are part of the process and innovators should not be penalized for such events. Nothing ventured nothing gained.
  • Big ideas may only succeed when enabling technologies emerge. This means that organizations must strive to keep an open environment for learning and assimilating ideas and technologies from anywhere in the world. The idea of “not invented here” negativity is long gone – it is a path to failure.
  • The more important and far reaching a new product idea , the more important it is to make sure that the best minds are dedicated to its realization. Management must be actively involved—world changing ideas don’t see fruition without management being partners with the innovators. Sooner rather later, management will be faced with a financial decision regarding such concepts. Only the most engaged and educated management team can make wise decisions.

Source: Winarski N, Mark B, Kressel H “The development of Siri and the SRI Venture Creation Process – Siri Caltech Case HK

The comment on enabling technologies touches on a deep truth. Jacques Barzun makes exactly this point regarding the printing press in his From Dawn to Decadence 500 Years of Western Cultural life – a fascinating book. Technological development may have sped up as identified by Ray Kurzweil, but within this sped up process there are other constants which we can know from studying the past. But it is not just technology this applies to. The same applies to ideas. There are multiple instances of ideas being conceived of independently and at the same time, such as Newton and Leibniz’s development of calculus. The time was right.

Culture and ideas also change when enabling factors are in place. Nationalism and communism both spread rapidly because enabling factors were in place. As did politically correct perspectives and policies. Indeed, the whole mixed market western welfare state is but a set of ideas and concepts made concrete. For a time it appears to offer a viable structure for society, but contains within it the seeds of its own destruction:

The welfare state induced change in incentives change practice. The change in practice changes habits. The change in habits changes culture. The change in culture changes destiny.

A credit bubble and mass printing can delay the acknowledgement of the fact, just as more money flowing into a ponzi scheme can delay acknowledgement that some peoples wealth no longer exists. But it cannot change the underlying reality. Reality always wins – normally on the battle field.

In the West today,  some peoples wealth no longer exists. Other peoples ideological foundations are built on quick sand. They will sink along with the economies built on their big lie.

The widespread economic and political disruption which will be caused as reality reasserts itself across the western world will result in a new set of enabling factors. It is necessary now to lay down the basis for sound new normal – at least somewhere. Alternative systems will not be able to compete with a trustworthy system built on sound principles. Sound principles are not communist, socialist, fascist or Luddite. They will entail empowering individuals and enabling them to reach their full potential. It will create responsible adults grounded in reality. Such a society will prosper, unless stamped on by more powerful despotic regimes.  It could be a very mercenary time, so there will be no guarantees. There never have been, but this will become more obvious.

History Rhymes

Is Bastiat predicting the future, explaining the past or commentating on the present:

When plunder becomes a way of life for a group of men living in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it.”

Of course it’s a bit of a trick question as the answers are not mutually exclusive. There is a constant in history and it is us. Our basic DNA will not have changed much since he wrote that sometime before 1850. Looking around our world is very different, but we are fundamentally the same.

The much longer, incomparably more comfortable and relatively pain free life we lead flows not from within us, but without. It is the effect of the social and physical capital created by our ancestors, elders and even ourselves in our youth. The knowledge, institutions, practices and procedures work hand in glove with our physical infrastructure to sustain our way of life. It is this external fabric we have created that drove past improvements and is the only hope for future gain. That’s why attacks on them are so unforgivable. It is why this site takes such a strong stance against attacks on our cultural capital. Cultural capital being shorthand for all those things that make our way of life what it is.

So it is with a heavy heart that I catalog some of the latest signs of just how rotten our system has become. But it is not with a hopeless heart. For we still have within us and around us knowledge of a better way. We know things can and will be better, if we but make it so. Honesty and integrity are not dirty works.They are a clarion call from our past to us and our future. We will revive. We will survive. We will make a better world.

The only question is how low do we go? Germany repeatedly in the last century dived into the depths.  It exterminated its own people, then moved onto those of its neighbors. Plundering. Ever plundering. No restraint. No morality. No reflection of its cultural past curtailed the excesses of its then progressive present. Then occupied, cleaved into two and absorbed into ideologically opposed camps. Yet a generation or two later and it is again united and a European colossus. Albeit one with a heart of paper.

