Author: Matthew G. Saroff

HFT, SEC, EE-I-EE-I-O

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SEC Chairman Mary Schapiro is now saying that there may be some real problems with high frequency trading:

Chairman Mary Schapiro of the Securities and Exchange Commission (SEC) is worried about the rise of high-frequency trading, but two years after the agency flagged the phenomenon as a potential problem, she says regulators still don’t know enough to do much more about it.

High-frequency trading, which is practiced by hedge funds and other technologically turbocharged investors, involves the purchase and sale of large volumes of shares in tiny fractions of a second, often to exploit fleeting inconsistencies in the markets.

At a wide-ranging question-and-answer session with reporters Wednesday, Schapiro said that major regulators from various countries gathered in the fall to confidentially compare notes about high-frequency trading.

“And we all concluded that we have concerns but we don’t have enough data yet to really be able to justify significant additional steps at this point,” Schapiro said. “We need to have a much deeper understanding of the impact of high-frequency trading on our markets.”

This is why financial “innovations” should be treated the same way that the FDA treats drugs: You don’t get to use them until they are proven safe and effective.

But beyond this, it’s clear that HFT is a form of front-running, where computers see incoming orders, and get to the queue ahead of those orders in order to profit from the market move.

A financial transaction tax of 10 (I’d actually favor 50) basis points would solve this, and a lot of the other problems of our financial system.

Dungeons and Draghi*

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Someone has finally set up the Greek/Euro financial crisis as a choose your own adventure game:

Reading the media and blogs, it seems to me that left and right are united in the view that the Greek default is being handled appallingly, that the current attempts at a solution are childishly obviously wrong and that everything is the fault of someone, probably the Germans. My own view – that it is not at all clear what the direction of policy is, and that although I don’t agree with the troika plan, it’s recognizable as a good-faith plan made by conscientious international civil servants working under unimaginably difficult political constraints in an economic context that was irreparably broken before they got there – is, as always, unpopular.

I don’t have a solution myself – the more I end up discussing this with people, the more I am reminded of the London Business School proverb taught on some of the gnarlier case studies, which is “Not All Business Problems Have Solutions”. So, CT hivemind, what do you think the best outcome is? Below the fold, I note some talking points, aimed at preventing our commentariat from falling into some of the pitfalls and mistakes which appear to be dominating debate at present. Because the whole issue is a twisty turny maze which at times seems to consist of nothing but false moves, I am presenting it in the form of a “Choose Your Own Adventure” book. I would note at this stage that I could probably have presented it in a funky HTML way rather than making you scroll up and down, but I have convinced myself that this is a feature rather than a bug – the medium matches the message here, because international debt negotiations are cumbersome, inconvenient and irritating too. Also, it is probably easier than it needs to be for readers to end up at the wrong paragraph and get a confusing jumbled narrative which bears little resemblance to the decisions they thought they’d made. Again, this is a crucial part of giving you the authentic international financial diplomacy experience.

…………

It’s an inspired idea.

*Not my bon mot. One of the commenters on  the above post came up with it.

Being Unwilling to Train Employees is Not a Skilled Worker Shortage

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What Ryan Chittum says:

What’s going on here? The Post writes that the laid-off workers don’t know how to operate newfangled machinery and that Baby Boomers are retiring but younger generations “have avoided the manufacturing sector because of the volatility and stigma of factory work, as well as perceptions that U.S. manufacturing is a ‘dying industry.’”

I have another way to put that: These young folks don’t want to spend a lot of money and time training to do a specific job they might not get only to get laid off when some private-equity slicks (where the real money’s at) buy out the company and ship the jobs to China.

That’s what happens when owners and management have shredded the social contract. They find workers can’t or won’t do what they need them to. A flexible workforce has its downsides too.

This entire spate of stories about employers being unable to find qualified workers is crap.

What they really mean is that they cannot find people who need no training and are willing to work at slave wages, but that does not sell papers.

