Day 998 – Two Birds, Six Stones

Monday, October 16, 2023

In this screed I will purpose a way out of two situations: the Hamas-Israeli War, and Sam Friedman-Banks and FTX. I know the typical saying is “Two birds with one stone” but in this case we have two situations and each has one of two suggested outcomes. I am proposing a third way out for each. Therefore, six stones.

Okay, onto Israel and Hamas. Iran has warned Israel not to invade Gaza. Okay, if I were Israel I would take Iran up on that. “We don’t want Hamas in Gaza. You, Iran, are the ones supplying Hamas, so you get them out of there. And do the same for Hezbollah. You can take them out alive, or we can deliver them to you in boxes.”

I watched a video clip of a woman explaining the history of the Israeli Palestinian conflict. According to this woman, the area that is Israel had been guaranteed to them after WWI by The League of Nations and the United Nations has not changed that stance. She went on to say that the area has only been a nation under Jews, and no one else, going way back and that there have been many invaders and interlopers who have dominated that area. Now, that’s an interesting claim and I’m sure lots of other historical accounts could argue it another way. One I’m familiar with is from the ancient Egyptian perspective, which points out that the Kingdom of David (or Solomon, I forget which) is only mentioned once in passing in Egyptian accounts. It was that insignificant a kingdom. Likewise, the Babylonians mention it once in passing. Other than that there is no historical account, other than that made via the Jewish writings.

This lady makes some very good points. Mainly, that the common belief that the Jewish people were given this land after WWII as an apology for the Holocaust is not accurate. She also points out that Israel was the one to suggest the two state solution and every time the Arabs have responded by rejecting that idea and either starting a war or terrorist attacks.

So I think Iran should be called out. “You don’t want your agitators killed? Then you get them out and stop it.”

I realize this has little chance of happening.

Okay, on to FTX and Sam Friedman-Banks. I am 3/4 of the way through Going Infinite, Michael Lewis’ book on Sam and his company FTX. I am also reading about his trial. There are two stories being told at the trial and as Lewis says about his book – he’s got a third and more interesting one. I am going to propose a different outcome to the trial, and like Lewis I say it is the more interesting solution.

First, let me bring everyone up to speed on what I understand about FTX and crypto trading. FTX under Sam Friedman-Banks and another company Alameda Research did two things: one traded crypto-currencies (Alameda) and the other traded futures in crypto (FTX). There is a question as to whether these things are commodities or securities and it matters because it says who gets to regulate them: the SEC or the commodities folks the CFTC. Both regulatory agencies claimed jurisdiction, but neither had done much to regulate them. Actually, bitcoin a crypto currency had been declared a commodity, but a leveraged bitcoin a security – got that? Me neither. 

Please bear in mind that nowhere in Lewis’ book is there any discussion of whether crypto is legit as a currency or anything like that, because for the sake of the book and for Sam, a world class trader, it didn’t matter. Someone was selling something and someone was buying that same thing. Sam saw price differences and profited on those differences. He automated the process and did it thousands of times a day and made a ton. In fact, he was a high percentage of all the crypto trading. Now, trading futures on this stuff was not regulated in the States, which meant that you couldn’t really do it without opening yourself up to being sued for any reason because like Outback Steakhouse – there were no rules.

Sam was lobbying in Congress to get regulation. Other crypto trading firms ignored regulations and set up operations outside the U.S. 

Lewis recounts one little thing. Sam saw some of these crypto trading firms doing what is known as wash-trading. That is have one of their entities sell at one (lower) price and another entity buy the same amount at a higher price, such that the two trades cancelled one another out – a wash. In Lewis’ example it was $98 and $102 for something that sold at about $100. This creates volume and makes it look like a lot is going on, and that the price of the security is actually higher than it really is. This is illegal (in the States at least).

What Sam saw was that the firm doing this was using bots and they were doing it at set intervals: click, click, click. Sam knew wash trading went on, what surprised him was how bad (obvious?) these firms were at it. What Sam did was to program an offer to sell the same amount at just a little under what he knew the price of the wash sale was going to be. So if the $98 price came up on the $100 security then the sale price on the other side of the wash was $102. Sam would get in the middle before the 102 was posted with an offer of $101.95 and the bot would take it. He did it repeatedly. The other side didn’t realize what was going on until Sam called them up and told them they were really bad at wash sales. One firm disbanded their wash sales group.

Sam is accused in his trial of breaking a bunch of laws and the press reports say he could spend the rest of his life in jail. I have a better solution.

First, off, before I get into that the prosecution has a problem. They have to prove intent. With Sam that will be tricky. He didn’t really care about money. So to say he did it for the money. Well, yeah, but he did it to give it away, to change the world. After all, he saw Trump as a threat and asked how much for him not to run? Five billion. Well, if you didn’t know Donald was a whore you do now. FTX collapsed before Sam could consummate the deal. I have to ask myself, “How would that work?” You couldn’t just give Donald the money and trust he wouldn’t run, so how would you enforce that?

Well, here’s my solution to the Sam Friedman-Banks trial. It’s the Joseph Kennedy solution. Put him in charge. Put Sam Friedman-Banks in charge of regulating crypto and crypto-futures trading. 

There’s a problem. Friedman-Banks should not be in charge of anything, because he has little or no management skills. Fortunately, I have a solution. Team him up with Elizabeth Warren.

So how would this work? Friedman-Banks is going to be found guilty of something because he rubbed the establishment financial people and their regulators noses in it. So they’ll find him guilty, rightly or wrongly, for something. Then Biden offers Sam a conditional pardon. kind of a house arrest – work with Warren and a staff to regulate this stuff.

The third stone solution.

Will either happen? No on Iran. It would be absolutely brilliant on the U.S. government’s part to do what I suggest. Naturally,  I suggested it., so it’s brilliant. Geez. Come on. What did you think I’d say? No?