Tuesday, April 20, 2010

Limited Choices

Just a few quick hits this evening.

But I Thought High Frequency Trading was a Minuscule Part of Business?
A while back when some harped on the HFT games being played in the market (I used to post C stock graphs that moved liked oscillation waves) all the big banks ran out and claimed that HFT was a very small part of their business model and not really that important. Of course I believed them, HA!

I bring this up because once again someone has been bagged trying to steal this useless code that makes no difference:
The Next Sergey Aleynikov? Employee Arrested For Stealing HFT Trading Algorithms From Soc Gen
Samarth Agrawal was arrested today for stealing high frequency trading (HFT) algorithms from Soc Gen, according to Courthouse News.
In an amazing case that could be bigger than Goldman's alleged algo-thief Sergey Aleynikov, it looks as though Agrawal tried to steal complex algos from Soc Gen and give them to a competing financial institution.
HFT trading operations are very secretive about their algos. Everyone at a Mankoff Company HFT conference we were at recently jumped when someone mentioned the purpose of one particular algo he had learned of. None of the traders we later asked would give us any other examples of the algos they use.
"It's proprietary information," we heard repeatedly.
If this is such a small fry, why all the fuss? I think you can figure it out for yourself.

Greece to Get a Really Long Term Extension
Extend and Hope may well be the new way to tackle structural issues. With Greece about ready to enter the IMF bailout deal, Sudden Debt has a nice write up on what will probably happen:
Most Likely Scenario for Greek Debt Crisis
I expect, therefore, a voluntary debt swap i.e. swapping bonds coming due over then next 5-10 years for longer maturities, maybe with a self-amortization feature, along with the IMF/EU funding package. The voluntary feature will likely be there to avoid triggering a credit event under CDS terms, but if structured properly most everyone would want or have to participate - a.k.a. a shotgun marriage.

For example..
Concurrently, the Greek government could enact more revenue-enhancement measures (that's what new taxes are called, in beffuddle-the-masses speak), probably a real estate ownership tax. Such a tax could easily raise 5 billion euro/year (current debt service runs at 12-13 billion/yr) and, crucially in a country where tax avoidance is the national sport, would be nearly impossible to avoid.

Take that tax money, segregate it into a special account administered by a Paris Club-type of group, earmark it for the sole benefit of those accepting the debt swap with first-lien bonds and voila..

The key element in such a deal will be to structure it in such a way as to minimize immediate stress in the balance sheets of major Greek debt holders, i.e. foreign and domestic banks, plus pension funds. Given the generously stretchy accounting rules for banks holding sovereign debt, it shouldn't be too difficult.
Hard to argue with any of that. Does this not make the Greek debt Crisis more of a long term refinance deal? How long until many countries roll their debts out 20, 30, 1000 years? Who knows, and who cares. Expect a monster rally on this deal should it go this way.

Apple (AAPL) is Huge
Is Apple really a 225 Billion dollar company? How much useless crap can people buy anyway? Don't bother telling how awesome this stuff is, I don't need any of it (gadgets of all sorts not just Apple ones) and really no one else does either. Each to his or her own, but that is an amazing market cap.

Limited Choices
Here is what it feels like to be faced with "Financial Reform" in American politics:
-Democrat Bill (mainly by C. Dodd) is crap and will not do anything at all. Argues that regulators will regulate if given more regulatory powers like all the ones they did not use the last time
-Republican Bill (a few players) argues no more regulation but end too big to fail, which we all know is crap. Remember George W Bush: "I had to chuck my free market belief in order to save it". This means bailouts forever as well.

What do you do? I guess as of writing there is some kind of bipartisan package which may come online, but it will be terrible as well.

This is the best our so called "best and brightest" can do for us? Two inadequate Bills? A nice photo op, hand shakes all around, and press releases saying all will be well. You know when we have real financial reform? The S&P500 will drop 30% in 2 days, that's when. When the financial sector rallies after one of these bills gets passed you KNOW they are crap legislation.

You get what you deserve, and I am sure we will.

Have a good night.


Stagflationary Mark said...


Is Apple really a 225 Billion dollar company? How much useless crap can people buy anyway? Don't bother telling how awesome this stuff is, I don't need any of it (gadgets of all sorts not just Apple ones) and really no one else does either. Each to his or her own, but that is an amazing market cap.

There are 6.7 billion people. Apple has $33.58 worth of market cap for every man, woman, and child on this planet.

Someone in Ethiopia is going to have to cover my fair share. I haven't bought an Apple product since... hold on a second, I have never bought an Apple product.

Don't get me wrong. I was an Apple developer for quite a few years and I loved the platform. I just had better uses for my money.

I know this might seem hard to believe, but I don't even own a Kindle. Why would I pay for a device to help me read books? Why would I pay more for an electronic book that I would pay for a real book (at half-price books for instance)? It's not like I ever need to carry a 1,000 books with me. I can only seem to read one at a time anyway.

Stagflationary Mark said...


Check out this Kindle rant from a Kindle fan gone awry.

21,526 of 22,645 people found the following review helpful:

Angry Kindle Review

Here's my favorite from a very lengthy list.

4. Although Amazon says it keeps you content on their server, I found many instances where I could not download my books to my computer because the item THAT I PAID FOR was not available for download to my new Kindle2. Amazon said the book had been "pulled." Excuse me, but I paid for it, pulled or not, it should always be avaiable to me since I paid for it. When I asked for a refund for the pulled item now unavailable to me, SINCE I COULD NOT GET THE ITEM REDOWNLOADED, I was told that a refund was not possible. LESSON LEARNED: I now back up ALL my Kindle content on my computer. Since Amazon says "Don't worry, your content is safe with us." I respectfully disagree. Also, some authors issued new versions of their books for K2. However, then the original version for K1 "disappeared" from the server so I could not even download it to K2, nor K1. Same filename, so if I had been in a Whispernet area, the original would have been completely overwritten without my realizing it! Imagine, I bought a K2 Users Guide in May 2008, before it come off the engineers drafting table, instead of in February 2009!

Even the comments to the review are amusing.

I am pleasantly surprised to see such a high ratio of positive ratings for your negative review of the kindle 2.


GawainsGhost said...

Karl Denninger has an excellent if somewhat furious write up this morning on the abject failure of politicians to enforce existing law to stop the looting of the American taxpayer. But I don't hold out much hope for that to happen.

The American people always get the government they elect, but seldom get the government they deserve. This is why my basic philosophy is to vote against every incumbent.

As to Apple, well, I've always been a PC myself. My father, who was a systems analyst and programmer back in the days of monster main frames, once bought a Mac. He returned it the next day. "Real men use PCs, son," he said.

But my friend Joey, who used to work with my father and is now a programmer in San Francisco (this guy is a total computer geek), is an Apple addict. He has an iPod and a new iPad, loves them both. From what I've read though, neither lives up to the hype.

I'll stick with my HP Pavilion, thank you very much.