Thursday, April 03, 2014

FLASH BOYS versus SKYNET – How Wall Street may be even more dangerous than Michael Lewis thinks

michael-lewis-flash-boysMichael Lewis's new book, Flash Boys: A Wall Street Revolt, has certainly gathered tons of well-deserved attention. He was on the Daily Show and his interview on NPR is an absolute must-listen podcast in which you'll painlessly (except for an angry gut reaction) learn an awful lot about how Wall Street is (surprise) cheating the rest of us.

Lewis focuses especially on an area about which I've inveighed heavily for two years… the perils of High Frequency Trading.

You don't have time for books or podcasts? Then if you read or even skim any in-depth article this month, make it this one… an excerpt from FLASH BOYS about how the world of fast-pitched Wall Street trading has become rife with computerized cheating, so pervasive that any justification is impossible through the usual rationalizations of "market forces" and "correct price equilibration." No little guy can win the full value of his trades. No retirement fund manager can use keen insights to maximally benefit her clients without paying a large "tax" or overhead in stolen value.

Excerpt-Flash-boysLewis's article appears to have a relatively happy ending, with the creation of a new trading center that corrects some of the grotesque advantages of behemoth banks and super-empowered Hugh Frequency Trading (HFT) operations. And I hope the sunny optimism of the final paragraphs comes true! (Failure to correct the cheating will lead us to French Revolution levels of anger, with tumbrel-riding lords losing much more than their "genius" predatory gains.)

What is more likely is a moderate series of reforms that -- like those our ancestors performed under Teddy Roosevelt -- restore just enough fairness and flatness and wary trust to keep it all in motion for another generation… and maybe restoring a bit of strength to the beleaguered middle class.

Michael-lewis-stock-riggedIndeed, the hoo-row over this one book appears to be affecting markets! It has prompted a few traders to bet against shares of the Nasdaq OMX Group, the parent of the NASDAQ exchange. One analyst estimates that about 25% of Nasdaq's revenue, and about 33% of earnings, are attributable to high-frequency trading. The Wall Street Journal offers: The Responsible Way to Rein in Super-Fast Trading

If HFT is reined in - maybe with timing measures but far better with a tiny Tobin Tax -- then this one particular cheating mode will be controlled.

== Would that solve it? ==

But the danger remains… that we might return to the normal patter of 99% of human cultures across 6000 years. And that is the lesson of this book. Those who manipulate and distract us from getting mad and reforming capitalism are not only our enemies… but they are the enemies of the very same flat-fair open capitalism that they claim to admire.

Contradiction-Capital-MarketsRationalization and excuse-making for the predatory depredations of a monopolistic cartel of financial "wizard" parasites.

Alas, the relatively optimistic tone of FLASH BOYS must be viewed with caution. The "solution" of a new, neutral exchange can easily be perverted by the next round of cheating -- both Adam Smith and Karl Marx called cheating the ultimate enemy of fair and flat and free competitive and creative markets.

Indeed, so long at the stock exchanges are controlled by closed cartels of conniving "seated members" there will be an inherent incentive for them to trade with each other, commission-free, which is the essential unfairness of HFT… and not the timing factor that Lewis dwells upon.

TransactionFeeTerminateI have also offered another, more science fictional but chillingly plausible reason to fear the many billions of dollars that major trading firms are pouring into the HFT versions of artificial intelligence (AI). It is a failure mode that grown more credible by the day. It could wind up wreaking devastating harm.


40 comments:

Carl M. said...

Back in the good old days, we had market makers and large spreads. We also had a minimum commission that was quite high by modern standards.

Unless you can show that bid/ask spreads have widened compared to the 1970s, I suggest you are turning into the liberal equivalent of Gary Allen.

Robert J Frey said...

