Guest Post: Let Them Eat Trinkets

Tyler Durden's picture




 

Originally posted at Coyote Blog,

Steven Rattner, investment banker and former member of the Obama Administration,  is terrified that under a proposed law companies will be able to raise money without investment bankers.

Most troublesome is the legalization of “crowd funding,” the ability of start-up companies to raise capital from small investors on the Internet. While such lightly regulated capital raising has existed for years, until now, “investors” could receive only trinkets and other items of small value, similar to the way public television raises funds. As soon as regulations required to implement the new rules are completed, people who invest money in start-ups through sites similar to Kickstarter will be able to receive a financial interest in the soliciting company, much like buying shares on the stock exchange. But the enterprises soliciting these funds will hardly be big corporations like Wal-Mart or Exxon; they will be small start-ups with no track records.

This is absolutely, classically representative of the technocratic arrogance of the Obama Administration and the investment bankers that inhabit it.  I have three quick thoughts:

  1. Rattner's concern for individual investors comes rather late.  After all, he was the primary architect of the extra-legal screwing of GM and Chrysler secured creditors in favor of the UAW and other Obama supporters.
  2. God forbid investors get actual, you know, ownership in a company for their capital rather than just trinkets.  This is so bizarrely patronizing that I had to read it twice just to make sure I wasn't missing something.  But no, he is explicitly preferring that you and I get trinkets rather than ownership  (ownership, apparently, to be reserved for millionaire insiders like himself).
  3. We have truly entered the corporate state when leftish opinion makers argue that large corporations like Exxon and Wal-Mart get preferential access to capital and that smaller startups that might compete with them be shut out of the market.

I would predict that over time, Internet entrepreneurs running such crowd-sourcing sites would develop reputation management and review tools for investors (similar to those at Amazon and eBay).  Over time, it may be that these become far more trustworthy than current credit agency reports or investment bank recommendations.  After all, which do you trust more -- a 5-star Amazon review with 35 responses or a Goldman Sachs "buy" recommendation on an IPO like Facebook or Groupon?  Besides, it would take a very long time, like eternity, for fraud losses in a crowd-sourcing site to equal 1/100 of the investor losses to heavily regulated Bernie Madoff.

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Wed, 03/06/2013 - 14:03 | 3305327 fuu
fuu's picture

Fuck you Rattner!

Wed, 03/06/2013 - 14:06 | 3305340 redpill
redpill's picture

OT: Rand Paul is in the midst of an old school filibuster of John Brennan's nomination (and by proxy our drone policy), he's a couple hours in already.

 

http://www.c-span.org/Live-Video/C-SPAN2/

Wed, 03/06/2013 - 14:10 | 3305357 Tijuana Donkey Show
Tijuana Donkey Show's picture

Long Red Bull!

Wed, 03/06/2013 - 14:20 | 3305398 NotApplicable
NotApplicable's picture

What? Unregulated capital formation?

Seal the exits, STAT!

Wed, 03/06/2013 - 14:30 | 3305436 Zer0head
Zer0head's picture
What It Means to Manage the Mayor’s Money

“Steve Rattner’s my friend, of course I’d keep him on. Why would you not? If he can do anything to help, I value his advice and he’s a close friend of mine, and you stick by your friends.”

 

http://dealbook.nytimes.com/2010/10/15/what-it-means-to-manage-the-mayor...

Wed, 03/06/2013 - 14:35 | 3305466 Say What Again
Say What Again's picture

Ratner was re-gifting the trinkets for christmas and birthdays.  He's pissed off that he now has to spend his own money to get said trinkets.

Wed, 03/06/2013 - 15:07 | 3305584 DblAjent
DblAjent's picture

What is troublesome to RATner is perfectly logical and righteous to me.

Should I have my head examined?

Wed, 03/06/2013 - 17:44 | 3306251 Ignatius
Ignatius's picture

The issue raised in this article really goes to the meat and potatoes of the struggle, does it not?

Privilege trying to hold on to same.  "Same as it ever was...."

Wed, 03/06/2013 - 14:15 | 3305362 toxic8
toxic8's picture

watching now...

 

"Everyone on 9/11 got medals"

 

^ a good point but missing the big picture. Amazes me how 10 years later they still talk about 9/11 without raising a single significant question

Wed, 03/06/2013 - 14:14 | 3305373 otto skorzeny
otto skorzeny's picture

then it's off to a kosher lunch for Rand with an AIPAC handler

Wed, 03/06/2013 - 14:15 | 3305375 machineh
machineh's picture

History in the making.

DON'T MISS IT!

Wed, 03/06/2013 - 14:28 | 3305430 Confundido
Confundido's picture

Thanks for the update.

Wed, 03/06/2013 - 14:31 | 3305442 Spastica Rex
Spastica Rex's picture

Drone is right.

Wed, 03/06/2013 - 14:37 | 3305475 NotApplicable
NotApplicable's picture

Our drone policy?

Dunno 'bout you, but mine is fairly benign.

"Don't drone me, bro!"

