America still leads the world in one thing: inflating speculative bubbles using gibberish finance acronyms. Meet the latest 'Get-Super-Rich-Quick' scheme, the Special Purpose Acquisition Company
This is what happens when policy after policy is passed to shift GDP from the poor and middle class to the ULTRA RICH. The ultra rich literally can't spend all of their money so things like CDO's and SPACS are created to take the money in the pocket of the rich, put it in the pocket of other rich people and then when the idea BLOWS UP like CDO's did in 2008 the government will borrow money to make sure the RICH keep their money and the people that took it from them don't pay any costs.
The solution to the problem with the rich getting more money than they can rationally spend is to shift it to the poor and middle class who have seen their income decline for 40yrs now. $15 min wage, Universal Health Care, Breaking up Oligopolies (Banks, Tech, Farming Supplies, Food, Telco etc...).... Shifting GDP across a broader set of people will GROW the economy faster, like it did from 1950 to 1980 and improve the lives of the majority of Americans. But we will have to live wither fewer SPACS and CDO's
They already do, it's called a progressive tax. The more you make the more you give to the gov, which should filter on through to people who need it. The problem is the government. It gets distracted and sprinkles the money all over the place. Need to come up with a better mechanism -- Reddit seems to be effective (see Gamestop). But I'm sure some of the Marxists in the Democratic party can figure it out.
In the US our "progressive tax system" charges Warren Buffet lower taxes than his secretary... And the tax cut Trump paid went 87% to the top 1% and insreased the deficit by almost a trillion dollars.
Taxes alone wont shift this problem of too much of GDP going to the CDO/ SPAC buying billionaires and too little going to the poor and middle class who are now dying younger, and poorer than their parents.
Things like increasing min wage impacts people far more than marginal tax rates. Universal Health Care that wont bankrupt people improves more peoples lives.
These solutions are NOT COMPLEX and voters love them. But as long as we vote into power people like Pelosi, Biden, Trump and McConnell these issues will NEVER EVER be voted on.
Where is 87% come from? And how can that be if the Trump tax plan eliminated the SALT deduction? Giving back that deduction would certainly go to the rich. You're oversimplifying why the poor and middle class are in a bad state. We've been exporting the middle class to China and Mexico for the past 40 years, through ill-thought-out trade policy, which has lead to dead towns and factories and a huge opioid epidemic. Higher min wage may help eventually but there will be a lot of poor people out of work waiting for that eventuality; small biz cant afford it. Btw, what if all the cash rushing into SPACs works? what if it starts creating companies and jobs? i'd rather have private money taking the risk than my tax dollars.
Jobs moving off shore was NOT the primary reason 50% of Americans saw their share of GDP go from 20% to 12% since 1980. There are books with empirical evidence showing how that was done with decades of policy under Democratic and Republican administrations.
This happened because of policy written under the influence of lobbyists and corporations that funded congress and the presidents (all of them) with campaign money, jobs, speaking engagement, consulting fee's etc... While the people in the lower 50% had no one speaking for them to our elected leaders.
China took less than 4M American jobs 2021. (Google it) and the US economy has created 40M new jobs since 2001. (Google it)
China did not cause min wage to stop going up with inflation and thus 40M Americans work for less than $15 an hour. Congress caused that. China did not force the US health care prices to grow twice as fast as nations with universal health care. Congress caused that. China did not force America to leave rural Americans high and dry when automation took 7M jobs since 1980. Congress caused that. (again google this) And we manufacture MORE in the US today than we did in 1980.
China did not force the US to go into debt bailing out our banks and funding wars that accomplished nothing for our country or anyone else country.
China did not force the US to pass a tax cut in 2017 that aded $1T to the counties debt and 87% of the tax cut went to the top 1% of Americans. (again google this).
It is all about wages not China...
But the media wont tell you that because the billionaires that own the media want to keep things going the way they are. More money going to the rich, GDP growing slower and slower and the lower 50% getting poorer and poorer. GDP has grown slower in the 40yrs that incomes for 50% of Americans have gone down relative to incomes to the top 1% who have seen their incomes go up 4x (again, google it).
Policy needed to fix this is easy (Higher Min wage laws, Universal Health Care, Breaking up Huge companies that own Congress, Higher taxes to the rich etc...). But the media wont tell you that because their owners know that will cost their owners and advertisers profits.
It will be GREAT for the economy but not as good for the rich as it is today.. Sorry but your claims above are no more factually accurate than the claims of people that say Climate Change Science is wrong and Trump actually won the 2019 election but for cheating. And your claims above are coming from the same sources that lied you about climate and Trump
Yes we have a "progressive" tax. But just look at how it's changed over the last hundred years: The highest tax bracket that the ultra-wealthy pay was well over 60% from 1931-1980. Now it's much lower. Also most of the ultra rich pay even less through capital gains and other loopholes. We weren't "Marxist" during WW2 or vietnam. Taxing the rich doesn't make us "Marxist"...far from it.
The problems here is that the $15 minimum wage mostly screws the small business trying to survive down the street from Walmart. You need a mechanism to help the poor that bleeds the rich, not the middle class. I hate the idea of the UBI for its antiwork incentives, but it seems like the way to go, not just to make sure the poor have at least a subsistence income, but more importantly to make sure the rich pay for it. I would recommend, EITC style, that your UBI decline 25-50 cents for each dollar you earn, that way working never brings your income down and you don't face that place where working instead of sitting at home is financially stupid.
Geoff... while i understand that intuitively one might think $15 min wage 'mostly screws the small business" their is now a great deal of research in areas where they have implemented this policy and small business is not 'mostly screwed"
When I was in college, I worked summers at McDonald's. A couple of my coworkers were challenged, one due to fetal alcohol syndrome. As markets (not government) pushed their wages higher, their jobs disappeared and they were replaced by more equipment. Other coworkers were high-school kids saving up for college. At the start, they weren't very responsible. But they learned. On the other hand, our local downtown got gutted when Walmart moved in 15 miles down the road and fastfood places took anchor just off the highway.
I see two problems with the minimum wage being too high: 1) it makes it hard for marginal businesses to survive. 2) It eliminates jobs for those who you would have to take a risk on, including people who need either to build or to rebuild their work record.
If you want to apply the higher minimum wage to businesses with more than 50 employees or $500K in annual revenue, fine. But I think it's important to maintain a bottom rung to maximize the ease with which one can find some sort of entrance into the worlds of work and/or business. The UBI would allow budding entrepreneurs a better chance to find out if their business idea was real or stupid and problematic workers to get a job when no one else will hire them. The higher minimum wage sets the stakes higher both for starting a small business and for hiring someone.
I hear you, there is enormous value in getting that 'entry level' job where we all learn how to work for the first time. And i certainly don't want to take away from your experience.
Nations all over the world have significantly higher min wage than we do in the US and they are still able to have entry level jobs for the young and simple jobs for those with other challenges. And they also have far more ROBUST small businesses than we do in the US.
Small business in the US gets screwed by large business every day. And that will continue with our with out $15 min wage. And i strongly support fighting the policy large businesses get their lobbyists to have congress to vote on that given them advantages that screw small business.
As compelling as your story is the evidence both here in the US (communities that have implemented $15 min wage and other nations with higher min wage) has to outweigh your evidence.
Moving this wage up move millions of Americans out of poverty. It moves tens of millions of American into far more financial stability than they have today and it is GREAT for the economy.
