Cartoon: The Changing World

A vintage cartoon from John T McCutcheon demonstrates to us that we’re seemingly again starting to look into some topics in a similar way as before the great depression in the 1920.

Click on the image below for the link

link to Barnacle press web site

This cartoon is an excerpt from John T McCutcheon’s “The Changing World” drawing for February 23, 1920 comparing how people react on having the richest man in the country becoming president.

While George Washington’s inauguration on Wall street did certainly send a different signal at that time than an inauguration of an U.S. president at that place in the 1920s or today would provide due to the vastly expanded financial industry in that part of Manhattan, it nevertheless does show that the feelings towards the financial industry today and in 1920 before the huge stock market crash on Wall street might not be that much different.

Complete “The Changing World” cartoon for February 23, 1920

Another very interesting one for May 18, 1920 – A billion dollar congress used to cause comment … Now a few billions, more or less, doesn’t matter

Cartoons provided by Barnacle press and considered Public Domain

end of post

Finance: Are technology VCs coming back? (Part 1)

image money small After quite a few years of dull runs since the 2000 IT bubble burst and together with it many hopes and portfolios of high flying Venture Capital firms in Silicon Valley, it seems they getting back again into full swing.

While many of the smaller VCs still struggling to get new funds in, last week’s successful placement of a new USD 650 Million fund by Andreessen Horowitz, basically tripling their capital for investment, speaks a different language.

With nearly zero return on treasuries, negative yields on TIPS and very low coupons on newly emitted corporate bonds, the huge increase of capital available through Quantitative Easing and money presses running non stop around the globe, more and more capital seems to seek investments that provide income beyond such meager returns. Private Equity and Venture Capital funds have demonstrated this in the past.

Investors putting money into Private Equity or Venture Capital funds that are considered an illiquid asset class, do certainly believe that holdings in companies even within the less mature ones VCs normally invest into will provide (more) tangible assets for their money than by investing into such companies via the stock markets which in the U.S. have endured an constant outflow of retail investors funds over the last year.

And the battle for investments between VC funds looks like heating up again (like it’s 1999 ???) when following the bidding war of various VC funds over a 6 month old small New York start-up called GroupMe that Khosla “won” during the last days by valuating it at a hefty USD 35 million.

There are nevertheless many changes since the 2000s – particularly for VCs investing into technology start-ups.

First with cloud services from Amazon and alike many start-ups can today start getting money in by bootstrapping and running up a few thousand dollar bills against their credit cards vs. seeking a few hundred thousand dollars as seed investment from a VC.

Then the market has gone far more global from Silicon Valley and Europe out to India, China, Brazil and other emerging markets. While Kleiner Perkins (KPCB) or Sequoia, to name only two of the established big players, both went out and opened shop in China and India during the last years, also new and strong players from these markets have risen that are now competing on eye level with the “old dogs”.

In a series of articles and interviews we will look into how the VC landscape has changed over the last years (since the 2000 bubble) and will provide an outlook of what we expect might happen next.

Our first article in this series will look into the VC market in India that is expected to grow to about USD 1 Billion next year and we will include an interview with Mr Pravin Khatau who will share his insides into India’s emerging VC industry.

Mr Khatau, a native Indian and a former Executive Director with Goldman Sachs, has a distinguished track record in Venture Capital investing globally and particularly into the Indian markets. He is currently also serving as a Board member of the MVCA in Europe.

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License

Image from Flickr CC – by –filmmaker in japan–

end of post

Duvet-Dayz: Another welcome back

image Duvet-Dayz logo small Hello and welcome back (again) – after a long silence on this site new life will come to it during the next days.

We will change the overall profile and focus more on open source content in the literal sense, (re)publishing content from writers that allow us to do so together with the content of our own provenience.

Now finally the look-and-feel of this site will also get some new cloths, overdue as we think as our current layout is now more than 3 years old.

But first for some new content.

end of post

Music: Janelle Monae – Many Moons

Wouldn’t it be great to switch people on and off like Androids – the wet-dream of any totalitarian state and dictatorship.

I imagined many moons in the sky lighting the way to freedom – Cindi Mayweather

end of post

AIDS: Liberia Vice

During the last days VBS.TV has made a series of videos available created by them while traveling in Liberia (so far mainly Monrovia and surroundings) and talking to local journalists, war lords, slum inhabitants and other “normal people“. A story about civil war, drugs, AIDS, child soldiers, rape, daily killing, corruption, cannibalism… – it shows how deep the rabbit hole goes in one of the poorest countries and failed states on this planet.

The series comprises 8 short videos with different stations of their “travel” through Liberia of which so far 4 are online on their site.

Click on the image below for the link

link to VBS.TV web site

What they have so far not covered is how much foreign aid is sunk into this country and what actually happens with it.

There are almost a dozen U.N. and other international agencies plus private aid organizations present or working with that country / the government of. Hundreds of million USD have been flooded into Liberia after the official end of the civil war 2003 and more monies are allotted in even larger grants for the future. There are about 19,000 U.N. peace keepers currently present (cost not included in the above sum) to separate the various fighting parties.

First it’s good to know that international aid agencies love small countries like Liberia (ca. 3.5 million population) or Rwanda as with relatively small amounts, in general, large results can be created in a short period of time – at least on paper. This often works along the lines of percentage of people in need reached with their programs and most of the times does not calculate in longer term, systemic issues or actual change of the situation for those in need.

