http://www.nakedcapitalism.com/2012/11/can-open-source-ratings-break-the-ratings-agency-oligopoly.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Yves here. One of the causes of the financial (CRISIS?) that should have been relatively easy to fix was the over-reliance on ratings agencies. They wield considerable power, suffer from poor incentives, in particular, that they can do terrible work yet are at no risk of being fired thanks to their oligopoly position, and are seldom exposed to liability (they have bizarrely been able to argue that their research is journalistic opinion, which gives them a First Amendment exemption). But they are not big enough moneybags to be influential donors, nor are they critical to the financial infrastructure.

Yet they’ve managed to stymie meaningful reforms. Scarecrow and Jane Hamsher detailed how Standard & Poors started threatening to downgrade US debt just as provisions in Dodd Frank that would have made them liable for their opinions, just like other experts, were moving towards a vote. And, mirabile dictu, they managed to get that provision stripped from the bill...Note that the EU is in the process of imposing rules that would make the ratings agencies liable for “mistakes in case of negligence or intent.” This presumably would apply only on ratings of issuers based in the Eurozone; if a European investor relied on ratings to invest in a US security, these rules would not apply. Some commentators are skeptical of other provisions, namely, ones to curb sovereign debt ratings and restrict ownership of ratings agencies.

At the same time, even though ratings of structured products have proven to be sorely wanting, investors still prefer having a bad metric to no metric, particularly since that allows them to shift blame if Something Bad Happens (“everyone else in the industry uses them, we would have lost business if we tried something different”).

One way to remedy this problem would be to reduce the power of the current incumbents by allowing for new entrants. While the SEC initially appeared to be receptive to that approach, people I know with solid backgrounds have found that the SEC is requiring so much capital as to make it unattractive to proceed, thus keeping the current oligopoly intact...Open source ratings is another route for chipping away at the oligopoly. In computers, privately developed operating systems also had a quasi monopoly position, yet open source programs have come to play a more and more important role. And many now forget that in the early days of Linux, most potential users regarded it as simply nuts to consider it. How could you use software where no one was….responsible??? Where there was no business that had an interest in updates and bug fixes? Who do you call if something goes wrong? (That ignores the issue that Microsoft in particular releases buggy software, and that many fine programs nevertheless don’t get updates and upgrades because the developer can’t sell enough copies to make a business out of it). But over time, Linux and other open source software has gone from being bleeding edge to having meaningful market share in certain product areas. So if more independent-minded investors were to find open-source ratings useful (hedge funds, sophisticated individuals and family offices), you could see acceptance there leading it to become a legitimate alternative for institutional investors.

The current credit-ratings system is a complete farce that has caused damage in the trillions. It needs to be completely reformed into a more transparent, competitive system. An open-source approach presents a perfect solution.

Introduction

Credit ratings are of paramount importance in the economy. A rating evaluates the creditworthiness of the borrower. It provides the likelihood that the borrower will repay its debt, which describes the risk of default, and therefore the risk of the borrower and the loan. This risk determines the required return on the loan – the interest rate. Because investors cannot adequately determine the credit rating of a borrower, they rely on the ratings provided by credit ratings agencies. Good ratings allow for proper allocation of capital; while poor ratings result in overlending, misallocation of capital, and investor losses. Thus, proper credit ratings make capital markets efficient and underpin strong economic growth...Sovereign credit ratings are especially important, because they affect the whole credit system in the economy. The sovereign is generally the government of an independent country like the United States, France, or Argentina. In general, the government is considered to be the lowest risk in the economy; in a sense, it represents the relative risk-free rate in the economy. Corporations and municipalities derive their risk from their national government. They are generally considered higher risk, because they “inherit” their government’s risk and add on top of that other economic and business risk. The whole credit structure of an economy is entirely built upon government credit. Its risk is based upon government risk. Any misjudgment of government risk propagates throughout the whole credit system with catastrophic results for the economy and horrific losses for the lenders.

Unfortunately, our modern credit rating system is fraught with problems that have already resulted in trillion-dollar losses and untold suffering by many nations. These problems extend to municipal, corporate, and structured-finance ratings. The system has proven to be a massive failure and needs to be entirely overhauled. The reform must necessarily provide for more transparency, more competition, and more flexibility. It also needs to address a large number of other problems outlined in the next section.

Problems of the Credit Rating System

The weaknesses of the current credit rating system are well-known and well-understood. It is not surprising that the ratings agencies have been heavily criticized for their spectacular failures in recent years. Triple-A ratings were assigned to large volumes of “toxic” mortgage-backed securities and collateralized debt obligations that ultimately lost value. A classic example of a corporate rating failure is that of Enron, where the ratings agencies did not downgrade the company until a few days before its bankruptcy. Equally spectacular were the triple-A monoline insurers like MBIA and AMBAC that went bankrupt or suffered belated multiple-notch downgrades during the global financial crisis. Finally, the spectacle surrounding the downgrade of the U.S. Government during the debt-ceiling crisis in 2011 made it all too clear that credit ratings agencies are politicized and incapable of prompt, decisive action. A deeper investigation offers other, more subtle problems. Here is a brief outline.

Problem 1 – Government Monopoly.
Problem 2 – Unaccountability.
Problem 3 – Politicization.
Problem 4 – Conflicts of Interest.
Problem 5 – Lack of Transparency.
Problem 6 – Inconsistent Methodologies.
Problem 7 – Inconsistent Ratings.
Problem 8 – Untimely Downgrades.
Problem 9 – Insufficient Analysis.
Problem 10 – Ignoring Maturity.

The Open Source Solution to Credit Ratings

The open-source movement has proven to be a powerful force in our modern technological world. It began in the software industry and rose to prominence with the success of Linux. It is steadily spreading in other areas. Open-Source Credit Rating Models provide a superior platform that effectively resolves all of the above problems. One leading example in the field is Public Sector Credit Solutions, which published in May 2012 an open-source sovereign and municipal rating tool called the Public Sector Credit Framework...It is important to understand that, just like Linux, the open-source model does not immediately provide the “ultimate” solution. However, it is a dynamic, evolving rating system that is open to enhancements and modifications. Anyone can modify it, justify their enhancements, and observe the results. It is likely to branch, just like Linux, into many alternative and competitive versions. Some versions will prove better and will stand the test of time; others will fall behind and will be forgotten; still others might specialize in municipal, corporate, or structured credit. In such an open, transparent, and competitive environment, natural selection, adaptation, specialization, and survival of the fittest will determine the winners.

The open-source solution addresses adequately each one of the above concerns:



Conclusion

The current credit rating system is fraught with problems: from lack of competition, accountability and transparency, to politicization, inconsistencies, and untimeliness. Private sector competition and transparency are needed to overcome these problems. The open-source approach, as implemented by the Public Sector Credit Framework, provides one possible solution to our current credit rating problems. Other solutions could be possible, if they offer sufficient degree of competition and transparency.