They Posthumously Baptized Anne Frank Again?!?!!?

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Oh those whacky Mormons:

Anne Frank, one of the most renowned Jewish victims of the Holocaust, has allegedly been baptized -again- in a Mormon temple. The proxy ritual, known as a ‘baptism for the dead’ reportedly happened in the Dominican Republic.

On Saturday, a member of the Church of Jesus Christ of Latter Day Saints, was said to have performed the ceremony posthumously, according to whistle blower Helen Radkey.

Radkey, a Salt Lake city researcher and former member of the church, discovered that Anne Frank, who died in a concentration camp at 15, was baptized by proxy over the weekend.

The situation also stirred conflict between the two religions, as the Mormon church vowed to stop the posthumous baptisms. But the ritual has been carried out at least nine times in Frank’s case, over 10 years, from 1989 to 1999. Radkey said she made the discovery of the incident when Frank’s name appeared in a database for proxy baptism, which is usually only open to Mormons.

It is so on, bitches.

The Stupidest Thing Ever Written

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Surprisingly enough, it’s not Thomas Friedman who wrote this, it was David Graeber, in his book, Debt: The First 5000 Years.

I have to admit that I have not actually read this book, (and now, I never will) I am relying on a review from LizardBreath at Unfogged, and this is what she finds:

But then he starts talking about how democratic methods of structuring organizations are often more efficient than rigid hierarchies, and so will often arise spontaneously when people really need to be get things done. And he uses Apple Computers as an example:

Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other’s garages.

I don’t know all that much about the history of Apple or of the computer business generally, but I’m pretty sure that’s as wrong as it could possibly be. Apple was founded by two guys, neither of whom (AFAIK) worked for IBM (maybe for a very short time? But certainly not extendedly). It was notoriously a rigid, top-down hierarchy, it was founded in the ’70s, not the ’80s, and who had a laptop until the very end of the ’80s? That’s a whole lot of wrong for one sentence.

It’s so stupid, that I am amazed that this wasn’t written by Tom Friedman.

Quote of the Day

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A lawyer for Mr. Strauss-Kahn appeared to confirm that he had attended the events, saying that his client would not have been aware if the women who entertained him were prostitutes.

“He could easily not have known, because as you can imagine, at these kinds of parties you’re not always dressed, and I challenge you to distinguish a naked prostitute from any other naked woman,” the lawyer, Henri Leclerc, told a French radio station, Europe 1, in December.

—Dominique Strauss-Kahn lawyer

The rich REALLY are not like you and me.

H/t Brad Delong.

OK, Rubio Won’t be the VP Pick

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I had thought that he was the likely pick, as his selection would serve to mend some bridges with the Hispanic community, but, if Mitt Romney is the nominee, he won’t select Rubio, because he is sort of a Mormon:

In the compelling personal narrative that has helped propel Florida Senator Marco Rubio to national political stardom, one chapter has gone completely untold: Rubio spent his childhood as a faithful Mormon.

Rubio was baptized into the Church of Jesus Christ of Latter-day Saints with his family at around the age of eight, and remained active in the faith for a number of years during his early youth, family members told BuzzFeed.

Rubio spokesman Alex Conant confirmed the story to BuzzFeed, and said Rubio returned to the Catholic church a few years later with his family, receiving his first communion on Christmas day in 1984 at the age of 13.

The revelation adds a new dimension to Rubio’s already-nuanced religious history—and could complicate his political future at a time when many Republicans see him as the odds-on favorite for the 2012 vice presidential nod. Vice presidential candidates are traditionally chosen to provide ethnic and religious balance to a ticket. Mitt Romney’s Mormonism and Rubio’s Catholic faith would already mean the first two members of minority traditions on a Republican ticket in American history. Rubio’s Mormon roots could further complicate that calculation.

Yes, having a Mormon on the ticket should not be an issue in this day and age, but having 1½ Mormons on the ticket will have every bigoted whack job’s head exploding.

