Extraordinary Popular Delusions and the Madness of Facebook

The Facebook IPO priced at $38 per and the offering was increased 25% by over 100 million shares. At this price Facebook will be the largest tech IPO in history and second largest IPO of all time behind VISA.  Depending on how the offering trades, it may finish the day as the largest offering of all time. At the IPO price Facebook as a company will be valued more than tech giants Cisco, Amazon, and more than all except 20 other companies listed on the S&P.

There is no shortage of advice on how to assess the value of Facebook's stock. You can easily find analysis outlining the bull case, the bear case, and everything in between.  The financial news networks have turned all their programing over to 7x24 Facebook coverage.  Many spent $5.00 to download an anonymous author's analysis in e-book form - The Pitch. This blog will not try to assess the merits of the company value versus the IPO value versus the value of as it trades in a speculative frenzy.  However, we will suggest that the best book for analyzing the Facebook offering is available for a free download for your Kindle, or on the web.

Charles Mackay's Memoirs of Extraordinary Popular Delusions and the Madness of Crowds was first published in 1841 and summarized three economic bubbles:

 "Among the bubbles or financial manias described by Mackay are the South Sea Company bubble of 1711–1720, the Mississippi Company bubble of 1719–1720, and the Dutch tulip mania of the early seventeenth century. According to Mackay, during this bubble, speculators from all walks of life bought and sold tulip bulbs and even futures contracts on them. Allegedly some tulip bulb varieties briefly became the most expensive objects in the world during 1637. Mackay's accounts are enlivened by colorful, comedic anecdotes, such as the Parisian hunchback who supposedly profited by renting out his hump as a writing desk during the height of the mania surrounding the Mississippi Company."

Submitted for your consideration  - Charles Mackay's insight into the Facebook IPO:

"We find that whole communities suddenly fix their minds upon one object, and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first. We see one nation suddenly seized, from its highest to its lowest members, with a fierce desire of military glory; another as suddenly becoming crazed upon a religious scruple; and neither of them recovering its senses until it has shed rivers of blood and sowed a harvest of groans and tears, to be reaped by its posterity...


Money, again, has often been a cause of the delusion of multitudes. Sober nations have all at once become desperate gamblers, and risked almost their existence upon the turn of a piece of paper. To trace the history of the most prominent of these delusions is the object of the present pages. Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."

Your loyal blogger is no more immune to the "delusion of multitudes" than anyone else. He has begged his discount broker for any allocation of the stock.  Why not? I like tulips.

Semper Augustus, the most expensive tulip sold during tulip mania

Good luck to anyone lucky enough to be allocated shares.

Remember the trading aphorism - "No one ever went broke selling too soon".

Sell early, sell often.

Carnival of Divided Government LIII Três et Quînquâgintâ Special May Day Edition

Welcome to the 53rd edition of the Carnival of Divided Government - Special "MAY DAY GENERAL STRIKE!!!!" Edition. It is the First of May - International Worker's Day - May Day - and the official start of the Occupy [FILL IN THE BLANK]! protest season.

Today the Occupiers kick off the season by calling for a national General Strike. Their inspiring motto: "No Work. No School. No Banking. No Shopping. No Housework." is emblazoned across dramatic posters calling for May Day protest actions. Vera HC Chan has identified what may be their most important and lasting cultural contribution: "Whatever the outcome of May Day, one thing has clearly emerged -- the return of propaganda art."

Wait. What? No House Work? Yeah. The poster actually says "No House Work." Is this really how the "99%" are going to stick it to the man? No house work? Some of the posters substitute "No Chores". No joke. It's like an Onion story.

Here in EssEff, the Occupiers were very excited about closing the Golden Gate Bridge. Until they decided not to close the Golden Gate Bridge. Then, apparently experiencing some Midwest Protest Envy, they decided to embark on a "Wisconsin-Style Occupation of San Francisco City Hall". And just like in Wisconsin, about 300 protesters marched into City Hall carrying sleeping bags, made some noise, then left. I guess that is sort of like what happened in Wisconsin. Well, if all else fails, they always have breaking windows and vandalizing small businesses in minority neighborhoods to fall back on.

The Dividist is disappointed that "No Blogging!" was not included in the general strike directives. He now has no excuse for failing to get this latest Carnival of Divided Government posted as scheduled.

Dividist Doubles Down on Divided Government for Six Year Blogiversary

The Dividist let several auspicious dates float by without comment over the last week, including Earth Day, 4-20 Day and Tax Day.  The latter is responsible for us missing the former. One date that we cannot let slip by is the six year blogiversary of The Dividist Papers (aka Divided We Stand United We Fall).  We celebrate by reflecting on the journey as we paraphrase previous posts, plagiarize ourselves, and update some familiar themes and favorite topics.

Six years ago today, the Dividist started this blog by asking the question "Is this blog for you?" As no one else was reading the blog at the time, the Dividist answered his own query saying "Probably not."

William A. Niskanen - The Godfather of Divided Government Voting Strategy

Bill. Niskanen, long-time member and chairman emeritus of the Cato Institute passed away last October. This tribute video was presented  at a Cato Institute memorial service last week.