DETAILS AT LINK

Read more at http://www.nakedcapitalism.com/2012/11/can-open-source-ratings-break-the-ratings-agency-oligopoly.html#BLFIrzCbhbMYdqAB.99

http://www.nakedcapitalism.com/2012/11/70-of-jobs-created-dont-require-a-college-education.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

No wonder the collision of the higher education bubble and the job market is proving to be so painful.

This Real News Network interview with Jeannette Wicks-Lim shreds the idea that getting a college education is a way to get a well-paid job. While there is still an upper tier of positions that require a college education and in many cases, advanced degrees, the bulk of employment growth in this economy is in badly paid service jobs. Despite the fact that the pundit class keeps wailing how America isn’t growing enough high skilled workers to compete in the world economy, the evidence is otherwise. For instance, Gene Sperling will regularly contend that America needs more engineers. Yet engineering jobs don’t pay enough to reward the cost of getting that degree. I’ve had engineers regularly say in comments that the only way to do well with an engineering degree is to then get a law degree and become a patent/intellectual property attorney. If the US really does need more engineers for competitiveness reasons, then it needs to get the cost of their education down, much the way it subsidizes the cost of educating elite mathematicians and physicists.

The proof of the notion that a college education is a bad investment for many. From the inteview:

So if you look at these $10 an hour or less workers, you see that between—you know, over the last three decades, there was 25 percent of these workers who had some college experience, and now you’ve got 40 percent of these workers with some college experience.

Read more at LINK

http://truth-out.org/opinion/item/13526-no-santa-claus-and-bill-clinton-was-not-an-economic-savior

The truth is often painful but nonetheless it is important that we live in the real world. Just as little kids have to come to grips with the fact that there is no Santa Claus, it is necessary for millions of liberals, including many who think of themselves as highly knowledgeable about economic matters, to realize that President Clinton’s policies sent the economy seriously off course...In Washington it is common to tout the budget surpluses of the Clinton years as some momentous achievement, as though the point of economic policy is to run budget surpluses. Of course the point of economic policy is to produce an economy that improves the lives of the people in a sustainable way. Clinton badly flunked this test. The Clinton economy was driven by a stock bubble. This is not a debatable point. The ratio of market- wide stock prices to corporate earnings was well over 30 to 1 at the peak of the bubble in 2000. This is more than twice the historic average. This run-up in stock prices drove the economy in 2 ways. First, since any good huckster could make millions selling shares in dot.whatever, we had many hucksters starting nutball businesses that never had a prayer of making a profit. This is not much of a long-run economic strategy, but in the short-term
it led to an increase in investment...The other way that the bubble drove the economy is through the wealth effect on consumption. The run-up in stock prices generated roughly $10 trillion in bubble wealth. The wealth effect from stock is usually estimated to be 3-4 cents on the dollar. This would mean that the bubble generated between
$300 billion to $400 billion annually in additional consumption. This would have been 3-4 percent of GDP at the time ($480 billion to $560 billion annually in today’s economy). This is born out in the Commerce Department’s data which show that the saving rate fell from close to 7 percent at the start of the 1990s to around 2.0 percent at the peak of the bubble in 2000.

This was the economy that President Clinton handed to President Bush in January of 2001. It was an economy that was being carried by an unsustainable bubble that in fact already was in the process of deflating at the time Bush took office. The S&P 500 was more than 10 percent below its 2000 peak and the NASDAQ was down by more than 40 percent on the day that Bush took office. This pretty much guaranteed the recession that began in March of 2001 just as the collapse of the housing bubble placed President Obama in the middle of terrible recession in January of 2009. The 2001 recession was the main reason that the surplus vanished in the 2002 fiscal year. Directing tax cuts to the wealthy was a foolish policy response to the downturn, but it was reasonable to turn to fiscal stimulus following the collapse of the stock bubble just as it was reasonable for President Obama
to turn to fiscal stimulus following the collapse of the housing bubble. The Bush tax cuts did provide a boost to the economy, although they would have provided a larger boost if this money had been directed at moderate and middle income people or devoted to long-term investments like education and infrastructure...The growth of housing bubble eventually provided the boost needed to recover from the 2001 recession, just as the stock bubble propelled growth in the 1990s. As the economy got back near full employment in 2006 and 2007, the deficits shrank to sustainable levels. However, while the deficits were sustainable in the later years of the Bush presidency, the housing bubble was not. Its collapse gave us the most predictable economic disaster in human history, even if all our top economists somehow didn’t see it.

To have a sustainable growth path we have to reverse one of the other central policies of the Clinton years, the over-valued dollar. This policy, which was put in place when Robert Rubin became Treasury Secretary, ensured that we would have large trade deficits. The trade deficits were good news for Wall Street with its obsession over inflation. It was also good news for companies looking to move operations overseas to take advantage of cheap labor. However, the high dollar was terrible news for the country’s workers who were placed at an enormous competitive disadvantage. It resulted in the loss of more than 4 million manufacturing jobs. It was also bad news for anyone who doesn’t think that bubbles are a clever way to drive the economy.

Rubin and his allies control the Democratic Party with their money at the moment. Their financial power will not be easily overcome. However, it is important that people understand that the Rubin- Clinton team is every bit as much about redistributing money from the rest of us to the very rich as the Republicans. The big difference is that, unlike the Republicans, the Rubin-Clinton crew believes that the rich should have to pay their taxes. That’s something, but until there is someone in this debate who isn’t pushing policies that redistribute before-tax income upward, the vast majority in this country can only lose.

He's got a lot of charm, and he wasn't publicly embarrassing. Until the private became public, that is.

http://www.nationofchange.org/hospital-facility-fees-boosting-medical-bills-and-not-just-hospital-care-1356362401

After Vermont hospitals started buying up the medical practices of local physicians, state Sen. Kevin Mullin of Rutland, began hearing complaints that prices some patients were paying for routine medical care had soared. One family accustomed to paying about $120 in out-of-pocket costs for doctor visits and other medical services was outraged when they ended up forking over more than $1,000 for similar visits, Mullin said, mostly for seeing doctors whose practices had been bought out by a local hospital.

“The only thing that was different was the office was now hospital-owned,” said Mullin, a Republican. “All of a sudden everything was charged differently."