I dont want to diminish your concerns. But the case for a higher min wage is irrefutable.
Finally, an explanation of the Biden Administration's energy policy. It works precisely like a SPAC: First, you spend a bunch of other people's money without a clue as to what it will be used for and who will profit. Next you get rid of whatever value you might already have had, then promise people jobs in industries that don't yet exist, located anywhere but where the people whose jobs you've destroyed, doing work no one can explain, and being financed with fairy farts. Finally, you create the opportunity for a hostile takeover by OPEC and blame the stupid American population for not having been sufficiently devoted to the Holy Sepulchre of Wokeness.
Come to think of it, the education policy is a SPAC. First, you ask the teachers' unions how much money they want, give it to them, then ask them again how much money they want and give them that much, and finally ask which of six or seven things that do not exist and cannot be accomplished within the next decade is their next demand, and tell the stockholders (school children) to be patient.
If anyone wants to make a ton of money, they can just give me a few million. I'm sure I can come up with something worthwhile to do with it that will turn huge profits sooner or later. I don't know what that would be yet, and honestly I haven't put much thought into it, but the potential is limitless!
A sure sign of your potentially unbridled success is when you start creating, and funneling, large sums of monies to subsidiaries. I’ll be honored to be your first subsidiary, I’ll call it “Future Foot”.
Go ahead and transfer the $1M my way and as soon as I get my tax refund I’ll pile up the 10 for you. See, business is picking up already; we have a sound operation others will be confident they can toss their money our way.
Admittedly, I don't know much about it - but isn't the purpose of the SPAC to avoid doing the normal disclosures when taking a company public? The SPAC does it on themselves, buys/merges the private company and voila - it's now public without doing the full IPO process. The article mostly focuses on the giant piles of cash being put up for TBD businesses, which is indeed a depressing sign of the times... but maybe not the most significant issue with SPACs.
Or maybe SOX is insane. Or the 40 Act is insane. Have you considered those possibilities given that all the (initial) stakeholders in a SPAC are alledgedly sophisticated?
We can poke holes in every capital raising vehicle, including SPAC's, and I don't know anyone who can/would argue that. Take a step or two back and we can find a similar, if not dead on exact, storyline for maybe every financial mechanism that has ever been concocted. I mean, 'they' made my house a vehicle of gross and fraudulent financial speculation that nobody really saw coming. I like my house, but if someone from Bear Sterns knocked on my door in 2005 and said, "my firm is going to take the mortgage on your house along with a bunch of your neighbors houses and get inordinately rich by running them through a bunch of machinations that even we don't really understand and, by the way, we're cheating here and there's a possibility that it's not going to end well for anyone," I'd have laughed in his/her face and called them misguided. Because I didn't know better back then. But then I would have invited that person in for coffee because who doesn't like a good laugh.
What I think would be helpful is to document some practical insight on the SPAC so we can understand it better. What is the intended use case for it? Why do some investors prefer it over 'traditional' VC? Is it as blatantly nefarious as this article suggests? And so on. That way, we can possibly get ahead of the potential bubble that has recently and repeatedly been associated with SPAC's.
Call me an optimist, but I assume there is a positive use for these things and, in the right hands, they are efficient. I would suggest interviewing a name that has appeared in this thread and in a few other TK finance thread - Chamath Palihapitiya. As mentioned below, he does seem to be one of the leaders in this effort and, when I hear him talk about it, he states that it allows him to control who he's investing with and to define the long term direction of the company, among other things, which sounds like a good idea. If it's BS, or if it's suspect, maybe we can calibrate our radar to see the trouble coming. I know, I'm way too naïve to be talking about anything financial, but I can't help it.
Chamath Palihapitiya is one of the big guns in the SPAC world and certainly knows what he is doing. However, when any vehicle becomes a "mania" you really have to stop and wonder. Eventually SPACs, like any other craze (see subprime, ALT A etc....2002-2007) end up getting done to get the creators paid and you start sucking up the bottom of the river. $80 billion in 2020 smashed the record and there's been about $40 billion done this year and we arent through Feb! The SPACs, just like the guys who securitized mortgages in the 2000s will eventually be chasing after garbage or non existent companies to take public and that will leave a lot of people broke.
Chamath Palihapitiya is also the same guy who promoted hydroxychloroquine on live TV last year at the height of the pandemic. And the same guy who cried wolf about the evils of social media after making plenty of cash as an early Facebook "executive."
I agree Chamath is a very smart dude.. Undoubtedly.
But learning TRUTH about SPACS from Chamath in 2020 is like trying to learn the truth about CDO's from Lloyd Blankfind in 2005...
Chamath and Llloyd are highly biased in what they think and what they will say. They both have CONFIRMATION BAIS.. it is in their interest to LOVE these products and does them great harm seeing the flaws so they wont. And both know that they PERSONALLY will not suffer when these things blow up. Chamath = Tech and Tech spends more money on lobbying in 2020 than banks spend on lobbying in 2005.
Fool me once shame on you,. fool me twice shame on me.
I'll more than likely take a crap tomorrow, isn't that a safer bet than this ? For a few million I can mail you your return.
Does anyone remember the classified ads that used to be in the back of the Rolling Stone ? I remember one that read something like : Send me a dollar and I will send you absolutely nothing in return. I wonder how much money that made ?
“On October 16, 2015, tin 54 was sold at Christies for £182,500. In August 2016, at an art auction in Milan, one of the tins sold for a new record of €275,000, including auction fees.”
Of course an artist already thought of this. Did you notice how the lawyers have already gotten their cut in this hustle ? Nothing happens in this world good or bad that they don't get paid for somehow.
I think art is a little more like pro sports? Lawyers are close to guaranteed a comfortable, if not exceptional, income; a JD from even a mediocre school is pretty much a ticket to some PMC position if you're not an outlier/psycho. Art -- you're freezing in a garret or you're Damien Hirst.
Vanity Fair c. 2015 is a fascinating relic in and of itself. "They’re skewing Trump’s numbers upward, in a way that doesn’t reflect reality.... The presidency is beyond his grasp."
Anybody who tries to justify SPAC as a legitimate business venture might as well just fuck all the way off. Seriously, what the fuck is a SPAC, besides,”Gimme money now for nothing and I might turn it into something for you eventually. But maybe not.”? The grift never ends. This sounds, to me, more like,”I have a couple mortgages and ridiculously expensive cars to pay for, so give me money to pay for that now and I could maybe make you some money later. Maybe.” Fuck all of these people. Seriously, fuck them all. “This guys rich! So maybe he’ll include me in his money-making scheme!” all the while never realizing that the dude they’re giving money to is wealthy because he’s taking THEIR money. Fuck. Off.
I'm launching a new SPAC. It consists entirely of swampland "assets" in Arizona. Jay-Z has already endorsed it. We're gonna be SO RICH. Are you in, or are you IN?
My SPAZ will be "Arcology in the Great Plains." Currently we are fighting against the idea that these will be "like an Indian reservation." Is that you putting out this disinformation?
Dude, do you know how sick I am of people classifying my comments as “Hate”? What I’m saying is not hateful. Why does what I said seem “hateful” to you? Because I said the word “fuck” a lot? Gimme a break. Am I disgusted? Sure. Does it baffle me that people will give money to SPACs just because there’s a celebrity involved? Sure. But I don’t think I’m being hateful. Or I dunno. Maybe I am. Either way, we should all despise these bullshit artists.
