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373 days until the start of class as I return to graduate school.
In yesterday's post, I lamented that shortage of time. I reported wanting more time each day to read, to write, and to prepare for graduate school.
Yet, I spend a fair amount of time playing online games. Actually, one online game: Lord of the Rings Online. On the Landroval server, my current main characters are the hobbits Alphred Trout and Hedgerow Shrewburrow.
Time after time I have protested the amount of time and money spent on useless activities such as sports, movies, and computer games- resources that could have been spent on other things such as food and medicine for the global poor. Yet, here I am wasting time and resources on a computer game.
Am I a hypocrite?
Technically, no. A hypocrite is somebody who applies a different moral standard to other than he does to himself. If I were to condemn such time-wasting activities in others, but not in myself, then I would be vulnerable to the charge of hypocrisy.
However, I judge that I would be a better person if I did not have these interests. If I were to hold myself up next to a person who lacked these interests, and who worked more fully on products that produced a social benefit, I declare myself the morally inferior person. I wish I had been that person. However, I am not.
People have reasons to condemn those who are like me in this respect - people who waste time on games. I can think of no good defense against it.
I do not engage in these activities free of guilt, but often with the knowledge that there is something else I should be doing - that I should want to be doing.
These points are relevant to a class of argument popular in public debate. The examples of this class that I am most familiar with involves somebody who is strongly anti-gay being discovered soliciting same-sex partners. A common response is to call this person a hypocrite and assert that this discredits everything that person has said on the subject.
The person who uses or defends this response is more interested in scoring rhetorical points than in a reasoned discussion of political and social matters. This is an ad hominem argument. The claims that a person may make on the harms of smoking do not become false on the discovery that the person saying them smokes. Warnings about alcoholism do not lose their merit by being uttered by an alcoholic.
I want to be clear that I believe that there are no good reasons to oppose homosexual relationships. However, there are sound and unsound ways to refute the claims of those who do oppose those relationships. The gay person has nothing to be ashamed of. The person who resorts to rhetorical tricks to score political points does. They are living a lifestyle that is harmful to society as a whole and deserve condemnation for that. Using hypocrisy and demagoguery in defense of a true conclusion does not make it legitimate.
Ironically, we can find genuine hypocrisy in those who shamelessly use these fallacious arguments to score political points. When others use fallacious arguments against them, they condemn the practice. Yet, they engage in the practice that they condemn without even a nod to the idea that the same principles they use to condemn others are applicable to them as well. So, while being gay cannot be reasonably condemned, being a demagogue and a hypocrite certainly can be.
This does not deny that those who condemn homosexuality for no good reason - who uses fallacious reasoning in defense of the claim that it is legitimate to harm the interests of others - are themselves morally flawed individuals as well. In their case, they have bad arguments AND a bad conclusion, rather than just bad arguments.
Returning to the topic of this post, nothing I have written above invalidates the arguments that show that people generally have many and strong reasons to discourage the playing of video games as a notorious waste of time, keeping people from engaged in more productive and potentially helpful tasks. I cannot deny that I would be a better person if I were somebody who spent less time playing games and more time actually trying to produce something useful - such as useful philosophical ideas.
Finally, I want to make it clear that the discussion here is not about sacrificing something that one enjoys in order to wade into something useful that one does not like. My arguments here are about molding what people like and dislike. There is virtue in being the type of person who likes doing things that are productive and useful, and who dislikes wasting time on meaningless activities such as video games. It is a virtue I do not have in the degree that I think can be argued for, but it is a virtue nonetheless.
I should add that, if this was an activity that I performed alone, then I would find it easier to give up. However, this is an activity that I engage in with others, and that makes the thought of quitting so much harder. I would miss the people. And, I suspect (hope) that they would miss me. Relationships are hard to give up. Relationships ought to be hard to give up. That's a subject for another day.
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September 29, 2012 - Get free updates of new posts here
Can I be real with you? Real real?
(A note from Zuck)
I’m TIRED of answering this question so I’d rather write it out and just point people to this post.
Let me start in reverse.
I can tell you every detail of the day I got fired aka “let go” aka “down-sized” aka “shit-canned.”
I thought I was going to a routine coffee with my boss and randomly saw Matt Cohler sitting at the table inside (surprising)!
I knew something was amiss. Matt broke the news quickly and I was in dead-shock as the words came out of his mouth. They walked me back to the office and removed my laptop and my cell phone.
Then I proceeded to the Verizon store to use their phone, called my gf (at the time) and drove to the house I shared with 6 other FB guys.
Packed up all my stuff in my CRX, smoked a 1/2 pack of cigarettes on the balcony and drove to my friend Johnny’s place. It took me a bit to let my mom know and I slept on Johnny’s couch for a few days, thanks J!
Later that night we had a bbq at this place and everyone was asking me how the job was going….#awkward
I kept drinking that night to pass out and pray this was all a bad dream.
At that time, here’s the order of what was important in my life:
1- Facebook
2- Myself
3- Food / Shelter
4- My gf
5- Family
6- Friends
To spell it out. Facebook was my entire life.
