Joe Stiglitz On High-Frequency Trading

A rather brilliant set of notes by Salmon on a rather brilliant speech by Stiglitz, making the case against market volatility in general and high-frequency trading in particular. Markets should “reward people who find out information about the real economy”. But HFT robots “steal the rents that otherwise would have gone to those who had invested in information”, with the result that “the market will become less informative” (1,650 words)

Mark Zuckerberg, The Warren Buffett Of Tech

Buffett is the “classic conglomerator: he’ll buy any business, so long as it’s good”. Zuckerberg is starting to do the same thing in tech, with his purchases of Instagram, WhatsApp and, most recently, Oculus. None is an obvious fit with Facebook. But by now Zuckerberg is investing for a future beyond Facebook. He “knows that his flagship won’t last forever”. So he has “decided to build himself a flotilla” (535 words)

Satoshi: Why Newsweek Isn’t Convincing

Post-mortem on Newsweek‘s cover story claiming to have identified the inventor of Bitcoin. The writer, Leah McGrath Goodman, did a “huge amount of work” amassing circumstantial evidence. Her fatal error was to frame her story as a revelation of fact. She would have done much better to frame it as a quest, sharing the evidence and ending with a tentative identification of the most-plausible candidate (2,390 words)

Markets See A Putin Win

Russia has a history of accepting “economic hardships unimaginable to Western observers in pursuit of geopolitical goals”. It is “pure wishful thinking” to imagine that economic sanctions will force Russia out of Crimea now. The West has “no intermediate option between accepting the Russian invasion and full-scale war”. The current stand-off evokes the 1962 Cuba missile crisis — but this time, Russia wins (960 words)

Broadband Competition Relies On Regulation

Why the cable companies’ broadband monopoly is bad for America. “We already have perfectly adequate pipes running into our homes, capable of delivering enough broadband for nearly everybody’s purposes. What we don’t need is a brand-new nationwide broadband network. What we do need is the ability of different companies to provide broadband services to America’s households” (860 words)

Facebook’s Horrible Stroke Of Genius

Facebook’s $19bn purchase of WhatsApp “is a statement by Zuckerberg that mobile matters more than money. He’s right about that. Without mobile, it doesn’t matter how much money Facebook has. If you’re asking whether Zuckerberg paid too much for WhatsApp, you’re asking the wrong question. Zuckerberg is sending a message, here, that Facebook will never stop in its attempt to dominate mobile” (1,135 words)

The French Way Of Cancer Treatment

It’s better than the American way. “When my dad began to get worse, the home visits started. Nurses came three times a day to give him insulin and check his blood. The doctor made house calls several times a week. French healthcare was not just first rate — it was humane. We didn’t have to worry about navigating a complicated maze of insurance and co-payments and doing battle with billing departments” (1,340 words)

Licensed To Lie

Central bankers enjoy a moral dispensation unique in public life. They are expected to lie. And they do, especially when devaluation threatens. “Yet despite this historic record of broken promises and unfulfilled commitments, central bankers enjoy more respect and trust than any other public official. They are particularly trusted by the people they most frequently deceive — financial market investors” (1,000 words)

On Secular Stagnation

US recovery since 2008 has been weak despite record-low interest rates. Even pre-crash growth relied heavily on bubbles. America is moving into a long period of stagnation marked by reduced consumption, reduced investment, risk aversion. “The presumption that runs through most policy discussion — that normal economic and policy conditions will return at some point — cannot be maintained” (860 words)

Rules For Writing About Art Auctions

Top 20% of pieces bring in 90% of auction revenues every year, and get 90% of headlines. Smarter to focus on artists who aren’t selling well: “The auction houses do a very good job of expectations management: if the estimate is low, and the price realised is equally low, it’s easy to think there’s nothing newsworthy going on — even if, a few years ago, the same piece might have sold for multiples of what it’s now able to fetch” (840 words)

Filling Hillary Clinton’s Shoes

Big profile. John Kerry’s critics call him undisciplined and reckless. But give him his due. In his first year as Secretary of State he has revived the Israeli-Palestinian peace process; brokered a deal with Russia to remove chemical weapons from Syria; embarked on a new round of nuclear talks with Iran, and started hammering out a new post-withdrawal security agreement with Afghan President Hamid Karzai (9,740 words)

