Sunday, May 15, 2011

A Quarter of a Century Later....

In general, I admire the french civil service. Not everything. Not all the time. But both relatively and absolutely, their performance should give anti-Statists pause for thought about their position (not that such dogmatists will ever do so). Sometimes, however, they do fuck-up. Sometimes quite badly. Such as, for example, twenty-five years ago in New Zealand (youngsters see inset photo to the left).. Ummm errrrrr great plan guys!! A Franco Bay-of-Pigs of sorts.

Time travel back to the present, a quarter-of -a-century later, and after reading today's lead story, one must wonder whether Agents Prieur and Mafart have been seconded back into service - this time on an even more ignoble plan to sink (no pun intended) the political fortunes of DSK, presently polling several percentage points ahead of Mssr Sarkozy, even after the announcement of the soon-to-emerge mini-Bruni. Ouch! Decisive action appears to have been called for. Some shit that, once thrown, will stick stick stick.

I am not saying he doesn't have a dark side. You don't really know someone until they come an live with you (and even then there is still.....ummm errrr stuff that....). I am not saying he didn't do it. Heck almost everyone has something that might not withstand public scrutiny and microscopic examination. But this one just seems implausible. In all my years, and too numerous hotel stays, I've never been cornered in my hotel room by the J-Lo hot chambermaid (and, then, in the micro instant of having emerged clothes-less from shower, schocked by the instrusion, thought: Wow she's hot! Followed by "Hey babe wanna fuck??!? No? Really, no? Well then I'll just have to force you...." Oh, yea, and we gonna be quick, 'cause I got ze plane to catch". Perhaps that is because that lot are all swarming by the suites upstairs looking for the bigger fish (like DSK?),  rather than the plebeian closets where I hole up. But c'mon. In the run-up to an imminent election? When you are the the front-runner? And about to depart for an important meeting with Chancellor Merkel about some trifling matter about the future of the periphery of Europe? (Frau M can wait.....right?!??).  Forcible detainment?? After having been busted and having apologized for shagging a (rather willing, it would seem) colleague??  It just smacks of a set-up. A rather dirty, dirty-trick, that needn't be true, but merely cause some fence-sitters to come to the conclusion that the devil you know may just be marginally better than an accused rapist.

Any thoughts on this one guys & girls........??!?

Wednesday, May 11, 2011

'Tis a Shame There Is No More Shame

So the Home Team managed to salvage a categorical victory after the embarassing whitewashing to Michael Lauer's defense team. Bravo, chaps! Well done! Hopefully this might be the start of some more serious flogging of the at least some of the more notorious contrapreneurs and cheaters of this past decade.

It was sad (for the criminal justice system) that Lancer's Lauer slipped away. However, I cannot decide which of the black hats' perpetrations were more offensive. Lauer blatantly and cynically stole from those who had relied upon him as a fiduciary for his own parochial gain. He seemingly did this in a most premeditated and calculated manner such that there was (to the cognoscenti) no doubt about his intentions. This is willful fraud and deceit and should be dealt with harshly since failure to do so condones the behaviour and spawns others to pursue such malfeasance.

Raj, in his defense, didn't commit fraud, nor violate the trust placed in him as a fiduciary, unless potential disgorgement of profits is on the list, though it is probable that (like SAC) many investors knew he was stretching the proverbial envelope. Rather, he stole from the faceless market, though it must said, there were indeed willing others on the other side of his trades. The thing is, they were willing participants at the price, and, it is likely, would have transacted anyway with a counterparty. I was about to add "fair or foul", to that last sentence, however, it is almost certain they would NOT have transacted given the material non-public information teased from umm ...errrr.... it seems nearly everyone from every profession. But that is the risk to every trader's trade: someone knows more than you; someone can forcast better you, someone like Wayne Gretzky sees the play unfold better than you, seemingly in slow-motion while it  passes lesser mortals by until its too late. But Raj Rajaratnum is no Wayne Gretzky. He is a cheat, that knew the rules, but decided to clearly and cynically break the rules for parochial monetary gain and it would seem to feed his ego. By extension, it was also Fraud, since the many investors who did NOT know he was cheating were fraudulently deceived. They thought they were buying the services of a thorough researcher - NOT a cheating scumbag, who parlayed his position into a circle-jerk of favors to big fish and minnows alike. Like Madoff, the Fraud allowed him to create a larger fraud and leverage little cheats and deceptions into something systematically large, to the point where (like the reinsurance price-fixing scandal, or like Lichtenstein's Steel Partners ramping of in-portfolio shares in order to colelct more performance fees) it becomes entrenched, and SOP for the wanna-get-rich crowd pursuing a fatuous dream. that I have got that off my tits, I still cannot say who should be drawn and quartered first (though I lean towards Lauer for pure calculating cynicism).