My social circle, my validation, my identity and everything was tied to this company.
How the fuck could have ended up like this?
WTF! I just got a promotion and a raise 2 months before!
This was my first time being fired and it took me 1 year to get over the depression.
—————————————————————————————
After running AppSumo for over 2 years I’ve finally understood that Facebook made the right decision to let me go.
When you hire people there are three types of employees:
1- Grower. Someone who starts when the company is small and improves / adapts their skills as the company scales.
2- Show-er. Someone who can be good for the company where they are now but NOT where they are going.
3- Veteran. They’ve done it before and it’s second nature for them to teach you how to do it in your company.
I was a show-er at Facebook. I dealt with chaos of a 30 person company extremely well. (Did I mention my boss got fired on my first day and my next boss got fired 2 months after me?)
Most decisions were me walking over to Mark’s desk for approval, but at 150 people it was a group meeting of 30 people or me having to schedule time via Mark’s secretary.
I was a bit annoyed with the situation even though our memories always deceive us. Ever recall how you thought all the times with your ex-girl/boy friend were great but in reality there were a lot of shitty times…
The specific reasons I wasn’t able to adapt are as follows:
1- Selfish. I wanted attention, I put myself before Facebook. I hosted events at the office, published things on this blog to get attention and used the brand more than I added to it.
Lesson learned: The BEST way to get famous is make amazing stuff. That’s it. Not blogging, networking, etc.
2- Marketing. The marketing team’s plan was not to do anything and the night before we opened Facebook to the professional market (anyone with a @microsoft.com, @dell.com, etc…) I emailed TechCrunch to let Michael Arrington know to publish it in the morning. He ended up publishing it that night (I was at Coachella and will never again attend) before the actual product was released in the morning. I immediately notified the e-team and assumed full responsibility.
Lesson learned: I don’t think what I did was that wrong since the marketing team did not do anything to promote our new features. My lesson learned was more I should have involved them instead of just going around them. (Learn How to Hire a Great Marketing Person.)
3- Skills. As I said above when things needed to get done. I was there and shit got done. As we progressed to needing to organize massive spreadsheets and big group collaboration meetings, I zoned the F out and was then shortly out of the company.
Lesson learned: Go see if your weaknesses are hindering you at your job. Ie. I wasn’t great at planning or product management at this time. Fix them or move to another position. Also, constantly ask yourself how can I make the company more valuable. You do that and you will never get fired*. *unless you do something really stupid or the company goes out of business.
Each human on Earth has super powers. I’ve realized mine are execution, sales, marketing, eating tacos and throwing in occasional jokes.
As I’ve gotten older I’m more patient, a bit better at planning and able to work better with larger groups. Would I be a great fit for product management at Facebook now, likely; would I ever work there again, Frick No.
Ultimately, when I’m hiring now I’m looking for people who have gone to the promised land and can come back and teach us. They’ve built certain things, done the marketing we need to know, etc…
Matt Cohler (early LinkedIn, FB and now Partner at Benchmark) called me a “liability” as they let me go that day in the coffee shop on University Avenue.
This has scarred me and I’ve worked hard to be an asset to the companies I start and people I’m involved with. Thanks Matt!
A few key things I’ve learned after letting people go from AppSumo:
1- It stings the person WAY more than the company. I thought every day that the company missed me but I’ve learned they just keep going on with business. AND (UN)FORTUNATELY most businesses get better. So be stern when letting someone go but be reasonable and thoughtful to how it must feel. I encourage everyone to get fired once so they know that feeling. It’s unbelievable and something to definitely learn from.
2- EVERYONE is replaceable. You are NOT special and there is guaranteed someone better than you on this planet. So be the opposite, find the way to be invaluable where you work. This doesn’t mean locking things into you but opening things up so you are trusted and subsequently valued more.
3- Most people when they get let go, they know it’s time. They may not want to accept what their subconscious tells them but they know it’s right and it opens them up to something better. Instead of throwing them away, help guide / work with them to see what is their true calling and better suited for them.
People hear me speak or see my resume as awesome experiences but the details / depth of them is the interesting / meaty part.
Being at Facebook is where I grew the most professionally. I’ve NEVER been around such smart people. I’ve never felt so consistent like I wasn’t the smartest person in the room.
So all this combined ended up costing me around $100,000,000. It is what it is. Ultimately, I appreciate where I am now and all the experiences I got from NOT being there.
A true measure of an entrepreneur / successful-person is how they deal with adversity.
As my high school drama teacher told me the day I ran crying off the stage, “it’s not the outcome but learning from the experience that really counts….”
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Nobody has "suffered" more under central planning than billionaire hedge fund managers, and as 2016 went on, the suffering continued.
It is no secret to regular readers that over the past decade, hedge funds have not only underperformed the market, but have failed to generate "alpha" since 2011.
As we have shown year after year, the centrally-planned "New Paranormal" has been a total disaster for traditional alpha generation, since with all traditional fundamental relationships flipped upside down thanks to the Fed, the only way to generate outsized returns for one's investors (and one's offshore bank account) is to be massively levered beta, or merely wrong.
