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Donald's Blog
April 27, 2015 Be careful not to arrest anybody we've ever heard of
We had a friend who was a day trader for a while. We actually invested $1000 with him. He promptly lost it. He is still a friend, but no longer a day trader. Another day trader, however, a certain Mavinder Sarao in suburban London, was very much better at it. He has made a lot of money over many years, because he can trade "very very fast". He bought and sold mostly futures contracts, and sometimes bought big orders which he immediately canceled, which some call "spoofing". He wrote in an email to Britain's Financial Conduct Authority:
Now he is charged by the American authorities with contributing to the "flash crash" in 2010, when a trillion dollars of value was erased from the markets before they bounced back almost immediately. He was arrested a few days ago and was in jail pending bail of $7.5 million. The "flash crash" in fact was caused not by any trader or traders but by too much reliance on technology by the markets, which suddenly could not cope. Sarao's lawyer said that he would fight extradition to the USA. Was anything Sarao did illegal when he did it? He was very, very good at what he was doing, at home alone at his computer, as opposed to rapid-fire trading from high-frequency companies with rooms full of technology, which he thinks ought to be banned. Meanwhile the Wall Street and big bank bigshots who caused the economy to collapse back in 2008 are still walking around collecting their bonuses, in no danger whatever of being arrested. UPDATE: The news on April 30 is that Sarao is still in jail, unable to raise $7.5 million for bail. For day trading. April 27, 2015 A good book We've just finished reading Donna Leon's By Its Cover, her latest mystery to come out in paperback. She has a new one in hardback called Falling In Love, which I must take out of the library. Leon is originally from New York. She has written around 20 books about Commissario Guido Brunetti, a cop in Venice. Sometimes the bad guy gets caught, sometimes he doesn't, and sometimes there isn't any bad guy after all. The books are about Brunetti, his colleagues, his family, about Venice and about Italy. And Leon is a very good novelist. Nearly every paragraph has its revealing felicities. Brunetti is on his way to a library where somebody has been stealing rare books; a motorboat is being driven by Foa, the Questura's faithful pilot.
If you've ever been to Venice and seen one of those cruise ships dwarf the city, you will know exactly what Leon is writing about. The Venetians hate them; why are they allowed to come so close? There are reasons for the incompetence of the authorities. The decision-making is divided up among so many committees and agencies so that no one expects them to come to a decision, so that they can keep busy hiring their wives and children as consultants, and "picking up small gifts that fall from the table of the companies that own the ships?" Each Leon novel is like living for a few days in that incomparably beautiful city, as well as a cracking good mystery. April 27, 2015 The Wall Street Journal A couple of weeks ago Peggy Noonan wrote about an off-Broadway play called Hamilton, about Alexander Hamilton, a great American whose face is on our ten-dollar bill, and whose end was tragic. Having recently read Joseph Ellis's wonderful book Founding Brothers, I was moved by what Noonan was writing. Then I realized that the play is a musical. And that what the 18th-century characters are given to sing is...rap. I didn't know whether to laugh or cry. Dan Neil recently wrote about attending a stock car race. An honest-to-god stock car race, a family outing on a dirt track with fried baloney sandwiches for sale, no plastic NASCAR clothes in sight. I didn't know there were still such things; it was somewhere down south, but I was reminded of my aunt and uncle taking me to a stock car race over 60 years ago, in New Jersey. I went to the WSJ website to look for Neil's piece yesterday but couldn't find a way to search for something a few weeks old. Looking at the WSJ's monthly magazine, which is nothing but expensive fashion photography, I found myself wondering why the models all seem to be mouth-breathers. Is this related to their anorexia? I refer of course to the women; the boys merely look surly, spivs that you wouldn't want to meet in a dark alley. The paper continues to cover the saga of the lawyer Michael Bromwich, who has been authorized by federal judges to screw Apple out of millions of dollars. He is a monitor, following a federal court ruling that making books available on an iPad is somehow price-fixing (next thing you know they'll come to arrest my wife for reading them). The ruling is probably nonsense and in any case is being appealed, but meanwhile Bromwich gets to poke his nose into everything at Apple, and they have to pay for it. Sometimes when I am reading the news I think I must have been abducted by aliens.
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