Big Brother is [Not] Watching You

I rarely click on banner ads. But one from these folk aroused a morbid curiosity in yours truly that caused me to override my normal reticence. For those not wanting to click through and read in detail, it was a teaser for market surveillance software to flag less-than-salubrious activities of traders, one's customer's, PMs and one would imagine, those with capital commitment authority unable to withstand the temptation of cheating for wanton egotistical pleasure, or more likely, parochial financial gain.

It describes itself as a highly configurable software compliance module that will detect market manipulation including (but not limited to):

Pre-arranged trades
Wash trades
Naked short sales
Cancellations
Marking the close
Price jump and significant position
Phantom orders
High volume and price jump
Painting the tape
Spoofing
Concealing ownership
Price jump with following reverse price jump
Reference price manipulation
Late trading and deal capture

Wow, and hello Andy DuFresne!

This perhaps raises some interesting questions. For example: What does it say about an organization that feels this is necessary to deploy? Although, one believe it the expression of a zero-tolerance policy, might it also imply that the owners or management - perhaps the management upon which the reputation of the organization was built - is now too-distant from the trenches to know when a PM or strategy manager is marking his book or doing impact trades at investor expense? Or perhaps that management is too thin on the ground (or inexperienced or ill-informed) to oversee or even know malfeasance when they witnesses it. "Good on yer matey - that stock you bought has doubled (no matter you bought 25% of the float at higher and higher prices and now own three months volume..."). Of course the managers could also be knowing and in complicity (or more insidiously, orchestrating) begging the question is there a management compliance module to detect such behaviours?

Indeed, I may mistaken in believing such software may be intended for the humble hedge fund (though one wonders what if any alarms would have been sounded over RajRat's Galleon, or what might be caught in its driftnet were it cast over SAC's trade histories) but rather it has been built for the large IB, or industrial money manager. But even here, one wonders whether a sweep of Fidelity or, say, Cap Research would yield unsavouriness relating to "price-jump and significant position", "marking the close", or "concealing ownership". Or, more interestingly, what their opinion would be of implementing compliance software that claimed the ability to red-flag such unvirtuous behaviours. Methinks they would feign insult and dismiss it as ridiculuous that such things might be associated with their venerable names. "Gambling....here? I am shocked...."

There are some obvious holes in their malfeasance suite: old-fashioned insider trading; trading upon material non-public information (e.g. GLG & Sumi CBs and front-running of equity inssuance), predatory trading (e.g. Citadel/JPM vs Amaranth; GLG vs Eifuku, or any number of Red-D private CBs or convertible prefs); stock cornering (e.g. Porsche); regulatory loopholing (opaqueness of OTC reporting), stock parking and collusive trading, to name a few from a list which is certainly not exhaustive.

This begs the most obvious question: If it well and truly "works", why don't the regulatory authorities, exchanges, and self-regulatory organizations license it and blue-sky the results? Name and shame might be a useful addition to the regulatory arsenal. For shame and ultimate reputational risk (next to prison resulting from enforcement and prosecution) is a powerful deterrent, but only it is only a deterrent if transparency and subsequent enforcement prevails.

Channeling Outrage

After smiling silently upon reading the rumble over at Barry Ritholtz' I must admit that, for my amusement, I am all for a good conspiracy theory purporting to explain the inexplicable - one that projects blame away from where it perhaps hurts most, or onto something that makes erstwhile sense out of randomness and/or seeming injustice, particularly on a canvass where The Bad Guys seems to triumph more often than Mom, Pop, Guy Little, or even the virtuous citizen. Yes, blame the Fed, it's leader(s), Goldman Sachs, it's leader(s) - present or former, the Plunge Protection Team, CIC, the NWO, vulgar Russians, fundamentalists, George Soros, Water fluoridation, The Jews (oh yeah - don't forget the Jews), Sunspots, Cronies, Old Boys, Ivy-Leaguers, Etonians, Extra-terrestrials, Economists, Hedge Funds, HFT'ers, rich folk, poor folk, Freemasons, Unions, Vaccinations, the CIA, Jews (oops I've already said that) crack-heads, [insert favorite other pet tag, famous persona, or just Timothy Geithner here], anyone and anything other than what the wise seeker of explanations, William of Ockham and his obvious razor might suggest with appropriate contemplation.

In the world of the Sordid and Nefarious Conspiracy, cabals dominate. Nothing, I repeat NOTHING, is at seems. The truth, you see, would bring tears to the eyes of Macchiavelli and Lao Tzu, not to mention Mother Teresa and the Dalai Lama. At least if they walked away from watching Glenn Beck or reading certain financial blogs more informed and rage-a-licious than before. Yet the market for intrigue, cynicism and increasingly, financial skepticism is large and expanding seemingly at a faster rate than the market for sober-minded analysis and cogent, thoughtful non-hyperventilated explanations. To be certain, flaws are prevalent in everything and everyone. Systems and rules will gamed frequently and systematically, and competitors will inevitably collude, more or less in inverse proportion to the amount of oversight, regulation, scrutiny and enforcement of said affairs. Politicians will frequently bend the truth for self-serving reasons. Good people universally will make some bad decisions (in hindsight). And bad people will make worse decisions. Heck, just ponder the plight of an altar boy in Ireland. Corruption is almost certain to be prevalent to a greater or lesser extent while honesty will perpetually be in short supply where money, power, and/or privilege is concerned. Conflicted interest is behind every door. Institutions are only as good as the people within, and the support from the polity. Culpability is in short supply in American culture. Even Clinton found it hard (no pun intended) to own up to a few moments of illicit pleasure. Yet, for all that, conspiracy theories - like religion - need to be credibly and plausibly proved to be anything other than a phantasmagoric conjuring at best, or sad excuses NOT to confront the prevailing reality with the prevailing palette of contributory causes and explanatory factors and influences, because it is contrary to one's presently anchored view.

Conspiracy theory, like demagoguery, begins with a remote kernel of seductive and at a cursory glance seeming explanatory power. A simplistic soundbyte lodging itself within, but for practical purposes, of little use in comprehending the complexity of modernity. It is precisely this complexity and the subsequent loss of individual control that has caused the bull-market in Conspiracy and Demagoguery. Reality just has too many facets and moving parts. Dumb it down. "Six-Minute Abs" applied markets or politics. It sells ad slots on late-night talk radio, and elevates the eyeball-count on websites. But sadly, it provides little more than a placebo in place prescription required.

