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I hear people crying for limiting capitalism, due to greed and corrupt behavior in big corporations in these times of global financial crisis.

I think people are making a big mistaking in not realizing that capitalism is not corruption (in fact corruption really flourishes in non-capitalist systems, because there are no legal way to directly act to better your life, so corrupt economic systems emerge),  any power can be abused no-matter which political system you live in.

The AIG management is not behaving like capitalists, they are just trying to abuse the power they have had in their position, and get as much cash out and and get out before the house comes down. If they and the company were true capitalists they would have a part in the up-side of the company making money, and share in those profits (and handsomely at that), and perhaps even fund the company in these times.

And if they were true capitalists, they would not take government financial aid in the first place…

I agree with those saying that we can not have capitalism on the up-side of and socialism on the down-side, the current period is a cleansing of many bad companies and bad business practises (and sadly some good business go with it). But the US government (and other western governments) have had a big part in making the current financial crisis a happen, and they too need to step in be part of solving it (as they do, I am not sure they are making the right choices for the long run though).

Today I received an e-mail from the CEO of my US bank.

Sometimes it seems like I collect banks, and you might need to when you are a parallel entrepreneur with companies in different parts of the world. So to say the least I have some experience with banks and how they work with your personal finances as an entrepreneur and as a entrepreneur or CEO of a early stage company.

I will not quote the complete e-mail (because it was probably not intended for wider distribution), but a short excerpt shows SVB’s focus:


We remain focused on our mission to help entrepreneurial companies succeed and have taken the necessary steps to ensure we are able to continue to do so. ….. We see it both as our responsibility, and our opportunity.

In these challenging economic times, know that we are here for you and will do our best to help you succeed. I believe open and frequent communication is hugely important, particularly in times like these, so please don’t hesitate to let us know how we can help your company and we will keep you updated on our perspective as well. We thank you for your business and continued support.

If any of you early-stage entrepreneurs reading this have dealt with UK or Swedish banks for your company, you know that this is not the message they will send you. Especially in these times.

The bank is Silicon Valley Bank, which is committed to working with entrepreneurial companies, and have built a successful business around this for the past 25 years.

This is just one part of the entrepreneurial eco-system that is Silicon Valley, and I am glad to soon be part of it full-time (move is planned for beginning of March!), with my new bootstrapLabs venture, where I will continue my serial and parallel entrepreneurship to create new companies, and bring new products and innovations to the market.

The US government lending Spree that started in the beginning of the 1990 were the US government created Fanny/Freddie (among others), is deemed by many as economists as a root cause of our current economic crisis.

I would say that Alan Greenspans actions in the 2000’s is aftermath that kept it racing in the wrong direction, but this crisis was not created during the past 10 years, but rather in the past 20 years.

Fiat currencies, they have been around since the first wave of globalisation (the colonial powers created them), and the real big change was when Bretton Woods was abandoned (-71), and was part in creating the very volatile gold markets in the 70-ies.

What would be the alternative? All currencies that are freely convertible/traded are by definition fiat currencies, and an effect of global trade.

They are traded against each other, so if you increase circulation, you will loose comparative purchasing power against the other global currencies, thus keeping a balance in the global markets (there is one exception though, see below). They makes the fiat currency a commodity with scarisy as any other (as increasing circulation/printing more money will be costly).

If you would describe a closed economic system (with a restricted/non-convertible currency) such as the Soviet Union was or some countries in the world today, scarcity would not be as balanced.

There is hardly any alternative, but fiat currencies is harder to value than currencies that are convertible to gold (as for example the US dollar was until 1971, when Bretton Woods were abandoned) as with a majority of the things traded on markets today, you never know if it’s lemon….

Which is the problem with fiat currencies, a fiat currency can be very sound, with-out a large reserve, but it’s hard to assess if it’s sound or a lemon.

The US Dollar have had a development were it was kept very low for a long period of the 2000’s, the odd thing is that the international purchasing power in the US have been very competitive (the same new Japaneese car would cost more than twice as much in Sweden compared to the US), so the US enjoyed the benefit of the low dollar, but not the loss in purchasing power (for some things yes, but for many not at all). I think this is due to the fact that the US economy constitutes 30% of the wold GDP, and many currencies are pegged to it and a majority of trade agreements have been dominated in US Dollars.
This fact have tilted the market dynamics in the favor of the US, but now we are seeing a backlash, were the US Dollar has been pressed up in value, and other lost in comparative value. This is probably a sound reaction. I would not bet my money on the US dollar being as strong as today, but it will not go back to mid 2008 levels either I think.