The comments section on this Reuters article on George Zimmerman/Trayvon Martin is interesting.  The article was posted on Friday, but it says

This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

The article was published on Friday.  Other stories don’t have comments blocked.

It’s pretty obvious what happened.  There was a heated debate in the comment section.  The moderators purged the comment section and blocked further comments.

That is frustrating.  Mainstream media websites pretend to be open, but they censor and block comments when the discussion gets interesting.  It’s fake openness.

Most people wouldn’t notice that article had comments blocked.  It says “discussion closed” rather than “We’re censoring the comments because people are posting things we don’t like.”

That’s a common mainstream media Internet censorship pattern.  They block comments and purge the comments section, when an article attracts “inappropriate” comments.

This story was interesting.  After the first day of trading, Facebook’s IPO is trading near the IPO price of $38/share, closing around $38.25.

A fool says “Facebook’s shares didn’t spike on the first day of trading.  Therefore, the IPO was a failure.”

Actually, it means that the shares were correctly priced.

Suppose that Facebook sold $10B of equity at the IPO, and the share price doubled on the first day.  In effect, Facebook sold its shares for $10B less than they were really worth.  If that happened, $10B was stolen from the pre-IPO shareholders to the underwriters and people who bought the IPO.

Also, the underwriters get the “green shoe”, an option to buy more shares at the IPO price a few months later.  That call option is *VERY* lucrative.

Facebook is a successful business with lots of users.  However, it already has a $100B valuation.

I interviewed at a profitable web business, and asked “How much revenue do you make per user per year?”  They answered “$3-$5 per user per year”.  Assume that Facebook makes $5 per user per year.  Even if every person on the planet created a Facebook account, that’s only $15B revenue per year (assuming 5B potential users).  Also, ad sales in 3rd world countries aren’t worth as much as ad sales in the USA.  If you correct for that, Facebook’s “max revenue” makes it hard to justify a $100B valuation.

I never saw the attraction of Facebook.  I’d rather write on my personal website than Facebook.  I’d rather have people go to “realfreemaket.org”, than go to facebook.com/fsk.  It’s better to build a personal website/brand, than be just another page on Facebook.  Also, Facebook has a “real names” policy.  I would not be allowed to create an account with username “FSK”.

Facebook doesn’t have a lock on its users.  There is a risk that 5 years from now, someone else will come up with something better, and Facebook will lose its position.

$100B is a very high valuation for Facebook.  With lots of media hype surrounding the IPO, that makes it easier for insiders to cash out, selling to unsuspecting fools and retail investors.  If the pre-IPO shareholders are smart, they should cash out as much as they can.

I still say that gold is a better investment than the stock market.  I only know of one stock that did much better than gold over the last 10 years, Apple (AAPL).

Facebook’s shares did not pop on the first day of trading.  That doesn’t prove that the IPO was a failure.  When an IPO pops on the first day of trading, the pre-IPO shareholders got ripped off.  At a $100B market cap, that’s a high valuation.  Gold will almost definitely be a better investment than Facebook over the next 10 years.  The mainstream media hypes the Facebook IPO, because a lot of banksters and insiders are making money off Facebook.

It’s perversely entertaining, to watch professional athletes fail miserably.

It’s enjoyable to watch the Lakers and Miami lose, because they were big payroll teams and the superstars acted like they were a lock to win.

In MLB, it’s amusing to see the Angels, Red Sox, and Phillies in last place.  They are big payroll teams who wasted their money.

It’s amusing to see Pujols batting .200 after signing a $240M contract.  It would be entertaining to see him either failing miserably or batting .400.  If he were batting .300, it wouldn’t be as entertaining.  Similarly, the Rangers and Nationals are interesting, because they’re playing well.

It’s amusing to see Tiger Woods struggle to make the cut.  It’s entertaining to either see him struggle, or win.  If he was consistently finishing 10th, that wouldn’t be interesting.

I don’t follow much sports, but I do a little.  It’s always entertaining to see someone fail miserably, or be spectacularly successful.

This story was interesting.  Allegedly, Microsoft has software that will interfere with BitTorrent swarms.

I looked at it, and I realized “They’re doing it wrong.”