The German work ethic survived. Its culture is amenable to wealth creation. It creates wealth. We can recreate our cultural pillars. We can overthrow the rogues and advocates of political correctness. We owe it to our elderly and our ancestors as much as to our children and children’s children. They deserve better than the base vile acts being undertaken in the world, sometimes in their name or with the approval of their elected representatives:

MF Global repeatedly misappropriates steals clients money:

What could be alarming is that the conditions that led to the loss of customers’ funds at MF Global have not been corrected, and it could be happening again at some other firm even now. We just may not realize it because the losses have not yet been publicly disclosed.

As in the case of MF Global, the insiders and powerful customers learn about the impending loss first, and take steps to secure their accounts before the collapse and downfall occurs.

Around 75 years since customer money was stolen in tis money. But no one is responsible, it was bad systems, fat fingers. Only in America, or perhaps not.

Then there is  the issue of the Greece not paying and not defaulting:

Greek haircuts:


The International Swaps and Derivatives Association said on Thursday that based on current evidence the Greek bailout would not prompt payments on the credit default swaps.”…

The claim that Greece has not defaulted — despite refusing to make good on their obligations in full or on time — is utterly laughable.

In order to get paid on a default, you need a committee to evaluate whether or not failing to make payments is a — WTF?!? — default? Even more ridiculous, the committee is composed of biased, interested parties with positions in the aforementioned securities?

Zerohedge details the composition of the ISDA in this post and notes:

Keep in mind, as criminal as this appears, and as damaging to the CDS market, the real trigger will be what ISDA does determines following the end of the PSI process. If there is no credit event then either, especially when the CACs are triggered as expected – an event which will certifiably be a trigger event under Section 4.7, then ISDA is truly hell bent on blowing up the CDS market as a hedging vehicle in its entirety.

Perhaps most alarming of all is the purchasing of stocks by central banks. Central banks that are backstopped by the Fed. What have they cooked up between them? Read about it at Jesse’s Cafe Americain. I’m sick of the slime.

Bastiat was right. We are at a low ebb and heading down. What we do now will determine how low we go. Will we wait until Greece is our fate? Or will we rise up sooner, seizing control of our culture, our capital? Spread the word. The sooner people see, the sooner they object, the less dire the circumstances when we can start rebuilding. Western civilization will prevail within its own countries. We will prevail. But will it be your children or your children’s children who are born free? It is their birth-right. It is your birthright.

We outnumber the Kleptocrats.  We live in democracies.  Think about it. We can win this battle, as long as we ensure it involves ballots not bullets.  So go ahead, make my day, make everyone’s day. Make a new day, a new civilization. One which increases our cultural capital, one built on trust and integrity.  One worthy of us.

Killing cultural capital

A casual glance around the net reveals how much of our cultural capital has been destroyed. Trust is integral to our way life and is being undermined in so many ways. Take MF Global for instance, which involves outright theft of customers money. Much has been written on it, but Janet Tavakoli has the best lines:

Too Big To Fail and Too Connected To Jail.

MF Global was the eighth largest bankruptcy in the US, with thousands of customers victimized by theft, and yet one hardly ever hears about it…

I have heard that they will attempt to drag this investigation out until after the national elections in November, but if it comes out before that it will be wrapped up in a “don’t ask don’t tell admit no guilt” settlement….

“Our government…teaches the whole people by its example. If the government becomes the lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy.”  Louis D. Brandeis

Corzine is a powerful figure in the Democratic funding machine, and JPM is the biggest kid on the Street.

On MF Global don’t forget:

Feds Key In on $325 Million Wire Transfer Made in Last Hours of MF Global: Keep in mind that customers who had requested their money DAYS before the 31st were sent checks instead of the customary wire transfers which they had requested, and those checks were not honored. And I have heard of at least one instance where a customer’s wire tranfer was reversed a day later by the banks, which I had thought was not even possible.

Barry notes problems with the foreclosure settlement:

As I noted oh so many times before, once we bailed out failing banks, there is a strong incentive to protect rather than police them. This deal is a perfect example.