The root of these increases are controversial charges known as “facility fees,” and they are routinely tacked on to patients’ bills not just for services actually provided in hospitals, but also by outpatient care centers and doctors’ offices simply because they’ve been purchased by hospital-based health care systems. Hospitals argue they can’t afford to keep the doors open without facility fees. Hospitals have billed them at least since 2000 when Medicare set billing standards for doctors employed by hospitals, and private insurers went along. Since then, the fees have grown increasingly common, costly and controversial. Critics argue that the billing practice needlessly adds billions of dollars to the nation’s ballooning health care costs and needs to be revamped. Some private insurers have protested the fees and in some cases even refused to pay them, which can add to the patient’s share of the bill. But getting rid of the charges — or even requiring medical offices to post facility fees — has proved daunting, reformers say. Mullin introduced legislation earlier this year to ban the practice in his state, only to see the bill “watered down” to simply require that the fees be disclosed in advance. The state Senate approved the amended bill, but it failed to pass in the House, even though the state hospital association supported it.

Now, as budget cutters on Capitol Hill drill into Medicare payment policies in hopes of finding new veins of cost savings, the fairness of these fees is facing new scrutiny — including from the federal commission that advises Congress on Medicare spending policy. Hospitals are fighting back and have enlisted support from the Service Employees International Union, which represents more than one million nurses, doctors and other health care workers. The stakes are high indeed. A decision by Medicare to quit allowing the fees would almost certainly lead private insurers to do the same across the country and all but put an end to them....

Fees for more than hospital care

Facility fees are a routine part of any hospital bill. But patients can also be hit with facility fees when they seek care from:

Private physicians who have sold their medical practices to a hospital and stayed on as employees. More than half the nation’s doctors now work on salary. When that happens, patients may suddenly get a bill from the doctor and a separate one from the hospital that owns the office. Some prestigious health systems, such as the Cleveland Clinic, also put their doctors on salary and charge a facility fee for office visits.

Outpatient medical centers that are part of a hospital-owned network, including centers treating serious diseases such as cancer or operating specialized clinics for the elderly.

Urgent care centers set up by hospitals largely to treat relatively minor ailments. Thousands of these centers exist nationwide, about one third believed to be hospital-owned. Some don’t tell patients in advance about facility fees.

Outpatient surgery centers where doctors perform routine operations. The centers can charge facility fees that run into the thousands of dollars. As deductibles rise on some insurance policies, patients may not realize they can get stuck with paying larger hunks of these bills than in the past.

The fees date back to April 2000, when Medicare clarified its policy for billing by health groups that hired physicians. At the time, CMS officials acknowledged that critics wanted the agency to forbid hospitals from buying up medical practices for the purpose of converting them to hospital “facilities” that could tender higher fees for the same services. In a response published at the time in the Federal Register, CMS said it understood the concerns, but lacked the authority to “prohibit this practice.” The issue popped up last year when the House passed legislation that extended the payroll tax holiday and unemployment compensation benefits. Tucked into the “Middle Class Tax Relief and Job Creation Act” was a provision to cut about $6.8 billion in Medicare costs by targeting doctor services in hospital-owned offices...The hospital industry fought back hard — and ultimately successfully. The cuts never passed the Senate and were not in the final conference committee bill signed by President Obama in February...

THERE'S SO MUCH MORE TO THIS...YOU WOULD HAVE THOUGHT GOLDMAN SACHS INVENTED IT! TALK ABOUT BLOOD FUNNELS....

MUST READ

http://truth-out.org/opinion/item/13529-where-are-we-heading-bedford-falls-or-pottersville

...Every year about now I watch “It’s a Wonderful Life” again to remind myself what Frank Capra understood about America — its essential decency and common sense.

In many ways the nation is better than it was in 1946 when the movie first appeared. Women have gained economic power and reproductive rights; we enacted Civil Rights and Voting Rights and, through Medicare and Medicaid, dramatically reduced poverty among the elderly; we began to tackle environmental devastation; we stopped treating gays as criminals and have even started to recognize equal marriage rights. We elected and then re-elected the first black president of the United States. We have enacted the bare beginnings of universal healthcare. But we are still in danger of the “Pottersville” Capra saw as the consequence of what happens when Americans fail to join together and forget the meaning of the public good.

If Lionel Barrymore’s “Mr. Potter” were alive today he’d call himself a “job creator” and condemn George Bailey as a socialist. He’d be financing a fleet of lobbyists to get lower taxes on multi-millionaires like himself, overturn environmental laws, trample on workers’ rights, and shred social safety nets. He’d fight any form of gun control. He’d want the citizens of Pottersville to be economically insecure – living paycheck to paycheck and worried about losing their jobs – so they’d be dependent on his good graces.

The Mr. Potters are still alive and well in America, threatening our democracy with their money and our common morality with their greed.

Call me naive or sentimental but I still believe the George Baileys will continue to win this contest. They know we’re all in it together, and that if we succumb to the bullying selfishness of the Potters we lose America and relinquish the future.

Happy holidays.

http://www.alternet.org/6-ways-juice-labor-movement?akid=9855.227380.fHHeIE&rd=1&src=newsletter766654&t=7&paging=off

...While Michigan's unions regroup and begin the twin processes of trying to survive and retain dues-paying members in the face of RTW and trying to find a way to overturn the law, it's clear that the national labor movement needs to do more than just fight defensive battle after defensive battle. To kick-start a conversation, AlterNet spoke with several of the smartest organizers and labor thinkers we know, and asked them for their suggestions on how labor can go on the offensive in the next year.

1. Stephen Lerner, architect of the Justice for Janitors campaign: “It's time to reinvent the strike—the strike as guerrilla warfare"...in his work with Justice for Janitors, Lerner learned that bosses weren't ready for short, quick strikes. “If you look at the strike as a way to make them pay a price for how they treat you, you do short strikes, in and out strikes,” he notes. “Part of the reason it's so difficult to organize workers now is most people work multiple jobs, they have not a moment to participate. If you view the strike as having multiple goals, one is it allows workers to publicly declare and demonstrate they're unhappy. Second, because they're not at work they can talk to the media, go to churches. Third, it's something very concrete that they can do that does start to make the bosses a little crazy.”
   
   The second thing Lerner suggests is a re-politicization of bargaining. “We need bargaining not to just be about workers but what's good for the community,” he says, “So that we're bargaining for broader issues, especially in the public sector. So that it's not bargaining for the few, it's bargaining for the many.” Chicago's teachers, he notes, raised the issue of the city divesting from banks that were foreclosing on people. “We need to make it so that people see that when those workers win, we all win, rather than they're negotiating for something we don't have.”
   
   
2. Jonathan Westin, executive director, New York Communities for Change, organizer of recent fast food strikes: “We believe that the future of the labor movement is really organizing low wage service sector jobs. These are the jobs we're stuck with, we need to make them livable jobs,” says Westin, whose organization, despite not being a labor union, has been organizing low-wage workers across New York City, from McDonald's and Wendy's to grocery stores and car washes. It's not just about who you're organizing, Westin notes, it's also about how you do it. “It's about constantly pressuring employers from as many angles as possible. It's leveraging not only NLRB elections but back wage claims to pressure the employers, leveraging community pressure, boycotts, strikes. We did a strike at the car wash in the Bronx and they came to the table. That's the lesson, it's not just any one strategy, you have to come at them at every different angle.”
   
