Posted by Qem 2 days ago
We're all familiar with some of the "defund the police" experiments that went too far in places like Portland and San Francisco and resulted in things like epidemics of casual shoplifting.
Well, what we just did is basically the white collar crime equivalent. We now have a wide open free for all for all forms of white collar crime. You can just insider trade, launder money, commit investment fraud, anything you want, the way you saw random people just walking into CVS drug stores years ago in SF and grabbing stuff and walking out.
But as usual when someone steals $100 worth of stuff on the street that's a national crisis and those people are scum, but when people steal billions that's fine cause they're wearing suits.
At my local CVS, they just started locking up the bulk candy. You don't take the the sales hit and the expense of those locking cabinets unless you have a real shrinkage problem.
They absolutely would.
Shrink has not gone up
The National Retail Federation, which publishes those numbers yearly, has stopped publishing those numbers to hide that fact.
There are real shoplifting problems but they are extremely local. Your local police department needs to stand up and do their fucking jobs to identify and take down the organized crime perpetuating it.
Like how Cloudflare wants you to think every unprotected website gets DDoSed.
Something I'd disagree with is... enforcement will not help against what causes people to turn out and steal in stores. Fix widespread poverty, get people out of homelessness, help people legitimately get off of drugs, help them get jobs even when they have convictions on the book, and then they won't need to become members of what is, essentially, small and hyperlocal crime networks.
In contrast, insider traders and billion-scale fraudsters - they do not have the need for survival pushing them to do crime. It is just pure unchecked greed that drives them.
The idea poor people are somehow criminal is a myth that needs to be eradicated.
There is not such a strong distinction. Organized crime groups often use poor people who have few alternatives as the pawns of their theft and fencing operations. People with other better options don't usually take up petty crime as a vocation.
There is not overall any sign that poor people, as a whole, have increased criminality; other factors like culture are far stronger.
Punishing crime and preventing it (like shoplifting) helps poor people, too. Poor people do not benefit from stores closing, or having the stores closest to them have everything locked up.
"Criminality" is too broad a characterization. It covers both assault and petty theft. I never said the poor are more criminal as a group than any other group.
People in poverty are more likely to commit petty theft out of need. Similarly, people who are very wealthy are more likely to commit large scale tax evasion out of greed. Both are financial crimes, but they are not committed equally by both groups.
> Punishing crime and preventing it (like shoplifting) helps poor people, too.
Yes, and so does giving people in poverty a step up out of life circumstances that make them more likely to commit petty crimes (like shoplifting).
Similarly, punishing large scale financial crimes by the wealthy (something that has basically stopped of late) would benefit everyone, from the poor to the wealthy. In fact, punishment may be the only disincentive for financial crimes by the wealthy, since they don't want for anything else.
Yes and no. Enforcement deters career criminals by increasing the cost of doing business. Improving society means fewer honest people have to turn to crime.
> insider traders and billion-scale fraudsters - they do not have the need for survival pushing them to do crime. It is just pure unchecked greed that drives them
Right, so career criminals. See above.
But it can and will massively help against large scale white collar crime. When you got dozens of millions of dollars in wealth, now you have the means to make more out of it (honest or not), the incentive to make more out of it - and also, a lot to lose, should they get caught.
I disagree. Career criminals also do petty crime.
I'm a fan of an idea I ran across recently. Instead of calling Musk, Bezos, Zuck, Ellison, etc the richest people in the world, we should call them the greediest.
"Greediest man in the world Elon Musk promises robotaxis" hits different than the "Richest man" version
Don't say "Billionaire Jeff Bezos does <thing>", say "Champion of Greed Jeff Bezos..."
- Paul Krugman, 1998
Excuse me if I take the Krug-o-tron's opinions with a grain of salt.
That personality type- highly verbal but able to produce talk to fit anything from a 5 second sound bite up to 2 hours, superficially bright but not actually thoughtful, full of spicy opinions, prone to predictions that sound interesting but don’t come true - is all over TV and now podcasts. Alex Jones is the same type.
https://www.southcoasttoday.com/story/news/nation-world/2005...
for a view of the internet's impact on the economy in 2005.
internet delivered massive value post 2005, but that is outside of the window K called out.
Good for them, I guess.
The losses of market participants and the gains from insiders is difficult for me to take seriously as a problem in commodities market
I read all of the cases in the article
There are people and institutions, such as oil producers, who will need to sell oil at a future date. They want to lock in the price today on those future sales. There are also people and institutions, such as airlines, who have a future need for oil and would like to lock in the price today.
Oil producers sell futures simply to ensure deliver of their oil at a certain date so that someone actually shows up to pick it up.
The rest of the market is speculation, and in particular short term movements have always been very speculative and also believed to be plagued by insider trading. Airlines and oil producers do not care about minute to minute changes.
https://www.aerotime.aero/articles/airline-fuel-hedging-iran...
Unfortunately they ditched the strategy last year, claiming the costs were no longer worth the benefits: https://www.wsj.com/articles/why-southwest-airlines-finally-... and http://www.wsj.com/articles/airlines-pull-back-on-hedging-fu...
I bet they’re regretting that decision now.
Now the airlines simply raise fares in lockstep when oil gets expensive, or simply go out of business, like Spirit did last week.
https://www.independent.co.uk/travel/news-and-advice/jet-fue...
> While this figure might appear significant, it constitutes a mere 1.5 per cent reduction in total worldwide aviation capacity,
That said, I don't know a lot of people that book that far in advance, even when their travel plans are well settled.