Seeing as how the, “my parents are first cousins, X-Files wannabe, black helicopter, tinfoil hat wearing, stupid, dim-witted, thinks pro wrestling is real, lunatics,” are also known as “The Republican Base,” this is highly problematic.

We Are a Nation of F%$#ing Ingrates

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In the latest episode of this, we have farmers complaining because the Iraqi people have decided not to buy their overpriced rice:

The talk of the day among Ray Stoesser and other rice farmers is Iraq’s decision not to buy U.S. rice, a stinging move that adds to a stressful year punctuated by everything from drought to unusual heat.

Stoesser and other farmers know Iraqis struggled during the U.S. invasion and subsequent occupation. They know most countries , and people , buy based on price.

But at the moment, with production costs rising, export markets shrinking and rice prices dropping, it’s difficult to be rational and suppress emotions so intimately intertwined with their land and livelihood.

“That’s just not right,” the 63-year-old Stoesser fumed. “If we’ve got some rice to sell, they ought to pay a premium for it just because this is the country that freed them.”

Iraq imports most of its rice, about 1 million metric tons per year, making it a significant player in the global market. In the past decade, about 10 percent to 15 percent of that total came from the United States. But Iraq hasn’t bought any U.S. rice since late 2010.

“You would think with all that we’ve done over there, there would be a way to get them to do business with us,” said Ronald Gertson, who grows rice in Lissie, Texas.

So, we invade their country, setting off massive ethnic cleansing, a collapse of their infrastructure, a retreat to reactionary religious oppression, daily violence, and a political leadership who take their orders from Tehran.

And that’s ignoring the fact that we caused over 100,000 deaths, and over a million refugees.

And they are supposed to be grateful that we broke their country and are in the process of stealing their oil?

What the f%$# is wrong with these farmers?

H/t Atrios.

Another Person I Do Not Want to Piss Off

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Lewis Black. Seriously. This guy is brutal.

I really have no opinion on the death of Whitney Houston, but the coverage has been awful, thought thankfully I have missed the self-debasement of Nancy Grace over this event (In fact, avoiding her clear psychological pathologies is kind of a goal of mine).

 As an aside, I’m pretty sure that he has the lowest blood pressure in America, because he doesn’t keeop anything bottled up.

The Aliens are in Retreat

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It was Jon Stewart that Killed the Beast

So the space the aliens* more commonly known as the Virginia Republican Party, following extensive coverage, or no small amount of ridicule, have started to walk back from the bill requiring that women be probed in genitals if they want an abortion:

Virginia governor Bob McDonnell has performed a U-turn on a controversial bill which would have forced women seeking first trimester abortions to undergo an invasive transvaginal ultrasound.

McDonnell had previously said he would sign the bill if it was passed by the general assembly. But faced with growing opposition, McDonnell released a statement on Wednesday minutes before the bill was debated in the House, in which he said that, after discussions with lawyers, physicians and legal experts, amendments were needed to “address various medical and legal issues which have arisen.”

Critics had pointed out that the bill, if passed in its original form, would have obliged doctors to carry out a procedure that risked breaking a state sex crime statute known as object sexual penetration.

State lawmakers passed the amended bill on Wednesday afternoon. It now explicitly states that no woman will have to undergo a transvaginal ultrasound involuntarily. Instead, it requires women seeking an abortion to have an external, transabdominal ultrasound.

The changes also include having a doctor ask the woman if she wants to see an image from the ultrasound rather than requiring a copy to be attached to her medical file.

The upside is that they are retreating because their ideas on this are completely toxic.

What I fear is that they will keep coming back to this, and in a few years, it will be considered a legitimate area of dispute, as opposed to the rantings of bat-sh%$ insane Taliban wannabees.

*Basically we know that aliens conduct involuntary probes of their captives, and so do the Republicans in Virginia, QED Virginia Republicans are space aliens.

