dagblog - Comments for "Does The JOBS Act Really Suck? "

Oxy, Just happened across

artappraiser — Fri, 13 Apr 2012 22:07:01 +0000

In reply to Dan, technically, I didn't

Oxy,

Just happened across this, made me think of some of the things you said on this thread, and even though it goes way beyond what you were talking about, thought it might be of interest to you:

http://www.huffingtonpost.com/klaus-schwab/end-of-capitalism----_b_14233...

Taibbi expands on his

Lulu — Fri, 13 Apr 2012 11:55:56 +0000

In reply to Does The JOBS Act Really Suck?

Taibbi expands on his critique of the jobs bill

http://www.rollingstone.com/politics/blogs/taibblog/yes-virginia-this-is...

Thanks for those links, they

A Guy Called LULU — Thu, 12 Apr 2012 00:40:31 +0000

In reply to James Kwak: The so-called

Thanks for those links, they are well worth reading if the root subject is of interest.

Dan, technically, I didn't

Oxy Mora — Wed, 11 Apr 2012 23:36:03 +0000

In reply to I don't think the problem is

Dan, technically, I didn't say I would like to "avail" myself. What I tried to say, maybe not clearly, is to say while there is opportunity, taking on outside investors in whatever capacity raises a lot of issues. I will consider this option over the coming year. It is truly revolutionary. It might be the answer to a personal conundrum of estate planning for me. As always, the key is the quality of people you deal with---meaning the various crowdfunding ideas and sites which are springing up. There is no free lunch but an exciting new lunch counter just opened up--I'm evaluating the menu and the prices.

One of the essential problems we have in the economy and monetary policy,imo, is that the "transmission" system is not working and I suspect that one of the reasons is simple mechanics---small banks and community banks simply don't have the systems and staff to make small loans. Crowdfunding is very much an alternative to what used to be a system of commercial loans to small businesses. Why don't we focus of whether the law needs to be tweaked rather than condemn something across the board which has such great potential for funding enterprises across the spectrum, including, perhaps, new forward looking economics institutes.

I have great respect for your writing and analysis. I agree that fiscal policy and stimulus is needed. But I also think creative solutions which remove bottlenecks should be given a chance.

By the way, I'm just curious. Do you think a $2000 per year limit for investing in crowdfunding for a person making less than $100 K a year is not sufficient government protection for a person who would otherwise not be able to properly evaluate the quality of an on line investment. I think the actual availability of on line "product" reviews, plus social media, would go a long way in evaluating crowdfunding sites and their deals and even seeking redress. For myself, one or two bad product reviews on Amazon will put me off a product. It would be the same with me for a crowdfunding site---either as deal provider or as customer.

I don't think the problem is

Dan Kervick — Wed, 11 Apr 2012 19:33:29 +0000

In reply to On a more serious note, so

I don't think the problem is large, middle or small. The worry is that this act just made flim-flam and criminality even easier than it was before.

Sure you would like to avail yourself of crowdfunding. So would I. So would every con man with a laptop and a place to plug it in.

On a more serious note, so

Oxy Mora — Wed, 11 Apr 2012 19:16:05 +0000

In reply to Thanks for the response. You

On a more serious note, so far the media coverage has been at the extremes, a new Indian restaurant in London, a guy with a bamboo keyboard idea in Vail and then the larger companies---which is what I think Taibbi is talking about. The middle market, the market of actual companies, say in the million dollar range with successful histories is what interests me because crowdfundidng is the biggest opportunity for capital that has come along in my memory.

The larger companies, say the $100 million ones, or the $20 million tech startup will be getting a lot more latitude. Taibbi can complain all he wants to. I still don't expect to have a real opportunity to buy into a high quality tech startup trying to raise $10 or $20 million. If it's that good a deal it will stay with private funding until more leverage is generated. Caveat Emptor and Sour Grapes all around. And it's one of the best stimulus ideas to come around in the last four years, imo.

For small companies like mine the real hit is in the opportunity to do crowdfunding--specifically, the ability to raise up to a $1million a year in equity financing. This is a startling development. As the owner of a successful business my decision will be whether I want to give up my independence and whether a larger company is really worth the changes in my life it would bring. I can't get a $50 K credit line from a bank without signing away my house equity. But I now have a real source of financing---if I want it. If it would be legal for me to put offers up on my website or talk to existing contacts, I no doubt could now legally raise the money.

