Belgium bids adieu to civil liberties

BBC — A Belgian parliamentary committee has voted to ban face-covering Islamic veils from being worn in public.

These stupid Belgians are well on their way to throwing the baby out with the bathwater, Baruch. There should be a law against women being forced to wear burqas by their husbands, not against wearing burqas outright. If that is hard to enforce, well, tough. The right of a woman not be forced to wear a burqa by her husband must not come at the expense of the right of a woman (or a man) to wear a surfeit of fabric in public, for whatever reason, including religious belief.

Belgians forbidding the wearing of burqas is as backwards as Saudis forbidding the not wearing of burqas. Both constrain the civil liberties of women. That this blazingly obvious point does not gain more traction in Belgium infuriates me.

If Belgian lawmakers want to convince me that this is not a law borne of religious intolerance then I look forward to the ban on motorcycle helmets, ski masks, carnival masks, full-face bandages, wedding veils and Halloween costumes. Otherwise, there will be a ready-made excuse that should hold its own all the way up to the European Court of Justice: “It’s not a burqa, officer, it’s my Halloween costume.”


Google: Scientist


Symbolism is never lost on the Chinese, who are the masters of signaling, and thus there was some great poignancy to Google’s A new approach to China being posted to the domain, which is blocked in its entirety by China’s censorious government. This proved quite a sassy way to illustrate a point, before even starting on the merits of the case. Those outside China didn’t even notice. Everyone inside China, including the officials, had to turn on their VPN to read it.

Now that the deed is done so publicly, I don’t imagine either side will back down, and nobody expects’s redacted search service to last much longer, with perhaps a further punitive ban on for the sheer audacity of this insubordination. But already today the blogosphere erupted in competing narratives explaining Google’s autodefenestration from Chinese search, and not all were wholly credulous of Google’s stated motives.

Among the cynics, the arguments ran thus:

– Google is misrepresenting its decision: It was a face-saving, kudos-generating way to exit a failing business (though without explaining why profitably capturing 31% of the search market in China should prompt shutting down).

– Google is making a mistake: No business in their right mind would purposely anger the masters of such a lucrative market, so this has to be a stupid tactical mistake. (The stated presumption here is that Google cannot be ethical, or it would not have entered China in the first place, so this fiasco must be a very bad business decision merely masquerading as a moral decision.)

Among the partisans:

– Google was pressured into it by Hillary Clinton, thinks Rao Jin, the founder of the China’s patriotic Anti-CNN forum. (I suspect a failure of the imagination on the part of Rao — clearly, he is projecting onto the US how things are done in China.)

And tomorrow, expect the official mouthpieces’ take, which I predict will involve far more references to the peddling of pornography than to the free market of ideas.

I, Bento, take Google’s explanation at face value, however. And I intend to restate the narrative in terms that will be familiar to long-time readers of Ultimi Barbarorum: All along, Google’s approach to China has been that of the scientist: There was a testable hypothesis, an experiment, and a conclusion based on that experiment. And today, we saw the publication of the results — the hypothesis proved false.

Specifically, the hypothesis, as formulated by Google during 2005: The internet in China will become freer in the coming years, and Google’s presence in China will help strengthen this process. Many believed and hoped this might be the case — the Olympics were approaching, China was opening up, officials exuded reasonableness.

The experiment, initiated in January 2006: Enter the Chinese search market, try to improve the system from within by collaborating with the regime, and see if China’s internet gains freedoms over time.

The evidence: Over the past few years, a progressively stricter program of shutting down those Chinese sites that do not comply with demands for censorship and surveillance. The progressive blocking of all popular foreign sites that allow uncensored anonymous communication, including several Google properties: Twitter, Facebook, YouTube, Blogger, WordPress, IMDB, Google Docs, URL-shortening services… And, what Google cites as the final straw, recent industrial-strength malware attacks aimed at Gmail-using Chinese dissidents.

The conclusion: Google’s collaboration was not making things better; things were getting worse. They admit they were wrong! There may have been a financial return on its China investment, but the civic return proved disappointing.