   SO MUCH MORE! ANOTHER READ AND BOOKMARK

http://www.bloomberg.com/news/2012-12-25/high-frequency-trading-prospers-at-expense-of-everyone.html

Finally, a bit of evidence, rather than anecdote, about the costs of high-frequency trading.

In a new study, Andrei Kirilenko, the chief economist at the U.S. Commodity Futures Trading Commission, along with researchers at Princeton University and the University of Washington, examined high-frequency trading in a futures contract called the e-mini S&P 500, between August 2010 and August 2012.

The study looked at only the expiring contracts (which trade electronically on the Chicago Mercantile Exchange) that are used to bet on the direction of the Standard & Poor’s 500 Index. The researchers also did something they’d never been able to do before: Use actual trading data from individual firms, though none were identified.

What that data does is help explain the frenzy in today’s markets: The most aggressive firms tend to earn the biggest profits, hence the incentive to trade as quickly and as often as possible. Furthermore, these traders make their money at the expense of everyone else, including less-aggressive high- frequency traders.

The study found that the most hyperactive trading firms earned an average daily profit of $395,875 in the e-mini S&P 500 contract over the two-year period. First and foremost among those on the losing end: small retail investors. The study found that, on average, they lost $3.49 on every contract to aggressive high-frequency traders.

WHO WRITES THESE HEADLINES? IT SOUNDS LIKE A MANGLED TRANSLATION FROM A 3RD WORLD ECONOMY...

http://www.bloomberg.com/news/2012-12-24/dealers-tighten-treasuries-grip-as-fed-qe3-suppresses-correct-.html

The world’s biggest bond dealers are growing more reluctant to give up their record holdings of Treasuries, providing support for a rally in the world’s most- liquid debt market that is entering its fourth year...Goldman Sachs Group Inc., JPMorgan Chase & Co. and the rest of the 21 primary dealers of U.S. government securities have reduced the amount of bonds they offered to the Federal Reserve to average of $8.04 billion a day in the past two weeks, from the $11.6 billion in September 2011, when the central bank began its Operation Twist stimulus program, according to data compiled by Bloomberg. At the same time, Wall Street’s holdings of Treasuries more than doubled since March.

The hoarding shows rising demand for the safety of U.S. government debt as economic growth remains sluggish and President Barack Obama and House Republicans struggle to resolve the budget dispute that threatens to trigger more than $600 billion of spending cuts and tax increases in January.

“The market continues to be held hostage by politics and the economic numbers aren’t that strong,” Matthew Duch, a fund manager in Bethesda, Maryland, at Calvert Investments, which oversees more than $12 billion in assets, said in a telephone interview Dec. 20. “In this environment, where you have fewer and fewer options, you have to align yourself with what the Fed is doing. You can’t afford not to.”

Investors have bid a record $3.16 for each dollar of the $2.011 trillion in notes and bonds the government has auctioned this year, up from the previous high of $3.04 last year, Treasury data show.

Banks submitted offers equaling $2.61 for each $1 of securities purchased by the Fed for its expiring $667 billion stimulus program, known as Operation Twist, where the central bank swaps short-term debt it owns for an equal amount of long- term Treasuries. That’s down from the weekly average of $2.99 since September 2011, according to data compiled by Bloomberg. The primary dealers that trade with the Fed boosted holdings of Treasuries to $136 billion from this year’s low of $59 billion in March, central bank data shows. Inventories of government securities averaged $90.4 billion in 2012. Investors have poured about $302 billion into bond mutual funds while withdrawing $135 billion from those that favor equities, according to data from the Washington-based Investment Company Institute.

The Fed has been the biggest buyer of U.S bonds, flooding the economy with more than $2.3 trillion through three rounds of purchases since the depths of the financial crisis in 2008. It’s now the biggest owner of Treasuries, with $1.66 trillion as of this month, ahead of China’s $1.16 trillion...Purchases by the Fed will effectively absorb about 90 percent of net new dollar-denominated fixed-income assets, according to JPMorgan. The government will reduce net sales by $250 billion from the $1.2 trillion of bills, notes and bonds issued in fiscal 2012 that ended Sept. 30, according to 18 of the 21 primary dealers...

MORE

http://www.bloomberg.com/news/2012-12-25/u-s-holiday-sales-advanced-a-marginal-0-7-spendingpulse-says.html

U.S. holiday sales growth slowed by more than half this year after gridlock in Washington soured consumers’ moods and Hurricane Sandy disrupted shopping, MasterCard Advisors SpendingPulse said.

Retail sales grew by 0.7 percent from Oct. 28 through Dec. 24, the Purchase, New York, research firm said yesterday, without providing a dollar figure in the billions. Sales grew at a 2 percent pace in the same period a year ago. SpendingPulse tracks total U.S. sales at stores and online via all payment forms.

Americans became skittish as Washington approached the end of the year without an agreement to forestall higher taxes and automatic spending cuts -- the so-called fiscal cliff. Hurricane Sandy interrupted shopping in stores and online after it slammed into the East Coast in late October. Last month, retailers from Macy’s Inc. (M) to Target Corp. (TGT) posted same-store sales that trailed analysts’ estimates.

“You are looking at modest to marginal growth from a year ago,” Michael McNamara, a SpendingPulse vice president, said in a telephone interview yesterday. “Weather events and the fiscal debate both anchored the season in terms of growth. The media coverage, which did a good job of explaining the negative consequences of the fiscal cliff, created this negative trend in consumer confidence and spending.”

http://abcnews.go.com/US/wireStory/us-holiday-retail-sales-growth-weakest-2008-18063224#.UNritaz3R1g

U.S. shoppers spent cautiously this holiday season, a disappointment for retailers who slashed prices to lure people into stores and now must hope for a post-Christmas burst of spending. Sales of electronics, clothing, jewelry and home goods in the two months before Christmas increased 0.7 percent compared with last year, according to the MasterCard Advisors SpendingPulse report. That was below the healthy 3 to 4 percent growth that analysts had expected — and it was the worst year-over-year performance since 2008, when spending shrank sharply during the Great Recession. In 2011, retail sales climbed 4 to 5 percent during November and December, according to ShopperTrak.

This year's shopping season was marred by bad weather (HURRICANE SANDY, BIG MIDWEST SNOWSTORM) and rising uncertainty about the economy in the face of possible tax hikes and spending cuts early next year. Some analysts say the massacre of schoolchildren in Newtown, Conn., earlier this month may also have chipped away at shoppers' enthusiasm...Retailers still have time to make up lost ground. The final week of December accounts for about 15 percent of the month's sales, said Michael McNamara, vice president for research and analysis at MasterCard Advisors SpendingPulse...Steep discounts weren't enough to get people into stores, said Marshal Cohen, chief analyst at the market research firm NPD Inc.

