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View Diary: Walkergate Revelations Prompt "Squirrel!" Cries from Walker's Allies (130 comments)

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  •  Venture capital (3+ / 0-)

    Usually venture capital means early investment, putting money into a company for an ownership share, with the hope that the new company succeeds and goes public (issues stock and trades on the exchange). Then the venture capitalists can sell some or all of their share of the company.

    The profits can be enormous, like getting back two or 20 times the amount invested. Or, the company can fail and the investment is a total loss.

    It is not like bank loans where the company pays back with, say, 10% or 15% interest.

    •  Thank you. (2+ / 0-)
      Recommended by:
      stcroix cheesehead, elwior

      That would explain why the capcos are interested.  (The possibility of huge profits).  Do you think the reason a couple other states accepted the terms that included only 0-20% of the profits for the states was in order to create jobs? Why would any state accept those terms? Is there a financial reason for them to do that? Or is more a case of uninformed people agreeing to rather silly terms?

      Also, where does the money come from? Is it tax money buying shares in companies directly? Is it tax money to capco to shares?

      I also don't get where the money comes from.  According to the MJS, the bipartisan plan being discussed would give tax credits to companies who also raise their own venture capital from private investors. Wisconsin would then give the companies a tax credit.  Is the idea that the tax credit would be an incentive to get private investors to invest?

      •  State employee retirement funds? (4+ / 0-)

        I've heard rumors Walker wants to tap those for various "investment" schemes. He'll need to change law and stack the board.

        Mere passive citizenship is not enough. Men must be aggressive for what is right if government is to be saved from men who are aggressive for what is wrong. - Robert M. LaFollette

        by stcroix cheesehead on Thu Sep 22, 2011 at 07:41:44 AM PDT

        [ Parent ]

      •  Quickly (1+ / 0-)
        Recommended by:
        elwior

        Sorry, your specific questions quickly moved far beyond my general level of competence to even 'venture' an answer.

        •  LOL. Thanks for reading the questions anyway. (0+ / 0-)

          I just wish there were articles on these sorts of issues with full background, written by someone who could explain what is happening to the average person who is not totally finance literate.

          •  But where? (1+ / 0-)
            Recommended by:
            buckybadger1988

            There must be newsletters from obscure investment advisers (or possibly reports in obscure academic journals) or some trade association or business group like a state Chamber of Commerce. After all, the businesses that are pushing for these kinds of tax credits, and apparently getting them in other states, have to learn how to find their way to the trough.

            It would take a master of Google search to find the info you want, especially anything really specific to Wisconsin.

            But you can be sure that some business lobbyists in Madison are regularly advising their clients of what they want the new or proposed tax rules to do for them.

            Good luck in crashing the party.

            •  I think that is the problem. (0+ / 0-)

              But, it is interesting to learn something new. The libraries in Wisconsin do have the information online. But it is not something that is going to be front page news, exactly. I am reading up on venture capital because I realized my gut instinct was to be against the idea because Walker was for it. Then, I thought, well, that is really the problem, for example, with the train, people were against that because it was Obama's idea.  I don't mean that everyone who was against high speed rail had a bad argument, just that the average voter, if you asked them, "Don't you like the idea of the train?" they would say something like, "yes, I do, but not this plan, there is no transportation from the station to your door." or " the state will have to pick up the maintenance costs", not realizing that the state also pays for roads, etc. etc.

              So, that is why I started to read up on venture capital, because I thought it wasn't good to go against the idea, just because Walker was for it.

              You are completely correct that the business lobbyists are way, way ahead of me, average citizen from a non finance background. But my objective is to find out the "truth" as much as I can, so when I hear this issue brought up, I can interpret the honesty, knowledge, etc. of the candidates.

      •  Again, if I remember, the state was going to (1+ / 0-)
        Recommended by:
        peptabysmal

        provide the initial investment, and the capco gets to keep it now matter what.

        •  The capital venture plan isn't done yet (0+ / 0-)

          the bipartisan group is still working on it.  Back in March or April or May, when this was first brought up the capcos were involved. Now there are 3 other plans without capcos and one Republican plan that  we don't know anything about yet, if I understand the newspaper article correctly.

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