them in their knickers in the bedroom, watching porn.
Well, that is true, but the worst thing is that the ideas
that we exchange every day, if they are collated and
sifted, just like gold, can reveal secret shiny stuff,
that government insiders can take to the bank, or
stock market.
It's like they're stealing your inner thoughts, except
that you've spewed them out in an impetuous email
to your best friend. so, BOOM. There goes your big
win. The NatSecAg will cash those chips in, happily.
Oh, and that big story you've been writing, that would
make you "rich" (in 2000+never), well, the NatSecAg
has already stolen it and given it to the copyright bandits
in H-Wood.
checkit: Naked
capitalism
How
Much Are the NSA and CIA Front Running Markets?
A
2008 paper by Arindrajit Dube, Ethan Kaplan, and Suresh Naidu (hat tip MS)
found evidence that the CIA and/or members of the Executive branch either
disclosed or acted on information about top-secret authorizations of coups.
Stocks in “highly exposed” firms rose more in the pre-coup authorization phase
than they did when the coup was actually launched.
Here’s
how the dataset was developed:
We selected our sample of coups on the
following basis: (1.) a CIA timeline of events or a secondary timeline based
upon an original CIA document existed, (2.) the coup contained secret planning
events including at least one covert authorization of a coup attempt by a
national intelligence agency and/or a head of state, and (3.) the coup
authorization was against a government which nationalized property of at least
one sufficiently exposed multinational firm with publicly traded shares.
Out
of this, the authors found four coup attempts that met their criteria: the
ouster of Muhammed Mossadegh in Iran in 1953, two programs in Guatemala in 1952
and 1954 that eventually removed Jacobo Arbenz Guzman; the unsuccessful effort
to topple Castro in 1961, and an operation that began in Chile in 1970 and
culminated in overthrow of Salvador Allende. Then they chose companies:
We apply 3 criteria to select our sample of
companies. First, a company must be publicly traded, so that we can observe a
stock price. Secondly, the company must be “well-connected”, in terms of being
linked to the CIA. Finally, the company should be highly exposed to political
changes in the affected country, in the sense that a large fraction of a
company’s assets are in that country.
They
used these criteria to devise two samples (based on different definitions of
“highly exposed”) and tested both.
Their
conclusions:
Covert operations organized and abetted by
foreign governments have played a sub- stantial role in the political and
economic development of poorer countries around the world. We look at
CIA-backed coups against governments which had nationalized a considerable
amount of foreign investment. Using an event-study methodology, we find that
private information regarding coup authorizations and planning by the U.S.
government increased the stock prices of expropriated multinationals that stood
to benefit from the regime change. The presence of these abnormal returns
suggests that there were leaks from the CIA or others in the executive branch
of government to asset traders or that government officials with access to this
information themselves traded upon it. Consistent with theories of asset price
determination under private information, this information took some time to be
fully reflected in the stock price. Moreover, the evidence we find suggests
that coup authorization information was only present in large, politically
connected companies which were also highly exposed.
We find that coup authorizations, on net,
contributed more to stock price rises of highly exposed and well connected
companies than the coup events themselves. These price changes reflect sizeable
shifts in beliefs about the probability of coup occurrence.
Our results are robust across countries,
except Cuba, as well as to a variety of controls for alternate sources of
information, including public events and newspaper articles. The anomalous
results for Cuba are consistent with the information leaks and inad- equate
organization that surrounded that particular coup attempt.
Now
sports fans, given the fact that there’s reason to believe that people in the
intelligence with access to privileged information weren’t above leaking it to
people who could take advantage of it, why should we expect things to be
different now? And given what has already been revealed about the NSA’s data
gathering, if you were a clever trader and had access to this information, how
would you mine it? How would you go about finding patterns or events to
exploit?
