Today's threads (a thread)
Inside: The long bezzle; and more!
Archived at: https://pluralistic.net/2023/08/10/smartest-guys-in-the-room/
#Pluralistic
1/
Shorts are lauded as one of capitalism's self-correcting mechanisms, and Hindenberg certainly has taken some big, successful swings at some of the great bezzles of our time. But as Verizon shows, shorts alone can't discipline a market where profits and investor confidence are totally decoupled from competence or providing a decent product or service.
eof/
Burton points out that Anderson's upside for these massive bloodletting was comparatively modest. A perfectly timed exit from the $17b Icahn report would have netted $56m. What's more, Anderson faces legal threats and worse - one short seller was attacked by a man wearing brass-knuckles, an attack attributed to her short activism.
15/
This year, Anderson's targets have included #CarlIcahn, whose company lost $17b in market cap after Anderson accused it of overvaluing its assets. He went after the world's fourth-richest man, #GautamAdani, accusing him of "accounting fraud and stock manipulation," wiping out 34% of his net worth. He took on #JackDorsey, whose payment processor #Square renamed itself #Block and went all in on the #cryptocurrency bezzle, lopping 16% off its share price.
14/
Billionaire shorts were the villains of the #Gamestop squeeze, accused running negative PR campaigns against beloved firms to drive them under and pay their bets off:
https://pluralistic.net/2021/01/30/meme-stocks/#stockstonks
But shorts can do the lord's work. Writing for *Bloomberg*, #KathyBurton tells of #NateAnderson, whose #HindenburgResesearch cost some of the world's wealthiest people over $99b by publishing investigative reports on their balance-sheet shell-games just this year:
12/
Anderson started off trying to earn a living as a #SEC whistleblower, identifying financial shenanigans and collecting the bounties on offer, but that didn't pan out. So he turned his forensic research skills to preparing mediagenic, viral reports on the scams underpinning the financial boasts of giant companies...after taking a short position in them.
13/
Billionaire shorts were the villains of the #Gamestop squeeze, accused running negative PR campaigns against beloved firms to drive them under and pay their bets off:
https://pluralistic.net/2021/01/30/meme-stocks/#stockstonks
But shorts can do the lord's work. Writing for *Bloomberg*, #KathyBurton tells of #NateAnderson, whose #HindenburgResesearch cost some of the world's wealthiest people over $99b by publishing investigative reports on their balance-sheet shell-games just this year:
12/
Verizon isn't just bad at being a phone company that does non-phone-company things - it's *incredibly* bad at being a phone company, too. As Bode points out, Verizon's only real competency is in capturing its regulators at the FCC:
And sucking up *massive* public subsidies from rubes in the state houses of New York:
https://www.techdirt.com/2017/03/14/new-york-city-sues-verizon-fiber-optic-bait-switch/
New Jersey:
and Pennsylvania:
10/
Despite all this, and vast unfunded liabilities - like remediating the population-destroying lead in their cables - they remain solvent:
Verizon has remained irrational longer than any short seller could remain solvent.
Short-sellers - who bet against companies and get paid when their stock prices go down - get a bad rap.
11/
#Vcast, 2005-2012, yet *another* failed streaming service (pray that someday you find someone who loves you as much as Verizon's C-suite loves doomed streaming services):
https://venturebeat.com/media/verizon-vcast-shutting-down/
And the daddy of them all, #Oath, Verizon's 2017, $4.8b acquisition of Yahoo/AOL, whose name refers to the fact that the company's mismanagement provoked involuntary swearing from all who witnessed the $4.6 billion write-down the company took a year later:
9/
Verizon isn't just bad at being a phone company that does non-phone-company things - it's *incredibly* bad at being a phone company, too. As Bode points out, Verizon's only real competency is in capturing its regulators at the FCC:
And sucking up *massive* public subsidies from rubes in the state houses of New York:
https://www.techdirt.com/2017/03/14/new-york-city-sues-verizon-fiber-optic-bait-switch/
New Jersey:
and Pennsylvania:
10/
Then there was Verizon's bid to rescue #RedBox with a new joint-venture streaming service, #RedboxInstant, launched 2012, killed in 2014, $450,000,000 later:
Then there was #Sugarstring, a tech "news" website where journalists were prohibited from saying nice things about #NetNeutrality or #surveillance - born 2014, died 2014:
