“I admire the move by the European Union to restrict the bonuses of that class of privileged civil servants called “bankers” — a recognition that the taxpayers have the right to control the income of those they subsidize and bail out, just as they set the salaries of other state-sponsored workers. Alas, bankers in their current status are an offense to capitalism; they are in a strange situation of having upside without downside, no skin in the game. As an additional insult to the taxpayer, bankers paid themselves the largest bonus pool of their history in 2010 — thanks to Troubled Asset Relief Program. If a banker wants to be free in his income, he should start his own hedge fund. Because hedge fund operators are invested in their funds; they typically have 50 times more risk as a share of their net worth than their largest customer.” [NYT]
I feel like if I were the Financial Services Roundtable and I wanted to send a letter to Congress telling them to get rid of a rule that gives lashings of government support to little banks at the arguable expense of, um, this cast of ne’er-do-wells, I would do it anonymously. Or, like, I’d try to trick Matt Taibbi into writing it. Because it’s government support of banks. Banks! We hates banks:
This past week, Sen. Bob Corker (R., Tenn.), a member of the Senate Banking Committee, said the program shouldn’t be extended. “The program’s benefit to the community banking system is, at best, unclear,” he said. “It’s time to move beyond this period of unprecedented government support of the banking industry.”
The program is the FDIC’s transaction account guarantee program, which basically guarantees transaction accounts above the normal $250,000 FDIC limit, meaning that corporate and municipal treasurers can confidently keep their checking accounts at tiny little (but government guaranteed) General Universal Nationwide Bank of America1 instead of opening a money-market checking account at, like, Reserve Primary. Read more »
Sort of. Basically a fellow named Lawrence Dicristina was running a poker room in Staten Island. He was arrested by the Feds and charged under the federal Illegal Gambling Business Act. He was convicted by a jury and asked a federal judge, Jack Weinstein, to throw out the jury verdict because he ran a poker room and poker isn’t gambling. Today Judge Weinstein agreed: under federal law, poker isn’t gambling. So Dicristina is free to go.
The opinion is here and it is 120 pages; the important don’t-try-this-at-home headline is that this opinion “does not undermine the holding that poker is gambling as defined by New York law” and therefore probably illegal in New York. It’s just not federally illegal, which I suspect means that Lawrence Dicristina may follow in Sergey Aleynikov’s footsteps to state court. And this is just the opinion of one judge in one district, so consult your lawyer before you restart your online poker business/Ponzi scheme/other scheme that is not technically a Ponzi scheme: the online poker crackdown is unlikely to stop just because of this.
Nonetheless it’s a nice win for the forces of poker. The decision basically turns on whether poker is mostly a game of chance (gambling, bad) or skill (not gambling, okay). For this the court looked at the testimony of two experts, defense expert Dr. Heeb, “a respected economist, statistician, and player in national poker tournaments,” who argued that skill predominates, and prosecution expert Dr. DeRosa, an econometrician who “neither has any personal experience with poker, nor has he independently analyzed the game,” and therefore felt comfortable saying that it’s mostly a game of chance, which, okay, nice intellectual honesty prosecutors.* Given that – and, the fact that, y’know, poker is a game of skill – it’s not surprising that the judge came out for the defense.
Even if you’re not one of our readers who comes here for the gambling tips, you still may enjoy this opinion just for its recapitulation in miniature of the efficient markets hypothesis. Here is the defense expert’s money chart: Read more »
Nassim Taleb, author of “The Black Swan,” said he favors investing in Europe over the U.S. even with the possible breakup of the single European currency in part because of the euro area’s superior deficit situation. Europe’s lack of a centralized government is another reason it’s preferable to invest in the region, said Taleb, a professor of risk engineering at New York University whose 2007 best- selling book argued that history is littered with rare events that can’t be predicted by trends. A breakup of the euro “is not a big deal,” Taleb said yesterday at an event in Montreal hosted by the Alternative Investment Management Association. “When they break it up, there will be a lot of fun currencies. This is why I am not afraid of Europe, or investing in Europe. I’m afraid of the United States.” [Bloomberg]
Update: NNT says he’s not looking forward to a Euro break up at all actually, and that a “tawdry” Bloomberg reporter took his words out of context.
Earlier today, we discussed the upcoming bonus season and the fact that, for those who are employed by banks, it’s looking to be something of a disappointment. Numbers are estimated to be down 20-30 percent on average from last year, with fixed-income being hit the hardest. For many, it’s cause for some preemptive JO&C’ing at the desk this morning and some curling up into the fetal position this afternoon. According to Black Swan author Nassim Nicholas Taleb, however, you drying those eyes, picking yourself up off the floor and thanking your lucky stars you’re getting anything ’cause if he were in charge? You’d get no-thing. Read more »