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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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It’s Probably More Complicated Than You Think

Comments (20)

Santo Politi has a great post up today titled Election 2008 and Price of Crude.  We were in a meeting together today and he mentioned it (but didn’t mention the content.)  Santo’s cynicism is right on the money as well as his concerns.  It’s definitely worth a read.

  • Roy

    In an industry where conservation has been the feared, the swings in crude oil prices have driven a profoundly valuable experiment in charting price elasticity. There was no fundamental public outrage, threats of government intervention, or shifts in consumer behavior until oil bounced around $140 and gasoline at $4. The World’s supply chain has been forever changed with raw material prices and transportation costs now set to optimize the profits of the oil industry. Good business management now equipped with much better data on market behaviors.

  • Karl

    Not sure I see Santo's point when OPEC cuts output unexpectedly by 520,000 bpd today.

  • http://www.techcrunch.com anonymous

    He says that Fannie and Freddid have 500 trillion in debt…what is he smoking?

    • santopoliti

      That was a mistake, the right number is 5T (actually somewhere between 5T to 6T or 1/2 of the US mortgages). I typed the post on my blackberry in my flight to Denver yesterday. No excuses on reporting the wrong number but originally I was writing about the cost of the debt (200B) then decided to highlight the staggering liability and did not delete the zero's, sorry/

  • Robert V

    Does he realize what $500 trillion is? Together they back about half the country's $12 trillion in mortgages.

    • santopoliti

      Please see comment above…

  • Reid

    I think this was a poor link for two reasons. First, as pointed out by others, the logic is seriously flawed. Second, my eyeballs almost exploded after being exposed to the ridiculous gray-on-black design of the site. That might just be a nominee for webpagesthatsuck.com's worst of 2008 contest.

    • http://www.feld.com Brad Feld

      Eh – maybe Santo will show up to defend his logic as well as his particular choice of design.

      • santopoliti

        I am finally home in front of my computer and I shall defend myself.

    • santopoliti

      If you give me the benefit of the doubt that the 500T is a tying mistake, I don't think my logic is flowed. As for my choice of colors, no comment :)

  • John

    or not

  • togilvie

    There's an extremely liquid futures market that thinks Santo may be smoking something as well.

    OPEC may have something to gain from having a Republican victory, but there are tons of hedge funds who would sell their mothers for juiced performance. The futures market suggests they don't believe this is a temporary dip until november/january.

    • santopoliti

      If only the futures market was an exact predictor of the future, we would all be minting money.

      The price and features are where they are today because Saudi Arabia in a surprise move decided to reject the equally surprising OPEC production cut that was announced 2 days ago. Hmmmm….

      If it were not for the latest announcement, all those hedge funds would have lost their shirts. Do you think they knew what would have happened?

      The supply / demand curve in my opinion dictates oil prices to keep rising. Geopolitical interests (this is where my cynicism comes in) requires prices to be low at least until the end of the US election.

  • Steve Bergstein

    I have NO economic background but I do wonder what economic links there are between the outrageous spending in Iraq and the current economic malaise. Someone must have some theories about it.

  • cdscurto

    Come on, Santo doesn't break any original thought in this post. To ad insult to injury he is a nutter with his 500 trillion commnet. My recommendation to him would be to get off the “feed my ego/read my blog” train he is on and read the details of the bail out deal with Freddie and Fannie. My high school son can read a balance sheet and figure out what the total liabilities of a company. Maybe someone should teach that skill to a couple bloggers.

    • santopoliti

      I guess I will respectfully ignore your recommendation.

      I have been blogging for a while but it is more to be a student of the social web so that I can do my job more effectively. I tumble (blog, tweet etc.) infrequently usually to test something new and very rarely on a specific subject.

      According to Google analytics I get on average 10 hits to my tumblog a day so there was no reason for me to expect a higher number for the particular blog entry either.

      Brad happened to read my entry yesterday because I asked him something about the VC feed that he manages and he was kind enough to link to my tumblog.

      I am sorry you had an allergic reaction but you always have the option to ignore me.

      As for my familiarity with what's going on with Freddie and Fannie, it is my job to know the macro economic conditions. My firm manages a large sum of money which we invest in early stage start ups that align with our views of long term trends.

      And for my skills in reading a balance sheet, probably my Wharton professors would agree with you.

      I would love to know your credentials though…

  • cdscurto

    Post Script: Brad I should give you some credit a vast majority of your links to other post are good stuff. Keep recommending posts because more times than not they are right on in terms of being provocative. And when I feel the post is off the mark, like above, at least it is entertaining.