Faced with this realization, Google could have done nothing. But that way lies death by a thousand cuts as web property after web property gets axed. How soon before Gmail gets blocked? Google Maps? Earth? Picasa? Google Reader? Instead, Google cleanly terminated the experiment: There will be no more collaboration with the regime. Now China must throw them out if it wants to save face domestically — albeit at the price of losing face internationally.

As Spinozists, this is a proud day for us. Google has posted that placard declaring China’s government Ultimi Barbarorum in a public place. Gone for them is the queasiness of having to placate a regime that believes calling for free elections deserves 11 years in jail for subverting party state power. I’m betting it’s a relief.

A postscript: I was surprised that several Shanghai-based European VCs and businessmen I follow on Twitter were among the cynics, berating Google for not conforming to Chinese/Asian business practices based on saving face, consensus and relationship-building, instead reverting to an “American” ultimatum. But these views come from individuals who have already made their peace with China’s political system, and whose business models and reputation do not depend on the unfettered flow of information. Perhaps some of them are unwittingly using the occasion to signal their own reliability as partners in China: “Look at us — we’d never consider doing what Google just did.” Google may have burned its financial bridges, but they are burning their moral bridges, making them the Stupid Cartesians of this sorry episode, Baruch.

Dirty, rotten scoundrels

Felix is far, far too kind to the telcos of the world, when he writes in an otherwise excellent post  (picked up by Krugman), of the lack of decent network coverage in NYC:

If I were an AT&T shareholder, then, I’m not sure how much money I’d want my company to spend on beefing up 3G wireless in New York and San Francisco, especially when there’s little obvious return on such an enormous investment. Sometimes you make more money with cheaper unhappy customers than with more expensive happy customers. And this could well be one of those times.

Firstly, let Baruch share his amusement at being cited as an expert in the physics of radio networks; he is at heart a poncy arts student, and is more likely to think an Erlang is a seminal German film director than the measure of network whatever-it-is that it is.

Secondly, and more importantly, western telco operators are in fact hapless, scrooge-like con-men, who have consistently misled their investors and customers about the extent of their next generation network investment. They have scrimped on 3G spending for years, preferring instead to provide investors improbably fat, 10% plus, free cash flow yields, and 5-8% dividend yields. As of this point, 10 years after getting the spectrum, they have still not properly built out their 3G capacity; and now the chickens, in the form of iPhones, have come home to roost. Continue reading “Dirty, rotten scoundrels”

Inside Men

Crikey. Looks like they’re going after Stevie Cohen now. For context, SAC Capital is the leading hedge fund of our time. They get to charge not 1 and 20, not 2 and 20, but 3 and FIFTY to their punters. And like La Gavroche, they get to decide who gets in; most of the funds are closed, with waiting lists up the wazoo. They’ve done this through nothing but creating consistent, (suspiciously?) persistent, 20% plus returns a year for god knows how long. SAC is the “smart money” you would follow if you knew where it was going; Baruch has known traders do that, no questions asked. And why? Because you just reason that they know something; they always do. How ominous that sounds now.

If SAC goes down like Galleon did it’s a much much bigger deal. I don’t mean the trading impact on the market, although there might be some — SAC is a rapid-fire trading house and will likely be positioned in mostly highly liquid securities. What I mean by a bigger deal is in an Ivan Boesky sort of way, a Drexel Burnham Lambert, a Defining Moment of Wall Street Greed sort of thing. A number of awful mini-series will be made about it. It may even turn out to be worse than that.

