This Must Be a Joke

By James Kwak

From the Times article on President Obama’s signing of the JOBS Act (emphasis added):

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.

“While it seems reasonable to worry about these issues, there is just so much more information these days,” said Timothy Rowe, the chief executive of the Cambridge Innovation Center, which provides office space for start-up firms next to the campus of the Massachusetts Institute of Technology.

The thing speaks for itself.

(True, the phrase “social media sites like Facebook” is paraphrase from the reporter, not a direct quotation, but I have no reason to believe it isn’t an accurate representation of what the act’s backers said.)

22 thoughts on “This Must Be a Joke

  1. We all KNOW everything typed into the internet is completely veridical, vetted, and worthy of follow up action, including the cutting of a personal or business check.

    What a joke.

    Kwak, stay on this story.

  2. They should manually submit your site to all the major search engines, and this includes Google, Yahoo, and MSN. In addition to this, your website should be listed in a large number of directories. Some online website submission services will submit your site to thousands of search engines, and this basic service is excellent for webmasters who are on a budget.

  3. James, great point. This is just so emblematic of the media as a cheerleader, complete with the distracting pompoms of misleading information. So, I guess the proposed startups will post things in places like Facebook and other “public” sites, like business plans, initial investors, patents applied for, funding base, etc. All of the information necessary for investors to feel comfortable and be able to conduct an appropriate analysis. I’m sure that they will also give the names of those who have applied for and received the necessary licensing and authorizations regarding legal issues of production, sale, place of manufacture, etc. Sure, when pigs fly this will happen. No startup will ever provide anything or spend a cent more than necessary to deal with the issues relating to operations. Due diligence, a basic requirement of all business analytical work will be straight out the window, unless made a requirement. This act is another perfect instance of the road to hell being paved with (seemingly) good intentions. Who actually came up with this. I am sure that is was a part of the Wallstreet profit factory and some very well paid and well connected lobbyists.

  4. “So when all the yielding and objections is over, the other Senator said, ‘I object to the remarks of a professional joker being put into the Congressional Record.’ Taking a dig at me, see? They didn’t want any outside fellow contributing. Well, he had me wrong. Compared to them I’m an amateur, and the thing about my jokes is that they don’t hurt anybody. You can say they’re not funny or they’re terrible or they’re good or whatever it is, but they don’t do no harm. But with Congress — every time they make a joke it’s a law. And every time they make a law it’s a joke.”

    —–Will Rogers

  5. I think you are missing the point. Or at least there is a valuable point here being overlooked. When I read about efforts to make it easier to invest online I assume the subject being discussed is “crowdfunding” — in which large numbers of people “invest” small amounts of money, like maybe a hundred bucks or so, in businesses. The risk profile of this activity is completely different more traditional sorts of corporate investments. Recently I was at a party at which an entrepreneur entertained us all with a wonderful vision of a new service he hoped to roll out. If we had had a simple way to do it, we would all have pulled out our smartphones and invested a C note in his idea. But we sure weren’t going to go through the paperwork.

  6. No kidding a point is being missed. Under current rules hedge funds can claim they are prohibited from disclosing their performance to the general public (1933 law). This JOBS bill seems likely to undo that privilege. At least for smaller hedge funds.

  7. James: Yes, stay on this story. Your Headline: This Must Be a Joke. Are you referring to the JOBS Act or to the November elections? I say both.

  8. Robert Shiller is down with it;

    ‘The new law, called the Jump-start Our Business Start-ups, or JOBS, Act, tries to regulate crowdfunding constructively. This innovation might be as well received as Wikipedia, which is constantly being updated and improved by a vast army of users. There may well be disappointments at first, but the concept can be tinkered with, like other democratizing financial innovations that have eventually delivered much good to society. I discuss many such examples in my new book, “Finance and the Good Society.”

    ‘Consider Wall Street in 1811. It wasn’t obvious then, but worldwide economic growth received a major boost that year from a New York law that allowed anyone who satisfied some minimal requirements to set up a corporation, with limited liability. The law turned out to be one of the most socially productive pieces of modern financial history.’

