Author Archive

Here’s the S-1.


Is this company really worth the $100 billion or so implied by the IPO pricing? A few points of comparison: the market capitalization of Duke Energy is $29 billion. Target stores is $36B. Yahoo is $19B while Amazon is $101B and Cisco Systems is $89B. CSX railroad is $22B, Ford is $38B, and General Electric is $194B.


Do you think a $100B valuation for Facebook is realistic? What strategies and future environments could lead to this number being sustainable or even understated?


(I don’t have any direct financial interest in Facebook currently, but may do something with the stock at some point, more likely in the short than in the long direction. This post is for sharing of general information and discussion and does not represent financial advice.)

The hot energy story of the last few years has been the vast expansion in the available supplies of natural gas, and the very significant economic implications thereof. I though it might be interesting to take a look at the past, present, and future of this commodity.
The first known use of natural gas was by the Chinese, circa 500 BC…they captured gas from places where it was seeping to the surface, transported it in bamboo pipelines, and burned it for a heat source to distill seawater and capture the resulting salt and fresh water. The modern gas era began circa 1800 with the use of gas for lighting–initially of streets and later of homes and other buildings. Since there was no network of gas wells and long-distance pipelines, the gas used for these applications was usually not true natural gas, but rather “town gas,” made by heating coal. (Gas stoves seem to have become popular circa 1880, and apparently had quite an impact….I’ve read that the term “gas-stove wife” was enviously applied to women who were so fortunate as to have one of these appliances and were thereby spared the labor of tending a wood or coal stove, and hence had some leisure time available.)


The transition from coal gas to true natural gas had to wait on the build-out of a long-haul pipeline network, which took place mainly from 1920 to 1960. Although electricity became the glamor “fuel” and displaced gas in many cases for cooking and heating, the generation of electricity itself has in recent years become a major source of gas demand. Natural gas is also important as a feedstock for the production of fertilizer and of various plastics. By the early 2000s, there were serious concerns that the US was running out of natural gas–see for example this 2003 TIME Magazine story. The article cites Alan Greenspan’s concerns that high nat gas prices would make us uncompetitive in many industries, as well as citing direct economic pain inflicted on consumers. The only solution seemed to be large-scale imports of natural gas via LNG (liquified natural gas) ships. (Gas is far more difficult to transport than oil, because it needs to be liquified in order to make the volumes manageable, which in turn requires refrigerating it to very low temperatures.) In late 2005, US natural gas prices hit an inflation-adjusted level of almost $16 per million BTUs.


The price is now about $2.50 per million BTUs. What happened?

Read the rest of this entry »

…and its successor, the computer-driven phototypesetting machine.

Because in the Olden Days, when typesetting was done by hand, the typesetter would need a physical piece of type for each occurrence of a specific letter in a particular composition.

If we were still at that level of technology, there would be a serious “I” shortage for print-media reporting of the speeches of a certain individual.

Arthur Brooks (surely one of the very few people to pursue a career as a professional player of the French horn before becoming a professor of business and government) has a good piece in today’s WSJ.

The opposite of earned success is “learned helplessness,” a term coined by Martin Seligman, the eminent psychologist at the University of Pennsylvania. It refers to what happens if rewards and punishments are not tied to merit: People simply give up and stop trying to succeed.

During experiments, Mr. Seligman observed that when people realized they were powerless to influence their circumstances, they would become depressed and had difficulty performing even ordinary tasks. In an interview in the New York Times, Mr. Seligman said: “We found that even when good things occurred that weren’t earned, like nickels coming out of slot machines, it did not increase people’s well-being. It produced helplessness. People gave up and became passive.”

Read the whole thing.

The prospect of terminating Barack Obama’s employment inspired Bookworm and her commenters to link various breakup songs.

Which reminded me of this great song: Goodbye to You!

Irritating 10-second ad at the beginning, but it’s worth it.

From an Amazon customer review of one of Tom Russell’s albums:

Twice in my life, while driving in heavy freeway traffic, I’ve heard songs so good on the radio that I had to pull off the road and collect my thoughts. Turns out Tom Russell wrote both of ‘em.

I’ve never had to actually pull off the road, but there’s no denying that TR’s songs pack a considerable emotional punch…indeed, I think Russell is one of the most talented singer/songwriters working today. I’ve been meaning to write a review of his work for some time, and was stirred into action by L C Reese’s post Grasshoppers and Frost, which reminded me of some lines from Russell’s song Ambrose Larsen:

The blackbirds and the locusts, destroyed our corn and wheat
The hawks they ate the chickens, the wolves our mutton meat
With traps and dogs and shotguns loud, we fought this old wild ground
Our children caught the fever, but no doctors were around

(listen here)

The above is from TR’s album The Man From God Knows Where, a song-cycle about the American immigrant experience based in part on the lives of his own Norwegian and Irish ancestors. “Concept albums often fall flat because they are too explicit” noted an SFGate review of this work, “…but The Man From God Knows Where triumphs by laying out the story of one man’s family in intimate detail while developing general themes that inform all our lives.”

