Restaurants like Olive Garden and Red Lobster are struggling, while high end dining is flourishing. At GE, demand for high-end dishwashers is racing ahead of sales growth for mass-market models. The increased wealth of highly skilled workers, the insane wealth of those with capital, and the outsourcing of lower skilled jobs have left us all asking, “what happened to the middle class?”
Submitted by Pater Tenebrarum of Acting-Man blog,
Most of our readers probably know what we think of minimum wages, but let us briefly recapitulate: there is neither a sensible economic, nor a sensible ethical argument supporting the idea.
Let us look at the economic side of things first: for one thing, the law of supply and demand is not magically suspended when it comes to the price of labor. Price it too high, and not the entire supply will be taken up. Rising unemployment inevitably results.
However, there is also a different way of formulating the argument: the price of labor must not exceed what the market can bear. In order to understand what this actually means, imagine just for the sake of argument a world without money. Such a world is not realistic of course, as without money prices the modern economy could not exist. However, what we want to get at is this: workers can ultimately only be paid with what is actually produced.
As Mises has pointed out, most so-called pro-labor legislation was only introduced after enough capital per worker was invested to make the payment of higher wages possible – usually, the market had already adjusted wages accordingly.
However, unskilled labor increasingly gets priced out of the market anyway, which is where the ethical argument comes in. If a worker cannot produce more than X amount of goods or services, it is not possible to pay him X+Y for his work. Under minimum wage legislation he is condemned to remain unemployed, even if he is willing to work for less.
In Switzerland, the unions have recently managed to get the demand for minimum wage legislation on one of the quarterly referendums in the country. An interesting point has been brought up by one of the opponents in the course of the debate, but first a little background information:
“Jasmin Eicher has already axed her sole full-time employee to keep afloat her shop selling cards, candles and paper in a Zurich suburb. If Switzerland approves what would be the world’s highest minimum wage, she says the only option would be to close her door.
The Swiss will vote in a national referendum May 18 on whether to create a minimum wage of 22 francs ($25) per hour, or 4,000 francs a month. While about 90 percent of workers in Switzerland already earn more than that, employers say setting Switzerland’s first national wage floor would push up salaries throughout the economy. When adjusted for currency and purchasing power, it would be the highest minimum in the world.
“We couldn’t pay it,” said Eicher, standing behind the counter in her shop in Schlieren. The employee she let go earned 3,500 francs a month. Now she’s by herself, working 10 hours a day, six days a week, and her hopes of hiring a cheaper helper would be dashed if the proposal passed.
“Of course I understand about people not earning enough, but not everyone is worth 4,000 francs. Here in Switzerland we’re already so well-off,” she said.
The chief backers of the proposal are Switzerland’s biggest trade unions, which argue that pay levels need to reflect the country’s prices – among the world’s highest.”
George Sheldon, professor of economics at the University of Basel, said the Swiss proposal would be counterproductive.
“Unemployment among the unskilled is increasing,” he said in a phone interview. “The solution to their problem can’t be to make them more expensive.”
So, 90% of all employees are already paid more than the proposed minimum wage. It turns out that virtually all the biggest companies pay salaries above what would be the world's highest minimum wage – but that is not the main problem.
Who Would Lose Out?
The point we actually wanted to get at is touched upon in the following excerpts:
“Despite being home to multinational corporations such as KitKat-candy-maker Nestle SA and drugmaker Novartis AG, Switzerland gets two-thirds of its employment from small and medium-sized enterprises.
The Association of Swiss Cleaning Companies, Allpura, opposes the minimum wage, saying it would lead to job cuts and worse working conditions. It says employees in the sector earn between 18.50 francs and 26.50 francs per hour.
Big companies including Nestle, Novartis and Swatch Group AG are against the measure too, saying it will hurt the economy.
“State intervention in the liberal economic system also goes against the market economy principles of our society that have been so successful to date,” Novartis spokesman Dermot Doherty said via e-mail.
At Nestle, the wages of all Swiss employees are above the proposed minimum, spokesman Philippe Aeschlimann said. “A higher cost of labor would however affect companies in our supply chain and our Swiss customers,” he said via e-mail.
“A minimum wage won’t stop poverty,” Economy Minister Johann Schneider-Ammann said at a press conference in Bern in February. “This new system could be counterproductive.”