It’s clear too, the other half of the vast conspiracy (should it be proven to exist, of course) lies among technology stock executives, at least among those high enough up the chain to know the numbers. So far, at least, executives at IBM, Intel, 3Com, Atheros, and Polycom are supposed to involved. This is a highly representative list, across many tech subsectors and market caps. It’s not unreasonable to think staff at other companies are going to be indicted. Galleon’s original investors seem to have been tech executives who used to talk to Raj when he was a sell-side analyst, ie his sources, his informal “channel checkers”. Even if no brown envelopes changed hands initially, secretly advising a fund you have invested in p.a. on sensitive stuff doesn’t seem a stretch on the part of the executives, especially if it took place before RegFD. The relationships may have then become formalised, secrets in exchange for cash — is it unreasonable to imagine that the original conflict of interest sowed the seeds of the greater, and more obvious crime later on. If I was one of the Feds working the case I would view identifiying the early and later investors in Galleon as an avenue of enquiry rich, shall we say, in possibility.

Now it’s not just Galleon involved, but a horde of satellite hedgies with obscure names, and some of the managers who have started to cooperate with the authorities seem to have worked at SAC. “People familiar with the matter” (ie most likely the prosecutors themselves) have told the WSJ that SAC are the ones they’re gunning for. Given the size of the target, the prosecutor who can pull off this one is, on past form, a dead cert to be mayor of NYC, or at least state governor, and eventually will have the chance to become a cross-dressing presidential candidate.

If indictments are really going to be sent out, a number of half-formed thoughts spring to Baruch’s mind:

  1. this is grist to the mill of the “you can’t make money in the stock market crowd”, the Felix Salmons of this world* who would have us all invest in index funds and ETFs. This is terrible, not just for people like me who depend on belief that a small number of gifted investors are capable of consistent, though not necessarily persistent, returns. No, it also, reductio ad absurdiwhatever, will make the stockmarket less liable to make any distinctions between companies whether they be good ones or bad ones — the very life force of capitalism itself
  2. highly successful “fundamentalist” hedge funds may now have to spend as much time excusing suspiciously excellent performance, just as more unfortunate ones have had to traditionally spend time explaining away bad returns. In many cases this may be difficult, as the successful ones no doubt touted their “informational edge” as a way of getting the investors in in the first place.
  3. because of this I can’t decide whether this is good for us honest fundamental investors, or bad. At worst, the boundaries of what we consider ethically and legally acceptable may stray. What we could call the “brown envelope” investment strategies are clearly not kosher, but what about ones where legitmate “homework” brings about the same result? How exactly is a sell-side channel check, communicated to a limited number of paying clients, conceptually different? Insider trading as a concept does not have hard edges, and innocents may get caught up in the net, or much worse, be encouraged to stop doing any digging at all. Maybe investors will conclude that all the fundamental investment strategies are at risk, and eschew the class altogether in a “kill them all, god will know his own” sort of way. At best, however, the money invested in dodgy funds may find a home with more honest practitioners, and, much more to be hoped for, fund investors themselves may reset unrealistic expectations for consistency of returns. Larger drawdowns will become more acceptable, as will greater volatility in monthly and quarterly track records. In other words, expectations will become more in line with what the real world actually doles out.

* of course, Felix Salmon has many other opinions, some of which are even correct.

The Worm in the Apple

 The blogosphere is buzzing with reaction to Jason Calacanis’s epic post on Apple’s uncompetitive practices. Basically, as concerns iPod, iTunes, switching off apps it doesn’t like or who it thinks are a competitive threat, Calcanis thinks that Apple is acting like a monopolist and should probably be investigated by the DoJ. His most telling points come in the comparison between the current behaviour of Apple and the ex-great monopolist Microsoft:

On iTunes:

Think for a moment about what your reaction would be if Microsoft made the Zune the only MP3 player compatible with Windows. There would be 4chan riots, denial of service attacks and Digg’s front page would be plastered with pundit editorials claiming Bill Gates and Steve Ballmer were Borg.

On Apple’s draconian apps policy for iPhone:

Imagine for a moment if every application on Windows Mobile or Windows XP had to be approved by Microsoft–how would you react? Exactly.

On banning other browsers on the iPhone

Apple was more than willing to pile on after Microsoft’s disasterous inclusion of Internet Explorer with Windows. In fact, what Apple is doing is 100x worse than what Microsoft did. You see, Microsoft simply included their browser in Windows, still allowing other browsers to be installed. In Apple’s case, they are not only bundling their browser with the iPhone, but they are BLOCKING other browsers from being installed.