Read the rest of this entry »

Link

via Instapundit

See also Claire Berlinski’s post A hidden history of evil.

It’s been obvious for some time that Obama simply cannot stand Israeli Prime Minister Benjamin Netanyahu. It’s also increasingly obvious that the President feels a real sense of liking for and fellow-spiritedness with Turkish leader Recep Erdogan, who has moved his country away from secular democracy and disturbingly far in the direction of Islamic fundamentalism and hostility to Israel.


Which says plenty about the kind of leadership we are getting from Obama himself.


More here.

Nick Schulz interviews Jim Manzi about Manzi’s forthcoming book Uncontrolled: The Surprising Payoff of Trial-and-Error for Business, Politics, and Society. Excerpt from the interview:

We are all, to some extent, the prisoners of our experience. Like everyone, my experiences have surely created numerous biases to which, by definition, I am blind. But I have drawn some conscious lessons from my various jobs. Mostly, I suppose they relate to humility about how much harder it is to get anything done out there in the world than it seems like it ought to be when you read about it in a book or discuss it in a conference room. 

A good example is that I think that most mainstream economists radically underestimate the importance in any business of what in another context Carl von Clausewitz called “friction.” Headquarters rarely knows what is going on in the field; people in frontline positions have little idea of the big picture, and react to local conditions as best they can; entrepreneurs are mostly making it up as they go, and so on. Economists are of course aware of this issue conceptually, but their attempts to incorporate it into their models of the firm and the economy are inadequate in the extreme. As compared to mainstream economic doctrine, therefore, I believe that uncertainty plays a far bigger role in real world decision-making, that quantitative models of the economy are less useful as guides to action, and that trial-and-error learning as embodied in existing institutions and practices is more important.

(via Grim’s Hall)

Last week, long-time Washington Post columnist Richard Cohen published an extremely vitriolic column attacking Mitt Romney as “a man of falsehoods.” What I want to focus on in this post, though, is not the positives and negatives of Mr Romney, but rather the concluding paragraph of Cohen’s article:

He often cites his business background as commending him for the presidency. That’s his forgivable absurdity. Instead, what his career has given him is the businessman’s concept of self — that what he does is not who he is. This is what enables the slumlord to be a charitable man. This is what enables the corporate raider to endow his university. Business is business. It’s what you do. It is not who you are. Lying isn’t a sin. It’s a business plan.

So, in Cohen’s view, the businessman’s “concept of self” inherently involves a separation of what he does from who he is…a more forthright way he could have put this, I guess, would have been to simply say that all businessmen are weasels. (It’s interesting that Cohen chooses to use the term “businessman” rather than the gender-neutral term “businessperson.” Does he believe that there are no female slumlords? Does he think women inherently lack the analytical skills and competitive spirit required to be a successful corporate raider?) Evidently, Cohen believes that businesspeople are much more prone to unethical behavior (“Lying isn’t a sin. It’s a business plan.”) than are, say, tort lawyers, college professors, civil-service employees, or the executives of “nonprofit” organizations.

Of course, there is a long tradition of aristocrats looking down their long noses at those who are “in trade.” (Although I expect that average aristocrat’s view of a newspaper columnist wouldn’t be much more positive than his view of a storeowner or a factory manager.)

Cohen is far from being on the leftmost pole of the Washington journalistic establishment, and that fact that he feels able to make such pejorative drive-by assertions about the nature of businesspeople, without the need to build a case for their validity, speaks volumes about the current climate of opinion among those who today identify themselves as liberals and “progressives”–ie, the controlling elements of the Democratic Party.

A corporate executive who despised salespeople or manufacturing people would be unlikely to be able to run the sales function or the manufacturing function of his company effectively. There is no chance that politicians from a party dominated by people like Cohen–and much worse–will be able to supervise a free-market economy in a way leading to sustainable economic recovery and growth.

Today is Yom HaShoah, Holocaust Memorial Day. Screenwriter Robert Avrech has posted the first part of his Emmy-award-winning film The Devil’s Arithmetic, which is based on Jane Yolen’s book of the same name, for on-line viewing.

The DVD is available from the usual sources, including Amazon and Netflix. Highly recommended.

The 70th anniversary of the Doolittle Toyko raid is being marked at the National Museum of the USAF near Dayton, OH. Four of the original raiders will be present.

Video here.

Speaking of the Titanic….there must have been at least a thousand books written about this ship, and quite a few of these books have been getting a marketing push from the 100th anniversary of the sinking. One worthy book that could have done with a little marketing assistance is this 1998 novel, which currently stands at #5,797,127 on Amazon.

Passenger Sumner Jordan is a 12-year-old from a wealthy Boston family, returning from a visit to his father in England. Sumner was named for the abolitionist Charles Sumner, who was beaten and nearly killed–on the Senate floor–by a proponent of slavery, and he desperately wants to live up to the level of courage shown by his namesake. He has a crush on 19-year-old Ivy Earhshaw, a dedicated suffragette.

