Wednesday, November 10, 2010

Quotes of the day

The real lesson from the story told in “The Social Network” is that businesses are not sold too soon or too late, but that they are instead sold when the founders can no longer take them forward.--Steven Davidoff

Smart people can be very clueless when they apply too much precision to imprecise problems.--Eric Falkenstein

Older Americans are less healthy than their English counterparts, but they live as long or even longer than their English peers, according to a new study by researchers from the RAND Corporation and the Institute for Fiscal Studies in London. Researchers found that while Americans aged 55 to 64 have higher rates of chronic diseases than their peers in England, they died at about the same rate. And Americans age 65 and older -- while still sicker than their English peers -- had a lower death rate than similar people in England, according to findings published in the journal Demography.--RAND Corp

Capital controls and a fixed exchange rate distort local capital markets in ways that can lead to malinvestment or underinvestment; done badly they harm global trade flows; and they are often a source of rent-seeking for local elites. For this last reason, they are also pretty popular.--Megan McArdle

The US discovered nearly half the drugs approved during [1998-2007], and accounts for roughly that amount of the market, for example. But there are two big exceptions: the UK and Switzerland, which both outperform for their size. In case you're wondering, the league tables look like this: the US leads in the discovery of approved drugs, by a wide margin (118 out of the 252 drugs). Then Japan, the UK and Germany are about equal, in the low 20s each. Switzerland is in next at 13, France at 12, and then the rest of Europe put together adds up to 29. Canada and Australia put together add up to nearly 7, and the entire rest of the world (including China and India) is about 6.5, with most of that being Israel. But while the US may be producing the number of drugs you'd expect, a closer look shows that it's still a real outlier in several respects. The biggest one, to my mind, comes when you use that criterion for innovative structures or mechanisms versus extensions of what's already been worked on, as mentioned in the last post. Looking at it that way, almost all the major drug-discovering countries in the world were tilted towards less innovative medicines.--Derek Lowe

We believe a significant drag on economic activity has been the result of overly-burdensome regulatory initiatives, our challenged fiscal situation, legal uncertainty created by the erosion of the rule of law, and unpredictable tax policy. ... QE2 is much more likely to be successful in creating inflation and speculation in financial instruments. It is perverse that on the heels of suffering the after-effects of the collapse of the internet bubble and then the real estate bubble (both of which the Fed disclaims responsibility for creating or supporting), the Fed would like to encourage the formation of yet another asset bubble. ... An FOMC member added that he didn't know "what the world 'bubble' means." How about a rule where if you don't know what a bubble is, you can't serve on the Fed?--Greenlight Capital

Profitable, high flying startups like Facebook and Zynga don't bother going public anymore. Why put up with the expense, scrutiny, and distraction? Why risk exposure to class action shareholder suits every time a stock blips? Why kowtow to the whims of grandstanding Congressmen each time one of these potentates feels like holding a hearing to beat up on CEOs? These days the IPOs the public has a chance to participate in are mostly companies bleeding money so profusely that they can no longer be supported by their venture capitalists. Going public is their best alternative to going broke. But wait a minute - how do top tier startups achieve liquidity if they don't go public? Isn't getting rich the main objective of entrepreneurship after founders and early employees succeed in changing the world? Can't Uncle Sam force successful entrepreneurs to bend to the rules before they buy those yachts? Nope. The modern way to cash out is by selling stock on a shadowy collection of unregulated private markets. Emerging exchanges like Second Market and SharesPost as well as innumerable bilateral secondary transactions arranged on the old-boy network offer a free-market escape from the tender protections of Congress. Yes, these private markets are opaque, thin, and bereft of both pricing and company performance information. Which is why by law only the rich and well connected can participate. What do the Income Inequality mongerers have to say about that? By trying to eliminate risk from our public markets, Congress is on its way to eliminating reward.--Bill Frezza

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