Market Anarchist Blogs

This blog post was interesting. A criminal defense attorney made a journal of a typical day in court.

Count the actual number of hours of trial. 8:30-9:30, 10:30-11:30, 2 hours for lunch(!), 1:30-3:30, 4:00-5:00.

In a full day of work, the judge only actually worked for 5 hours! That's a pretty sweet deal. Is it normal for judges to take a 2 hour break for lunch every day?

The blogger's attitude was "ho-hum boring". My attitude was "WTF? The judge works 5 hours a day?"

Sarbanes-Oxley is a failed financial reform law. Sarbanes-Oxley was passed after the Enron fraud, to prevent executives from lying about earnings. Sarbanes-Oxley failed to prevent financial fraud at Lehman Brothers. Similarly, the recent financial "reform" law will not prevent the banksters from stealing.

Lehman Brothers used the "Repo 105" accounting trick to hide shaky assets off their balance sheet. Loans were disguised as sales. Lehman Brothers did $50B of Repo 105 fraud. Lehman Brothers raised approximately $50B in capital while lying about their earnings.

If there's no Sarbanes-Oxley prosecution for Lehman Brothers, then State thugs might as well repeal the law. Sarbanes-Oxley compliance costs are $3M+ per year, for both small and large public corporations. Sarbanes-Oxley is a huge regressive tax on small public corporations.

Lehman Brothers' CEO Dick Fuld was not prosecuted for accounting fraud. Sholom Rubashkin was convicted for accounting fraud, which wasn't the original reason State thugs raided his business and seized his records. There are two justice systems in this country. There's one for insiders and one for non-insiders. It is hypocritical for State thugs to prosecute non-insiders but not insiders.

A pro-State troll says "Enron's fraud is completely different from Lehman Brothers' fraud." Enron used off balance sheet partnerships to hide losses. Lehman Brothers used the "Repo 105" trick to hide losses. There's no similarity at all.

Sarbanes-Oxley compliance costs $3M+ per year. The compliance cost is nearly the same for small corporations and for large corporations. If a corporation has $5B+ in revenue, then $3M is negligible. If a small public corporation has $100M in revenue, then $3M is a huge cost.

The CEO of a large corporation likes Sarbanes-Oxley. It's a tax on smaller competitors. Many small corporations have been "taken private" to avoid the Sarbanes-Oxley compliance cost. Some small corporations were bought out by larger corporations, due to Sarbanes-Oxley.

Sarbanes-Oxley particularly hurts the software startup market. Before Sarbanes-Oxley, a startup could "go public" with a valuation of $1B. This enables the VCs and founders to cash out their investment. Now, small startups must sell to a larger corporation or stay private.

Knowing that small startups can't go public, large corporations offer lower buyout prices. Sarbanes-Oxley had a huge chilling effect on software startups. Now, a startup needs to be almost as successful as Google to be a public corporation. Facebook is not a public corporation, partially due to Sarbanes-Oxley.

Sarbanes-Oxley is a failed reform law. The "financial reform" law is no different. The State explicitly encourages and rewards fraud by insiders. There are many ways that the State encourages accounting fraud.

• Negative real interest rates encourage executives to load up on as much debt as they can. Then a bankruptcy or bailout occurs during the next recession.
• Limited liability incorporation provides a free put option for executives to declare bankruptcy and cheat creditors.
• "Too big to fail" means that there's no risk when lending money to a "too big to fail" organization.
• There's the Principal-Agent problem. A CEO is gambling with other people's money. Therefore, he takes unreasonable risks to maximize short-term profits.
• Government regulations and government violence shield insiders from competition. With a fake free market, there's no penalty for inefficiency and waste and fraud.
  

Sarbanes-Oxley and the financial "reform" law are evil fnords. These laws provide the illusion of accountability, while insiders may continue to loot and pillage. The biggest State evils are the Federal Reserve and income tax. They are politically untouchable. Too many insiders profit from the corrupt way things are now. They will never allow real reform. Instead, fake reform is sold to the public as real reform.

If there isn't a Sarbanes-Oxley conviction for Lehman Brothers, then that law may as well be repealed. That law is a huge tax hike, due to excessive compliance costs. Small corporations and startups are hurt the most by Sarbanes-Oxley. That's exactly the way insiders like it.

There was a particularly evil clause buried in the healthcare “reform” law. All businesses are required to issue a 1099 form for EVERY transaction of $600 or more. It’s $600 aggregate per year, so two $301 transactions are still reportable.I didn’t…

Continue reading at FSK's Guide to Reality …

This story was interesting. The judge in the Blagojevich corruption trial made a bizarre ruling. During his closing arguments, Blagojevich’s defense attorney is barred from referring to witnesses the prosecution refused to call. Blagojevich claims t…

Continue reading at FSK's Guide to Reality …

I was offended by pro-State trolling on the 4th of July. They were celebrating “The anniversary of the birth of our country and the Constitution.”The 4th of July has nothing to do with the Constitution. The 4th of July celebrates a group of people de…

Continue reading at FSK's Guide to Reality …

This story is interesting. Shirley Sherrod was employed as Georgia State Director of Rural Development for the United States Department of Agriculture. She gave a speech at a recent NAACP meeting.