The problem is not high frequency trading but CHEATING. Merely accessing prices and executing trades quickly. i.e., reducing latency, is just sound procedure because the greater the latency between decision and execution, the greater the new information that accumulates adding noise to the result. A high frequency strategy can be relatively benign. For example, statistical arbitrage is a strategy that makes money by providing liquidity. When that liquidity is needed, then stat arb makes money. When not, then it loses money. Nothing either uneconomic or unfair going on. The high frequency traders who are front running, or stuffing trades, or otherwise manipulating the market are, no mistake about it, very bad people and need to be stopped. If the only way to do so is to add a transaction tax, then it is worth doing so, but that option is not without its costs. The additional friction of even a tiny tax will increase bid-ask spreads and reduce liquidity. By the way, the "good" high frequency guys will not be unduly affected by such a tax. In fact, going back to the stat arbitrageurs. they will probably make the same or even more money under such a regime because short-term mispricings will be larger by a factor consistent with the size of the tax. (Disclosure: applied math prof. and former hedge fund researcher/manager)

David Brin said...

Carl M you actually buy into the mythology that "narrowing the spread" is somehow a sacred goal? I have never once seen a study that shows how that helps companies to raise capital or helps investors, an iota.

A moderate spread means the buyers and seller disagree over the price. Yet they do come together at last to trade. One will be more right than the other, who will lose. Boohoo. That's the way things are in nature. What HFT does is parasitically steal the enthalpy difference …

… but I described that in my HFT article and I do not have time now.

Robert Frey, so long as Big Houses have both commission free trading via seated membership cartels and the advantages of billion dollar systems, there is no fairness.

Anonymous said...

HFT is electronic front running. It serves no market purpose, provides no liquidity, and is not market making. HFT operation uses fake orders to ping the market, much like a sonogram takes an image, and then trades with that info. Essentially it measures true order flows, and then arbitrages against it, thereby raising the cost of each transaction...however little. It is an invisible tax on the free markets by Wall Street Barons and MIT math geeks and that is the reason the FBI is now investigating HFT.

Anonymous said...

The handle for above is@lawbla. I'm a long time trader with terrible grammar. pardon.

Tom Crowl said...

Good points David! Its also important to note that spreads narrowed largely because of the rise of electronic trading... and while HFT is a type of electronic trading (a corrupt type)... spreads actually began to narrow before HFT arose.

And I believe most who look at the issue don't believe ending HFT would lead to a return to those wide spreads.

LarryHart said...

There is a recent novel by Robert Harris (sorry, I'm totally blanking on the title) which revolves around a concept eerily similar to what you suggest in the main post.

LarryHart said...

Dr Brin in the main post:

(Failure to correct the cheating will lead us to French Revolution levels of anger, with tumbrel-riding lords losing much more than their "genius" predatory gains.)


The WSJ editorial by Charles Koch may go a long way in that direction.

Jumper said...

We can hire an incorruptible guy for $12/hr to measure those loops of fiber optic cable to make sure they're as long as advertised.

Tony Fisk said...

Naive thought on flash trading:

Place order to buy [flash/buy!] shares...
and don't [flash/sell...?] proceed with the trade.

Seeking to profit through mark-up, I don't think the HFT brigade are set up to hang on to shares but, as I said, it's a naive thought.


Carl M. said...

Narrowing the spread is not a sacred goal. It's not worth destabilizing the markets by giving arbitragers dangerous leverage, etc.

Now anonymous makes an interesting point. I would favor not a Tobin tax, but a requirement that bids/asks be binding for a reasonable period of time. Pinging the market with spurious offers is playing hogs of the road and should be penalized.

The crime is not speed or unfair advantage. The crime is lying.

David Brin said...

Carl, your approach deals with one trick, one time and lets them move on to the next and the next. HFT must be killed. Not one advantage has ever been put forward that is anything more than a voodoo incantation. Let them pay 0.1% on each transaction. Human beings will not notice… and Skynet won't happen.

Robert said...