Unfortunately for the 2 and 20 crowd, in the second quarter this distressing trend continued, with Goldman's latest Hedge Fund Trend Monitor reporting that in 2016, the hedge fund industry generated a 3% return, underperforming the broader market's 9% YTD return. Worse, the average equity long/short fund and Goldman's own VIP basket have each returned just 2% YTD, both lagging the S&P 500 substantially.
As Goldman's Ben Snider points out, "even with the recent rally in the most popular long positions, the average hedge fund has returned just 3% YTD, lagging the S&P 500 for the eighth year in a row. Many active managers continue to struggle in 2016, with the average large-cap core mutual fund also lagging the S&P 500. Among hedge fund styles, although most have posted similar returns, event-driven funds have fared best (+5%) while equity long/short funds trail (+2%)."
There is some good news: during the last six weeks Goldman's Hedge Fund VIP basket of popular long positions has led the S&P 500 by 470 bp, ending the basket’s record 1500 bp stretch of underperformance since August 2015. However, even with the recent rebound, as the chart below shows, any hedge fund that merely bought the most popular stocks, or otherwise copied what everyone else was doing, is now back to a level last seen in 2008.
Sadly, little of this came from actual stock-picking: as Goldman explains, "VIPs benefitted from a surge in net leverage." After months of declining market exposure, the sharp increase in hedge fund leverage in recent weeks has helped drive VIP outperformance. Goldman Sachs Prime Brokerage reports a surge in net long exposure to 63%, approaching the highest levels in 12 months, from below 50% in 2Q. After declining during 2015 and 1H 2016, leverage bottomed at the end of 2Q, and in subsequent weeks funds boosted market exposure as stocks rallied. In addition to adding leverage through cash equities, call option volume rose to record levels, hedge fund S&P 500 futures exposures climbed by $15 billion, and the share of S&P 500 market cap held short fell to a 1-year low.
To be sure, there was some sector rotation as well, with exposure moving toward cyclical sectors and factors that hedge funds have continued to prefer despite the early 2016 outperformance of bond-like equities such as Utilities and low volatility stocks.
One interesting note comes from a deeper dive into hedge fund holdings, where crowding has declined modestly from recent record highs (as a reminder, BofA recently found that the most preferred stocks by HFs have underperformed the market, while those most neglected have been a consistent source of alpha) but more surprisingly, aggregate portfolio position turnover returned to a record low in 2Q, confirming the ongoing contraction in actual trading, as very few hedge funds rotate in or out of new and existing positions.
Goldman adds that the six-year trend of declining position turnover continued in 2Q, with overall portfolio turnover settling back at its all-time low of 27%. The largest positions, which account for the majority of fund portfolios, experienced just 14% turnover.
In short: hedge funds are stuck trying to disaggregate their holdings from each other, even as they continue to underperform the market in the process while trading increasingly less, instead merely adding even more debt to capture beta and pretend it is alpha.
Finally, for those curious what are the most widely held hedge fund stocks (ostensibly to short them), here are the stocks indicating the largest number of hedge fund investors.
Narrowing down the universe to just the woefully underperforming Goldman hedge fund VIP basket, which consists of stocks in which fundamentally-driven hedge funds have large positions, and consists of stocks that “matter most” as the positions that appear most frequently among the top 10 holdings within hedge fund portfolios, here are the top 50 names.
Finally, for those eager to go long, few lists beat the 50 companies most shorted by the "smart money."
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While there have been some very prominent recent entrants into the billionbear club, such as BIll Gross, Jeff Gundlach, Carl Icahn and George Soros, who only recently switched from being bullish on the market to predicting gloom, one name has been a staple when it comes to warnings about the disastrous consequences of the new normal's monetary policy: Elliott Management's Paul Singer.
And, sure enough, in his latest letter he does not disappoint, dispensing with his usual dose of what Kate Kelly calls "bleakness", warning that the bond market is "broken", and when the unprecedented central bank actions of recent years can no longer prevent a market decline - which considering that both the BOJ and ECB are running out of monetizable bonds may be sooner than many expected - "the subsequent loss of confidence could be severe."
As Singer admits in Elliott's Q2 letter to investors, what the fund, up 6% YTD, is seeing, is "the most peculiar period we have faced in 39 years." The details are familiar to those who have read Singer's previous laments (most recently here) on central planning: too much central bank power, too much monetary debasement, inevitable inflation, and "when it happens it could be swift and impossible to tamp down."
Not surprisingly, Singer touches on a very popular topic in a world of nearly $14 trillion in negative yielding bonds, namely the scramble for safety, and surprised by the "continued stampede" to buy such bonds, he says that today's environment marks "the biggest bond bubble in world history", leading him to declare that "the global bond market is broken."
Singer is stumped by the "mentality that flies to an asset class regarded as a "safe haven" even when there are low or nonexistent returns attached to it and no guarantee that current conditions will persist", and warns buyer of negative yielding debt to "hold such instruments at your own risk; danger of serious injury or death to your capital!"
