You'll be sponsoring a little... box of exquisite wine

Lay on the wine and cheese, we just cashed our
charity money. As previous entries have shown,
I have no faith in the charity industry. It's just
designed to make money for shiftless Oxbridge
graduates.

[VOICEOVER: "You'll be sponsoring this little
crate of Chateaux Le Foutre. Isn't it just precious?
We will send you:
regular emails describing how the wine tastes
and what it was drunk with. There will be
pictures of the people, our executives,
as they enjoy this wine. We thank
you for this benevolence"]


We get tv ads with crying kids, the charities
get our money and spend it wining and dining
politicians.

Here's a fine report out of Florida, brought
to us by Barry Ritholz

checkit: Ritholz

America’s Worst Charities

by Barry Ritholtz - June 13th, 2013, 7:17am

I have to direct your attention this morning to a monster piece in Tampa Bay Times titled: America’s Worst Charities.

Aside from the obvious Pulitzer Prize potential, the series is a fantastic look at the massive waste of money – donated in good faith by people who have reasonable expectations that the cash would actually do some good to people in need. Instead, the worst charities are simply treadmills, raising more money to apply it to the not very important business of raising more money.

The finance industry has deep ties to the world of philanthropy (aka charity industry), as wealthy clients very often engage in major “gifting.” Foundations and donations are a major part of tax and estate planning.

As the series makes clear, intelligent philanthropy is much harder than it looks. I always advise that before writing a check, you do your homework. Start with GiveWell and Charity Navigator (also check out Evaluating the Charity Evaluators). Focus on what actually helps people, rather than poorly run, self-interested shops that are borderline scams. (Also, check your ego and avoid trying to have a building with your name on the side of it).

And for heaven’s sake, stop giving money to outfits that pocket 90% of the donations, leaving little or no aid for its intended purpose.

Are you paranoid fascists? the 5 Ayes

Question for the Canadian government:

Q: Are you paranoid fascists?
A: Aye
and so on, for
US, UK, NZ, Aus

To me, what is the scariest part of the Snowden
disclosures so far is that the five major anglo
countries are all spying on each other so that
they can give this stolen information back to
its country of origin, in exchange for the dirt
on its own citizens.
That passes for following the letter of the
law while still being rights-abrogating
fascists.

Here's a man who should know about this
system as he continues to be a victim of
it , to this day. An intro. The military-
style raid on the house of this man, who
has no history of violence, and yes the
governments do know if he's violent
because they spy on everybody. In this
case, it all went down because of the request
from the US entertainment industry to shut
down a "filesharing" site:



checkit:   guardian.co.uk

Prism: concerns over government tyranny are legitimate

The post 9/11 security narrative has eroded our privacy rights in favour of government control. Prism should be discontinued immediately

       Kim Dotcom      

      Thursday 13 June 2013 09.01 BST 

Nobody would be shocked to hear me admit that I have a problem with authority. During most of my adult life, I have resisted the notion that the government always acts in the best interests of its citizens. Edward Snowden’s recent interview with the Guardian underscores the possibility that those like me – who see the state as a potential threat to basic civil rights and liberties – may have been right all along.

Snowden’s leak of classified US government information acquired during his work for the National Security Agency (NSA) confirms that the US government is gathering and archiving online data and metadata on a massive scale. The data is stored at NSA data centers, where zettabytes of cloud storage are available to authorities. Snowden’s revelations have again framed the debate over the balance between our privacy rights and our need for security.

Some proponents of Prism assert that it is an essential tool against terrorism. They claim that only data belonging to foreigners (that is, non-US residents) is retained, and that content is not reviewed as a matter of course, only algorithmically analysed for suspicious patterns. They point out that a search warrant is still required from a secret court set up under the US. The Foreign Intelligence Surveillance Act (FISA) may be spun up so that content – accumulated over years of daily internet spooling – may be extracted and analysed, laying bare a suspect’s entire virtual life.

