We ought to savor the luxury of fleeting times such as these, when Matters of Consequence have been shoved off the front page by the sordid and the salacious. A Burmese python got loose in a Florida home yesterday, strangling a two-year-old. Should the pet’s owner, the boyfriend of the toddler’s mother, be charged with endangerment? Tune in to Larry King for the debate. In other news, the piously unsensational NPR jumped headlong into the debate over whether Mark Sanford should resign South Carolina’s governorship for the sin of adultery. How quaint to think that, at least in politics, there is still some shame left in the ho-hummery of extramarital trysts.
In the meantime, we read on an inside page that California is about to throw in the towel, fiscally speaking. Will the Federal Government, with its unlimited ability to create rescue money, bail out the state? You can bet it’ll be a mighty slow day for tabloid news before Larry King airs that issue. We note in the same story that no fewer than 15 states are teetering on the edge of bankruptcy and that 21 others are seriously on the ropes. If and when the U.S. decides to get involved, putting what remains of its by-now laughable “full faith and credit” behind state and local bonds, we have one word of advice to investors: Don’t be holding dollars. In practice, that means you should already have more gold coins in your safe box than dollars in your savings account.
California Bankruptcy Hard to Explain
We shouldn’t be quick to castigate the news media for being so utterly clueless about which news deserves to be out on the front page. Splash California’s bankruptcy above the fold, and you’ve got to explain what it means. The task is made even more difficult by the fact that the stock market has been on a bullish tear since early March. Wouldn’t that seem to imply that California’s problems, as well as those of New York, New Jersey, Ohio and a dozen other states, are somehow manageable? Most Americans would like to think so. But then, most Americans get their news from the likes of Brian Williams and Katie Couric, and from other prime-time mouthpieces of a corporate world that would rather viewers be left buoyant by accounts of the day’s events.
We should enjoy this hiatus from worry while it lasts, since the day will come when killer pythons and adulterous governors are once again relegated to the World News Roundup where they belong. More pressing concerns await.
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Something to Like About Gov. Sanford
We took a cheap shot at Gov. Mark Sanford in the picture that accompanied Thursday’s commentary (see above). The caption characterized his adulterous saga as “comic relief” for a nation unable to face up to more serious problems. However, as counterpoint, we have reprinted a letter to the editor of The Wall Street Journal that explains why Sanford may deserve better:
“If Mr. Baker is right that Gov. Mark Sanford’s honesty was ‘cringe-making’ when he professed that he actually loved the woman with whom he committed adultery, then our social order has, indeed, turned upside down. Was it really icky when Mr. Sanford went off-script by facing the public alone and offering the truth without excuses? Or was it an uncommon display of character and courage to stand there by himself, rather than forcing upon his wife the gratuitous humiliation of standing beside him? Even Mr. Baker can’t suppress a backhanded compliment. ‘There was, for once,’ he writes, ‘no adoring wife standing by her man, gazing dewy-eyed at the flawed hero.’
“Unfortunately, even the compliment smacks of moral relativism, because that ‘dew’ is really the tears of shock and shame, and because it takes but little ethical common sense to realize that making a woman stand there under such circumstances is nothing less than spousal abuse. Any man who would put his wife through that doesn’t love her. And he’s not a hero.
“Mr. Baker was appalled when Mr. Sanford offered this honest commentary on the human condition: ‘The odyssey that we’re all on in life is with regard to heart.’ Described by Mr. Baker, it becomes an excursion ‘through the cheap literary landscape of forbidden love.’ Of course Mr. Sanford did harm his family by having an affair and lying about it, and he was wrong to leave his state ignorant of his whereabouts. But his honest approach in facing the public after the fact sets him apart from any politician whose adulterous exploits have more to do with narcissism and hedonism than with love, and who habitually shrinks from the ickiness of honesty.
“If Mr. Baker is even half right about the new moral equivalence, however, it raises this existential question: What’s to become of a people who see no measurable difference between opportunistic serial adultery and adultery based on feelings of love that developed after eight years of friendship – and who don’t care, anyway?”
Marianne Ferrari
Phoenix
Amen Keith.
Tired of having accurate posts deleted, so will shuffle on.
As farewell gift, consider this impact on the Bailout Stim (BS) market:
A Goldman Trading Scandal?