https://www.theverge.com/2014/12/2/7324063/verizon-kills-off-sugarstring
An app store, started in 2010, killed in 2012:
https://www.theverge.com/2012/11/5/3605618/verizon-apps-store-closing-january-2013
8/
#Vcast, 2005-2012, yet *another* failed streaming service (pray that someday you find someone who loves you as much as Verizon's C-suite loves doomed streaming services):
https://venturebeat.com/media/verizon-vcast-shutting-down/
And the daddy of them all, #Oath, Verizon's 2017, $4.8b acquisition of Yahoo/AOL, whose name refers to the fact that the company's mismanagement provoked involuntary swearing from all who witnessed the $4.6 billion write-down the company took a year later:
9/
Then there was Verizon's bid to rescue #RedBox with a new joint-venture streaming service, #RedboxInstant, launched 2012, killed in 2014, $450,000,000 later:
Then there was #Sugarstring, a tech "news" website where journalists were prohibited from saying nice things about #NetNeutrality or #surveillance - born 2014, died 2014:
https://www.theverge.com/2014/12/2/7324063/verizon-kills-off-sugarstring
An app store, started in 2010, killed in 2012:
https://www.theverge.com/2012/11/5/3605618/verizon-apps-store-closing-january-2013
8/
This week, Verizon shut down #Bluejeans, an also-ran videoconferencing service the company bought for *$400 million* in 2020 as a panic-buy to keep up with #Zoom. As they lit that $400 mil on fire, Verizon praised its own vision, calling Bluejeans "an award-winning product that connects our customers around the world, but we have made this decision due to the changing market landscape":
https://9to5google.com/2023/08/08/verizon-bluejeans-shutting-down/
6/
On the other hand, as the #PrivateEquity sector has repeatedly demonstrated, there are all kinds of accounting tricks, subsidies and frauds that can animate a decaying, zombie firm long after its best-before date (Keynes's irrational markets):
https://pluralistic.net/2023/06/02/plunderers/#farben
4/
One company that has done an admirable job of balancing on a knife edge between Stein and Keynes is #Verizon, a monopoly #telecoms firm that has proven that a business can remain large, its products relied upon by millions, its stock actively traded and its market cap buoyant, despite manifest, repeated incompetence and waste on an unimaginable scale.
5/
On the other hand, as the #PrivateEquity sector has repeatedly demonstrated, there are all kinds of accounting tricks, subsidies and frauds that can animate a decaying, zombie firm long after its best-before date (Keynes's irrational markets):
https://pluralistic.net/2023/06/02/plunderers/#farben
4/
If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
https://pluralistic.net/2023/08/10/smartest-guys-in-the-room/#can-you-hear-me-now
2/
The bezzle is contained by two forces.
* First, #SteinsLaw: "Anything that can't go on forever will eventually stop."
* Second, #Keynes's: "Markets can remain irrational longer than you can remain solvent."
On the one hand, extremely badly run businesses that strip all the value out of the firm, making things progressively worse for its suppliers, workers and customers will eventually fail (Stein's Law).
3/
When it comes to the modern world of #enshittified, terrible businesses, no addition to your vocabulary is more essential than "#bezzle," #JKGalbraith's term for "the magic interval when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it"
https://pluralistic.net/2023/08/09/accounting-gimmicks/#unter
1/
If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
https://pluralistic.net/2023/08/10/smartest-guys-in-the-room/#can-you-hear-me-now
2/
When it comes to the modern world of #enshittified, terrible businesses, no addition to your vocabulary is more essential than "#bezzle," #JKGalbraith's term for "the magic interval when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it"
https://pluralistic.net/2023/08/09/accounting-gimmicks/#unter
1/
nostr:npub15rfh84f70wpuz7rtn4qttsjymnrpusgg0tpecpqw3xc7rgcfxfzsa8t8qm nostr:npub18cmfuffkqq0fed6jqzr9f7jq658kpq7th3sldk4jhux2cfv5t8fqfv6tw7 nostr:npub1st4s064a7hulzffxh422l22l060l6urts4z8phuklvxapt6df3esdx0jh3 Whaaaa? Where did you get this book from with DRM?!
nostr:npub159yk36tpn7ju53507jua0dvn5wn66gq6wcjf84m7nd8phq77v8fq7sg9py Alas, the mobile companies have made "sideloading" stupidly hard. here's a good thread on different techniques to overcome their antifeatures: https://www.kickstarter.com/projects/doctorow/red-team-blues-another-audiobook-that-amazon-wont-sell/posts/3788112?ref=ksr_email_creator_new_post_comment
nostr:npub1g07xyx9tzdskvtxwjkhzeea7dgjz8fp5glrh2lj7yvu0293wjqnq87sh3v I agree. Always think of him Defcon week especially.