The claim that "everything is rigged" is supported by a small number of specific examples coupled with a generous helping of polemics. Facts are not placed in useful contexts. The reader, after reading this article, has likely learned very little but only had whatever pre-bias he had confirmed. It takes a lot more than that to support the fantastic superpowered-global-banking-conspiracy thesis of the article.
Since, on articles like this, you tend to be downvoted for going against the zeitgeist, I'll provide a specific example.
Taibbi writes: "In that case, a federal judge accepted the banker-defendants' incredible argument: If cities and towns and other investors lost money because of Libor manipulation, that was their own fault for ever thinking the banks were competing in the first place." This is a baffling recontextualization: suits are thrown out when they are not lawful because we live in a democratic rule of law, and there is no reason to believe the judge wished to punish or blame consumers. The suit was thrown out because the suit was illegal. This isn't an uncommon or partisan thing: the famous Walmart v. Dukes discrimination lawsuit was thrown out 9-0 by the Supreme Court, because it was unlawful. (The reason the case is famous is because of a 5-4 decision on whether it could be refiled, but that's beyond the scope of this comment.)
A long history of reading Taibbi comment threads on HN and r/economics has taught me that Taibbi routinely lies in this fashion; this is just one example.
It's of interest to me because I've had some direct experience tangling with banks over other issues. I have come to believe that the extent to which the banks control the world is even greater than what Taibbi says.
> we live in a democratic rule of law
That is heartbreakingly naive. It is not possible to get elected to office in the U.S. without substantial funding, which means that all of the people in office are either themselves rich or have garnered the favor of wealthy donors. Either way it is impossible as a practical matter to pass any law that constrains the interests of the super wealthy in any meaningful way.
The article may be polemic but I don't see how LIBOR fixing was not a criminal act[1]. If something similiar happened with ISDAfix it is worth reading about it. And a failure to apply a certain law does not invalidate the crime alligations against the banks.
Taibbi writes from a script. Particularly with his finance posts, the formula is: comic invective, appeal to populism, name drop, comic invective, name drop, attempt to explain technical concept he himself does not understand, name drop, appeal to populism, comic invective.
People want him to be right, because who the hell doesn't want to read a fun piece on how corrupt Wall Street is? (I think Wall Street is pretty corrupt, B.T.W.)
He was much better writing about politics, because most of the time you can write a competent political story without needing to explain a technical concept you yourself don't understand. Name dropping, appeals to populism, and comic invective are entirely adequate to that task.
He's good at sports writing too, because he understands the technical concepts he wants to explain.
But with finance writing, Taibbi has set a needlessly high bar for himself, and he doesn't just routinely fail to clear it; he seems to be running under the bar.
I think, in the case of fixed income, there is a public expectation of fair play (i.e. competitive market). That simply is not the case, nor is it mandate. Case in point, there is no such thing as "insider trading" when it comes to UST auctions.
As for "interest to hackers", this market seems to like finance. I suppose the grass is always greener...
I'm very interested in the index manipulation, but not at all in Rolling Stone's coverage, for the same reason as you - Matt Taibbi is not a reliable reporter, and if anything he poisons the well for other media coverage.
This is exactly the calibur of comment that makes hacker news superior to reddit in every way. You have expressed everything I think about Taibbi's yellow journalism more eloquently than I ever could.
But that this comment could go against the grain of Internet circle jerking and be the top voted one makes me e-swoon. Bravo everyone.
Anyways, I've worked for Apple and I've worked for a major investment bank. The two brand names are both major headline grabbers and I would say in both cases, about 60% of what you read is an outright fabrication designed to attract page views.
I may be missing your point. It sounds to me like this argument could invalidate any antitrust case. "No, it's not illegal for us to collude on the price of widgets, because we're cooperating to sell widgets instead of competing with each other."
"But when the attorney general says, 'I don't want to indict people,' it's the Wild West. There's no law."
How long has it been since we've actually had an AG that really went to bat for the American people? I feel like more there than anywhere, we've been failed by every administration for a good long while.