According to Boris Zuercher, head of the Employment Directorate at the State Secretariat for Economic Affairs, the uniform wage would get passed on to consumers in the form of higher prices and will ultimately result in job losses among low-wage earners. Workers earning between 4,000 and 6,000 francs a month — 40 percent of the full-time workforce — will seek higher pay too, he said.
“The main criticism is that it’s an enormously high minimum wage — it would be the highest internationally,” Zuercher said, speaking by phone from Bern. “It’s not a question of Novartis or UBS not being able to afford to pay 4,000 francs, but some little company in a remote valley.”
By contrast, the Swiss Federation of Labor Unions says a minimum wage wouldn’t lead to higher unemployment because it would mostly affect domestically-oriented sectors where outsourcing isn’t possible.”
The first salient point is the fact that once this new minimum wage law is introduced, upward pressure on all wages would likely ensue. Note in this context that Switzerland is awash in newly created deposit money due to the ministrations of the SNB, which is manipulating the Swiss franc's exchange rate (a few charts on Swiss monetary inflation over recent years can be seen in our article 'How Safe is the Swiss Franc?'. The article is slightly dated, but it still serves to illustrate the point). So there is no brake on prices and wages due to a lack of money supply inflation – rather the opposite. Naturally, wages would not be the only thing rising under these circumstances – prices would be adjusted accordingly, and in the end the purchasing power of the higher wages would not be greater than before.
The second important point is the one about which enterprises would suffer the most on account of such legislation. When the union official cynically comments that 'only businesses that cannot be outsourced will be hit' (i.e., those who cannot vote with their feet and simply flee), he forgets to mention that small and medium-sized companies as a rule cannot 'outsource' their operations either, almost regardless of what they are producing. We felt reminded of something a friend of ours mentioned to us recently: “The problem of today's form of capitalism is that there are not enough capitalists:”
Indeed, an individual entrepreneur running a small business has a very difficult life already, as every new imposition is much harder to overcome for a small business than it is for a large corporation. This is also why we often find that big corporations don't resist new regulations: they reckon they are likely to keep competition from upstarts at bay. It is laudable that several big Swiss corporations are evidently not following this trend.
If Swiss voters agree to introducing a new minimum wage law, they would end up doing incalculable damage to Switzerland's entrepreneurial culture. At the moment, Switzerland is still one of the freest economies in the world. It has been extremely successful so far and its achievements would clearly be put at risk. Hopefully Switzerland's voters won't be swayed by union's arguments.
Democratic strategists have made a blunt declaration in an election-year memo, according to AP, "Don't talk about the economic recovery. It's a political loser." Stan Greenberg, James Carville and others wrote that in head-to-head polling tests the mere mention of the word "recovery" is trumped by a Republican assertion that the Obama administration has had six years to get the economy moving and its policies haven't worked. But, but, but... stocks are at all-time highs?
As AP reports, Election-year memo to Democratic candidates: Don't talk about the economic recovery. It's a political loser.
"As a start, Democrats should bury any mention of the recovery. That message was tested ... and it lost to the Republican message championed by Karl Rove," they wrote.
So say Democratic strategists in a blunt declaration that such talk skips over "how much trouble people are in, and doesn't convince them that policymakers really understand or are even focusing on the problems they continue to face."
In addition, Stan Greenberg, James Carville and others wrote that in head-to-head polling tests the mere mention of the word "recovery" is trumped by a Republican assertion that the Obama administration has had six years to get the economy moving and its policies haven't worked.
Coincidentally or not, Democrats have largely shelved the "R" word.
President Barack Obama's only utterance of it in recent weeks was on April 8, and it was in the context of accusing Republicans of blocking progress on issues that "would help with the economic recovery and help us grow faster."
Additionally, at a news conference on March 26 where they announced a campaign-season agenda, neither Senate Majority Leader Harry Reid, D-Nev., nor most of the other five lawmakers present uttered the word "recovery."
By traditional measurements, an economic recovery has been underway since partway through Obama's first year in office.
The economy was shrinking when he was sworn in but turned positive in the third quarter of 2009. It has been growing since, although barely so at times. Unemployment, measured at 7.8 percent when Obama took office in January 2009, rose to 10 percent in October of that year until it began declining. It now stands at 6.7 percent, according to the Bureau of Labor Statistics.