"A lot of the Christmas spirit was left behind way back in Black Friday weekend," Cohen said, referring to the traditional retail rush the day after Thanksgiving. "We had one reason after another for consumers to say, 'I'm going to stick to my list and not go beyond it.'"

The SpendingPulse data released Tuesday, which captures sales from Oct. 28 through Dec. 24 across all payment methods, is the first major snapshot of holiday retail sales. A clearer picture will emerge next week as retailers like Macy's and Target report revenue from stores open for at least a year. That sales measure is widely watched in the retail industry because it excludes revenue from stores that recently opened or closed, which can be volatile...Shopping over the past two months was weakest in areas affected by Sandy and a more recent winter storm in the Midwest. Sales declined by 3.9 percent in the mid-Atlantic and 1.4 percent in the Northeast compared with last year. They rose 0.9 percent in the north central part of the country. The West and South posted gains of between 2 percent and 3 percent, still weaker than the 3 percent to 4 percent increases expected by many retail analysts. Online sales, typically a bright spot, grew only 8.4 percent from Oct. 28 through Saturday, according to SpendingPulse. That's a dramatic slowdown from the online sales growth of 15 to 17 percent seen in the prior 18-month period, according to the data service....

...Holiday sales are a crucial indicator of the economy's strength. November and December account for up to 40 percent of annual sales for many retailers. If those sales don't materialize, stores are forced to offer steeper discounts. That's a boon for shoppers, but it cuts into stores' profits...Spending by consumers accounts for 70 percent of overall economic activity, so the eight-week period encompassed by the SpendingPulse data is seen as a critical time not just for retailers but for manufacturers, wholesalers and companies at every other point along the supply chain....

Nothing over $50.

We've got medical bills.

Still a Merry Christmas, though.

http://www.bloomberg.com/news/2012-12-26/yen-breaches-85-a-dollar-as-abe-takes-rein-asian-stocks-advance.html

The Japanese yen weakened to the lowest since April 2011 amid expectations Japan’s new government will push for more cash infusions to bolster the economy. Oil and U.S. stock-index futures advanced.

The yen retreated 0.6 percent to 85.31 per dollar as of 6:20 a.m. in New York and has fallen against all but nine currencies this year. Crude climbed 0.7 percent and copper added 0.7 percent. Standard & Poor’s 500 Index futures rose 0.2 percent. Japanese stocks advanced to nine-month highs and bonds declined with the parliamentary approval of Shinzo Abe as the country’s new premier. Trading in Treasuries is closed until later today in New York.

Abe, whose Liberal Democratic Party won a landslide victory in the Dec. 16 election, appointed a cabinet today, including Taro Aso as finance chief. BOJ board members said the economy is weakening and one suggested open-ended asset purchases, minutes of last month’s policy meeting showed. Democrat and Republican lawmakers in the U.S. plan to convene tomorrow for budget talks aimed at avoiding more than $600 billion in tax gains and spending cuts scheduled to take effect Jan. 1, known as the fiscal cliff.

“The BOJ minutes from the November 19-20 policy meeting provided yet another excuse to sell the yen overnight,” Gareth Berry, a foreign-exchange strategist at UBS AG in Singapore, wrote in a client note. “Having taken a mostly passive interest in the yen over the past few years, the policy board now seems willing to adjust its policy stance in a conscious effort to weaken the currency.”

http://www.marketwatch.com/story/yen-hits-years-low-with-other-pairs-steady-2012-12-25?link=MW_home_latest_news

The Japanese yen headed lower against the U.S. dollar and euro Wednesday, accelerating losses after minutes from the Bank of Japan’s November meeting showed some determination to drive the nation’s currency lower...

http://www.bloomberg.com/news/2012-12-25/india-joins-indonesia-in-juggling-growth-price-risks-in-2013.html

Central banks in Indonesia and India, with the worst-performing currencies among Asian emerging markets this year, will face more challenges in 2013 as they balance inflation risks with the need to boost growth.

The Reserve Bank of India must deal with “conflicting cues” from elevated prices and an economic slowdown, complicating policy decisions even after it recently signaled there is room to lower interest rates, Mizuho Corporate Bank Ltd. economist Vishnu Varathan said. Indonesia’s inflation may be at the upper end of the central bank’s targeted range, forcing it to raise borrowing costs “aggressively,” according to HSBC Holdings Plc.

Demand for higher wages, reduced government subsidies and greater capital inflows may drive up price pressures in the world’s fastest-growing region. Bank Indonesia refrained from raising rates this year even as the currency slumped and costs accelerated, while delayed reforms and infrastructure bottlenecks in India have spurred the most rapid inflation among the largest emerging nations.

“Central banks will have to strike a delicate balance between tightening policy, allowing stronger exchange rates and looking past inflation humps,” Varathan said in a Bloomberg survey of 15 economists on challenges facing policy makers. “Inflationary pressures may be emerging in a few quarters, whereas growth may not be recovering quickly and broadly enough to justify shifting to decisive policy tightening.”

http://openmarkets.cmegroup.com/4967/a-market-for-snow-how-some-businesses-use-futures-to-prepare-for-winter

Winter in the United States may have come in quietly in 2012, and while weather forecasters can predict the weather, they cannot give long-term outlooks that offer absolute certainty. This is where snowfall futures and options come in....The contracts launched in 2006 largely as a risk-management tool, with input from brokers responding to the needs of municipalities. Snowfall Index Binary options, the most customizable part of the product, were launched in 2009. September to December is prime time in trade of the snowfall contracts, as this is when most market participants take their positions based on the long-range expectations of weather forecasters. But clients think about snow all year long, contacting financial firms that deal in hedging weather risks mid-summer to early fall to get some quotations for winter. They later come back and tell firms what they need.

This year, the 2012 National Oceanic And Atmospheric Administration’s (NOAA) U.S. Winter Outlook (December through February) looks for warmer-than-average temperatures in much of Texas, northward through the Central and Northern Plains and westward across the Southwest, the Northern Rockies, and eastern Washington, Oregon and California, as well as the northern two-thirds of Alaska. The outlook looks for cooler-than-average temperatures in Hawaii and in most of Florida, excluding the panhandle. The rest of the country falls into the “equal chance” category, meaning these areas have an equal chance for above-, near-, or below-normal temperatures and/or precipitation. The seasonal outlook, however, doesn’t project where and when snow storms may hit or provide total seasonal snowfall accumulations. Snow forecasts are dependent upon the strength and track of winter storms, which are generally not predictable more than a week in advance.