I started the company by begging, borrowing, maxing out credit cards. home equity loans and worse. Somehow I got everyone paid back and the company made it. VC was just not an option. Nor was bank financing in a straight commercial loan. One learns how to buy a small piece of equipment and work his way up with rolling stock, etc. But none of this is cheap and nothing about it represents a straight commercial loan or venture capital in the traditional sense.

The new legislation offers something entirely different. And there are some safeguards for small investors---a $2K per year limit of CF for an individual making less than $100K a year. Sure there will be fraud. Some guy will take out a home equity loan, give friends $2K on a side deal which they will invest for him---what's new. My son-in-law went to twenty rock concerts last year. Should I worry about his on line investing at a $2K per year level?

I have started investigating crowdfunding sites, which are springing up like blue bonnets in a Texas cow pasture.THey run the gamut. Essentially you pitch your idea and see if the site accepts you. There seems to be a serious one for retail called Circle Up and others with special slants. These sites will come under some regluation---and that's a good thing as long as they don't shut down the basic idea. I give it six months and there will be some serious sites, connected to securities firms, which will offer a real service to actual investors and companies with ongoing track records. Do I want this? That's a much bigger question.

There are 2 kinds of the

The Decider — Wed, 11 Apr 2012 19:14:22 +0000

In reply to Does The JOBS Act Really Suck?

There are 2 kinds of the people in the world: people who want to give their money away and people who want to take it. We grease the wheels of industry when we make it easier for those people to get together. Problem solved!

James Kwak: The so-called

Donal — Wed, 11 Apr 2012 18:05:00 +0000

In reply to Does The JOBS Act Really Suck?

James Kwak:

The so-called JOBS act is a victory of faith over basic logic. The motivating idea seems to be that if we reduce the regulations that govern the process of raising capital, small companies will find it easier to raise money, and that money will translate into jobs. Many people have pointed out some of the problems with the bill: recently, for example, Andrew Ross Sorkin highlighted the potential for companies to take advantage of investors, and Steven Davidoff pointed out that regulation is probably not the reason for the decline in the number of small company IPOs.

There are a couple of more fundamental misunderstanding I want to focus on, however. First, it’s not clear that relaxing regulations will actually make it cheaper for companies to raise money. Sure, eliminating the independent audit requirement will save companies a few bucks. But what really affects the cost of capital is not out-of-pocket fees but the price that investors are willing to pay for equity. The less confidence that investors have in a company’s prospects, the cheaper that company will have to sell its stock. If small companies are allowed to provide less information to investors, that could simply make it more expensive for them to raise money.

Kwak also points out this NY Times quote as absurd:

While soliciting investment funds online has triggered fears of fraudulent schemes, the law’s backers said the greater availability of information through social media sites like Facebook would allow would-be investors to conduct their own background checks, making it difficult for such schemes to succeed.

The problem I see is that background checks will probably switch you over to Facebook Timeline. Yecch.

All 'jobs' programs that

EmmaZahn — Wed, 11 Apr 2012 17:21:39 +0000

In reply to Does The JOBS Act Really Suck?

All 'jobs' programs that funnel money to people through third parties suck, imo. They channel money the wrong way round thereby failing to get maximum bang for every buck.

Since a knowledge-based economy is supplanting the industrial one, why do we not consider paying people to acquire (and teach) assortments of desirable and useful skill sets. Maybe even consider paying people for being the healthcare guinea pigs we have become. Study us, learn from us, and be truly scientific -- and humane -- about it.

Why not pay to prepare us for the future, the present, too. Let the past go already.

Thanks for the response. You

A Guy Called LULU — Wed, 11 Apr 2012 16:27:22 +0000

In reply to I have not read the details

Thanks for the response. You made some very good points, I think, and that is what I was hoping for, seriously, the view of someone with skin in the game that had an informed perspective and maybe a different conclusion. But; "... the only fucking perk we've gotten in the last fifty years". Seriously? Still, after reading your response I was ready to vote for putting Taibbi into a big bag of feral cats, maybe tied back to back with Greenwald, and pitching them into the nearest river. Have these "jerk pundits" ever said anything worth examining since Bush has been gone? Then Donal comes along and muddies the water with some sensible points in agreement with Taibbi. So confusing.