Dr. Brin, in regards to the previous post with the dark meteorite caught on film... you obviously didn't watch or even fully read the article. Footage from the helmet-cam shows the airplane landing under the skydiver. The other skydiver was on a different trajectory than the rock. And the rock was falling at a significant speed - the camera managed around a half dozen or so shots of it falling and was able to get some minor detail on it.

Also, seriously think about that for a second. How could a pilot or another skydiver have managed to throw a rock that missed within a couple meters and yet was moving at a fast speed so it streaked by the guy? And no doubt you're now going to now claim "I was being snarky, why didn't you cue in on that?" or some such BS.

(For people who didn't see the post in question, here's a URL to the article. The primary video is subtitled, just as a warning: . http://www.nrk.no/viten/skydiver-nearly-struck-by-meteorite-1.11646757 )

Rob H.

Daniel Duffy said...

As for yesterdays' SC decision in McCutcheon v FEC it will probably come back to haunt the GOP:

http://www.theatlantic.com/politics/archive/2014/04/how-em-mccutcheon-em-could-come-back-to-haunt-the-republican-party/360063/

"Something similar sometimes happens with political parties and the Supreme Court. In the early decades of the 20th century, conservative Republican presidents appointed conservative Supreme Court justices who went on to strike down chunks of the New Deal. For Republicans, this turned out to be a problem. To adapt to a political environment transformed by the Great Depression, the GOP needed to stop rigidly opposing federal intervention in the economy. But the Supreme Court wouldn’t stop, and Franklin Roosevelt shrewdly used the justices as his political foil. Republicans had created something they could no longer control.

A few decades later, something similar happened to Democrats. In the 1950s and 1960s, Democratic (and some Republican) politicians appointed justices and lower-court judges committed to expanding civil liberties and civil rights. But by the 1970s, American politics had shifted to the right. Democrats suddenly needed to show they were tough on crime and respectful of traditional morality. Judges, however, kept pushing a liberal agenda, thus giving Republicans ammunition to use against their Democratic foes...

But Obama won anyway, in part because he raised so much in increments of less than $200. And in part because he successfully painted Mitt Romney as a rich guy, surrounded by other rich guys, who couldn’t understand the struggles of ordinary Americans. Romney’s private-equity background, and his 47 percent comment, made himself a particular easy target. But the GOP’s country-club reputation remains its single biggest political liability. A February 2013 Pew Research poll, for instance, found that while Americans were six points more likely to say that Republicans have “strong principles” than Democrats, they were 16 points more likely to call the GOP “out of touch with the American people.” A CNN poll this February found that while Americans were six points more likely to say Democratic policies favored the middle class than the rich, they said Republican policies favored the rich over the middle class by a whopping 46 points....

In the 1970s, a liberal Supreme Court fueled right-wing cultural populism. Today, a conservative Supreme Court is breeding left-wing economic populism. For the contemporary GOP, the danger of looking like the plaything of America’s super-rich outweighs the benefits of increased support from America’s super-rich. Even in the age of the Roberts Court, winning elections generally requires more than just raising more money. It requires winning more votes."

Daniel Duffy said...

That is not to say that Oligarchs like the Koch's don't want to destroy democracy if given the chance. So in the meantime, perhaps some talented Sf writer (hint) should rewrite Goldstein's book in "1984" and call it the "Theory and Practice of Oligarchic Capitalism":

"But it was also clear that an all-round increase in wealth threatened the destruction — indeed, in some sense was the destruction — of a hierarchical society. In a world in which everyone worked short hours, had enough to eat, lived in a house with a bathroom and a refrigerator, and possessed a motor-car or even an aeroplane, the most obvious and perhaps the most important form of inequality would already have disappeared. If it once became general, wealth would confer no distinction. It was possible, no doubt, to imagine a society in which WEALTH, in the sense of personal possessions and luxuries, should be evenly distributed, while POWER remained in the hands of a small privileged caste. But in practice such a society could not long remain stable. For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupefied by poverty would become literate and would learn to think for themselves; and when once they had done this, they would sooner or later realize that the privileged minority had no function, and they would sweep it away. In the long run, a hierarchical society was only possible on a basis of poverty and ignorance."