Snow futures contracts are similar to an insurance policy, paying out a set amount of money for every inch over or under, depending on which contract is used. The snowfall product suite includes six different contracts in 10 locations. The CME Snowfall Index provides average monthly snowfall information for designated cities in the United States. People who wish to trade snowfall futures or options determine what amount of snowfall would be detrimental to their businesses and take futures or options positions based on that determination. As weather patterns have grown more historically uncharacteristic, the profile of the contracts has risen. ““The contracts have received more exposure in the last couple of years, and we’ve seen interest ranging from municipalities to snow removal companies, ski resorts, outdoor equipment suppliers and salt companies,” says Heidi Centola, manager, weather and alternative investment products for CME Group.


Protection from Unexpected Snowfall Levels

State and local governments, tourism and other industries are impacted by the snow. The contracts thus far have probably gained the most traction among snowplow companies, salt suppliers and property managers. Jeff Hodgson, founder of Chicago Weather Brokerage, a firm that provides solutions to help hedge against the financial consequences of unexpected winter conditions, says his company tends to use the binary options contracts as they are easier to quantify. Binary snowfall options give the holder a fixed-dollar payout when exercised. If expiration occurs without the option being exercised, the losses are limited to the amount paid for the binary option.

Hodgson started his career at Merrill Lynch, where a client talked with him about a wish to protect his business from risks associated with unexpected snowfall levels. The conversation was the impetus for the formation of Chicago Weather Brokerage. Hodgson says some users of the contracts, including snow removal and salt companies, view the contracts as a big competitive tool that they can use to their advantage. Trading snow futures and options through the exchange with a clearinghouse eliminates counterparty risk. According to Hodgson, before these contracts came along, many of the product users would naturally hedge to prepare for snowy conditions. The models used would be “pay for push” or an “all-inclusive” model. Pay for push means an entity such as a snow shoveling company or salt contractor would charge each time they go out. The more it snows, the better the contractor would do and the more it would cost the customer. With the advent of snowfall futures and options, contractors can be buyers of snowfall put options that pay out in a light winter to protect their lost revenue.

In an all-inclusive model, the client pays a fixed fee for the entire season, regardless of how much or little it snows. In a strong year, the client could save money and in a light winter, the contractor does well since they collected a lot of revenue but didn’t have to perform a commensurate amount of services (i.e. plowing, salting, etc.) at the property. Here, a contractor could buy call options that pay-out in a high snowfall season to offset the higher expenses incurred by additional plowings at the property they may not have budgeted for within their all-inclusive contract.

“It’s all about stabilizing the cash flows and earnings,” says CME’s Centola.

While the learning curve is “definitely steep,” says Hodgson, just as agricultural futures and options have become more developed, it’s expected that the snowfall futures will also become a more complex and used market. Indeed, at CME Group in 2011, more than $9.2 billion in weather contracts were traded. According to the Weather Risk Management Association, another $2.4 billion in over-the-counter weather contracts were traded in the 2010/2011 marketing year. These included futures on regional temperatures, snowfall, rainfall, hurricanes and frost.

http://openmarkets.cmegroup.com/4977/who-needs-snowfall-futures

Some may remember the “Snowmageddon” of January 2010. The East and Midwest were pounded by record snowfall, and Washington D.C., the epicenter of the severe weather, was shut down for days. Each snow day cost taxpayers $100 million in lost productivity from federal workers. The Chicago “Snowpocolypse” in 2011 had a similar impact. Weather events are expensive. The $100 million estimate didn’t factor in accidents, lost sales, as well as home, building and infrastructure repairs related to the storms. And then there were the airlines. Based on totals reported from the airlines, some 7,000 flights were cancelled the first few days of the 2010 storm.

Snowfall isn’t always something that is undesirable though. In January, the Federal Reserve noted in its Beige Book report that an unexpected lack of snowfall was dampening tourism in the Ninth District – which consists of Minnesota, Montana, North and South Dakota. A lack of snow and surprisingly warm weather stymied snowmobiling, ice fishing, and skiing in many areas. Tourism officials in Minnesota noted that the lack of snow was affecting businesses that cater to winter recreation. Low snowfall in Yellowstone National Park was affecting nearby resorts and businesses that offer winter tours of the park on snowmobiles and in snow coaches.

In fact, according to the National Ski Areas Association (NSAA) The 2011/12 season was also marked by the lowest national average resort snowfall since 1991/92, the second‐lowest snowfall in 21 years of available data. According to the survey, 50 percent of responding ski areas opened late for the season, and 48 percent closed early. Every region experienced a decrease in overall days of operation, with particularly significant declines in the Southeast, down 13.9 percent, the Northeast was down 13 percent, the Pacific Southwest was down 11.7 percent, and the Midwest was down 10.6 percent. Accompanying this was the fact that U.S. ski areas tallied an estimated 51 million skier and snowboarder visits during the 2011/12 season. This represented the most challenging season in over two decades, when 50.8 million visits were recorded in the 1991/92 season, according to a preliminary 2011/12 Kottke End of Season survey.

Snowfall futures could be seen as the financial equivalent to a ski resort’s artificial snow making efforts. The contracts can be used when traditional insurance products may not be available, or when focusing on a busy period for a winter recreation company, when insufficient snowfall can cut into profits...

I'm staying indoors!

http://www.cnbc.com/id/100338795

The recent rash of insider trading cases may be a shock to some on Wall Street, but not to one long-time market player: Bernie Madoff.

In a Christmas Eve letter from the medium security federal prison in North Carolina where he is serving a 150-year sentence for running a massive Ponzi scheme, Madoff tells CNBC that insider trading has been around "forever."

He also rails against what he calls a lack of transparency in the financial markets, and says the growth of hedge funds is forcing market players to take outsized risks in order to earn decent returns.

Madoff has granted only a handful of interviews since he went to prison in 2009. More recently, he has declined to speak on the record about his case. But he was willing to share some views about the financial markets in the e-mail, which he sent to CNBC and a handful of attorneys and academics he has been communicating with...

BERNIE TELLS ALL! WELL, SOME, ANYWAY, AT LINK

I'll bring back a report tomorrow.

I have some lovely gloves in a leopard print, with thinsulate lining and the fabric is like velour....

http://online.wsj.com/article/SB10001424127887323291704578201684061152970.html?mod=dist_smartbrief

Small banks around the country are spending the last days of 2012 trying to assure customers they can be trusted to hold their deposits, as the government's unlimited insurance on certain accounts expires this year.

Many of the affected accounts are essentially noninterest-bearing checking accounts that hold more than $250,000. The Federal Deposit Insurance Corp. granted unlimited insurance to these accounts—often held by businesses, municipalities and other entities that require quick access to large amounts of money for payrolls and other needs—at the height of the financial crisis to help instill confidence in the nation's smaller banks. The goal was to prevent account holders from moving money from smaller institutions to larger ones viewed by customers as less likely to fail.