GOLDMAN SACHS, TRADING, CRIME, THEFT, SERGEY ALEYNIKOV
Reuters, CNBC.com
| 05 Jul 2009 | 04:14 PM ET
Did someone try to steal Goldman Sachs’ secret sauce?
While most in the United States were celebrating the Fourth of July holiday, a Russian immigrant living in New Jersey was being held on federal charges of stealing secret computer trading codes from a major New York-based financial institution. Authorities did not identify the firm, but sources say that institution is none other than Goldman Sachs .
The charges, if proven, are significant because the codes that the accused, Sergey Aleynikov, tried to steal are the secret sauce to Goldman’s automated stock and commodities trading business. Federal authorities contend the computer codes and related-trading files that Aleynikov uploaded to a German-based website help this major financial institution generate millions of dollars in profits each year.
The platform is one of the things that gives Goldman an advantage over the competition when it comes to the rapid-fire trading of stocks and commodities. Federal authorities say the platform quickly processes rapid developments in the markets and using secret mathematical formulas, allows the firm to make highly-profitable automated trades.
The criminal case has the potential to shed a light on the inner workings of an important profit center for Goldman and other Wall Street firms. The charges also raise serious questions about the safeguards that Wall Street firms deploy to protect these costly-to-build proprietary trading systems.
The criminal case began to unfold on the evening of July 3, when Aleynikov was arrested by FBI agents at Newark Airport after returning from Chicago. Aleynikov apparently had just started a job with another big firm in Chicago after leaving his previous employer in New York in early June. It appears that the financial institution allegedly victimized by Aleynikov had alerted federal authorities that its former employee might be up to no good.
On July 4, Aleynikov was processed on a “theft of trade secrets charge” in a criminal complaint. As of this morning, he was still being held at the Metropolitan Correction Center in Brooklyn.
A Goldman spokesman declined to comment on the incident.
Calls to Aleynikov’s home in New Jersey, which he shares with his wife, were not returned. A spokeswoman for the United States Attorney’s Office in Manhattan did not comment.
The Federal Bureau of Investigation, in charging Aleynikov, says he began working for the major financial institution in May 2007 as a computer programmer and left in early June. That matches the description of a man named Serge Aleynikov on the social networking site LinkedIn (the difference in spelling of the first name could not be immediately explained).
The biographical information for Aleynikov on LinkedIn says he joined Goldman in May 2007 and was vice president for equity strategy. The bio says he was responsible for “development of a distributed real-time co-located high-frequency trading platform.”
The case against Aleynikov may explain why the New York Stock Exchange moved quickly last week to stop reporting program stock trading for its most active firms. Goldman was often at the top of the chart — far ahead of its competitors.
It’s possible Goldman had asked the NYSE to stop reporting the number after it discovered that someone may have infiltrated the proprietary computer codes it uses.
Here’s the way the criminal complaint describes the Goldman trading platform:
“The Financial Institution has devoted substantial resources to developing and maintaining a computer platform that allows the Financial Institution to engage in sophisticated high-speed, and high-volume trades on various stock and commodities markets. Among other things, the platform is capable of quickly obtaining and processing information regarding rapid developments in these markets.”
Federal authorities appear to believe Aleynikov may have had help. The German website that Aleynikov is accused of uploading the stolen information to is registered to a person in London.
While the case is still unfolding, there is more information to unearth about Aleynikov. For instance, it appears that he and his wife are competitive ballroom dancers—there are videos of them on YouTube.com.
Many questions remain. Which Chicago firm hired Aleynikov?
The job he took in Chicago, according to the criminal complaint, paid nearly three times more than his $400,000 salary at Goldman.
Also there’s more to learn about anyone who might have been helping him and the fallout the case may have for Goldman. When he was arrested, Aleynikov told the FBI he “only intended to collect ‘open source’ files on which he had worked, but later realized that he had obtained more files than he intended.”
Quick, get this guy a good lawyer.
One question investors need to ask is whether this incident will have any impact on Goldman’s second-quarter earnings. The alleged wrongdoing by Aleynikov took place at the beginning of June—although it’s not clear if it had any material impact on automated trading.
URL: http://www.cnbc.com/id/31750907/