  • http://santopoliti.tumblr.com Santo Politi

    I was off the grid and I plan to come back with my comments. 500Trillion was wrong, the right figure is 5 Trillion. The error occured becasue I typed it on my blackberry in my flight to Denver yesterday. I will make the proper connection.

  • http://www.kidmercuryblog.com kid mercury

    great link, brad.

    the article is pretty legit. i don't doubt the markets are being very rigged due to the election; this has been done many times in the past in history, most typically though the fed cuts rates unnecessarily to create a short-term boom before an election. but whatever the method, markets are often rigged for political purposes by the powers that be (central banks).

    for people who may not be too familiar with the economic situation, the story is actually simple: the money supply has been expanded to preposterous levels, the 14% inflation we've seen this year is symptomatic of that, the fannie/freddie disaster is only going to end up further expanding the money supply and destroying the value of the dollar, which the author of the article correctly foresees. stock up on real assets now, the value of your money is going to fall noticeably over the next few years.

    the one serious error in the article is the notion that fires caused WTC 1 and 2 to collapse. a peer-reviewed study — journalof911studies.org — as well as a group of highly credible architects and engineers — ae911truth.org — would beg to differ with the fire explanation. for the common sense explanation, look into the collapse of WTC 7, which was not hit by a plane. eyewitnesses say they heard a countdown to a controlled demolition for WTC 7. rudy giuliani said he was told beforehand to evacuate WTC 7 because it was going to collapse. BBC and CNN reported 20 minutes before the collapse of WTC 7 that the building had collapsed. larry silverstein, owner of WTC 7 who had taken out a massive insurance policy on his WTC properties in the months before 9/11, admitted the building was pulled. those buildings were not destroyed by fire, and controlled demolition is the most likely hypothesis.

    more importantly, 9/11 is a total inside job, the evidence is overwhelming. good starting point: http://www.patriotsquestion911.com

    that is relevant to the discussion, as the fraudulent wars that have been started after 9/11 and the outrageous expansion of government in the name of protecting us from almighty cave dwellers have been financed by deficit spending and an expansion of the money supply. while this is far from the sole cause of dollar devaluation, it has certainly contributed.

    but ultimately, the article, in all of its doom and gloom, is telling the truth.

  • Roy

    In an industry where conservation has been the feared, the swings in crude oil prices have driven a profoundly valuable experiment in charting price elasticity. There was no fundamental public outrage, threats of government intervention, or shifts in consumer behavior until oil bounced around $140 and gasoline at $4. The World’s supply chain has been forever changed with raw material prices and transportation costs now set to optimize the profits of the oil industry. Good business management now equipped with much better data on market behaviors.

  • Karl

    Not sure I see Santo's point when OPEC cuts output unexpectedly by 520,000 bpd today.

  • John

    or not

  • Robert V

    Does he realize what $500 trillion is? Together they back about half the country's $12 trillion in mortgages.

  • anonymous

    He says that Fannie and Freddid have 500 trillion in debt…what is he smoking?

  • Reid

    I think this was a poor link for two reasons. First, as pointed out by others, the logic is seriously flawed. Second, my eyeballs almost exploded after being exposed to the ridiculous gray-on-black design of the site. That might just be a nominee for webpagesthatsuck.com's worst of 2008 contest.

  • http://intensedebate.com/people/bfeld bfeld

    Eh – maybe Santo will show up to defend his logic as well as his particular choice of design.

  • togilvie

    There's an extremely liquid futures market that thinks Santo may be smoking something as well.

    OPEC may have something to gain from having a Republican victory, but there are tons of hedge funds who would sell their mothers for juiced performance. The futures market suggests they don't believe this is a temporary dip until november/january.

  • http://intensedebate.com/people/steve_bergs2127 steve_bergs2127

    I have NO economic background but I do wonder what economic links there are between the outrageous spending in Iraq and the current economic malaise. Someone must have some theories about it.

  • Santo Politi

    I was off the grid and I plan to come back with my comments. 500Trillion was wrong, the right figure is 5 Trillion. The error occured becasue I typed it on my blackberry in my flight to Denver yesterday. I will make the proper connection.

  • cdscurto

    Post Script: Brad I should give you some credit a vast majority of your links to other post are good stuff. Keep recommending posts because more times than not they are right on in terms of being provocative. And when I feel the post is off the mark, like above, at least it is entertaining.