The standard Apple response to all this is that the restrictions Apple places on its products are necessary to ensure the quality of the user experience, that Apple deserves to be paid for the innovations it has brought to the marketplace and the consumer freedom it has enabled to use things like the mobile internet, to make online music easy and fun to use etc. But these remain the classic arguments of all monopolists, and are identical to the ones Microsoft used back in the days it was being investigated.

Baruch has often thought of what would have happened had Apple actually won the market share wars of the early 1990s; its instincts are much more controlling than Microsoft’s. Would we really have had an open-source internet? Would we really have had all the innovation spawned by cheap and ubiquitous computing?

Needless to say, this is not being well received by the hordes of Apple aficionados, the self-confessed fanboys. Baruch is constantly amazed at the level of brand loyalty Apple has managed to instil in its punters. I certainly don’t feel the same way about my crappy old Toshiba (although I would be cross with anyone who disparaged my Subaru).

Count me firmly in the Calcanis camp on this. As every reader knows, I make no secret of my dislike of the company, for very much the same reasons Calcanis does. Reader Verec, in the comments attached to the last post, accuses me of “anti AAPL bias.” But “bias” is a loaded word. Is a well thought out position against something, a consistently held position, bias? For those utterly convinced of the righteousness of the other, the pro, side, it may appear so. And that is probably why it is generally very hard to have a proper conversation about Apple on the interblogs.

At the risk of throwing lighter fluid on the flames, I blogged this on Apple, almost 2 years ago:

. . . I do so very strongly dislike Apple as a company. They sell high quality hardware it is true, but so overpriced; you pay a premium to be unable to use 90% of the world’s software without running some other complex program to do so. I hate the cutsie-coo operating system and the self satisfied “pop” when you close a window. I find the advertising unbelievably irritating, with its “Think Different” slogan, which when you think about it is a pean to its lack of market share; if they had managed to sell more Macs than PCs would they be telling us to “Carry on Thinking the Same” to make us buy more Macs? More than that, I pity the ponytailed, smug, pseudo-individualist, and above all gullible Apple fanboys, who all believe they are part of some greater social movement representing god knows what but who are in fact the victims of some corporate succubus which cares not a jot for them except how much more they can milk them. And the fanboy’s anger at the Wintel axis ignores the fact that the only thing which kept the company afloat during the dark times was Microsoft’s charity; that and the need to pretend that Windows was not in fact a monopoly.

No, Apple is the antithesis of what a Spinozist technology company should look like: closed, not open systems; overly pleased with itself and arrogant; and its advertising and brand values appeal to the grossest of the Passions: envy, pride, confusion and fear. In their defence, the flip side of their arrogance is a certain appealing audacity. The company from time to time (but not as often as we think) creates attractive and innovative products. But net net they have to go in the Stupid Cartesian bucket.

It’s nice to finally have company. And now we have that out of our system, let’s hope that ‘s the last blogpost about Apple here for a while.

Crook on torture

Returning to the Spinozist, pseudo-philosphical, tyranny-bashing roots of what was not originally an econo-blog, Ultimi Barbarorum must indict the otherwise incisive Clive Crook of the FT for what is an astonishing op-ed in yesterday’s FT; Stupid Cartesianship beckons. There is moreover a question whether we may need to go further. What do you think, Bento? Are you still there?

Crook does not believe there should be any investigations into torture. Those that argue that there should be investigations make 2 mistakes, he thinks: firstly they fail to see that waterboarding may indeed work as a way of gaining information, and secondly, that it may not be illegal. He mischaracterises the seriousness of the pro-investigation argument.