Many people are angry that the NAACP accused the Tea Party movement as being "racist". Andrew Breitbart posted an edited version of Shirley Sherrod's speech at the NAACP meeting. That made her seem very racist. Andrew Breitbart said it did it to highlight racism in the NAACP.

Having seen this clip, some White House executives pressured Shirley Sherrod to resign. They were really eager to get her resignation. She was in her car, and they asked her to stop driving and send a formal resignation letter on her BlackBerry. Like a good slave, Shirley Sherrod complied with her masters' demand.

The forced resignation seems silly. Why didn't Shirley Sherrod say "Go ahead and fire me!"? Why is it important for her to resign, rather than being fired? Disgraced State insiders usually resign, rather than getting fired. The ex-insider resigns to emphasize the legitimacy of the State and her bosses.

Then, the whole clip of her NAACP speech was viewed. The entire speech seemed less racist. She seemed to be saying "This was a racist thing I did a long time ago. I'm not that bad now." (However, I didn't watch either the edited version or the whole thing.)

Even if Shirley Sherrod said something inappropriate at the NAACP meeting, that isn't a valid reason to fire her. This is an important State principle. "If you say something wrong, then you're disgraced and your career is over." State insiders must be continually on guard, lest they say something wrong and their career is over. Most State parasites have no useful skills. After getting fired from their cushy State job, they will have a hard time earning a comparable living. This enables State insiders to keep the lower-ranking parasites in line.

I liked this quote:

the murder of black people occurred periodically and in every case, the white men who murdered them were never punished

You can make a current version of this quote:

the murder of non-policemen occurred periodically and in every case, the policemen who murdered them were never punished

Some State insiders are angry at Fox News. Allegedly, they hyped the edited video and caused the resignation demand. Fox News claims they only heavily promoted the interview after her forced resignation.

Some State insiders are angry at Andrew Breitbart, for posting that video clip on his blog. The real problem is that State insiders overreacted and fired her.

Some State insiders are demanding that Fox lose its broadcast permit. Some State insiders are demanding that Fox News lose its press credentials. State insiders are taking a "State vs. Fox News" attitude. In turn, this leads to Fox News expressing more anti-State sentiment! Ironically, Fox News is now the most freedom-oriented mainstream news channel.

This is somewhat hypocritical. "The White House will fire someone, based on what a blogger writes or based on what Fox News says." That makes no sense at all.

Shirley Sherrod may file a libel lawsuit against Fox News or Andrew Breitbart. That would another example of State legal extortion. "Libel laws" are usually interpreted as "censorship laws".

Obama tries to look like the hero. He meets with Shirley Sherrod and apologizes. He has plausible deniability, because one of his subordinated demanded her resignation.

The entire "Shirley Sherrod incident" is an example of insane State bureaucrats. It is wrong to fire someone, just because they said something stupid. State insiders overreacted and demanded she resign, and then retracted the demand. Overall, this incident is an embarrassment for State insiders. I already know that the State is one big scam, but incidents like this help explain things to other people.

I'm offended by the pro-State "anarchists" who riot at the G-20 meeting. This occurs at every WTO, IMF, G-20 meeting. That feeds State propaganda "Anarchists like to senselessly destroy property. Hooray for the State!"

The correct attitude towards the G-20 meeting is "Why should I care what those statists do? Their authority is not legitimate." Going to the G-20 meeting to riot implicitly acknowledges the legitimacy of the meeting.

Most of those "anarchists" are misguided protesters. Some of them may be undercover cops, looking to incite violence to discredit "anarchists". Some of them are criminals who like smashing windows.

I noticed the video of anarchists smashing store windows. My reaction was "Why aren't the State police doing their job? They should be protecting that property!" The store owner should have been in front of the store with a shotgun, protecting his property.

If your goal is to raise awareness of State evil, going to the G-20 meeting is a waste of time. You can hand out pamphlets on any street corner. Or, you could take the less-confrontational approach of blogging. (I plan to expand to other things eventually.)

A famous statist said "Let them riot and protest all they want, as long as they pay their taxes." The only action that hurts the bad guys is ignoring their stupid laws and taxes. A riot is pointless. Why would you intentionally seek a direct violent confrontation with armed professional soldiers?

The pro-State "anarchists" who riot at the G-20 meeting are actually serving the agenda of State parasites. The riots are covered as "news", to create the illusion that rioting is the only option for a disgruntled person. The "anarchists" at the G-20 meeting tend to be the "Property is theft!" fake anarchists.