My apology to you. It was an Orwell reference attempted in a simultaneously arch and admiring tone. My jokes land less often than not.
I personally am just long past the point where I care whether I can be labeled "hateful" or "racist." Sometimes my carelessness may slosh over others' boundaries.
I don’t care how I’m “labeled” either. What bothered me was that anybody would classify my comment as “hateful.” But maybe that classification isn’t wrong. Do I hate scam artists? Yes. Do I despise the fact that wealthy people can invest and lose millions of dollars but somehow still make money? Of course. You get it. It’s fine. I have no boundaries. What I do have is a limit on the number of reactions to my comments that imply that I’m “hateful” just because I said,”Fuck these con-artists.” Or,”Fuck Rush Limbaugh.” Or,”Fuck Wall Street.” Or,”Fuck bought-and-paid-for politicians.” Those are things we should all hate. I’m comfortable with my response to those things. But I’m uncomfortable with people who go,”Oh my gosh! You’re so hateful.” Yeah, I am. Why aren’t you?
I do not have a very sophisticated financial mind and end up having to read things over and over to have it make sense. I do however know the art of a hustle. This unfolds much like a financial fairy tale that people buy into because there is a celebrity anchored to the plot. Is it really that different from buying a product because it is endorsed by someone branded as an influencer?
That's a really interesting point. Wish there was more on celebrity influencing methods (inside and out) and why this kind of influencer is really needed to sell this product?
When you get down to it, the people selling it need more and more influence to peddle less and less substance because we live in this criminogenic culture as Dr Bill Black suggests where there is this Gresham's dynamic (bad behavior pushes good or honest behavior out the marketplace).
Makes me wonder why anyone in America would trust an influencer (to make familial or business decisions)? In fact, I would be much more skeptical of it because of the need to use celebrity. It's a clear signal that they need PR to sell this product.
Skepticism is healthy and we should encourage it to be used as much as possible when assessing situations and opportunities. What you’re expressing is more than than that, it’s bias. Not all SPACs or the companies that offer these opportunities are the same. This is a marketplace. As with any market and its products, there is wide variability across all forms of measurement. No one is forcing anyone to invest in SPACs. But just because you think they all suck doesn’t mean they do and doesn’t mean we should enlist the government to outlaw or restrict them to the point of obsolescence.
I don't we are saying they all suck. There's certainly some good ones run by good managers who have pretty much told you what they are going to acquire...Like Bill Ackman at Pershing Square. Even the latest Churchill SPAC "CCIV" was pretty clear they wanted to buy Lucid Motors (Electric Car Maker) so if you wanted to make that play, it was up front. Somebody on here made the Berkshire comment....that makes sense. If it is a manager you like, it could be worth it but just know that most of these are made for the managers, promoters, lawyers and I bankers to get theirs first. If you are into I did a podcast on it TheMonkeyBusinessShow. We have fun with it but it goes a little deeper.
I tried to write this as a Devil’s Dictionary candidate, but it’s better as a story on great quips. Financial journalist Allan Sloan loved to recount what he called his best introduction ever. He was presented once as “the middle finger of Adam Smith’s invisible hand.” I thought this crowd would appreciate it. Cheers.
This is just like derivatives and credit default swaps. These are not investments, they belong in Las Vegas, not on Wall Street. Back when these “investments” were popular, people couldn’t explain what they were. They said “Oh they are like futures”. They were nothing like futures. Futures are investments in real things. If you buy pork bellies and make money, good for you. If you lose money, you still have the pork bellies.
These fake “investments” can easily leave you with nothing, like ponzi schemes.
...may I interest you in some pork bellies? I have a surplus.
I say once again, tediously, that the idea of Wall Street being somehow a more inherently legitimate entity into which to "invest" money is absurd. It is different from Las Vegas only insofar as Vegas is more honest with the American public; the chicanery and showmanship *is* the point, and it's out in the open.
"Las Vegas is America's truest city," or something like that from Hunter S. Thompson. Actually it should be more like "Southern California is the root of all evil," but I digress.
Yes, he said something like nothing beats flying over Los Angeles to get a view of what hell is like outside of a Hieronymus Bosch painting. It's that scene in Blade Runner. The latest residents of post-modernism's Club Med love the place. The books to read if you are interested in more of why Southern California is a vector for demonspawn are: 'City of Quartz' and 'Southern California: An Island on the Land.'
No. Ponzi schemes are totally different. They're characterized by false profits that are not profits but rather money coming into the company from new investors, that are made to appear to be profit by cooked books. On the other hand, a SPEC, or a blind pool can be quite legitimate; its just that you can have no clue about what its going to invest in because the organizers don't know, or profess not to know, what they're going to do with the money. The track records of the organizers would be paramount. I mean, who wouldn't invest in a SPEC offered b Warren Buffett?
Well, if you drill down to the core of it, Berkshire Hathaway is a long-running Warren Buffett SPAC. You buy it today having no idea what he's going to do in the days after you buy.
You know, that’s really true, except you get all the existing assets plus a manager with a rather exceptional record. My son and I listened to either his autobiography or a Buffett biography on a long car drive. What a tale. A “quant” since he was like seven years old.
So much more worthy things to write about. This is private money going to private financial vehicles. Banks arent (cant be?) involved so there's no systemic risk (unlike 2008). Just personal, 'fool and his money' sort of thing.
I'm kind of with Theo here. Maybe you can connect the dots a bit for us. How do these black boxes put the average American at risk?
I'm not saying it isn't true, but how wasn't really manifest in this piece. Also...so what? Should we be trying to make SPACs illegal? Calling Congress people? What should I say?
Im glad you brought this up and I'm sure I'll be paying more attention, but in all of the examples you laid out of all the various financial ills, one after the next, over my lifetime, only one thing is clear to me: ain't nothing to be done about it because it can't be stopped.
Their SPAC money seems like fun money that various levels of government should claw back and use for infrastructure and health care. I look at the SPAC investors as the people who don't pay enough taxes. Do they get to write off losses, unlike everyone crushed by student debt?
yeah, I don't disagree. As a person who aspires to be a multi-millionaire (but isn't even close) I definitely believe the tax rate for the extremely wealthy is too low, but it's a complicated issue and I'm also not convinced that an increased tax rate won't chase all the money to wherever the lowest tax rate is. It's a Tragedy of the Commons kind of thing.
i get that..this is going to sound flippant, but I don't care if socialist policies cause the millionaires, billionaires, and corporations to move out of the country and we should hunt down every tax-dodging entity and claw it all back because...we only need the essential workers, and non-predatory capitalism to survive and thrive...in this scenario you/we can still become millionaires, but without crushing people and ruining lives.
I've never liked the "American Pie" concept. It's not pie, there's enough for everyone.
I guess I meant it more like we'd go from getting whatever taxes we get from them now to 0 and wouldn't be able to stop the money from flooding out of our system either. I suppose, had we a functional government, we might find ways to prevent this from happening.
The *investment* banks are involved. It's not like SPACs are being pledged as a reserve collateral or something like MBS pre GFC. The advisory practices are intermediaries who are going to be involved in all the large transactions where they can charge fees.
