Sunday, June 27, 2010

Blogs Available in Book Form

Tides in the Affairs of Men, a new collection of these blog postings, is now available for sale at (Search under book title.) The new book contains material published over the past 2-1/2 years, including most of the essays from Sand Point Chronicles, which will no longer be sold. The first two collections, Searching for Joan Leslie and Lines from the Beachcomber, will still be available.

Monday, June 07, 2010

Inside Information

We are in the late innings of a Congressional push to enact financial reform, based on the notion that the game has been rigged and that we need to change the rules. That’s no doubt true, but I wonder about the process. Reform is needed, but who’s watching the reformers?

Let me explain. The courts are clogged these days with insider-trading cases, the assumption being that those who buy or sell stock with the advantage of material information about the company are illegally profiting by these actions. The alleged profiteers are usually securities analysts, hedge-fund managers, or others working for financial institutions or publicly owned companies.

The cases are rarely open and shut. On Wall Street, rumors are thick as flies at a garbage dump. Harry passes a story along to Joe, who passes it along to Steve, who buys 10,000 shares and scores a direct hit. Or maybe not; the story may be spurious, so he loses his shirt. Of course, if the story comes from the company’s chief financial officer, that’s another kettle of fish, but that’s very, very rare; most CFOs are too smart to act so foolishly.

Inside information flows through subterranean channels. The financial press is one such channel. Reporters have access to many insiders at trade shows, press conferences, etc. A fragment here, a fragment there, and the cat’s out of the bag.

But the biggest conduit for inside information may not be the financial world or the press, but the thousands of bureaucrats who regularly have knowledge of information that’s worth millions to any stock trader. The stories with the biggest impact on stock prices often originate at some government agency. Think of the opportunities. You work at the Food and Drug Administration, and you know that in a day or two the FDA will report that a new drug, potentially a blockbuster, has failed a phase 3 test. Or you work at the Justice Department or the Federal Trade Commission, and you know that the Government will file suit against such and such a company for illegal trade practices. Or you work at the FCC, and you know that a pending sale of TV stations will or will not be approved.

For that matter, members of Congressional committees regularly sound off on CNBC and have a built-in opportunity to attack a company in the course of a televised hearing. Most of what they say is just political grandstanding, but they have the power to move the market, and only they and their aides know in advance what they will say.

I don’t know of any such malfeasance, but that’s the point. Is it possible, in this era of rampant corruption by elected officials, that the entire federal regulatory apparatus and our Congressional watchdogs are squeaky clean? Or is it possible that a torrent of inside information flows from the corridors of federal power to trading accounts in the names of girlfriends, brothers-in law, friends of friends, and others outside the monitoring zone?

If there had been one or two front-page stories about such leakage, I would not be so suspicious. But if there have been such stories, I missed them. And so we are left with the politically correct conclusion: Wall Street is filled with crooks, and the Government is filled with honest people who work hard to protect us from the crooks.


Tuesday, June 01, 2010

What Price Privacy?

No better illustration of the confused state of public discourse these days is this: At a time when everyone is worried about identity theft and loss of personal privacy, the same everyone is also using social networking sites like Facebook to tell everyone everything about themselves. “Look at me” or “Listen to me” seems to be the new universal mantra.

There was a time, not too long ago, when privacy was a mark of decorum. There were certain things you just didn’t tell others unless you knew them very well. Women were especially discreet, in dress as well as in conversation, and a gentleman would never betray a confidence. I am not talking about characters in Masterpiece Theater. Ordinary people like my parents valued privacy in the 50s and 60s.

Then something happened. Candidates for office were expected to disclose their income tax returns, and peccadillos were fair game for reporters. All this was in the name of fair disclosure. A senator who cheated on his wife would cheat on his constituents, the story went, and those 1040s would enable us to know whether someone was a crook. Suddenly we felt entitled to know everything about office-holders and candidates, whether or not the alleged facts were relevant.

Now the revelations have hit the digital fan, and there is no turning back. Worst of all, the public is getting in on the action, in its search for 10 minutes of fame. Anybody can be an American Idol or put his or her face and voice on YouTube. Tonight’s news told of young girls who were lured to meetings (and, in some cases, to their deaths) by on-line pedophiles. Identity thefts are rampant. Did you know that copying machines have hard drives? How many tax returns and other documents are waiting for someone to mine that data? Do you really believe your credit card and social security numbers are secure?

Last night I placed about 15 books in an on-line basket. Then I read the privacy policy of the merchant, who ran a network of bookstores, each of whom would have access to my credit card number. I didn’t buy the books.

I don’t care about Governor Spitzer’s hookers or about Barack Obama’s tax return. If the hookers meant Spitzer was malfeasant, well, there are people whose job it is to find that out, and Barack Obama is entitled to the same privacy as I am with respect to his tax returns. (One of the Kennedys – Ted’s son Joe, I believe- once suggested that everyone’s tax return should be a matter of the public record, but we’re not there yet, thank God.)

I am not on Facebook or Twitter or LinkedIn or any of the others, and I stonewall the many invitations I receive to join the crowd. Of course I do have a blog, and that inevitably causes some loss of privacy. I will have to think about that one.