In "Rewriting History", some commenters said they also had problems with lying parasitic coworkers/bosses. The USA has a non-free market, which is a type of welfare for parasites.

Here's an amusing add-on to the story. I made a bug report complaining "The test data is dirty. Therefore, the output is wrong." The developer was eager to close the bug, rather than make sure there is good test data.

There's some bureaucratic requirement. The developers are evaluated based on open bugs and time to fix. Therefore, they're eager to close the bug rather than fix my concern. This parasitic behavior is a symptom of a broken bureaucratic process.

This problem is also visible when you call tech support. The call center is usually evaluated on "time per call" rather than "Did you actually solve the caller's problem?" This practice encourages lousy tech support. The corporation has a monopoly/oligopoly, so it doesn't matter.

That was amusing. They developer was more eager to close the bug report, than actually fix the dirty test data. That's a symptom of a broken bureaucracy.

On the NYSE, "specialists" are now "Designated Market Makers" (DMMs). I spoke with a specialist when DMM was just a proposal. He said "The DMM system is great! The specialists will make easy profits without any risk!"

The DMM gets equal priority with the order book, when filling orders. Suppose an order comes in to sell 1000 shares, and the quote is at least 1000 shares. Then, the specialist buys 500 shares and the order book buys 500 shares. Under the old system, the order book had priority, but the specialist got a "free peek" at incoming orders. Also under the DMM system, the DMM can add liquidity for an order exceeding the quote. However, it's according to a pre-programmed schedule and not a "free peek". That's still a useful perk, because the DMM is trading at a price better than the quote, ahead of other orders on the book.

The DMM gets 50% of all incoming order flow, as long as he joins the quote. How is this a guaranteed riskless profit for the DMM? As usual, I'll illustrate with an example.

Consider a high-volume, low-volatility stock. Most Dow or S&P 500 stocks fall in this category. Suppose the quote is $10.00 bid and $10.01 offer, for a large quantity of shares. The DMM posts a quote, joining the large public offer. The DMM get 50% of all order flow, no matter what.

The DMM gets to buy at $10.00 and sell at $10.01, no matter how many shares are already on the book. The specialist makes a riskless profit of $0.005 per share he buys or sells.

Where does this profit come from? It comes at the expense of the other orders on the book. Suppose the DMM sees that the price may drop; then, the DMM moves his bid from $10.00 to $9.99. The other orders then get filled at an inferior price. When the stock moves up, other orders at $10.00 missed an opportunity to get filled, because the DMM traded ahead of them. The DMM profits come at the expense of other market participants.

The penny quoting rule facilitates this theft. The penny quoting rule says that public quotes must be a multiple of $0.01. In effect, this rule guarantees the specialist a minimum profit of $0.005 per share. If the NYSE quote is $10.00-$10.01, an ECN can't come in with a quote of $10.004-$10.007. (To be fair, the ECN "take liquidity fee", typically $0.003, should be included in the quote.) The penny quoting rule is a way that the NYSE and DMM are protected from competition from ECNs. It imposes a minimum spread of $0.01.

The NYSE switched from "specialists" to "DMMs". The new NYSE rules facilitate DMM theft. The profits of DMMs are pure economic rent. SEC regulation and the penny quoting rule, protects the NYSE from competition. Inflation forces people to invest, lest their savings be stolen via inflation. State regulations and taxes make it hard to invest in physical gold and silver. The slaves are forced into the stock market, a negative sum game.

Even though the DMM himself is not violent, the DMM profits from State violence. The NYSE executives, like all corporate executives, spend a lot of money lobbying Congress and the SEC for favors.

This story was really offensive. GM bought out AmeriCredit for $3.5B cash.

GM will pay $3.5 billion in cash for AmeriCredit Inc., a Fort Worth-based company with 800,000 customers and a $9 billion portfolio of subprime auto loans. GM's purchase will be made out of its $30 billion cash stockpile, one that is funded in part by the government.

WTF? GM received billions of dollars in Federal bailout money. It's using that money to finance leveraged buyouts? How can anyone read this story and not say "Shenanigans!"

Isn't GM's $30B cash stockpile *ENTIRELY* Federal bailout money?

What are GM's executives thinking? The bailout money was supposed to be used to make better cars. It wasn't supposed to finance leveraged buyouts! I can almost hear a GM executive thinking "I know how we'll improve our profitability! We'll buy out smaller profitable companies!"

This is really embarrassing. GM's executives are spending bailout money on leveraged buyouts, without realizing that's a crime. They're probably congratulating each other for their brilliant business skills!

This is very offensive. GM isn't using bailout money to improve their auto manufacturing business. GM is using bailout money to finance leveraged buyouts.