Yes, the blame goes much, much deeper, but so many of the problems (be it banking or privacy and liberty related issues) all end up at the feet of the attorney general and we've not had one that's been a champion for the people for far too long.
IIRC there was a class-action(?) lawsuit against the banks which was with regards to the forged documents in the mortgage scandal (The one where people forged the signatures of people who had signing authorities when they lost the chain of ownership for properties under mortgage - this may have been 2008-9)
At that time, the bank(s) were batting for a settlement which I believe was opposed by the then DA of New York and 1 more. Most of the other DAs were on board.
I forget what happened to that particular lawsuit though.
PRIMARY SUBMITTER: Whats it worth
SWSISS FRANC TRADER: ive got some sushi rolls from yesterday?...
PRIMARY SUBMITTER: ok low 6m, just for u
Uh, what. Assuming this is a real transcript, and without some very compelling proof that PS actually fixed the price, I think that this is obviously, literally, a joke. That is, SFT and PS are bullshitting around, a bit of gallows humour about the possibility of price fixing.
while it's possible PS was going to submit `low 6m' regardless, all you'd have to do to verify this mostly likely was not a joke is check to see what PS submitted
Yeah, I'm sure he realized it was a joke. But it is funnier/sadder to use payment in day old sushi as a metaphor for "with impunity". That is, no payment necessary, because there is no fear of punishment. As it was obvious to us it was really a joke, perhaps Taibbi thought there was no need to spell it out for his readers.
However, it could also be seen as manufacturing outrage, as accepting as payment something of little to potentially negative value would cause more outrage for those who didn't get the farce. And perhaps that was/is Taibbi's goal, to try to elevate the level of outrage to what he feels are appropriate levels.
Whether this tactic is ethical and even pragmatically advantageous is not absolutely clear in my mind. I generally have an overriding value of intellectual truth, and abhor skewing that for the sake of an emotional response. However, if an unimportant intellectual truth is sacrificed to communicate a significant emotional truth, is that acceptable/virtuous? Of course, the danger is that this may be used to call into question the intellectual integrity of other claims which do involve important intellectual truths, as cynicalkane has done in this thread.
I think in the case of the day old sushi, the truth is outrageous enough without misrepresenting such an insignificant detail, even in jest, which could be used to undermine the author's credibility.
Finance is a game of imperfect information. Most investors only has access to published information such as companies quarterly reports, so obviously, if you have an information advantage (by being an insider or knowing the next LIBOR rate) you can translate that into guaranteed profit.
Contrast finance with sports betting. If you bet on a hockey team, you have almost complete information about any variable you can imagine. The career of each player, how the team has performed so far, how far the away team has to travel (you use that to estimate the fatigue of the players), any player injuries and so on.
Surprisingly, sports betting is both more transparent and much more fair than finance because everyone has access to the same information. Sure, someone might know that the ice cleaning machine in the arena is malfunctioning so there may be debris left on the ice which may negatively effect one star players skating abilities and be able to exploit that information advantage. But it is marginal in comparison to the huge advantage traders and insiders can acquire in finance.
My point is that looking at finance as betting makes it much clearer what is going on. Some of the players have an information advantage and are exploiting it. The rest are getting screwed.
only thing shocking about this story, is that people are actually shocked by it.
do we not know that money runs the world? i mean its almost infantile, its not even a question of world view, its simple science, its like writing a news story about the fact that the earth is round
Now replace LIBOR with google page rank. OMG! people who can "fix" things actually "fix" things! This isn't a conversation about banking. It's a conversation about human nature.
That's a deliberate choice on his part. He leaves out pertinent information so as to increase the reader's feeling of helplessness. If you ever read a story of his about a subject you happen to be familiar with the amount of manipulation he engages in is nauseating.
I'm not saying this to blow off the story, I'm alarmed that there's more rate-fixing going on and suspect that we'll hear about more again. But Taibbi writes to incite, not to inform. I don't trust him any more than I trust Glenn Beck or Alex Jones.
I'm curious -- does anyone know of other important financial numbers that are easily manipulated?
