Cognitive Labs

Like cicadas emerging from the ground after a long developmental slumber and leaving their chitinous shell on the soil or in a downed, rotting tree trunk - rather than 17 years, however, this cycle was 79 years - i-bankers Goldman Sachs and Morgan Stanley are going to be reclassified as integrated banks, allowing them to take deposits and make commercial loans. In 1929, just as Gatsby was muttering his last 'old sport' the bank holding company act of 1929 forbade investment banks from the bread-and-butter banking business, in an attempt to put a drogue chute on some of the sleight of hand financial practices that had created and amplified the roaring 20's.

Reversing this decision puts us back into the landscape of the Herbert Hoover administration. (Hoover test) All of these gyrations may create opportunities for smaller banks to bulk up and fill the gap left by the recently departed.

Morgan Stanley was the lead underwriter for UPS - in what (at the time) was the largest initial public offering yet. Stock held by founders and heirs and pre-IPO mgmt was set aside as Class A - a new class "B" was created for retail purchasers. Only around 10% of the equity was sold, with different voting rights than Class A. The previous largest offering was Dow Chemical co, and the subsequent largest was AT&T Wireless.

Labels: goldman, hoover, morgan, sachs, stanley

The proprietors of Gaia Online, a teen virtual world portal,looked down from their digital perch and noticed that supply-"S" was shifting to S'or S-prime. Time to take action, so they just named economist Michael Boskin of the Hoover Institution to their advisory board, according to news.com. He will chair the board of economic advisors. Google also recently added a UC-Berkeley transaction-cost economics professor, who specializes in the dynamics of virtual markets, as Chief Economist. We talked to him a few times in our first start-up,which had bid/ask auction components for the supply chain.

Why is this happening? Because the share of purely digital transactions is growing -imaginary or conceptual goods that are acquired with digital currency that is pegged, however, to real currencies like the dollar and euro in a determined exchange rate. Will the traditional currencies go the way of the gold standard? Instead of 'free silver' will it be free digital tokens, or unlimited scrip?

Labels: boskin, hoover, stanford