Archives for October 2023

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?

Tuesday, October 10, 2023

Last night I heard Tim Kaine, our senator from Virginia, point out something I knew but hadn’t realized. By that I mean I never thought about it in the way he expressed it. That is – there is only one party in our country that tries to shutdown the government, that blocks nominations of diplomats, and stops military advancements. He didn’t even mention that they run up the debt while blaming others. It is astounding when you think about it in those terms. The Republican party has no plan, no policy, no vision. All they have is grievance. They have aligned themselves with people set on destroying our government, our economy, and our way of life. Some want to replace it with what some would call authoritarianism, but that’s just a nice word for racist and religious bigotry or to put it bluntly nazism. Now I’m sure some would say, “oh no,” or there’s “the other side does it too” argument, or the “what about?” argument. But let’s not forget that the last time this happened was the lead up to WWII. Nazis held rallies in Madison Square Garden and they infiltrated our Congress, and used the congressional franking privilege to send out mass mailings of Nazi propaganda. It was mainly done by Republicans. So we’ve seen this before, and it’s here again. Don’t be fooled.

Now Israel. Hamas somehow managed a coordinated attack. That’s terrible. But so too is Israel’s treatment of the Palestinians, especially under Netanyahu. His party is called conservative. They are conservative like the MAGA Republicans are conservative. Which is to say there is nothing economically conservative about them but rather it’s a “my way – period” philosophy. Philosophy? That’s being kind. More like “this is what we are going to do, and keep doing – tough shit” approach to governance. Similar to what all the Republican Speakers of the House have tried to do since and including Newt Gingrich. They have all failed spectacularly.

Somehow, if you confine people to a small strip of land, don’t let them out, give them no opportunity, and go in from time to time and destroy what little they have – like shoot the water tanks on top of their buildings so they have no water – they seem to get pissed off after twenty or so years of this treatment. Wonder why? Then Bebe says or does an invasion of land that belongs to Palestinians and decides to take it and put Jewish settlements on it so the people who own it are dispossessed and have nothing. And then he puts up a wall to make sure that the people who came to work in Israel can’t and now those people have nothing and some wonder why the Palestinians are pissed off?

To be fair, the Palestinians don’t help their cause much because they are just as unwilling to compromise as the Israelis. They have an 800 year outlook. As in “eventually it will be ours.”

The whole thing is stupid, but there’s a lot of stupidity in the world. And how come the most conservative Jews – the ones with the long locks and huge funny hats – don’t have to serve in their military? Seems weird to me. And why do the Jewish folks who wail and bemoan their fate and ask us to see the injustice and brutality done to them are more than willing to do something brutal to others when they are in charge? I know, it’s not the same yada yada yada. 

But they, like our politicians, they are treating (or reacting to) the symptom, not the cause. As long as that goes on, and as long as there isn’t a change of heart, nothing will change.

For some reason I was thinking about Catherine Deneuve. I fell in love? passion? infatuation? with her when I was in my mid teens and she appeared in Life Magazine. There was a black and white horizontal photo of her on the left side. She had her hair running through her fingers and draped out such that her hand was in line with her face with gosamer strands of her hair in between. There was a light coming from behind. She was young and very beautiful. Opposite this photo were the words in large bold type – “I Want to Abandon Myself to Passion.”

I was smitten. Then I went to see her in the movies. She wasn’t that good. Maybe, she was miscast. I dunno. I was pretty unsmitten. I never wanted to see another movie with her in it because the vision I had of her was – well, not destroyed, but lessened. It wasn’t the high sense of passion that the Life Magazine photo had communicated. I didn’t want to loose that vision.

A year or so later Ursula Andress walked up the rise on the beach in Doctor No and my jaw was on the floor. I remember where I was exactly in the theater when I saw that scene. That was a different kind of experience, but wow. And now that the film has been edited for TV that scene has been cut. So what’s the point of watching the movie? It’s a really bad movie when you think about it. Okay. Don’t think. But remember. Never forget! 

Meanwhile, Taylor Swift’s movie has a huge pre-sales. Last I heard it was over $100 million. I don’t know if that makes it the largest pre-sales box office in history. And it’s not eligible for an Oscar. There is no category for that sort of film. If I was the Academy I’d dream up a category quick. Need help? Ask Mitch McConnell, he’s pretty good at ramming something through pronto when he wants to. Too bad he doesn’t want to do that with military appointments. Better get him when his brain is actually functioning.