At the same time, though, many of the jobs that have been created are lower-paying than the ones that preceded them. Long-term unemployment is at historically high levels, another factor that does little or nothing to reassure hard-pressed men and women that any recovery is helping their own pocketbooks.
Page Gardner of Women's Voices, listed as a co-author of the memo, said in an interview that for unmarried women and other key parts of the Democratic coalition, "a message about the benefits of a recovery doesn't really reflect their lives currently. The power of the women's economic agenda and talking about equal pay for equal work, paid sick leave, and messages that go to their ability to make it themselves and help their families make it is very powerful, and that's what they want to hear."
But that makes no sense? Initial jobless claims are at pre-crisis levels?
Oh yeah this... For all those curious why layoffs and departures are so low, the
answer is simple: hires are 1 million lower than they should be:
And stocks are at record highs?
Oh yeah this...
Still keep BTFD as it's all gonna be great soon - just wait until the weather is all hot and lovely across the US...
Submitted by Mike Krieger of Liberty Blitzkrieg blog,
Just yesterday, I wrote a post about how a South Carolina construction worker was fined $525 and lost his job for not paying $0.89 for a drink refill while working at the Ralph H. Johnson VA Medical Center in downtown Charleston. The point was to emphasize how the law comes down with a devastating vengeance when an average citizen commits a minor crime, yet allows the super rich to loot and pillage with zero repercussions. There is now a systemic two-tier justice system operating in these United States, and the result will unquestionably be tyranny if the trend continues unabated.
The latest example of a lowly citizen being subject to a disproportionate use of the law, is Jon Daniel of Peoria, Illinois. Jon was behind a parody Twitter account that mocked Peoria mayor Jim Ardis, and his biggest mistake was not making it clear that it was a parody. As a result, Twitter had already suspended the account weeks ago. Problem solved, right? Wrong.
The tough guy mayor was so offended that a plebe would dare criticize his royal highness that he ordered a police raid on the home of Jon Daniel and his roommates. Peoria native, Justin Glawe wrote an excellent article on the subject for Vice. He writes:
Jon Daniel woke up on Thursday morning to a news crew in his living room, which was a welcome change from the company he had on Tuesday night, when the Peoria, Illinois, police came crashing through the door. The officers tore the 28-year-old’s home apart, seizing electronics and taking several of his roommates in for questioning; one woman who lived there spent three hours in an interrogation room. All for a parody Twitter account.
Yes, the cops raided Daniel’s home because they wanted to find out who was behind @peoriamayor, an account that had been shut down weeks ago by Twitter. When it was active, Daniel used it to portray Jim Ardis, the mayor of Peoria, as a weed-smoking, stripper-loving, Midwestern answer to Rob Ford. The account never had more than 50 followers, and Twitter had killed it because it wasn’t clearly marked as a parody. It was a joke, a lark—but it brought the police to Daniel’s door. The cops even took Daniel and one of his housemates in for in-depth questioning—they showed up at their jobs, cuffed them, and confiscated their phones—because of a bunch of Twitter jokes.
So the police raid on Daniel’s house wasn’t an isolated incident; it was just another case of the cops acting shady—and naturally, many in this town are raising serious questions and concerns over the use of taxpayer resources and manpower to find out who ran @peoriamayor.
Fortunately, this story does have a silver lining. Daniel’s original Twitter account was actually pretty unsuccessful, with only 50 followers by the time it was shut down. Mayor Jim Ardis should’ve just left well enough alone, but he couldn’t do that, and as a result of all the attention this story has received in the blogosphere, new parody accounts have emerged. The most successful one is @NotPeoriaMayor and the avatar is Jim Ardis with a Hitler mustache. See below:
The best part is this account already has 7x the followers of the other one.
Lesson Learned: Don’t fuck with the Internet.
Full Vice article here.
The LA Times also covered the story, here.
Submitted by Brandon Smith of Alt-Market.com,
"Freedom had been hunted round the globe; reason was considered as rebellion; and the slavery of fear had made men afraid to think. But such is the irresistible nature of truth, that all it asks, and all it wants, is the liberty of appearing." - Thomas Paine
The label of “fringe” is a common one used by statists, bureaucrats and paid shills in order to marginalize those who would stand against government corruption. The primary assertion being sold is that the “majority” joyously supports the establishment; and the majority, of course, is always right.
