The USPS is planning a rare, above-inflation postage stamp price-hike on Jan 26, 2014; and they're also selling "forever-stamps" that can be used at any time. Allison Schrager and Ritchie King show how these two facts in combination offer a significant arbitrage opportunity, and set out a plan to buy 10 million stamps at $0.46 and sell them at $0.48, netting $200,000 in profit, at 4.3 percent.
It's pretty thoroughly thought-through, with a detailed finance and distribution plan. I'd love to see them try it.
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Last Wednesday's Fed announcement that it would not taper its bond-buying program triggered huge orders on exchanges everywhere. Several of those orders on Chicago exchanges were placed 2-3 milliseconds after the announcement, which is a good 7 milliseconds faster than the speed of the light-cone emanating from DC, suggesting that either someone in Chicago has a time-machine, or can travel faster than the speed of light, or is a crooked son-of-a-monkey.
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The Center for Public Integrity's
After the Meltdown
series documents the fate of the regulators, executives, and firms that were most directly responsible for the subprime meltdown, and demonstrates that the top bankers for firms like Lehman got unbelievably rich due to their failures, and are still in business with lucrative consulting firms (for example, Lehman CEO Richard Fuld walked away with several hundred million in cash and now has homes in three states and a personal consulting outfit). Consumerist's Chris Morran has done a great job of summarizing the findings:
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David Graeber, who wrote last year's incredible Debt: The First 5,000 Years, has an extraordinary essay up called "On the Phenomenon of Bullshit Jobs," which explores the phenomenon of people in productive industries (nursing, teaching, etc) being relentlessly ground down on wages, job stability and working conditions; while all the big money aggregates to the finance industry and a layer of "bullshit jobs" like corporate attorneys, administrators, etc -- who do jobs that produce no tangible benefit.
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In 1975, Warren Buffet wrote a memo to the Washington Post's CEO Katharine Graham about how to invest the company's pension fund. His advice -- to ignore pricey fund-managers, be patient and play the long game -- was good enough that the WaPo pension is still in rude health today. Meanwhile, stark assertions like "the rational expectation of assuring above average pension fund management is very close to nil" continue to have relevance today in questions as diverse as whether we need to pay bankers huge bonuses to keep the "best talent" on hand to how you should invest your pension.
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In Rolling Stone, Matt Taibbi takes a long, in-depth look at the scandal of student loans and tuition hikes, a two-headed parasite sucking America's working class and middle class dry as they plunge their children into a lifetime of ballooning debt in the vain hope of a better, college-educated future. The feds keep backing student loans, and the states keep cutting university funding, so the difference is made up by cranking up tuition and shifting the burden to future grads. Meanwhile, the laws that prohibit discharging student debt in bankruptcy, combined with ballooning default penalties (your $30K debt can rocket to $120K if you have a heart-attack and are bedridden and can't make payments) and the most ruthless, unsupervised, criminal collection agencies means that tens of millions of Americans are trapped in a nightmare that never ends -- student debt being the only debt that can be taken out of your Social Security check. Matt Taibbi is a national treasure, and Rolling Stone does us all a service by keeping him working.
If this piece moves you and you want to learn more, Don't miss "Generation of Debt," an important pamphlet on the subject from UC students.
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Back in 2012, the major US banks settled a federal mortgage-fraud lawsuit for $95,000,000. The suit was filed by Lynn Szymoniak, a white-collar fraud specialist, whose own house had been fraudulently foreclosed-upon. When the feds settled with the banks, the evidence detailing the scope of their fraud was sealed, but as of last week, those docs are unsealed, and Szymoniak is shouting them from the hills. The banks precipitated the subprime crash by "securitizing" mortgages -- turning mortgages into bonds that could be sold to people looking for investment income -- and the securitization process involved transferring title for homes several times over. This title-transfer has a formal legal procedure, and in the absence of that procedure, no sale had taken place. See where this is going?
The banks screwed up the title transfers. A lot. They sold bonds backed by houses they didn't own. When it came time to foreclose on those homes, they realized that they didn't actually own them, and so they committed felony after felony, forging the necessary documentation. They stole houses, by the neighborhood-load, and got away with it. The $1B settlement sounded like a big deal, back when the evidence was sealed. Now that Szymoniak's gotten it into the public eye, it's clear that $1B was a tiny slap on the wrist: the banks stole trillions of dollars' worth of houses from you and people like you, paid less than one percent in fines, and got to keep the homes.
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A wily Russian fellow crossed out the fine-print on an unsolicted credit-card application from Tinkoff Credit Systems in 2008 and wrote in his own terms, giving himself unlimited, interest-free credit and exemption from all fees, with a 3MM ruble fee should the bank change the terms and a 1MM ruble fee should they cancel his card. He crossed out the URL giving the terms and conditions and wrote in his own. And a court has ruled that his changes -- which were blindly accepted by the bank -- are binding. He's now suing them for breach of contract, since they refused to pay him the cancellation fee he'd written in -- he's seeking USD727,000.
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HackBB is a popular underground BBS for computer criminals; last March it went down after a prominent user and administrator called Boneless stole all the funds in an escrow service used by criminals to pay each other for services; destroyed part of HackBB's database; and sent blackmail notes to many of the site's users. Prior to the theft, Boneless had been a sterling member of the community, posting well-written, useful guides to using stolen credit cards, defrauding online bookmakers, and going underground anonymously. After two years' worth of winning the community's trust, he raided them and took the site down. But it didn't last long -- today, HackBB is back up and running.
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"Look at games like World of Warcraft, Diablo, Dungeons and Dragons, or the original Final Fantasy. In those games, gold is the money, and you often get gold not by doing an honest day's work, but by running around and beating people up and taking their gold. In other words, the entire world of modern fantasy role-playing is a subtle joke on gold's unsuitability as a medium of exchange.