“In [my] view”, Crook writes, “torture might sometimes work. CIA officers and senior intelligence officials have said that “harsh interrogation” did yield important information.” He doesn’t give any examples, and so far I don’t think anyone has. Certainly, were I to be tortured I would spill the beans as quickly as possible on any secret I might try otherwise to keep; however, one might attain the same result by other means (in my case, asking nicely, offering me money) which don’t incur the same costs, be they moral, reputational or otherwise. Al Qaida fixer Abu Zubaida is said by his interrogators to have given up more secrets though non violent suasion than under the subsequent torture.

Moreover, while I don’t doubt important information may be yielded under torture, Crook fails to see that hostile interrogation through torture surely incurs greater costs than the alternatives. From a purely practical point of view, it creates a much higher percentage of false positives, stuff the victim made up in order to make the pain stop. Extra analytical resources are needed to sort the information, and extra costs in research to check the remaining leads. You need extra torture sessions to check the same story. It’s hard to see how torture as a way of sourcing information can be very efficient against the alternatives, a conclusion the UK, Israel, and even highly tyrannical regimes like the Soviet Union came to. In the latter case, they found it much more interesting to use torture as a way of extracting false confessions, which is clear from a basic reading of the history of show trials in communist countries in the middle years of the last century. That should tell Clive Crook something.

Secondly, is waterboarding actually illegal? “Congress should make waterboarding a crime,” says Crook,  “and it has had many chances before and since 9/11 to do so. The fact is, it has chosen not to.” Well, it may not need to; the fact that such convoluted and apparently erroneous legal opinions were needed to justify waterboarding and other techniques in the White House argues that there was some sense beforehand that it might be slightly dodgy. Precedent exists: the US executed Japanese soldiers for it after WW2. Moreover, I believe the US is a signatory to the UN Convention Against Torture, ratified by Congress, which is entertainingly precise:

For the purposes of this Convention, torture means any act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person for such purposes as obtaining from him or a third person information or a confession. . . when such pain or suffering is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity. . .

 Article 2

  1. Each State Party shall make these offences punishable by appropriate penalties which take into account their grave nature.
  2. Each State Party shall take effective legislative, administrative, judicial or other measures to prevent acts of torture in any territory under its jurisdiction.
  3. No exceptional circumstances whatsoever, whether a state of war or a threat or war, internal political instability or any other public emergency, may be invoked as a justification of torture.
  4. An order from a superior officer or a public authority may not be invoked as a justification of torture.

Article 3

  1. No State Party shall expel, return (“refouler”) or extradite a person to another State where there are substantial grounds for believing that he would be in danger of being subjected to torture. . .

Article 4

  1. Each State Party shall ensure that all acts of torture are offences under its criminal law (my emphasis). The same shall apply to an attempt to commit torture and to an act by any person which constitutes complicity or participation in torture.

That would be the Bush administration caught fairly bang to rights, then. It is probable that up until 2004-2005 Congress never passed a law against waterboarding because 1) no-one ever thought it was possible the US government would want to do it to anyone (just as no-one passed a law e.g. against feeding cats too much marmalade), and 2) it was covered by the convention above, and/or the US constitution.

I think opponents of torture investigations like Crook who use this argument misunderstand the nature of common (the basis for US and UK law), versus roman law. The latter is precise, laying out what is possible/impossible in great detail, the former is experiential, based on principle and tests. We do not need a law specifically banning waterboarding for it to be an offence. We need someone to be prosecuted for it to see whether it is illegal under US law or not, for it to go through the courts on appeal if need be, ultimately to the Supreme Court. Crook decently seems to worry about the consequence for the US’ standing in the world should any indicted torturers be acquitted. But this is not something we can decently worry about. The rule of law demands its test, for the dice to be thrown. And then we shall know where we are.

There are lots of other things wrong with Crook’s argument, including that it concentrates on waterboarding to the exclusion of more clear-cut forms of torture such as “wall slamming”, and finally, that arguing for prosecution against torture is a “furiously partisan project”. This last is firstly, plain wrong (I am a fricking Thatcherite hedge fund manager for chrissake, not a bed-wetting beardy-weirdy) but primarily a cowardly suggestion, implying that were one side or the other to argue fiercely against say, rape and pillage, it would be proper to find a compromise. 