In Defense of The Case Against HiFTers

In principal, I am reticent to contradict Burton Malkiel because I respect him, large, but I feel that I must raise a few salient points in regards to his recent FT Op Ed. He says essentially that over the years, trading costs have fallen (which is true); market-makers are useful (also reasonably true with caveats); he then nebulously defines HFT as computers closely proximate to the exchange that buy and sell quickly (OK he's dumbing it down guessing some WSJ readers also peruse the FT); then he debunks HFT as being synonymous with flash order predators (I'll charitably leave this as uncontentious given the numerous flavours of HFT); claims HFT is misunderstood (probably true because I think he, too, misunderstands it); and finally in the unsubstantiated non-sequitir says "they" (HFTers) are The Good Guys; They are The Guys who SAVE you money; They are the de-facto market-makers and if they steal they seem to only steal from other traders and not from individual or long-term investors. To which I say: "...Whooaah there bossy...."

The implied argument is that HiFTers are genuinely providing liquidity and therefore, in the process, bearing substantial risk and therefore deserving of return for the useful function of providing temporal liquidity. That's a fine-and-dandy justification for market-making one I find uncontentious.

But really the question that must be asked is: "Are HiFTers (c) truly market-makers in the classical (and it must be said, useful) sense??" From all my experience, assimilating everything I have seen on by and sell sides, by comparison to market-makers in the past, and even some present market-makers such as Tom Petterfy's Timber Hill, I think the answer is "categorically not", and the esteemed Dr Malkiel is essentially wrong. I believe, HiFTers, in the main, are NOT reversion oriented (in the Princeton-Newport, Thorpian sense), warehousing risk, until the opposite side emerges. They are, in the main, making a market NOT to price the temporal cost of warehousing risk to capture spread, but rather to sniff out the direction of order flow and predate it. They are, in effect, inverting the purposefulness and utility of market-making with respect to liquidity. As a result, one might even wonder whether Dr Malkiel is perhaps on some HiFTers advisory board or consultancy payroll. Granted, I have no figures to support my assertion, only my long experience in the trenches - but then neither does Dr Malkiel cite any numerical support for his assertions. We are left in a substantiation stand-off, my tangible market experience vs. Dr Malkiel's academic reputation.

Idealists would like to see bona fide buyers and sellers match directly, thereby disintermediating parasitical traders, where "bona-fide" is defined as those with a non-feedback-based orientation. Thoughtful apologists accept the virtue in this ideal, but then suggest that, practically, institutional herding makes it unlikley bona-fides are able to find the other side when and where they want it. Here again apologists narrowly define HifTers as liquidity providers rather than disruptive front-runners. And while I accept the possibility that periodic herding effects might swamp the more typical opinion and participant diversity of market order flow, I think the argument is spurious since the contribution of HiFTers as faux-market-makers remains negative sum for both bona-fide buyers and sellers where HiFTers intermediate.

Some justify HiFTing by arguing "so what if they are parasitical front-runners, as the activity help market prices more quickly move towards something resembling a short-term equilibrium". I find this path of argument a tad more useful, yet, all it does is push the argument into the realm of "is informationless feedback trading itself useful or desirable??" If they were convergent upon longer-term equilibria, I would be far more sympathetic, but amplifying divergent trends is certainly detrimental to efficiency sympathies (and justifications), and the front-running HiFTers seem just as likely to push something away from these arguably more important equilibria than towards them, making the argument irrelevant at best.

Still others (particularly from the BD community) justify their HiFTing by "Internalization" of order flow, proudly (though still somewhat disingenuously) suggesting there are no resulting casualties, and customers in any event get the best execution, but this is likely smoke and mirrors, in the same way that restricted access US Govt secs inter-dealer brokers always had inside markets relative to prevailing markets available to non primary dealers. Discretionary and/or limit orders embedded in the books of electronic exchanges visible or known to broker-dealers (as they are/were to monopolistic specialists) are used NOT to execute the customer at the best price, but help the HiFTing firm capture so-called riskless spread at the expense of their customers' best execution. Low body count and conflict of interest, indeed - as they take from the customer pennies at a time.

The descriptive argument with the most apt potential to mirror the actual dynamic is one where a host of HiFTers predate large or several large orders, buy up everything out there in front of them who then flip the appropriate sized parcels to the hapless buyer at an elevated price reflecting the same spread and market impact that a traditional market-maker, block-trader or specialist-of-old would have yielded, the only difference being that instead of Vinnie or Mario licking his finger and making his price, it is now some UNIX programmers who implemented it as a complex algorithmic system that forms an ecosystem to do the same. This may or may not be true, or rather was probably not true in the short-run when profits were fat but probably will in the longer-term where competition eventually shrinks inverting the opportunities back to reversion, where they converge upon the true price of providing liquidity adjusted for some return on capital. But between here and there, there is likely increased cost for bona-fide investors and short-term price volatility. Judging by the scramble for UNIX developer talent, and number of entrants ditching "longer-frame" warehousing for shorter-term order-sniffing and pseudo-front-running, the scrum is intensifying, and the denoument has yet to be reached.

10 Surprises for 2010

I can't help but the join the bull market in 2010 surprises. Here they are, like 'em or not....

10. Obama administration despite pyrrhic healthcare victory sets sights on social security reform including some means-testing and tax and contribution holidays for those working longer than age 65.

9. The DGDF meme wilts. Carry-trades in entire anti-dollar complex implode. EM equity fares best (relatively) in unwind.

8. Europeans demand new gas pricing regime with Russia as shale gas is proven to be present "in spades" throughout the continent.

7. CIC buys the Gherkin and becomes the largest shareholder in Ferrovial - doesn't touch distressed Dubai assets.

6. Popularity of naturopathic and herbal remedies EXPLODES. P&G makes large acquisition in this space.

5. The virtues of coffee are PROVEN to exceed their detriments in a landmark study puiblished in Lancet. Despite this GMCR shares underperform the market dramatically.

4. A large indictment of Wall Street executives ensues, accused of tunneling in regards to mortgage securitisations. Main Street rejoices. Agent-principal conflicts become the rage.

3. In a blinding glimpse of the obvious, diesels finally become increasingly popular in America since even big cars can achieve >60 mpg with perfectly acceptable performance, and plenty of interior quietude.

2. Inflation DOESN'T rise. But rising expectations of inflationary expectations refuse to be quelled.

1. Byron Wein stops making predictions in 2010 citing the inability to find sensible anti-consensus predictions...

(bonus prediction: Ireland, desperate to emerge from its mire launches a full-frontal assault to garner hedge fund relocates destined for Switzerland with corporate tax-holidays and "We'll Match Any Bona-Fide First World Forfait Offer in Writing" guarantee)

Seasons Greetings to All & Best Wishes for 2010!

dEAr sANta...

dEAr sANta...

I know it's crunch-time for you, the elves and Mme Claus, but nevertheless, I reckon I've been reasonably good (excepting that naughty thing or two you must already know about), and so with that in mind, I submit to you my 'modest', scaled-down Xmas list...