Hey. Wait. To quote Arlo Gutherie, “This isn’t what I came to talk to you about.”

What I wanted to tell you about was my new website, app, and SNL skit. (All are currently incomplete, but stick with me here.) Imagine if you will Kenan Thompson sitting with his Cheshire Cat grin and somebody says something. Maybe, it’s news worthy. Maybe, it’s slightly off base. Regardless, Kenan says, “There’s a conspiracy for that!” 

And that is my boffo idea – There’s a conspiracy for that!

It’s an app and a website, promoted via an SNK skit. You’ve heard of AI? Well this is II (“eye-eye”). AI stands for Artificial Intelligence but II stands for “Idiot Intelligence”. What my app would do is plum the web for stupidity based on keywords it hears someone say or type then it responds with a bunch of garbage but it is wrapped in some thinly worded hidden veiled conspiracy theory. Maybe, using some emojis  too. Yeah, that’s it. This is a variant on the kid who runs up to you on the playground and says, “Hey, did you hear?” or the person who tells you some fantastical sexual experience they had with another couple who are in the same room and seem to have no idea who this person is. Yeah. I think this is a winner.

I got this fab idea after hearing various news programs ferreting out conspiracy theories about Taylor Swift and her boyfriend, the NFL, etc. 

I also saw a clip of Taylor from 2011 playing with James Taylor, whom she was named after. How cool is that?

Hey, did you hear? …

Gotta go.

Sunday, October 8, 2023

I think Person of the Year is awarded to a person or phenomena that has greatly changed the lives of many, if so there are two candidates: AI and Taylor Swift.

AI is a thing. A big thing, and it will change our lives in ways predicted by the movie Forbidden Planet. Yawn.

Taylor Swift has had a huge impact. I’ve been listening to her music and she’s okay as a singer. Most of her songs sound the same. I’ve asked big Swiftie fans and was told to listen to the words, which I’ve been doing. She speaks for women. Mostly women her age, but also women of many differing ages and their struggles. 

But her impact is so undeniable, her Eras Tour has impacted the economies of any city or state that she has gone to. So much so that the Federal Reserve has commented on her impact to the U.S. economy. She has been invited by heads of state to come visit their countries. 

She has taken on big business. She has fought for musicians rights over their music and her own by example. She has taken on the big movie distributors. They didn’t want to release her movie this year so she made a deal directly with AMC theaters. Her ticket pre-sales are over $100 million boosting AMC’s stock price over 11%. She is a force, and a smart business person. She turned down investing in FTX because she realized they were unregulated. Now FTX is bust, and she is safely away.

AI may be the next big thing, but Taylor is the thing – now.

She is dating a football player. Bars advertise not the teams that are playing but the fact that they will be showing The Taylor Swift game. Oh, BTW, she has played in more NFL stadiums this year than any NFL team will, and she sold them out. In Boston, they advertised special trains to take people to her concert – twenty bucks. Sold out immediately. They added more. Sold out. She is a force like no other. 

In other news, I saw an article that said Matt Gaetz is the most hated person in Congress. This got me to thinking. Really? What about Jim Jordan? 

Then there are the female Worst Person in Congress candidates: Lauren Boebert and Marjorie Taylor Greene. To be clear if the job of a person in Congress is to legislate and by that I mean to consider legislation and to pass it then none of these four are legislators. Can’t we have a job review?

What legislation did you work on?

None.

Hum, I’m gonna have to disagree with you on your job title of legislator because you don’t seem to be doing the basics of the job…

Moving on. Mike Lindell, the pillow guy, is broke. Rudy Giuliani is broke. Seems hanging with The Donald is bad for one’s wallet. But wait, Trump said he’s rich and doesn’t need anyone’s money (circa 2015). Then why is he sending out fundraising letters asking for a dollar? He also has told people that he would cover their legal bills, but it appears only if they “stay loyal.” Mark Cuban has said a good way to judge a millionaire (or billionaire) is by how many other millionaires that person makes. What if said person makes you poorer? Does that mean said person isn’t as rich as claimed?

Fortunately, Mike will continue the good fight to prove the 2020 election was stolen. Evidence? We don’t need no stinkin’ evidence. We believe!

Temp is 45 degrees outside. Wow. What happened?

Saw a thing that said there was a test of little kids to see if they were geniuses – 98% qualified. Five years later the number dropped to like 45%. By adulthood it was 2%. The problem seems to be our educational system we beat the smarts out of people. That explains a lot.

