Re: whitehouse web incident, viva la web revolution
Vladimir Z. Nuri wrote: <Uninformed crap> Its worth pointing out that a complaint to an editor is not necessarily pressure. Did the Whitehouse threaten to sue HotWired? What _pressure_ was applied? I find Meeks' style somewhat tiresome. It is tabloid jornalism rather than reasoned argument. His dislike for the Clinton is well known - he recently accused the administration of being fascist. I know of no evidence that the Clinton administration has a genocide policy, it is an insult to the 10 million civilians murdered by Hitler to use the term facist simply as a term of abuse, especialy if it is being used as a substitute for an argument. Point of fact: the skeleton closet does not know how traded options work. If one sells a traded option one is liable to pay the broker if the market moves the opposite way to that hoped for. Normally the broker asks a client to put up a deposit or "margin" to ensure that the broker can recoup the money. In this case the broker knew that Hilary had good credit and so accepted only a token deposit as "margin". Had the market moved in the opposite direction Hillary would have been liable for very much more than $1000, she was liable for hundreds of thousands. In most cases it is profitable to sell options, it is only if the market moves in the "wrong" direction that one can lose out. In such cases the losses are unlimited - the potential profit being fixed. This is why most punters buy options - the potential loss is limited. You can see a similar effect in the market each time there is a "short squeeze". A lot of people bet on Netscape going down in price because it was overvalued. The number of short positions turned out to be higher than the number of shares on offer which meant that many people were having to buy shares at high prices to cover their positions. This is how lack of confidence in a stock can send it through the roof. The free market - don't you just love it? Phill
Phill, quit while you are ahead. It is my opinion, as a person highly familiar with the markets in question, that Hillary Clinton's profits were impossible to achieve by any means other than fraud, and that no honest broker would have allowed her to hold positions in which she was so far out of mandatory margin requirements and a trivial move would have wiped out her entire net worth and more. I do not know of a single professional in the industry who disagrees with me. I know of at least one extremely well written study, by Victor Neiderhoffer (a very successful futures trader) and Caroline Baum (a reporter for Telerate) that more or less demonstrates that there is no way that any of what happened could have been legitimate. The most astounding part of the trading pattern was that Hillary Clinton did not "let it ride" and earn the money off of repeated increases in the value of a single investment -- instead, she took all profits out of her account after each trade and never invested more than a tiny sum in any transaction. That is to say, she didn't earn modest profits repeatedly over many trades -- she earned nearly impossible profits in trade after trade. In spite of withdrawing her profits after each trade, she racked up an impossible profit of 100 times her initial investment in a tiny period of time. At no time did she meet margin requirments, and she repeatedly risked more than the Clinton's entire net worth on what would have been gambles had her profits not been guaranteed. In spite of her astounding "performance" she immediately stopped trading after $100,000 in profits had been accumulated. There is an obvious trick by which this can be achieved. The broker writes two tickets -- one to buy, one to sell. One ticket always loses exactly what the other gains. The winning ticket is assigned to the bribee, the loser to the person doing the bribing. The mechanism self-launders the funds. Hallam-Baker writes:
Point of fact: the skeleton closet does not know how traded options work.
Mr. Baker, she traded FUTURES.
If one sells a traded option one is liable to pay the broker if the market moves the opposite way to that hoped for. Normally the broker asks a client to put up a deposit or "margin" to ensure that the broker can recoup the money.
Margin requirements are set by the exchanges and the CFTC, not by the broker in most cases. They are required by law -- not under broker discretion.
In this case the broker knew that Hilary had good credit and so accepted only a token deposit as "margin".
He's not allowed to. Furthermore, no sane broker would have allowed a customer to hold a position in which a small move would have more than wiped out the customer's entire net worth.
In most cases it is profitable to sell options,
Futures, Mr. Baker.
it is only if the market moves in the "wrong" direction that one can lose out. In such cases the losses are unlimited - the potential profit being fixed. This is why most punters buy options - the potential loss is limited.
Hillary Clinton was trading FUTURES. Perry
Phill, quit while you are ahead. It is my opinion, as a person highly familiar with the markets in question, that Hillary Clinton's profits were impossible to achieve by any means other than fraud, and that no honest broker would have allowed her to hold positions in which she was so far out of mandatory margin requirements and a trivial move would have wiped out her entire net worth and more. I do not know of a single professional in the industry who disagrees with me.