After the program, known as the Transaction Account Guarantee, expires Dec. 31, noninterest-bearing accounts will receive the same $250,000 insurance coverage that the FDIC provides for other depositors. Roughly $1.5 trillion of deposits are covered by the expiring guarantee, according to the FDIC....

...The expiration of TAG comes after smaller banks unsuccessfully lobbied Congress to extend the unlimited coverage on the grounds that its elimination would give an unfair advantage to large banks. They also said that the guarantee is good for the financial system because it helps ensure that deposits are diversified among banks of all sizes....

http://www.washingtonpost.com/business/economy/sec-going-high-tech-with-real-time-trade-data/2012/12/24/53d991c8-47c0-11e2-ad54-580638ede391_story.html?hpid=z12

As computing power and big data have revolutionized stock trading in recent years, one market player has lagged far behind: the Securities and Exchange Commission, whose job policing the markets has been hampered by a serious technology gap.

Now the SEC is trying to catch up.

This month, the agency is in the final phases of testing software that will stream real-time trade data into its headquarters near Union Station, helping regulators better grasp the market’s plumbing. The technology should go live in early 2013, at a cost of $2.5 million for the year.

“What we’re giving them is public data that they need in order to figure out what happened at any given moment of the trading day or reconstruct events,” said Manoj Narang, 43, whose company — Tradeworx, based in Red Bank, N.J. — created the SEC’s new software. “To me, there’s no substitute for the regulator having the capability to discover the answers on its own without any bias from outside parties.”

MORE

http://www.businessinsider.com/south-korea-considers-other-drones-2012-12


A visitor is seen walking past a US Air Force Global Hawk surveillance drone during the Seoul International Aerospace and Defense Exhibition at a military air base in Seongnam, south of Seoul, on October 17, 2011.

South Korea is not necessarily committed to buying US Global Hawk surveillance drones, a spokesman said on Wednesday, after the Pentagon requested congressional permission for such a sale.

Seoul's Defense Acquisition Program Administration (DAPA) said it would decide early next year whether to buy the high-altitude unmanned aerial vehicles made by Northrop Grumman that have come with a higher than expected price tag, at $1.2 billion for four of the drones.

"We will decide whether to proceed with the purchase plan only after we receive a letter of intent and carefully study the sale's terms," a DAPA spokesman told AFP.

Yonhap news agency quoted an unidentified top government official as saying Seoul could consider other choices, such as Boeing's Phantom Eye and the California-based AeroVironment Global Observer.


Read more: http://www.businessinsider.com/south-korea-considers-other-drones-2012-12#ixzz2G9w5xW6b

We have got to get drones grounded, banned and illegal around the world.

http://www.telegraph.co.uk/finance/globalbusiness/9765348/US-lambasts-China-for-breaches-of-trade-rules.html



China is still flouting World Trade Organisation rules 11 years after it first joined, misusing the complaints machinery for tit-for-tat retaliation, said US Trade Repesentative Ron Kirk.

"China's trade policies and practices in several specific areas cause particular concern for the United States," said Mr Kirk in his year-end report to Congress.

"China's regulatory authorities at times seem to pursue anti-dumping and countervailing duty investigations and impose duties for the purpose of striking back at trading partners that have exercised their WTO rights in a way that displeases China," said the report.

A range of policies raised "increasing concerns that China has not yet fully embraced the key WTO principles of market access, non-discrimination and transparency. China's incomplete adoption of the rule of law has exacerbated this situation."

http://hosted.ap.org/dynamic/stories/A/AS_CHINA_HIGH_SPEED_TRAIN?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-12-26-07-17-23

BEIJING (AP) -- China on Wednesday opened the world's longest high-speed rail line that more than halves the time required to travel from the country's capital in the north to Guangzhou, an economic hub in southern China.

The opening of the 2,298 kilometer (1,428 mile)-line was commemorated by the 9 a.m. departure of a train from Beijing for Guangzhou. Another train left Guangzhou for Beijing an hour later.

China has massive resources and considerable prestige invested in its showcase high-speed railways program.

But it has in recent months faced high-profile problems: part of a line collapsed in central China after heavy rains in March, while a bullet train crash in the summer of 2011 killed 40 people. The former railway minister, who spearheaded the bullet train's construction, and the ministry's chief engineer, were detained in an unrelated corruption investigation months before the crash.

http://hosted.ap.org/dynamic/stories/W/WORLD_MARKETS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-12-26-04-11-12

BANGKOK (AP) -- Asian stock markets rose Wednesday as traders snapped up stocks before the end of the year, while the Tokyo benchmark hit a nine-month high after a new, pro-business government prepared to assume leadership in a country plagued for years by economic lethargy.

Japan's Nikkei 225 index surged 1.5 percent to close at 10,230.36 as a further weakening yen gave momentum to the country's major exporters. That was its highest close since March 27.

Incoming Prime Minister Shinzo Abe has put pressure on the Bank of Japan to raise its inflation target from 1 to 2 percent to extricate the country from two decades of deflation - continually dropping prices - which has deadened economic activity.

Abe named a new Cabinet on Wednesday, following the resignation of Prime Minister Yoshihiko Noda's government. Abe has urged the central bank to take steps to dampen the strength of the country's currency. A strong yen has hobbled big exporters like Toyota by eroding the value of repatriated earnings and making Japanese products more expensive overseas.

12/26/12 Wall Street Wiretaps: Investigators Use Insiders' Own Words To Convict Them

Wiretaps allowed investigators to listen in on the skyscrapers of midtown Manhattan for the first time and build insider trading cases with more than circumstantial evidence.

Rajaratnam was convicted in May after a trial featuring more than 2,400 taped phone conversations. Many of those recordings included Rajaratnam disclosing over the phone that he got an inside tip and was planning to trade on it.

Rajaratnam's lawyers have appealed his conviction on the ground that the wiretaps were illegal.

Rajat Gupta, a former Goldman Sachs board member and close friend to Rajaratnam, was convicted this year.

Now prosecutors are said to be closing in another hedge fund giant — billionaire Steven Cohen. And investigators say all these cases, and others, cropped up because a bunch of scared people heard their voices on wiretaps and started coughing up information.

more text and audio at link
http://www.npr.org/2012/12/26/168021457/wall-street-wiretaps-investigators-use-insiders-own-words-to-convict-them

http://www.guardian.co.uk/commentisfree/2012/dec/26/germany-austerity-beggar-europe-eurozone


Greeks protest against austerity measures outside the parliament in Athens. Photograph: Louisa Gouliamaki/AFP/Getty Images

Has the eurozone crisis ended? Many politicians in Europe, including France's president François Hollande, seem to think so. Well, not so fast. Far from ending, the crisis is yet to reach its most difficult phase.