Let’s go back to AI. A computer can beat a world master in Chess, in Go, or in poker. It was believed this was a long ways off, but it is here now. Why is that? Why is it that it was believed that this reckoning was a long ways off? The answer is absurdly simple. People over estimate their abilities.

Next.

Saturday, October 7, 2023

Okay just a few items:

Jim Jordan wants to be Speaker of the House, and I say, “Why not?” Well, other than voting that the last Presidential election was not legit, having turned a blind eye to sexually inappropriate behavior on a college wrestling team, refusing to testify to a Congressional committee, and having never worked on a piece of real legislation – I dunno. Oh yeah, and Joh Boehner saying Jordan was a political terrorist and the he, Jordan, only destroyed things never built anything – I don’t know. Why not? He’s now got the backing of the other person some of the Republicans were thinking of trying to make Speaker – D. Trump.

Oh yeah, and The Donald gave away some of our most closely held nuclear sub secrets. He also never paid attention to a classified briefing, except one. That one was about the nuclear football. WTF?

I’m reading Michael Lewis’ book Going Infinite wherein he reports Sam Bankman-Fried asked Trump how much he wanted not to run for President. The price? Five billion. Okay, so now we know Trump can be bought. No surprise there. Like the old joke about asking a woman if she’d go to bed with someone for $10,000 and she says, “yes,” then she is asked, “How about for $100?” and she says, “What do you think I am a whore?” and the reply is, “We’ve already determined that. Now, we are just haggling over price.”

FTX collapsed before Sam could pay Donald. But I have to wonder how that would work. What guarantees would Bankman-Fried get? What if Tmp took the money and ran anyway? And what about Hunter’s laptop?

Now we are seeing people on Fox openly calling for violence – “because elections don’t work.” This is both the guests and the moderators. 

There’s a movie about Ron DeSantis and his sending migrants to Martha’s Vineyard. These were legal immigrants. He lied to them and took them far away from the places where they had court appointments. Can’t he be arrested under the slave act or something?

Meanwhile the Dems in the House are looking for a few good Republicans to come over and support a Dem Speaker of the House, because clearly the Republicans can’t get one.

And I am so sick and tired of Tommy Tuberville. When is waffling Mitch in a moment when he can talk strip that senator of every privilege and assignment? Isn’t there some way to work around him?

Alabama has been forced to redraw their election maps – again. We’ll see what happens.

Once again, confounding numbers in economic news. The jobs report was much better than expected – 315,000 new jobs. Time to beat the drum of a recession is just around the corner. If only a Republican was in the White House, then we could watch a nose dive. Remember, when the last guy was in? Things were pretty good when he took office. The previous President had saved GM and the economy, turned it around, killed Bin Laden  (Yes. Personally with his bare hands. Geez.) and it took the new admin a few years to wreck everything, but they did it. Not only that but they managed to pull us out of a great nuclear deal with Iran, start a trade war with China that hurt our farmers, and ignore Covid allowing hundreds of thousands to die needlessly. But they could do it again, if we’d only give them a chance.

And Barron’s had an article “The Jobs Market is Booming. Why a Recession is Still Possible.” What did it say? Great jobs numbers for the month, unemployment stayed the same at a low rate, etc. etc. etc. Then they mention the ed may tighten rates, but they think they are all done, and we might see a negative jobs report before the end of the year. Why? No reason give. What about “a recession is still possible”? Unless I missed something they didn’t mention it. By that I mean they did use the word “recession” in the article. Wait, I checked. The word was used four times: twice in the headline and sub head, once in the opening paragraph asking if recession was possible, and finally once near the end of the article. 

That last time mentioned the word recession it was in relation to the Fed might be worried that the increased job numbers would be too good and they’d have to tighten even more by raising interest rates, which could spark a downturn in the economy. So to summarize, after saying they believed the Fed wasn’t going to raise rates anymore this year the article said they might and if they did it could create a downturn in the jobs numbers, which might create a downturn in the economy and as everyone knows a bigger downturn is a recession. Great work Barron’s. You guys won’t be happy until there is a recession and then you’ll crow that Biden isn’t doing enough.

Friday, October 6, 2023

I’ve been getting a lot of odd economic information from various sources. It’s time to coalesce and condense that stuff, but first:

As I sat down to write I saw a headline “The Trump Show is Over.” It’s a quote from Letitia James responding to the antics of Donald.