Let’s have a closer look at a smaller grant provided to Liberia in the last years to fight AIDS. It is published as a success, but we refrain from naming the organization(s) involved as it is like quite a few of their grants – actually almost all grants of that international organization providing the funds that have so far been reviewed – another example for misconduct and abuse of funds. We did use numbers provided by that organization, very conservative estimates for some actual numbers not directly available – this is a real world example:

They have provided almost USD 8 million via another international agency to the local government over a period of about 2.5 years. This is one of the smaller grants – but as said before – considered a success. While there is no real budget information available – one of the reasons some say most of their grants are actually institutionalized corruption – let’s have a bit of a deeper look into what happened with that money based on the sparse information made available.

While claiming that in the last half year they would have treated about 900 AIDS patients besides handing out brochures and providing general training to a few hundreds they also say they’ve handed out about 2 condoms to around 2.6 Million people each which for Liberia must be above the number of people living in that country within the population bracket potentially affected (e.g. above 14 to 50 years). At the same time a whole plethora of other international agencies are claiming similar numbers during the same period with even more money out of their own budgets put onto it.

Nevertheless, lets just assume for a moment there would be no double-, triple-, quadruple-counting of interventions and say those numbers are close to reality which we have our strongest doubts. Now we will break down these numbers on realistic cost bases as published by the international community (which factors in their cost of distribution as well – i.e. the cost of running the international agencies with regards to these tasks).

1. ARV treatment

Cost for ARV treatment have come down massively from initial prohibitive levels of > USD 10,000 p.a. / patient in the early 1990s to now around USD 1,000 – 2,000 in Africa (including USD 300-500 for the cost of drugs). We do believe that those figures are artificially high for the countries in concern here – they should be a maximum of around 2 times the drug cost which would make it 600 – 1000 USD – effective use of generics would further lower this but lets stick with the numbers provided by international agencies.

2. Condom distribution

Generally agreed condom distribution costs for areas / situations similar to Liberia are about 10 cents per condom. Cost of the condom within that is about 3 cents. We stick with these numbers as well.

3. General training, brochures etc.

As a 3rd part of that grant various other “interventions” are listed including general awareness training, information etc that the grant organization says have been provided to various groups of people within Liberia. We estimate a “very generous” USD 1 million flat for that (most likely it will be much less).

Estimates based on these numbers sum up to:

  • ca. 750 treated for 2.5 years ca. USD 2.8 million (detail numbers top end last 1/2 year ca. 900 people)
  • ca. 5.4 Million condoms distributed (USD 0.1 distribution cost) USD 540,000
  • other treatments, training and information distribution (flat) USD 1 Million
  • total (high estimate) ca. USD 4.3 Million

Now just remember we are talking about a country where almost 80% of the population is living on USD 1 per day (50% on less than 50 cents a day). And we have assumed that all of the goods & services provided have actually been purchase out of these funds and that none of the condoms, drugs or services from other programs or donations were used to be counted here again (which to our knowledge has happened quite a few times in the past in various countries). And we have – as said before – already factored in the cost for the international agencies providing the distribution and other services.

So what has happened to the remaining almost 50% of the grant money – well it has disappeared. That effect is called corruption, abuse of funds, gross misconduct or other euphemisms. And this grant is considered a success. If one adapts this example with real life experience and estimates provided public / non-public in our example with “counting mistakes etc” we would most likely end up at around 70-80% that has disappeared from the funds that once had arrived in country. But that would be guessing – or wouldn’t it.

One could expect to see some hard facts or real budget figures on what actually happened with that money as in our example it is almost all tax payers funds. But this is what those kind of “humanitarian organizations” are fighting to the blood not to have – there is no accountability – its just like a bottomless pit with lots of people profiteering along the lines the monies travel.

And as the “cream on top of this” that agency in Geneva – for basically having some people writing some checks and filling out half a dozen MS Excel sheets with very little data – is charging a fee of almost USD 1 Million to do that (again: They don’t implement they only provide the money – actually not theirs, your money). Yes this is not the money for distributing or helping in-country – this million is basically just for writing the checks.

How far can you stretch this?

Seemingly even further as we used the fee structure from a few years ago. On today’s fees that would add up to more than USD 2 Million for writing the checks. That’s 50% disappearing in country, another 25% on top for general administration / writing checks and all that above the USD 100,000+ salaries (after taxes) for the “humanitarian workers” from international agencies that have already been included in the distribution costs.

No surprise people are getting more-and-more angry about these bloated structures.

But the worst of it all with programs like the above grant – nothing really changes. And when the U.N. will move out from Liberia next year as planned it all starts over again. Your taxes at work to change the world.

Now we guess you got a bit of background information to evaluate where this kind of “Aid” will get the people in Liberia. Now watch those videos and understand one of the key principles of such type of “Aid” – only when the conflict continues, only when misery perpetuate there will be an endless steam of money for the parasites along the lines. And sometimes some breadcrumbs fall down to the people in-country needing that help to survive – if that would change anything – those people don’t care. But such “unlikely” situations are always great photo-opportunities and stories to tell to even get more money.

(Update/Note: The organization used within this example is not an U.N. organization while some have already assumed that by their office location. It is nevertheless almost completely funded by tax monies. It should be noted that there are other initiatives including tax payer funded ones that are actually trying to change the situation of the people in Liberia by fighting poverty, building sanitarian facilities and strengthening the health system often with far less monies at hand but real results to look back to.)

Quote of the day: Politics and Business

image handshake THB The only difference between the Republican and Democratic parties is the velocities with which their knees hit the floor when corporations knock on their door. That’s the only difference.”

Ralph Nader – American attorney, author, lecturer, political activist

end of post