The answer is inside the belly of the beast

clipped from www.cnsnews.com Documentary film director Michael Moore, who has become a millionaire thanks to the profits from his movies, told CNSNews.com that “capitalism did nothing” for him. “You know, I had to pretty much beg, borrow and steal,” he said. “The system is not set up to help somebody from the working class make a movie like this and get the truth out there.” “In fact, in Fahrenheit 9/11 if you remember, capitalism, the Disney Corporation, tried to kill that film--tried to make it so that people couldn’t see it,” said Moore. Moore reportedly was paid $21 million by Disney for producing, directing and creating the film. Moore also earned 50 percent of the profits of his 2007 film “Sicko,” totaling $25 million plus DVD sales, according to Vanity Fair. CNSNews.com asked: “Critics may say, when they see this movie, Michael Moore has amassed a fortune of over $50 million, some have said and –” Moore said: “Really? Are you kidding me? Seriously? Wow. Where did it go?”

The good news is that if single-payer health care passes Moore will either die from a heart attack or be found out to have used private doctors (like the wealthy liberals in "progressive" Western democracies Moore talks about do) and defrauded as a grade-D pork once and for all.

An MBA in Hustling

Given the amoral utilitarianism of Russia's oligarchs it's not surprising that they would be willing and able craft what may very well become one of the only business schools that's more than a circle jerk rest stop for burned-out bankers and bored corporate types seeking to switch careers.
Learning how to deal with the prevalent issues of politics, bureaucracy and corruption is applicable not just to emerging markets, but to the developed world as well. Wherever there are puppet politicians there are puppeteers pulling the strings.
Furthermore, anyone who has worked for a large corporation understands the importance of successfully navigating office politics and greasing bureaucracy's palm to free oneself from its suffocating grasp.

clipped from www.businessweek.com A handful of top Russian business figures have created an MBA program that tackles the issues they faced themselves: bribery, relentless bureaucracy, imperfect laws. Skolkovo includes classroom courses in management theory, but invites dozens of guest speakers [and] might even invite an organized crime boss to talk about the challenges of management. Skolkovo faculty members say they avoid moral judgments, and offer no ready-made strategies for handling corruption and predatory practices. Among the patrons are some of the Russian business world's biggest names: Abramovich, the billionaire investor and owner of the Chelsea football team, donated 26 hectares (64 acres) of choice land outside Moscow for the construction of the gleaming $250 million campus, which has its own helipad. Skolkovo's training doesn't come cheap. Fees for a full-time MBA including accommodation, flights to India, China and the U.S. come to euro50,000 ($74,000).

A Darling Buffoon

Alistair Darling must have slept through his maths classes in elementary school. If you want to get tax revenue from the rich, but also command firms to curb bonus payments then where are you going to get that extra money from?
At least he is being completely "Frank" about his socialist, Robbin' Hood, ideals. Maybe Labour should just drop the pretense and rename themselves the Pathetic Proletariat Party.

clipped from www.bloomberg.com Chancellor of the Exchequer Alistair Darling, targeting what he calls “greed and recklessness” in Britain’s financial system, asked banks to curtail bonuses and said the rich will pay more in tax. “It is right that those who earn the most should shoulder the biggest burden.” “We will introduce legislation to end the reckless culture that puts short-term profits over long term success. It will mean an end to automatic bank bonuses year after year.” Darling said he has raised tax rates and eliminated relief for pension contributions for the rich. This week, Darling will [ask bank heads of remuneration] that they reduce bonus payments at the ahead of a change in the law aimed at formalizing curbs on pay. “The government’s implicit presentation of excessive remuneration as the cause of the crisis, and the banking bill as a silver bullet that will kill off financial excesses, is singularly unconvincing,” said Simon Morris, a partner at law firm CMS Cameron McKenna.

Robertson puts it in real simple terms for the fools on the Hill

...but somehow I doubt even these clear and irrefutable facts from one of the brightest minds in finance will make them listen.
When all you're thinking about is reelection, or your immediate problems - in the case of dimwitted constituents, it's hard to see past to the burgeoning debt load that will put a vice grip on future generations. At least we'll all be green - cars will be too expensive and dollars will be crowding out all other colors in landfills.

clipped from www.cnbc.com The US is too dependent on Japan and China buying up the country's debt and could face severe economic problems if that stops, Tiger Management founder and chairman Julian Robertson told CNBC. "It's almost Armageddon ... if the Chinese and Japanese stop buying our bonds, we could easily see [inflation] go to 15 to 20 percent. It's not a question of the economy. It's a question of who will lend us the money if they don't. Imagine us getting ourselves in a situation where we're totally dependent on those two countries. It's crazy.” “The other thing is, they're buying almost exclusively short-term debt. And that's what we are offering, because we can't sell the long-term debt. And you know, the history has been that people who borrow short term really get burned.” "The U.S. has to quit spending, cut back, start saving, and scale backward," Robertson said. “I really do think the recession is at least temporarily over. But we haven't addressed so many of our problems and we are borrowing so much money that we can't possibly pay it back, unless the Chinese and Japanese buy our bonds.”