Yeah but even so, the size is really immaterial in the grand scheme. I suppose if starts getting up there, it could be the little thing that starts tripping up big things. And what do you propose? A new law? People are way better at separating investors from their money than the other way around (reddit being the exception).
no it's certainly not. and it we get to 300b by summer or 600bn by the end of the year, then it's definitely something. still i dont see the connection to the greater economy or market -- not saying that it's not there or will materialize in some unforeseen way. and yes banks will do the IPOs but at a later stage, when the idea has ripened and the hairbrained ideas have died on the vine. idk, maybe i'm being naïve but i dont think it's internet 1.0 or GFC 2008.
I think more than anything, it's symbolic of where we are right now: With the Fed propping up markets, the wealthy are infused with cash while everybody else struggles. Vehicles like this emerge when there's too much investor cash that needs somewhere to go relative to new value actually being created.
It's not the SPAC that's going to blow up. It's the company they IPO that shouldn't exist and wouldn't exist if the money churning in the markets weren't artificially inflated. A few SPACs are a recipe for some heartbreaks. But a lot of SPACs could drive the creation of the next round of Webvans and Pets.coms when one of the incentives for buying up and IPOing a start-up is that if you don't you have to give the money back.
«This is private money going to private financial vehicles»
And private money and private financial vehicles were generously bailed out in 2008-2009 too because of "counterparty risk".
Anyhow the point that Matt Taibbi is making is "the latest 'Get-Super-Rich-Quick' scheme", he is making a point about a symptom of our times, about a cultural phenomenon, as in investing in black-boxes endorsed by celebrity quarterbacks.
I think it's a symptom of every time; this is just a new iteration. and who's to say we won't get the next apple or facebook or other wildly successful tech company? they're also not on one big tight rope. they're on many, and it's doubtful they'll all crash at once. anyway, i dont think it rises to the level of the financial crisis in potential shit show. further, there's dodd-frank, capital ratios, volker rule etc. I just think banks would stay away from this nonsense. but again, it's money and any idiotic thing can happen.
Longterm Capital, Nick Leeson and future trading, S&L Crisis, Internet stock bubble, Algorithm black box events, Index bid rigging, Accounting fraud, rating agency fraud, CDO's and leverage at insane levels, Hidden 3rd party intermediaries, Foreclosure policies, Robo-signing mills, trading on inside information LBOs, bank practices since Travelers-Citicorp merger, OCC & CFTC, FINRA lobbying, ZIRP, and shifting of investment risk using NDAs, 3rd party mediation over conflicts, and oligopolies in all of our main industries.
The thing is, capital has been sucking the marrow of useful economies (or drivers of the economy) now for decades. Most ideas have been put down, milked or zombied via debt.
The entire point of a SPAR is that these people want to get out in front of future monopolies and gain an advantage in the market place around disclosure of people and ideas (making it an opaque engine of trust). Late stages of capitalism this.
Maybe naive is not fair. But if Matt and Eric think enough of the topic to write about it at this point our financial history -- then it probably serve as a warning (somewhere between reverse mortgages and REITS). It seems like it has potential to blow up or just blow through - we'll see.
I would have just said that I view Apple and Facebook as net negatives for American society, not net positives.
It's sad. For a while I thought Apple was innovative and OK, actually; developing a relatively cheap, easy-interface personal computer for middle-income households. Kids could learn to code!
The iPhone came out in 2007 and not long thereafter I (hypocritically) transmogrified into Kaczynski/Savonarola. Constant electronic contact and the generalized expectation thereof might not be good, actually. I miss the answering machines with the cassette tapes in them.
I meant was one step further though. What I am talking about with Mandatory arbitration clauses is that investors are herded into a process they can neither control nor win at --- and often its being sold as a solution to conflict -- when in actuality it is the solution to the financial institution's problem not the average investor.
So when I make a list of stuff like this, it is not merely to make a divot in the memory hole of US financial fraud but also to call out predation. Of course, we know that Wall Street is looking to socialize losses onto the public, in one form or another.
But in the end, we are all gonna pay with something (flesh, money, family life, or loss social relationships and our natural resources). Or at least, we are alive long enough to see these people pay:
Bernie Madoff, Jeff Skilling, Ken Lay, J Epstein, Leon Black, Charles Keating, Sackler family, Alan Greenspan, Jamie Dimon, Larry Summers, B Bernanke, Robert Rubin, Phil Gramm, Richard Fuld, Lloyd Blankfein.... these people are financial predators.
The Chinese wall between personal and systemic risk is ever more illusory by the year. Its just a matter of time before these things go from being plugged by Eddie Jones advisors to 1-800 infomercials.
This is what happens when policy after policy is passed to shift GDP from the poor and middle class to the ULTRA RICH. The ultra rich literally can't spend all of their money so things like CDO's and SPACS are created to take the money in the pocket of the rich, put it in the pocket of other rich people and then when the idea BLOWS UP like CDO's did in 2008 the government will borrow money to make sure the RICH keep their money and the people that took it from them don't pay any costs.
The solution to the problem with the rich getting more money than they can rationally spend is to shift it to the poor and middle class who have seen their income decline for 40yrs now. $15 min wage, Universal Health Care, Breaking up Oligopolies (Banks, Tech, Farming Supplies, Food, Telco etc...).... Shifting GDP across a broader set of people will GROW the economy faster, like it did from 1950 to 1980 and improve the lives of the majority of Americans. But we will have to live wither fewer SPACS and CDO's
They already do, it's called a progressive tax. The more you make the more you give to the gov, which should filter on through to people who need it. The problem is the government. It gets distracted and sprinkles the money all over the place. Need to come up with a better mechanism -- Reddit seems to be effective (see Gamestop). But I'm sure some of the Marxists in the Democratic party can figure it out.
In the US our "progressive tax system" charges Warren Buffet lower taxes than his secretary... And the tax cut Trump paid went 87% to the top 1% and insreased the deficit by almost a trillion dollars.
Taxes alone wont shift this problem of too much of GDP going to the CDO/ SPAC buying billionaires and too little going to the poor and middle class who are now dying younger, and poorer than their parents.
Things like increasing min wage impacts people far more than marginal tax rates. Universal Health Care that wont bankrupt people improves more peoples lives.
These solutions are NOT COMPLEX and voters love them. But as long as we vote into power people like Pelosi, Biden, Trump and McConnell these issues will NEVER EVER be voted on.
Where is 87% come from? And how can that be if the Trump tax plan eliminated the SALT deduction? Giving back that deduction would certainly go to the rich. You're oversimplifying why the poor and middle class are in a bad state. We've been exporting the middle class to China and Mexico for the past 40 years, through ill-thought-out trade policy, which has lead to dead towns and factories and a huge opioid epidemic. Higher min wage may help eventually but there will be a lot of poor people out of work waiting for that eventuality; small biz cant afford it. Btw, what if all the cash rushing into SPACs works? what if it starts creating companies and jobs? i'd rather have private money taking the risk than my tax dollars.
Jobs moving off shore was NOT the primary reason 50% of Americans saw their share of GDP go from 20% to 12% since 1980. There are books with empirical evidence showing how that was done with decades of policy under Democratic and Republican administrations.
This happened because of policy written under the influence of lobbyists and corporations that funded congress and the presidents (all of them) with campaign money, jobs, speaking engagement, consulting fee's etc... While the people in the lower 50% had no one speaking for them to our elected leaders.