  • http://intensedebate.com/people/santopoliti santopoliti

    I guess this news came a day late:

    Saudi Arabia won't follow OPEC production cut
    Here is a write up in SF Gate
    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/

  • http://intensedebate.com/people/santopoliti santopoliti

    If you give me the benefit of the doubt that the 500T is a tying mistake, I don't think my logic is flowed. As for my choice of colors, no comment :)

  • http://intensedebate.com/people/santopoliti santopoliti

    If only the futures market was an exact predictor of the future, we would all be minting money.

    The price and features are where they are today because Saudi Arabia in a surprise move decided to reject the equally surprising OPEC production cut that was announced 2 days ago. Hmmmm….

    If it were not for the latest announcement, all those hedge funds would have lost their shirts. Do you think they knew what would have happened?

    The supply / demand curve in my opinion dictates oil prices to keep rising. Geopolitical interests (this is where my cynicism comes in) requires prices to be low at least until the end of the US election.

  • http://intensedebate.com/people/kidmercury kidmercury

    great link, brad.

    the article is pretty legit. i don't doubt the markets are being very rigged due to the election; this has been done many times in the past in history, most typically though the fed cuts rates unnecessarily to create a short-term boom before an election. but whatever the method, markets are often rigged for political purposes by the powers that be (central banks).

    for people who may not be too familiar with the economic situation, the story is actually simple: the money supply has been expanded to preposterous levels, the 14% inflation we've seen this year is symptomatic of that, the fannie/freddie disaster is only going to end up further expanding the money supply and destroying the value of the dollar, which the author of the article correctly foresees. stock up on real assets now, the value of your money is going to fall noticeably over the next few years.

    the one serious error in the article is the notion that fires caused WTC 1 and 2 to collapse. a peer-reviewed study — journalof911studies.org — as well as a group of highly credible architects and engineers — ae911truth.org — would beg to differ with the fire explanation. for the common sense explanation, look into the collapse of WTC 7, which was not hit by a plane. eyewitnesses say they heard a countdown to a controlled demolition for WTC 7. rudy giuliani said he was told beforehand to evacuate WTC 7 because it was going to collapse. BBC and CNN reported 20 minutes before the collapse of WTC 7 that the building had collapsed. larry silverstein, owner of WTC 7 who had taken out a massive insurance policy on his WTC properties in the months before 9/11, admitted the building was pulled. those buildings were not destroyed by fire, and controlled demolition is the most likely hypothesis.

    more importantly, 9/11 is a total inside job, the evidence is overwhelming. good starting point: http://www.patriotsquestion911.com

    that is relevant to the discussion, as the fraudulent wars that have been started after 9/11 and the outrageous expansion of government in the name of protecting us from almighty cave dwellers have been financed by deficit spending and an expansion of the money supply. while this is far from the sole cause of dollar devaluation, it has certainly contributed.

    but ultimately, the article, in all of its doom and gloom, is telling the truth.

  • cdscurto

    Come on, Santo doesn't break any original thought in this post. To ad insult to injury he is a nutter with his 500 trillion commnet. My recommendation to him would be to get off the "feed my ego/read my blog" train he is on and read the details of the bail out deal with Freddie and Fannie. My high school son can read a balance sheet and figure out what the total liabilities of a company. Maybe someone should teach that skill to a couple bloggers.

  • http://intensedebate.com/people/santopoliti santopoliti

    I guess I will respectfully ignore your recommendation.

    I have been blogging for a while but it is more to be a student of the social web so that I can do my job more effectively. I tumble (blog, tweet etc.) infrequently usually to test something new and very rarely on a specific subject.

    According to Google analytics I get on average 10 hits to my tumblog a day so there was no reason for me to expect a higher number for the particular blog entry either.

    Brad happened to read my entry yesterday because I asked him something about the VC feed that he manages and he was kind enough to link to my tumblog.

    I am sorry you had an allergic reaction but you always have the option to ignore me.

    As for my familiarity with what's going on with Freddie and Fannie, it is my job to know the macro economic conditions. My firm manages a large sum of money which we invest in early stage start ups that align with our views of long term trends.

    And for my skills in reading a balance sheet, probably my Wharton professors would agree with you.

    I would love to know your credentials though…

  • http://intensedebate.com/people/santopoliti santopoliti

    I am finally home in front of my computer and I shall defend myself.

  • http://intensedebate.com/people/santopoliti santopoliti

    That was a mistake, the right number is 5T (actually somewhere between 5T to 6T or 1/2 of the US mortgages). I typed the post on my blackberry in my flight to Denver yesterday. No excuses on reporting the wrong number but originally I was writing about the cost of the debt (200B) then decided to highlight the staggering liability and did not delete the zero's, sorry/

  • http://intensedebate.com/people/santopoliti santopoliti

    Please see comment above…

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