Crap Perry, I discussed the affair with a top investment manager at Barclays Bank Suisse. He saw no problem whatsoever in the deals. Neither did my friend who trades oil futures for Rappaport. If you want to play the "who knows who in banking" game remember that the Oxford Union and the Swiss National Croquet team are probably better places to meet banking types than the Palo Alto Au Bon Pain.
Futures, Mr. Baker.
Its Dr., Mr Metzger Before you get all steamed up and bothered consider that you are behaving in typical USEnet flamefest fashion. Are you going to claim that the underlying mechanism for options is any different than for futures? The point was that she was _selling_ and not _buying_. Thats a fixed profit bet with an unlimited downside.
The most astounding part of the trading pattern was that Hillary Clinton did not "let it ride" and earn the money off of repeated increases in the value of a single investment
Of course, a person _selling_ futures is going to take the profits out each time. The profits are made against the net worth of the person concerned. Its an _underwriting_ business Mr Metzger. $100,000 is not a substantial increase in Hillary's net worth so she _can't_ underwrite more business.
There is an obvious trick by which this can be achieved. The broker writes two tickets -- one to buy, one to sell. One ticket always loses exactly what the other gains. The winning ticket is assigned to the bribee, the loser to the person doing the bribing. The mechanism self-launders the funds.
Oh yes, and how does one cover up the matching ticket? They would show up on the brokers account. If one wishes to bribe a politician a much better way is to give them a huge advance on their book, or buy some tangible asset at above market value. I can't see an intelligent broker risking his business when there are easier mechanisms available.
Margin requirements are set by the exchanges and the CFTC, not by the broker in most cases. They are required by law -- not under broker discretion.
Forgive me if I am wrong but are CFTC margin requirements not requirements placed on brokers as opposed to requirements brokers must impose on customers? That at any rate is my understanding of the situation from Galbraith. Given the four years of dirt digging over Whitewater its a safe bet that none of the actions were illegal as Mr Metzger claims. If they were it would demonstrate more than incompetence on the part of D'Amato et al. After four years they have a convicted fraudster and self confesed pejurer as their only link to the Whitehouse. If there was such obvious criminality in those dealings D'Amato would have been all over them. ObCrypto: Perry is only able to make allegations because the financial markets are to a degree open. If anoymous cash takes off and anonymous derivatives follow won't it make it easier to conceal the type of dealings Perry alledges? Phill
hallam@Etna.ai.mit.edu writes:
If you want to play the "who knows who in banking" game remember that the Oxford Union and the Swiss National Croquet team are probably better places to meet banking types than the Palo Alto Au Bon Pain.
Working for Wall Street investment banks is probably better than both. I live in New York, not Palo Alto. Guess who I work for. Hint: if I want to speak to a futures trader, most days I can walk down the hall.
The most astounding part of the trading pattern was that Hillary Clinton did not "let it ride" and earn the money off of repeated increases in the value of a single investment
Of course, a person _selling_ futures is going to take the profits out each time.
I don't think you get it. Its one thing to put up $1000, make $4000, then put up the $5000 and make $10,000 with it, etc. Thats a situation where you are compounding your profits -- reinvesting them. Its another thing to put up $1000, make $4000, withdraw the $4000, put up $1000, make $4500, withdraw the $4500, etc. This is not a case of someone making a profit and reinvesting it so that she got compound returns. This is a case of someone miraculously turning one in a million trades over and over and over again on the same tiny stake until she got $100,000. Its almost impossible to turn $1000 into $100,000 by reinvesting. Its dead impossible the way that Hillary did it. Neiderhoffer and Baum list about a dozen criteria for detecting fraud in securities transactions like this. Hillary Clinton hits every single one. She was a first time trader. She took gigantic risk. Her account was full of large scale irregularities like failure to meet margin requirments. She earned astounding profits. She was in a position to be bribed. She made her money off leverage in tiny movements that would be hard to impossible for people to exploit. She stopped trading just as suddenly as she started in spite of her miraculous success. You can read Neiderhoffer and Baum's article yourself if you like. I will state this for the record: Having examined the evidence, I would say that even a non-expert who was reasonably informed about how the futures markets work would have no choice but to conclude that Hillary Clinton's trading pattern was impossible without some sort of fraud being committed.