" -Noah Smith
(via Making Light
On Popehat, Ken details the astounding story of Katie Barnett, whose home was burglarized by agents of the First National Bank of Wellston, Ohio, who mistook her house for one that they were foreclosing upon. The bank broke into her house, changed the locks, and got rid of many of Barnett's possessions.
The local police refuse to get involved, and the bank's CEO, Anthony S. Thorne, is refusing to reimburse her in full for her possessions, which were stolen and destroyed by his company. Thorne says that because Barnett can't produce receipts for all of her goods (because who does that?) (and also, even if she had, they'd have been in her burglarized house), and because her recollection of her stuff doesn't match the "inventory" of the bungling bank employees who stole everything she owned, he will not pay her full compensation.
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The Consumer Finance Protection Bureau has released a set of templates for letters to send to harassing debt collectors. These letters contain the binding language required by fair debt collection laws and should cause debt collectors to back off. What's more, they remind debt collectors of the penalties for ignoring such a letter and let them know that you know your rights and are willing to enforce them against the hounds.
New ways to combat harmful debt collection practices
(Image: Chopping off my little finger, a Creative Commons Attribution (2.0) image from nihonbunka's photostream)
OpenCorporates has a data-visualization tool for peering into the corporate tax-evasion structures of big corporations -- subsidiaries nested like Russian dolls made from Klein bottles:
In Hong Kong, there's a company called Goldman Sachs Structured Products (Asia) Limited. It's controlled by another company called Goldman Sachs (Asia) Finance, registered in Mauritius.
That's controlled by a company in Hong Kong, which is controlled by a company in New York, which is controlled by a company in Delaware, and that company is controlled by another company in Delaware called GS Holdings (Delaware) L.L.C. II.
...Which itself is a subsidiary of the only Goldman you're likely to have heard of, The Goldman Sachs Group in New York City.
That's only one of hundreds of such chains. All told, Goldman Sachs consists of more than 4000 separate corporate entities all over the world, some of which are around ten layers of control below the New York HQ.
Of those companies approximately a third are registered in nations that might be described as tax havens.Indeed, in the world of Goldman Sachs, the Cayman Islands are bigger than South America, and Mauritius is bigger than Africa.
Tim Harford's 2011 book Adapt proposes an ingenious regulatory solution to this problem, explaining how it might have been applied to companies like Lehman, whose complex structures drew out the post-bankruptcy mess for years and years. He suggested that if banks were stress-tested to determine how long they'd take to sort out after a bankruptcy, and then required to keep reserve capital necessary to run all operations through that whole period, they would be strongly incentivized to have the most simple, transparent corporate structures. Otherwise, they'd have to tie up billions of dollars in escrow to keep the doors open in the event that it all collapsed.
OpenCorporates | How complex are corporate structures?
Mark Blyth, a delightfully sweary Scottish economist, talks for about an hour to Googlers about the stupidity of austerity as a means of recovering from recession, describing it in colorful, easy-to-grasp language. This is brilliant, accessible and important economics:
Governments today in both Europe and the United States have succeeded in casting government spending as reckless wastefulness that has made the economy worse. In contrast, they have advanced a policy of draconian budget cuts--austerity--to solve the financial crisis. We are told that we have all lived beyond our means and now need to tighten our belts. This view conveniently forgets where all that debt came from. Not from an orgy of government spending, but as the direct result of bailing out, recapitalizing, and adding liquidity to the broken banking system. Through these actions private debt was rechristened as government debt while those responsible for generating it walked away scot free, placing the blame on the state, and the burden on the taxpayer.
That burden now takes the form of a global turn to austerity, the policy of reducing domestic wages and prices to restore competitiveness and balance the budget. The problem, according to political economist Mark Blyth, is that austerity is a very dangerous idea. First of all, it doesn't work. As the past four years and countless historical examples from the last 100 years show, while it makes sense for any one state to try and cut its way to growth, it simply cannot work when all states try it simultaneously: all we do is shrink the economy. In the worst case, austerity policies worsened the Great Depression and created the conditions for seizures of power by the forces responsible for the Second World War: the Nazis and the Japanese military establishment. As Blyth amply demonstrates, the arguments for austerity are tenuous and the evidence thin. Rather than expanding growth and opportunity, the repeated revival of this dead economic idea has almost always led to low growth along with increases in wealth and income inequality. Austerity demolishes the conventional wisdom, marshaling an army of facts to demand that we recognize austerity for what it is, and what it costs us.
Mark Blyth: Austerity - The History of a Dangerous Idea
(via Memex 1.1)
The folks at Dollar Shave Club have a new product out: One Wipe Charlies, a peppermint-scented toilet wipe they claim is better than normal toilet tissue. Their video sure is flashy, but how much more will it cost me? Is this worth the cost?
One Wipe Charlies are selling for $4 for 40 wipes. That's a dime a wipe, and I'll buy the claim that it only takes one. At my house we order our TP in bulk from Amazon: Ultra Plush 3-ply double rolls from Quilted Northern for $25.94 per 48 pack. Shipping included. It's surprising how convenient it is to just have this show up at the door.
Each roll has 176 sheets, and with 48 rolls that comes to about $0.0031 per sheet. If you're allowing a dime a dump, you can run all the way up to 32.5 sheets before you match the cost of a One Wipe Charlie. That's a fifth of a roll! You're probably managing to get the job done in 10-12 sheets, around 3 cents per.
Sorry, Charlie. No fancy marketing is going to get me to triple my budget in this department.
Quilted Northern Ultra Plush 3-ply double rolls, 48 pack at Amazon