Wed, 03/06/2013 - 14:07 | 3305347 TruthInSunshine
TruthInSunshine's picture

Pelosi, Reid, SCHUMER, MAX BAUCUS...they'll defeat this....they and their families get a comfortable life through guaranteeing that the fucking parasites on Wall Street get their pound of flesh and pint of blood come hell or high water, bitchez.

Wed, 03/06/2013 - 14:47 | 3305511 ZerOhead
ZerOhead's picture

Sometimes they even interbreed...

Facing up to fame: Ms Clinton sparked a media storm when she married investment banker Mark Mezvinsky in 2010, in a lavish ceremony believed to have cost $3million

Read more: http://www.dailymail.co.uk/femail/article-2188462/Chelsea-Clinton-husband-Marc-Mezvinsky-break-silence-marriage-break-rumours-children.html#ixzz2MmqLGXFK
Follow us: @MailOnline on Twitter | DailyMail on Facebook
Wed, 03/06/2013 - 14:53 | 3305533 css1971
css1971's picture

Why do Americans believe the American Empire does not have an aristocracy?

Wed, 03/06/2013 - 15:04 | 3305565 ZerOhead
ZerOhead's picture

It gets worse... read on...

Chelsea also admitted - for the first time - that she would not rule out running for office herself.

'Before my mom's campaign I would have said no. And now I don’t know,' she said.

Read more: http://www.dailymail.co.uk/femail/article-2188462/Chelsea-Clinton-husband-Marc-Mezvinsky-break-silence-marriage-break-rumours-children.html#ixzz2MmuEERKU
Follow us: @MailOnline on Twitter | DailyMail on Facebook

As if four Bush family campaigns and three Clinton family campaigns for the Whitehouse weren't bad enough for the U.S. ...

Wed, 03/06/2013 - 15:39 | 3305730 Kirk2NCC1701
Kirk2NCC1701's picture

Saw that one coming when Hil' dragged her onto podiums in the 2008 election.  Told my wife:  "Mark my words, she's being prepped & groomed for 8-12 years out, starting with a run at the Senate.  After she gets married to an Elite member and has a kid or two.  Of course the Bush/Arbusto clan will position Jeb for 2106, by which time the 'Bush' brand will have been refreshed and repackaged:  I'm not like George.  I'm a Moderate Republican...". 

Some things never change.

Wed, 03/06/2013 - 18:33 | 3306425 CPL
CPL's picture

 

lol, In 10 years there won't be a government elect in any central capacity in the US.

 

There are much bigger changes happening now that people are starting to acknowledge but it's far to late because of pussy footing.

 

 

Wed, 03/06/2013 - 15:00 | 3305535 flacon
flacon's picture

"Chelsea Clinton has spoken publicly for for the first time about her marriage - giving her mother the 'grandchildren she has always wanted', and following her parents into politics."

 

Sexist, ego-centric little bitch. "Giving her MOTHER the grandchildren she has ALWAYS WANTED." What a pile of shit. She has a intern-fucking FATHER too! And what is it with getting pregnant in order to please your parents with another soul? I pity this poor baby. Can you imagine having HiLIARy Clinton as your grandmother?! "Give grandma a kiss!" UGH!

Wed, 03/06/2013 - 15:08 | 3305582 ZerOhead
ZerOhead's picture

If I were the unlucky baby it would be awful enough to make me upchuck into my little mouth...

Wed, 03/06/2013 - 16:11 | 3305881 Umh
Wed, 03/06/2013 - 18:44 | 3306482 August
August's picture

"Ms Clinton sparked a media storm when she married investment banker Mark Mezvinsky in 2010, in a lavish ceremony believed to have cost $3million."

Well, it's just as easy to fall in love with a rich boy as with a poor boy.

Wed, 03/06/2013 - 14:13 | 3305360 aint no fortuna...
aint no fortunate son's picture

"But the enterprises soliciting these funds will hardly be big corporations like Wal-Mart or Exxon; they will be small start-ups with no track records." Yeah, heaven fucking help that the little guys get a chance to get into a garage size AAPL before that scumsucking douchebag Dimon gets a chance to get RICHER off it.

Wed, 03/06/2013 - 16:09 | 3305854 TheGardener
TheGardener's picture

What happened to monopoly commissions ? Shouldn't big corporations be rather broken up and dismantled instead of being fed capital ? Wait, this was in pre-corporate-fascism days.

Bust the trusts, return entrepreneurship.

Wed, 03/06/2013 - 14:18 | 3305389 God Bless The V...
God Bless The Virtuous's picture

FUU,

            If I might just add a small addition to your eloquent feeling,

Fuck You Rattner,

You rat bastard!

 

Wed, 03/06/2013 - 14:47 | 3305512 fuu
fuu's picture

Fair enough.

Crowd sourcing is a great thing, Rattner should DIAF. 

Wed, 03/06/2013 - 14:23 | 3305407 Wile-E-Coyote
Wile-E-Coyote's picture

Crowd Funding: This is obviously run by Al Qaeda.

Drones taking off 3...2...1

Wed, 03/06/2013 - 14:30 | 3305437 rotagen
rotagen's picture

Alternatives exist, make the fuckers irrelevant Bitcoin is just the start - subvert - marginalize - then destroy.