Those safeguards have limited value. According to congressional reporting, the FISA court received 1,789 applications for authority to conduct electronic surveillance in 2012, but not one application was denied. We cannot debate whether the FISA court is a rubber stamp, because its proceedings are secret. Further, any assurance to US citizens that the NSA will not gather and archive their data is suspect. The “Five Eyes” alliance between the intelligence agencies of the US, Australia, Canada, New Zealand and the UK effectively permits those governments to circumvent the prohibition against gathering data on their own citizens by sharing information across the Five Eyes intelligence community. The UK for example can spy on Americans and make that information available to the US government on its massive spy cloud – one that the NSA operates and the Five Eyes share.

Prior to 9/11, the operative presumption in developed nations favoured privacy, but the security narrative has since reversed the presumption, eroding our privacy rights in favour of government control over our personal information. However, government is an instrument – sometimes a crude one – susceptible to abuse, as demonstrated by recent admissions that the US Internal Revenue Service has targeted specific groups based on ideology. When we empower the state, we empower those that hold sway over the state, and the state is subject to influence from a multitude of quarters.

I have personally been a victim of such abuses. The US government has indicted me, shut down my cloud storage company Megaupload and seized all of my assets because it claims I was complicit in copyright infringement by some of the people who used the Megaupload service. I have emphasised that I am being prosecuted not because the charges against me have some sound basis in US copyright law, but because the US justice department has been instrumentalised by certain private interests that have a financial stake in neutralising my business. That trend represents a danger not just to me, but to all of us.

Recent polls in the US suggest that the public is not much preoccupied with the fact that our data is being retained, so long as our own political party is in control of the government. That kind of fickle comfort is small-minded. The point we should derive from Snowden’s revelations – a point originally expressed in March 2013 by William Binney, a former senior NSA crypto-mathematician – is that the NSA’s Utah Data Center will amount to a “turnkey” system that, in the wrong hands, could transform the country into a totalitarian state virtually overnight. Every person who values personal freedom, human rights and the rule of law must recoil against such a possibility, regardless of their political preference. Others take a more cavalier approach, such as former Google CEO Eric Schmidt in 2009: “If you have something that you don't want anyone to know, maybe you shouldn't be doing it in the first place.”

I was in a bad place then. I worked in a bank

subtitle:
 MARKETS . HOME OF THE REMOTE BACKSTABBER


Of course banksters are not to blame. Governments
have set up the sandbox such that it pays bankers
to commit crimes and scoff at the law. The
politicians are to blame, but they in turn are funded
by the same banksters.
But, I insist. It's the environment that is to blame.
Too much expensive cologne shrinks the amygdala.

Such remote-control violence is also classed together
with drone piloting and missile firing.

Checkit:  Boing boing

How markets allow people to violate their moral codes

Cory Doctorow at 3:00 pm Sun, Jun 2, 2013

Here's a press-release describing a paywalled paper in Science magazine, written by a pair of University of Bonn Economists. They conducted an experiment that showed how markets diffused responsibility for actions that ended up violating individual moral codes, so that people did things in market contexts that they had previously described as immoral when done individually.

    "To study immoral outcomes, we studied whether people are willing to harm a third party in exchange to receiving money. Harming others in an intentional and unjustified way is typically considered unethical," says Prof. Falk. The animals involved in the study were so-called "surplus mice", raised in laboratories outside Germany. These mice are no longer needed for research purposes. Without the experiment, they would have all been killed. As a consequence of the study many hundreds of young mice that would otherwise all have died were saved. If a subject decided to save a mouse, the experimenters bought the animal. The saved mice are perfectly healthy and live under best possible lab conditions and medical care.

An MBA in Whistleblowing: Private sector crimes

Coming soon is my commentary on a certain Mr Mba,
a whistleblower that is not as famous as Edward
Snowden, the Snowman Informer, but who
nonetheless helped tell us about the "crimes" of Goldman
Sachs, particularly how it strong-armed HMRC to drop
its request for GS to pay the 20 million is owed.

As a result of his good deeds, Mr Mba is sitting idle.
Because criminals like to work in the dark.

checkit:Tax research

Dave Hartnett takes all: Osita Mba takes the punishment. There is no justice in that

Posted on May 29 2013

As the Guardian notes this morning:

    Until last summer the country's top tax official, Dave Hartnett is taking up a job with tax consultancy Deloitte. Does this matter? Yes, it does; both in its specifics, and the light it casts on the relationship between our governing elite and corporate interests.