Here’s how to disrupt a BitTorrent swarm.  Write a client that serves data that passes the “hash check”, but is otherwise garbage.

I’m surprised nobody does that.  Maybe I don’t understand the BitTorrent protocol correctly, but that should work?

Even if someone did that, people would add hash re-checks, to verify which clients are sending bad data.  If a client sends carefully-calculated bad data, that should disrupt public trackers but not private ones.  On a private tracker, the misbehaving user would be identified and banned, although BitTorrent clients would need to be extended to remember which piece came from where.

I already mentioned that JP Morgan Chase lost $2B on derivative trades.  This article was interesting.  There may be shareholder lawsuits against JP Morgan Chase, regarding the $2B loss.

As I mentioned before, suing the government is pointless.  Government workers are protected by “sovereign immunity”, unless their crime is truly egregious.  When you sue the government, any victory is not paid by the government workers, but by the government’s general fund.  Everyone else pays higher taxes, to pay for the verdict.

For example, suppose that a policeman shoots and murders you, saying “I thought he had a gun!”  The district attorney says “It was a reasonable mistake!”, and refuses to pursue criminal charges.  Your relatives file a “wrongful death lawsuit”, and win $25M.  The $25M isn’t paid by the policeman who murdered you, or by the police department’s budget.  It’s paid from the government’s general fund.  In a city of 5M people, in effect, every person pays $5 more in taxes, to pay for your verdict.  Your relatives got $25M, but it’s functionally equivalent to stealing $5 from every other person living in the city.

The government workers don’t pay the damages themselves.  Therefore, suing the government provides zero incentive for government workers to behave.  Even if there is a lawsuit loss, they aren’t paying it themselves.

There shareholder lawsuits are similarly ridiculous.  Why?  The cost of the verdict is not paid by the CEO or Board of Directors or employees.  The cost is paid by the corporation!  In the fine print of a CEO or BoD contract, it says “The corporation will reimburse you, if you get sued based on your work for us.”

If JP Morgan Chase shareholders win $2B in a shareholder lawsuit, that money doesn’t come from the CEO or Board of Directors.  That money comes from JP Morgan Chase’s shareholders!  The shareholders are suing themselves!

It does make a slight difference, if you already sold your shares.  In that case, a former shareholder is suing the current shareholders.  However, the damages in these lawsuits tend to be pennies per share.  The only people who profit are the lawyers.

For another example, there’s a Bank of America class action lawsuit, regarding the buyout of Merrill Lynch and improper disclosure.  I own the same number of shares of Bank of America now as I did a few years ago during the merger.  In effect, I’m suing myself (with the lawyers getting a cut).  If I “win” $0.05 per share in that class action lawsuit, I’m losing $0.05 per share from the shares I already own. plus an additional loss of $0.05+ per share for legal expenses.

This story was interesting.  Executives at MF Global took out a $170M “insurance policy”, to cover their legal expenses if MF Global failed and they were sued.  The bankruptcy trustee claims that the $170M belongs to the customers.  That seems obvious to me, but a Statist judge might rule otherwise.

Before MF Global went bankrupt, the executives spent the shareholder’s money to buy insurance to cover themselves if MF Global went bankrupt and they were sued.  That’s crazy!  Due to the way insurance and bankruptcy law work, that enables the executives to set aside pre-bankruptcy money to pay themselves after the bankruptcy.  If the premium on the insurance policy were $200M, the executives would buy it anyway, because it provides money if the corporation goes bankrupt.

MF Global no longer exists, so MF Global can’t reimburse the executives for their loss.  Via that “insurance” loophole, the executives managed to save some money.  You shouldn’t be able to buy insurance that covers criminal negligence.

It is pointless to sue the government.  The money is not paid by the State employees who misbehave, but rather by all the other taxpayers.  Similarly, it’s pointless for shareholders to sue executives.  The money is not paid by the executives, but rather by the other shareholders.  In this manner, State insiders have nearly zero accountability when they do bad things.  This is true for people who work directly for the State, and for State insiders who control large corporations.

This story was funny.  The MLB baseball game MLB2k12 had a “perfect game challenge”.  If you pitched a perfect game, you were eligible to enter a contest for $1M.  The code had countermeasures to prevent cheating, but there was a gaping loophole.