Why Yes, Republicans are F%$#ing Nuts

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The latest target of their mishugas? Why it’s the Girl Scouts of America:

Next time you buy a box of Tagalongs, you might be helping to fund an abortion.

Or, at least, that’s what one Republican lawmaker in Indiana might have you believe. State Rep. Bob Morris (R) wants to kill a resolution honoring the Girl Scouts because they are a “radicalized organization” that promotes “homosexual lifestyles” and funds Planned Parenthood.

In a letter to his fellow Republicans on Saturday, Morris said he would refuse to support a resolution celebrating 100 years of the organization because “after talking to some well-informed constituents, I did a small amount of web-based research, and what I found is disturbing.”

The letter, obtained by the Fort Wayne Journal-Gazette, says that the Girl Scouts of America and the World Association of Girl Guides “have entered into a close strategic affiliation with Planned Parenthood,” though “you will not find evidence of this on the GSA/WAGGGS website—in fact, the websites of these two organizations explicitly deny funding Planned Parenthood.”

Seriously, when did those guys with newspapers wrapped around their feet and standing on street corners screaming obscenities at passers by become the Republican Party mainstream?

Federal Court is Dubious of Republican Redistricting in Wisconsin

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They have strongly suggested that the Republicans come up with something a bit less blatantly discriminatory before the trial:

Republican lawmakers said Tuesday they believe they have no power to make changes to election maps they approved last summer, inserting new questions into fast-changing litigation over those maps.

A trial over those maps began with a surprise Tuesday, when the presiding judge told the attorneys to confer with top legislative leaders and others to consider redrawing the maps taking into account legal challenges from Democrats and Latinos.

After a day of consultation, an attorney for the state told the three federal judges that top Republicans were willing to consider making changes to the maps but believed a 1954 opinion by the state Supreme Court prevented them from doing so. The attorney, Dan Kelly, said the state’s high court had found lawmakers can make changes to the maps just once a decade.

Two groups suing the state disagree and say the Legislature still has the ability to make changes.

Tuesday’s developments left numerous questions in place – including when the trial may continue in earnest. The presiding judge told the attorneys to be available Wednesday to return to court with 45 minutes notice, but made clear the court may rule only on the relatively narrow issue of the extent to which an attorney for the Legislature would have to later testify.

The panel – which includes two judges appointed by Republican presidents and one appointed by a Democratic president – has repeatedly criticized Republican lawmakers in written orders for their secretive process for drawing the maps.

On Tuesday, presiding Judge J.P. Stadtmueller did the same shortly after hearing that attorneys for the legislators had released a new batch of emails Friday that they had not previously disclosed they had. The release of emails came a day after the court had ordered the lawmakers’ attorneys to make public a separate group of emails.

“The facts are the facts and what has occurred here is beyond the pale in terms of lack of transparency (and) secrecy,” Stadtmueller said. “Appearances are everything and Wisconsin has prided itself one generation after another on openness and fairness in doing the right thing. And to be frank we have seen everything but that in the way this case has proceeded.”

Almost all lawmakers signed secrecy agreements about the maps and they tried repeatedly to prevent their aides from having to testify or produce documents. Those attempts were unsuccessful, and last month the panel ordered the Republicans’ attorneys to pay the other side $17,500 for filing frivolous motions.

Here’s a hint to the Republicans in the WI legislature and their attorneys:  When the judges demand the testimony of one your counsels, and fine your attorneys 17½ grand, your prospects are not good.

When you have pissed off the judges this much, Clarence Darrow couldn’t help you.

Del. Sam Arora Needs be Drummed Out of Politics

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For those who are not up on Maryland politics, Sam Arora was considered to be a politico with a great future, but he campaigned on a promise to support, and co-sponsor, a bill supporting gay marriage, and then he opposed it.

The bill passed the House of Delegates by virtue of a Republican vote delivered by the lobbying of Dick Cheney.