China took less than 4M American jobs 2021. (Google it) and the US economy has created 40M new jobs since 2001. (Google it)
China did not cause min wage to stop going up with inflation and thus 40M Americans work for less than $15 an hour. Congress caused that. China did not force the US health care prices to grow twice as fast as nations with universal health care. Congress caused that. China did not force America to leave rural Americans high and dry when automation took 7M jobs since 1980. Congress caused that. (again google this) And we manufacture MORE in the US today than we did in 1980.
China did not force the US to go into debt bailing out our banks and funding wars that accomplished nothing for our country or anyone else country.
China did not force the US to pass a tax cut in 2017 that aded $1T to the counties debt and 87% of the tax cut went to the top 1% of Americans. (again google this).
It is all about wages not China...
But the media wont tell you that because the billionaires that own the media want to keep things going the way they are. More money going to the rich, GDP growing slower and slower and the lower 50% getting poorer and poorer. GDP has grown slower in the 40yrs that incomes for 50% of Americans have gone down relative to incomes to the top 1% who have seen their incomes go up 4x (again, google it).
Policy needed to fix this is easy (Higher Min wage laws, Universal Health Care, Breaking up Huge companies that own Congress, Higher taxes to the rich etc...). But the media wont tell you that because their owners know that will cost their owners and advertisers profits.
It will be GREAT for the economy but not as good for the rich as it is today.. Sorry but your claims above are no more factually accurate than the claims of people that say Climate Change Science is wrong and Trump actually won the 2019 election but for cheating. And your claims above are coming from the same sources that lied you about climate and Trump
Yes we have a "progressive" tax. But just look at how it's changed over the last hundred years: The highest tax bracket that the ultra-wealthy pay was well over 60% from 1931-1980. Now it's much lower. Also most of the ultra rich pay even less through capital gains and other loopholes. We weren't "Marxist" during WW2 or vietnam. Taxing the rich doesn't make us "Marxist"...far from it.
Thank you for beaming in the news from Pluto.
You mean this won't "tinkle"down ? Shocker !
They are tinkling for sure!!!
"Don't piss down my back and tell me it's rainin'."
https://www.youtube.com/watch?v=PpwJ1n7g1pM
The problems here is that the $15 minimum wage mostly screws the small business trying to survive down the street from Walmart. You need a mechanism to help the poor that bleeds the rich, not the middle class. I hate the idea of the UBI for its antiwork incentives, but it seems like the way to go, not just to make sure the poor have at least a subsistence income, but more importantly to make sure the rich pay for it. I would recommend, EITC style, that your UBI decline 25-50 cents for each dollar you earn, that way working never brings your income down and you don't face that place where working instead of sitting at home is financially stupid.
Geoff... while i understand that intuitively one might think $15 min wage 'mostly screws the small business" their is now a great deal of research in areas where they have implemented this policy and small business is not 'mostly screwed"
UBI is a separate issue. But on $15 min wage it has a huge impact on the quality of life for poor and middle class families. HUGE. And the impact on small businesses is quite small and in aggregate quite good...https://www.businessinsider.com/what-a-15-minimum-wage-would-mean-businesses-workers-employment-2021-1
When I was in college, I worked summers at McDonald's. A couple of my coworkers were challenged, one due to fetal alcohol syndrome. As markets (not government) pushed their wages higher, their jobs disappeared and they were replaced by more equipment. Other coworkers were high-school kids saving up for college. At the start, they weren't very responsible. But they learned. On the other hand, our local downtown got gutted when Walmart moved in 15 miles down the road and fastfood places took anchor just off the highway.
I see two problems with the minimum wage being too high: 1) it makes it hard for marginal businesses to survive. 2) It eliminates jobs for those who you would have to take a risk on, including people who need either to build or to rebuild their work record.
If you want to apply the higher minimum wage to businesses with more than 50 employees or $500K in annual revenue, fine. But I think it's important to maintain a bottom rung to maximize the ease with which one can find some sort of entrance into the worlds of work and/or business. The UBI would allow budding entrepreneurs a better chance to find out if their business idea was real or stupid and problematic workers to get a job when no one else will hire them. The higher minimum wage sets the stakes higher both for starting a small business and for hiring someone.
I hear you, there is enormous value in getting that 'entry level' job where we all learn how to work for the first time. And i certainly don't want to take away from your experience.
Nations all over the world have significantly higher min wage than we do in the US and they are still able to have entry level jobs for the young and simple jobs for those with other challenges. And they also have far more ROBUST small businesses than we do in the US.
Small business in the US gets screwed by large business every day. And that will continue with our with out $15 min wage. And i strongly support fighting the policy large businesses get their lobbyists to have congress to vote on that given them advantages that screw small business.
As compelling as your story is the evidence both here in the US (communities that have implemented $15 min wage and other nations with higher min wage) has to outweigh your evidence.
Moving this wage up move millions of Americans out of poverty. It moves tens of millions of American into far more financial stability than they have today and it is GREAT for the economy.
I dont want to diminish your concerns. But the case for a higher min wage is irrefutable.
So true.
Finally, an explanation of the Biden Administration's energy policy. It works precisely like a SPAC: First, you spend a bunch of other people's money without a clue as to what it will be used for and who will profit. Next you get rid of whatever value you might already have had, then promise people jobs in industries that don't yet exist, located anywhere but where the people whose jobs you've destroyed, doing work no one can explain, and being financed with fairy farts. Finally, you create the opportunity for a hostile takeover by OPEC and blame the stupid American population for not having been sufficiently devoted to the Holy Sepulchre of Wokeness.
Come to think of it, the education policy is a SPAC. First, you ask the teachers' unions how much money they want, give it to them, then ask them again how much money they want and give them that much, and finally ask which of six or seven things that do not exist and cannot be accomplished within the next decade is their next demand, and tell the stockholders (school children) to be patient.
Dammit, there goes my use of "rent-seeking" to explain everything bad.
Bill gets it.
If anyone wants to make a ton of money, they can just give me a few million. I'm sure I can come up with something worthwhile to do with it that will turn huge profits sooner or later. I don't know what that would be yet, and honestly I haven't put much thought into it, but the potential is limitless!
A sure sign of your potentially unbridled success is when you start creating, and funneling, large sums of monies to subsidiaries. I’ll be honored to be your first subsidiary, I’ll call it “Future Foot”.
It's a deal. Just donate $10M to my company and I'll be glad to budget $1M for setting up your subsidiary.
Go ahead and transfer the $1M my way and as soon as I get my tax refund I’ll pile up the 10 for you. See, business is picking up already; we have a sound operation others will be confident they can toss their money our way.
Admittedly, I don't know much about it - but isn't the purpose of the SPAC to avoid doing the normal disclosures when taking a company public? The SPAC does it on themselves, buys/merges the private company and voila - it's now public without doing the full IPO process. The article mostly focuses on the giant piles of cash being put up for TBD businesses, which is indeed a depressing sign of the times... but maybe not the most significant issue with SPACs.
Yes, they call that a legal arbitrage....which is insane. You hit it right on the head.
Or maybe SOX is insane. Or the 40 Act is insane. Have you considered those possibilities given that all the (initial) stakeholders in a SPAC are alledgedly sophisticated?
People just don't learn. ... It's as if that movie Working Girl never happened!
I do a podcast The Monkey Business Show and one of the podcasts goes through SPACs trying to make if fun
Just sub now - thanks.
