The Venture Capital firms in Silicon Valley can’t figure out what Geitner means when he testifies that they cause systemic risk to the financial system. These firms invest equity raised from wealthy investors in start-up with new technology. They don’t borrow money; debt leverage is not used. They are the essence of entrepreneurial risk-taking. Silicon Valley has put America in the lead on a world wide basis. How could an industry which has spawned the likes of Google, Cisco and Amazon, pose “systemic risks” to the financial system?
Tiny Tim, not the brightest bulb on the tree, compares the VC firms to Madoff’s Ponzi scheme and says they need regulation. He fails to mention that Madoff’s firm was subject to regulation and didn’t invest in venture capital at all. Perhaps he just doesn’t understand that the regulators were simply stupid and got the wool pulled over their eyes several times.
The consequences of micromanagement and over regulation are a migration of technological excellence to more entrepreneurial environments outside the Untied States.
I have questioned our tax-challenged secretary of treasury’s intelligence in the past, but in this case I suspect that he is being a bit disingenuous. As with other Obamaites, he simply wants to control everything. “Liberty” and “pursuit of happiness” are simply not in his lexicon.
Tom Motherway