It is easy to see why politicians claim the crisis is over. Greece has just been promised another €50bn, provided it accepts still more austerity, deregulation and privatisation. Elsewhere in the periphery, Ireland is in its sixth year of recession, Portugal is heading for major economic contraction, and Spain is going from bad to worse – but their governments are imposing austerity, and people appear to be putting up with it. Even core countries, including Italy and France, have accepted the need for balanced budgets. Across the eurozone, there is no effective opposition to the mantra of austerity emanating from Berlin.

The financial markets, meanwhile, have been placid since September when Mario Draghi, chairman of the European Central Bank, announced that he would buy the debt of countries in difficulties provided they accepted bailout conditions. The spreads on Italian and Spanish debt have tumbled by 250 basis points. The official launch of the European Stability Mechanism has also helped, since the ESM is fortified with €500bn. The calculation of bond markets is transparent: for the moment it is not profitable to borrow money to speculate against the debt of weaker European countries.

But austerity and calmer financial markets do not amount to ending the crisis. Rather, they point to the emergence of a German eurozone. Commentators who have protested that crisis leadership in the eurozone has been weak have been wide of the mark. In practice, austerity is transforming the periphery into a vast East Germany: a zone of weak growth, low wages, poverty and no economic dynamism. There will not even be some of the fiscal transfers, amounting to perhaps €60bn annually, that have supported East Germany.

http://www.guardian.co.uk/world/2012/dec/25/portugal-hold-fire-sale-state-assets


A girl receives a Christmas present during a charity toy distribution in one of the poorest neighbourhoods in Lisbon. Photograph: Rafael Marchante/Reuters

Portugal is to embark on a sweeping fire-sale of state companies over the coming months, possibly even privatising state broadcaster RTP, as it bends to the will of the troika of lenders that bailed it out 20 months ago.

With the government of prime minister Pedro Passos Coelho hoping to persuade the troika of the European commission, the European Central Bank and the International Monetary Fund to treat it more leniently in 2013 by lowering interest rates on loans, the sell-off of national companies is seen as one way of winning support.

Airports operator ANA is expected to be sold this week, with French construction group Vinci reported to have bid €3bn (£2.4bn). A consortium led by the Zurich airport operator Flughafen Zurich and Germany's Fraport is thought to be the other leading bidder.

But finding suitable buyers for Portuguese state companies is not always easy. Brazilian businessman Germán Efromovich tried to buy ailing national airline TAP for €36m last week, but his offer, which reportedly included a further €315m in capital for the airline, was turned down after the government said his financing was not solid enough.

http://www.businessinsider.com/ted-talk-algorithms-2012-12

In an insightful TED Talk, by tech entrepreneur Kevin Slavin on how algorithms have reached across industries (from finance to Hollywood) and into every day life (h/t dailymotion).
Problem is, we may be building whole worlds we don't really understand, and can't control.

One of our favorite quote:

Algorithmic trading evolved because institutional traders had the same problems the U.S. Air force had, which is that they're moving these huge positions... and they're moving a million shares of something through the market, and if you do that all at once it's like playing poker and going all in, you tip your hand. So they have to find a way... to break up that big thing into a million little transactions, and the magic and the horror of that is that the same math you use to break up the big thing into a little things can be used to find a million little things and sew them back together and find out what's actually happening in the market. So if you need to picture what's happening in the stock market now... is a bunch of algorithms that are programmed to hide and and bunch of algorithms programmed to go find them and act. And all of that's great... and that's 70% of the operating system formerly known as your pension... what could go wrong? What could go wrong is that a year ago 9% of the entire market just disappears in 5 minute, they call it the Flash Crash of 245...and nobody to this day can agree as to what happened, because nobody ordered it, nobody asked for it, no one could control what happened. All they had was a monitor in front of them that had the numbers in front of it, and a button that said STOP... We're writing things that are illegible, we're rendering things illegible.

http://www.dailymotion.com/video/xn8cg8_ted-talk-kevin-slavin-how-algorithms-shape-our-world_tech


Read more: http://www.businessinsider.com/ted-talk-algorithms-2012-12#ixzz2GAKJsEoU

Only 15 minutes, but note that the video was from 2011

http://www.marketwatch.com/story/boob-tube-recycling-business-gets-busted-2012-12-26?siteid=YAHOOB

Brandon Richter and Tor Olson developed what might have been one of the world’s most amazing business models were it not for a few pesky environmental regulations. They got people to pay them to take away their old cathode ray tubes. They then shipped these boob tubes — from obsolete TVs and computers — to China where other people would pay them again for this junk.

This was the entrepreneurial equivalent of a perpetual motion machine. Imagine owning a factory where suppliers stood in line at the front door to pay you for the commodities that they gave to you. Then, at the back door, customers lined up to pay you again for this very same stuff.

This was the business model that Richter, 38 years old, of Highlands Ranch, Colo., and Olson, 37 years old, of Parker, Colo., perfected at their company, Executive Recycling Inc. They had boob tubes coming and going, and they got paid on the come and the go.

China exports so much junk to the U.S., you have to admire a couple of guys who shipped it right back. Except on Friday, a jury in Denver’s Federal District Court convicted these boob-tube magnates on several felony charges related to the illegal disposal of electronic waste, smuggling, obstruction, mail fraud and wire fraud. Executive Recycling collected used electronics from consumers, businesses, and governments. It was doing business across Colorado, with the cities of Broomfield and Boulder, El Paso County, Jefferson County Public Schools, Cherry Creek School District, The Children’s Hospital, Centura Health Hospital, ADT Security, and even the company that published the Rocky Mountain News and Denver Post...Executive Recycling advertised that this waste would be disposed of in compliance with all local, state and federal laws, and that it would all be done “properly, right here in the U.S.”

MORE COMPLEXITY AND CONFUSION AND A CRIMINAL TRIAL....

Last edited Wed Dec 26, 2012, 01:29 PM - Edit history (1)

That effing union-busting (see Wobblies/Barista) Corporate Ghoul -

http://finance.yahoo.com/news/starbucks-cups-send-fiscal-cliff-message-lawmakers-130845209--sector.html

"Fix the Debt" of course is the Oligarch's answer to the non-existent "Debt" problem - destroy the social safety net, destroy the already inadequate and much too-long-delayed (WE NEED TO LOWER THE SOCIAL SECURITY FULL RETIREMENT AGE - NOT RAISE IT!) so-called "retirement security" we have now, and funnel more $$ to the top few % ....

on edit - meant to note (not that those here will need it pointed out) the despicable use of power as "boss" to "urge" workers to promote a course of action that will take even more out of their hides to pad the glut of the 1%ers

I hope someone in DC picks up on this and dies something clever like that - some good street theatre sort of action - accding to the article, Starbucks is only pushing this in the Capital, so we won't be able to effectively act on it here in the hinterland where I live