  9. Joke or not,
    here it is.

    The BRICS countries (Brazil, Russia, India, China and South Africa) in

    late March held a summit in New Delhi, which can be considered the

    beginning of a new global financial and political order. In five years

    this world will be unrecognizable. The Anglo-Saxon model of governance of

    the world that flourished in the 1990s is losing its way and is being

    replaced by the Sino-Russian one. Yuan came close to international

    recognition, and with the adoption of Brazil and India into the UN

    Security Council the West will lose its political hegemony.

    In 2008, the Wall Street’s practice of inflating financial bubbles in

    alliance with the U.S. Congress led to the collapse of neoliberalism. As

    Western politicians have not been able to build a coherent model of its

    resuscitation, the financial crisis is smoothly transforming into the

    political one. If President Obama advocates for the return of the industry

    to the country, what kind of subsequent prosperity of the United States

    are we talking about? The globalized economy has gradually shifted

    production to China, India and Brazil, where labor is cheaper, and tax and

    other legislation is much softer. So far there are no obvious reasons as

    to why Obama will return it to the United States.

    This year, the BRICS countries provided 56 percent of world GDP growth,

    while the share of the richest of seven (G7) is only 9.5. In 2035 the

    BRICS countries will outrun G7 in terms of the economic potential. The

    volume of trade within the block grew from $27 billion in 2002 to $250

    billion in 2011.

    The main interests of the groups include the need to change the present

    world order, which is based on the global leadership of the U.S. dollar

    and its leading position as a major world currency. This order was

    approved by the agreements in Bretton Woods in 1944, at the end of World

    War II. The U.S. allies in Europe panicked before the inevitable spread of

    Soviet socialism and were happy to have hidden under the wing of the

    economically powerful neighbor in the Atlantic.

    The economic rationale for cooperation among the BRICS is clear today, but

    more serious political points of contact are found. Here Russia rules,

    because it was President Medvedev who most emphatically called for

    political unity. The unity for the first time was obvious on the Libyan


    The countries agreed to abstain on the vote of resolution 1973 of the UN

    Security Council, and after the military operation were critical of the

    coalition of NATO. This unity can be described today as “friendship

    against NATO.” Russia, despite a smaller contribution to the global

    economy (two to three percent of 18), is considered promising for

    investments due to the large potential of the consumer market and

    sustainable autonomous growth.

    South Africa (39 per cent of the GDP of all sub-Saharan Africa) joined the

    block on the invitation to make the alliance global and build a “bridge”

    to Brazil. In addition, the partners of South Africa in the BRICS gained

    access to the promising African market, which is particularly important

    for Brazil and China.

    At a recent summit in New Delhi two important statements were made. The

    first one is geo-financial (about creating a joint Development Bank in

    future) and the second – geopolitical (condemning the war rhetoric and

    sanctions of the West against Iran and Syria). It should be noted that the

    leading U.S. media angrily commented on these statements.

    The Financial Times, for example, published an article stating that the

    BRICS countries are asking for more power in the IMF. The paper concludes

    that if the BRICS are unable to overthrow the American director and

    replace him with a single candidate, the block will cease to fund the IMF

    and will focus on the Development Bank mentioned in New Delhi. The

    American press has stressed that the Development Bank is not to rival the

    IMF. This is a strange statement, considering that the China Development

    Bank has a capital of two times greater than the entire capital of the


    The Washington Post noted the BRICS’s opposition to Iran and Syria. The

    newspaper wrote that the block has made a significant geopolitical move,

    namely, condemned the military threats against Iran and Syria. In fact,

    the collective claims were filed against the sanctions of the West that

    are detrimental to trade with these countries. This means that in case of

    the negative development of events this position may become more serious.