We can poke holes in every capital raising vehicle, including SPAC's, and I don't know anyone who can/would argue that. Take a step or two back and we can find a similar, if not dead on exact, storyline for maybe every financial mechanism that has ever been concocted. I mean, 'they' made my house a vehicle of gross and fraudulent financial speculation that nobody really saw coming. I like my house, but if someone from Bear Sterns knocked on my door in 2005 and said, "my firm is going to take the mortgage on your house along with a bunch of your neighbors houses and get inordinately rich by running them through a bunch of machinations that even we don't really understand and, by the way, we're cheating here and there's a possibility that it's not going to end well for anyone," I'd have laughed in his/her face and called them misguided. Because I didn't know better back then. But then I would have invited that person in for coffee because who doesn't like a good laugh.
What I think would be helpful is to document some practical insight on the SPAC so we can understand it better. What is the intended use case for it? Why do some investors prefer it over 'traditional' VC? Is it as blatantly nefarious as this article suggests? And so on. That way, we can possibly get ahead of the potential bubble that has recently and repeatedly been associated with SPAC's.
Call me an optimist, but I assume there is a positive use for these things and, in the right hands, they are efficient. I would suggest interviewing a name that has appeared in this thread and in a few other TK finance thread - Chamath Palihapitiya. As mentioned below, he does seem to be one of the leaders in this effort and, when I hear him talk about it, he states that it allows him to control who he's investing with and to define the long term direction of the company, among other things, which sounds like a good idea. If it's BS, or if it's suspect, maybe we can calibrate our radar to see the trouble coming. I know, I'm way too naïve to be talking about anything financial, but I can't help it.
Chamath Palihapitiya is one of the big guns in the SPAC world and certainly knows what he is doing. However, when any vehicle becomes a "mania" you really have to stop and wonder. Eventually SPACs, like any other craze (see subprime, ALT A etc....2002-2007) end up getting done to get the creators paid and you start sucking up the bottom of the river. $80 billion in 2020 smashed the record and there's been about $40 billion done this year and we arent through Feb! The SPACs, just like the guys who securitized mortgages in the 2000s will eventually be chasing after garbage or non existent companies to take public and that will leave a lot of people broke.
Chamath Palihapitiya is also the same guy who promoted hydroxychloroquine on live TV last year at the height of the pandemic. And the same guy who cried wolf about the evils of social media after making plenty of cash as an early Facebook "executive."
Looks like one of his SPAC plays ain't so hot after all: https://www.reuters.com/article/us-clover-health-short-seller-idUSKBN2A518S
I agree Chamath is a very smart dude.. Undoubtedly.
But learning TRUTH about SPACS from Chamath in 2020 is like trying to learn the truth about CDO's from Lloyd Blankfind in 2005...
Chamath and Llloyd are highly biased in what they think and what they will say. They both have CONFIRMATION BAIS.. it is in their interest to LOVE these products and does them great harm seeing the flaws so they wont. And both know that they PERSONALLY will not suffer when these things blow up. Chamath = Tech and Tech spends more money on lobbying in 2020 than banks spend on lobbying in 2005.
Fool me once shame on you,. fool me twice shame on me.
It's true. I lost a bundle in the Dutch Tulip Frenzy.
You're an optimist.
I'll more than likely take a crap tomorrow, isn't that a safer bet than this ? For a few million I can mail you your return.
Does anyone remember the classified ads that used to be in the back of the Rolling Stone ? I remember one that read something like : Send me a dollar and I will send you absolutely nothing in return. I wonder how much money that made ?
Matt, was that you ?
I remember reading about ads like that as a kid in “Weird Fact Almanac” type books-the ads usually made a few bucks in profit.
«I'll more than likely take a crap tomorrow, isn't that a safer bet than this ? For a few million I can mail you your return.»
Not a new investment scheme, but "a few million" seems a bit too expensive: https://en.wikipedia.org/wiki/Artist%27s_Shit
“On October 16, 2015, tin 54 was sold at Christies for £182,500. In August 2016, at an art auction in Milan, one of the tins sold for a new record of €275,000, including auction fees.”
Of course an artist already thought of this. Did you notice how the lawyers have already gotten their cut in this hustle ? Nothing happens in this world good or bad that they don't get paid for somehow.
Are artists failed lawyers or are lawyers failed artists?
Both art and law are subjective. Both are full of shit so there goes your proof.
I think art is a little more like pro sports? Lawyers are close to guaranteed a comfortable, if not exceptional, income; a JD from even a mediocre school is pretty much a ticket to some PMC position if you're not an outlier/psycho. Art -- you're freezing in a garret or you're Damien Hirst.
“Artist”🤣
Crap Futures are nothing to sneeze out. Made a load there myself.
Always bet on crap.
Didn't SPY Magazine send The Donald like a 10-cent check back in the '80s or early '90s and he cashed it?
Wouldn't surprise me a bit.
It was 13 cents in 1990! If anyone has access to an internet archive of SPY, plz let me know, but this will have to do in the interim: https://www.vanityfair.com/news/2015/08/spy-vs-trump
Vanity Fair c. 2015 is a fascinating relic in and of itself. "They’re skewing Trump’s numbers upward, in a way that doesn’t reflect reality.... The presidency is beyond his grasp."
There are a lot of Spy Magazines in Epub format at Archive.org. Looks like you can download the whole lot at once too. https://archive.org/details/SpyMagazine/Spy%20Magazine%201986-1998/1986/1986-10-OCT
TY; a treasure trove.
In all fairness to The Donald, I myself would have cashed that 13-cent check. It's the principle of the thing.
I think people not afflicted by Cheap Mentality fail to understand that for a Cheapster, the next meal you eat might well be your last.
Anybody who tries to justify SPAC as a legitimate business venture might as well just fuck all the way off. Seriously, what the fuck is a SPAC, besides,”Gimme money now for nothing and I might turn it into something for you eventually. But maybe not.”? The grift never ends. This sounds, to me, more like,”I have a couple mortgages and ridiculously expensive cars to pay for, so give me money to pay for that now and I could maybe make you some money later. Maybe.” Fuck all of these people. Seriously, fuck them all. “This guys rich! So maybe he’ll include me in his money-making scheme!” all the while never realizing that the dude they’re giving money to is wealthy because he’s taking THEIR money. Fuck. Off.
I'm launching a new SPAC. It consists entirely of swampland "assets" in Arizona. Jay-Z has already endorsed it. We're gonna be SO RICH. Are you in, or are you IN?
My SPAZ will be "Arcology in the Great Plains." Currently we are fighting against the idea that these will be "like an Indian reservation." Is that you putting out this disinformation?
Arcology on the Great Plateau already exists. It's called Arcosanti.
So am I! That’s so coincidental! Where in AZ?
Hey you wouldn't happen to be related to Charles Keating would either one of you?
No sarcasm: this is a Two Minutes' Hate I can get behind. Refreshing and nourishing.
Dude, do you know how sick I am of people classifying my comments as “Hate”? What I’m saying is not hateful. Why does what I said seem “hateful” to you? Because I said the word “fuck” a lot? Gimme a break. Am I disgusted? Sure. Does it baffle me that people will give money to SPACs just because there’s a celebrity involved? Sure. But I don’t think I’m being hateful. Or I dunno. Maybe I am. Either way, we should all despise these bullshit artists.