The liberty movement, which is a collection of numerous freedom organizations and political activists brought together by a shared philosophical bond, has been accused of “fringe” status for quite some time. With corporatist dominance over the mainstream media for decades backing an elitist machine in Washington and a global banking cartel footing the bill with money created from thin air, any such accusation can be made to seem “real” to those who are unaware.
The problem has always been a matter of physical action giving rise to an acknowledgment of numbers.
We have all heard the old story of the debate within the ancient Roman government over the idea of forcing the slave population to wear distinct armbands so that they could be more easily identified among the regular population. The concept was rejected on the realization that if the slaves were given a visual confirmation of their considerable numbers and strength, they would be encouraged to revolt against the Roman tyrants. That is to say, as long as the slaves felt isolated, they would remain apathetic and powerless. Of course, that was not always the case. Sometimes, a small group would stand up despite their supposed isolation, and the rest of the world, wide-eyed and astonished, would take notice.
The liberty movement has just experienced one of its first great moments of realization and empowerment in Clark County, Nev., and millions of past naysayers have been shell-shocked.
I covered my views in detail on the Bundy Ranch saga in Nevada in my article “Real Americans Are Ready To Snap,” amid the usual choir of disinformation agents and nihilists desperate to convince Web audiences that the liberty movement would do nothing to stop the Bureau of Land Management’s militant assault on Cliven Bundy’s cattle farm. This assault included hundreds of Federal agents, helicopters, contractors hired essentially as cattle rustlers and even teams of snipers.
The statists and socialists were certainly out in force to misrepresent the Bundy issue and frighten anyone who might consider taking a stand for the family. The Southern Poverty Law Center, not surprisingly, was hard at work spreading lies and disinformation about the confrontation in Nevada, painting a picture of fractured patriot groups and militiamen with “little training” going to face unstoppable Federal BLM agents and likely “ending up dead.” The SPLC insinuated that the movement was ineffective and in over its head.
The reality was much the opposite. Liberty groups arrived in droves and were staunchly unified — not by a centralized leadership, but in defense of the basic moral principles outlined in the U.S. Constitution and Bill of Rights. Sources on the ground at the Bundy ranching operation relayed to me that at least 1,000 activists and militia members arrived over the weekend, with many more on the way. This one event proved certain points:
- The liberty movement is not afraid to put itself in harm’s way for the right cause — even if this means facing off against highly armed government thugs.
- The liberty movement has the ability to field a response team or even an army anywhere in the country at any time within a couple of days.
- The liberty movement has the ability to change the course of events, even to the point of removing Federal agents from a region who are acting in an unConstitutional manner.
- The Federal government is not invincible, nor is it unfazed by liberty movement opposition. They worry about our strength and ability.
Over the past weekend, we witnessed the true influence of the liberty movement. As thousands of activists and militia arrived in the area, the BLM finally began to understand what it was facing. The government agency that has been terrorized farming communities throughout the West for years, the agency armed with military-grade weaponry and hundreds of agents, ran away, as freedom fighters descended on the region.
Nevada Governor Brian Sandoval and Clark County Sheriff Doug Gillespie, two politicians who were deathly silent during the beginning of the Federal incursion on the Bundy ranch, have now suddenly become vocal in defense of Nevada ranchers against the BLM. It’s amazing how “inspired” politicians can become to do the right thing when they see an army of liberty activists marching against tyranny in their own backyard.
Not only was the BLM forced to remove itself from the area, but it was also forced to relinquish all the cattle it had stolen from Bundy over the course of the past week. Here, liberty groups close in on the cattle holding pens of the BLM and take back Bundy’s property.
Statists are indignant and furious over the surrender of the BLM. The same people who boasted that liberty activists would be slaughtered by Fed agents are now frothing at the mouth because they did not get their massacre. Not only that, but the bureaucracy they worship has shown itself to be impotent in the face of Constitutional champions. All I can say is nothing puts a bigger grin on my face than to see statists cry like babies when their delusions of grandeur are trampled on.
This was a major victory for the liberty movement. But let’s be clear; the fight is just beginning.
I suspect that the Bundy event will be spun by news agencies and the government until it is unrecognizable. They will claim that the BLM left not because they were wrong, but because they were trying to keep people safe. They will claim that liberty movement protesters were the aggressors and the poor BLM agents were just trying to do their jobs. They will play the race card as they always do, much like this pathetically lazy and unprofessional article from Slate, which asserts that if the Bundy's had been black, the Liberty Movement would have never supported them. They will argue the so-called Federal legality of the raid itself, and paint Bundy as a “freeloader” who refuses to pay taxes and who is living off the American people. They will do everything in their power to destroy the image of the victory and soil the name of the Bundy family.