Sound familiar?

Or perhaps a whole parody of 1984 with Big Brother Company monitoring your every keyboard stroke and workers being subjected to the 5 minute Sales Pitch, and the Department of Love being Human Resources...

Daniel Duffy said...

As a practical matter, McCutcheon v FEC may not amount to much due to the law of supply and demand and the negative results that always occur from an over saturated media campaign.

There are only so many commercial minutes that can be bought even during an election year. All this money flooding the market will do is drive up the price for political commercials until they cost more than a 1 minute during the Super Bowl.

Meanwhile, consumers/voters being inundated with such ads will simply tune them out and get sick of them. Besides, the market for commercial TV and radio is growing smaller every day - most people get their entertainment via the internet and pay cable/satellite.

So let the oligarchs piss away their money.

Alex Tolley said...
This comment has been removed by the author.
Alex Tolley said...

There is so much money to be made (or lost) in financial market casinos that many forms of cheating will emerge. Insider trading is one example, and what constitutes this is a very gray area.

Another, of course, was the packaging of mortgages in a way guaranteed to fail and allow proprietary bets against it. Yet another was the Libor fixing scandal. The list is almost endless, yet the number of perps actually caught and jailed is tiny compared to teh cheating that goes on, and so far not a single bank exec has been even indicted, let alone jailed.

Arguably the 'big fix' is buying legislators to serve the interests of the plutocracy. Looting on Wall Street, London, Beijing is just enabling.

David Brin said...

Robert that "meteorite" came from the same direction in the sky that we later see the cameraman's friend arriving! It was blatantly tossed by the other skydiver!

locumranch said...

You're all ignoring the 'elephant-in-the-room', that the stock indexes which we all commonly identify as 'The Stock Market' were never intended to be either fair or equitable because they are For-Profit business enterprises.

The Dow Jones Industrial Average is 90% owned & operated by the CME Group Inc, a For-Profit publicly traded business, which also owns the 'Chicago Mercantile Exchange'(CME), CBOT, NYMEX and COMEX, the S&P 500 is owned & operated by the For-Profit McGraw-Hill Financial, and the New York Stock Exchange (NYSE) and Euronext are owned & operated by the For-Profit Intercontinental Exchange Group, Inc. (ICE), which also owns and operates a total of 23 regulated exchanges and marketplaces.

But it doesn't stop there. As publicly traded enterprises, these stock market index companies are owned & operated by other big financial institutions (Majority Stockholders) like American Fund Washington Mutual, the Vanguard Group, JP Morgan, major banks, insurance companies & even proxies of the other non-aligned stock market indexes (CME, ICE, McGraw-Hill, etc) which then utilize the 'The Stock Market' as a means of generating profit.

In other words, these corporations don't have to 'cheat' in order to make a profit because the same for-profit companies that regulate 'The Stock Market' are owned & operated by the same companies that use the 'The Stock Market' as a means of generating 'profit' AND the same for-profit companies that own or control trade-worthy stock also regulate 'The Stock Market as the means of generating 'profit’ ...

Which is why it 'takes money to make money ‘, why 10% of the population 'owns' 90% of the world's wealth and why most of us are screwed, blued & tattooed by a circular financial system.


Best.

David Brin said...

Daniel Duffy that is one scary Orwell quote.

Robert said...

Then that guy has the world's best arm seeing that footage of the other skydiver is smooth (the video camera shooting was able to capture enough frames-per-second that he was not a stop-motion blur), while the rock was moving at a significant clip. Nor had that skydiver yet deployed his parachute, which means that if he did throw the rock he should have passed within half a second after the rock.