You were allowed to make substitutions before the start of the game, including the opposing team!  You could take out the other team’s best hitters, and replace them with .200 average scrubs!  That’s cheating, but the game allowed it and the rules allowed it.

That totally ruins the integrity of the contest.

I went for a few job interviews where they were organizing Internet gambling.  I questioned the legality, but they said “The game has no random element.  Therefore, it’s legal.”  I pointed out “People will cheat!”, but they were not concerned.

People will cheat even when no money is involved.  People cheat at World of Warcraft.  When money is involved, people will find another way to cheat.

Even though the game has countermeasures against cheating, there still will be loopholes.  If you can run a game on your hardware, some clever hacker will always figure out a way to cheat.

That was amusing.  People cheated at the MLB2k12 “Perfect Game Contest”, due to a loophole in the game and the rules.  People will always find a way to cheat, when money is involved.  People will even cheat when there’s no money involved.

When applying for jobs, many corporations make you fill out a webform first.  They all seem to use the same software, with the same bugs.

They ask you to fill out “country”, and select from a listbox.  Instead of making “USA” the default option, they make you scroll all the way down to the ‘U’s and pick “USA”.  Every website has this bug.

Why not make USA the first choice?  Or, look at my IP address and fill it out by default?

Note: Due to a defect in the rawr plugin, the formatting for this post shows up wrong on the blog homepage, but it does show up correctly if you view it as a single post or in a RSS reader.

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David Z commented on About FSK.

Hey FSK I just sent you an email with a question. Wanted to leavea comment here just in case you don't check your email regularly.

I stopped reading the old fsk2006@gmail.com. I've been considering setting up gmail on my realfreemarket.org domain, but didn't get around to it yet.

I'll make my answer a post also.

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Dave Edelhart commented on node.js Is VB6 - Does node.js Suck?.

I can't see a single thing to suggest that the author actually TRIED Node.js. Regardless of the outcome, your method is to paste theory onto theory. You are "Thinking about" something which is easily testable. There is a reason they don't give degrees in "Computer Philosophy".

Richard commented on node.js Is VB6 - Does node.js Suck?.

While it does seem like you might've dealt with some idiots in the situation you described in your article, I don't think your conclusion about node.js is very fair.

When I write web applications I usually use PHP. I have a lot of experience with PHP so I can write decent scripts quickly and easily. I'm sure there are valid criticisms of PHP, but many of them (there are too many function aliases! it's sloppy! etc) are irrelevant to somebody who knows the language.

I recently started working at a new job with a team that's making use of node.js for some of their web applications. Since I barely even knew what it was before I started, I've spent the last few days researching and learning to use node. I was, like you, skeptical of node at first, but closer inspection and further acquaintance has shown that it is actually a nifty piece of software.

For people used to developing in PHP, node might take some time getting used to. It's been a little frustrating at times. But contrary to what you might've said, node is actually very powerful. It has very high performance, rivaled mainly by C/C++ and Java (yes, Java isn't the slow piece of shit it used to be nowadays). In fact, the company I work for uses it precisely for this reason and also because it allows for rapid development. Better yet, you can actually incorporate C or C++ code into your node scripts, which opens the door to capabilities that might not be attainable using javascript solely. As for your comparison of node to VB6, I can tell you that node is cleaner and more sophisticated than VB6 was. A shitty amateur who could poorly write node-based scripts that work could also write shitty PHP or ASP scripts.

I can only encourage you to avoid assumptions and sweeping generalities. While it is true that staunch proponents of certain technologies can often be ignorant nutjobs, the fact that there are node evangelists doesn't mean that node itself is bad. Try node out for yourself, should you desire, and rid yourself of these preconceived notions, lest you stoop to the level of the uninformed "psychopaths" you so enthusiastically denounce.

Those specific people were doing it wrong. They described their product to me, and I know I could have built it by myself in a month. It took them more than 4 months, and their website isn't that great.

I was involved in a Rails disaster. They weren't using Rails correctly, and Rails was unsuitable for that project, and Rails itself is a POS. I researched node.js, and it reminded me a lot of Rails. There was a lot of hype, but not so much in terms of useful documentation. For example, the php.net website is much easier to use and search, compared to anything I found for Rails or node.js.