One final thought: it is a shame there is no shame. I recall a youthful summer spent in Northern Ireland. On a visit to friends in lovely Armagh, in search of something other to do than drink endless pints of Guinness, I went for a tour  of the Observatory. When I returned to the pub with my tales, all the locals had a laugh as they recounted with glee the story of a local senior clergyman who'd been caught diddling some of the younger members of his flock (no pun intended). Rather than let him be shipped anonymously to the clink, or assigned elsewhere by the church, the townsfolk insisted he visibly remain in Armagh, and was assigned to tour-guide at the local landmark (none other than the Observatory!!) - one visited by school children from all over Northern Ireland. Such was the notoriety his case, he was, in effect, publicly shamed, humiliated, and ridiculed day-in and day-out for his remaining years, in a manner that arguably was more severe than jail. Though in Japan (and pehaps some other traditional societies) shame remains truly a stigma and a veritable deterrent to all manner of rule-breaking, we, in the modern west, have lost virtually all semblence of shame, and in many cases, are the worse for it.

And Michael Lauer, who despite losing the civil case, is planning a return to Hedge Fund Management.... 

Monday, May 02, 2011

Break Out

I caught a few moments of Tom Keene at the Milken Conference yesterday, on Bloomberg TV. I am ever-more amused by the ads run for the concentrated demographic of those who voluntarily watch real-time financial television, and have written about my indignation at the increasingly high-tech ones run by the FX Bucket Shops, a view sympathetically shared by my friends at FT-Alphaville.

Almost as amusing, though slightly less macabre than the coming retail FX train wreck, was Bloomberg's ad touting its own "Launch Pad" kit, a part of its professional service. As a user of Bloomberg since its inception, I have mostly respect for the system and what its management team have built - obliterating all competitors en-route.  Of course, Bloomberg has its flaws which are significant (and which I won't go into here), but the pitch was that you Launch Pad allows you to customize YOUR view of the market, and tailor their data to YOUR desires, in order for YOU to stay informed, so that when the market BREAKS OUT!!!! (yay! whooopeeee!!), you can spot it and TAKE ADVANTAGE of the MOVE. (end of the flashy bits and accompanying thumping escalating rhythmic dramatic music). Whew, now that our blood pressures are south of the near-month price of Cotton, perhaps we might examine what is wrong with this picture.

If I am to understand Bloomberg's ad agency, the world is sitting around passively. Drinking coffee. Making sexist (but not too-politically incorrect) jokes, watching talking heads on BTV tell us what is going to happen, or erroneous attributions about why something just happened. Then, quite randomly perhaps, the market MOVES, and everyone else NOW, AFTER THE MOVE, with the help of their Bloomberg system, takes note of the move, and decides how they are going to react to THE MOVE. And, according to Bloomberg, this is what THEY NEED, because this is the way THEY look at the market, and Bloomberg can help you stay on top.

Think of the absurdity of this. Think of it multiplied across the Bloomberg installed base. Across the number of trading rooms of banks and brokerages across the world. Wait. Watch. See somebody else do something significant, and then try to jump on the train. And then, when IF you manage to successfully get on the train, and the train is, by chance, going in the direction you expect, you then, one would suppose, go back to the water-cooler, and wait for someone else to do something significant in the opposite direction, which  you would, by extension, follow again trying to leap from the train to safety before a larger train wreck. Does that about sum it up?