The profits are made against the net worth of the person concerned. Its an _underwriting_ business Mr Metzger. $100,000 is not a substantial increase in Hillary's net worth so she _can't_ underwrite more business.
Huh? What are you talking about? Futures contracts aren't an "underwriting" in any case. They are very simple contracts. When you buy a futures contract in, say, feeder cattle, you are buying delivery of a fixed size number of feeder cattle on a particular date in the future. When you sell a contract, you are agreeing to deliver that many cattle. Thanks to margin, of course, by putting up a fairly small sum of money you can buy control over a large number of cattle, and not have to actually put up most of the money. One major problem with Hillary Clinton's fraudulent trades, however, was that she was buying enough contracts that a tiny shift in the price of the cattle downward -- shifts of a size that would be common in a given day -- would have more than wiped out her families entire net worth and more. Somehow, though, her broker allowed her to take such large positions -- without putting up the *legally*required* margin -- and somehow in lots of trades a statistically ordinary blip never hit her. One wonders why someone who's husband had just been elected Governor, and who had no history of gambling, and had no sudden financial crisis, would be willing to gamble her family's entire future over and over again -- unless, of course, it wasn't gambling.
There is an obvious trick by which this can be achieved. The broker writes two tickets -- one to buy, one to sell. One ticket always loses exactly what the other gains. The winning ticket is assigned to the bribee, the loser to the person doing the bribing. The mechanism self-launders the funds.
Oh yes, and how does one cover up the matching ticket? They would show up on the brokers account.
Of course they would. Sadly, however, the broker in question conveniently lost ALL RECORDS OF TRANSACTIONS THAT TOOK PLACE AT THAT TIME. Sad, isn't it? This same broker was censured repeatedly for violating securities laws, by the way. Does the word "coverup" mean anything to you?
If one wishes to bribe a politician a much better way is to give them a huge advance on their book, or buy some tangible asset at above market value.
Both of those are visible. This is invisible.
I can't see an intelligent broker risking his business when there are easier mechanisms available.
The trick was very common at the time, a fact that all your brilliant friends you consulted didn't seem to know. Many brokers got snagged, along with their clients, in pulling this game for all sorts of reasons -- shifting assets from a taxable account held by a client into their tax free pension account, for example. The SEC, CFTC and IRS caught on, and the practice has been largely wiped out. Matched trades were common, however, in the period we are talking about, and many brokers did in fact perform them for clients.
Margin requirements are set by the exchanges and the CFTC, not by the broker in most cases. They are required by law -- not under broker discretion.
Forgive me if I am wrong but are CFTC margin requirements not requirements placed on brokers as opposed to requirements brokers must impose on customers?
I must confess that I don't know, largely because its irrelevant, even in this case.
Given the four years of dirt digging over Whitewater its a safe bet that none of the actions were illegal as Mr Metzger claims.
Of course they were. They just can't be proven. We are not dealing with some idiot like Spiro T. Agnew here. We are talking about a pair of well educated, very smart and totally unscrupulous crooks -- Bill and Hillary Clinton. There is no evidence that you can pin on them in court. However, I'm not a court, and I'm allowed to judge something to have been impossible to achieve without hanky panky regardless of whether or not you can prove who the counterparty is and why the bribe was made. Perry
I live in New York, not Palo Alto. Guess who I work for. Hint: if I want to speak to a futures trader, most days I can walk down the hall.
Well why don't you do that and come back with the results eh? You have to actually _talk_ to them for the knowledge to transfer Perry y' know. It dosen't osmose into you just because you are frobbing the ethernet on some secretaries Mac while some merchant banker is making trades in the next office.
I don't think you get it.
Its one thing to put up $1000, make $4000, then put up the $5000 and make $10,000 with it, etc. Thats a situation where you are compounding your profits -- reinvesting them.
Its another thing to put up $1000, make $4000, withdraw the $4000, put up $1000, make $4500, withdraw the $4500, etc.