Here is the (subtitled) YouTube video on it.

https://www.youtube.com/watch?feature=player_embedded&v=jfEdEIwhj6s

Watch at 1:50 and the rock's trajectory. Then at 1:57 you see the other skydiver. He's coming in at a different angle and at a slower speed.

Then watch the rest of the video. Yes, it's subtitled, but you call yourself a scientist. You should at least gather information before dismissing something out-of-hand.

Of course, you can also ignore this. Ultimately I'm sure it doesn't matter. They'll not find the meteorite and thus confirmation won't happen.

Rob H.

Joel Greenwood said...
This comment has been removed by the author.
Joel Greenwood said...

Carl M. said...
Back in the good old days, we had market makers and large spreads. We also had a minimum commission that was quite high by modern standards.


In the 1970's the exchanges quoted stocks in fractions - the equivalent of 12.5 cents.

Decimalization has indeed reduced spreads but not through the brave stewardship of the NYSE or NASDAQ. No, they were dragged kicking and screaming into doing decimalization in 2001 (after the tech boom - meaning tech stocks were traded in fractions!). They didn't even do it themselves - they *bought* companies that were competing with them who had already done it.

Commissions are lower due to the tech boom, the commercialization of the internet and heavy competition - computerized trading, algorthmic trading and/or HFT did not really exist until the early 2000's AFTER the commisions and spreads were lower.

So I think your argument holds no water at all.

rseed42 said...

Dr. Brin, I would be actually very interested in what you think of Ripple: http://en.wikipedia.org/wiki/Ripple_(payment_protocol).

In contrast to Bitcoin, it is focused on facilitating exchange and it is designed from the ground up to resists spamming (and by extension - HFT).

Moreover, the public ledger idea by itself may enable truly science fictional technologies - distributed legal system, insurance, etc. Marc Andreessen certainly thinks so! It is also inherently transparent, therefore any system implemented on top of it should be very difficult to abuse by "feudal lords".

Paul451 said...

From the last thread:

Robert,
Re: Skydiving meteor.

Although the meteor expert talked about the rock's speed, it's relative velocity didn't look that high. In spite of being just a few metres from the camera, it was in shot for 5 or so frames. It would have only killed the skydiver if it knocked him in a way that prevented him from deploying his 'chute. (Disorienting him, for example.)

David,
Re: Someone threw the rock from above.
The plane quickly dropped below the sky-divers (and can be seen on the video.) There is a skydiver who passes immediately after the rock. So in theory he could have jumped with the rock so that he and his friend could stage the whole thing.

Robert again,
Re: Estate tax.
You'd want treat partner-inheritance (husband dies, wife inherits) like a divorce. So that the wife "owns" half the inheritance in her own right, tax free, and so only pays tax on the other half. Likewise, exceptions for the primary residence up to an additional $5m, indexed to property prices, not inflation. This reduces the stories of the poor family kicked out of their family home because of neighbouring development raised the property value beyond the 20 year old limit. That's the stuff used by the rich to sabotage estate taxes.

Another idea is to extend the minimum income tax idea (where people with an income over a certain amount must pay a minimum amount of tax, regardless of other deductions and structures), to apply to corporations. If you a declaring a profit for shareholder reporting purposes, then you should be paying a net minimum tax regardless of any other deductions and claims.

Robert again,
Re: Meteor snark.
Don't be touchy. Fraud is vastly more likely than having an actual meteor miss you by a few metres. It doesn't mean it was fraud, but fraud is still more likely. (Put it this way, how many media and internet hoaxes will there be this year, vs how many people who have a meteor land metres from them?)

[I also tend to be doubly suspicious so soon after April Fool's. It wouldn't be the first time that one media outlet's April Fool's gag article gets picked by others days later as genuine "dead donkey" filler.]

Robert said...

As I pointed out, the video shows the second skydiver coming from a different angle than the rock, and at a much slower trajectory. The rock skims by in what is in essence eight clicks of the video camera. It goes by so fast you barely notice it. The skydiver on the other hand goes by at a slower pace.