As a practical matter, I can refuse all Rails and node.js interviews, and there still will be plenty of other jobs. I briefly researched node.js, and concluded I didn't like it. Some of the comments here are really hostile, which is interesting. I just wrote a summary of that interview and my conclusions after briefly researching node.js.

Some people are evil. An evil person would say that I'm evil. I'm confident that I'm mostly in tune with the truth now. That's why Rails and node.js are popular even though they suck. They are attractive to evil people, who evaluate based on hype and not technical merit. That's also why people are so hostile. If you're running a scam, you're very hostile to people who question your scam.

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cogitansiuvenis commented on Real Money!.

It's funny. I have a special needs uncle that loves coins, his favotires where junk silver, wheat pennies, and war nickles. I remember my grandmother saying that he started collecting them the moment the government stopped minting them. Every silver coin he found he kept, and he would go to the bank every week to get rolls of quarters, nickels and dimes go through them and remove the junk silver. At the time late 60s and early 70s, people would give him weird looks and just attribute it to his 'condition'. The joke ended up being on them. He did this for nearly every week for forty years and when we went through his bags, and I mean dozens of bags, of junk silver coins and it turns out he had something on the order of 10-15 grand worth that he had amassed.

10-15 grand face amount, or fair market value?

Someone estimated that he made about $5/hr (tax-free!) going through bags of pennies and picking out the pre-1982 ones.

It's a more effective use of my time to get a regular job and buy silver, than look through bags of coins.

The interesting bit is that I can usually immediately recognize junk silver! I get 1-2 pieces per year. That was my first quarter. I got a few war nickels and a couple of dimes.

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Justin commented on Trademark Foolishness - "Ball So Hard University".

A trademark lasts forever, but its conditional on you legally attacking people using what is trademarked. If you don't you lose it.

That's also true for copyright. If you don't enforce it aggressively, a court may rule you abandoned it.

That's one really offensive bit about State law. Copyright law and trademark law force "owners" to aggressively go after every infringement, no matter how minor.

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Anonymous Coward commented on Annoying Windows UI Flaw.

If you were a real man you would use FreeBSD and not Windoze.

Justin commented on Annoying Windows UI Flaw.

I once moved our entire 8gb source tree, complete with branches and tags. Thanks windows.

commented on Annoying Windows UI Flaw.

Ctrl + Z FTW!!!

That doesn't always work. You may not notice the files got moved accidentally, and moved on to other things.

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cogitansiuvenis commented on Disposable Phone.

I was just thinking about this the other. More and more consumer items are built, or rather, engineered to fail. They are designed to last only as long as the next product cycle, or when the companies legal obligation ends. Just look at housing today. I currently rent out an old house that was built at the turn of the last century, it creaks and groans, but the beams are strong and the walls are thick. The house was built to last a long time. We've made amazing advances in technology, and one of them was the ability to use engineering to improve the structural design of buildings. However, rather than couple these new innovations with time tested material they pair these new methods with cheaper materials. I've seen houses built only a few years ago that would not last a decade without extensive retrofiting and constant maitennance.

It's a symptom of a corrupt economy.

In a free market, if X makes a lousy product but Y makes a great long-lasting product, then X loses customers to Y.

If you have a monopoly, you maximize your profit by making a product that breaks after a certain time. If you build a car that lasts 20 years, you only sell 1 car every 20 years. If you build a car that lasts 5 years, then you sell 4x as many cars and make 4x the profit.

Suppose that you used to make a great product, but now make garbage. People remember that it used to be good, and still buy from you. The State restricts competition. Someone else can't say "Hey! He's making a lousy product! I'll compete with him!" For example, the auto industry is so inefficient. Why don't a group of clever college kids start a new car manufacturing business? The answer is "regulations and State restriction of the market".

The State has removed the "market penalty" for making a lousy product. Therefore, most corporations have lousy quality.

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Anonymous Coward commented on JP Morgan Chase, The "London Whale", "Voldemort", And A $2B Loss.

Mark Knopfler wrote the song "Money For Nothing".

Its title seems to concisely summarize your post.

Anonymous Coward commented on JP Morgan Chase, The "London Whale", "Voldemort", And A $2B Loss.