A Running Tally Of Epic Waste

Pentagon is “largely incapable of keeping track of its weapons, ammunition and other supplies”. Not to mention finances: it has never completed the annual audit required by law since 1996. In that time the military has spent $8.5 trillion in taxpayer money — more than China’s GDP. Managers struggling with monthly returns are told to make “unsubstantiated change actions”; in other words, enter false numbers (6,500 words)

China’s Broken Art Market

Thoughts provoked by the recent New York Times investigation, Forging An Art Market In China. You can certainly read the original, which is in that overwrought Snowfall style; or you can go straight to Felix, who extracts the main points, explains and critiques them, and adds some conclusions at a much brisker pace. “If you’re speculating in Chinese art, you’d better have your exit planned out. Because the bubble is certain to burst” (1,160 words)

Kill The Sticky Nav

“It might have been the Slate redesign which pushed me over the edge, I’m not sure. Maybe it’s just PTSD from Reuters Next. But I will seriously donate a substantial amount of money to anybody who can build a browser plugin which automatically kills all persistent navbars, or sticky navs. It has become the single most annoying thing on the news web, overtaking even the much-loathed pagination for that title” (1,130 words)

The Idiocy Of Crowds

Start-ups can now crowdsource equity. Investors: don’t go there. “Right now — the tail end of the ZIRP experiment — is the absolute worst possible time to embark upon this general solicitation road. Even the smart money has started funding companies at utterly bonkers valuations. When you then open up the dumb money to projects which the smart money has passed on, the outcome is certain, and not pleasant” (1,000 words)

Egypt’s Avoidable Massacre

America should cut off aid to Egypt immediately. Doing so may not curb the army’s behaviour, but it will signal that America does care about some basic principles. “The message the White House sent to young Islamists in Egypt this week was clear: What jihadists have been telling you about American hypocrisy for years is true. Democratic norms apply to everyone but you. Participating in elections is pointless.” (1,000 words)

Jeff Bezos And His Journalists

Jeff Bezos is a great businessman. His acquisition of the Washington Post is logical and promising. But he’s going to need a management style there very different from the one that’s worked so well at at Amazon. “At a large newspaper, the default mode cannot be hyper-efficient. Greatness emerges mysteriously from the slack in the system, from source lunches and newsroom cross-pollination and expensive editorial whims” (1,340 words)

In Praise Of Stevie Cohen

Why hedge-fund manager Steven Cohen, now facing criminal charges, may be “the greatest stock-market trader of all time” — and what that means. Trading is not investing. “It is more about understanding probabilities, taking advantage of fleeting arbitrage opportunities, and ‘reading the tape’ — understanding the way that money is flowing around the market, and how those flows are going to manifest themselves in securities prices” (1,280 words)

How Do You Restructure A Guarantee?

Well-pointed summary of new Lee Buchheit paper (here; also worth downloading). Sovereign debt guarantees have multiplied, as a way of masking national debts. How do you deal with them when the issuer is forced into a debt restructuring? You cannot safely leave them out of the haircut; not can you easily bring them in. Conclusion: “If you thought that sovereign debt restructuring has been difficult until now, you ain’t seen nothing yet” (590 words)

Adventures With “Free” Checking

When you take a free checking account, you invite your bank to make money out of you any other way that it can. Bogus fees in America, bogus products in Britain. “Retail banking is broken, it’s broken everywhere, it’s endemically reliant on hidden fees, and if you think your bank is being transparent about how it’s making money from you, or if you think that your banking is free, then you’re almost certainly mistaken” (1,650 words)

Promiscuous Media

The rise of new open publishing platforms — Tumblr, Medium, Facebook among them — increases writers’ mobility, flexibility. Mainstream publishers would do well to embrace this. “Certain journalists will be wonderfully active on Pinterest; others will develop huge followings on LinkedIn. Their employers will be gifted with a new way to extend their brand to people they never reached before, in what feels a very personal manner” (1,172 words)

How Much Does Jamie Dimon Matter?

To JP Morgan and its admirers, a lot. He runs a huge bank probably as well as any human could. To his detractors, he’s key-person risk writ large. “If I were a conspiracy theorist I might even suspect that all the fuss about Dimon is supposed to make us ‘watch the birdie’. A distraction from the real point, which is how we structure a financial system that serves the needs of consumers and businesses in as safe a way as possible” (1,099 words)

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