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David's Macro Blog

Analysis and commentary on business, economics, real estate, financial markets, and other fun topics

Jon Stewart of the Daily Show was interviewed for about an hour by Rachel Maddow regarding his perception in the media, The Rally to Restore Sanity, media biases, and politics.

Why is one of our most insightful social commentators a comedian?

Visit msnbc.com for breaking news, world news, and news about the economy

Best quotes from the interview

RM: “Why did you want to talk to me?”

JS: “After the rally…whenever you go out there you can only control your intention, you can’t control its perception or how people receive it.”

JS: “and to see that with the Capitol Building, which normally in our studio is a picture because we are fake.”

We’d done 12 years of the show, I’d earned 10 minutes of just rank sincerity.

I think the point of the rally was, this is as far as I can go… a satirist is… I can always criticize but I can’t actually do anything… we have no responsibility. [David’s note: really good segment, listen to the whole part]

I feel more of a kinship with Jerry Seinfeld than what you guys do or what CNN does or what NBC does. He’s able to comedically articulate an intangible for people.

Because we are parodying a news organization… but the process the material goes through is not a news process, it’s a [comedic process.]

We’re commenting on the news comedically.

Both sides have their way of shutting down debate and the news networks have allowed these two sides to become the fight in the country. And I think the fight in the country is corruption versus not corruption, extremist versus regular.

again we have to define our terms… we were talking about tone there not content.

We have a tendency to grant amnesty to people we agree with and to overly demonize people we dont.

It all comes from the perspective of defending your guy or your turf. What I’m saying is, let’s stop defending teammates and get an organization and tenacity and the kind of heart and the kind of intelligence… and look at it from a slightly different perspective, which is not we’re saying they’re crazy, but corruption is everywhere. It’s on the left, its on the right.

But Fox is not partisan either, they’re really not.
They are ideological but not partisan.

The problem with the 24 hour news cycle is that it’s built for a very particular thing: 9/11. Other than that there really isn’t 24 hours of stuff to talk about. The problem is, how do you keep people watching it? OJ isn’t going to kill someone everyday, so that’s gone. So what do you have to do? You have to elevate the passion of everything else that happens that might even be somewhat mundane and elevate to the extent that this is breaking news.

I think the conflict to develop a news network would be corruption and non-corruption.

I don’t care where it comes from; if it’s right, it’s right.

Let’s try and fight on the most precise and proportional terms we can.

In my life I try to get on the field and help people, just not through the show.

Summary

Comedy has to contain some element of truth or it isn’t funny. There may be a joke about the Polish invention of a submarine with a screen door, but there isn’t one about the MIT PhD Physicist with the same invention.

Jon’s whole point is that news is moving towards him as a social critic / satirist. He believes intelligent people should be able to discuss ideas without quickly jumping into polarizing argument that instantly kills quality discussion and debate.

During the height of the 2008 credit crunch, Lehman Brothers, led by CEO Dick Fuld, was not bailed out by the government. Instead, it was allowed to fail and become the largest bankruptcy in history.

How did this 150-year old firm that survived the Civil War and the Great Depression fail?

The short answer is, the firm was obsessed with growth so it chased returns with little regard for prudent risk management.

Their business model during the 2000’s economic growth period relied upon:

  • Excessive leverage (40 to 1): a couple percent drop in asset prices renders the firm’s balance sheet without equity.
  • Being the largest securitizer of sub-prime real estate mortgages.
  • The overnight repo market to fund daily operations.
  • Accounting gimmicks such as Repo 105 to make the balance sheet look good for quarterly reporting.
  • Unrealistic modeling with faulty assumptions such as real estate prices only go up and the overnight repo market is always liquid.
  • Believing “this time is different” and not preparing for the inevitable market cycle to reverse course.
  • Retaining ownership in some securities they created to increase their profits.
  • Incorrectly believing they would get a bailout from the government like Bear Sterns (after rejecting a bailout from Warren Buffett before late 2008).

What lesson can individual investors learn from this?

Be wary of investments requiring excessive leverage and market conditions remaining the same in perpetuity.

Source:
Barry Ritholtz – Dick Fuld’s Fantastic Revisionism!

Startup businesses are often toughest on the owners because they have to overcome so much adversity on the road to eventual success. Online shoe retailer Zappos, led by Tony Hsieh, endured about a decade of failures before its successful acquisition by Amazon Inc.

Success is the ability to go from one failure to another with no loss of enthusiasm.
-Sir Winston Churchill

Inc. Magazine’s “10 Steps to Zappos’ Success” highlights Zappos’ struggles and eventual success:

  • Being in a bad business with a track record of failure.
  • Running out of money multiple times.
  • Tony selling his San Francisco home to pay for a distribution center.
  • Tony taking an annual salary from $24 to a high of just $36,000.
  • Rejecting Amazon’s first buyout offer of $370 million.
  • Eventually selling to Amazon after a decade of hard work for $1.2 billion and being able to remain as CEO and keep the company independent.

For entrepreneurs, even the path to success is filled with mostly failure after failure.

Richard Davis - Flip This House

Richard Davis - Flip This House

Reality TV is entertainment.

Remember the halcyon days in the mid 2000’s when everyone thought they could make money flipping real estate for profit after watching shows like Property Ladder and Flip This House?

Richard Davis, host and inventor of real estate reality television series Flip This House, sued distributor A&E Television Networks for his share of the profits from the TV show. He claimed to have an oral agreement with an A&E representative to split profits from the show 50/50.

One reason for the profit split was because flipping houses for television wasn’t a profitable business.

The Post and Courier reported: Ginger Alexander, Richard Davis’ partner, “testified that the firm’s normal business took longer because of the series and that, overall, the company lost money creating episodes of the show because it still holds a few unsold properties.”

Also from the Charleston Post and Courier: A federal jury awarded Richard Davis $4 million in his lawsuit for his share of the profits from the successful television show.

A&E disputed that any agreement existed. Its lawyers declined to provide immediate comment on the ruling, which came after more than five hours of deliberation.

“I’m very pleased with the verdict,” said Mount Pleasant attorney Frank M. Cisa, who represented Davis. “These cases are very tough to prove.”

Excellent coverage of the whole story is available at Flip This Lawsuit

In Yosemite Nature Notes – Episode 9 – Frazil Ice (video below), you see the shifting, natural melting process of frazil ice produced by Yosemite Falls. The water freezes on its descent from the river down to the base of the falls, forming something similar to a giant snow cone. This “frazil ice”, small crystals of frozen mist, then mixes with liquid water and snow to form amazing and interesting patterns downstream.

Makes you want to visit Yosemite in the spring, doesn’t it?