My apology to you. It was an Orwell reference attempted in a simultaneously arch and admiring tone. My jokes land less often than not.
I personally am just long past the point where I care whether I can be labeled "hateful" or "racist." Sometimes my carelessness may slosh over others' boundaries.
I don’t care how I’m “labeled” either. What bothered me was that anybody would classify my comment as “hateful.” But maybe that classification isn’t wrong. Do I hate scam artists? Yes. Do I despise the fact that wealthy people can invest and lose millions of dollars but somehow still make money? Of course. You get it. It’s fine. I have no boundaries. What I do have is a limit on the number of reactions to my comments that imply that I’m “hateful” just because I said,”Fuck these con-artists.” Or,”Fuck Rush Limbaugh.” Or,”Fuck Wall Street.” Or,”Fuck bought-and-paid-for politicians.” Those are things we should all hate. I’m comfortable with my response to those things. But I’m uncomfortable with people who go,”Oh my gosh! You’re so hateful.” Yeah, I am. Why aren’t you?
Jesus said we had to love everyone. We recognize the dignity of all human beings.
The Low SPAC of the well-heeled Boys. Surely this bamboozle lalapaloosa grift will work out perfectly fine for all involved.
"The Low SPAC of the well-heeled Boys. "
I see what you did there.
Such a wallflower to see the one headlight in the middle of Traffic :)
And people are saying crypto is a bubble. LOL Wall Street isn't to be outdone.
I do not have a very sophisticated financial mind and end up having to read things over and over to have it make sense. I do however know the art of a hustle. This unfolds much like a financial fairy tale that people buy into because there is a celebrity anchored to the plot. Is it really that different from buying a product because it is endorsed by someone branded as an influencer?
That's a really interesting point. Wish there was more on celebrity influencing methods (inside and out) and why this kind of influencer is really needed to sell this product?
When you get down to it, the people selling it need more and more influence to peddle less and less substance because we live in this criminogenic culture as Dr Bill Black suggests where there is this Gresham's dynamic (bad behavior pushes good or honest behavior out the marketplace).
Makes me wonder why anyone in America would trust an influencer (to make familial or business decisions)? In fact, I would be much more skeptical of it because of the need to use celebrity. It's a clear signal that they need PR to sell this product.
I totally agree. I think there is seductive illusion that I am now in business with (insert celebrity name here).
America was built on the hustle, saith Morris Berman.
Skepticism is healthy and we should encourage it to be used as much as possible when assessing situations and opportunities. What you’re expressing is more than than that, it’s bias. Not all SPACs or the companies that offer these opportunities are the same. This is a marketplace. As with any market and its products, there is wide variability across all forms of measurement. No one is forcing anyone to invest in SPACs. But just because you think they all suck doesn’t mean they do and doesn’t mean we should enlist the government to outlaw or restrict them to the point of obsolescence.
I don't we are saying they all suck. There's certainly some good ones run by good managers who have pretty much told you what they are going to acquire...Like Bill Ackman at Pershing Square. Even the latest Churchill SPAC "CCIV" was pretty clear they wanted to buy Lucid Motors (Electric Car Maker) so if you wanted to make that play, it was up front. Somebody on here made the Berkshire comment....that makes sense. If it is a manager you like, it could be worth it but just know that most of these are made for the managers, promoters, lawyers and I bankers to get theirs first. If you are into I did a podcast on it TheMonkeyBusinessShow. We have fun with it but it goes a little deeper.
I’m a podcast junkie. Checking out the show now. Thanks!
Two reptiles in a pod. From the text of the article, it implies all SPAC's do suck. Matt agrees with you?
Wall Street's apotheosis will be as a glowing and radioactive heap of marble, sometime shortly after New York becomes New Venice.
What does SLE stand for? Savings and Loan Engineer?
Lol. No
I tried to write this as a Devil’s Dictionary candidate, but it’s better as a story on great quips. Financial journalist Allan Sloan loved to recount what he called his best introduction ever. He was presented once as “the middle finger of Adam Smith’s invisible hand.” I thought this crowd would appreciate it. Cheers.
This is just like derivatives and credit default swaps. These are not investments, they belong in Las Vegas, not on Wall Street. Back when these “investments” were popular, people couldn’t explain what they were. They said “Oh they are like futures”. They were nothing like futures. Futures are investments in real things. If you buy pork bellies and make money, good for you. If you lose money, you still have the pork bellies.
These fake “investments” can easily leave you with nothing, like ponzi schemes.
This is known as a two tiered judicial system. If anyone not of the blue blood tried this stuff we'd end up with a court date and be needing a lawyer.
...may I interest you in some pork bellies? I have a surplus.
I say once again, tediously, that the idea of Wall Street being somehow a more inherently legitimate entity into which to "invest" money is absurd. It is different from Las Vegas only insofar as Vegas is more honest with the American public; the chicanery and showmanship *is* the point, and it's out in the open.
"Las Vegas is America's truest city," or something like that from Hunter S. Thompson. Actually it should be more like "Southern California is the root of all evil," but I digress.
Baudrillard and a bunch of other French pomo guys were in love with Vegas.
No, I do not actually recommend that you read this link.
https://baudrillardstudies.ubishops.ca/simveillance-in-hyperreal-las-vegas/
Yes, he said something like nothing beats flying over Los Angeles to get a view of what hell is like outside of a Hieronymus Bosch painting. It's that scene in Blade Runner. The latest residents of post-modernism's Club Med love the place. The books to read if you are interested in more of why Southern California is a vector for demonspawn are: 'City of Quartz' and 'Southern California: An Island on the Land.'
In somewhat older olden days this was called a blind pool. I've always wanted one.
Did it ever go by the name of Ponzi that you are aware of ?
No. Ponzi schemes are totally different. They're characterized by false profits that are not profits but rather money coming into the company from new investors, that are made to appear to be profit by cooked books. On the other hand, a SPEC, or a blind pool can be quite legitimate; its just that you can have no clue about what its going to invest in because the organizers don't know, or profess not to know, what they're going to do with the money. The track records of the organizers would be paramount. I mean, who wouldn't invest in a SPEC offered b Warren Buffett?
Maybe I'm missing something. How would "a SPEC offered by Warren Buffett" be better than shares of Berkshire Hathaway?
Well, if you drill down to the core of it, Berkshire Hathaway is a long-running Warren Buffett SPAC. You buy it today having no idea what he's going to do in the days after you buy.
You know, that’s really true, except you get all the existing assets plus a manager with a rather exceptional record. My son and I listened to either his autobiography or a Buffett biography on a long car drive. What a tale. A “quant” since he was like seven years old.
Correction: SPAC, not SPEC. Sorry.
It’s another angle on the celebrit-ization of everything. If your favorite celeb thinks it’s grand, it must be, no?
Not only can Kim Kardashian make a mean purse, she's also a financial wizard to boot(y) !
So much more worthy things to write about. This is private money going to private financial vehicles. Banks arent (cant be?) involved so there's no systemic risk (unlike 2008). Just personal, 'fool and his money' sort of thing.
Banks absolutely are involved, they have to do all the IPOs, just like they did in the nineties.
I'm kind of with Theo here. Maybe you can connect the dots a bit for us. How do these black boxes put the average American at risk?
I'm not saying it isn't true, but how wasn't really manifest in this piece. Also...so what? Should we be trying to make SPACs illegal? Calling Congress people? What should I say?