The Doctrine of False Non-Equivalence - or - Why the left whining about "False Equivalence" is equivalent to the right whining about "Liberal Media Bias"

It's all in the framing
image from [F]oxymoron

The President’s comments at the Associated Press luncheon on Tuesday received a great deal of media attention. Much of the punditocracy was focused on the President’s preemptive strike at the Supreme Court and apparent attempt to direct judicial decisions from the oval office. The political grandstanding by the President precipitated a grandstand volley between the judiciary and the DOJ, as well as predictable partisan posturing from both the right and left.

Frankly I am at a loss to understand what Obama hopes to gain from this kind of rhetoric. Sure it will fire up his base, but it also fires up the GOP base to a degree that the presumed Republican nominee could never hope to achieve. I also don’t see how it helps Obama with centrists and independents. When both a former mentor and student think he got it wrong, it is no surprise that his press secretary was on the defensive.

The President also tried to make hay with the oft-repeated point that the individual mandate was supported by Republicans before they were against it. Avik Roy and Ilya Somin point out the converse is also true, with many Democrats (including candidate Obama) opposing the individual mandate before they supported it.

We once again see partisan hackery, hypocrisy, and cynical opportunism from partisans and politicos on both the right and left. Nothing new there.

But is it true equivalent hypocrisy? Or is it false equivalence?

Meta-Infographic on Infographics

Snark-infused infographic hacked from original work by Zabisco.

I've generally found the Infographic deluge to be no more than a minor irritant in the panoply of indignities, insults to intelligence and affronts to common decency that are part and parcel of any casual excursion into the political blogosphere. In many ways, a political Infographic is not vastly different than a blog post. There is usually an agenda, cherry-picked factoids selected to support the agenda, and a sensationalist misleading headline intended to attract attention and links.

Carnival of Divided Government LII Duo et Quînquâgintâ Special April Fools Edition

Welcome to the 52nd edition of the Carnival of Divided Government - Special April Fools Day Edition.

April Fool's Day - The Dividist can think of nothing more foolish than permitting either major party to govern and legislate without the moderating effect and enhanced oversight found only within the constraints of divided government.

With over 80% of our fellow citizens voting along pure party lines in federal elections (regardless of what they tell you, what they tell pollsters. or even what they tell themselves), asking the few true Independents to cast their vote based on the situational partisan landscape in any given election may indeed be a fool's errand.  No matter.  The Dividist embraces the iconography of the "The Fool" Card in the Tarot Deck:

"Think of The Fool not so much as naive as open-minded and optimistic. The Fool is hopeful and positive, and he's doing his best to shine a light on new beliefs, innovative and shocking ideas and the unpredictability of life."

Indeed.

As explained in earlier editions, we have adopted Latin ordinal numeration to impart a patina of gravitas reflecting the historical importance of the series. In this the Carnival of Divided Government LII (Duo et Quînquâgintâ), as in all of the CODGOV editions, we select volunteers and draftees from the blogosphere and main stream media writing on the single topic of government divided between the major parties (leaving it to the reader to sort out volunteers from draftees).

Consistent with this topic, the primary criteria for acceptance in the carnival is to explicitly use the words and/or concept of "divided government" in submitted posts. A criteria that, to our endless befuddlement, is ignored by many of the bloggers submitting posts, which sadly results in The Dividist reluctantly ignoring their fine submissions. Among the on-topic posts, essays and articles we choose our favorites for commentary and consideration. We hope you enjoy these selections, and without further foolishness, we submit for your consideration  this month's selections (actually published on April 2nd - gotcha!) .

Earth Hour in San Francisco

San Francisco at 8:15 PM, fifteen minute before Earth Hour.

Tonight San Francisco observed "Earth Hour", an international celebration of freezing in the dark. Or something. During the hour of 8:30 - 9:30 PM local time, people all over the world turned off unnecessary lights. Then, at 9:31 PM, people all over the world turned all their unnecessary lights back on.

Don't Cry For Me San Francisco -The Mirkarimi Musical

An Ess Eff Scandal Pregnant with Possibilities

Your loyal blogger has been transfixed in recent weeks by the unfolding saga of our recently elected Sheriff Ross Mirkarimi and his firecracker Venezuelan wife - telenovella star Eliana Lopez. Several times I started to knock up a blog update when new plot twists, an "only in San Francisco" character, or breaking news stopped me short. Finally I realized a mere blog post can no longer encompass the epic scope of this unfolding morality tale.

Some have characterized this story as a Soap Opera, Godfather Sequel, or Greek Tragedy. They all miss the mark. Nothing less than a full scale Golden Age Hollywood Musical Extravaganza or an Epic Operatic production on a Wagnerian scale will do it justice. Having neither the skill nor the time to do this properly, I'll just sketch out a few ideas in the hope that someone will take this and run with it. My fervent hope is that someday I will be sitting in the front row and watching this production at the San Francisco Opera House. Look for me opening night.

I see a three act production - recognizing the last act and final denouement is yet to be written and unfolding as we speak.

Let's play "Clue": Was it Mr. Corzine in the Board Room with the "Smoking Gun" E-mail?

Some mysteries are not very mysterious. The culprit seems obvious. But the wheels of intrigue turn slowly, investigations proceed at their own pace, and the full story emerges grudgingly over months and years.

As we have chronicled on this blog from the first week that MF Global declared bankruptcy, the mystery of the missing "sacrosanct" segregated client funds was not something that could be explained away with run-of-the-mill corporate incompetence and executive malfeasance: