Bear Market in Integrity Continues (2019 Update)

Things, people, and/or ideas believed to have integrity, now seemingly compromised...(the second third  fourth latest updated and expanded version). The bear market in integrity continues unrelentingly…2013, 2014, 2015, 2019 edition.


Permbears
Woodford
Carlos Ghosn
Sheryl Sandberg
Quantitative Easing 
Boeing Corp
Generic Pharma
Justin Trudeau
James Dyson
Kayne West
US Immigration Policy
Alan Dershowitz
Patisserie Valerie
PFI
PBGC
Defined Benefit Pensions
Grant Thornton
John Humphrys
Susan Collins 
Ben Sasse
Lisa Murkowski
Hertz
Toshiba
Swedbank
Tom Brady
Morrissey
Roger Daltry
Deutsche Bank
Danish Banking 
Elon Musk
Australian Cricket
US Gymnastic Trainers
UK Football Coaches
SAT Tests
US University Admissions
Louis CK
Al Franken
Wells Fargo
Anthony Weiner
Intel CPUs
Kobe Steel
Mitsubishi Materials
Johnson & Johnson Corp

Volkswagen
Porsche
Audi
Fantasy Sports
Theranos
Mt Gox
Lufthansa
NFL Football Air-Pressure
Bill Cosby
Pot Noodles
Michel Platini
"Kids Company" Charity
Student Loans
Rabobank
US Secret Service
Energy MLPs
Glastonbury
Tesco
Whole Foods Market
Bruce Jenner
American Police Conduct
Rachel Dolezal
Airbags
Red Meat

SCOTUS
Jimmy Savile (tnx Anon)
Rolf Harris (tnx Anon)
US Veterans Administration
The Red Cross
CPI
Justin Bieber
Abenomics
CPS
The London Gold Fix
Chris Christie

Snooker
Intrade
US Govt Agency Data Release
The UK National Health Service
Swiss Train Safety
Nick Clegg
IM Confidentiality 
Austerity
BBC Management & Oversight
SSL
Risk Parity
Whistleblowing
Segregated Customer Accounts
Investment Consultants
Bloomberg Privacy
Dark Pools
Intrade
London FX PM Closing Prices
Meredith Whitney

Reinhart & Rogoff
Gold
Jérôme Cahuzac
Japanese Yen
Jamie Dimon/JP Morgan
Bitcoin
Banca Monte dei Paschi di Siena 
LULU
IKEA Meatballs


Wen Jiabao as "Humble Servant of The People
Lance Armstrong
Top Ten Lists
NYSE
Facebook
Austerity as an Economic Panacea
Harvard Students' Academic Honesty
BLS Statistics
Cyclical Recovery
Book Reviews
Strong Computer Passwords
Toyota
'Organic' Food
Money Velocity
Patents
Undecided Voters
Hospitals
The Food Pyramid
Purity of '.999 Fine Gold Bars
Penn State Football
"Top of the Pops" 
Fareed Zakaria
The "risk-free" rate
LIBOR as a Benchmark
Public Sector Pensions
HFT as a Beneficial Provider of liquidity
Diversifying properties of Hedge Fund's
Einstein's Theory of Special Relativity 
Celtic Rangers
Macroeconomic Forecasts
John Paulson
FRB Open Market Operations
Standardized Educational Testing
Swiss National Bank
A Relaxing Cruise
WTI as Oil Benchmark 
Olympus Corp.
TEPCO
Payment Protection Insurance
DSK
HM Revenue & Customs
Sony Playstation Network
Google
Privacy
Social Mobility
Actuarial Return Assumptions for Pension Funds
Marmite
Ryan Giggs
Acupuncture
USA Govt AAA
France   AAA
Voicemail
Boob Jobs
Snooker
David Einhorn
Nuclear Power
Deepwater Drilling
Tiger Woods
Professional Cricket
Sumo
Professional Cycling
High-Frequency Trading
Professional Baseball
FIFA
Professional Tennis
Municipal Bond Underwriting
The Catholic Church 
Track & Field Athletics
NCAA Sports
US Congress
UK Parliament
Analyst Research
Credit Ratings
Banks
Newtonian Physics
The Stock Market
The Food Pyramid
Incentive Stock Options
Reinsurance Brokerage 
Lou Dobbs
The Mortgage-Backed Securities Market
Hedge Funds
Social Security
Government Balance Sheets
Tooth Fairy

Errr ummm Professional Wrestling is starting to look good by comparison - at least it makes no pretensions to be anything other than it is. What's left?

Could Progressives Have Done More to Prevent Nasty Populism?

The rise of populism has caused both left and right to indict centrist’s seeming embrace of “neo-liberalism”, to further their own agendas, or to forensically assign blame for the current blight of Trump, Brexit, Five Star, Gilets Jaunes, Orban, etc. While neo-liberalism has always been multi-dimensionally-flawed I believe these indictments of Centrists are mostly unfair, and fall prey to the cardinal sin of revisionsm by ignoring the context of centrists’ appeasement with neo-liberalism across most western democracies.

Neo-liberalism means many different things to different people. While it’s history is long, it’s come to mean “laissez-faire” government, coupled with monetarist, supply-side orientation, restraint of social policies, and generally free trade in goods and cross-border movement of capital. It rose with popular support from the embers of 70s inflation, bloated states, and Volcker’s massacre, championed first by Thatcher and then by Reagan in a re-play of Weimar disorientation and Brunning’s smackdown. It has accompanied four decades of economic growth, laid the foundations for globalization, trade liberalisation and, subsequently, prepared the world for re-entry of China, Eastern-Europe, and India. It’s helped draw billions of people out of most extreme poverty, while also fostering rising inequality in industrialized nations (especially US/UK), industrial concentration, industrial hollowing, corporate rent-seeking, and with these, market-failures across many sectors.

Economic growth and transformation in the 1980s led to general popular acceptance in the public psyche on grounds of economic efficiency and positive externalities. Some see this resulting from policy success, and while some is, I view it through an “Iceland analogy” where (like Iceland’s meltdown) the Volcker induced pain was so deep and thorough, that when authorities removed their foot from the economy’s head, and loosened fiscal policy, there was only one direction for things to go – both for the economy and the national zeitgeist.

Neo-liberalism is, was, and always will be, far from perfect. Humans have spent the better part of our modern history tinkering with “what works” and what doesn’t in social and business organization, and the limitations of policy and structure. In the process, we’ve discovered what are likely the effective (pragmatic) boundaries of taxation, regulation, fiscal, and monetary policies, as well as nuances of democracy, and human rights. As a result, we know that: Government is not universally bad, inept or inefficient (but certainly has the capacity to be); both fiscal and monetary policy have roles to play and differ according to circumstance and regime; we ignore the social impacts of economic policy and income/wealth distribution at our peril (ask Nicholas II!); trade is good, and unfettered globalization can hollow-out industries; immigration has strong economic benefits but also has social consequences; that mobile capital is pre-disposed to rent-seek and arbitrage both regulation and tax; and that markets often fail – whether from privatised monopolies, natural monopolies, or collusive oligopoly. But don’t always use this knowledge, and since it’s emergence in 1981, forces who gain parochially from “purer” policy (be it tax, regulation, environment) have organized to prevent The State from using and applying this hard-won knowledge.

Clinton and New Labour, and then Obama thereafter, are accused mostly by the more ambitious left - both academics and politicians – of embracing neo-liberalism and thereby neglecting the social consequences thereby creating the present populist backlash. I’ve also heard it from think-tankers, writers/journalists and academics blithely blaming the failure of centrists. And I have a problem with this. Not a problem with the fact that neo-liberalism has contributed to the populist backlash (I agree to some extent), but rather that Centrists should shoulder the blame for this.

Both history and policy analysis are contextual and incremental. In all but the most extraordinary times, we are bounded by prevailing sentiments. Progressives, Democrats, Liberals, Social Democrats have been in ideological opposition to the prevailing societal narrative since Reagan/Thatcher’s success and popular pursuit of neo-liberal agenda(s). Legislative majorities and electoral considerations in this environment further constrain policy options. Consider Walter Mondale in 1984, which was a defining electoral moment. Mondale, a Minesota Democrat, a sensible pragmatic progressive suggested: “We might have to raise taxes”, in a debate, and was requited with one of the most resounding defeats in electoral history. Ditto for Dukakis in 1988 whose opponent GHW Bush’s catchphrase “Read my lips – No new taxes” produced an equally decisive result. Would a more radical left have fared better? Hardly. Would a harder left manifesto by Kinnock have led to a labour victory with similar constraints? No.

By 1992, in the US, Clinton and the progressives understood the impediments. Ditto Labour/Blair in ‘97. Claim more of the center, assuage fears on the economy. One can wish all one wants for a pure and fanciful but unpopular manifesto, but in the end nothing gets done if you don’t have power. And even if legislatively, it proves difficult, you will have prevented the worst-case erosion from more conservative agendas. Now that you had power – albeit with slim and fickle popular vote majorities, what could you do. As said, you could prevent further erosion, tinker on the edges of social policy, but giving is easy – taking away is hard. Ambitious social agendas require spending, and the lessons from Mondale remain. And legislative majorities short-lived and easily obliterated by an economic mis-step, and constatntly shifting and challenged at State levels. Their best hope was go with flow, expand the economy and opportunity. Their achievement was continuing to foster growth, pursuing sounder social and environmental policies, and being less mean-spirited than the conservatives. Is that something to be proud of? Were they unwitting stooges of global capital, manipulated by industrialists to shaft The People? Not in the main. Both Clinton & Obama arrived with ambitious plans to tackle healthcare and failed. The failure resulted from broken democratic process, cynical lobbying and media distortion, and corrupt subterfuge across party lines, but not an embracement of neo-liberalism by the center. This is indicative of being in power, but remaining in opposition to the prevailing (probably contentious and often wrong) economic narrative. But one thing is certain: social policies, and economic policies with the most negative negative externalities upon The People, were less bad, and illiberal social agendas delayed or stymied during progressive rule.

That alone made would have made co-opting neo-liberalism worth it.

It’s useful to denigrate one’s predecessors in order to set oneself apart and cut a new path. But this carries dangers as zealots are everywhere (on both sides). Impugn the historical reality of pragmatic centrism, and one may open the path to von Hindenberg-National Socialist coalitions in response. By all means, I believe journalists, activists, academics, think-tankers and politicians, should make the case for reducing inequality, increasing opportunites, crackdowns on crony-capitalism and corporate rent-seeking, better education, transport, housing, regional policies for changing economic geographies, and more humane immigration policies. But do not destroy the efforts of pragmatists who’ve throttled the corrosive effects of ideologically-driven neo-liberalism. There is too much at stake.

James Fields, Jr. is a Coward

I sent my middle child to a boarding school, deep in the bowels of the English countryside, when she was of a tender single-digit age. One doesn’t make such a decision without carefully consideration, but the reasons, while complicated, were compelling and I have no regrets. She will have her whole life to ruminate upon it, and blame me. But what doesn’t kill you, often makes you stronger, and as a result of her experience, she has become very strong indeed.

Most parents blithely have positively distorted images of their children. I’m no exception, but I won’t digress further because I have a point to make. This child was wilful, playful, and mischievous. Boarding schools for adolescents necessarily have lots of rules, for more or less everything, and children have equally numerous ways to break them. Sweets. Phones. Reading time. Bedtime. Evening movements. Study time. Music Practice. Treatment of others, all have rules. For whatever reason, mine was involved in almost every transgression, and prank. They got away with lots: hiding prohibited sweets in the ceiling tiles, using night lights under their covers to read when lights were out, or pranking overly-severe matrons . But clever and precocious as they are, experienced minders don’t miss much, so she was caught. Frequently. Sometimes as inspired leader, but most often as co-conspirator. And we’d get the inevitable call from her, or the school, that she’s been caught (again) doing ABC and as a result will be punished by XYZ. Here is my point, and one that expresses my strong admiration of her: whenever she was “caught” and was guilty, in whatever capacity – either as leader or co-conspirator – while her mates typically denied responsibility, she quite courageously and stoically accepted responsibility and subsequent punishment. No whining or whingeing. Not defiant, not overly contrite. She knew the rules. She knew she was breaking them. She knew the consequences. Just courageous mature admission - an integrity that earned not just my respect, but that of her interlocutors, and gave her a legendary reputation amongst her more cowardly peers. Greasy readers might think her stupid, but despite her frequent mischief, she had the strongest sense of justice and fairness (unsurprising raised as she was in a Rawlsian household). When, from time to time, she was unjustly accused or punished, or witnessed others similarly suffering, she became fearsome and would march into the Head’s office (or the Head’s wife) and passionately plead her case, or those of others. So strong was her character and sense of justice, that when she saw others being bullied – whether or not her friends were the bullies or irrespective of whether she disliked the bullied, she would intervene. She has retained this courageous awesomeness into university, yet this trait sits in a blind spot of her consciousness. She doesn’t try to be this way – she just IS this way.

This brings me to the “Alt-Right”, exemplified presently by James Alex Fields, Jr. now infamous for ploughing his vehicle into a crowd of counter-protestors, injuring many and killing a young woman. He has pleaded “not guilty” and disingenuously claims to have driven over counter-protesters “in fear” (or so is the absurd claim of his defense strategy). For on that day in Charlottesville, the facts are indisputable as to who arrived with their own heavily armed militia. There is no revisionist version of this history. Fields, Jr. is a coward. Fields Jr. is pussy. He is a coward and a pussy because he refuses to accept responsibility for actions, or acknowledge – without weasel words – the beliefs that drove him to his actions. Deeds without consequences. He epitomizes the cowardliness of the alt-right, and both their apologists and sympathizers who, to avoid the moral revulsion of the overwhelming majority of fellow citizens and its practical consequences – both in the marketplace and under the law - also refuse to explicitly, wholly, own their own dogma and sentiments. There are few other words for it.

And when I see this fully grown, mature man, with strong ideas and beliefs, make a plea of “not guilty” for an undeniably objective action seen by all, that had mortal consequence, I think back to my daughter, who at age nine, standing accused, for something she knew she was guilty of, had the integrity NOT to lie in order to avoid culpability. Her morals and integrity were clear. Fields, Jr. and the Alt-Right? Not so much.

Elizabethan Verse

So farewell then
Theranos,
inventor of
innovations
that weren't.

You fooled
some of the people
all of the time,
but not enough
of the people
some of the time.

You were like
the "Roy Batty"
of start-ups -
shining multiples
as bright
for fractions
as long".

Your name
was an amalgalm
of "Therapy"
and "Diagnosis,
Now,
your investors
will need
both.

(apologies to EJ THribb & PrivateEye)

Farewell Then Toys"Я"Us

Farewell then
Toys"Я"Us
America's Halfway house
to Barbie, Ken,
G.I. Joe and
"Rock-'em Sock-'em 
Robots"

You were 
the first company 
to crucify
the English Language 
for the sake of 
a memorable 
name.

Upon your shelves,
aptly-named board games 
like "Risk", 
"Chutes & Ladders"
"The Game of Life" 
and "Trouble - 
foretold your
future.

Category Killers
rose by roll-up 
like Lazarus (not your founder);
but neither Jesus (nor Kravis)
could resurrect
you now.

You put  
the Big Box
into Retail.
But now,
KKR will solemnly
bury their retail 
in a
Big Box.

Bitcoin Haiku

It's been more than three years since I first posted these. So on the day when the value of 1 Bitcoin surpassed that of 1 oz of Gold, I thought it'd be fun to see how they have aged.  For the sake of FD, I can re-affirm that I own no Bitcoin (as if you had to wonder).

Icarwho?

Up Up and Away
The sun feels good up yon-der
"Relax!" said Hamlet


Macklemore&More&More

Pop some Bitcoin tags?
'Mother Mary & Joseph' !!!!
Napoleon's Waterloo


Left Of the Curtain

The Wizard told him
"Rub two Bitcoins together"
What is 'kurtosis'?


Security

ya-da ya-da ya
crytpocharlatanery
Where's my USB?


Not the Monkey King

'That's a nice robe'
Exclaimed she to the vain king
Eat more bananas.


Giapetto's Nightmare

Pinocchio dreamed
When you wish upon a star
Jiminy Bitcoins!


(with apologies to Bashō; As usual, all contributions are most welcome)

On The EU & Brexit

The following is a my Remainer's reply to a Brexiteer's comment on my last piece "The Uninspiring Antitheses to Populism". I wouldn't normally turn a reply into a post but I've been wanting to articulate most of these thoughts in Cassandra's record for the future. I've replied in-line to the commentator's (in boldface italics). All further comments, thoughts and replies are both welcomed and appreciated (especially opposing views):

* * * * * * * * * * * * * * * * *

I am huge admirer of your blog and this piece of yours is an excellent example. However, although it's true that Brexit is fraught with downside risks to the UK economy, with few likely economic upsides, there are good reasons for its necessity nonetheless. The vast majority of UK voters and politicians are in favour of the club that we joined: an alliance of advanced West European countries bound together in a free-trade customs union.

Thank you for the kind comments. I have few doubts that that there reasons people hold for Brexit. Whether such reasons have virtue is more contentious. First, I'm sure I needn't recount the history of the EU as rooted in the ECSC. This was, first and foremost, a political project and for very good reasons following the scale of death & destruction from two world wars, that was pragmatically rooted in mutual economic entanglement. Churchill knew this since his ideas were central. Ted Heath, the UK's steward, knew this, both when UK was rejected, and when his efforts were finally requited.

But our Continental partners pushed on with a different vision: a nation called Europe 

I can't find the nation called Europe, anywhere. Yes some members have agreed currency union. Others have chosen to do away with internal borders. Some even "feel" themselves more European in spirit than their national identity. But last time I looked, UK was not a member of either Schengen or the Eurozone.  If anything it is for THOSE countries to feel concerned about real or imagined EU power usurption - NOT Britain. After all, it is they (not UK) who will in likelihood, eventually move towards at least a weak form of fiscal union – probably weaker than Canada which itself is one of the weaker federal unions. But why should that concern the UK? Yes, it may sap more political energy and activism, but that should suit UK just fine as they are, by your own view, interested in a narrowly purposeful trading union.

Most Brexiteers who claim to support Free Trade speak derisively of a “single market”, but it's worth re-stating that, for most, a single market IS the holy grail of free-trade. It is precisely what drives the internal economic might of the US. It is far more powerful and liberating than a mere "free-trade zone" or "customs union". It levels the playing field helping prevent cheaters (e.g from excessively polluting or abusing labour safety in order to gain cost advantage), and closet exclusion (e.g.  domestic agencies like VOSA from creating NTBs that might reference “peculiarly special nature of UK roads” to exclude foreign made cars). There's obviously much more - much of what individual nations would do of their own accord for their own benefit, but is far more efficiently accomplished and sensibly implemented at large scale (pharma & chem  regulations; health & safety, environmental standards. Most are essential since pollution, food safety, etc  don't respect borders  One need only look at the idiocy of US insurance regulation where each state maintains it's own insurance commission and regulatory regime, to realize the value. But a single market is decidedly NOT a nation, nor does pretend to be. Yes, ALL members cede a modicum of sovereignty (Britain less than others) in exchange for the large opportunity within the single market . Fortunately, the EU  remains a customs union as well (like the one the UK joined) since they are not mutually exclusive, which has even more palpable advantage than it did when Britain joined. This is particularly true when broadening the Single Market's opportunity against larger, and more powerful counterparties (US, China, Japan, India)  which is where most major trade results. The advantage is counter-veiling power as well as technical negotiating ability. Outside of Fishing, I've heard few if any Brexiteer talk specifics of trade that would occur, but that hasn't as a result of the EU, although we have heard an endless stream of concrete examples of how the UK benefits from both customs union and single-market membership. While I'm sure you are not in the “Tea Kettle Paranoia Brigade” using bogus stories about “how the EU is intending to legislate-away Britain's Tea kettles” I remain open to the evidence that will sway my opinion

Everything changes. Institutions evolve. Complaining about change or evolution is like the spouse complaining ”that his partner's aged, and he didn't sign up for that”. Nothing stays the same. Mere evolution with the times is frankly insufficient ground for divorce. This is not to deny there aren't ever grounds for divorce. There are. I've just yet to hear them well-articulated by Brexiteers. And for those who make the economic case built upon new potential trade - I've yet to see this potential "time-weighted or probability adjusted - which is essential to cost vs. benefit analysis.

within which Britain would be merely a "member". 

All countries are “merely members”..  All have rights and obligations. The matters of the community are mostly pragmatic – not grandiose, or for most except the UK, contentious. Therefore, I am suspicious of exceptionalist arguments, that either accuse other members or believe they themselves should be conferred extra-special rights by history or aggrandized self-opinion.  Britain is a small nation in the world, with rich history and tradition. Contrary to the view of Euroskeptics, the UK is important in the EU, playing an vital role, from which it derives enormous benefit – not least peace and growing prosperity of its neighbors. At its worst, the UK might consider the cost  “a small net annual prosperity dues”  - i.e. an immunization against the considerable costs of cost of war, autocracy, corruption, breakdown in the rule of law etc.

Worse, it has become clear that the power driving the new EU Nation would be centred on Berlin and Frankfurt with its Admin Centres in Brussels and Strasbourg so as to save face for the French. 

I appreciate there some British suspicion and jealousy exists. But to me as a detached American observer, living in Britain with a European Passport, it appears that the neutral Belgians got the Senior Admin, the French got the Parliament (some spillover bens to Germany), the Dutch got the judiciary, the Danes got the Environment, the Germans took the ECB, & the Brits got The City as the central Financial & Insurance capital, AS WELL AS the Euro equiv of the FDA . I think the view painted and held by Euroskeptics is a bit paranoid. On the surface, the Germans appears to get the raw deal, paying most and getting least. The Commission doesn't appear skewed, but a fair representation of the community. If anything, voting history suggested Germans have historically sided with Brits, and the UK exit will be most sorely missed by the Germans. More comprehensive research by the LSE suggests this is isn't reflective because there are different political approaches amongst members that skew results (i.e. much coalition-building/vetting happens before official votes, and it's here where Brits have been most effective (and valued by Germans). It's incumbent upon skeptics to make a more substantive case that Britain is somehow on the verge of getting shafted by an enlarged Community and Commission (that it must be said, the UK themselves were ardent supporters of).  Some even argue further that the EU was a conspiracy set up for the benefit of France. I would liken this to the history of the internet which was founded to connect a few physicists, but now has evolved as the most important tool for mankind, with creators accruing little to no benefit. Whatever the EUs origins, the present system is quite distant in the most positive sense, while the benefits are more universally-shared and felt among all her members.  

This is an intolerable drift towards a European political configuration that Britain fought two great wars in the 20th Century to prevent. 

If one were to distill the war and it's aftermath, one might say, Britain fought two great wars to diminish the likelihood of having to fight further wars. Oh, yes politics were dirtier and less transparent in WW1 (this isn't the venue for rehashing UK diplomacy of the era, and WW2 might have been avoided altogether if the French had only heeded JMKeynes. Britain's own enthusiastic support for enlargement was as much predicated upon the desire to consolidate free-market liberal democracy in Eastern Europe (for the same reasons as membership had been extended to the Italians, Spanish & Portuguese as they emerged from struggles with isolationist authoritarianism) as the desire to extend and reap the benefits of a single common market  As an American with a sense of history, I would argue my country didn't fight two world wars in Europe to see Europe splinter and the continent become a quarrelsome door-mat for Russia  We fought the wars, created, funded, supported  Marshall Plan, NATOetc.  to NOT fight another war, to insure spread of democracy and self-determination, to prime European markets and consumer demand for US good/services, and yes, to contain the Soviets and illiberalism. Little of that rationale has changed, even of the commitments and rules have altered with time.

Furthermore, the EU is not democratic and may soon not even be liberal. 

Citing the possibility that in the future the EU may become illiberal as a reason or cause to Brexit is rather like filing for divorce because you suspect that, one day, hypothetically, your spouse might have an affair. This is absurd logic, and even worse national behaviour as a state and party to existing treaties.

There are many forms of democracy and the UK's own “first-past-the-post” is but one (and itself highly flawed), even before considering the “House of Lords”. By your own definition of “undemocratic", the UK's Prime Minister herself is illegitimate since there is no direct election by The People, of UK PMs, and Mrs May even less so. But this hypocrisy rarely silences critics, or sets them to work on bills to yield more power to the UK People. You've left out the reason that some use positing the superiority and longevity of UK Democracy at Westerminster as much stronger than than on the continent. I, too, hold the UK's democratic tradition  in high esteem. At then time, I also marveled at the traditions and longevity in Athens, and in Rome. But longevity, as demonstrated by our Greek and Roman forebearers, says little about the future. If anything, it portends darker days.

The lack of democracy is not only evident in the fact that EU laws are almost entirely manufactured by faceless and overpaid bureaucrats.  

Euroskeptics and Brexiteers make much of “EU Laws”. In the main, they are either related to development of the single market or are laws that are the lattice binding nations to their agreements/responsibilities and conferring, and  importantly protecting  rights among their citizens, rather constricting their individual rights. As an individual citizen, this is decidedly reassuring to know. Perhaps Brits will only appreciate this benefit AFTER they suffer from the indignity of fascism or authoritarianism. Continentals understand its value presently for obvious reasons.

For most UK citizens, their laws are manufactured by faceless bureaucrats whom they don't know, and most often, didn't vote for, who get paid much more than them, and have staff (often family members) who are also faceless. However true this argument may be, it has problems. First, what  IS a “faceless bureaucrat”? This is a classic Tim Bell turn-of-phrase that sounds ominous but is insidiously demagogic. Commissioners (presumably the faceless bureaucrats you are talking about, are the A-Team of each member country. Leon Brittan, Chris Patten, Neil Kinnock, (of sorts) Catherine Ashton, UKs last four Commission Representatives hardly seem nameless or faceless. We may not know the A-Team from each others' countries, any more than Brit's know MPs other than their own. But they are appointed by the delegated representatives, elected by the people for each member country, and hardly faceless. Most UK policy and directives are made by appointees, appointed by elected delegated representatives, or career members of the civil service. It is true that the Commission are the sole introducers of legislation, but member states directly, and parliament ( who often brings ideas to the commission to introduce) also are part of the process so it's just simply wrong to characterize the producers of legislation as faceless bureaucrats.

Over-paid & Over-privileged? I sympathize with this claim and think member nations should make clear through their commissioners that IF you're going to suggest members tighten belts and restrain pensions, it might be best to set the good example. Headline egregiousness is typically focused on the 28 EU Commissioners. It's doubtful EU impoverishes its lower level civil servants, but it's always been with the UK government's ability to bring this to the fore. Interestingly, one hasn't seen the Brexit MEPs relinquish portions of their salaries to prove the point by example, nor has it gone unnoticed that Brexit MEPs were less-than-restrained when it came to claiming their own expenses. Nor did Brexit MEPs set the example for attendance at their respective membership committees  (which were appalling). On the other hand, UK's maligned faceless bureaucrats, from Leon Brittan to the recently resigned Lord Hill were all deemed to extraordinary Representatives of the UK's public interest, and extremely well-regarded Team Players and managers of their respective portfolios within the commission. Here, there is disconnect as the Brexit MEP slackers mooched and whinged for parochial political gain, while the lavish layabouts worked their asses off.  What one CAN accurately say, is there is a communications failure, be it the UK Press (for it's own commercial advantage or for benefit of the political  views of its patrons and shareholders), or just the arcane and boring nature of the majority of the work of the commission. NOT unimportant – just less-than-newsworthy  in the Fleet St. sense

Even the apparent democracy of the EU Parliament is a sham. In the U.K., for example, an MEP is chosen by the Party List form of proportion representation. The latter guarantees that the actual MPs close to top of those list will become elected. The selection is made by a few Party Managers and thereafter hardly any potential voter has any idea or interest in who is meant to be representing them in Brussels. In other words, it's a stitch-up.

Many representative democracies have found proportional representation MORE democratic than first-past-the-post. I agree with them, and think first-past-the-post is less well-suited to representative democracy especially in the 21st century where identity and interest is truly more fragmented than ever before and large parties are finding it increasingly difficult to aggregate and represent The People's majority will.  Proportional Rep results in the majority in and around the pragmatic center coalescing to do the right thing for the most people in the Public's Interest. I fail to find fault in this approach, but appreciate the strangeness for the UK as an outlier democracy. One needn't recount the flaws in first-past-the-post (Just look at Trump!), or that Lib Dems  could win  8% of the popular vote & 2% of seats, or SNPs with 5% of vote & 10% of seats or admittedly UKIP with 12% yielding just 1 seat. True representative democracy – that truly represents the variety of political interests NOT one's parochial local geography is unfamiliar, but upon reflection, more thoughtfully democratic

Thereafter, the MEPs need to no work, they oft n pay their partners as PAs and generally live it up (often with their mistresses whilst in Strasbourg and Brussels).

It appears as if your description by UK Eurosceptics and UKIP MEPs characterizes rather well the Brexiteer MEPs. Or embarrassingly for that matter UK's own MPs, across all the parties.  I cannot defend the rest of the MEPs, but at best it makes the Euroskeptics and Brexiteers hypocrites. If reform is warranted the are plenty of avenues to purpose before throwing the toys from the pram and sacrificing the project that has substantially contributed to uninterrupted peace and one of the longest periods of of the most profound economic prosperity in modernity.

Pay and pensions are high. It's corrupt and unreformable.

Yes on pay and pensions, and categorically, no on reformability. I believe almost everything can be reformed, and hold no such strident fixed ideas. Each and every day is a new day. Just look at the east of Germany or the pragmatic evolution of German labour unions. Anything is possible The political importance and economic advantages conferred by the EU are far too important to jettison over parochialism, nostalgia, or petty pessimism based on some queer form of exceptionalism.

David Cameron didn't want Brexit, he just sought some help from Merkel, Hollande and The EU to get some control of the UK's borders. And why the hell not? But he got nothing. Therefore, I would suggest, if this is a cock-up, those responsible are not the British. In particular, a bit of foresight from Merkel would have avoided it. Sometimes there is more to geopolitics than just trade and economics. Otherwise, why should Britain not have caved to the Germans in 1939?

I am personally sympathetic to Populist fears on immigration. Not because I fear immigration itself (all evidence suggests it IS a positive), and not because I think it will continue ad infinitum (it WILL reverse as Blighty is squalid compared to compared to most of the continent), but rather because UK is most densely populated member by a wide margin, and the stresses ARE exacerbated by Tory indifference & austerity to investment needs (education, healthcare, roads, transport) to accommodate and therefore profit from the inflows. So while its true that few continentals appreciate just how densely populated it is in the south of the UK, successive UK Govts must share a large portion of culpability. One cannot have all the benefits of immigration without bearing investment costs which BTW are long-term investments with long-tail benefits (lower dependency ratio being primary) along with improved infrastructure & enhanced skills-based competitiveness.

For domestic political expediency, the UK made little effort to throttle immigration pressure from non-EU origins, nor did they make reasonable attempts to modify welfare-pulls (totally-free point of use NHS, generous in-work benefit etc). The sovereign UK parliament and Govt had the freedom of UK policy prerogative. Which is their choice, but one elicits little sympathy by throwing a tantrum and making threats, when the Club's functioning is dependent to the greatest extent possible respectful cohesion to one's commitments or else other members (and their constituents) will ask why the UK is allowe to free-ride on cornerstone responsibilities when others are making sacrifices. Perhaps, had the UK first attempted to do what was within its formidable sovereign powers to solve its problems, AND not already been the EU Member with the most special deal (opt-out of the Euro, no Schengen, uniquely large fee rebate) they would have received more sympathy and very probably the cooperation on at least some of concessions sought. I've no special knowledge here – just the view of the detached observer. Look, I'm married, and know that negotiating with just one partner  is all-too-often fraught with difficulty and frustration. Yet, I remain married for many reasons - much of which is not economic. I see many others divorce, and believe that will end their problem yet, with a great many, I still see them suffering from the problems they projected onto the focus of their frustration and anger rather than look within at what they themselves can change.

Nothing is perfect – certainly not the EU. Despite it's numerous flaws, it represents positive progress across economic, social, judicial, and even political spheres. Economically, it represents the most ambitous and successful example of a single-market amongst independent states, and has built the infrastructure to extend this from a position of scale and strength. Socially, it has codified rights, opened enormous opportunity for its citizens to seamlessly move, study, work, and travel, as mutually recognizing qualifications across borders. Moreover, it is an important contributor to regions where development has been neglected. Judicially, it has created protections, and avenues of appeal, to citizens treated unfairly or unIawfully BY THEIR OWN GOVERNMENTS, checks without which citizens rights can be more easily be trampled by individuals state for parochial political purpose. Citizens in the UK, with an increasingly illiberal and authoritarian State, more than others, should appreciate the great value in this umbrella.I hesitated when including the political sphere because the evolution of democratic and transparent processes are new and still evolving. But I include it because the EU remains the single most ambitious cooperative endeavor to bring sovereign nations together in whereby each voluntarily yields a bit of sovereignty and accepts mutual responsibilities to other states in the community in exchange for benefits and payoffs whose return are far in excess of what they have paid.

The Uninspiring Antitheses To Populism

Many have written insightfully on the reasons that seem crucial both to understanding Brexit and the parallel populism carrying Trump into office. Richard Baldwin, Branko Milanovic, even Tom Friedman's latest shed much light on the political-economic fractures and their causes. Useful data analyses have teased out the statistics  past and present county-by-county or even town-by-town. There are those like Cambridge Prof Nicholas Boyle, who evaluates the nostalgic psychological shortcomings of the Brexit demagogues, their disciples, and sychophants, so ill-suited to the 21st century, and which might be extended to American exceptionalism. Some like Martin Wolfe and George Magnus are critical of incumbent elites for their accused culpability which allowed this to happen, and still others (like the itinerant Chris Arnade) take an anecdotal approach to give the neglected and the angry representative faces, and a narrative rarely heard. As a “front row” kid who hung (and whenever possible still hangs) with the “back row” kids, I find this illuminating and fascinating, though not specifically useful for understanding how and why our formerly enlightened democracies have descended into illiberalism and absurdist nostalgia.

Inequality, leftoutism, the cumulative impact of technological change and the social and economic globalization that have industrially-hollowed out swathes historical manufacturing, urbanization, immigration, stagnant real wages, diminishing affordability of housing (and the inflation in much of the aspirational basket of goods) exacerbating the effect of stagnant real wages, a Facebook Syndrome that makes it plain and clear how great everyone else is doing and  how crappy one's own life is, rapid technological change, the relentless demise of religion with no spiritual replacement or purposeful endeavor, increased longevity amplifying conservative share of population, as well as the cumulative under-investment (particularly in the US & UK) in public goods such as education, affordable housing, public transport and healthcare, all have a role in explaining the reasons less-astute people might find comfort in Populist ideas that someone else (like The EU) Is The Cause of My, Your's, and All of our Problems (and that Brexit BTW will be The Solution) or embrace the view that reversing almost every piece of progressive legislation and dismantling almost every multilateral trade, financial, social and legal infrastructure that over several generations we, ourselves, have helped build in the world, will somehow improve our lot, and contribute to OUR future prosperity AND Make America Great Again.

Beyond comprehension except when seen against the anti-thesis. First, let's take stock of the obvious: “Globalization” (in the broadest sense) is a powerful force in the timeline of history. It will likely continue whatever the length of the present populist interlude. As the world shrinks socially, economically, and politically, our problems (and solutions) are increasingly transnational. Global social and cultural convergence is, and will, remain rife. Technological change has been rapid and will continue apace.  Trade and international relations are, for the most part, not zero-sum. Winners and losers result from all of these processes. Overall, more people benefit – globally and domestically – than are hurt. However, people who are are hurt by these processes ARE undeniably hurt. Finally, and most importantly, attempts to arrest these processes wholesale will cause the people who are, and will be hurt, to be hurt EVEN MORE (along with many other people who wouldn't otherwise suffer). This encapsulates the prevailing reality of our world, and most thinking people should find the recap beyond dispute.

When it comes to political anger and resentment, there is little distinction between  big losers and little losers, or between real losers and those who only imagine. For doubt avoidance, I am NOT using “losers” in the pejorative deplorable sense, but rather as the opposite of winner.  One cannot ignore inclusion of the racists and xenophobes as losers, for they too suffer from  imaginary loss, either having lost, or in the grips of fear of losing their absolute and/or relative sense of identity, privilege, and entitlement, however absurd, bogus, stupid, deplorable one may judge these fears/feelings/sentiments. The last element are The Old People, with a biologic fear of change that monotonically-increases with age – as crucial to Brexit as to Trump.  The resulting coalescence between losers and old people together represent the most combustible of populist tinder  All it requires is the flame to set it alight – be it Brexit, Trump. Immigration, or any inflammatory otherism of one's choosing. Anything to avoid confronting the hard fact of loss. Any lottery ticket to hope – no matter how stupid or deleterious the premise might be to one's self-interest, or cynically-predatory upon one's ignorance. To the populist and the demagogue, this is The Opportunity – not The Problem.

To everyone else, this is the problem. For there are no solutions for bringing steel mills back to the Monongahela Valley, or the textile mills back to Lancashire. New or growing automakers will not lay their roots in Detroit whatever the rhetoric. The economic geography of these regions former success, not accidental to their waterside location, has moved on. Other forms of modern economic geography networking based upon knowledge are now ascendant, and they are not along the Calumet or in Aliquippa. Supply chains are increasingly global, and digital. Tobacco farming is on the wane. Coal is enroute to ignominy. Even Pit Traders are the stuff of nostalgic history. For these losers, there is no anti-thesis that can compare against the  rhetorical demagoguery of populism's “Make America Great Again” or to a lesser extent, Brexit's “Take Back Control”. None. It can't.  The chain of dependencies that ripple out from now-hollowed-out industrial heartlands further diminishing opportunity. One could lay blame – on aloof Grosse Pointe managers, short-sighted capital unwilling to invest, raiders, predators, etc. but it will serve little purpose. Eddie Lampert did not kill Sears. He just profited from it's demise. Historically, the winners helped cushion the blow of the losers, if not explicitly then implicitly, though less so since the drubbing of Walter Mondale for hinting of at a need to raise more revenue. Historically, people moved. Sometimes across borders. Sometimes across oceans. Who, and what remained, rarely thrived without something miraculous. There is no divine entitlement to having a prosperous income where there is no prosperity.  Even the Crusades were as much about men seeking their fortune as anything else. Life IS tenuous. Earning a superior income without copious luck or patrimony IS hard. The reality, for those losers who've lost, or are in the process of losing decidedly is not one of hope and optimism, whatever MAGA promises.

The winners and those of us just plodding along, can do what we can do. Some will say it has not been enough...and they will almost certainly be right in comparison to what might have been done, or what we, as a nation, can afford. What we can do is, we can allocate resources and effort to improve education for modernity. We can re-educate those with out-dated or redundant skills. We can provide universal, and mobile healthcare coverage to allow people to move more easily. We can provide a reasonable social safety net for those unwilling or unable to move. We can support emergent business with investments in infrastructure that may facilitate their growth. We can attentuate the tax system to incentivize long-term investment for those enterprises that remain. None of these involve militaristic rallies, gimmicky hats with empty platitudes, blaming others for the changing fortunes of modernity's impact or for the  mis-fortune of our economic geography, or for some, our own poor decisions - be it substance abuse or hedonism. Most importantly, none of these things we can (and should do!) penalize the opportunity and futures of the overwhelming majority of citizens, or their hopes and aspirations, beyond realistically and progressively sharing the burden of adjustment to modernity of those less fortunate. Rawls would likely approve and suggest nothing different. Those are the plain and not-too-pleasant realistic alternatives that are before us, that other peoples on this earth are wrestling with, and doing their level best (or not) with which to come to terms.

Unfortunately, this depiction of reality will not win elections. This version irrespective of it's veracity, is not inspirational, but pragmatic. It is not intentionally dark, nor does it, or should it portend hopelessness or despondency. Resourceful people and regions can reinvent themselves. They can overcome adversity, with vision, investment, fortitude resourcefulness (not necessarily in that order). They can do this by looking forward to the possibilities of the future  – NOT backwards to a nostalgia that will not be resurrected no matter how many trade agreements are shredded, new minorities persecuted or patriotic hymns sung. If anything, these new people, these immigrants are your hope – our hope - not our villains  They were the reality of our past. They are the common bridge between the past and the future.

As difficult as it is to counter the siren calls of Populism, we, the majority, must take responsibility our failures. We must accept that we have been unable to outline a future and attendant policies any more inspiring than:

“It sucks for you, but not as bad as it could suck with the Populist narcisstic misogynist idiot” .

Or leaving aside the ad hominems:

 “Yes even though it sucks for YOU, at least with us and our “policies”, there is a non-zero probability it won't suck quite as bad for your kids".

Or how about:

"Well, at least with us in power, there might be some medicare and public transport when you get old and you *might* be able to drink the water. But don't count on that prosthetic knee..." 

Maybe this is better?:

"No really, believe me, just believe me: those scary looking dudes hanging down at the local weren't foreign...they just look foreign. And besides, they really won't hurt you"  

All this is pretty bleak compared to inane but hopeful  platitude of  "Make America Great Again".
One last attempt:

"Honestly...we'll do the very best we can and we will try very very hard not to enrich ourselves at your expense because we actually do care about policies that will help us in the future be the best we can be..".

Whatever HRCs flaws, this lack of an inspiring narrative wasn't her  fault. Progressives have been stymied continuously on so much social legislation that addresses the interests of the losers, and/or helps cushion their loss – from  education, and housing to progressive taxation. If and when we emerge from what is setting up to be the greatest self-inflicted episode of self-harm seen in the modern era, I sincerely hope that pragmatic sanity will help us try and solve our common problems with integrity and common sense and decency.In the meantime, I challenge all of you to define the positive narrative to address the challenges we face. Failure to do so could result in an even longer dark winter of discontent...

Nothing Cures Populism Like Populism

Though skeptical by nature, I tend towards the optimist. The infectious idealism of my mother is difficult to quash. I would like to believe that sound reasoning, so-called sensibility, could sway, teach, influence, impact, attenuate, educate ameliorate, moderate and contribute towards the evolution in the opinions of those under the influence of angry populism. But it can't.

If, like Jimmy Stewart's "It's a Wonderful Life" one could go back in time with the knowledge one has now, what would you tell the people of early 1930s Germany? of 1930's Italy? 1917 Russia? 1975 Cambodia? 1979 Iran? Would you plead with each of them NOT to make the mistake they were each about to make? Each of these shit-shows of suffering most importantly burned Populism as their fuel. Each sold a set of ill-suited solutions to what were mostly mis-diagnosed or the wrong problems altogether. Yes, each had their own issues of place and time, but in all of them, the whim of The People was usurped by the demagogue who history has judged very unkindly...for millions of irreparable irreplaceable reasons. So, of course you would plead, like a Cassandra, with your perfect knowledge of the future that you have seen with your own eyes. You would do everything in your persuasive powers... 

The thing is, in each of those situations, they, i.e. The People, would've all told you to fuck the fuck-off before they trampled your gonads, cut them off, and fed them, and the rest of you, to the dogs. The thing is: you can no more intervene to stop populism once it's left the station, any more than you can tell your kids not to do the stupid shit they will want to do, and are going to do. They can not, will not, believe you or obey you – certainly not because you know better. It is beyond their capabilities when otherwise possessed, be it by FOMO, ideology or mere wishful delusion. Of course, as a parent, (or well-reasonably well-trained, mature, observant non-dogmatic macroeconomist) with more knowledge YOU probably do know better. It's NOT the parental aspect that makes you know better since THAT confers no god-given right. It's the knowledge and experience. Yes, yes, I know that it sounds arrogant. It reflexively causes the: , "who the fuck are YOU that YOU know better, you smart-ass?" response, or the devilishly cleverly dismissive smarm of Michael Gove Fucking experts, right? One needn't spend too much time defending the role and value of so-called experts, as the idea that somehow one would embark on cancer treatment via advice from a KFC clerk, or have one's dry rot treated by your hair stylist is absurd. Moreover modernity IS complex and getting more so every day. The common (and reasonable) response to this challenge is to consult those wiser than you. Young people who ignore informed advice have the excuse of a still-developing forebrain in one's youth. Mature citizens under the sway of populist delusion have no similar excuse The abuse-to-come will be self-inflicted be it from a natural predisposition to conservatism or authoritarianism or any of a multitude of behavioural biases that prevent reason from entering their thick and stubborn skulls, or responding to new information it reveals itself and changes .

And so the young will do what they must do. They will learn the hard way. “Learn by experience” is their catchphrase, and as a parent, I can only only hope that with any luck mine will prove sufficiently less stupid than is required to teach them their lessons without mortal endangerment to themselves or others. But for the entranced masses for whom Populist rhetoric is the panacea - feeling as if it will cure all their ills (and asthma too!), I can only pessimistically suggest that “nothing cures populism like populism”. It is not coincidental that both Germany and Japan, poster-children for the Last Populism are emerging as the present beacons of liberal enlightenment, while the USA & the UK, the two countries who've not experienced the perils of demagogic populism in modernity have slid dangerously far towards the illiberal abyss – dismissive of any and all warnings that there even IS an abyss. 

The only ray of hope I see is that it numerically remains a 50/50 divide. But this is offset by the reality that the levers of Power are in the hands of The Populists. This is true in legal and administrative halls of government, in the media and mediation of information, and the direct instruments of law & order as expressed through the police, intelligence services, and home guards. This makes it feel as if Populism is more numerically ascendant, and makes expressions of opposition and dissent not only more challenging, but physically, economically and mentally more perilous. 

Of course, I think we should and must fight in all spheres, and not shy away from the inevitable battles ahead, in whatever forms of protest and dissent are available. But I am privately resigned that people possessed by Populism, will only learn from their own bitter experiences (or worse carnage of neighbours and loved ones) what are its true costs...

On Selling Short

Oh, roller-skating is exciting,
   and so are volcanoes too.
And a good old-fashioned blizzard
   will put you in a stew;
But of all exciting pastimes,
   or any kind of sport,
There's nothing quite so thrilling
   As the game of Selling Short.

It isn't merely selling
   something which you have got;
It's much more complicated -
   You sell what you have NOT.
And the thing that makes exciting
   (if you don't believe me - try it)
Is that after you have sold it
   You have simply GOT TO buy it.

And so, when you go to buy it,
   If you have to pay the price
Higher than what you sold it for -
   That isn't quite so nice.
And the market is most disobliging -
   Though no one seems to know why -
For it's always down when you HAVE to sell,
   And it's up when you HAVE to buy.

(From Sophronia Tibbs "Stock Market Quotations", published 1926 by John Day & Co.)

So Long Pershing Square

Farewell then
Bill Ackman,
"Activist investor".
Whatever
that
means.

You made
a few good trades,
and a couple of friends
along the way
(like Ezra Mirkin,
and some guy you met
in a cab).

You also made
some stinkers,
and a bushelful-o'-enemies -
on The Street,
in Congress,
at the SEC,
and the DOJ
(to name a few).

"Shootin'-The-Moon"
was your
strong-suit,
but
risk-management
was not.

Which is jolly-fine
when it works,
but rather not
when clusterfucked it doesn't.

You wanted fame,
but got Valeant infamy.
Because
it's likely
that you "lost"
more investors' money
than you ever
made. 

Upon seeing the miraculous photo of a headset-less Mark Zuckerberg walking through an Oculus Sea, I thought that this post, written in 2012 was just as, if not more apt today than when it was written. All comments most welcome. 

Pleasure Principles

“What will fill the vacuum formerly occupied by religion?”

The most thoughtful, as well as the most memorable wedding gift my spouse and I received in 1993, the year of my first (and only) marriage, was neither the most expensive, nor an object. Rather it was a “Brunch” - that uniquely American invention deplored by Anthony Bourdain in Kitchen Confidential as a reliable though odious route for restaurants to recycle anything and everything left over in their refrigerator and pantry. I learned other useful pointers from Boudrain, (who since parlayed that success into a TV Celebrity status that sufficiently provides for his habits), such as never eat restaurant fish on a Monday, and if you're a foodie and looking for best execution, avoid Fri and Sat evenings like the plague., etc. But I digress. This 'Brunch' was a simple but special affair in that it included the company of [the late] acclaimed author, Chaim Potok, and his lovely wife Adena.

Who is Chaim Potok, you might ask? I'd read several of his novels, independently, following on the heels of those  by Nobelists Saul Bellow and Isaac Bashevis Singer, though before I'd been introduced to works of Philip Roth. All their voices rang true. All chewed upon the clash of the traditional with the modern. All seemingly lamented the loss(es) of what was, even when (reluctantly) accepting the victory of modernity's “progress”. And they all struck some chord within me, each ruminating in their own perspectives and style upon issues still-raw-and-contentious (in my own family), growing up as I did on the generational cusp, and witnessing my parents wrestling with theirs over the same.

I think Potok stands out as his breadth of thought was more encompassing. He was first a Rabbi, then a writer, also a theological academic and philosopher (PhD Penn, Philosophy) as well as a graphic artist, and playwrite, though the arts were his first love and a source of conflict with his own (traditional) parents. His  timeline reflected this same struggle: from indoctrination and orthodox study sliding towards the increasingly secular graphical artist and thinker. He may not have been the superior novelist of the genre shared by the four eminent writers, but he probably was the most eclectic and adept thinker. His experiences were varied: an army Chaplain, a rabbi, a teacher, an editor, writer, an artist). Bellow's and Roth's characters and dialogue might have been more realistic, Potok stretched the boundaries of thought further than the others. Like the great Jewish minds (unlike those of current-day Likud), Potok ruminated thoroughly and saw things not categorically, but nuanced – context within context within context.

Beyond these spartan observations, there is little I can add. We drank coffee, and chatted about our experiences, and about faith. I made no effort to hide my lack thereof, though I couched it in the agnosticism of the empiricist versus certitude of the militant aetheist, which was more useful for friendly discussion than Dawkin's axe-wielding approach. More coffee and cakes, and the conversation drifted from the first to third person, and modernity's impacts upon religion. I noted that religion was useful historically as a means control. Fear of God, his wrath (for the Jews) or Hell (for Christians) were powerful tools. And whether a tool for purposes of control, or more recently as panaceas for the spirit, there is in modernity, I suggested, a gaping hole in the psyche and in one's preoccupation that was previously occupied by religion. “What”, I continued, did he “think might or will replace it???!!?”

He pulled on his whiskers for a long time, looked upwards towards the heavens, and then stared deep into the depths of his half-filled cup before meeting my eyes and saying more categorically than he had about anything to that moment ......”Hedonism”. “Hedonism will fill the void...”, and for the first time, I saw resignation on the face of this otherwise thoughtful optimist. It is the same resignation floor traders must have felt as transactions went "upstairs", or that which strikes value-oriented reversion traders horse-whipped by seemingly less-than-explicable momentum, or an allocator feels when assessing the new normal of what used to be the risk-free rate. It is a distinct feeling that the sense one previously made of the world has been palpably altered, leaving it a less-hospitable place as a result.

Conversation rebounded from the after-effects of this pronouncement, for it was clear he knew that however depressing the prognostication, there was nothing he could do. He could analyse this wave, indeed, he could explain it. But he knew it will be as it inevitably will be. Efforts to change the direction of such a tide would be futile. I understood he was not whining. Nor was he living in the past. As was the case with his literature, he sought first and foremost to understand what was going on around him, and make sense of it, rather than tell us how it should be.

In 2012, it seems ironic, that mired in debt with unemployment rife, that our Grasshopper-like spirits' gaze is, as Potok forecast nearly two decades ago, firmly fixed (and growing) upon hedonism. Not spiritualism or New Age-ism, but full, unbridled "Whatever!" I see it manifested in demagogues pandering "7-Minute Abs" solutions, to problems of marathon proportions. I see it in my eldest's seeming addiction to fatuous social networking, or under the spell of inane traditional media at the cost of reading or doing. I see it in the increasingly stylized beach or ski holidays. I see it in the untempered expectations still being conjured and polished by companies and their Madison Ave agents. I see it in the politicians' promises to restore what Americans' believe is owed to them.   

But is this not natural? Should hedonism be a pejorative?  To the extent it plays a part in fueling expectations and pursuit of a lifestyle for the individual that is unsustainable for the group, then yes. To the extent that it prevents sober or pragmatic evaluation  of what needs or might  be done to pursue even weak-form sustainability, then yes. To the extent it discounts the longer run policy pursuits, for the short-run, then indeed, yes. To the extent it encourages anti-social behaviour to finance parochial hedonism, then yes.  To the extent it fuels near-unprecendented greed at the expense charity yielding a coarser way of life for the benefit of parochial pleasure and the privilege of the yet unborn, then yes, it is a pejorative, and we should lament its expansion in filling the vacuum.

Unlike the Apocalyptors and Tin-Foil Hat Brigade, I do not believe 2012 will be the year of the Return of Barter or Oblivion For Mankind, and while it may even surprise to the upside given the hugely bearish expectations of the market and anti-European shills, I do think it will be an interesting year for observing what happens when hedonistic rubber meets the austere reality of the road ahead of us [all].

Where are all the Jewish Momentum Traders?

Many would find financial research a curious pursuit. And while most curious financial researchers have their own peculiar or arcane interests, one area of modern finance continues to intrigue and mystify me: "Why are there so few Jewish momentum investors?" Now before the ADL or JDL launch a protes taking issue with this post before giving it a fair read, let me first clarify several points at the risk of spoiling my punchline. First, by way of full disclosure, I have strong affiliations with The Tribe itself (of Abraham that is) - and little to no affiliation with the Church of Serial Correlation (the Cult of Momentum) or The Turtle Traders. Second, despite the fact that I am an unashamed peacenik, frequent critic of Likud and the last two decades of much Israeli policy, I admire many Israeli's such as Amos Oz, Y. Rabin, D. Barenboim and Y. Beilin, the Jewish faith the Jewish faith, and many things The State of Israel has accomplished. This qualified and tepid opinion, however, does NOT - I repeat does NOT - in any way whatsoever make me anti-semitic. Third, and contrary to your suspicions, the accompanying image, as any native from Calgary might tell you, strangely enough has nothing to do with the Star of David, or Momentum. It is in fact a sheriff's badge presumably labelled to express disaffection over the "mess" and chaos their annual rodeo-related Stampede creates. But it does a nice job of visually marrying my seemingly unrelated subjects.

Having dispensed with formalities and belied critics who might impugn my credibility based upon THEIR politics, I will return to subject: the dearth of Jewish momentum traders. This puzzle initially gestated from meditations regarding the relative contribution of nature vs. nurture upon one's political beliefs. Proposing too much nature, it seems, is a contentious thought to some folk as I've discovered, for after espousing it, I've had people look upon me as puzzled and suspicious as if I were Kim Jong-Il doing a Liza Minelli impersonation, even though it's a quite innocuous observation. It goes like this. Based upon keen but anecdotal observation, populations seem to have roughly similar distributions of political archetypes between what one might broadly categorize as "progressive" or "conservative", irrespective of ethnicity, religion, or nationality of the entire population. Whether it's exemplified by Republican or Democrat, Labour or Conservative, Social Democrat or Christian Democrat there seems to be a rough equivalency in the percentages of these divisions in society. This seems to hold even if the specific ideological anchors have different coordinates in the political spectrum in different places. As other personality traits such as optimism and empathy have been shown to be strongly influenced by genetic predisposition, my probably unoriginal hypothesis by way of extension was quite simply: Why not politics? Perhaps everyone is born with a certain greater or lesser predispositon towards progressivity or conservatism, which themselves are possibly based a general affinity towards being receptive of, and embracing change (in the case of the progressive), or being cautious and suspicious of said change (as befits the conservative). The resulting conclusion: people underestimate the role of such genetic predisposition in political belief structures, in general, and in their own idelogical make-up in particular. While I am not an anthropologist nor a sociologist there are many examples of similar less-than-physical pre-disposed traits in relatively consistent proportions across varied populations (e.g. homosexuality). And while learned people who have studied this are not necessarily in agreement as to which competing theory best explains WHY the phenomena exists, there is little disgreement over the existence of the objective phenomena itself. This is NOT meant to disavow or diminish the influence of nurture, or to discount free will of the spirit which both have a role. But it is interesting, if not uncomfortable, to speculate that we may not be as free as we would like to believe.

Teleport now to what was the floor of the CBOT or the CBOE where, mixed amongst the overly-tall brokers and traders, were speculators of many persuasions. Scalpers, market-makers, front-runners, discretionary liquidity providers, strategic traders, trend traders, and counter-trend traders, some disciplined, some emotional some visceral or instinctive. But here too there seems to be similar archetypical personality divisions: that of the "trend-trader" or "counter-trend trader". One can also think of it as momentum-oriented or reversion oriented (or short-premium option traders vs long-premium option traders for our derivative friends). Might not genetic predisposition have a similar role in whether one felt more comfortable "riding a trend" or "or trying to anticipate a reversal"? Or in "buying a breakout" or "fading a pop"?? Or "Buying growth" or "buying value"? After all, these dichotomies are essentially attributable to the inherent optimism vs pessimism, or safety vs. adventuresomeness which we already have good reasons to believe are strongly influenced by nature.

Whether one agrees or not at this point, I hope you'll see a consistency and logic to this thread so far, that, if not probable, is at least plausible. Now comes the puzzle: if the general population consists of some relatively consistent distribution of, for simplicity's sake, "momentum-traders" and "reversion traders", why does there seem to be such an asymmetrical distribution specifically amongst the Jews? It's certainly not for lack of prowess at making money. Trading is in our blood and has been since our days refueling camels at the Judean cross-roads of civilisation. As a tribe, we account for some of the greatest value investors, but we seemingly can't ride a trend. Even Sol Waksal for example, whose company has the ultimate momentum theme - a cure for cancer, felt compelled to trade his position lest it's value be [temporarily] knocked by some petty little FDA concerns about experimental design. Few would argue that we are over-represented in the world of arbitrage, but under-represented amongst the great CTA's. Or that we have a keen eye for spotting and picking up the four-cent nickels, but have more difficulty sticking around to turn $1 dollar in $10. I could be way off base, but I think there is a pattern here. Is it something peculiar to "us" or is there something about momentum? Maybe it's just the "feel of it"? Or maybe it's the risk vs. reward proposition that is intuitively (or objectively) unappetizing? Or perhaps momentum requires something more of the mind or spirit, something that we simply cannot give?

It would be useful at this stage to better define "momentum". Though I am no expert on the subject, it may be helpful to separate it into different categories. One is "naive momentum" which is quite simply using past returns to predict the future direction of returns. "What's gone up will keep going up". What is outperforming will (hopefully) keep outperforming. For academics analyzing the stock market's cross-section of returns, this phenomena is typically viewed as relative in nature, or normalized performance ranks. Through this lens, persistence in relative return has been found to exist for as yet undiscovered and undiscernible reasons, confounding theorists - especially those espousing market efficiency. But the real Momentum-Men (and they ARE men as not a single famous woman springs to mind), are the practitioners that call themselves "trend-followers" and would perceive themselves as more sophisticated and discriminating than the naive crowd. Here, simple moving averages give way to complex pattern matching techniques and endlessly catalogued contingency tables - all integrated systematically to find the holy financial grail which will allow them to distill the real trend that has the higher probability of persisting and thus being the motherlode that will take an ounce of gold that broke out from $454 to the stratospheric price of $5,000/oz (or beyhond!). This is a periodically prerequisite necessary to pay for for all the shakeouts, false starts, and ubiquitous reversals that are the by-product of the financial equivalent of chaos. That a number of practitioners have been reasonably (if not fabulously) successful employing these methods would seem to indicate that one dismisses them at their peril. Yet, others employing quite similar methods have crashed and burned spectacularly. But there is no shame in making (and losing) a fortune, for aside from being an adventure, it generates notoriety. And with such fame (infamy might be more accurate), one can always write a book, or post his musings on a website, or teach others to trade using trend-following techniques (but hopefully a more complete set than they used - one that incorporates counter-measures against periodically going nuclear). But perhaps the most amusing description of something with momentum was by Leif Ericson (on Peter Greenfinch's website) which he posited "was the battle between those with more money than intelligence against those with more intelligence than money.

Indeed, momentum has its uses, and has made some people (particularly brokers and exchanges, as well as some investors and traders) fabulous amounts of money. But it's not for the faint-hearted, and not without large and attendant risks. But that still doesn't answer why Jews are under- or unrepresented here. What's preventing them from joining the search for the leprechaun with real potfulls of gold at the end of the rainbow for the lucky few?

For a start, it seems that being long momentum requires faith. Similar in nature to the good old-fashioned bible-thumping fire-breathing kind. But faith in what? It's difficult to say just what that something is, and theoreticians remain perplexed. One might say it's essentially faith that the future bias of returns will continue to resemble the past. But is this wise or even accurate? It's not a bad bet with respect to things like whether the sun will tomorrow, whether the leaves will turn color this autumn, or whether the government will suddenly feel geneorous and abolish tax. And it's not unreasonable have some more-then-ambivalent confidence in a directonal movement when something is converging towards some probable equilibria. But the odds and thus confidence intuitively diminsh as one moves farther from equilibria (assuming one has a reasonably accurate estimate of probable equilibria). Consequently, risk increases. By contrast, it is "doubt" which comes easy to us Jews. Faith comes much harder. We desire proof. We NEED proof. A Covenant, for example, would work well. As would a burning bush, or some directives or commandments carved in stone. Recall, God had to crack the whip many times before people were convinced. And it took lots of smiting. And even then, there was backsliding. Moses was skeptical at first and took multiple minor demonstrations of transmutation to convince him. And I would guess that when he took his demands to the Pharoah, he probably had his doubts. At least until Pharoah's kingdom was over-run by toads. That was his nature - to doubt.

Maybe we eschew Momentum because we're just contrarians? While it's true that we are always up for a good debate, it is unfair to say that we are contrarians for the sake of it or just for kicks. Having said that, one must remember that we are wary of crowds as historically, when we Jews have seen the crowd coming, it was time to leave. And fast. Over the generations it's become burnished in our minds. But suspicion of the herd is not pathological. When there is sale on, we are the first to queue up and often lead the stampede. No obvious contrarianism there. And one must not forget that the God of the old testament is severe. He can (and often did) take away what he'd bestowed, not to mention the ever-present threat of smiting. Momentum needs time, and these things in combination have always made time an issue for us which, while it makes us good bankers, does put some behavioural boundaries upon our holding period. The old saw "One in the hand is worth more than two in the bush", would take on special meaning if one not might be around to collect.

Jews are studious, value education, and usually pretty rigorous. The faith required of a momentum investor resembles closing one's eyes when taking risk. We are used to and not shy of taking risks, but they are typically calculated risks. Like the risk of taking that "Home Office Deduction" against our income tax. We can do the math. But we disapprove of pure gambles. When was the last time you a saw one of our tribe win a large Pick-6 jackpot?!? Or when was the last time your Jewish friend invited you to go the racetrack, or wager on the greyhounds? We intuitively know lotteries are poor odds. That's why when we went to Vegas, we would rather "be the house" and "be paid" than "pay the house" and be played. When we do go to casinos as a customer its for the free drinks, and not for thrill of trying our luck against the odds. We prefer investment to speculation. At least with an investment, one can estimate probabilities and calculate expected returns. And hedge. Only then do we pray. And when we pray, we pray to God not for "good luck" but rather that the hedge holds.

Without being disparaging, momentum is useful as a discipline for people who have no other. And some form of discipline is better than none. We've an inherent intellectual flexibility which in investment terms is important in order to integrate new information and fight against hard-to-overcome cognitive biases. Maybe that's because we've always been moving and have had to learn the ways of new people and places. Unlike the way many conservative strict-constructionists in America prefer an ossified constitution, or the way fundamentalists of all religious persuasions strictly interpret their religious texts, Jews are constantly re-examining and re-interpreting the meaning of their scripture (amongst other things). Trend-following is a disciplined system that proxies for intelligence-derived flexibility. It dictates change in response to something, even if that something is facile, and often ill-logical, and frequently uneconomic. Our nature results in a demanding need to know "why" and to reach our conclusions by way of intellect, rather than faith. This creates decision flexibility (to react to, or incorporate change) which inhibits belief anchoring without sacrificing understanding.

Or perhaps we're just not optimistic enough to "close our eyes and buy"? It seems that most momentum traders are optimists by nature. Optimistic in their belief market solutions are always better. In conservative republicanism. In low taxes. I would not deny the suggestion that as a people we are not renown for our positivism. Not in art, literature, nor psychiatry. But in finance, optimism is independent of, and should not be confused with, momentum. Sometimes there is good reason to be optimistic about the direction of price movement, and sometimes not. And while I would agree that optimism serves many useful functions in the human struggle for survival, it's been shown by researchers that pessimists perception of objective reality is in fact closer to objective reality. Optimism is an important tool in sports, healing the mind and spirit or achieving personal goals, but it cannot and will not move market prices. Full stop. Objective reality (or at least reasonably accurate perception of reality), on the other hand, is extremely useful and of paramount importance when assessing probabilities, making expected return calculations, or discerning the sign and location of the fat tail..

What is the final take-away? Though untested, and unproven, the asymmetry seems to result from an unusually strong combination of natural predisposition towards progressivity inherent in our genes coupled with a multitude of social nurture factors emanating from our idiosyncratic history, religion and culture, all which reinforce our predilection for value and the counter-trend. This is not to discount the potential contributions momentum can make. But that doesn't mean we have to like it, or for that matter, pursue it, which in aggregate, we apparently don't. After all, no one really "likes" insurance, but we still buy it....


(NB: This was first published in 2005 - well into the last momentum cycle, but nonetheless a few years early in its veiled critique of momentum's popularity amongst investors)