Actually, it is far less complicated than that: bonds are no longer being bought for current yield purposes (which does not exist in NIRP world) - an honor instead delegated to dividend yielding stocks, which can wipe out several years of dividends in an instant, as happened earlier today to CXW - but simply for capital appreciation, as demonstrated last week by the failed BOE QE buyback operation, where the central bank would literally pay anything to a willing seller, and yet was unable to find one in an offerless market. Of course, the culprit behind this irrational scramble is well-known: central banks.
Which leads us to Singer's next point, namely that "trading in this market is particularly difficult", something hedge funds which haven't generated any collective alpha in 5 years know too well.
"Everyone is in the dark," Elliott notes. "Experience doesn't count for much, and extreme confidence may be fatal."
Singer's gloomy conclusion is almost as apocalyptic as that of Carl Icahn from his latest Bloomberg TV interview: "the ultimate breakdown (or series of breakdowns) from this environment is likely to be surprising, sudden, intense, and large."
End of the investing world aside, the hedge funder says he is seeing opportunity in the distressed-energy sector despite the rebound of oil and gas prices from their lows. The fund also has been building up its gold position "in a conditional format," to ebb losses "should prices fall back from their recent strength."
Finally, Singer says that "it seems to us that investments and trading strategies which make money in a value-added way, in a different manner than the returns obtainable from the passive ownership of stocks and bonds, are especially good additions to institutional portfolios in the world going forward," the letter states. As Kelly adds, that may be a more challenging argument for the average hedge fund competitor, which according to the HFR composite is up just 3 percent through July versus an S&P 500 that's up more than 6 percent. Furthermore, considering Steve Eisman's latest "big bet", this time against the hedge fund industry's well-known "2 and 20" compensation model, many active managers may not be in business long enough to see the "ultimate sudden, intense breakdown" predicted by Singer.
One person, however, who will be there is fellow billionaire Carl Icahn, ready and waiting for the apocalypse, as per his comments we noted yesterday:
"I have hedges on, I'm more hedged than I ever was. I will tell you there's certainly good companies. [The market] is way overvalued at 20 times the S&P and I'll tell you why: a lot of it is a result of zero interest rates. It's just what I said. You have zero interest and a lot of buybacks. ... I think the market is at literally very high levels because of zero interest rates. There's going to be a day of reckoning here. I've seen it many times in my life. When things look good, they look great. You go into the sky. But that's when you have to really pull down and really stop buying. That being said, I'm not going to tell you it's going to happen tomorrow, next week, even next month, even next year possibly. But it's going to happen, and you have to change the direction of our economy. I can't say it plainer than that. "
And while we await the moment it all comes crashing down, we are starting a database of memorable quotes by billionaires who are predicting both the end of the world, and also believing they can somehow hedge for it. We hope to present it to readers just as soon as the world's central planners finally decide they have had enough of propping up the "market."
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Submitted by Darius Shahtahmasebi via TheAntiMedia.org,
On Thursday, the U.S. State Department approved the sale of more military equipment, valued at around $1.15 billion USD, to the oil-rich kingdom of Saudi Arabia. This sounds like a lot of money to most of us, but the most frightening aspect of the sale is that it represents a continuation of an arms-dealing relationship between Washington and the Saudi regime, which has been worth over $50 billion USD in arms sales to date.
It is not an understatement to say Obama’s tears over gun violence are disingenuous considering his administration has enacted a policy of systematically arming the entire world with all manner of warcraft. According to the Department of Defense Security Cooperation Agency (DSCA), during his first six years in office, the Obama administration entered into agreements to sell more than $190 billion USD in weaponry worldwide. As the director of the Arms and Security Project at the Center for International Policy, William D. Hartung, states, this figure is higher than any U.S. administration since World War II. Perhaps that is why the Nobel secretary has voiced serious regrets about awarding the Peace Prize to the president.
While there are a number of companies who are making an absolute killing from these sales — like Lockheed Martin and Boeing — the fact remains that the U.S. government actively facilitates this industry in more ways than one.
In 2013, the Obama administration loosened controls over military exports so military equipment could be sent to almost any country in the world with little oversight. U.S. companies began to enjoy fewer checks than they had in the past. For example, thanks to the Obama administration, weapons manufacturers can now send military parts to most regions of the world without a license, which makes it easier for companies to extend their market — even to countries that are on the U.N. arms embargo list. This is because, according to Colby Goodman, an arms-control expert with the Open Society Policy Center, once an item is approved for that exemption, there may no longer be any ongoing, country-specific human rights review as had been conducted previously.
As Mr. Hartung observed, all of this raises a number of issues when dealing with global security:
“36 US allies—from Argentina and Bulgaria to Romania and Turkey—will no longer need licenses from the State Department to import weapons and weapons parts from the United States. This will make it far easier for smuggling networks to set up front companies in such countries and get US arms and arms components that they can then pass on to third parties like Iran or China. Already a common practice, it will only increase under the new regulations.”