    This was stated by the President of Brazil Dilma Russef, who promised that

    at the next summit of G20 in July the BRICS will make a joint political

    statement. Perhaps, the criticism will be heavier at the end of the

    campaign in the U.S. The BRICS are unwilling to press Obama, who is more

    acceptable for them than any of the Republican “hawks.”

    The Washington Post pointed out that the countries of the block will never

    find a common platform for a political union. The newspaper quoted a

    former Indian Ambassador to the U.S. Lalit Mansinha, who assured that all

    the countries of the Union have issues with China, and said that before

    challenging the United States they should think hard. He thinks that

    Beijing and New Delhi have strong border disputes and Russia is increasing

    its military spending to counter China. There is also rivalry between

    Brazil and China in Africa and the expansion of the Chinese goods causes

    discontent of the Brazilians.

    However, first, the NATO countries do not always come to a consensus on

    all issues, and, second, every country has its own internal benefit. The

    foreign factor that unites the BRICS countries is the desire to push the

    US dollar from the leading positions, to oust the U.S. from the Middle

    East, not to decolonize Africa and to deprive it of the economic and hence

    political influence in developing countries. This is what the Development

    Bank will engage in. It assumes the creation of lines of credit in

    national currency and financing of the developing economies.

    The work in this direction has been already started, and both China and

    Russia in recent years reduced their national reserves in US dollars,

    preferring to invest in other assets. Everything leads to the fact that in

    five years the Yuan will be a major world currency, and China – the main

    engine of the global economy.

    The mutual trade turnover of the BRICS over the years will reach $500

    billion with growth of 28 percent per year. The BRICS will become a major

    global player in the political arena, all the leaders of the block are

    convinced. Dmitry Medvedev said after a meeting in New Delhi that “Brazil,

    Russia, India, China and South Africa must transform their alliance into a

    full-fledged mechanism for international influence and move from

    discussion of purely economic issues to developing positions on political


    Medvedev said that the BRICS countries are not satisfied with the fact

    that the UN is used to cover the actions to offset unwanted modes, and

    will advocate for the inclusion of its partners as a permanent member of

    UN Security Council. He was echoed by Prime Minister of India Manmohan

    Singh, who noted that “the prosperity of the BRICS is associated with the

    geopolitical situation.” While China is the economic leader, Russia is the

    political leader of the BRICS. This “axis” is a serious concern for the

    West, and later through the media it will in every way try to minimize the

    successes of the BRICS, as it feels threatened.

    The political benefits of Brazil and India are also obvious. Traditionally

    on the sidelines of the world politics, these countries finally got the

    opportunity to realize their ambitions through the BRICS. For the first

    time they are talked about as a giant, and not only on the regional scale.

    With regard to South Africa, after its entry into the union for the first

    time sub-Saharan Africa ceased to be referred to as “miserable and poor.”

  10. @ Filbt, no joke there relating to the BRICS. This is a really good summation, so thanks a lot.

  11. Who knew?! :-)

    While reading filbt’s divining-tea-leaves summation of political and economic power, I had no idea that the species – Human Being – was evolving to achieve the perfection of an insect colony – ants, bees, cockroaches, etc. True, insect colonies are mechanistically perfect *survivors*….so who is the ruling insect out of all the insects? Fiat $$$$…?

    Quality vs. quantity – I’m all for witnessing the scientific and architectural and political genius, yet to come, of providing clean water for the all the worker bees/ants…if, of course, the workers are allowed by the master to spend their labor on improving their own lives with fresh clean water…

  12. Yes, if we could only see the trees through the forest. Ah, but unfortunately we can’t.

  13. @fhapgood – I suppose a $100.00 ‘investment’ is a small amount to risk. But what about the $1MM’s or $100MM’s, needed by most any startup with real potential?

  14. Ah, filbt, that’s what *visions* are for – seeing WAY beyond the trees and the forest – to the great ant colony in the sky…the perfect Ponzi :-)

  15. Need I bother you all of my travels in the wonderlands. It ended one day on a wall, you see, I had become tired of……….

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