So this suggests one of two things. First, the footage is legit (and mind you, one thing that the skydiver did consider was that something had been caught up in his parachute - the speed of the rock falling makes that less likely). Second, they photoshopped in a meteorite or object like a meteorite and then proceeded to add it to the rear-facing camera as well.

As for the timing? The question isn't when was it released in the English language sites. The question is when did it appear in the Scandinavian sites. This may predate April 1st. Outright shrugging and saying "it's a fake" without considering that it might not be is in essence being a an ostrich Republican. You refuse to accept it might be real because it doesn't fit your preconceptions.

The Earth is hit by tens of thousands of meteorites a day. The small ones will make it to the planet's surface, most hitting water. Eventually one would be caught on camera. If this one is a fraud? Oh well. But if you spend your life refusing to believe anything because of the possibility of fraud, then what's the point of anything?

Rob H.

David Brin said...

It sure looks like the other skydiver tossed it. I can picture the angles as quite plausible. Lacking the air resistance of a body suit, the rock would pick up lots of relative speed. I call the odds almost nil.

Just saw Simon Pegg's weird weird THE WORLD'S END.

I liked the first -- less SFnal -- half much better.

Tony Fisk said...

If you wanted to get really forensic, check whether the rock is accelerating.
I would think that a true meteorite would have reached terminal velocity.

Duncan Cairncross said...

Just seen an interesting possible solution to your campaign finance problem

The solution is to tax each exchange or expenditure of money used in political campaign activities.

Tax it heavily, as much as fifty percent. So that in the end, for every dollar spent half goes towards financing public elections.

The Supreme Court can't stop such a tax without outlawing all taxes in general, and that is clearly not going to happen.

I though this idea was worth spreading

Paul451 said...

Meteor again:

David,
Re: Other skydiver dropping it the rock

Doesn't work. The other diver is visible in the distance a few frames before the rock is appears. He isn't above the filming skydiver, but is coming in from the side (thanks to the wingsuit.)

Tony,
"If you wanted to get really forensic, check whether the rock is accelerating. I would think that a true meteorite would have reached terminal velocity."

It's hard to do so, the videoer is probably still decelerating (he'd just released his 'chute), is still swinging around from the jerk of the 'chute, the camera is helmet mounted and turning so the angle changes between frames, the rock is moving at an angle to the camera (ie, changing it's depth), and you don't know the FOV of the camera to correct for fish-eye effects. I did notice that the trajectory was highly curved, which rules out a meteor. But that could be due to the skydiver's own movements between frames, which rules it straight back in. :)

It's interesting and suspicious that no one on the ground looking up (skydivers always have watchers) saw the actual bolide re-entry. Didn't notice a blazing, burning streak across the sky pointing right at the plane/divers?

I mean, it's the sort of thing people mention.

Paul451 said...

Robert,
"But if you spend your life refusing to believe anything because of the possibility of fraud,"

Sorry, dude, I've had too many True Believers tell me that, when I raise concerns about things which turned out to be nonsense or outright fraud, for that argument to have any effect.

I know that I'm not closed minded to new things, given the number of new things I've come to believe in. But I also know from past experience that my bullshit-alarm is pretty good. And I'm not saying that this must be fraud, my BS-alarm is not screaming that loud (except for the April Fool's thing, which always puts it on a hair-trigger), I'm saying there are too many other possibilities which I have no way to eliminate which have a higher probability than miraculously filming a meteor falling a few metres away, while in mid-air.

"The rock skims by in what is in essence eight clicks of the video camera."

Assuming 60 frames per second (I don't know the original format), and a vertical of 5m within the camera frame, that's that's 130kmh (80mph). A 2m vertical means 50kmh/30mph. We don't know the distance from the camera.