For once, it appears that there will be consequences of his action.

I’m sure he’s feeling courageous, but he’s a coward. If he had any guts, he would not have pretended to support marriage equality when he thought that there was no chance of it passing.

He campaigned on gay marriage, and when it looked like it would pass, he voted against it.

This is why members of the Democratic establishment in both Maryland and nationwide are currently determining the best way to ensure that he won’t work in Democratic Party politics ever again.

I would note that it’s likely that he’s going to have some staffing problems in the immediate future, as his his legislative director quit once he knew that he was going to vote against HB 348.

My guess is that this is the first of many departures, because if anyone on his a staff wants to have a future in politics, having Sam Arora on your resume after January 2012 will be toxic.

Iceland Wins

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I don’t understand why other countries don’t compare what has happened to Iceland, and compared it to what is going on with Greece, Ireland, Portugal, etc., and realizing that telling the banks to go Cheney themselves is the best policy. Fitch’s has just upgraded Iceland’s credit rating from BB+ to BBB-, which means that they are now investment grade.

What is of note here is that the Icelanders made the decision to favor their own people over the banks:

Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.

Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association.

“You could safely say that Iceland holds the world record in household debt relief,” said Lars Christensen, chief emerging markets economist at Danske Bank A/S in Copenhagen. “Iceland followed the textbook example of what is required in a crisis. Any economist would agree with that.”

The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium. Most polls now show Icelanders don’t want to join the European Union, where the debt crisis is in its third year.

What? You mean the people of Iceland don’t want to become part of an institution that increasingly is an instrument of Germany’s incompetent hegemony? Hoocoodanode?

What they also did:

The island’s households were helped by an agreement between the government and the banks, which are still partly controlled by the state, to forgive debt exceeding 110 percent of home values. On top of that, a Supreme Court ruling in June 2010 found loans indexed to foreign currencies were illegal, meaning households no longer need to cover krona losses.

Note that both of these actions are considered to be cardinal sins under the international financial consensus, which states that creditors must always be repaid under the most favorable terms.

The fact that, “Iceland’s approach to dealing with the meltdown has put the needs of its population ahead of the markets at every turn,” is an anathema to the large financial institutions, as is the implementation of capital controls in a crisis.  (And, BTW, they are prosecuting senior bank executives as well)

They argue that these sorts of policies put a damper on international credit and finance.

They may be right, but it increasingly appears that the capital flows that they are describing do more harm than good for everything but the bankster’s bonus checks.

Keynes was right about this, and Wall Street and The City should thank their lucky stars that Iceland is small enough (population 318,452) to be ignored.

If other countries followed their lead, not only would the “Masters of the Universe” be out of job, they would be under criminal indictment.

H/t Credit Write Downs.

Wanker of the Day

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John Corrigan, who thinks that people deserve to have their home stolen by the banks:

That can lead to confusion over who had the legal right to process the foreclosure. But it doesn’t mean the foreclosure itself was unwarranted.

So, foreclosing on someone who doesn’t have a mortgage, or for a mortgage that doesn’t belong to you, or illegally evading billions in title fees, or defrauding investors in mortgage backed securities is all OK, because you are robbing bad people.

H/t Atrios.

Why It’s Not Eleventy Dimensional Chess, It’s an Epic Fail

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At Digby’s place, David Adkins notes that the Obama’s “compromise” on birth control coverage with the US Conference of Catholic Bishops has had the effect making opposition to birth control mainstream:

And guess what? As Digby points out, it’s working. What just a few weeks ago was considered so mainstream as to an afterthought (providing contraception) is now seen as some sort of controversial touchstone, even as “religious freedom” has become a buzzword in the press.