What they don’t seem to understand, though, is that the liberty movement does not care what the Federal government deems “legal” or “illegal.” Our only interest is what is Constitutional and what is moral. The dispute was never about the “legality” of Bundy’s use of the land, which his family used for grazing without interference for generations — until 1993, when the BLM used the absurd endangered species protection racket to put all of his neighbors out of business and threaten his ranch with invasion. Add to this the recently discovered fact that Senator Harry Reid's former assistant and friend Neil Kornze is now head of the BLM due to Reid's influence, and the fact that Harry Reid and his family are reaping financial rewards by driving farmers from all over the region where Cliven Bundy's ranch sits while arranging land deals with Chinese solar companies, and one has to ask, why should Bundy pay any of his hard earned money to the federal government when they are just going to use it to bulldoze his cattle and make Harry Reid more rich?
Disinformation websites like Snopes contend that Reid's "projects" are not being established anywhere near the Bundy Ranch, yet, one such project has already been launched only 35 miles south of Bundy, and, the BLM has erased a page from its website specifically mentioning the Bundy Ranch and it's "interference" with Dry Lake Solar Energy Zone Projects, the same projects Harry Reid and his son are heavily involved in.
What is amazing to me is that in light of this information hardcore socialists are still willing to defend Reid and the BLM. My question is, if the BLM is so innocent, then why are they erasing such data from their website at all? What were they trying to hide?
Harry Reid has not responded to the facts behind his financial involvement in the BLM's attacks on Nevada farmers, except to say that they are "conspiracy theories". He added when asked about the status of the confrontation:
“Well, it’s not over. We can’t have an American people that violate the law and then just walk away from it. So it’s not over...”
Yes, Harry, it won't be over until men like you are thrown behind bars.
Note that he says "an American people"; as if he is separate, as if he is referring to all of us as a subservient organism, or servant class. What Reid is saying is, the elites can't have "an American people" openly exposing their criminality and defying their tyranny, and then just walking away. I'm sorry to break it to Reid, but that is exactly how all of this is going to end.
Statists and bureaucrats like Reid continually attempt to argue this issue from the standpoint of Federal legality, obviously because the Federal government has the legislative and bureaucratic power to make any despicable action legal (at least on paper) if it wishes. However, the liberty movement has no interest whatsoever in Federal interpretations of legal precedence. We are only concerned with what is right. As the old saying goes, when injustice becomes law, rebellion becomes duty.
The liberty movement also fully understands that the Bundy victory was only one battle at the beginning of a long war.
The BLM may very well be waiting for activists to leave the area before attacking again. And even if that is not the case, tyrannical systems have a way of attempting to make up for signs of weakness by escalating violence during the next siege. That is to say, we should expect the next event involving the BLM or other government agencies to be even more vicious than the Bundy incident. It is simply the natural inclination of totalitarian systems to exaggerate their power when their failings have been exposed.
That said, it should be noted that corrupt leadership often crumbles in the face of steadfast resolve and courage. We have a long way to go before this Nation is once again truly free, but the liberty movement has proven its invaluable worth over the course of the past several days. We arrived at a crossroads, and we are now moving forward in the right direction — without fear and without regret. It is in these moments when history is made — when common men and women thwart the odds, defy the darkness and make good on their beliefs by risking everything in the name of freedom.
So what part of "All sides must refrain from any violence, intimidation or provocative actions," did the US not understand when they decided that deploying troops to Poland was in keeping with the four-party deal? As WaPo reports, Poland and the United States will announce next week the deployment of U.S. ground forces to Poland as part of an expansion of NATO presence in Central and Eastern Europe in response to events in Ukraine.
Polish minister: U.S. troops are being deployed to Poland. http://t.co/42sifm1GsK
— Washington Post (@washingtonpost) April 18, 2014
Poland and the United States will announce next week the deployment of U.S. ground forces to Poland as part of an expansion of NATO presence in Central and Eastern Europe in response to events in Ukraine.
