My new article, Insider Trading Inside the Beltway, has been posted to SSRN. Now it just needs to find a nice law review home somewhere in the top 50.
Abstract: A 2004 study of the results of stock trading by United States Senators during the 1990s found that that Senators on average beat the market by 12% a year. In sharp contrast, U.S. households on average underperformed the market by 1.4% a year and even corporate insiders on average beat the market by only about 6% a year during that period. A reasonable inference is that some Senators had access to – and were using – material nonpublic information about the companies in whose stock they trade.
Under current law, it is unlikely that Members of Congress can be held liable for insider trading. The proposed Stop Trading on Congressional Knowledge Act addresses that problem by instructing the Securities and Exchange Commission to adopt rules intended to prohibit such trading.
Michael Hastings of Rolling Stone on the Story that Brought Down Gen. McChrystal and Exposed Widening Disputes Behind the U.S. Debacle in Afghanistan
In a rare extended interview, we speak to Michael Hastings, whose article in Rolling Stone magazine led to the firing of General Stanley McChrystal. Hastings’ piece quoted McChrystal and his aides making disparaging remarks about top administration officials, and exposed long-standing disagreements between civilian and military officials over the conduct of the war. The Senate confirmed General David Petraues as McChrystal’s replacement on Wednesday, one day after McChrystal announced his retirement from the military on Tuesday after a 34-year career.
Lunch with Luca Cordero di Montezemolo
Screaming down the home straight of Ferrari’s test track at 200kmph an hour in a classic red 458 Italia, I suddenly don’t feel like lunch. The Fiorano track near Bologna in central Italy is, at 3km, not long. But, partly in an attempt to impress the test driver next to me with some fast cornering, I feel as if I have left part of my stomach on one of its hairpin bends. Matters fail to improve as, in heavy fog untypical of early summer, I take the car off the track and, rather more slowly, on to the winding roads of the Apennines, heading for Ferrari HQ in nearby Maranello.
I am still spinning slightly when we pull into the car park just before the company’s elegant and aristocratic chairman, Luca Cordero di Montezemolo, who somewhat incongruously arrives in a small Fiat. He explains that his journey from Rome has been a nightmare as fog diverted his helicopter and forced him to take trains and cars – hence the Fiat. Nevertheless he appears in characteristically enthusiastic mood. “I’ve just been to a conference at the Vatican [on the financial crisis]. Fantastic,” he explains. “Fantastic” is a word Montezemolo uses a lot. Ferrari is “fantastic”, Italian food is “fantastic”, his new high-speed train company, NTV, is “fantastic”, as is the 458 Italia I have been driving.
On my way out he hands me a white postcard. “This is what I give to all new employees at Ferrari,” he says. Looking at it in a Ferrari 599 on the way back to Milan, it looks to me like the perfect credo for Montezemolo. It starts: “The real secret of success is enthusiasm. You can do anything if you have enthusiasm … With it there is accomplishment. Without it there are only alibis.”
Clusty Search: Luca Cordero di Montezemolo
Happy Independence Day!
US Constitution, Declaration of Independence and the Bill of Rights.
We have so much to be thankful for.
A Beautiful Saturday
RBS tells clients to prepare for ‘monster’ money-printing by the Federal Reserve
As recovery starts to stall in the US and Europe with echoes of mid-1931, bond experts are once again dusting off a speech by Ben Bernanke given eight years ago as a freshman governor at the Federal Reserve.
Entitled “Deflation: Making Sure It Doesn’t Happen Here”, it is a warfare manual for defeating economic slumps by use of extreme monetary stimulus once interest rates have dropped to zero, and implicitly once governments have spent themselves to near bankruptcy.
The speech is best known for its irreverent one-liner: “The US government has a technology, called a printing press, that allows it to produce as many US dollars as it wishes at essentially no cost.”
Bernanke began putting the script into action after the credit system seized up in 2008, purchasing $1.75 trillion of Treasuries, mortgage securities, and agency bonds to shore up the US credit system. He stopped far short of the $5 trillion balance sheet quietly pencilled in by the Fed Board as the upper limit for quantitative easing (QE).
Investors basking in Wall Street’s V-shaped rally had assumed that this bizarre episode was over. So did the Fed, which has been shutting liquidity spigots one by one. But the latest batch of data is disturbing.
God’s Glory: A Gorgeous Sunset
Shot with the fairly impressive iPhone 4 camera.
Three privacy initiatives from the Office of Management and BudgetThe U.S. government has a new take on federated identity, storage and social networks.
Last Friday was a scramble for government security personnel and independent privacy advocates, and should also have stood out to anyone concerned with the growth of online commerce, civic action, and social networking. The U.S. government’s Office of Management and Budget, which is the locus of President Obama’s drive toward transparency and open government, popped out three major initiatives that combine to potentially change the landscape for online identity and privacy, not only within government but across the Internet.
In this blog I’ll summarize the impacts of all three documents, as well as the next steps that I see necessary in these areas. The documents (all distributed as PDFs, which is not the easiest format to draw commentary) are:
- A discussion draft of the National Strategy for Trusted Identities in Cyberspace. Comments can be viewed and entered on a feedback site.
- An OMB Memorandum on Guidance for Online Use of Web Measurement and Customization Technologies.
- An OMB Memorandum on Guidance for Agency Use of Third-Party Websites and Applications.
These documents are not long, but the complexity of the policy areas they address ensure that no blog could cover everything of importance, nor could a single commentator like me provide a well-rounded view. I’ll focus on the changes they make to policies that are known to require change, with a “job well done” pat on the back. In highlighting gaps and omissions, I’ll deliberately swim around the shoals that others have loudly pointed to already, focusing instead on problems that I believe deserve more attention.
Vintage Trek Bike
Madison Saturday Zeitgeist….
