Tuesday, July 28, 2015

Twitter Fritter v.7

Ah, another quarter rolls by and Twitter burns another $136,000,000 using generally accepted accounting principles.

Are you a Twitter shareholder, hanging on to those shares "worth" $36.54 each? The company issued a fresh $175,000,000 worth of shares this quarter to pay employees and executives. Who slurped up all those new electronic shares of a company that has never earned one penny in profit? Lucky Twitter shareholders. Smart move!!

If you want to hitch your wagon to a hot Dot Com 3.0 company, I have a digital start up called projectile-vomit-shares.com. Here's the idea. Anyone can login to my server and post some text (limited to 160 characters), then everyone else can see their post. Meanwhile, the company will digitally projectile vomit roughly five million shares a quarter that lucky investors can buy. I only plan to issue $100,000,000 in shares each quarter to pay for my living and operating expenses and I promise I will lose less than $136,000,000 each quarter using GAAP. Note: This is not investment advice. Management makes no claims on forward looking vomit or projectile vomit.

See also: Twitter spends 35% of revenue on stock-based compensation

Monday, July 13, 2015

July 13, 2015 - Greek total surrender

After all the bluster and referendum, Greece gave in to total and utter surrender to their creditors. The details of the deal are horrific for Greece, supposedly mortgaging airplanes, airports, islands, and other assets to secure the third bailout. They will also be forced to pass specific legislation on a tight timeline. All humiliating, much like the loser of a bloody war.

The punchline is that the math of the deal will not work for long. The Greek debt will head up toward 400 billion euros, nearly double their GDP. Good luck squeezing more taxes out of an economy where the banks remain closed. The pain for the Greek people will be extreme and it would have been had they left the euro. The difference is that this crisis will be back again until and unless there is a large write down of the debt. There is no hope and no future in Greece. Only the grinding Euro boot on their face. Oh my.

Saturday, July 11, 2015

July 10, 2015 - Greek capitulation day

Less than a week after the Greek people voted against the latest EU bailout ultimatum, the Greek government caved completely and approved what amounts to the very same harsh bailout terms. Tspiras and the "radical left" were too afraid to actually listen to their own people and act to take their monetary future back into their own hands. They are good at talking but not doing.

With cooing noises from the IMF and some Euro leaders, markets thought this meant a new Greek deal was as good as done for this weekend. Some in the Eurozone see the need for a serious debt haircut for Greece to recover, Germany, Finland, the Netherlands, and a few others don't see it the same way. Germany has now floated a 5 year suspension of Greece from the Eurozone to "get their shit together", while allowing it to stay in the EU.

Their were all kinds of uncertainties after Greece voted No on the referendum. These continue to unfold over the weekend and I am sure will continue throughout the next week. This situation can still spin out of control in many different directions. Each kick of the can for Greece gets more expensive and this next one, priced at around $80 billion, may have reached a threshold where it overwhelms the political desire to keep the Eurozone dream alive. Fascinating, isn't it? Everyone knows that a new deal only makes the problem worse -- unless there is giant haircut which causes other kinds of big problems right now. There is no way out.

My friend Mr. T has one prediction...Pain!

Sunday, July 5, 2015

July 5, 2015 - Greek independence day

The news coverage is thick on the Greek referendum where the population rejected the Troika ultimatum. This was a big game of chicken and the Greeks just won not only the game but potentially their independence from the death grip of the horribly flawed Euro monetary union design. I've been expecting this since 2010, it only took 5 more years for the Euro system to break.

Still, there are mostly unknowns ahead for the EU, IMF, ECB, and Greece. A lot of different scenarios can unfold, including Greece staying in the euro while defaulting on the debt. They could end up out of the euro eventually. What they can't do is repay their outrageous debt in euros. This also sets a precedent for other members to turn their backs on the smart people running the EU experiment. It is going to be difficult and painful for the Greek people in the short run, but I hope they make the adjustments they need to right their economy. A big step forward is to dump their debt or at least give it a big fat haircut.