So a small stone at half a metre, gives 12kmh/8mph relative. Such as some gravel dropped from the skydivers own 'chute when it opened, which just happened to be caught on camera. The timing works, the rock drops less than a second after the 'chute opens, while the skydiver is still being jerked about. Unlikely? Perhaps. But if you want me to accept the possibility of a one-in-a-billion chance, shouldn't I be able to demand the same of you?

By the way, the latter would mean it's not fraud, just a genuine misinterpretation. Which is not unusual when you have no true depth reference. I've seen plenty of videos of bugs/birds misidentified as flying saucers; "Planes don't fly like that!" (Or at the opposite extreme, planets/stars, etc, in a shaky video. "It's following us!")

"The Earth is hit by tens of thousands of meteorites a day. The small ones will make it to the planet's surface, most hitting water. Eventually one would be caught on camera."

Contrast the total number of skydivers in the world with video cameras running at any given moment with the total number of people anywhere running video cameras (including security cameras running 24/7). Shouldn't we see 50:1, 100:1, even 1000:1 as much footage of meteors falling mere metres from those other cameras compared to skydivers? Hell, I would guess that the number of reporters filming live OBs at any given moment exceeds the number of skydivers in the air. Yet no live crosses, not even on pre-filmed walk-to-camera pieces, with a small meteor crashing down next to the reporter? How many hours of outdoor sports are filmed every year? Not one meteor falling on the field at a football game? (Let alone onto the crowd.)

You want me to accept that a ridiculously unlikely event is possible, but you refuse to consider (and get angry when someone else considers) much more likely scenarios.

That's not really fair, is it.

LarryHart said...

Duncan Carincross:

The Supreme Court can't stop such a tax without outlawing all taxes in general, and that is clearly not going to happen.


I'm not sure there is anytthing that the Supreme Court "can't" do.

There's a wonderul 1960s sci-fi story by Charles Harness called "Probable Cause" which relies on the reader being able to find awe and reverence for the venerable institution of the USSC. Re-reading the story since 2000, I've had to mentally adjust to think of the fictional court in the story as something different from the real Court, which I'm afraid has permanently lost its luster.

Paul451 said...

Back to Earth:

Duncan,
"The solution is to tax each exchange or expenditure of money used in political campaign activities."

Political donations (and PACs) are treated as tax deductible charities. Simply removing that, by tightening the definition of charity, would siphon a chunk of cash away from them without requiring any special new taxes.

However, what's the line between a dedicated PAC, Americans For Prosperity or Citizens United, a think-tank like Heritage or Brookings, an activist group like Greenpeace or Amnesty International, or a pure charity that occasionally does campaigning like Red Cross or Habitat For Humanity? (And that's not even touching religions.)

Where do you draw the line without it being manipulated by jerks? (As Obama is already being accused of doing against the Tea Party.)

"The Supreme Court can't stop such a tax without outlawing all taxes in general,"

Actually they could, by saying that the definitions are poorly defined and, as such, that it selectively infringes against free speech. Pretty much the same justification for their rulings against restrictions on corporate donations or donation limits.

At the risk of being obvious, I think the only solution is greater transparency. As Colbert showed, you can easily hide large donors behind another organisation that isn't required to report. And similarly, transfers can be hidden by adding a non-reporting step, hiding spending too. Change that so that every dollar is accounted for, have the FEC put the whole thing online in an easy to use, easy to trace format. Require all PACs to include a link to their section of the FEC display in any online material and print ads/pamphlets.

It would be an annoyance for churches and charities. But ultimately, "if you have nothing to hide..."

--

https://en.wikipedia.org/wiki/List_of_political_action_committees

https://en.wikipedia.org/wiki/List_of_think_tanks_in_the_United_States

Robert said...

One last bit on the possible meteorite caught on video.

The two basic arguments I've seen you bandying about is: the chances of catching a meteorite on film in freefall after it's gone dark are so infinitesimally small that it's impossible, and that there is a conspiracy to put this out and prank people.