Quite right. And they're right to criticise Hartnett too. But the most telling bit in what they have to say is this:

    The contrast between his soft landing and the brutal treatment administered to Osita Mba, the whistleblower who exposed the Goldmans deal, is stark and troubling.

Quite so. Make life easy for big business at HMRC and get handsomely rewarded. Seek to uphold the law, tell the truth and keep parliament informed of what is really going on and get hounded.

And that happened on Hartnett's watch.

you can cheat the middle class some of the time, but you need a middle class

You may be aware of a bright, young, mouthy Democrat
politician who spoke in defence of the downtrodden
fairly often.
Well, in SMSs, this fella, Weiner, tended to show his
eponymous member to young ladies. So, boom goes
the career.
Now, he has a lot of guts for trying again, but he's a
wise player and what you'll read below is an indication
of just how wise he is.
His profound idea, that a middle class is necessary,
for an economy, for bankers and for government, it is
the way that he puts it across that has garnered
respect from none other than Joshua Brown,
the Reformed Broker. Josh is jokingly pushing for
a political ticket in 2016 of Weiner and the Justice
Blind Guy, Eric Holder. Paired as Weiner Holder.

Holder has shown himself good at holding his
own weiner and that of criminal bankers, so why not?

Checkit: Joshua M Brown

The Weiner Doctrine

June 4th, 2013

I'm no longer a Manhattanite - after a decade of inflicting that upon myself, I packed up the family and escaped to the suburban nightmare I grew up in rather than pursuing the claustrophobic keeping-up-with-the-Upper-East-Side- Joneses  nightmare I had adopted in my twenties.

So, no, I don't get to vote for NYC's next mayor...but I am interested.

Anthony Weiner would be my candidate (if I had one). Don't get me wrong, I know he's an unprincipled social climber and a poseur who will be photographed with anyone and pretend to care about anything if it makes him look good.  Riding the subway, rolling up his sleeves talking to the deli guy, shaking hands with ethnic people in all the boros, riding a Citybike, etc - it's like a montage you see in a movie about political campaigns.

But I don't mind, I kind of like rooting for guys in his position to make a comeback. After all, he wasn't an embezzler or a drug addict or taking bribes, his penis never did anything to me...

 Anyway, he did nail the current New York City economy this week at a candidates' debate moderated by Fox News' Sally Kohn. Listen to this quote:

 When Kohn asked the candidates to address their views on economic equity in the city, Weiner was the last to speak, and notably directed his response to the audience in the room — a group of professionals on the 50th floor of Manhattan’s Citigroup Center, a midtown skyscraper home to top hedge funds, consulting shops, and law firms — rather than his colleagues on stage.

 “Can I just pause at the idea that the average New Yorker is poor today,” said Weiner. “So why should you care? You’re successful people. You’re professionals. You’re doin’ okay. Your firms, your companies, cannot sustain themselves just dealing with other rich people. You’re gonna run out of them sooner or later — there’s only so many oligarchs who are gonna buy our apartments, there are only so many millionaires who are gonna sue each other.”

 Which is probably the most honest thing he could have said in that room and something Bloomberg would never admit to out loud. he could probably win with that concept as his doctrine, although there's pretty much no solution for it given the way the national economy now works (trickle-down on steroids).

No-Bell end is worthy of the prize

On previous entries, I've presented the theories on how
Economics is not a science, because economists try to
prove a theory by plugging in real data, and it doesn't
work. So, they just change the equation.

Aah, my dear,

that is not a science.

that was easy.

The economics prize is called the Nobel, but it ain't.
Some Swedish bank has paid for it to appear like a
Nobel. They ought to get a Nobel for that degree
of corrupt behaviour in the aid of corrupt economic
thinking.

Now, I think I've posted Paul Ormerod's (I think) thesis
on how Nobel Laureates in Economics (a misnomer)
and their ideas have actually led us directly to the
crash of 2008.

The documentary Inside Job showed us how many
important economists are on the take from the banks.
And many others are sponsored. Is it just conveniently
coincidental that the ideas used by plutocrats are rubber
stamped by economics profs? I don't think so.
Economists are providing cover, by, you guessed it, lying.