• A complete boxed set of "Black Adder"
• An end to whaling and wholesale plunder of the oceans
• Some seriously steep cuts in the US military budget
• A US healthcare plan consisting of universal basic coverage, engaging a single-payor insurer of a mandatory-participation risk-pool funded through a VAT not forgetting to to remove corp healthcare-expense deductability, supplemented with a private market for supplemental cover.
• Sunshining of time-and-sales along with 13F as well as increasing filing freq. to monthly (delay still acceptable), including OTC swaps, derivs and all contingent exposures, separately detailed.
• A meaningfully large carbon-tax, particularly upon motor fuels, of perhaps 50% followed by several years of further flesh-extraction in order to quickly bring US energy policy into line with OECD peers.
• Debate and subsequent introduction of Electoral Reform including Preferential and Mandatory Voting
• A rapid decrease in developing world fertility rates.
• Elimination of CDS
• A diminishment of inequality between the rich and the poor
• A substitution of pragmatism for partisanship across the spectrum of American politics.
• An end to distorting energy subsidies in many emerging markets.
• An end to the dual mandate at the Fed (don't even ask which one we should kill)
• Peace between Israelis and Palestinians based upon a two-state solution, mutual respect and an agreement to administer Jerusalem as an international city.
• A raising of the mandatory retirement age for social security from 65 to 70 (until such time as The People can afford it).
• A resolve by financial institutions to counter-cyclicly RAISE collateral requirements and decrease the LTV ratio for new loans as asset prices rise over time and vice-versa as they fall.
• A separation of prop leveraged spec activities from publicly-regulated and insured banks.
• An end to the destruction of the rainforest and other fragile ecosystems.
• Better pricing of externalities, in general
• A marked increase in spec margins on global futures exchanges, a clampdown upon specs claiming hedge status and BD transformers assisting such actions, and an introduction of a "Tobin" tax
• Serious re-examination of monoculture and intensive fertilizer and pesticide use.
• A high windfall profits tax on bonus comp vested on short-horizons, with windfall rates diminishing to the prevailing marginal rate where said comp is accrued over long-horizons and and subject to claw-back.
• A heightened sense of the Public Interest in government & an end to corporate capture of The State along with its insidious rent-seeking,
• An extended spate of world peace would also be marvelous if you can swing it!
• Oh and for me, perhaps a pound or three of decent oily Italian-Roast coffee beans and a couple of drinkable bottles of LBV Port to sip by the fire...

With most heartfelt thanks on whatever you can swing,

Cassie

"It's the Cop's....Run!"

I was no angel/altar-person growing up. It was not an entirely mis-spent youth, but for a variety of reasons, not least suburban restlessness and boredom, I had my share of moments where we were up to no good of one variety or another, when someone, in a panic response to headlights, a flashlight baritone adult voices (whether real or imagined, whether the infraction minor or non-existent) would shout "HOLY SHIT !!! IT'S THE COPS! RUN!!!" Which was followed by the ditching evidence, an every girl/boy for themselves chaos/mayhem, sprints through forests, fields, swamps, brambles, into and out of gated yards with dogs, and across cricks and streams in order to arrive at a place of perceived safety. Whew, the adrenaline returns just thinking about it.

So I was reminded of such long-ago moments by yesterday and today's market reaction to the ummm errrrr "difficulties" in Dubai, admittedly the land of the "stupidest f*cking national business plan I've seen in my life"(after Iceland, North Korea and Iran). Tempting fate as the old-saw goes, leveraged specs and longs-squeezed-in increased exposures to virtually all category of risk asset AFTER two quarters of stellar returns for said risk assets, and AFTER price moves made forward returns appear rather pedestrian under the majority of likely outcomes DESPITE the unexploded ordnance strewn around including commercial real estate, the reality of possible CB exit strategies being implemented, the realization that The Era of Stupid Loans (except those to liquid markets specs on appropriate margins) is behind us, and will not be returning anytime soon, and that energy and debt service along with tax will, in the future, absorb yet high percentages of income presently channeled into consumptive pursuits. Running at the first sight of the cops is, while an amusing sight to see for those unencumbered, is admittedly a wise course of action under the circumstance, but liable to cause a pile up when simultaneously conjured and acted upon.

But one must wonder how intelligent such leveraged positioning is/was under the present circumstances and crowded-traded-ness. In this regard, I can only think of the head-shaking stupidity of the unending army of bungling amateur smugglers who used to [attempt] to run car-loads of contraband from Florida up to the northeast corridor, necessarily traversing the ignominious New Jersey Turnpike. Surfing the edge as they were with their illicit cargo, in a caricature of absurdity, they'd cross the Delaware Memorial Bridge into Jersey, in a clunker, of domestic origin with suspiciously foreign license plates (Fla, Ariz, GA,), heavily weighted-down in the rear, along with something else that inevitably would draw attention to themselves (a headlight mortally wounded or pointing skywards, tailight flickering), and driving too fast to boot. They would last - if lucky - to about exit #4, before the flashing red-lights of the bad-ass mirror-sunglassed (even at 0300hrs!) state troopers would pull them over, the officer then greeted by a pungently smoke-filled car (not your normal tobacco smoke) and a red-eyed over-confident driver. He apparently never got what was the best advice I ever received: "Don't break the law when you're breaking the law...."

That Goldman Sachs Xmas Party Menu (in Full)

With the holiday season rapidly approaching, I managed to get my hands on the Goldman Sachs Xmas Party Menu for this year. I'm told it's not final, but this is what they are proposing (note the pretty ballsy choice of venue...)

Goldman Sachs Holiday Fete - 2009 at the Palais Versailles

APERITIFS & HORS D'OEUVRES

Finest Golden Chartreuse Elixir

DOM Benedictine

Selection of Trappist 'Biere Belgique'

Chateauneuf du Papes - Balthazars of Domaine du Pegau 2000

Minted-Green Dacquiris Flowing From a Kozlowski-Inspired Ice Sculpture Fountain.

(Holy Water or non-alcoholic beverages available on request)

With Canapes of 'Pigs-in-a-Blanket', 'Devilled-Eggs', Blood Sausage; Godiveau Lyonnais;

* * * * * * *

FIRST COURSE

Shark-Fin Soup

or

Fish & Loaves (fish is sustainably caught from the banks of Iceland)

or

"Salade Romanov" of Lobster & Black Truffles Sprinkled With Gold Foil

* * * * * * *

MAIN COURSES

(Served Smorgasbord or "All You Can Eat-Style", to satiate the most unsatiable of appetites)

Roasted Market Goose Entier with "Couilles Brasse" With Scalped Pototoes

Chateaubriand of Milk-FED Beef avec une Sauce Banquiere

Braised Roebucks in a Creme-de-la-Creme Sauce

Banquette-Holding a 'Surf And Turf' with a bonus of sauce fine-blanc

Traditional Stuffed Turkey in a "Sangfroid" sauce

Freshly-Slaughtered Cutest Spring Lamb (Roasted on a Spit) in a Minted Sauce

"Stuffed Sucking Pig Five-Ways" (Chef's Surprise)

* * * * * * *

DESSERT

Cherry-Picked-Bonus Jubilee

Sponge Cake with a Luxurious Creme Anglaise

Grand-Sized Profiterole Balls with a Rich Chocolate Sauce

Gaffes with a Blanc-Fine Syrup

* * * * *

PETITS-FOURS

American Sponge-Drops

Bittersweet Karma Cookies

We're Sorry (but for what, we will not reveal...)

I have always looked suspiciously upon the concept of Confession, particularly (but not limited to) when the Confession is not supported by deeds and substantive changes in behaviour. Surely, any self-respecting deity, at the very least to keep the others in-line, would kick a bit of ass. So I wondered aloud whether there was some higher spiritual purpose when I read the following...

Goldman Sachs Chief Blankfein Apologizes for Role in Crisis
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By Christine Harper

Nov. 17 (Bloomberg) -- Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs Group Inc., apologized for the firm’s role in some of the activities leading to the financial crisis.

“We participated in things that were clearly wrong and have reason to regret,” Blankfein said at a conference in New York hosted by the Directorship magazine. “We apologize.”

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.

Last Updated: November 17, 2009 14:13 EST

(Editors note: Surely Ms Harper of Bloomberg meant to add: Mr Blankfein stopped short of returning profits, contributing them to charitable institutions, or asking for the return of bonuses for charitable contribution (i.e. return to the people via US Govt??) from employees awarded them in activities that Mr Blankfein and Gioldman Sachs now regret and deemed "clearly wrong". No specific list of such activities was provided to give legislators, magistrates, special prosecutors, or omsbudsmen around the world further insight into precisely what they were)

Balderdash (n) - fiddle-faddle, piffle (trivial nonsense), hokum

Macro Man's mediations on (but not limited to) things macro - particularly FX - always deserve a read and careful consideration. His attention was caught by Fed Chairman Bernanke's lightweight waffling at the New York Economic Club last night. I concur with his amusement at the inversion of the Chairman's focus.

But the sentence that caught my attention most was the following, contained as it was in MM's captured excerpt:

When financial stresses were most pronounced, a flight to the deepest and most liquid capital markets resulted in a marked increase in the dollar. More recently, as financial market functioning has improved and global economic activity has stabilized, these safe haven flows have abated, and the dollar has accordingly retraced its gains.

The question that caused my eyes to blink repeatedly in disbelief and head to uncontrollably nod from side-to-side was: Does The Fed Chairman actual believe this revisionist manure about what occurred? This seemingly unusual take on events (unusual for a Fed Chairman, not a freshly-minted academicwith no market experience) is clearly derived from the same School of Thought as the one spawning the Savings Glut hypothesis for America's large imbalances, and has as much probability of being correct (hint: not much).

So lets be clear about this once and for all. The rally in the dollar, along with the reversal of all trades across the markets from outperformance in highly-shorted securities to the correlation within the entire anti-dollar complex had virtually nothing to do with dollar primacy resulting from premeditated aversion to risk and almost everything to do with systemic deleveraging and consequential reversal of open positions, full-stop. Whether this was driven by pre-emptive attempts to reduce leverage in anticipation of, or reaction to changes in quantities and pricing-spreads of available credit, realized investment losses, and/or in response to firm or provisional demands by end-investors to their speculative agents for their money back, or all of the above and similar flavours of the same is, for all intents, irrelevant. To imagine otherwise (in light of the evidence of price movements across the panpoly trades) is disingenuous at best and ludicrous absurd puerile [please insert derogatory adjective of choice here] drivel at worst, and we should wonder aloud, who actually wrote this script for the Chairman, and admonish him (or less likely, her) accordingly.

Zooooooooooming

Does anyone remember Ayrton Senna?? Amazing as he was, I do not hear mention of his name often these days. While I do not watch CNBC very often either, I happened upon it last night for a few moments, and was transfixed by the deepening black sallowness of Maria Bartiromo's eyes, punctuation marks on time passed since her entry into the mile-high club. This was followed by an uber-slick, adrenaline-coursing formula-one race video - the kind where you can smell the burning rubber of the tires and feel the downshifts viscerally in one's mid-section. The ad was for FX-Pro one of the rapidly mushrooming FX trading sites peddling slick-colourful GUIs that make the day-trader feel like a trader coupled with obscene leverage. What was a peripheral phenom that began with simple tax-advantaged spread-betting and a pachinko alternative for Mrs. Watanabe is now huge business with nefarious Russians in warm offshore locations seemingly at the fore, making one wonder whether there is some grand money-laundering purpose behind the more overt feeding of the adrenaline-driven gambling beast via direct and leveraged FX market access, whether from your PC or iPhone.

But watching this Formula-1 machine weave its way around the track, with the powerful male voice-over trumpeting the unimaginable speed and power in your hands via FX-Pro (or CML or any one of a hundred other access providers peddling addiction via dreams) I had that awful feeling one has when witnessing the Private Equity purchase of EOP, the superbowl ad for Pets.com in 1999, or 300-words-per-minute urgent pleading for you to obtain a variable mortgage with a balloon repayment and teaser rate. Despite these premonitions, the blue F-1 car revved and swerved with increasing fury, that I nearly found myself with a phone mesmerizingly dialing their number to open account. Well, almost...

Yet Formula-1 is a dangerous sport, not dissimilar from surfing the edge of leveraged FX. Shit happens. Markets move often unexpectedly, and frequently in the wrong direction. Stops are triggered. Margin calls are issued, positions puked triggering yet more stops, and further negative gamma hedging from those short OTM vol. JPY moves 17 big figures overnight. Ouch!!
Even pro's get carried out. People who should have known better. Maybe that's why we don't speak of Ayrton Senna very often. He for he reminds us just how thin the tether actually is, between life and death - even for the greatest and most skilled in the world. One wonders how long one's "father" or "Brother" would last out on track in the pack, if they had the keys to such a machine...which is what FX-Pro and their brethren are doing each and every day.

More Sober-Minded "Hosanna's"

All kidding aside, the recent delusional religious rationalisations by Varley and Blankfein beg a more serious reply, the best I've seen which is in Marshall Auerback's measured retort entitled Attention Mr Blankfein, posted over at New Deal 2.0. Marshall deserves reading not because his analyses are unusually lucid and hyperbole-free (which they always are), but because he always translates them into definitive (and perhaps more importantly, realistic) public policy responses, which altogether put him in a rare class amongst practitioners/financial critics.

Hosanna!!

Salacious lies!! Goldman Sachs Press officers and executives had quite a day defusing all the fallout from CEO Lloyd Blankfein's so-called "own goal" (shooting himself in the foot for our American readers) by suggesting the $20 billion GS bonus pool is kosher because GS is doing ...ahem...."God's Work".

Some of their 'official' statements are collected below:

"GS will not ask its employees to make mandatory charitable contributions...their good and noble works for mankind in the name of God alone are sufficiently reverent that we believe our employees should be entitled to do as they see fit with their errrr ummm (verbatim hesitation) manna from heaven, without stipulations from management or worse yet, a secular, atheistic state".

"There is absolutely no truth to the rumour that Goldman Sachs will create a holding company for bonus-pool and deferred pay purposes, whose shares (like AIGs Starr affiliate) will ultimately be owned by a small Dublin charitable trust whose sole beneficiary is a 10-bed orphanage in Ireland". "We are shocked by the insinuation that GS would do anything contrary to the letter of the law to get a leg-up".

"Goldman Sachs will NOT be reorganizing itself into a tax-exempt religious "ministry" (or Temple rather) in order to take advantage of such status to further pursue God's Works" ( and get the Gross-of-tax Roll-Up). Bank-holding company status was quite sufficient thankyouverymuch. "Taxes" said their spokeperson, "in any event, are an important part The Lord's Work, which is why Goldman always engages multitudes of the best Tax Experts internally and pays for the best tax advice externally".

"Goldman Sachs is 100% categorically against abortion. We would never countenance aborting bonuses, at any part of the term but especially in late-term accrual, particularly when they've been earned in pursuit of such noble objectives as God's Work.

"Goldman Sachs is not a religiously-partisan organisation. If anything, we have a great diversity of religions pride ourselves on the diversity of our people. In fact we resemble the Unitarians - our units are the Millions, and the Billions"

"We have never claimed that our trading success was 'divinely inspired'. This is pure fiction. What we have said is different: Our traders are blessed with good luck (and information) and are annointed". The separation is not just semantic..."

"I don't know who said it (probably the goyim uptown at JP Morgan), but there is no truth that our blessed chairman and pious CFO were overheard talking derisively about the great, munificent, and most magnanimous people of America, suggesting that "....couldn't tell the difference between kneeling down and bending over..."

Hosanna's and Hallelujah's (for GS employees) all-round.

(Enough quotes! Amen.)

The First Call Before The First Call

At one end of the spectrum, you have so-called informationless traders who are the cheap bastards of the equity investment world. Not only do they desire to pay as little as possible to trade but many want/demand/expect to actually BE paid in the form of rebates. One might call them suppliers of liquidity, and they are desperate to be first in the queue. SO desperate are they, that they are competing to put their computers INSIDE the exchange's computers. OK, I exaggerate, but you get my drift. To facilitate this, some have conspired (errr sorry, I mean worked) with the exchanges to gain preference, however brief. Call it "first dibs". Others e.g. Timber Hill) have set up their own brokerage firms (e.g.Interactive) in order to directly capture the order flow (and thus the spread) before anyone else even sees it (and there is nothing wrong with that according to the letter of the rules though it must be said that bar of wrongness has not been set very high).

At the other end of the spectrum gather the information-based traders (and note my semantics - I do NOT term them information-based investors). They are the polar opposite of the cheap bastards when it comes to "commissions". They, it would seem, are relatively insensitive to commissions. In fact, they are willing to pay A LOT of commissions (so long as they are not in the nick). A fuck-of-a-lot of commission. A fuck-of-a-lot more of commission than the reasonably hefty commissions so-called research-clients pay for bundled brokerage and research services. Indeed brokers LOVE them. They love them so much, they call them often and often with good information (though admittedly they get called often with bad information too). And let me tell you (if you haven't had the pleasure) it is a brain-numbing and painful task reading through Wall Street research rife repetitive hackneyed cliches, all so dull as to make the literate amongst us positively suicidal. Galleon apparently is a good example of such a valued client.

But as Wall Street is a hotbed of efficient markets (umm errr right??!?) one might rightfully ask: What is the correct price that a 'good client' should be willing to pay for such 'good information'? This is not a simple question, but the answer lies (no pun intended) in examining several examples. At the extreme end, we have (or had) Raj who might cut you in by forming a side-venture with you, hiring you, promising to hire you, or letting you invest, the former more direct forms of profit-sharing. Others, like Marshall Wace (discussed in this I.A. Ehrenberg post) who systematically electronically capture and analyze broker tips, want to be the first to receive information updates, and will pay handsomely for it. Only not directly, and only if it makes them money. This is, in essence, a sort of reverse-rebate for the brokerage tipster. They (MW) of course apply strict rules to how they play - some of which might raise ethical eyebrows, were they not the eyebrows of the FSA. The beauty of their approach is that while ethically dubious, it games the system allowing the brokerage to recapture some of the value of their work - even if the value is the self-fulfilling, probably temporary, impact. Finally we have the "early bird catches the worm" approach. These are people who will pay whatever it takes to be the call before the first call. Heck 20-cents-a-share for execution is terribly cheap where the information is bankable, which is what for years SAC was rumored to frequently pay to be the first call before the first call. Such calls help the brokerage client get bigger. Who then does more business at high commissions in a veritable virtuous circle. It was with this in mind I read with some amusement in the online Wall Street Journal that as a result of information garnered in the Galleon investigation, the SEC is [finally?] turning it's attention to such less-than-salubrious arrangements, and that Mr Cohen and SAC are now the subject of inquiry which will see a more thorough examination of their trading records. It is no understatement to say that it is no easy task delving into a global trading organization with multitudes of mid and high-frequency strategies, carve-outs, etc., but nonetheless it something that a determined researcher could find in the patterns and footprints of position-sizing and relative success around market-moving events. Moreover, Wall Streeters, tough as they appear are really sissies when it comes to jail, and like Galleon, have again proven themselves notoriously mercenary when it comes to ratting out their colleagues (and bosses).

This is, of course, just the high profile tip-of-the-iceberg in respect of market abuse and manipulation. Ramping (and liquidation) for periodic performance fees and bonuses and corporate window dressing, insider trading, pump-and-dump, (or the inverse of bear-plunging) re all prevalent. To combat, I've an indecent proposal. which goes as follows: The exchanges and DTC & clearinghouses should be required to create and release the entire trade-by-trade data-set with ultimate customer delineation in some anonymized form. ALL shorts will be tagged as such. It can be lagged by a sufficient amount to prevent predatory short-squeezing, but it should be released in timely fashion. Options and Futures included. It should be available to any all who desire it. Researchers all over the world will be permitted to find the patterns and submit the likely errant violations to SEC, and if egregious and prosecuted, the finders would be entitled to an incentive fee of the disgorged profits, say 20% (50% in SAC's case). This would allow the market to recapture some of their lost profits. Fidelity would be as fair game as say for example, Steel Partners. I think this would result in some new financial innovation, but it would not necessarily the type that contrapreneurs would be pleased to see.

Plus ça Change, Plus...

With some trepidation, I attended a high school reunion recently at the urging of a couple of old school chums with whom I remain good friends. They are good fun and we had much to talk about despite their marked drift rightward in the political continuum, despite the night ending with one of them not speaking to me after a debate on immigration during which I highlighted the amusing paradox between his extremely nationalistic view and the details of his own central american spouse's naturalisation. I won't bore you with the other trite details certainly repeated at nearly every occasion across America. It was all polite, almost-acceptable food, perhaps insufficient drink, punctuated with a few unexpected surprises of interesting lives at their half-way points.

Sharing some such moments with an ivy-law educated black female classmate who against the odds scaled the heights of a Wall Street M&A practice of a top Wall St law firm, we were interrupted by the tall formerly good-looking alumni who'd lost most of his hair, being as disingenuous as he was twenty-five years before, almost pathological in his lack of awareness in his own behaviour. He was dishonest back then, always choosing the short-cut, irrespective of the morality or consequence. The pinnacle of such behaviour was during our AP History exam in a class taught by my favorite teacher - a Jesuit, and confidant of Bishop Abel Muzarewa. The boy in question sat behind me, and rather than study, copied my multiple-choice answer-sheet verbatim. Only his plan went awry when he transposed a letter from my sheet early-on, causing him it must be said, much embarrassment, and causing me to be called to account the next day by the Prof accusing me of complicity. Of course I explained that despite my rather tepid friendship with the guilty, I wholly disapproved and had nothing to do with it - which was the truth, and fortunately came across as such. Of course his ethical lapse didn't matter for he'd already been accepted to an Ivy undergrad whereafter he went on to, and graduated from the same Ivy Law School and ultimately, local mayor. Oh dear!! And here he was again, still affable, but still laughably disingenuous, interrupting some civilized conversation to talk about.....yes....himself!! Plus ça change, plus c'est la même chose. Once a narcissist...

And so when I look across the landscape today and I see health "insurers" (HMOs) organized (as much as possible) to restrict payments; property-cat insurance companies - even mutuals - hiring Mckinsey to find ways to avoid paying claims, corporate rent-seeking run amok, be it cash-for-clunkers, oil-co's penning environmental legislation and pharma co's routinely filing lawsuits to challenge generics after patent expiry, little of which raises eyebrows or arouses a renewed sense of public interest. One would have thought this paradox between the sub-moral public greed and the warm and fuzzy private life of my cheating former classmate, seen through the prism of his little-league coaching exploits, or one's high-profile faux-philanthropy vs. the more genuine and low-key tzedakah.

Despite my acerbic tone of disbelief, I should know better. For when I was sixteen, I was shown (in no uncertain terms), the way of the world. I was working as a "salesman" at a national chain of music & hi-fi shops - a plum-job for a long-haired high-school student when unemployment was high for adults. It was xmas. Taiwan and Korea, were not renown for quality, and the company sold a range of instruments from the expensive to the asian-sourced so-cheap many of which were wholly unplayable. I recall a post-xmas morning, a single-mother returning an instrument which was a xmas present - a bass guitar, just out of the box. The neck of this unplayed instrument was so warped, it was impossible to tune, even after attempting to straighten the internal bar. I returned to the store-room with another box of the same. Pulled it out. Worse than the first. The mother and child smiled waiting patiently and expectantly as I returned with a third, which was the same as the first two. I went to my manager, and asked him what to do? It was pretty upsetting to me as a budding musician, I empathized with the disappointed customer. He said "issue them a store credit" a lame response if ever there were one under the circumstances. I looked at him, quizzically and doe-eyed, and said: "Jimmy, why do we even sell such crap...we know it's lame and it causes nothing but problems and unhappy customers..Isn't this rather dishonest ummm errrr....??!?" Jimmy, a head taller, but more than three-quarters-of-a-decade older than me, didn't hesitate, broke into a huge shit-eating grin, slapped my back and chimed: "Welcome to the world of business...."

A Hope and a Prayer

Bernie Comes Out of The Closet was early in mulling over some of the unanswered questions brought to the fore by his out-ing. Now, according to revelations to the SEC reported by Bloomberg yesterday, The Fraud (if that indeed is the correct word), like many other large trading losses, began when his erstwhile legitimate trading strategy scuppered. And, like Jack Barry & Tom Daniels, like Nick Leeson, like Daiwa Bank's Toshihide Iguchi, like Jerome Kerviel, even Martin Armstrong, in the heat of the moment, they all took the cowardly route, employing deception punctuated with hope and invocations to one's preferred deity in order to forestall owning up in the belief that Master Market will sooner rather than later, come to their aid and make all that had gone wrong, right once again. Bernie, it would seem, has fessed to covering up the loss early-on, which was as I had thought, and lays to rest an important outstanding question - important if only from the viewpoint of my sadistic sense of curiousity.

Call me pedantic if you wish, but I do believe this meaningfully differs from most of the common Contrapreneurs listed in Hedgretracker's Hall of Shame, the majority of whom took the unashamedly direct route to [temporary] riches and a permanent entry into the Book of The Less-Than-Illustrious. This neither excuses nor elevates him above the others. But the distinction is worthy of something approximating a sense of pity rather than revulsion (and I direct this in general to the members of the category of folly, rather than Mr Madoff specifically who behaved appallingly in the interevening two decades of his charade). It is membership in a decidedly human club of folk, who when faced with adversity, unlike Shackleton, acted in a pathetic but empathizably escapist-like denial of reality. Perhaps I could be wrong in my sympathies. Perhaps Shackleton's success in reaching South Georgia from Elephant Island, managing to disembark at all on the wrong side and scaling the mid-island ridge with sweet f.a. for kit may actually have been what Leeson might have resembled had the Kobe quake not coincided with his monster covert naked-short puts on the Nikkei. Perhaps. But, Shackleton didn't lose a man, and so for the moment, I will rubberneck again at the less-than-robust fiber of those who acted poorly in the most crucial heated moments, and then wonder aloud, how many humans out of a thousand do, and would do, and have anti-heroically executed in their spheres, to greater or lesser extents. I fear, that we still place Shackleton on the pedestal precisely because fewer of us, and our brethren, are made of the same stuff.

Plausible Deniability

Being right too often raises suspicion(s). It was what singularly raised the reddest of flashes about Madoff. Of course there are smart competent and hard-working people around. And some get it right more often than wrong, and perhaps in bigger size. But even the best get hosed, sometimes royally so.

Explaining away why and how one gets it - statistically speak - righter than perhaps they ought- and in larger size, must be a hot topic. Dr Simons can point to his army of PhD's, huge diversification and measured sized of his "bets". Others, however, are standing on far less terra firma. Contemplating some of the conversations currently being carried out in the offices of expensive defense attorneys around the nation, I have called upon my own sources of inside information able to conjure some possible balloons that are being floated to create an air of plausible deniability.

Some of the more popular include:

The Sgt Schultz Defense: "I know nothing..."

The Art Samberg Defense: "I've got an army of Harvard MBAs rummaging dumpsters, counting cars in chipmakers' parking lots, and tracking the spending habits of middle managements' wives to get an edge..."

The BornWinner Defense: "I am just plain darn lucky! (and I'd rather be lucky than smart..)"

The Miraculous Defense: "I've had these epiphanies ever since I was a boy and fell out of that tree.."

The Fantastical Defense: "I am a Time Traveler (and since when is Time Traveling illegal??!?)"

The Prophetic Defense: "When Moses and Mohammed heard these voices in their head, they were called Profits (sic.?!??). Why am I being singled out??!?

The Well-Passed Rumour Defense: "I was in this bar, you see, and this guys were talking....and I'd heard the same thing from lots of different sources..."

The "It's written in the Stars Defense": "I've a wonderful financial astrologer..."

The Ernest Saunders Defense: "I am sorry I forgot the question... who am I again??"

The "I am The Best" Defense: "I like to think I invest like Barry Bonds plays baseball or Ben Johnson runs the 100...."

The Manna From Heaven Defense: "Praise be the power of prayer!"

The Divine Inspiration Defense: "The Lord works in strange and mysterious ways..."

The Annointed One Defense: "I am unashamedly Master of The Universe. Who are YOU to question ME...???"

(Please feel free to any and all other plausible explanations)

I am Shocked That You're Shocked

It is undoubtedly all over the web, the news reported by Bloomberg that The (aptly named) Galleon's been hit sending her and her booty plummeting to the icy depths. Her buccaneering skipper's been taken prisoner and is presently in irons (along with friends and friends of friends). I think this is most excellent, even if it is only a small flesh wound to the crony form capitalism. Cynics will argue that it's all show. The current administration is no different - just look at Geithner's mates. Perhaps Raj just didn't donate enough ((though this is admittedly a long-shot). And they may be right. But appearances - the vigour with which laws (both letter and spirit) are enforced (and, when things go, or are likely to go awry, made!) ARE important, if only to get the working man out of bed in the morning. The so-called "free-money", so clearly pegged to the wrong price, during the eight years of the Bush Admin, is finally getting priced.

Samberg got away (under the SECs catch & release program) . Cassano remains unindicted (where does one start? ummm asset freezes, tar & feathering, for starters?). Martha Stewart got spanked (hard), but little more. Innumerable traders, hedge fund managers, even entire mutual fund groups use dubious weight-of-money strategies, subvert the market by goosing the marks of existing positions - monthly, quarterly, annually, while corporations continue to surf the line of the ethical to hit numbers, subvert competition - in vain attempts to emulate Raj, or just make a few extra bucks to keep the balls of an unsustainable way of life in the air. The system is built upon it. However, mark my words: rooting out less-than-salubrious market behaviour will promote entropy and make the market more efficient to the long-term benefit of the greater good. But before big-swinging over-zealous shorts start, as Harvey Keitel warned as "The Cleaner" in Pulp Fiction, s*ckin;' each others' d*cks", they should take heed that entropy works both ways, and those who employ similar tactics should similarly be culpable (were I Sheriff).

But the most incredulous thing I read in the article was:

“My client is shocked and distraught,” said Kerry Lawrence, Moffat’s lawyer, in an interview in court today. He said his client learned only this morning of the U.S. investigation.

Yes, I am shocked that you're shocked. A Fraud. A Cheat. Call him (and especially Raj, who to his small credit issued no statement of being "shocked") what you will. Or wait til after the trial or plea-bargain and then throw mud. Next, use your imagination to extrapolate across The Street where even the cornerstone - "plausible deniability" - has seemingly been flaunted of late. But however you look at news of Raj's outing, it is a good day for honesty. Integrity may just have rallied a touch.

When Art meets Finance (repost)

On the Eve of the authorities first real attempt to instill the fear of The Law in The Cronies, I thought I'd re-post a piece that went unnoticed when it was first published When Art Meets Finance in late Dec 2007. I have no doubt that the late Greg Newton would have loved the sinking of Galleon. For all we know perhaps he had some otherworldly part to play.

When Art Meets Finance

Art intersects, sometimes collides with finance in different and often serendipitous ways. Titans of finance acquire and trade rare pieces like a child collects baseball cards or cats-eye marbles, perhaps because, in their lifetimes, there is little else upon which to spend such vast sums. There are those that choose to donate large sums in most un-anonymous ways to museums partially returning to the public what has often been accrued (or stolen), but not without trying to cheat the fate of time by extracting a named wing, or other honor. Others try to find the nexus where they can use money (often not their own) to stroke their vanity by narrowing the proximity between themselves and celebrity - often with disastrous results, economically speaking, at least i the realm of film finance. But we shouldn't ignore that there are undoubtedly many well-heeled donating and supporting the arts and artists anonymously with altruistic (or conscious-cleaning) intent. Bravo for them, and everyone please give them a moment of kharmic suport.

Then, there is the wholly serendipitous collision of art and finance. One example begins with Gary J. Aguirre, a name perhaps familiar to most as a former senior SEC official-turned-whistleblower, fired for the transgression of reporting wrongdoing, in regards to the SECs buckling to political pressure in its non-investigation of John, Mack, Art Samberg & Pequot over insider-trading allegations, detailed so well at Naked Shorts by financial sleuth and slayer of hubris, Greg Newton. The result made Martha Stewart and Sam Waksal - both of whom served time - appear, by contrast, as horrific victims of justice-gone-awry. On the other hand, it might just be that the American justice - in the Aguirre affair - was subverted in a most pathetic way. You should all re-read Mr Newton's well-written details on the affair, and form your own opinions.

Yes it's a mad world, a fact not lost upon Mr Aguirre directly, nor, evidently upon his son. For while neither Mr Mack nor Mr Samberg have been headlibne buyers at Sotheby's latest impressionist auction, nor were their collections ever called in to repay margin loans, there is an art connection: Gary Aguirre's son, is the contemplative musician, Gary Aguirre Jr. (performing under the name of Gary Jules). Mr Jules as you might know has a nice repertoire of original music, but is perhaps best known for his somber, haunting cover of the "Tears For Fears" hit, "Mad World" below, perhaps a lament or prophetic vision of the world in 2007.



For the year 2007 has been a most-strange one, in almost every way - socially, politically, economically, and financially. And while change may be afoot, there is something profoundly apt about the the sad poetry of this song, and Mr Jules interpretation.