Below is the URL of a very, very cool song about other problems with our monetary system and economy. The singer talks about how we are all underpaid and too dependent on bank loans. Also nobody mentions that the solution to high house prices is to lower them, not to think up ways for easier credit.

There is a lot of information in this song that can be missed. There is just one line saying "private banks print the public money". This is an important point. Printing money from thin air causes inflation, which is paid by all workers and savers. So why pay interest to banks, when the whole population pays for the new money?

http://www.youtube.com/watch?v=37eqoYbj1QM

Robert Caro was on Thursday’s episode of The Daily Show.  He was promoting his book, a biography about Lyndon Johnson.  He won two Pulitzer prizes.  One was for his work on Lyndon Johnson.  The other was for work on Robert Moses, a politician in NYC.

When a “journalist” writes about politicians, he’s writing propaganda for the State.  Then, Robert Caro gets a Pulitzer prize, reinforcing that it’s a good career move to write propaganda.

Robert Caro is saying “Isn’t it wonderful that we have these great leaders to make all our decisions for us!” rather than “They’re a bunch of criminals!”

He was writing about some of the nasty things Lyndon Johnson did.  However, he was extremely negligent, to not mention “Lyndon Johnson might have organized Kennedy’s assassination.”  He briefly indirectly mentioned that point and ridiculed it.

It’s pretty obvious that his book is complete propaganda and nonfiction.  The book is otherwise factually accurate, but doesn’t discuss the most important thing that Lyndon Johnson did.  In fact, Bobby Kennedy and Jacqueline Kennedy probably suspected he organized the murder, which explains why they were so hostile towards him.

It’s dishonest to write about Lyndon Johnson, without seriously discussing “He might have organized Kennedy’s murder!”  It reminded me a lot of the Pat Tillman book, where the author didn’t mention that Pat Tillman may have been assassinated.

There’s another important point regarding the Kennedy assassination.  Most people argue about details of the bullet that killed him.  It is much more important to ask “Why was Kennedy killed?”  He wanted to end the war in Vietnam, knowing it was a boondoggle and a huge profit for military contractors.  He wanted to reign in the CIA.  Most importantly, he realized that the Federal Reserve was evil and was challenging the banksters.

Whenever you see State “journalism”, it’s important to ask “What’s the propaganda?”  In this case, it was pretty obvious.  Robert Caro is helping cover up Lyndon Johnson’s role in murdering President Kennedy.  He wrote a book that is otherwise 100% factually correct, but omits something very important.  By writing a book that’s 100% correct except for an important omission, that helps cover up the big lie.  Robert Caro probably really believes that President Johnson didn’t organize the assassination, which helps make him a more effective liar.

This story was interesting.  A trader at JP Morgan Chase lost $2B.

The trader, Bruno Iksil, had amusing nicknames.  He was called “The London Whale” or “Voldemort”.  That’s interesting, that banksters think “Voldemort” is a cute nickname.

How did he lose $2B?  The trader was only supposed to be hedging.

If you hedge, you’re trading huge nominal positions that are supposed to cancel.  It’s very tempting to stop hedging, and start making bets.  If you’re right, you get to keep the profit.  If you’re wrong, you get a bailout.

If Bruno Iksil was running his own small business, there’s no way he would be allowed to take $2B bets.  All of JP Morgan’s assets are placed as collateral, for every trader’s bets.  This enables traders to borrow cheaply to finance their gambling.  This exploits the concept of “too big to fail”.

What was he trading?

The Wall Street Journal has reported that the trader, Bruno Iksil, had been placing bets on an index called “CDX.NA.IG.9″–the largest of a panoply of credit indices produced by data provider Markit.

I’ll translate this into English.

A Credit Default Swap (CDS) is a derivative based on a bond.  A CDS is paid off if the bond defaults.

After the Greek restructuring, there was a controversy over what the exact CDS payout should be.  A group of banksters who were short a lot of CDSs, voted on what the payout should be.  Given that CDS owners got robbed after the Greek restructuring, you’d have to be a fool to buy CDSs.

A CDS is a highly leveraged derivative.  For a CDS on $1B of bonds, the premium might be $10M-$50M/year.