Im glad you brought this up and I'm sure I'll be paying more attention, but in all of the examples you laid out of all the various financial ills, one after the next, over my lifetime, only one thing is clear to me: ain't nothing to be done about it because it can't be stopped.
Their SPAC money seems like fun money that various levels of government should claw back and use for infrastructure and health care. I look at the SPAC investors as the people who don't pay enough taxes. Do they get to write off losses, unlike everyone crushed by student debt?
yeah, I don't disagree. As a person who aspires to be a multi-millionaire (but isn't even close) I definitely believe the tax rate for the extremely wealthy is too low, but it's a complicated issue and I'm also not convinced that an increased tax rate won't chase all the money to wherever the lowest tax rate is. It's a Tragedy of the Commons kind of thing.
i get that..this is going to sound flippant, but I don't care if socialist policies cause the millionaires, billionaires, and corporations to move out of the country and we should hunt down every tax-dodging entity and claw it all back because...we only need the essential workers, and non-predatory capitalism to survive and thrive...in this scenario you/we can still become millionaires, but without crushing people and ruining lives.
I've never liked the "American Pie" concept. It's not pie, there's enough for everyone.
I guess I meant it more like we'd go from getting whatever taxes we get from them now to 0 and wouldn't be able to stop the money from flooding out of our system either. I suppose, had we a functional government, we might find ways to prevent this from happening.
If it didn’t end with us / usa not getting robbed it wouldn’t be worth it to them.
To the criminal crime is its own reward. Money us just flaunt.
The *investment* banks are involved. It's not like SPACs are being pledged as a reserve collateral or something like MBS pre GFC. The advisory practices are intermediaries who are going to be involved in all the large transactions where they can charge fees.
Yeah but even so, the size is really immaterial in the grand scheme. I suppose if starts getting up there, it could be the little thing that starts tripping up big things. And what do you propose? A new law? People are way better at separating investors from their money than the other way around (reddit being the exception).
50 billion in a month doesn't seem all that immaterial to me.
https://www.cnbc.com/video/2021/01/25/cramer-reacts-to-lloyd-blankfeins-concerns-about-the-spac-boom.html If Lloyd is worried....
GS has underwritten more SPACs than anyone else: https://www.spacresearch.com/underwriter
Lloyd's comment commits him to nothing and costs him nothing while continuing to collect fees for this new advisory revenue stream.
no it's certainly not. and it we get to 300b by summer or 600bn by the end of the year, then it's definitely something. still i dont see the connection to the greater economy or market -- not saying that it's not there or will materialize in some unforeseen way. and yes banks will do the IPOs but at a later stage, when the idea has ripened and the hairbrained ideas have died on the vine. idk, maybe i'm being naïve but i dont think it's internet 1.0 or GFC 2008.
I think more than anything, it's symbolic of where we are right now: With the Fed propping up markets, the wealthy are infused with cash while everybody else struggles. Vehicles like this emerge when there's too much investor cash that needs somewhere to go relative to new value actually being created.
It's not the SPAC that's going to blow up. It's the company they IPO that shouldn't exist and wouldn't exist if the money churning in the markets weren't artificially inflated. A few SPACs are a recipe for some heartbreaks. But a lot of SPACs could drive the creation of the next round of Webvans and Pets.coms when one of the incentives for buying up and IPOing a start-up is that if you don't you have to give the money back.
<<So much more worthy things to write about.>> So why don't you start your own substack and write about them instead of trolling this one.
«This is private money going to private financial vehicles»
And private money and private financial vehicles were generously bailed out in 2008-2009 too because of "counterparty risk".
Anyhow the point that Matt Taibbi is making is "the latest 'Get-Super-Rich-Quick' scheme", he is making a point about a symptom of our times, about a cultural phenomenon, as in investing in black-boxes endorsed by celebrity quarterbacks.
I think it's a symptom of every time; this is just a new iteration. and who's to say we won't get the next apple or facebook or other wildly successful tech company? they're also not on one big tight rope. they're on many, and it's doubtful they'll all crash at once. anyway, i dont think it rises to the level of the financial crisis in potential shit show. further, there's dodd-frank, capital ratios, volker rule etc. I just think banks would stay away from this nonsense. but again, it's money and any idiotic thing can happen.
That is incredibly naive.
Longterm Capital, Nick Leeson and future trading, S&L Crisis, Internet stock bubble, Algorithm black box events, Index bid rigging, Accounting fraud, rating agency fraud, CDO's and leverage at insane levels, Hidden 3rd party intermediaries, Foreclosure policies, Robo-signing mills, trading on inside information LBOs, bank practices since Travelers-Citicorp merger, OCC & CFTC, FINRA lobbying, ZIRP, and shifting of investment risk using NDAs, 3rd party mediation over conflicts, and oligopolies in all of our main industries.
The thing is, capital has been sucking the marrow of useful economies (or drivers of the economy) now for decades. Most ideas have been put down, milked or zombied via debt.
The entire point of a SPAR is that these people want to get out in front of future monopolies and gain an advantage in the market place around disclosure of people and ideas (making it an opaque engine of trust). Late stages of capitalism this.
Maybe naive is not fair. But if Matt and Eric think enough of the topic to write about it at this point our financial history -- then it probably serve as a warning (somewhere between reverse mortgages and REITS). It seems like it has potential to blow up or just blow through - we'll see.
I would have just said that I view Apple and Facebook as net negatives for American society, not net positives.
It's sad. For a while I thought Apple was innovative and OK, actually; developing a relatively cheap, easy-interface personal computer for middle-income households. Kids could learn to code!
The iPhone came out in 2007 and not long thereafter I (hypocritically) transmogrified into Kaczynski/Savonarola. Constant electronic contact and the generalized expectation thereof might not be good, actually. I miss the answering machines with the cassette tapes in them.
Mandatory arbitration clauses - instead of the benign 3rd party conflict resolution above... (wish there was an editing function on this stack of sub)
We are the 3d party, and resolution is us paying.
Externality... yep long warred.
I meant was one step further though. What I am talking about with Mandatory arbitration clauses is that investors are herded into a process they can neither control nor win at --- and often its being sold as a solution to conflict -- when in actuality it is the solution to the financial institution's problem not the average investor.
So when I make a list of stuff like this, it is not merely to make a divot in the memory hole of US financial fraud but also to call out predation. Of course, we know that Wall Street is looking to socialize losses onto the public, in one form or another.
But in the end, we are all gonna pay with something (flesh, money, family life, or loss social relationships and our natural resources). Or at least, we are alive long enough to see these people pay:
Bernie Madoff, Jeff Skilling, Ken Lay, J Epstein, Leon Black, Charles Keating, Sackler family, Alan Greenspan, Jamie Dimon, Larry Summers, B Bernanke, Robert Rubin, Phil Gramm, Richard Fuld, Lloyd Blankfein.... these people are financial predators.
SPAC not SPAR
The Chinese wall between personal and systemic risk is ever more illusory by the year. Its just a matter of time before these things go from being plugged by Eddie Jones advisors to 1-800 infomercials.
If those are up to the standards of Sally Struthers' infomercial about learning auto repair, I'm all in.
SPACs are the absolute tip of the spear in our current bubble. Consider this a prerequisite for the disaster headlines you read two years from now.
So spacs are like spax hammer drilling into the brittle concrete of our money world ?