The first argument is fallacious. Just because something is almost impossible doesn't mean it is. If you went by this theory, then we'd never have scientific progress because until something is done, someone will say it's almost impossible to do it. Take the Apollo Project. The United States managed to put a dozen men on the Moon and return them safely. They did it despite using technology from the late 60s and early 70s - thus they didn't have the light-weight alloys and composite materials we can make spacecraft out of today. This is in fact one of the arguments that the Fake Lunar Landing Conspiracy group uses: our technology would not allow us to get people to the Moon and back safely at that time, so it has to be fake.

This leads into #2. Conspiracy. If this was faked, then you are saying that the U.S. government recruited over a score of men to board four jets and deliberately crash them into several buildings so to bring about a war needed by George W. Bush to shore up his Presidency... oh wait, sorry, wrong conspiracy.

You are saying that these men and the scientists who looked at the footage are in cahoots. That a man in a bulky wingsuit was able to throw a rock at his buddy at high enough speeds that the rock was only shown in a dozen frames of the video camera... while the guy who threw the rock (and who had not yet deployed his parachute) and who was plummeting toward his friend not only managed to get the trajectory just right, but also didn't smash into his friend's parachute. All within a couple seconds time.

Or maybe you think he took a potato gun up with him, managed to hide it from the other skydivers (unless they are also in on your conspiracy theory), and then disposed of the evidence by dropping it (and risking damage to someone below) or hiding it when he landed. And that he was able to accurately aim the potato gun to not get his buddy and then hid the gun for the two seconds after being in his friend's camera view.

You do see why I find the conspiracy angle to be dodgy. I am loathed to believe in conspiracy as it falls apart so very quickly when there's more than one person involved.

So now I put forth to you: what proof do you have that this footage was in fact faked? If you do not have proof, then for the sake of scientific curiosity, might it not be considered potentially legit?

Rob H.

atomsmith said...

The American Meteor Society says the terminal velocity of a falling meteor in so called "dark flight" is between 90 -- 180 meters / sec (200-400 MPH).

Using Wired's equations density of iron, and drag coefficient of 0.48 (wikipedia's value for a rough sphere), a radius of 7 cm (eyeballed), I get 159 m/s (357 MPH), i.e. within the range of the AMS.

Subtracting the terminal velocity of a skydiver, 54 m/s (122 MPH), still leaves much more relative speed than Paul451 estimates the object in the video showed.

You can posit a higher drag coefficient and/or a smaller radius due to the ambiguity of the 2-d projection, but the terminal velocity falls by the square root of these values, and so won't be reduced much even as you push the values into implausibility.

LarryHart said...

myself:

I'm not sure there is anything that the Supreme Court "can't" do.


Ok, that's an exaggeration. They probably can't (to use a Monty Python line) tax forigners living abroad.

They also maybe can't create a rock so big that they themselves can't lift it.

But even on those things, I wouldn't recommend betting the farm.

David Brin said...

Sorry, the rock did NOT have to come from that other skydiver we see. Up… did you see how many divers were on that plane?

Thomas Jefferson summed it up. "I'd rather believe a Harvard professor is a liar than that stones fall from heaven."

So there! ;-)

onward

Paul451 said...

Atomsmith,
Thanks for the numbers.

"Subtracting the terminal velocity of a skydiver, 54 m/s (122 MPH), still leaves much more relative speed than Paul451 estimates the object in the video showed."

It's worse than that, the skydiver had pulled his 'chute when the rock passed, so he was decelerating to about 30kmh (8m/s, 18mph).

Robert said...

It's probably slower than that. First, it's doubtful it was a metallic object. It was likely a carbosilicate object. It may have also been something that broke up in the atmosphere. Given its size (fairly small), its maximum velocity would be lower because air pressure would help slow the object - it's why smaller meteorites actually land on the surface of the planet or push into a foot of dirt or so instead of each one leaving a crater.

Rob H.