That’s the scam AIG’s CDS desk was running.  They were selling lots of CDSs.  When the economy was booming, they were collecting premiums with no expenses or collateral requirements, making a huge profit.  When the economy crashed, they lost a lot of money.  However, the CDS traders didn’t have to give back the bonuses they made during the boom.  All of AIG was placed as collateral for the CDS trades.  That’s the exact same “too big to fail” scam.  When AIG was bailed out, the money actually went to Goldman Sachs’ creditors, another classic scam.  When Greece was “bailout out”, the money didn’t go to Greece.  The money actually went to the banksters who owned Greek bonds.

A CDS on a single bond is a “first-order derivative”.  It’s one order removed from a tangible asset, one specific bond on a specific corporation.

The “CDX” index is an index of CDSs.  It’s a derivative of a derivative.  That’s a 2nd order derivative.

Bruno Iksil was “placing bets on the CDX index”.  In other words, he was trading calls and puts and futures on the CDX index.  It’s a derivative of the CDX index.  It’s a derivative of a derivative of a derivative.  That’s a 3rd order derivative.

Summarizing, Bruno Iksil was trading 3rd order derivatives.  It’s almost completely removed from tangible assets.  He was pretending to be hedging.  He was actually gambling.

Why do people trade these things?  It comes from the Federal Reserve and negative interest rates.  You can borrow at 0% to buy a bond.  You can borrow at 0% to buy a CDS, in effect borrowing at 0% to buy something where you borrow at 0%.  You can buy futures and options on a CDS index, in effect borrowing at 0% to buy something where you borrow at 0% to buy something where you borrow at 0%.  You’re stacking up leverage on top of leverage on top of leverage.  It’s all fueled by the Federal Reserve credit monopoly, paper money, inflation, and negative real interest rates.

In most years, Bruno Iksil made profits of $100M.  It’s obvious what he was doing.  He was using a trading system where the results were “Make $100M 90% of the time, lose $2B 10% of the time.”  When you’re using options and derivatives, it’s very easy to do such a thing.  It was hidden behind fancy derivatives and calculations, but that’s what he was actually doing.

During that 90% of the time, Bruno Iksil was making a nice salary and bonus.  He doesn’t have to give that back, after losing $2B.  That’s the “advantage” of gambling with other people’s money.

In effect, some of the TARP bailout money paid for Bruno Iksil and his gambling.  If you always get bailed out, why not pursue a system where you make a small profit most of the time, and lose a bundle once in a while?  The banksters set up the system that way, on purpose, because that maximizes the amount they can steal.

For example, if you do nothing but sell unhedged way-out-of-the-money calls and puts, you can do that.  Most of the time, you’ll collect the premium and make a free profit.  Once in awhile you go bankrupt, but you say “Whoops!  Mistakes happen!”  That isn’t exactly what Bruno Iksil did, because that would be too obvious.  It was effectively the same.  It was hidden behind a complex series of 3rd order derivative transactions, “hedged” with some 2nd order and 1st order derivative transactions.  You can’t hedge perfectly.

Bruno Iksil lost $2B of other people’s money.  He was pursuing a system where he made a nice profit most of the time, but once in awhile lost a ton of money.  It’s very easy to do that with derivatives.

Bruno Iksil was trading a 3rd order derivative.  It was completely removed from tangible assets.  It was pure gambling.  It had nothing to do with the productive sector of the economy.  The official excuse is “Blame Bruno Iksil.  He’s just one bad apple.”  The real evils are is paper money, inflation, a central bank credit monopoly, and limited liability incorporation.  As long as those evils continue, banksters will continue to rob other people.  Even if you don’t invest in JP Morgan Chase or bank with them, you’re still financing their theft via inflation and taxes.

There was an amusing conspiracy theory.  This loss could have been swept under the rug.  It could have been buried off-balance-sheet.  This loss was announced to back more complicated regulations.  Complicated regulations ultimately benefit banksters and insiders.  Unless the Federal Reserve is eliminated, all other banking reforms are smoke and mirrors.  The Federal Reserve is one big price-fixing cartel.  The Federal Reserve finances all bankster corruption.  The Federal Reserve is the underlying reason that banksters earn huge salaries, even though they produce nothing useful and actually destroy wealth.