Friday, February 6, 2009

I Have Not Much For You Today, Maybe A Little Good News

For one, the NYSE may finally have bottomed, but I am not willing to bet the ranch (literally, Montana) on this. Companies have jettisoned expenses faster than a crashing aircraft loses fuel before it tries to land. But they are doing so by losing people. Of course, there are myriad other ways that they can reduce expenses, but firing people is always the easiest, first solution to this equation.

These job losses are astounding. Every day we read about major firms throwing out thousands (sometimes tens of thousands) of their workers. This is alarming to me and causes me great physical pain (I tend to internalize bad news...that's my issue, not yours.)

Where are these people going to get the money to survive?

The answer is that they are going to cut spending (which we have seen in spades) invade their personal savings, 401-K plans and the like. This will cause a ripple effect on the so-often chronicled crippled financial institutions.

Is there an Obama solution? I think not. It appears that the government is entering into "gridlock" which I usually favor, but in this case, "Houston (oh I mean Washington), We've Had A Problem."

We haven't heard much about the auto companies lately except that by March, some may very well be bankrupt..."film at 11."

My partners and I have been scouring the country for investment capital, and we have visited several large university endowments whose names we won't mention. Everyone we have spoken with in academia says that their endowments are at least 20% down...I don't believe it...this is akin to when someone asks you about your weight...they in my opinion are more like 50% down. If you doubt this, then access the University of Texas Investment Management Company site (UTIMCO) and look at their private equity investment performance...I'll make this easy for's the link:

Now UT (with whom my partners and I have not spoken to, unfortunately, we would love them to invest with us) has one of the biggest endowments in the history of the universe and just yesterday their (unpaid, voluntary) chairman resigned in the face of withering criticism from the Texas legislature. What all this means, longer-term for higher education is anyone's guess, certainly not mine, but it can't be good.

You would think that trees are always worth a lot; after all they take decades to grow. Well the world's largest tree farmer, Weyerhaeuser with 6 million acres under management (do you understand how big an area this is? Here's the answer...this is more massive than any of the entire states of MA, VT, NH, NJ, CT, RI or HI) just announced that trees aren't worth more than 60% of what they were yesterday.

We have to get people back to work. The government can't do it, the financial markets can't do it and the only solution, in my opinion, is innovation and in creating a new entrepreneurial environment throughout the world.

Humbly and respectfully submitted.'s an interesting article I turfed up about the US banking's a fun read.

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