All around me are familiar faces, worn out places, worn out faces
Bright and early for the daily races
Going nowhere, going nowhere
The tears are filling up their glasses
No expression, no expression
Hide my head I want to drown my sorrow
No tomorrow, no tomorrow

And I find it kind of funny
I find it kind of sad
The dreams in which I'm dying are the best I've ever had
I find it hard to tell you
I find it hard to take
When people run in circles it's a very very
Mad World
Mad World

Children waiting for the day they feel good
Happy Birthday, Happy Birthday
And they feel the way that every child should
Sit and listen
Sit and listen
Went to school and I was very nervous
No one knew me
No one knew me
Hello teacher tell me whats my lesson
Look right through me
Look right through me

And I find it kind of funny
I find it kind of sad
The dreams in which I'm dying are the best I've ever had
I find it hard to tell you
I find it hard to take
When people run in circles it's a very very
Mad World
Mad World
Enlarge your world
Mad World

Here's hoping that 2008 will yield more optimistic thoughts, and events for all.

Suspect Conclusions

In an informal unscientific analysis conducted by yours truly over the past few weeks whilst cycling my local (rather scenic, if I may say so) byways, some automobile makes and models along with their drivers profiles rank rather poorly in regards to road safety and civic-mindedness - at least as seen from the two-wheel, pedal-pushing perspective. The results are as follows...

3rd Runner Up: BMW X3 - It's not quite an SUV, and if it IS car...it is a shitty one. Likewise, the people who drive them also seem not to know what they are driving for even though it is essentially sized like a car, the oblivious drivers (if one can even call them that with a straight face) of these vehicles pilot them as if they were as unwieldy as a Dutchman's summer-holiday caravan being pulled down the A7 buffeted by the winds of the mistral, nearly clipping innocent and unsuspecting two-wheelers unfortunate enought to be anywhere remotely near their path. It begs the question: "Why DO they drive them?". Certainly not to be cool, for Jeremy Clarkson rightly points out: They are "about as cool as the Argyle sweater your colour-blind auntie bought you, worn in the height of summer while working in a bakery. In Uganda...."

2nd Runner Up Volvo XC90 - In all the kilometres I've been clocking up recently, I've yet to see a 40's-ish driver of this errrr ummm car (??!?) who didn't have a phone to her ear (and it certainly IS a "her") or lodged between her ear and her shoulder, gesticulating animatedly into thin air seemingly at no one, oblivious to the innocent cyclist she is about to send into the ditch, orphaning the rider's children. The cell-phone however is by no means the only danger, for it is likely that when the driver of this combine-harvester-sized Truck isn't on the phone, or isn't too frugal or/and has figured out how to use the Blue-Tooth hands-free system, she is so utterly distracted with what seems like an entire football-team of children packed into the bleachers behind the driver, that it is a wonder she hasn't killed herself and her family before. Or, perhaps she nearly has, which is why she's chosen a Volvo this time 'round. To her credit, she IS impeccably dressed, hair all in place, overly-expensive handbag, none of which , of course, matters the least to the hill climbing cyclist nanometers from being dismounted.

1st Runner Up (tie between Audi Q7 & any vintage Peugeot 205) - Let's be clear: the Q7 is NOT a car. It is not even in the same class as a camionette. It is unimaginably H-U-G-E. Cycling on the same road as this behemoth is similar to being stuck in cattle-class on a transcontinental flight (something I freely admit that know a thing or two about) next to the frighteningly obese person who rightfully should have purchased two seats. It is a wonder that the average female who drives this (and is not a professional beach volleyball player) can actually see over the dashboard, let alone the steering wheel, which would go far in explaining their apparent disregard for humble cyclists. Couple this with overly-tinted windows and manslaughter cannot be far away (not that the driver of such a vehicle would even notice the mosquito-like splat-on-the-windscreen of a collision with a two-wheeler of any variety excepting a >50lb Schwinn relic c1967.

The Peugeot 205 is another matter altogether. Ignoring Clarkson's view of Peugeot ("...I'd rather have my cheek super-glued to the arse of a horse than be seen driving one of these...") these cars are driven by young males who are always smoking, rarely fresh-shaven, with disinterested looks upon their faces, who, seemingly have little regard for the value of their own lives, which perhaps explains why they have so little regard for the lives of others when conducting themselves on the road, cyclists in particular. Patience, linguistically the same in French, seems to be excluded from their vocabulary as they believe their modified, rusting, POS is small enough to squeeze anywhere anytime - even between the struggling cyclist and over-sized Polish lorry barreling down the road in the other direction. Fortunately, for this cyclist, their cars ARE small, but it's no good excuse to add to the grey hairs of recreational bikers.

Winner (or biggest loser rather): BMW X5
This car, and their typically male 35-to-50 drivers, exude an "I-Don't-Give-A-Shit, Get-The-Fuck-Out-Of-My Way" egocentricity baffling to this pedal-pushing enthusiast. More often than not, they do not yield, depsite the adjacent cyclist juxtaposed to the oncoming traffic and impossibly blind corner ahead, but even when they do slow down to await a more prudential moment (while opportunely using the few-second pause to check messages on their Blackberry), one can feel the heat from the over-sized, over-engineered engine since they are impatiently only inches behind one's rear tire. Then, at the slightest opening, they punch the accelerator so forcefully, it is surprising they don't pull a Fred Flintstone and meet foot with the pavement, emptying the contents of their fuel tank in the process. I sometimes wonder how they might feel upon making road-pizza out of an ambling cyclist, but I've a strange suspicion they wouldn't give a toss.

I do realize that this analysis is rather anecdotal and unscientific, which resembles some rather voiciferous opposition to Healthcare Reform by some well-known hedge fund manager types upset with almost anything to do with Big G (admittedly not just in Healthcare)., despite overwhelming evidence to the contrary that (in healthcare) many foreign systems where The State has intervened, have witnessed tangibly superior outcomes in terms of coverage and service provision (though by no means perfect) for substantially smaller percentages of GDP. In my defense, I will (perhaps reluctantly and despite my good intentions) admit that I probably have harbored some a-priori negative feelings towards SUVs that have unscientifically impacted my otherwise unbiased opinions. It would be refreshing to see similar admissions from those opposed to healthcare reform on what most unbiased observers would see as almost wholly ideological grounds, unless the argument included an element of American Exceptionalism which at least admits that others nation-states with national risk pools, mandatory participation and single-payer insurers DO indeed achieve near-universal coverage with equal (or better) outcomes for at least several % less of GDP, but that for whatever reasons, Americans just cannot do Government...

Read Wolf

The FT's Martin Wolf is always cogent, thoughtful, and (unlike this commentator) parsimonious with his words. No, I am not bucking for a dinner-party invite. But one should read - even if you might disagree - two of his two recent pieces, one a commentary on Fred Bersten's forthcoming article (hat-tip to JCK @ Alea), and second arguing why LibDem Shadow Chancellor Vince Cable's Mansion Tax proposal is right.