John At The Center

Under this theory, the use of pseudo-insider networks to acquire information about public companies has created a wasteful “arms race” situation. Hedge funds feel obligated to pay outside experts to acquire information in order to compete with other funds who are paying experts for information. Everyone would be better if everyone agreed to avoid the experts, but no one trusts the other side not to cheat. It’s a kind of prisoner’s dilemma for hedge fund managers.

via The Government’s Insane War Against Insider Trading – CNBC.

John Kinnucan, a principal at Broadband Research LLC in Portland, Ore., sent an email on Oct. 26 to roughly 20 hedge-fund and mutual-fund clients telling of a visit by the Federal Bureau of Investigation.

“Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information,” the email said. “(They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.) We obviously beg to differ, so have therefore declined the young gentleman’s gracious offer to wear a wire and therefore ensnare you in their devious web.”

via The FBI Could Unleash The Biggest Wave Of Insider Trading Charges Ever — WSJ.

Expert-network firms hire current or former company employees, as well as doctors and other specialists, to be consultants to funds making investment decisions. More than a third of institutional investment-management firms use expert networks, according to a late 2009 survey by Integrity Research Associates in New York.The consultants typically earn several hundred dollars an hour for their services, which can include meetings or phone calls with traders to discuss developments in their company or industry. The expert-network companies say internal policies bar their consultants from disclosing confidential information.Generally, inside traders profit by buying stocks of acquisition targets before deals are announced and selling after the targets’ shares rise in value.The SEC has been investigating potential leaks on takeover deals going back to at least 2007 amid an explosion of deals leading up to the financial crisis. The SEC sent subpoenas last autumn to more than 30 hedge funds and other investors.

via U.S. Pursues Sweeping Insider-Trading Probe – WSJ.com.

This jumps out at me. ”Although our U.S. and non-U.S. pension plans were underfunded by $17.1 billion and $10.3 billion on a U.S. GAAP basis at December 31, 2009, a hypothetical valuation as of September 30, 2010 projects total contributions of $0.6 billion to U.S. pension plans through 2013.” My guess is that the new owners of GM, the unions, won’t be underfunding pensions. A lot of the cash flow from the company could go directly into that activity-not paid to shareholders as dividends. In the management discussion, point out that the GM pensions are “defined benefit”, not “defined contribution”. This is not any different than a government pension. Pensions could kill GM.

via Who Is Buying the GM IPO? Points and Figures.

As I’ve been saying, with a bank run:

Corporate clients have pulled deposits from lenders including the country’s biggest, Bank of Ireland Plc.

With its lenders frozen out of Europe’s money markets and with their deposits shrinking, the Irish government may be forced to seek the bailout ministers have so far resisted.

via Marginal Revolution: How a financial collapse starts.

Paulson & Co., the hedge fund run by John Paulson, trimmed positions in Bank of America Corp., Wells Fargo & Co. and Citigroup Inc. in the third quarter and sold off Goldman Sachs Group Inc. as regulatory changes and disputes over faulty mortgages threatened to hurt bank profits.

Paulson, whose New York-based hedge fund has $33 billion in assets, sold 30 million Bank of America shares in the quarter, or about 18 percent of his stake, according to a regulatory filing yesterday. The billionaire’s position in the Charlotte, North Carolina-based bank was valued at $1.8 billion as of Sept. 30. Bank of America shares fell 8.8 percent in the quarter.

via Paulson Trims Bank of America, Sells Entire Goldman Sachs Stake – Bloomberg.

Over the last two decades, the Internet has delivered tremendous economic and trade benefits. It has driven record increases in productivity, spurred innovation, created new economies, and fueled international trade. In part this is because the Internet makes geographically distant markets easy to reach.

But this engine of economic growth is increasingly coming under attack. According to one study, more than forty governments now engage in broad-scale restriction of online information. Governments are blocking online services, imposing non-transparent regulation, and seeking to incorporate surveillance tools into their Internet infrastructure. These are the trade barriers of the 21st century economy.

In the paper we’re releasing today, we urge policymakers in the United States, European Union and elsewhere to take steps to break down barriers to free trade and Internet commerce. These issues present challenges, but also an opportunity for governments to align 21st century trade policy with the 21st century economy.

via Google Public Policy Blog: Promoting Free Trade for the Internet Economy.

Reher maintained much of the world is now on the cusp of a prolonged period of population decline. The resulting population aging would lead to labor shortages even in developing countries. The result could be an economic disaster. … Santow … sees “nothing terrifying about a drop in the size of Europe’s population. Any decline will take time, and economies will adjust.”

via Overcoming Bias : Fertility: The Big Problem.

SpotCloud – Cloud Capacity Clearing House / Spot Market: Home.

Undeterred, a second generation of former Facebook founders and employees are cashing out and starting new companies. This is extremely healthy, but what are the implications for the broader investment economy when the entire cycle can be turned with private money? If you want to ensure that only the rich have a chance to get richer, cutting the public out of the entrepreneurial economy is one great way to do it.

Meanwhile Uncle Sam pours hundreds of millions in grants and loan guarantees into half-baked “green” startups, an industrial policy tailor-made to attract charlatans and losers. Why are we content allowing Washington to replace the judgment of millions of private investors with the whims of a handful of bureaucrats trying to score political points playing with taxpayers’ money?

Perhaps the recent tsunami that hit Congress will wake Washington up to the disastrous choices they’ve made. Marginalizing the entrepreneurial ecosystem, cutting it off from both Main Street and Wall Street, can hardly help our national competitiveness.

via RealClearMarkets – Regulations Force the Rise of Private Stock Markets.