Letters to a Young VC: Letter Four
A collection of letters encompassing simple insights and recognition of foundational shifts that any bright minds trapped within the old norms of a VC mindset can use to break free, whether they are just starting their journey or reflecting back on what they wish someone had told them in their early days.
Letter Four in the Letters to a Young VC series is now live.
From scavengers to prospectors, is web2 rehab possible?
TLDR; probably not. You can go home now.
But, for those still here, let’s see what the prospects are.
One of the biggest points of contention from web3 to web2, from NFTs to traditional real estate bubbles like the one that led directly into the GFC, is whether there’s anything of real value beyond speculation on matrioshka ponzis gift wrapped for the next greater fool until it all comes tumbling down.
What the killer was in 2008 was not that the real estate market was plagued with the subprime dodgy loans, the whole crisis was actually fueled not even by crazy trader speculation (Most were already majority short the madness of the market since 2006). No, the crisis was sparked and entertained by the regulators, and beyond that by the US government. The statement from Chuck Prince in July 2007 speaks more truth to this, where actually, they all already knew that the AAA tranches would be junk in 6 months time and they saw the certainty of the snowballing losses from subprime loans and others. It was all realised and spoken over a lunch between the Wall Street CEO convene, the FED chairman, the OCC chairman and the SEC chairman. And then, Chuck Prince went on to say that they warned that the markets could not go on like this, but were told that as long as those in power remain in power, then those below have to dance. So the ponzi continued. No questions asked.
Weirdly enough, not a single movie, documentary or other widely distributed account mentions these key fundamentals of the crisis.
So, when we look at the Chinese real estate market today and the imploding collapse of this bubble, and recognise the complete level of collusion in all global markets, is it really the case that the Chinese property bubble bursting will fuel another global economic collapse without consent from the government/s?
Well, yes, and no, and, it’s not even the right question.
A better question is what are we failing to see?
At a time when the broad outlines and basic concept of black swans has been generally digested and understood by a relatively mainstream and conventional audience, real systemic risks and completely invisible unknowns with catastrophic asymmetric potential must be very different from what we currently expect.
Ultimately, anything within the scope of conceptualisation disqualifies the event or action from being classified as a black swan. And, we should be very concerned about that, because we are almost certainly missing something really important.