Here’s an excerpt from the column:

“Before the settlement, we learned that nearly every aspect of the robosigned documents was false. None of the details were ever reviewed. The signatures attesting to the review of the documents were fabricated — made by someone other than the person whose name was on the document. Neither person — the supposed signatory to the document nor the hired forger — ever validated the facts of each case. All of the safeguards put in place to make sure foreclosures were done correctly and legally were bypassed. Even the notary stamps were bogus — they were not real, and not signed by a notary to validate that the signer and the signature matched.

How did this happen? Instead of a careful review, people were hired to rubber-stamp hundreds of foreclosure documents an hour. Former burger flippers were paid $8 to $10 an hour to violate the law, file false affidavits and commit perjury. Some of the information was correct, but much of it was wrong — and none of it was verified for court purposes.

We commented at the time that eroding accounting standards was an assault on part of the bedrock of our capitalist system. Barry has posted to similar effect on the FASB action:

In the height of the financial crisis, the Financial Accounting Standards Board were pressured to pass FASB 157 (“Fair-value accounting”)….

Derided as “Mark-to-Make-Believe” it leads to this unfortunate situation: The same models that led to the unfortunate money-losing purchase decision in the first place are now being used to actually value these holdings. regardless of the obvious flaw in the model in the first place.

As these bad buys plummet in price, investors in banks have no insight into the loss potential — they are hidden from view, along with the true financial condition of the company. This sort of accounting f..kery would never be tolerated in a nation where investors mattered more than insiders and bankers. Instead, it rewards the incompetent and allows near insolvent banks to pretend they are solvent, thereby allowing the granting of huge bonuses.

Almost three years later, we see the results of the Accounting Board’s move. The large bailed out banks remain weakened. Like all wounded animals, they are very dangerous. They have institutionalized fraud, made forgery a business expense. ZIRP exists for the primary reason of allowing these banks to rehabilitate their faulty balance sheets. Savers get punished.

The same could have been accomplished much more quickly and cheaply through prepackaged bankruptcies. That would have required an uncorrupted Congress, an honest Accounting board and a willingness to allow capitalism in America. Instead, we had foisted upon us a convoluted form of Socialism for Financiers.

Socialism for financiers is proving to be no better for society than was socialism for everyone else.

The problem is becoming abundantly clear to all:

The foreclosure fraud settlement has shown a breakdown in the ability of regulatory agencies to deal with the aftermath of fraudulent conduct. They simply have no ability to offer a regulatory response that’s commensurate with the behavior. If the behavior does lead to a negotiated settlement, then it comes with unsatisfying “neither admit or deny” statements that judges have continued to question.

It is good that our views are spreading. A few years earlier and we might now be on the way to recovery. As it is much of the developed world is going to have to hit bottom before it can start to get better. A bit like some alcoholics. Not surprising really as the West has been drunk on debt.

The extent of the regulatory capture is mind blowing. Again the blogs tend to be fulfilling the role vacated by the fourth estate:

The OCC doesn’t want anyone digging too deeply into the solvency of the major banks or into the mess they’ve made of the mortgage paperwork system. Well, now there’s evidence that this is exactly what’s going on. The interview with this whistleblower is well worth reading. Put this one in the suspension of belief category:

Supervisors told his entire group that “Wells Fargo had submitted over 10,000 files to Promentory. Only 4 were found to be in question, and upon final review by Wells, no harm was found.” So, 10,000 homeowners submitted their complaints and all 10,000 were deemed to be models of perfection.

It will be interesting to see the final figures on the reviews…if the OCC releases them.

It appears the entire regulatory and political infrastructure of the US has been captured by vested interests. The nation is living off its cultural capital. While there is a lot of ruin in a nation, it is not infinite.

It is time to return to integrity. In fact it is well past the time. The current devouring of all that made us what we are can not continue. The sooner we face up to reality and start laying down more cultural capital the better. Not every nation needs to hit bottom. Anarchy is best avoided. The US, Canada, Australia and NZ may yet avoid it. I fear there are dark days ahead for UK, irrespective of what it now does.