The expansion of this industry is already well under way, and the U.S. is at the helm. According to Vice News, as of February of this year, the U.S. had sold weapons to nearly half of the countries in the world. The Stockholm International Peace Research Institute found American exports reportedly made up a third of the global trade. A congressional report found that for 2014 alone, the U.S. made $36.2 billion in arms sales.
The Middle East region, hardly known for its peace and security, accounts for approximately 40 percent of U.S. weapons exports. Nearly ten percent of U.S. arms exports between 2011-2015 were sent to Saudi Arabia, and a further 9.1 percent went to the United Arab Emirates (UAE), who are primarily responsible for the humanitarian catastrophe unfolding in Yemen. But Obama is not merely turning a blind eye to the atrocities in Yemen — his policies are enabling its destruction.
The Obama administration is also doling out weapons elsewhere. In May of this year, the White House lifted its arms embargo against Vietnam — a country once ravaged by the United States — and is set to become a rising recipient of U.S. weaponry. The target of the move is China, as Vietnam has been one of the countries participating in a stand-off with China over tensions in the South China sea.
The current U.S. arms industry is worth more than $70 billion a year but no major news outlet is talking about it. Hillary Clinton and Donald Trump are not talking about it, except as far as to state how much more fantastically militaristic they can make the U.S. government.
In spite of politicians’ and weapons companies’ enthusiasm for an arms industry that generates over $70 billion per year, the glut of sales has not provided the world with security. As CNN has reported, the State Department’s 2017 budget request is likely to include more funding for African armies in places like Mali, Somalia, and Nigeria. The U.S. already has a long history of meddling in these nations — and actually helped create the very terror threat they supposedly want to fight there.
Where will this end?
Providing countries with arms so they can confront a nuclear power like China is not going to provide the world with security. There are many who paint China to be the aggressor in the region, however, even if that is the case, provoking these conflicts and making billions of dollars in the process only benefits a select few — none of whom will ever have to feel the pain they inflict on the rest of the world.
This isn’t a case of companies making a profit because the government has little to no say in regulating what goes on. In any given arms sale, the U.S. government is involved in the entire process. Yet this is the same government that claims to passionately care about gun violence domestically while enabling chaos and destruction around the world.
They can hardly be said to be leading by example with their current track record.
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Uber's self-driving taxis will get their first real-world test in Pittsburgh this month, with the semi-autonomous vehicles assigned at random to customers using the company's app. According to a report from Bloomberg, the test fleet will consist of modified Volvo XC90 SUVs, with each car supervised by a human in the driver's seat (a legal requirement) as well as a co-pilot taking notes. The trips themselves will be free, with a tablet in the backseat informing the passenger about the car's capabilities.
Pittsburgh has been the home of Uber's self-driving ambitions since 2014, when the company began its quest to poach engineers from the robotics department of the city's Carnegie Mellon University. By early 2016, says Bloomberg, Uber had a team of hundreds of engineers, roboticists, and mechanics at its Advanced Technologies Center. Self-driving test vehicles were soon spotted around the city, and in May, the company released its first official photo of a prototype vehicle — a modified Ford Fusion.
The company has iterated quickly since then, and this month's deployment of semi-autonomous vehicles to actual (non-paying) customers is a significant step. Tesla's Autopilot software has been slowly increasing its functionality for drivers (despite a fatal crash in July that's currently being investigated by the NHTSA), and Google's self-driving fleet has been undergoing extensive testing, albeit with custom cars limited to speeds of 25 miles per hour. However, with this pilot program Uber is testing a rudimentary version of its final vision for self-driving cars: to replace its one million plus human drivers.
As Bloomberg reports, full autonomy for Uber's vehicles is still a way off. For now, supervising engineers will sit with "their fingertips on the wheel," with chimes sounding when they need to take control of the car — like on bridges, for example. Volvo has so far delivered a "handful" of the self-driving test vehicles, with 100 due by the end of the year. The automaker also announced today that it has signed a $300 million agreement with Uber to develop a fully autonomous vehicle by 2021 — the same target set by Ford for its own self-driving car, announced earlier this week. The future, it seems, is coming on fast.
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If hotheaded online commenters ran the Justice Department, would America's prisons be full of traders responsible for the financial crisis? It is tempting to think so—that the lack of corporate prosecutions is due to a lack of will rather than a lack of way.
But convicting bankers—or any other white-collar workers whose decisions at work have ostensibly damaged the economy—is difficult because while it is easy to identify systematic wrongdoing, it's much harder to pin blame, at least in the way a court might approve of, on an individual within that system.
Sam Buell, a Duke law professor, argues in his recent book Capital Offenses: Business Crime and Punishment in America’s Corporate Age that this is no accident. The difficulties that government prosecutors face in cobbling together fraud cases against even the most nefarious executives illuminates the fact that, legally, corporations are big, fancy responsibility-diffusion mechanisms. It’s what they were designed to do: Let a bunch of people get together, take some strategic risks they might otherwise not take, and then make sure none of them is devastated individually if things go south.