When the ship hits the iceberg, each of them will have some decisions to make about ideals versus personal safety.

(Writing this review from memory and information on Amazon, since I can’t find my copy and it’s not available on Kindle.)

(I originally posted this in early 2010–today seems like an appropriate day for a re-post)

Chevy Chase, MD, is an affluent suburb of Washington DC. Median household income is over $200K, and a significant percentage of households have incomes that are much, much higher. Stores located in Chevy Chase include Tiffany & Co, Ralph Lauren, Christian Dior, Versace, Jimmy Choo, Nieman Marcus, Saks Fifth Avenue, and Saks-Jandel.

PowerLine observed that during the 2008 election season, yards in Chevy Chase were thick with Obama signs–and wonders how these people are now feeling about the prospect of sharp tax increases for people in their income brackets.

The PowerLine guys are very astute, but I think they’re missing a key point on this one. There are substantial groups of people who stand to benefit financially from the policies of the Obama/Pelosi/Reid triumvirate, and these benefits can greatly outweigh the costs of any additional taxes that these policies require them to pay. Many of the residents of Chevy Chase–a very high percentage of whom get their income directly or indirectly from government activities–fall into this category.

Read the rest of this entry »

Ran across some information about a project to create an open-source Jacquard loom. A Jacquard has the ability to weave elaborately-patterned fabrics by controlling each individual warp thread in the weaving process. Machines that can handle a large number of threads are pretty costly…numbers I’ve seen are in the $30K-60K range…and there are evidently a lot of hobbyists and small businesspeople who would like such a loom but are unable to afford one. Hence, the open-source loom project.

The Jacquard is important in the history of technology, and I’ve been intending to write about this topic for a while. A good source is Jacquard’s Web: How a Hand-Loom Led to the Birth of the Information Age, by James Essinger. (I’m not a weaver, so hope that those who are will forgive and correct any inaccuracies or incorrect use of terminology in this post.)

Traditionally, the weaving of patterned fabric was a very labor intensive process requiring that for each throw of the shuttle, a number of cords must be pulled or not pulled in order to lift or not lift specific threads. Essinger estimates only 1 inch of fabric per day, for a weaver and his assistant, could be produced–so these fabrics were definitely luxury goods.

Read the rest of this entry »

Last week Ginny critiqued an article by a University of Iowa professor, in which said professor (who moved to Iowa from San Francisco 20 years ago) had some not-terribly-positive things to say about the people among whom he has spent the last two decades and remarked that of the places he has lived, many of them foreign countries, “none has been more foreign to me than Iowa.”

Coincidentally, while resorting documents in my office I ran into the July/August 04 issue of the (sadly now defunct) magazine The American Enterprise, which has several articles on the theme “Plain America,” that is, western, midwestern, and rural America. Happily, the whole issue is online, and these essays are thoughtful and thought-provoking. They include:

–a piece on the cowboy archetype, by Andrew and Judith Kleinfield
–growing up in Fargo, by James Lileks
–culture in Inner America, by Bill Kauffman
–rediscovering our Midwest, by Joel Kotkin
–small lives well-lived in small places, by Blake Hurst
–the significance of the Lewis and Clark expedition, by Karl Zinsmeister
–some thoughts by the then-governor of Colorado, Bill Owens

These essays make a good complement to Ginny’s post. The text display format used at the linked site is not greatly to my liking, but it is readable, and it’s well worth doing so.

…would be the predictable result of a second Obama term. So says Home Depot co-founder Bernie Marcus, in this video.

via Instapundit

A man’s admiration of absolute government is proportionate to the contempt he feels for those around him

–Alexis de Tocqueville, from the preface to his The Old Regime and the (French) Revolution. (Via PowerLine)

Translations of this passage differ: the one quoted above is from this version. A different translation renders the phrase as “contempt for one’s country.” The actual French phrase used in the original is son pays. Either way, the point is pretty similar.

The thread of previous Worth Pondering posts starts here.

In Britain, an 83-year-old woman has been told that she must find a new medical practice, because travel to the one she has been attending for the last 30 years involves an unacceptable carbon footprint.

Daniel Henninger, writing in the WSJ, argues that the Democrats–and Obama in particular–are very good at the emotional appeal to voters: the Republicans, focusing on logical argument, not so much.

Mr. Obama may not know much about the private economy, but he knows a lot about the uses of human anxiety. ..How can a president simultaneously hammer real job creation with the Keystone XL pipeline decision, then go into the country and claim kinship with the anxieties of the jobless? No problem. Just do it.

It could work. If we know nothing else about Barack Obama it is that he can play “hope” like a Stradivarius.

Read the whole depressing thing. I’d also note that Mitt Romney, in particular, has some real gaps in the ability-to-appeal-to-emotions department.

Related: the coolness/squareness factor in politics.