Democrats can high-five one another about Republican overreach and laugh hysterically at the increased number of votes Barack Obama will receive in 2012 over Mitt Santorum. But ultimately the joke’s on us. It’s been on us ever since the Obama Administration decided to concede an inch to the misogynist conspiracy of extremist fanatics that are the Bishops, rather than mock them immediately for being out of touch with their own flock, to say nothing of the mainstream American public.

The political ground on contraception has suddenly shifted to the right faster than I have seen on any social issue in my lifetime. It’s incredible.

The appropriate response to the outrage from the medieval set is, “Sorry, I live in the 21st century, if they don’t want to, then maybe they aren’t qualified to provide medical care or education.”

Next Generation Missile Cancelled

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The missile, intended to replace both the AMRAAM air-to-air missile and the HARM air-to-ground missile has been dropped from the Pentagon budget:

The US Air Force has cancelled the next generation missile (NGM) meant to replace both the anti-air AIM-120 AMRAAM and the anti-radiation AGM-88 HARM, both mainstays of the USA and its international allies.

The NGM programme, also formerly known as the joint dual-role air dominance missile and projected to cost up to $15 billion, was cancelled “for affordability reasons”, according to Gen Edward Bolton, USAF chief budget officer.

This is unsurprising.

In order to achieve what are almost diametrically opposed roles, the AMRAAM is a 7″ diameter missile which is designed to take a lofted trajectory to maximize range, and the HARM is A 10″ diameter missile which takes a direct route to the target to minimize time to target, you have to develop a whole series quantum leaps in propulsion and lethality, and gets the entire weapons system onto the cost escalation-schedule slippage hamster wheel.

It’s a good thing that this is canceled.

Obamacare Just Gets Better and Better

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As part of health care reform, consumers are supposed to be getting clear and simple summary of benefits and of an insurance policy.

This means things like deductibles, maximum out of pocket, and co-payments are supposed to be presented to the consumer in a simple and readable format.

The rather unsurprising development in all this is that Obama administration caved to insurers on the most important number of all, and there is no requirement for insurers and employers to tell people what they have to pay in premiums:

The Department of Health and Human Services recently announced that health insurers and employers must provide more information to consumers shopping for health insurance. The ensuing coverage, shall we say, was a classic case of journalistic bungling. Reporters took what HHS officials fed them and crafted their pieces for public consumption. But the stories were confusing—in some cases flat-out wrong—and did not exactly offer the clearest of explanations about what’s supposed to be a clearer process for buying health coverage. I’d wager the public didn’t understand much of what the media dished out, and probably won’t until they actually start shopping for coverage again in the fall and find the government hasn’t made it easier after all.

…………

The report that HHS released to the media discloses some important numbers: the amount of the deductible; what services don’t count toward satisfying it; what’s not included in the out-of-pocket limits, like premiums and charges from doctors who balance the bill; the copays; and, probably most important, the amount of coinsurance—the percentage of a bill patients must pay, which is increasing with each passing year.

But insurers and employers do not have to tell consumers how much a policy costs—in other words, no premium information has to be given. Yep, that’s right—the key piece of information needed to make a good decision is missing. When insurers design a policy, they consider the interplay of coinsurance, copays, deductibles, coverage, and, of course, the premium, which lets them know what price point will make a consumer say “yes.” Price is the bottom line for consumers, but it’s poison for sellers, who fear a shopper might choose a policy with a lower price, other things being equal. So much for that price competition that was to solve all the ills of U.S. health care.

This was followed up by the media almost entirely simply reprinting the HHS press releases, which means that this crucial omission was largely ignored:

What was needed from the media was analysis and sharp questioning about what these new disclosures would really mean for consumers in terms of ease of use and availability during the shopping process. We know consumers hate shopping for insurance, and take shortcuts to finish the task as fast as they can. But instead of helping them through this dreaded chore, the media gave the Department of Health and Human Services a free pass.

This is not a product of a biased media, this is a product of lazy media, which is the real problem with the media, particularly given the financial pressures present in today’s media environment, because a lazy media is a cheaper media.