More Quants shifting to Behavioral Finance

Behavioral finance, which once was a footnote in most advanced economics textbooks is now coming to the forefront of financial engineering as quants realize that models must account for the facts that market participants - when pushed beyond their comfort zone - will rarely act efficiently.
As followers of this blog will know I never bought into the EMH, and so have a perennial interest in modeling behavior in the markets. Exploiting inefficiencies is the true path to arbitrage profits.
Of course if quant models start trading against what they perceive as erratic human behavior it's inevitable that they themselves will act erratic at times. It's a Catch-22 of trying to predict the unpredictable.
The added volatility this brings should make things a lot more interesting in the coming years. It will also make whoever can decipher the decision pathways of both the black boxes and gray ones a whole lot of money.

clipped from www.nytimes.com IN the aftermath of the great meltdown of 2008, Wall Street’s quants have been cast as the financial engineers of profit-driven innovation run amok. The risk models proved myopic, they say, because they were too simple-minded. They focused mainly on figures like the expected returns and the default risk of financial instruments. What they didn’t sufficiently take into account was human behavior, specifically the potential for widespread panic. “When trust in counterparties is lost, and markets freeze up so there are no prices,” said Stephen Figlewski, a professor of finance at the Leonard N. Stern School of Business. The drive to measure, model and perhaps even predict waves of group behavior is an emerging field of research. “You don’t need a model of human psychology to see that there was a danger of impending disaster,” Mr. Farmer observed. “But economists have failed to make models that accurately model such phenomena and adequately address their couplings.”

I highly recommend reading the rest of the article for a look at two very different approaches to modeling investor behavior.

White House wants to bring out the Pavlik Morozov in all Americans

I am sure this name Pavel Morozov is foreign to Americans. In a nutshell, he was a darling young boy who achieved martyrdom in Soviet Russia by reporting his father's un-Partylike activities to the police. The father was summarily arrested and executed, and Pavlik's family, unable to see his unbridled patriotism, murdered him. There are statues of Pavlik throughout Russia, and schoolchildren were indoctrinated taught about his courage and bravery.
The Administration hopes that Joey Sixpack will take Morozov's fallen torch by sending in "fishy" emails about the President's Master Plan to the authorities at the White House. Can you imagine the [completely justified] outcry had Bush enacted such a policy?
I am sure that this story will be generally dismissed by the media and quickly die down in popularity (maybe the President can stage a bourbon summit as a distraction this time?), but the fact remains that fundamental principles on which this country was founded upon are being ever so slightly encroached.
Put a frog in boiling water and it'll jump out, but turn the heat up slowly and it will never realize that it's being boiled alive.

clipped from www.whitehouse.gov Opponents of health insurance reform may find the truth a little inconvenient, but as our second president famously said, "facts are stubborn things." Scary chain emails and videos are starting to percolate on the internet, breathlessly claiming, for example, to "uncover" the truth about the President’s health insurance reform positions. There is a lot of disinformation about health insurance reform out there, spanning from control of personal finances to end of life care. These rumors often travel just below the surface via chain emails or through casual conversation. Since we can’t keep track of all of them here at the White House, we’re asking for your help. If you get an email or see something on the web about health insurance reform that seems fishy, send it to flag@whitehouse.gov.

CFTC Helping Green America with $10 Gas

I'm starting to see the brilliant foresight of the master plan of our current Administration's social engineering program. Eroding liquidity in the energy markets that are easily accessible to hedgers (gas pump operators, airlines, utilities, etc.) who actively need big banks & other investors (speculators) to take the other side of their trades will certainly cause gas prices to spike at the pump, make air travel & shipping the luxury it once was, and ensure that the President is the only one who can keep his office tropically warm in the winter.
Since companies won't be able to put floors on the price of gasoline, natural gas and other commodities their costs will be at the mercy of a very volatile supply and demand and they will have to adjust their prices up to ensure they can still make a profit in any given quarter. That is, until they're nationalized because they can't sustain independent operations anymore and are too big to failll into the wrong hands (like those of a successful foreign company that might fire some US union workers).
This policy will at once force people into buying hybrids and increase the cost of imports (which makes Obama's protectionist allies happy). Of course it would be extremely unpopular to achieve these goals through gas taxes and import tariffs. Making this appear to be a crusade against evil market manipulators makes it far easier to achieve the same results with popular support.
Of course with taxes and tariffs at least the government would make some money to pay back the exponentially expanding debt load, but that's the problem of another generation. At least the Earth they'll inherit will be green, that's good since all their money will be going to interest payments they'll have to learn how to live off the land.

clipped from online.wsj.com CFTC Will Pin '08 Price Surge on Speculators, in a Reversal From Bush Findings. Under Chairman Gary Gensler, appointed by President Barack Obama, the CFTC is departing from the more hands-off approach it took under its previous head, a George W. Bush appointee. During his confirmation process earlier this year, Mr. Gensler said he believed speculation was partly behind the surge in commodity prices. In the U.S., the CFTC begins public hearings Tuesday to determine whether to limit speculative investments in commodities. Byron Dorgan, a North Dakota Democrat, has called on the CFTC to curb "oil speculators looking for a quick buck at the expense of American consumers." [CME Head] Craig Donohue, said: "We are deeply concerned that inappropriate regulation of these markets will cause market participants to move to dark pools and other unregulated markets, causing irrevocable harm to the entire U.S. economy." Last year, CFTC Chief Economist Jeffrey Harris told a House Agriculture subcommittee: "The economic data shows that overall commodity price levels, including agriculture commodity and energy futures prices, are being driven by powerful fundamental economic forces and the laws of supply and demand." Mr. Harris didn't return a call to comment. The acting CFTC chairman at the time, Bush-appointee Walter Lukken, told the House Agriculture committee that CFTC's economists "did not find direct evidence that speculation was driving up prices." Mr. Lukken, now an executive at the New York Stock Exchange, declined to comment. U.K.'s Financial Services Authority has found no evidence that speculators are behind big oil-price swings. The FSA doesn't believe that limiting the size of trading positions would be "beneficial" for the market.