Friday, November 17, 2017

Venezuela: no debt restructuring. Lessons from Greece

In 2012 Greece got a haircut of privately-held debt of 59-65%. As a result of restructuring, Greece  inched forward and 5 years later progress had been made. Greece's economy is now growing faster than the UK.

Venezuela seems to be close to a debt debacle and apparently no discussions, not even a hint of plan in works has surfaced. Should Venezuela take a hint from the works of the Greek saga ?

From "Greek Debt Exchange: An Autopsy" from EBRD and CEPR, University of Munich, CESifo, and Duke University authors Jeromin Zettelmeyer, Christoph Trebesch, Mitu Gulati : The Greeks were smart to apply new laws where "votes of 50% of face value and a consent threshold of two-thirds of the face-value of bonds, applied across the totality of all Greek law sovereign bonds outstanding rather than bond-by-bond" were required for the exchange. This paper discusses that despite the large variation in the present value haircuts across the bondholders, you had few "holdouts" with 90% of creditors participation.

Why did so many holders of debt take that deal ? There were three reasons, as numbered by Zettemeyer et. al.

-the 15% EFSF  (now ESM) "as good as cash";

-the new bonds were issued under English law, and included standard creditor protections such as pari passu, negative pledge, and cross-default clauses. Greek-law sovereign bonds contained almost none of these protections;

-the new bonds were issued under a “co-financing agreement” that created an "exact symmetry between Greece’s debt service to the new bondholders and its debt service to the EFSF." Of course, the largest creditor to Greece was the EU – both through the EFSF, and through the “Greek Loan Facility” (GLF)"

Since 2012, Greece defaulted again. In 2015, Greece defaulted on IMF loans, the largest default in IMF's history.

Monday, November 13, 2017

"Tips" on getting liked

Perhaps you've read The Like Switch by Jack Schaffer, Ph.D and Marvin Karlins, Ph.D on How to get "liked". If you haven't, here's a recap of the Friendship Formula in the book at the NY Post.

I suppose these are behaviors you wanna adopt in cases of servitude, inferiority, when you're begging and don't have the upper hand: at a job interview or when requesting a favor from your superiors. Those that have the power in the organization would not adapt these signals, with the exception maybe of intense eye contact.

It is useful for anyone to know, however, what is the difference between a fake and a force smile:
Schaffer- "As opposed to sincere smiles, forced smiles tend to be lopsided. Fake smiles also lack syncrony. In a fake smile, you can see that the corners of the mouth are not upturned and the cheeks are not uplifted to cause wrinkling around the eyes...-p. 33"
 I use the tips in this book more than anything to spot suck ups and manipulators. So what are the things to watch out for:

-Isopraxism is the mirroring of the actions of others (their legs are crossed, you cross the legs, point open torso towards the other to induce the sense of openness, etc.). Mirroring works to meet them at their level. Again, it is good for first contact, job interview.

-Use the rumor mill to spread compliments instead of delivering them directly. Especially if people are skeptical of you.

Friday, November 10, 2017

Anger at work: CEOs tool of the trade

I've watched executives exploit in anger -feigned anger that is- numerous times in order to win the show. One time, this guy start calling the team across the table the "Inquisition": "You've forsaken all your children. You've thrown the baby out with the bathwater, you SOBs." If only I had a tape recorder, which of course I didn't, that would be a violation of confidentiality, the NDA I signed.

You rarely, if ever, see how leaders behave, because most meetings are behind closed doors and most conferences (see the Dealbook conference this past week) are boring like hell. Occasionally, you see veterans on TV sparring , these are delightful.

The point is CEOs know how to use trash talk, they do it more often than you think, and that is a skill you want to develop if you want to climb up the ladder. New reader tip: what I do on this blog I analyze the world of corporate power and influence for the benefit of the underlings. I dig deep into the behavior, methods and secrets of the moneyed elite and let you know what they don't want you to know. Because press releases, biographies and auto biographies reveal only so much (correctly should be: only so little).

So can you trash talk like a MMA fighter ?