I'm thinking, in particular, of numbers like LIBOR that are generated from privately-reported or easily manipulated data. Although deregulation seems to lead to major fraud sooner or later, so that would be worth keeping track of too.
I'd like to get a feel for which numbers are "soft" and easily manipulated, vs. "hard". Prior to this I thought that LIBOR and ISDAfix were fairly hard to manipulate. Theoretically, it seems like they would be tough to manipulate, but the reality of the financial system is very different from theory.
[+] [-] cynicalkane|13 years ago|reply
The claim that "everything is rigged" is supported by a small number of specific examples coupled with a generous helping of polemics. Facts are not placed in useful contexts. The reader, after reading this article, has likely learned very little but only had whatever pre-bias he had confirmed. It takes a lot more than that to support the fantastic superpowered-global-banking-conspiracy thesis of the article.
Since, on articles like this, you tend to be downvoted for going against the zeitgeist, I'll provide a specific example.
The civil suit over LIBOR fixing, mentioned on page one, was thrown out because antitrust laws only apply to competitive processes. (Source: http://www.upi.com/Top_News/US/2013/03/30/Judge-drops-antitr...)
Taibbi writes: "In that case, a federal judge accepted the banker-defendants' incredible argument: If cities and towns and other investors lost money because of Libor manipulation, that was their own fault for ever thinking the banks were competing in the first place." This is a baffling recontextualization: suits are thrown out when they are not lawful because we live in a democratic rule of law, and there is no reason to believe the judge wished to punish or blame consumers. The suit was thrown out because the suit was illegal. This isn't an uncommon or partisan thing: the famous Walmart v. Dukes discrimination lawsuit was thrown out 9-0 by the Supreme Court, because it was unlawful. (The reason the case is famous is because of a 5-4 decision on whether it could be refiled, but that's beyond the scope of this comment.)
A long history of reading Taibbi comment threads on HN and r/economics has taught me that Taibbi routinely lies in this fashion; this is just one example.
[+] [-] lisper|13 years ago|reply
It's of interest to me because I've had some direct experience tangling with banks over other issues. I have come to believe that the extent to which the banks control the world is even greater than what Taibbi says.
> we live in a democratic rule of law
That is heartbreakingly naive. It is not possible to get elected to office in the U.S. without substantial funding, which means that all of the people in office are either themselves rich or have garnered the favor of wealthy donors. Either way it is impossible as a practical matter to pass any law that constrains the interests of the super wealthy in any meaningful way.
[+] [-] nisa|13 years ago|reply
What is your take on the issue?
1: http://en.wikipedia.org/wiki/Libor_scandal
[+] [-] tptacek|13 years ago|reply
People want him to be right, because who the hell doesn't want to read a fun piece on how corrupt Wall Street is? (I think Wall Street is pretty corrupt, B.T.W.)
He was much better writing about politics, because most of the time you can write a competent political story without needing to explain a technical concept you yourself don't understand. Name dropping, appeals to populism, and comic invective are entirely adequate to that task.
He's good at sports writing too, because he understands the technical concepts he wants to explain.
But with finance writing, Taibbi has set a needlessly high bar for himself, and he doesn't just routinely fail to clear it; he seems to be running under the bar.
[+] [-] fixxer|13 years ago|reply
As for "interest to hackers", this market seems to like finance. I suppose the grass is always greener...
[+] [-] anigbrowl|13 years ago|reply
[+] [-] CoolGuySteve|13 years ago|reply
But that this comment could go against the grain of Internet circle jerking and be the top voted one makes me e-swoon. Bravo everyone.
Anyways, I've worked for Apple and I've worked for a major investment bank. The two brand names are both major headline grabbers and I would say in both cases, about 60% of what you read is an outright fabrication designed to attract page views.
[+] [-] DennisP|13 years ago|reply
[+] [-] od2m|13 years ago|reply
[+] [-] incongruity|13 years ago|reply
How long has it been since we've actually had an AG that really went to bat for the American people? I feel like more there than anywhere, we've been failed by every administration for a good long while.