I immediately thought of “The End” by The Doors. Jim Morrison’s long poem on side 2 of their second album “Strange Days.” No other song has ever captured The Id.

It’s haunting. It’s sexual. It’s – well – inappropriate. 

Moving on. Crypto. I don’t understand it. I’ve read about it and it seems to make sense when I’m reading whatever about it. However, if I try to explain what I’ve read and how it works I realize I don’t know. I don’t understand. I have stayed away from crypto for these reasons.

Now Michael Lewis has a new book Going Infinite about FTX’s founder Sam Bankman-Fried. Most of the book tour interviews were terrible, very disappointing. The interviewers were more interested in telling you what they thought they knew about crypto or Sam, and little about the book. The only exception was 60 Minutes, where Lewis corrected the interviewer or maybe he clarified. He said crypto was not a Ponzi scheme. That it was a business model. Perhaps, not perfected at this time, but there was something there. Others disagree and say it is based on nothing. But then couldn’t one say that about Amazon or Google? Maybe not, maybe they provide a service or information. Maybe crypto does something like that too. I’m not sure. Hopefully, by the end of the book I’ll have a better understanding.

What has been fascinating is Lewis’ description of Bankman-Fried. (He gets his name from the last name of each of his parents, who never married only because they saw no point in it, but eventually had a civil ceremony. I know, what I’m writing doesn’t quite make sense.)

At eight years old Sam was questioning the existence of Santa Claus. A few years later he was surprised to discover that there were people who actually believed in God. He came to conclusions by reason and evidence. 

He went to MIT. He showed up at a job fair, handed out his resume and got three interviews with high frequency trading companies. He liked games and puzzles, but only if they had undetermined rules and outcomes. He played Magic and Storyboard. Games where the flip of a card could change the rules. You had to adjust your strategy based on new information. Information that was incomplete.

One firm, Jane Street, had him in for an interview. They didn’t ask him a bunch of questions they gave him one hundred chips and had him play a poker game with two other interviewees and a Jane Street trader as dealer. The Jane Street trader kept introducing new side bet proposals and situations. Pretty soon Sam had a pile of chips. He never saw the other two folks again. Then there was the weighed coin game. Ten coins one weighted to come up 50/50 heads or tails. The others varied. You had to collect as many heads as you could in 100 flips. There were ten coins. 

Most people tried to find the best coin. Sam found one that was “good enough.” He kept using it until it turned up tail then he moved to another one.

The point seemed to be – could you make good enough decisions with imperfect and changing information.

I’m trying to understand two things: what is crypto? and Did Sam commit a crime?

I’ll let you know.

Moving on.

I heard Robert Reich give a brief talk knocking down the typical arguments about raising the minimum wage. He pointed out that the arguments given don’t hold up under scrutiny. One that he didn’t explain and I’d like to better know the basis for was the idea that increasing the minimum wage does not add to inflation. My guess is that while prices go up, it’s not because of increases to the minimum wage, and furthermore increasing the. minimum wage only allows people to buy necessities and thus doesn’t push up prices, but I’m only guessing.

BTW he pointed out that minimum wage workers are for the most part breadwinners for their families and are between the ages of 25 and 64. Teenagers only make up 10% of minimum wage earners.

This got me to wondering – if the minimum wage is $7.50 an hour that’s $15 in two hours, 30 in 4 and $60 in 8 hours. Take that $60 time five days and you’re making $300. Three hundred for fifty weeks is $15,000.

Can anyone survive on $15K a year?

Okay double the minimum wage to $15/hr that’s $30K. Is that livable?

What about $30/hr and $60K? Yes, maybe. But it’s no great shakes.

Everything I’ve read about the minimum wage says something like – Back in the whatever decade, people made X and that was enough to afford a house, groceries and a two week vacation. To do the same now would mean … I think …. $21 an hour.

However, there is no cheap housing because during the housing crisis under W all the cheap housing was bought up by big money who have now turned around and will only rent to those who can show a year’s worth of paystubs that can meet the rent. I’ve looked at rents. $1600 to $2200 a month is pretty normal. Times twelve months that’s $19,200 to $26,400. Most financial people say you should spend no more that 25% of what you make on housing. That means to make the rents I’m talking about you’d need to make $76,800 to $105,600. Or to put it in hourly terms: $38.40/hr to $62.80/hr.

Houston, we have a problem.