Can you subdue an opponent relentlessly ?

Sure you can.

Tuesday, November 7, 2017

I was sexually harassed and this is what happened

Today I will be answering a reader's email:

Max: My name is Tina (name redacted) and I wish to share my story with you. My story is heartbreaking and filled with tears and disappointments.

I am 35 years old and have worked at a large hardware company for almost 4 years. We manufacture important components everybody has on their phones. We'are a pretty awesome company, however, in order to preserve my identity I won't go into much details. I am single currently, been married before when I was younger and have divorced many years ago.

The issue I have experienced at work puts me in a horrible position. A co-worker, we shall name him, Tobias, sexually harassed me. Tobias is single, no kids and about the same age. He came on my team fairly recently. Here's what happened. Last week Tues. we had to stay late to finish a project and Tobias began winking at me as we left, saying that "I was a gift to be around." That remark stuck with me, and I felt repulsed by it. But I gave him a pass. Then next day he said: "Would you like to go out this weekend ? Dinner and a movie ?" I thought, well, I wasn't doing anything, and that could be fun. So we set it up for 7 o'clock Sat. evening. I agreed to have him pick me up at my house.

The dinner went well, at a fancy restaurant, we ate fancy Italian rigatoni and garlicky sauce French escargot. Tobias ordered wine too, the wine was kind of strong, I felt it. Unfortunately so did Tobias, who after three glasses was getting drunk. As we finished dinner, Tobias paid the check, and as we were leaving the table, he said: "I really enjoyed our dinner. Care to see a movie at my place ?

"Wait, Tobias. I thought we're seeing a movie at Regal" (the theater in the same mall we dined.)

Him: "No, at my place. He than grabs my arm and says: "Well ?"

I said: No ! I'm out ! and I sprung for the doors, leaving that disgusting guy behind ! I got a ride home and was glad my awful night was over. Terrible !

I now have a lawyer taking up a sexual harassment case, and you know what ? They can't fire me because I'm suing. It would be wrongful termination. We filled an internal complaint as well. This is what happens when pigs put lipstick on and don't know how to behave.

I wrote you to illustrate how women don't have to put up with demeaning behavior. Ladies, we can keep our dignity intact, and in fact, defend our rights.


Friday, November 3, 2017

How to be a CEO, once you are one

 Adam Bryant (NYT) takes inventory of his 525 Corner Office columns in his Oct. 27th, 2017 New York Times article How to Be A CEO. While looking for patterns to the corner office, Bryant himself comes to the conclusion there are "C.E.O.s who started out in theater, music and teaching. Others had surprisingly low grades in school."

Bryant identifies four recurring themes:

1. Applied curiosity.

2. Ease with discomfort.

3. Trustworthiness. In that sphere perhaps the most interesting comment is that of Jeffrey Katzenberg, a tough Hollywood executive, who is quoted as saying "you're only as good as your followers.". If you beat the drum of morons, that says a lot about you, doesn't it ? The quality of your followers is in direct proportion to the quality of your teachings. If you've been following my blog for awhile, you see I expressly discouraged idiots from reading it. Who needs them ? It is better to have 20 quality readers than 20,000 piss-spot knuckleheads. I don't need that kind of following.

4. The culture is almost a religion.
“You can have your stated culture, but the real culture is defined by compensation, promotions and terminations." -Tae Hea Nahm, Managing Director, Storm Ventures.
 Show me who do you promote, and I know what your culture is. If your mid -management employees are 70% women, you don't have to sweet talk me into saying who do you promote. You don't promote equally on gender.

If you had only one question, what would you ask ? "If you could ask somebody only one question, and you had to decide on the spot whether to hire them based on their answer, what would it be?" Bob Brennan, for example, answered: "‘What are the qualities you like least and most in your parents?" What about you readers, what would you ask, and why, if you were making that hiring decision on a make it-or-break it single question ?

Bryant identifies as "best career advice" that of Joseph Plumeri, the vice chairman of First Data, a payments-processing company, and former chief executive of Willis Group Holdings. Plumeri's advice: “Play in traffic.”