In his book, Buell, who served as the lead prosecutor for the Justice Department’s Enron Task Force, sets out to soften some Americans’ lock-’em-up mentalities by providing some perspective on how the criminal-justice system works and why it works that way. I recently spoke with Buell about the anger many Americans feel about corporate crime, other potential targets of that anger, and why convicting white-collar criminals is not as straightforward as many people think it should be. Our conversation has been edited for context and clarity.
Joe Pinsker: I wanted to start by asking you the question that I think is probably the one that people are most likely to have asked at some point: Why are there no bankers in prison as a result of the financial crisis?
Sam Buell: Well, the short answer is we don't know, because prosecutors aren't required to make a report when they decide not to prosecute a case, so we don't know what exactly the evidence is that whichever prosecutors looked at these cases decided wasn't sufficient. So with that big caveat, which is to say we have to speculate, my view is that it's likely that these cases weren't brought because it's very difficult to establish a theory of criminal fraud when you have essentially one sophisticated bank trader selling a product to another sophisticated bank trader and the person who lost in the trade is saying, "Hey, there's more about this that you should have told me that you didn't tell me."
And these are not special fiduciary relationships, like the relationship between some investment advisers and average investors—this is trader against trader in a very sophisticated market. In a criminal case you've got to prove intent to deceive—that is, you've got to prove that there was an individual who at the time they sold that security to the other banker knew that what they were saying was false about that security. So these are hard cases to make, and I think, bottom line, maybe if we were to go through every single one of them, maybe we could find a case here, a case there, to quibble with the government's decision. But the idea that this is an area where you could have imprisoned large numbers of mortgage-backed-securities traders for what they did and the government just sat by and didn't do it, to me, is just totally implausible.
The frustrating thing about the financial crisis is that the victims, of which there were so, so many of us who were severely victimized when this happened, were not parties to the trades that created the problem. We weren't the ones who bought the mortgage-backed securities. So yes, we were victimized in the sense that we were downstream victims in the economy from a sort of risk fiesta that was allowed to go out of control because it wasn't regulated. But because we were victimized doesn't mean that somebody can be put in prison.
Pinsker: It would be easy to, after reading a Matt Taibbi article or watching The Big Short, to come away with the feeling that you just alluded to, that a lot of people should have been locked up. Can you talk a little bit about what narratives like that don't necessarily capture?
Buell: Well, I think what my book's trying to fill the gap in is for a layperson to understand what's going on in the legal system. Certainly the legal system is not optimal, and there are a lot of deficiencies in it, like in any society, but the reason why there's a lot of friction in the legal system is that it's actually very difficult to draw lines between right and wrong in an area where we're essentially saying two things at once: Be aggressive, take risks, make money—but don't hurt people while you're doing it.
So when we have situations like the financial crisis, where a lot of people end up hurt in the end, if you don't look at the question of, “Well, what are the questions that really have to get answered for there to be a result legally?” then it's very easy to say, "Oh, a bunch of people got hurt, so a bunch of people should go to jail."
But would we really want a legal system that did that? Would we really want a legal system that just said, “White-collar crime is going to be the thing that we don't like in retrospect when things go bad.” Which is not the system that we have. We have a system that says, “Look, there need to be rules of the road,” and in order to convict somebody of a crime, you have to really establish that those rules of the road were broken at the time, and that the person who broke them knew that they were breaking the rules.
So in some sense, I agree colloquially with Steve Carell's character in The Big Short when he says, roughly, "Oh my gosh, this was all a big fraud!" In a sense, yes, the mortgage-backed-securities market was a grand deception, but that's not how the law deals with the question of whether Trader Frank or Trader Harry should go to prison for their participation in that system. That's got to be a much more specific question legally. And it should be, because the way we deal with disasters in the capital markets shouldn't be just to have a big sweep and send a bunch of people to jail just to send a message. That's not the way that the American legal system works and I don't think it's the way most people would want it to work.
“The criminal-justice system is not well-suited and perhaps should not be primarily a vehicle for venting anger.”Pinsker: At various times in the book you liken the American appetite for prosecuting white-collar criminals to some sort of bloodlust. Can you talk about why that attitude may actually be counterproductive for making businesses operate in a way that people probably want them to operate and is fair to anyone involved in the economy?
Buell: I wouldn't use, and I don't think I actually used in the book, the term “bloodlust.” I think that's a little strong. But I do think there is a sense that people are particularly outraged about this form of crime, understandably, because it's generally perpetrated by people who are in a position of economic and social advantage in society. There's no reason to have sympathy for the plight of this person in the way that you might for some kinds of street criminals. So there's an anger there about, how dare the privileged abuse their position in society like this?
And so it's very understandable, then, that people would turn to the criminal-justice system as an outlet for that anger. But as you alluded to, one of the arguments I make in the book is, while that's understandable, it may not be the most productive thing in the end because the criminal-justice system is not well-suited and perhaps should not be primarily a vehicle for venting anger. It should be a vehicle for trying individual cases.
