Tag Archives: dress

The Feds Say One Schmuck Trading From His Parents’ House Caused a Market Crash. Here’s the Problem.

by Dominic58J Posted on April 23, 2015

Mother Jones

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Illustration by Giacomo Marchesi

On Tuesday, the Justice Department and the Commodity Futures Trading Commission, a key Wall Street regulator, blasted out press releases declaring a great victory in their war on illegal manipulation of financial markets. The reason for the feds’ braggadocio? They think they’ve caught the guy who caused May 2010’s “flash crash,” a market seizure that vaporized a trillion dollars in shareholder value in a matter of minutes.

Federal regulators say that Navinder Singh Sarao, a 36-year-old British futures trader whose company was reportedly based in his parents’ home, illegally placed huge sell orders he never intended to complete, artificially driving down the price of a key futures contract so he could later swoop in to buy it cheaply. (This is called “spoofing” in financial jargon.) There’s one big problem, though: By charging Sarao with “contributing to the market conditions that caused” the flash crash, federal regulators are changing their story about what really happened to financial markets five years ago.

Here’s the background. In the days and weeks after the flash crash, the Securities and Exchange Commission, alongside other regulators, worked diligently to figure out what had happened. The flash crash was chaos: Liquidity evaporated, the same stocks traded at both a penny and at $100,000, and CNBC hosts freaked out even more than usual. (Prices eventually returned to normal, and the SEC canceled some of the weirdest trades.)

The flash crash was essentially over in five minutes. But it took regulators nearly five months to come up with a theory about what happened. And in late September 2010, when the SEC and the CFTC—the same agency now charging Sarao with causing the crash—released a joint report on what happened, they didn’t mention spoofing, let alone Sarao. Instead, they blamed a large trade by a firm out of Kansas City.

It’s not even clear that the feds’ new explanation is correct. As Matt Levine notes over at Bloomberg View, regulators believe that Sarao continued to place massive fake sell orders in the years after the flash crash, but somehow that activity never triggered another crisis:

If regulators think that Sarao’s behavior on May 6, 2010, caused the flash crash, and if they think he continued that behavior for much of the subsequent five years, and if that behavior was screamingly obvious, maybe they should have stopped him a little earlier?

Also, I mean, if his behavior on May 6, 2010, caused the flash crash, and if he continued it for much of the subsequent five years, why didn’t he cause, you know, a dozen flash crashes?

So I mean…maybe he didn’t cause the flash crash?

But in some ways, it doesn’t particularly matter whether regulators’ new theory is correct. What matters is that it took so long for them to develop it.

As I reported in January 2013, today’s financial markets move so fast that regulators can’t even monitor them in real time, let alone intervene if something starts to go wrong. Sophisticated trading algorithms can buy and sell financial products faster than you can blink—all without human intervention, let alone real-time human judgment. When something does go wrong, it can take months or years to figure out what happened. “A robust and defensible analysis of even a small portion of the trading day can itself take many days,” Gregg Berman, who wrote the 2010 SEC/CFTC report, told me in 2013.

Since real-time intervention by human regulators is impossible, regulators have to rely on automatic measures—fail-safes that stop trading if prices rise or fall too fast, for example. But these sorts of automatic braking systems are, by definition, designed in response to the previous crisis. “We’re always fighting the last fire,” Dave Lauer, a market technology expert who has worked for high-speed trading firms, said in 2013. As I wrote then:

Years of mistakes and bad decisions led to the 2008 collapse. But when the next crisis happens, it may not develop over months, weeks, or even days. It could take seconds.

More here.

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The Feds Say One Schmuck Trading From His Parents’ House Caused a Market Crash. Here’s the Problem.

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Tales From City of Hope #4: The Smell of Victory in the Morning

by Heriber8089 Posted on April 23, 2015

Mother Jones

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Chemotherapy is over and tomorrow is Tag Null: that is, Day Zero, when they pump my own frozen stem cells back into me. The entire process takes about 20 minutes, but I’ll be in the hospital practically the entire day getting liters and liters of IV fluids. This is partly to keep me hydrated and partly just because they want to keep me under observation for a while.

But here’s the interesting thing. The stem cells are kept in a preservative solution to keep them fresh, and apparently this will give me a strong body odor of some kind. But what? One nurse said I would smell like bad garlic for a day. That sounds bad. But a different nurse said I would smell like creamed corn. That seems more tolerable. Yet a third suggested it differed by nationality, and a white boy like me might small like iodine.

But which is it? To me, of course, I will smell fresh as a new-plucked daisy. It’s only other people who have to put up with my olfactory weirdness. In any case, I plan to ask everyone who comes into my room what I smell like. Spoiled tuna? A lovely cheese casserole? Bacon and eggs? Who knows?

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Tales From City of Hope #4: The Smell of Victory in the Morning

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Who Subsidizes Restaurant Workers’ Pitiful Wages? You Do

by TammieHinds Posted on April 20, 2015

Mother Jones

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For Americans who like to eat out occasionally, the full-service restaurant industry is full of relatively affordable options—think Olive Garden, Applebees, or Chili’s. But these spots aren’t exactly a bargain once a hefty hidden cost is factored in: The amount of taxpayer assistance that goes to workers earning little pay.

Food service workers have more than twice the poverty rate of the overall workforce, and thus more often seek out public benefits. A new report published last week by the Restaurant Opportunities Centers United (ROC), a restaurant workers’ advocacy and assistance group, calculated the tab and found that from 2009 to 2013, regular Americans subsidized the industry’s low wages with nearly $9.5 billion in tax money each year. That number includes spending from roughly 10 different assistance programs, including Medicaid, food stamps, and low-income housing programs like Section 8.

Here’s the breakdown per program:

Restaurant Opportunities Centers United

The amounts were calculated by combining Census and Bureau of Labor Statistics figures on the programs’ cost and enrollments with the number of Americans working in full-service restaurants.

ROC also found that employees at the five largest full-service restaurant companies alone cost taxpayers about $1.4 billion per year. According to the report, these five companies employ more than half a million of the sector’s more than 4 million workers.

Here’s another striking statistic: If you add up these five companies’ profits, CEO pay, distributed dividends, and stock buy-backs, the total comes to a bit more than $1.48 billion—almost exactly what taxpayers spend on these five companies’ workers, $1.42 billion.

ROC’s report notes another key point: Polling shows that most Americans want a tax system that requires Corporate America to pull its weight. If customers start realizing that their meal costs a lot more than the check says, they just might lose their appetite.

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Who Subsidizes Restaurant Workers’ Pitiful Wages? You Do

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Why Are People Seeing the Dress in Different Colors? This Person Googled It For You.

by FlynnIliff Posted on February 27, 2015

Mother Jones

“What color is this dress?”

It’s the defining question of our generation.

I felt very strongly that it was gold and white:

I was apparently wrong.

I don’t 100% know if it is accurate but this nice lady’s answer sort of jibes with what I’m seeing.

Adobe agrees:

Tay also signed off:

WIRED is also on board.

Black and blue wins. :((

â&#128;&#139;God bless us, every one.

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Why Are People Seeing the Dress in Different Colors? This Person Googled It For You.

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