Metals (miners <> manufacturers) and agricultural (farmers <> food makers) futures are still non-speculative. There are industries that still buy materials from these markets, for delivery, as in they want to see the physical product in their hands. I was surprised to find that out as well
Some markets don’t have a futures market like hay, so people have to buy at spot prices and store it themselves.
And every time an article like this is published, HN predictably goes into the same tirade.
What are you actually going to do about it? Nothing. So keep complaining and hoping things change without changing.
Discussing it is against this website's TOS and the law in most countries
So no you can't stop it, but knowing that does at least let you make decisions with more clarity in your own life
"There is a great deal of ruin in a nation" and all that.
We'll be watching it for the rest of our lives, mostly in slow motion with occasional rapid periods of decline like the one at the moment
edit: see my subsequent comment. I'm not saying corruption is good. The whole point of the article is that it's bad beyond just corruption, and that's the point I'm pushing back on.
Besides, as Matt Levine often says. In the US, insider trading is a matter of miss-appropriating information when you have a duty of confidentiality. Its not about trading when you know more than someone else. Its about trading when you know something your not supposed to share.
The article specifically argues that it's extra bad beyond just corruption. That's the part I'm pushing back on.
>The stench of corruption is overwhelming. Yet aside from the raw corruption, these incidents also raise a larger question. The insiders ripped off the parties who sold futures to them at what turned out to be very unfavorable prices to the sellers. What broader damage does this kind of unchecked insider trading do?
They are elected officials that are supposed to be working in our best interests, or at least the interest of their supporters.
Are they making decisions in our best interests or what makes their pocket book fatter? Poisons the whole system.
This is extremely basic incenive / money-flow tracing and "setting aside corruption" is a premise that has the hairs on the back of my neck standing straight up. It smells like someone looking to force the framing. Everyone before me in this conversation was right to be suspicious of your motives in asking it, and I am suspicious as well.
That's still corruption. Your argument about other participants being "taxed" applies for other sophisticated counterparties as well, eg. hedge funds with armies of analysts and can fly helicopters around to gather intel. Unless you want to say that's bad too, the only difference between the two is that the hedge fund isn't engaging in corruption.
Other than that, Mrs. Lincoln, how was the play?
Again, if you read the TFA, the entire thesis is that the insider trading is extra bad beyond corruption. The corruption itself only gets a passing mention.
I did and that's not at all what TFA argues. It argues that it's the corruption that's the problem, which is exacerbated by the lack of legal enforcement by the current administration -- mostly because many in that administration are either actively involved in said corruption, or happy to cover it up/pooh pooh it.
I suppose you might think that some folks who haven't read TFA might buy your analysis, even though it's pretty much the opposite of what Krugman argues.
You go, girlfriend!
The wealthy can afford to continually leverage their wealth to accumulate even more wealth. This expresses in many different ways.
The wealthy man can afford the helicopter to get an edge at the global casino.
It's a structure designed to concentrate wealth and power and it won't end well for anyone involved, top or bottom.
Looking at my local tourist helicopter place, a private custom flight is $1k per ~15m. That seems like nothing if it allows you be make millions with the information.
Of course, this is the fastest way to lose your shirt and everything you have ever worked for, if there is any uncertainty.
This is allowed because you've gotten that extra information through your own methods that in theory anyone else can get access to. The problem here is they're using information that nobody else could possibly have access to, therefore its "insider" trading and it's been illegal for a long time.
Politician are servants of the people, for the people. This involves sacrifice and following the law. (I realize this is a naive statement, but shouldn't we be jailing these law breakers?)
If the market wants to incentivize pumping and dumping the American economy by releasing a stream of fake news from the US President, that's bad.
We should tilt the arbitrary rules away from the bad things and towards the good things.
> The real issue is never whether the trading was unfair to the people on the other side; it’s whether the information was misappropriated from its rightful owners
In this case the rightful owners are the American public in whose employ the leakers are. They got this information from their position of trust, and sold that information, to the disadvantage of the people they work for.
Unless the helicopter is dropping a bomb on a school on the way there (or back) I am not sure that the comparison is fair.
Modern tanks have floating lids. The lid is as much for keeping the volatiles in as keeping water out. Water gets into all sorts of places in oil refining anyway. It wouldn't really matter anyway since oil and water being famously good at mixing. You can just draw water off the bottom, filter it or boil it off depending on the situation and amount. Obviously they don't want more water (you're wasting money processing everything that you can't sell) but some isn't a big deal.
Instability is bad, but when the cause of it is market getting new information, it becomes ok: it is bad now, but it is good in the long term. But when the instability becomes a source of profits, when there are incentives and means to create the instability, then long term benefits go away.
It's not, when the article is specifically arguing that the insider trading is bad beyond just corruption, and barely touches corruption. You don't get to tack on a weak claim on top of a strong claim, and then when the weak claim gets pushback fall back to the strong claim and say everything's fine because you're directionally correct, or claim the person pushing back is wrong because they're directionally incorrect.
> Yet aside from the raw corruption, these incidents also raise a larger question....What broader damage does this kind of unchecked insider trading do?
That is what the article is about. It's saying that this is corruption, and discussing what the effect of this corruption is. "Beyond just corruption" is wholly your invention. I don't even know what it would mean?
Corruption is the cause. The article discusses the resulting effect.
Hell, being a congresscritter in charge of oversight of $industry allows you to cheat the public cause you know what's coming. How else do you see a senator making $174k/yr but net worth's of $100M? Its legal, only cause they carved their own exemptions and scam the public.