When we go into that system with that anger, number one, we may not get what we're looking for, and number two, it's an entirely backward-looking exercise. We're just saying, "What should we do with these people now that we're angry at them?" As opposed to, "What can we learn about how the systems were set up in a bad way, and how can we fix the systems?" whether it's the regulations that apply in a particular industry—banking, automotive manufacturing, oil drilling, whatever the industry is that has produced the problem—or it's the incentives that apply generally in the corporate structure, the structure of large corporations, and the question of personal responsibility for corporate management. Could we think about maybe arranging corporations in a different way to lower the appetite for risk or at least the appetite for bad kinds of big risks?
And those conversations, it seems to me, can be displaced a bit, and have been, in fact, in the wake of the financial crisis, by the dominance of the "why no bankers in jail?" narrative, which I think has a corollary to it implicit in it, which is, "If only the bankers were in jail, we would have fixed the problem." That's the part that I'm actually quite skeptical of.
Coming in from the Enron prosecutions, and in that era, there were some very serious sentences doled out to the kind of people who, 20 or 30 years ago, it would have been considered unthinkable that they would go to federal prison for a decade or more. I mean, managers of Fortune 500 companies, Fortune 100 companies, Fortune 10 companies, getting long prison sentences.
And yet there's very little evidence that that changed behavior in some larger sense, and in fact a lot of what went on in the banks leading up to the financial crisis was risk-taking and accounting maneuvers that were quite similar in a lot of ways to what went on at Enron—harder to prosecute, because they had lawyer and accountant approvals all over them, but similar in the types of risks that were being taken and the kinds of assumptions that were being made. So in that sense it seems that the prosecution process, as important as it is when there's serious wrong conduct, and there's plenty of examples of that—the Bernard Madoffs of the world, and others—it's mostly a backward-looking exercise. It's not a constructive, forward-looking one.
Pinsker: I think part of that “Why aren’t more bankers in jail?” narrative is an impulse to, as you say in the book, treat them “like common criminals.” And you recognize the mass incarceration of people who commit street crime as morally reprehensible. Can you walk me through, though, what it would have to look like if, when it comes to policing, white-collar criminals actually were treated like common criminals?
Buell: Well, it's an apples-and-oranges problem, because, when we talk about white-collar criminals, certainly in the corporate context, we're talking about people who are working in lawfully created and licensed industries. Not only are they lawfully created and licensed—they're encouraged. This is not the case with dealing cocaine or heroin or human trafficking and the other kinds of things that we see producing large segments of the federal prison population.
To say, "Oh, we just need to police white-collar crime the way we police street crime" kind of makes no sense, because we police street crime the way we police street crime because it's people engaged in entire realms of behavior that are banned. They're black markets, so you can have a pervasive policing presence in that context and any amount of the activity that's observed justifies legal intervention. What are you going to do in the context of lawful industries? Are you just going to send the cops in to patrol the corridors of office buildings? What are they supposed to be looking for?
Now, we do have, obviously, regulators that monitor many of these industries, and we could do a lot better job of regulating some of these industries, but that's different. That's a process of working with the rules to set the boundaries. It's not a question of having cops wandering around making arrests all the time.
Pinsker: How do you bridge the gap between the argument you’re making—which, however sound, is still rationalizing the status quo—and the average person's frustrations with the system?
Buell: I think we're getting to a place where that gap may be bridging a little bit on its own, in that, in contrast to where we were 10 or 20 years ago, we've got a widespread understanding that the system for policing street crime is unfair. But the way to fix street crime is not to necessarily get unreasonably harsh on white collar crime. That may be a way of satisfying some of the anger about the way the criminal-justice system has exploded in the United States with regard to drugs and other forms of street crime, but it doesn't really address the street-crime problem—it maybe just makes people feel better.
If in fact we're going to start looking at street-crime policing and saying—and I'm not the first one to make this point—“What if street-crime policing looked a little bit more like other forms of regulation where we actually have government systems that are trying to deal with the root causes of the problems rather than just locking up enormous amounts of people and expecting it to change something?”
Pinsker: Do you think people will ever be satisfied with how corporate crime is punished in the U.S., or are they just going to continue railing against what is an inevitable frustrating feature of the way the economy is set up?
Buell: Well, I hope that their attitudes will change if they read my book, but I'm not that unrealistic as to think that my book is going to become a bestseller or something. But the book is intended to be more thought-provoking than problem-solving, and one of the points I make in the book is that this whole subject has to do with something that we as a culture are deeply ambivalent about, and I don't expect us to stop being ambivalent about that. I think we have an ambivalent relationship with the large corporation and with capitalism. It's a relationship that involves need and dependency and some level of celebration but also resentment, anger, and victimization. As long as that relationship, as long as the big corporation and the capital economy continue to define us as a society, that relationship is going to remain ambivalent. And as long as that relationship is ambivalent, I don't expect people to reach a point of happiness and satisfaction in the way that the system deals with white-collar crime.
Pinsker: You teach a class at Duke on corporate crime. How do the law students that you teach today differ from your generation and your peers in how they think about corporate crime?