That was the word from Poland’s defense minister, Tomasz Siemoniak, who visited The Post Friday after meeting with Defense Secretary Chuck Hagel at the Pentagon on Thursday.
Siemoniak said the decision has been made on a political level and that military planners are working out details.
There will also be intensified cooperation in air defense, special forces, cyberdefense and other areas. Poland will play a leading regional role, “under U.S. patronage,” he said.
So is that an escalation? or a de-escalation? or is it different when the US moves troops towards another nation's borders?
As a reminder, we noted in December, Russia's placement of tactical nuclear-capable weapons near the Polish border which at the time sent a very clear message of escalation (despite the, at the time, lack of New Cold War headlines). We wrote at the time,
Russia quietly has come through on its threat issued in April 2012, when it warned it would deploy Iskander missiles that could target US missile defense systems in Poland. From RIA at the time:
Moscow reiterated on Tuesday it may deploy Iskander theater ballistic missiles in the Baltic exclave of Kaliningrad that will be capable of effectively engaging elements of the U.S. missile defense system in Poland.
NATO members agreed to create a missile shield over Europe to protect it against ballistic missiles launched by so-called rogue states, for example Iran and North Korea, at a summit in Lisbon, Portugal, in 2010.
The missile defense system in Poland does not jeopardize Russia’s nuclear forces, Army General Nikolai Makarov, chief of the General Staff of the Russian Armed Forces, said.
“However, if it is modernized…it could affect our nuclear capability and in that case a political decision may be made to deploy Iskander systems in the Kaliningrad region,” he said in an interview with RT television.
“But that will be a political decision,” he stressed. “So far there is no such need.”
Looks like a little over a year later, the "political decision" was taken as the need is there. But why does Russia need to send a very clear message of escalation at a time when the Cold War is long over, when globalization and free trade, promote game theoretic world peace (or "piece" as the Obama administration wouldsay), oh, and when Russia quietly has decided to reestablish the former USSR starting with the Ukraine.
We'll leave the rhetorical question logically unanswered.
A few years ago, a buddy of mine named Charlie invested in Uber.
People thought he was nuts:
Investing in a car service? Dealing with municipal and licensing regulations?
To most folks, it seemed like a high-risk dud.
Then – because, sometimes, it just happens – Uber became a “hot” private start-up worth billions.
Charlie isn’t looking so nutty anymore:
He just sold $10,000 worth of his shares in a private transaction…
For $4 million.
But that’s not the amazing part.
The amazing part is that the buyer of his shares is thrilled…
The buyer thinks those shares will soon be worth a whole lot more than $4 million.
Today we’re going to show you why the buyer’s strategy might be smart…
And why you might be smart to follow the same strategy.
Charlie is the textbook definition of an early-stage investor.
He takes chances on high-risk investments, knowing that, most of the time, his bets won’t pay off. But when they work, the returns can be staggering.
400x return on his Uber shares? Not too shabby.
The buyer who paid $4 million has a different investment approach…
He’s a later-stage investor.
He finds companies that have proven themselves – private companies that already have millions of paying customers and millions in revenue – and places big bets on them in anticipation of an IPO or major acquisition.
Maybe he’s shooting for a 3x or 5x or 10x return. Sure, he won’t get 400x – but who’s complaining about a 5x return?
Unfortunately, it’s no small feat getting access to these late-stage deals. Because these deals are in such high demand (and because the valuations are usually so high), only very large venture capital or private equity funds can access them.
SharesPost is an online platform for buying and selling shares of private companies. They’ve been around since 2009, and have a partnership with the Nasdaq. They’re legit.
Now they’re in the midst of launching something completely new: the SharesPost 100 Fund, a portfolio of later-stage private companies.
They’ll be investing in companies like Uber, Pinterest, Airbnb and Spotify. Many high-growth sectors will be represented – from software and healthcare to energy and consumer internet.
Here are six reasons why you want to look at this fund, right now:
1. Access - Getting access to private shares like Uber and Spotify – fast-growth companies backed by top venture capitalists – is tough. SharesPost has access because they’ve been working with these companies for years.
2. Less Risk - Compared to early-stage start-ups, the companies in the SharesPost100 tend to be lower risk – they’ve already proven, for example, that their technology works, or that people are willing to pay for their product.
3. Diversification - One of the key rules of early-stage investing is diversification. SharesPost’s fund structure gives you access to many of the most promising pre-IPO companies.
