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Strong opinions, weakly held

Month: February 2009 (page 4 of 4)

People don’t like Rush Limbaugh

Hedrik Hertzberg writes about Rush Limbaugh’s approval rating — it’s 21% among likely voters. Rush’s fans love him, in fact they love him enough to forgive him for being a hardcore drug addict. If I were a Democratic strategist (and we can all be glad that I’m not), I’d be shoving Rush Limbaugh down the GOP’s throat. This guy is an embarrassment, happy to cheer for America to go down the tubes because the right wing is waning in influence. Now that Democrats don’t have George Bush to inveigh against, they need to start making Rush Limbaugh the new right wing bogey man. I think some concerted effort could drive that 21% number even lower, and he’d take a lot of Republican elected officials with him.

Settin’ the blogs on fire

TPM DC’s Matt Cooper says that Tom Daschle will be confirmed as Secretary of Health and Human Services:

First, he apologized which is a necessary but not sufficent precondition to surviving these things. Second, Max Baucus, the chair of the Senate Finance Committee which has jurisdiction over Daschle’s nomination, came out for him despite a history of tension between the two. Third, Obama stood by Daschle–a sentiment echoed by Robert Gibbs at his press conference although Gibbs used the slightly miffed phrase, “a report we heard this weekend,” about the Daschle contretemps. Fourth: Silence. The blogs are not on fire–yes, there’s Greenwald, I know–but there’s not pitchfork mob calling for his head of the size and scope usually needed to kill a nomination. The optics of the thing are terrible but it’s not deadly.

So, he’s my contribution to setting the blogs on fire. Daschle should go. He failed to report as income the value of having a freely provided car (and driver) that he used. First of all, this is a perk that nobody can reasonably expect. It was provided by corporate interests who retain his Washington DC influence peddling services. That’s disgusting. If that’s not enough, be sure to read Glenn Greenwald’s blog post on Tom Daschle.

This is the guy economists had in mind when they came up with public choice theory.

(The title of this blog post is a reference to this song.)

Entrepreneurship 101

Fred Wilson explains how to run a business:

Let me explain. Businesses are worth the net present value of future cash flows. Cash flows means profits basically (capital expenditures are important but I’m going to leave them out of the discussion on this post). So a business is worth the sum of all of its future profits, discounted back to a net present value. For those who don’t want a lesson in finance, you can simplify this theory even more by using a cash flow multiple as a proxy for a net present value. I like to use a 10x multiple for cash flow as a simplistic proxy for net present value.

So with that simplification, the value of a business is approximated by 10 x (revenues – costs). You can focus on creating value by driving revenues or you can focus on creating value by driving profits. And they are not the same. Because costs don’t have to grow linearly with revenues.

The bottom line is that successful businesses need positive cash flow. Anything else is a shell game of sorts. Sometimes you can get people to give you money by way of debt, acquisition, private investment, or public stock offering on the promise that positive cash flows are attainable, but positive cash flows are always the goal. In a crappy economy, it’s tougher to convince people to bet on the future, so the goal has to be positive cash flows right now.

By the way, positive cash flow is the key to personal finance as well. Ever meet people who make lots of money but feel like they don’t? It’s because they aren’t managing their cash flow very well.

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