We can talk about this in the comments, if anyone is interested. But frankly I have to admit to a rather unpleasant sense of wonder that the FT, a UK newspaper staffed with many journalists I know personally should entertain this debate at all. I am astonished that these issues have to be discussed in the first place.

UPDATE: missed this — Tyler Cowen (HT Sullivan) opines on torture prosecutions, also understanding that this is a fit subject for an econo-blog. He’s against, worried that it would just prove the US actually likes to torture people, and somehow “lose the chunk of world opinion that Obama has been winning back”. Again, I think this misses the point, for reasons I write above. Then we’d know. And I don’t think sweeping torture under the rug is the courageous stand that will impress world opinion either.

Cramer vs Stewart

Just watched the Jim Cramer interview on The Daily Show. It made me sooo fucking mad. What a dick. How full of oneself can one person be? And such a preachy loudmouth, too.

I’m talking of course of Jon Stewart, self-appointed mob leader, First Pitchfork. Of whom nothing ill may normally be said. At least 70% of the “interview” was him talking, for chrissakes. The rest of it was sandbagging, showing shady internet video from 2006 off where Cramer fesses up to, among other things, spreading vaguely dodgy rumours about Apple, and ramming the futures down pre-opening. Big fucking deal, and that never took a dime from the Great American Public. The whole point of his banging on about it in the video, I can only imagine, was to warn viewers that this sort of thing goes on, rather than, as was clearly implied by His Preachiness, to inform his viewers and the SEC that he is a semi-criminal financial mastermind. Whatever; this was less an interview, in no way a “showdown,” more a pre-planned evisceration in front of a hostile, servile audience. That audience is so sycophantic, it makes Jon Stewart uncomfortable, and rightly so. As a spectacle, it was disturbing. One of those Spanish festivals where they torture a donkey came to mind, or where they drop a goat out of the church steeple.

Of course, it’s definitely not fashionable to be nice to Jim Cramer. He certainly hasn’t made many people a lot of money lately. However, it’s certainly unbalanced to show his disastrous buy Bear Stearns call but not show his famous CNBC freak-out (“they have no idea, they have NO IDEA!”), back in August 2007

That was a warning call for me, marking a shift in the posts on this site from a normally sunny (embarrassingly sunny, in retrospect) disposition to a more gloomy one. I’ve noticed that commentators, and the blogosphere, tend to be much crosser with Cramer than my fellow practitioners, many of whom recognise someone who, while often ridiculous, takes on risk. Unlike others he makes public bets; he allows himself the possibility of being wrong, and often is. Some would say almost always is.

Asking CNBC to become some sort of “good citizen” financial journalist, exposing evil banking shenanigans, as Jon Stewart fantasises, would be like asking Paris Hilton to teach an Open University course in quantum physics. It is not a realistic proposition. In any case, which muckraking financial institution does he have in mind as a paragon? The FT? WSJ? The Economist? Boooorring. Bloomberg TV is probably the model he has in mind, or something on PBS. There’s no money in that, neither explicity predicted, as far as I know, our current difficulties, and no-one watches.

For most of us doing the investing, CNBC (and, most of the time, Cramer, for that matter) is absolutely irrelevant in investing, a backround hum on the trading floor, good only for finding out what the consensus is thinking at any one time and lusting after the female presenters (I like Erin Burnett). No-one I know takes any of  it seriously.

Jon Stewart is surfing on rage, and unloading on the public face of stockmarket investing. Like most members of the public he doesn’t quite understand what has happened, and is sure they have all been somehow “gotten”. And of course they have been, but are all complicit in it the same time. Even if they didn’t buy overpriced houses with too much debt, I bet a lot of Jon Stewart’s audience remortgaged and bought an LCD TV, new car and a great holiday, or at least invested their 401ks into stocks and mutual funds. Get the pitchforks out and let’s get the bankers, anyway, it’ll make some good TV. Well, frankly it didn’t.