4. Less Time To Exit - An early-stage company generally takes 5 or 10 years to “exit” via IPO or M&A and return money to its investors – if it gets an exit at all. The companies that SharesPost will invest in are probably closer to 2 or 3 years from an exit – which might mean a quicker return on capital.
5. Liquidity - For the most part, shares of early-stage companies are highly illiquid: your money is tied up until the company exits. But SharesPost is set up as an “interval” fund – that means there are defined periods when investors can redeem a percentage of their shares for cash, and there’s no waiting around for an exit in order to get your money back.
6. Solid Management - The manager of the fund has more than 15 years of private investing experience. He previously managed $1.5 billion of venture capital investments.
Despite the benefits, there are substantial risks, too.
A fast-growing start-up – even one that IPOs – doesn’t always turn out to be a good investment for its later-stage investors. Zynga and Groupon, for example, IPO’d, but the price of their stock tumbled before some investors could sell their shares.
Other potential risks include liquidity – yes, this is an “interval” fund, but there are no guarantees there will be ample liquidity for all.
Intrigued? Here are a few details:
- Minimum Investment: $2,500
- Up to $500 million being offered
- Repurchase offers for liquidity will take place quarterly
- Fees include “Advisory fee” of 1.90%, and an upfront fee between 0% and 5.75% depending upon the amount invested
Ed. Note: When investing in startups, there’s no guarantees. Even as a later-stage investor, you’re still exposed to a substantial amount of risk if an IPO doesn’t perform well or there are liquidity problems. But there are great strategies to mitigate these risks, as Matthew points out above. And as a frequent contributor to the Tomorrow in Review email edition, Matthew shows readers some of the most lucrative ways to benefit from the private equity market, with substantially less risk. Sign up for the Tomorrow in Review email edition, right here, to find out what you’re missing.
This article originally appeared here at Crowdability.com
Well, I think you have to look at it in the context of how it all got started and you look back at the financial crisis of 2008, and the Austrian School would say that was inevitable. We may not have been prescient in picking the exact top or when it was gonna happen. Certain Austrian economists did do a good job of selecting.
And I talk about some of those people. The Austrian School, Mises and Hayek for example, predicted the 1929 crash and the Great Depression, and got quite a bit of notoriety as a result of that. And in 2008, a number of economists like Peter Shiff, who uses Austrian economics, or Harry Veryser, who has written a book recently – he’s an economist at the University of Detroit Mercy, who used some Austrian tools on the interest rates and money supply figures to figure out when the top was being reached – recognized that the government, the Federal Reserve in particular, but also the federal government encouraging excessive home ownership created an elixir, a combination that was – it blew up on us, to create this artificial boom, followed by collapse. So the Keynesians and the Monetarists, the standard neoclassical model was inject liquidity.
You have this collapse. Inject liquidity. Keep it from turning into a Great Depression. And they were successful in doing that, but it’s been a very slow recovery, and the – most of the new money that’s being created – see the Ludwig von Mises always said who gets the money first? You have this new money coming in, the easy money; where is it going?
And it appears it’s going into the stock market, and it’s creating this artificial boom in the recovery, and it’s largely going into the stock markets, gone into treasuries. It’s gone into gold and silver to some extent, although the last couple of years haven’t been very good on gold, but there has been a renewed interest in gold at these lower prices. So the Austrians are looking at that, saying this is an artificial bubble. You can play that bubble. I’ve been fully invested. But at some point, this market is going to top out and probably when interest rates rise sharply, this should be a critical factor as interest rates is something the Austrian School really looks at very closely.
We look at the money supply, which is what the Chicago School does. They have a fairly simple system. But the Austrian School has a little more sophisticated system, and we would argue, yes, it’s artificial; we’ve been playing that market, but at some point, we’ve got to use our stop orders. We’ve got to protect our profits, and we have to recognize that there could be another crash, another bear market sometime down in the future. I’m not predicting it any time right away. Yes, we’ve had a five-year recovery in the market. But until interest rates really spike, I just don’t think you’re going to see an end to it.
If you have watched the news or been online since last Monday, you might have heard something about the latest Internet threat to your privacy and online security — the Heartbleed bug.
The Heartbleed bug is a vulnerability in one of the principal tools used to encrypt sensitive information stored on Web servers. Information like usernames, passwords, and financial information like credit card numbers or bank accounts. The tool under attack, OpenSSL, is used by over two-thirds of all Web servers today to protect sensitive information on the Web.