Sunday, October 29, 2017

I.C.Os. (Initial Coin Offerings): far from fail-safe

NYT article " How Floyd Mayweather Helped Two Young Guys From Miami Get Rich" by Nathaniel Popper makes you wonder why these unregistered securities offerings even exist as they do and are nothing but smokescreens.

Boxer Floyd Mayweather endorsed an ICO offering of a company named Centra that raised $30 MM. By all accounts, not only the company appears running on flimsy wheels, but its owners have questionable backgrounds.

"For now, the bigger problem facing Mr. Sharma and Mr. Trapani [the owners of Centra] is the perjury indictment by a Manhattan grand jury on Oct. 5, just a few days after Centra finished fund-raising."

The problem here is celebrities like Mayflower are endorsing ICOs with such loose controls, it puts shame to shame.
"Celebrities have helped stoke the I.C.O. boom. The actor Jamie Foxx, the socialite Paris Hilton and the soccer player Luis Suarez, for example, have all promoted new virtual currencies to their sizable followings on social media in recent months, offering legitimacy and attention to coin offerings that might have otherwise gone unnoticed.

Mr. Mayweather, who has promoted three different tokens — Centra, Stox and Hubiits — has even taken to calling himself Crypto Mayweather in social media posts, a play on his better-known nickname, Money Mayweather."

Mayweather's involvement with Centra is however, disputed:
"He’ll do anything we ask,” Mr. Trapani said. “He’ll go shopping around Beverly Hills if we ask him to do it with this card.”

The boxing champ understood their deal differently. A spokeswoman for Mr. Mayweather, Kelly Swanson, said he had been paid in cash for the posts and was not involved in any continuing relationship with Centra. She did not say how much he had been paid.

After being contacted by The Times, Mr. Mayweather deleted his Instagram and Facebook posts endorsing Centra, though he left up a Twitter post."
"Assuming regulators don’t step in, Mr. Trapani and Mr. Sharma can keep the money, even if they don’t build anything."

Saturday, October 28, 2017

Taleb Procrustes aphorisms (Part II)

Watch me answer a reader question at the end of this post: why there's no such thing as female logic, why we don't need more women working on Wall Street. This is good. And since we're talking about Taleb today, ask yourself: How antifragile are You ?

I'm selectively posting 20 more aphorisms today from Nassim Nicholas Taleb's Bed of Procrustes. These are so rich in meaning that we are advised not to ponder on more than four at a time.

1. "Life is about early detection of the reversal point beyond which your own belongings (say, a house, country house, car, or business) start owning you. I'll add there's a reversal point with your wife, also. At what point the wife owns you ?"

2. "The most important aspect of fasting is that you feel deep, undirected gratitude when you break the fast." Try it. Fasting is good stuff. Then try fasting on stuff other than food as well. Live one week without your car. Live one week without your wife (can take up residence at relatives, second home a hotel room, and have no contact with the wifey). Fasting is a wonderful thing. Detox often.

3. "A writer told me, 'I didn’t get anything done today.' Answer: try to do nothing. The best way to have only good days is to not aim at getting anything done. Actually almost everything I’ve written that has survived was written when I didn’t try to get anything done."

4. "If you don’t feel that you haven’t read enough, you haven’t read enough."

5. " God created Monte Carlo and similar places so extremely rich people would come experience extreme envy." Yes, but casinos are routinely filled with poor people walking out poorer. Nevertheless, I do envy the rich or the "whales" as they call them. They don't have money worries like I do. That's why I envy the rich.

6. " It is very difficult to argue with salaried people that the simple can be important and the important can be simple."

7. " Never rid anyone of an illusion unless you can replace it in his mind with another illusion." I'm going to quote this in my book, 'How to get your boss job."

8. "Studying neurobiology to understand humans is like studying ink to understand literature."

9. " Every angel is an asshole somewhere."

10. " Every asshole is an angel somewhere." Ok, these two taken together makes you wanna ask the question: Are there more assholes than angels, or vice-versa ? Even number of assholes to angels ?