Yes, the blame goes much, much deeper, but so many of the problems (be it banking or privacy and liberty related issues) all end up at the feet of the attorney general and we've not had one that's been a champion for the people for far too long.
[+] [-] rosser|13 years ago|reply
At this point, I don't think it's terribly inaccurate to say that AGs seem to go to bat against the American people more than they do for them.
[+] [-] intended|13 years ago|reply
At that time, the bank(s) were batting for a settlement which I believe was opposed by the then DA of New York and 1 more. Most of the other DAs were on board.
I forget what happened to that particular lawsuit though.
[+] [-] jholman|13 years ago|reply
[+] [-] justsee|13 years ago|reply
The UK FSA Final Notice documents many transcripts just like this as evidence of the unethical, unprofessional, dysfunctional culture [1].
[1] http://www.fsa.gov.uk/static/pubs/final/rbs.pdf
[+] [-] fixxer|13 years ago|reply
That said, I believe the article. Some of the stuff you could get away with LEGALLY on BrokerTec (ICAP's electronic platform) would amaze most.
[+] [-] querulous|13 years ago|reply
[+] [-] jdrobins2000|13 years ago|reply
However, it could also be seen as manufacturing outrage, as accepting as payment something of little to potentially negative value would cause more outrage for those who didn't get the farce. And perhaps that was/is Taibbi's goal, to try to elevate the level of outrage to what he feels are appropriate levels.
Whether this tactic is ethical and even pragmatically advantageous is not absolutely clear in my mind. I generally have an overriding value of intellectual truth, and abhor skewing that for the sake of an emotional response. However, if an unimportant intellectual truth is sacrificed to communicate a significant emotional truth, is that acceptable/virtuous? Of course, the danger is that this may be used to call into question the intellectual integrity of other claims which do involve important intellectual truths, as cynicalkane has done in this thread.
I think in the case of the day old sushi, the truth is outrageous enough without misrepresenting such an insignificant detail, even in jest, which could be used to undermine the author's credibility.
[+] [-] nikcub|13 years ago|reply
edit: it isn't even bankers humor, it is just general office humor. you wouldn't recognize it if you haven't worked anywhere.
[+] [-] bjourne|13 years ago|reply
Contrast finance with sports betting. If you bet on a hockey team, you have almost complete information about any variable you can imagine. The career of each player, how the team has performed so far, how far the away team has to travel (you use that to estimate the fatigue of the players), any player injuries and so on.
Surprisingly, sports betting is both more transparent and much more fair than finance because everyone has access to the same information. Sure, someone might know that the ice cleaning machine in the arena is malfunctioning so there may be debris left on the ice which may negatively effect one star players skating abilities and be able to exploit that information advantage. But it is marginal in comparison to the huge advantage traders and insiders can acquire in finance.
My point is that looking at finance as betting makes it much clearer what is going on. Some of the players have an information advantage and are exploiting it. The rest are getting screwed.
[+] [-] apalmer|13 years ago|reply
do we not know that money runs the world? i mean its almost infantile, its not even a question of world view, its simple science, its like writing a news story about the fact that the earth is round
[+] [-] Sven7|13 years ago|reply
[+] [-] bdb|13 years ago|reply
[+] [-] anigbrowl|13 years ago|reply
I'm not saying this to blow off the story, I'm alarmed that there's more rate-fixing going on and suspect that we'll hear about more again. But Taibbi writes to incite, not to inform. I don't trust him any more than I trust Glenn Beck or Alex Jones.
[+] [-] webnrrd2k|13 years ago|reply
I'm thinking, in particular, of numbers like LIBOR that are generated from privately-reported or easily manipulated data. Although deregulation seems to lead to major fraud sooner or later, so that would be worth keeping track of too.
I'd like to get a feel for which numbers are "soft" and easily manipulated, vs. "hard". Prior to this I thought that LIBOR and ISDAfix were fairly hard to manipulate. Theoretically, it seems like they would be tough to manipulate, but the reality of the financial system is very different from theory.
[+] [-] rasengan0|13 years ago|reply
[+] [-] knodi|13 years ago|reply
[+] [-] unknown|13 years ago|reply
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