Wed, 03/06/2013 - 14:03 | 3305329 kliguy38
kliguy38's picture

Watta Scumbag!!

Wed, 03/06/2013 - 14:08 | 3305352 Edward Fiatski
Edward Fiatski's picture

Watto-Watt-ttto!

http://www.youtube.com/watch?v=skv3wSIL5xI

"Crowd-funding will do fine."

Wed, 03/06/2013 - 14:04 | 3305334 Hippocratic Oaf
Hippocratic Oaf's picture

Irony........just sold unsolicited shares of GM for a client that held the bonds.

"They're pretty much worthless" he said, "Just get 'em the fuck outta there"

Wed, 03/06/2013 - 14:40 | 3305339 Mercury
Mercury's picture

Crowdsourcing might work for IPOs (it's not all that new - remember SAM?) but I doubt it will eat much into other I-bank areas like M&A and more complex corporate finance deals where reputation and personal relationships (trust) play a much bigger role.

So, that "reputation management and review tools" idea touches on a critical area and is a big "if".

Perhaps more important, related issues are: A) To what extend are companies more relectant to be public now (at least in the US) than they used to be and B) are public equity owners getting less and less control with their equity shares due to dual class structures and the like?

Wed, 03/06/2013 - 14:50 | 3305525 augustusgloop
augustusgloop's picture

Trust! Funny. Banker = Trust and I scroll back to Fab Fab the French Douchebag, Cassano et. al. sheparding institutional clients through complex financial deals involving collatorilized mortgate obligations. 

Wed, 03/06/2013 - 14:05 | 3305341 Cognitive Dissonance
Cognitive Dissonance's picture

"Most troublesome is the legalization of “crowd funding,” the ability of start-up companies to raise capital from small investors on the Internet."

While crowd funding is a wonderful concept that can be used to empower and capitalize micro businesses and individuals it can (and I suspect will) be used to seek out and fleece the last of the greater fools.

Wed, 03/06/2013 - 14:07 | 3305349 fonzannoon
fonzannoon's picture

Really? I see it as an expressway back to black markets.

Wed, 03/06/2013 - 14:21 | 3305402 NotApplicable
NotApplicable's picture

Those perspectives are not mutually exclusive.

Wed, 03/06/2013 - 14:23 | 3305408 fonzannoon
fonzannoon's picture

good point.

Wed, 03/06/2013 - 14:46 | 3305507 NotApplicable
NotApplicable's picture

As I've gotten older, I'm realizing that it applies to almost every disagreement I see. Especially when many of the conclusions rely on particular worldviews that simply do not overlap.

Wed, 03/06/2013 - 21:24 | 3305700 MachoMan
MachoMan's picture

sage advice...  although, I figure by the time I have wrinkled old man balls, I'll be drinking whiskey, eating bacon, and have come full circle...

Wed, 03/06/2013 - 14:25 | 3305414 CPL
CPL's picture

Black markets aren't public, anyone telling you a crowd sourced loan scheme is the black market would be wrong.

 

You know what a black market doesn't accept?  Credit.  Cash up front.

Wed, 03/06/2013 - 14:30 | 3305435 Mercury
Mercury's picture

They can be public (or public enough) they just aren't by definition legal.

Wed, 03/06/2013 - 14:32 | 3305451 Peterus
Peterus's picture

Not really. Actually cash is not commodity money so black market dealer taking paper dollars is exchanging for US govt credit... And you may take credit and still be illegal - so black market operation.

He's stretching the definition but so do you. Though I'd agree that it is somewhat similiar in the good side of the actual black market. It's reputation based and parties govern their own risks and it is outside of government control.

Wed, 03/06/2013 - 14:37 | 3305473 fonzannoon
fonzannoon's picture

I think it is an avenue to eventuality.

Wed, 03/06/2013 - 15:03 | 3305563 resurger
resurger's picture

Cash and Gold/Silver - CPL

Wed, 03/06/2013 - 14:21 | 3305400 XitSam
XitSam's picture

It is not government's job to protect me from myself.  The assumption that something is harmful unless government has a hand it is the root of many problems we now have.

Wed, 03/06/2013 - 23:45 | 3307586 honestann
honestann's picture

government === harmful

Wed, 03/06/2013 - 14:27 | 3305426 walküre
walküre's picture

cloud computing ... crowd funding ... who are the originators? has IPO mania back to the late 1990s written all over it.

let's do it all over again!

 

Wed, 03/06/2013 - 14:41 | 3305493 Matt
Matt's picture

The big difference is there is much more transparency, I think. If people, with the best information available, decide to invest in something that is either too good to be true, or is massively over-valued, why is it your business if that is how they choose to use their money?

When the government regulators and big banks like Goldman Sachs are running an IPO, there is an air of legitamacy that clouds people's views. With crowd funding, most people can see it is the wild west. There is no comfort blanket of regulations. It is pure caveat emptor.

On a side note, I find the term "trinkets" a bit offensive. In most cases, you help finance the developement and scale production of a product (or service), and in exchange, you can get that product. While many of these products are video games or books, there are some bigger ticket items like 3D Printers that can cost thousands.

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