Next, a recent winner, George Pissarides,  is
another of the LSE's fine cadre of empirialists, I mean
imperialists. His thesis was that, after the banking crash,
one way to improve a country's productivity was to cut
unemployment benefit. thanks, Pisser. You're a big help.

Well, I saw a tv show (can't find it) where Pisser
complained about losing his big Prof savings in
the Cyprus bail in. I was shouting at the tv saying,
"well you only encouraged the bastards. Did you
think they would spare you, I mean, not rob you?"
F%^&k nut!

But, now here's the (social) science on how useless
Economics is, from William Black

checkit: Naked capitalism

Bill Black: Great Moments in Nobel Prize History – 2007 Winner Pumps for Plutocracy, Billionaire CEOs

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. 

Introduction

This article begins a project to critique the work by economists concerning regulation that has led to the award of Nobel prizes. The prize in economics in honor of Alfred Nobel is unique. It is not part of the formal Nobel Prize system. It was created by a large Swedish bank and it is the only “science” prize frequently given to those who proved incorrect. The theme of my series is how poorly the work has stood the test of predictive accuracy. Worse, it has led to policies in the private and public sector that are criminogenic and explain our recurrent, intensifying financial crises.

I want to stress that the reason that the work has proven so faulty is not that the Nobel Laureates in economics are incompetent or evil. Indeed, that is part of my theme. Economics is not a hard science and its pretensions that it is have helped make even brilliant economists vulnerable to grievous error, particularly those who were most dogmatic about their hostility to even democratic governments. A recurrent defect that will emerge is the failure of economics to take ethics seriously.

This article responds to the Prize Lecture of Roger Myerson, who was made a Laureate in 2007 for his work on “mechanism design.” Mechanism design theory was developed in parallel to Michael Jensen’s work that led to modern executive compensation. Jensen criticized existing executive compensation as paying CEOs as if they were “bureaucrats” and argued that it led CEOs to shirk effort and avoid taking productive risks. These variants of the classic “unfaithful agent” problem were reminiscent of Ayn Rand’s premise of the CEOs going on a mass strike, but here the strike was against the board of directors and the cause was their “inadequate” pay.

Myerson’s Prize Lecture uses a variant of CEO compensation as central to his argument on mechanism design. CEO compensation is the subject of Myerson’s most interesting policy recommendation – the CEOs of large firms need to be billionaires and his most controversial conclusion – capitalism’s unique strength is plutocracy.

Myerson’s Prize Lecture returns repeatedly to the theme of demonstrating the inferiority of what he refers to as “socialism” (but appears to be referring to communist systems) and to advancing the views of Friedrich August von Hayek. Hayek’s most famous work warned that the democratic governments of the West were headed inexorably on The Road to Serfdom because of their mixed economies. Myerson’s Prize Lecture’s twin laments are that economics had proven unable to prove the inferiority of government programs and Hayek’s dismissal of the utility of mathematical economics.

Ethics, We Don’t Need No Stinkin’ Ethics

At first glance, it might appear that mechanism design involves an emphasis on ethics.

…

Myerson’s Policies Optimize the Criminogenic Environment for Control Fraud

The most fundamental problem with Myerson’s analysis of moral hazard and adverse selection is that they both predict accounting control fraud and Myerson assumes that his mechanism design prevents accounting control fraud. It does not and cannot. Indeed, by creating complacency through the fabulous claims that plutocrats are pure and principled, markets self-correct, and regulators cause injury Myerson’s proposals would make our economy even more criminogenic. Firm outputs are “hidden” by fraudulent accounting and as George Akerlof and Paul Romer explained in 1993, accounting control fraud is a “sure thing” (“Looting: The Economic Underworld of Bankrutpcy”). Indeed, if a large firm is failing the billionaire CEO who has hundreds of millions of dollars invested in the failing projects has a powerful incentive to falsify the accounting to declare the project was successful and pay himself off with a firm buyout of his “profitable” interest in the project.

Myerson ignores the fact that plutocracies produce crony capitalism, making “free markets” and real democracies impossible. Plutocracy greatly increases the ability of corrupt CEOs to loot with impunity, making a mockery of incentive-compatibility.