As its name suggests, OpenSSL is an open source implementation of the “Secure Sockets Layer” cryptographic protocol. This “authenticates” the source of information and provides a means for determining whether a communication is from a trustworthy source.
The OpenSSL protocol uses cryptographic “keys” that represent a sort of shared secret between communicating parties. The keys establish who the parties are before the exchange of information begins. They are the basis of the “certificates” we all rely upon to know that we are actually communicating with Google or Facebook or our bank.
Changing your usernames and passwords could address the main security issues. But it doesn’t address the bigger problem.
Heartbleed takes its name from the OpenSSL “heartbeat extension.” This extension monitors the connection between servers and your computer to determine whether the communication taking place is “live.” It also fulfills the trustworthiness criteria specified in the identification process.
Heartbleed is a glitch in the heartbeat code that allows memory on a device to be read by another device. That memory could potentially contain sensitive information. Since the information is not protected, hackers can read it and harvest information like usernames and passwords.
But that’s not the worst part. It was discovered later in the week that the Heartbleed bug can be used to create fake websites that mimic trusted websites you might use. It thereby could cause unsuspecting Web surfers to disclose sensitive information like user names and passwords as they log into a fake website.
Imagine logging into Google or Facebook. Everything appears as it always does at login, with the site thereafter performing as expected. It’s only later you discover that your privacy and security have been compromised.
The reason this is possible, as discovered by two ethical hackers separately, is that the Heartbleed bug not only allows the interception of user information in memory as noted above, but it also allows a server’s certificates to be copied and, thereafter, applied to mimic sites.
Changing your usernames and passwords could address the main security issues. But it doesn’t address the bigger problem, that being the fundamental breach of trustworthy communications on the Internet.
If the certificates of source aren’t trustworthy, how can anyone know their communications are going where they intend them to go?
Unfortunately, the simplest solution has potentially the gravest of consequences. Especially in our convenience-driven world of Internet communication. All websites on the Internet would need to change the existing certificates with new ones.
This already occurs on a fairly limited basis as website administrators discover their certificates have been compromised. In fact, your Internet browser contains software that checks to make sure the website you’re using has a secure and up-to-date security certificate. If a page’s certificate is on a list of invalidated certificates, your browser will warn you before it connects you to the page.
But currently, the list is very short. And it doesn’t take too much time for your browser to make sure the website you’re trying to access is secure. But imagine that list growing tenfold, or a thousandfold. Millions of entries from every Internet vendor who might have been affected by the bug would have to add their certificates to the list.
The amount of time it takes for your browser to certify the website is secure would skyrocket. And it could drive Internet traffic to a halt.
According to Paul Mutton, a security consultant at the Web services company Netcraft, checking a site’s identity would take vastly longer. “If a certificate authority has to revoke 10,000 certificates, that entry will have 10,000 certificates on it,” Mutton said. “And if browsers have to download that… we’re talking hundreds of megabytes.”
It’s roughly the equivalent of downloading 30 minutes worth of standard-definition video just to view a single Web page.
So what can you do?
If you’re already a subscriber of the Laissez Faire Letter, then you probably already know about LastPass. It’s a service that generates secure passwords and gives you the ability to store them online. And don’t worry, they make it a point not to log your account’s password in their records. So only you have access to your information.
Over the last week, LastPass has taken what appear to be the appropriate steps to protect their users from the Heartbleed bug and the dangers of certificate mimicry on their site. The advice they give is pretty straightforward. Change your usernames and passwords. But more importantly, adopt a strategy to regularly change them.
There will likely be significant fallout from the Heartbleed bug in the weeks to come. Especially as the ramifications of the security breach become more apparent and understood. And of course, you still have to worry about the hacker community, which is always trying to find ways to exploit and compromise the “fixes” that are put in place.
We’ll keep an eye on things and keep you up-to-date. Stay tuned.
Ed. Note: As Mike points out above, subscribers to the Laissez Faire Letter, already have access to an exclusive free report on LastPass. But there are actually plenty of programs that can disguise your Internet signature and hide your personal information from anyone who might be looking for it. And you can learn more about a few of them, by signing up for the FREE Laissez Faire Today email edition, right here.
Article posted on Laissez Faire Today