Buell: I think there's a huge difference with the level of awareness of these issues. When I was a law student in the early ‘90s, I was at NYU Law School, which, of all the law schools in the country, is probably the one that's most connected to what's happening on Wall Street and in the corporate-law space. In many ways that's kind of what's defined NYU as a law school. We didn't even have a course in white-collar crime when I was at NYU law school, and most of the big New York firms to which NYU was feeding students didn't even have practices in this space. It's not like we didn't know what white-collar crime was, but it just did not have the prominence in the legal profession and in the public realm.
The students that I get now, they're coming to me having read The Big Short or having seen the movie, or watched Billions. They've been reading about this stuff in the newspapers; they know about the financial crisis. Some of them even remember something about Enron or being told about Enron. There's an understanding among students now that this topic is an important piece of the public-policy space in the United States, in ways that it did not have that prominence when I was in law school.
And I think that's because the scale of the problem's gotten bigger, and crisis after crisis has showed us that these problems are very difficult to get under control. And that's maybe not good news for the American people, but it's great news for me as a scholar and a teacher.
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Hey science geeks! The luscious Ed Yong, probably the best science writer going, has written a wonderful book called I Contain Multitudes, which discusses the invisible world of microbes.
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The BBC detailed a report from the University of Warwick, which found that a percentage of elite golfers have oddly shaped hips.
That’s right, for all your biomechanics enthusiasts and amateur physiologists out there, the University of Warwick has discovered something interesting: In analyzing 55 elite golfers using MRIs, researchers found that golfers had “egg-shaped” right hip joints, while the left hip joint was the expected ball shape.
To be clear, the study didn’t determine that all elite golfers are imbued with egg-shaped right hip joints. Rather, 14 percent of golfers were found to, which is still a statistically significant number and one that will surely alter the way medical professionals think about hip injury in golfers.
It’s assumed, although not stated in the article, that golfers were all right-handed. And, of course, it’s unclear whether golfing causes the hip deformity. Co-researcher Dr. Edward Dickenson took the line of inquiry to its logical conclusion.
“Our findings have brought up new questions to be answered. What remains to be established is whether professional golfers develop these shapes because of the way they are using their hips or whether players with these hip shapes are more likely to become professional.”
The study, which tapped members of the 2015 Scottish Hydro Challenge, also found one-fifth of players had hip pain. More sophisticated communicators of the golf swing from a biomechanical standpoint could offer more insight, but it’s worth noting that in the course of the golf swing, the hips rotate in different direction at different speeds. Researchers posit this cam rotation is a contributing factor to the hip deformity.
Perhaps the results of the study will have tremendous application in the world of golf, perhaps they won’t, but we’re all for thorough scientific analysis of golfers, golf equipment, and the golf swing.
Featured image via Ohio State’s Spine Research Institute
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New wave of Fitbit devices revealed in images
Like so many other pieces of tech, activity trackers are constantly getting updated with new models adding features and functions with each iteration. Industry heavyweight Fitbit appears to have reached a point where their product line and the associated updates are starting to come out in a more orderly fashion. Although Fitbit’s trackers are several generations old in some cases, we are seeing a pair of their current devices poised to update to their “2” models with the impending release of the Fitbit Charge 2 and the Fitbit Flex 2, both of which were revealed in some new images.
In their current versions, the Fitbit Charge models include the plain version and the Charge HR version that adds a heart rate monitor. For the next round, it looks like Fitbit is going to move the heart rate monitoring into the main device and make it standard. The Fitbit Charge 2 looks like it will get a larger display to help users access information a bit easier. Based on the images, Fitbit may have made some modifications to the band to help address the issue of the bands breaking at the point where they join with the main unit. The Fitbit materials also indicate bands will be interchangeable, so it will be interesting to see how that works.
The Fitbit Flex 2 features many of the same features as the Fitbit Charge 2 with the notable exception of a screen and a heart rate monitor. With the simple design Fitbit was able to add one feature to this device that will likely interest some users – the ability to wear it while swimming. Previous models were resistant to the effects of sweat and even mild splashing or perhaps rain, but the quality of being “Swim-Proof” will be new for the line of devices.
No information has been revealed yet regarding a possible launch date, market availability or pricing. Odds are good though that these new devices will be available in time for the upcoming holiday shopping season.
source: TechnoBuffalo
Raised in North Carolina, Jeff Causey is a licensed CPA in North Carolina and possesses the CAPM credential from PMI. Jeff's past Android devices include an HTC EVO, a Samsung Note II, and an LG G3 along with a Samsung Galaxy Tablet 10.1. He currently uses a Motorola Moto X Pure Edition and (very rarely) a Nexus 7 (2013). Jeff used to have a pair of Google Glass and a Moto 360 Sport in his stable of gadgets. Unfortunately, his wife and kids have all drunk the Apple Kool-Aid and have i-devices. Life at home often includes demonstrations of the superiority of his Android based devices. In his free time, Jeff is active in his church, a local MINI Cooper car club, and his daughter's soccer club. Jeff is married, has three kids, and a golden retriever.
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