You still don't understand, the $1000 is not the stake, it is merely the deposit. The stake is Hillary's entire net worth, that is what she is betting with. Its not compound interest on a $1000 stake so $1000+ $4000 profit = $5000 stake, the stake is the $500,000 plus her house would fetch so each time she takes a $4000 profit her stake barely increases. $500K + 4K is $504K, next time she can write a contract for $4040.
This is not a case of someone making a profit and reinvesting it so that she got compound returns. This is a case of someone miraculously turning one in a million trades over and over and over again on the same tiny stake until she got $100,000.
Rubbish, thats only 25 contracts sold without a loss. Depending on the market one usually takes a profit when selling a contract. These are not "one in a million trades" Perry, they are the sort of trade that one would expect to make in an underwritting capacity for a commodity market. Steady profits on contracts which generally pay off.
I will state this for the record: Having examined the evidence, I would say that even a non-expert who was reasonably informed about how the futures markets work would have no choice but to conclude that Hillary Clinton's trading pattern was impossible without some sort of fraud being committed.
So you think that the Republican's in Washington haven't figured out what Perry Metzger has?
Forgive me if I am wrong but are CFTC margin requirements not requirements placed on brokers as opposed to requirements brokers must impose on customers?
I must confess that I don't know, largely because its irrelevant, even in this case.
Perry, its the crux of your case, you are claiming that Hilary committed fraud but you do not know whether the responsibility for covering the trades is on the broker or on the client. You are mouthing off that Hillary was illegally trading without putting up margin when you don't know whether or not that is a crime.
We are not dealing with some idiot like Spiro T. Agnew here. We are talking about a pair of well educated, very smart and totally unscrupulous crooks -- Bill and Hillary Clinton. There is no evidence that you can pin on them in court.
Perry, before you go off into what you would like to believe consider your last sentence. You admit that there is no evidence, you also fail to understand what is understand in selling contracts. As a media meme this one had legs in the same manner as the Borda medals affair. There is no reason to believe that Borda was wearing the valour pins in bad faith, the rules on the matter were vague. Depending on which version of the manual you believe you could say it was right or you could say it was wrong. No indication of an act of bad faith. But take a decorated combat vet who is wazzed off about being jacked out of the army and the Washington press we know what the result would be. Regardless of whether it was or was not an act of bad faith the press prefer the bad faith story. I don't know any other country which treats it politicians in the same way as the US does. I have friends in both parties who have left the Washington political scene because they don't think the game is worth the candle. Phill
Phill: On Wed, 5 Jun 1996 hallam@Etna.ai.mit.edu wrote:
You still don't understand, the $1000 is not the stake, it is merely the deposit. The stake is Hillary's entire net worth, that is what she is betting
Call it what you will, the odds of 25 consecutive contracts all showing a profit are miniscle, except under one set of circumstances. << It is something like 1 chance in 15 511 210 000 000 000 000 000 000. >> You expect us to seriously believe that somebody with virtually no knowledge of futures trading would not end up having to meet at least one margin call, in 25 trades?
trade that one would expect to make in an underwritting capacity for a commodity market. Steady profits on contracts which generally pay off.
Futures trading on contracts generally show a profit? I guess you are talking about the person who sets up the trades, and takes a commission on the trades, regardless of who makes, or ( usually ) loses money.
So you think that the Republican's in Washington haven't figured out what Perry Metzger has?
Statistical proof is only accepted in academia. Depending upon your POV, this may or may not be a good thing, when one is facing civil, or criminal charges. Finding proof for either civil or criminal charges is a slightly different matter.
the US does. I have friends in both parties who have left the Washington political scene because they don't think the game is worth the candle.
The US Media is slightly less freindly towards politicians, than other countries. US Politicians are freindlier to each other, than politicians in other countries are. xan jonathon grafolog@netcom.com ********************************************************************** * * * Opinions expressed don't necessarily reflect my own views. * * * * There is no way that they can be construed to represent * * any organization's views. * * * ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ * * * http://members.tripod.com/~graphology/index.html * * * ***********************************************************************
Call it what you will, the odds of 25 consecutive contracts all showing a profit are miniscle, except under one set of circumstances. << It is something like 1 chance in 15 511 210 000 000 000 000 000 000. >>
Rubbish, 2^25 is 33,554,432. How do you calculate your figures? Or do you just make 'em up as you go along? These are contracts which are expected to pay off more times that they are not, they are made on the advice of someone who is an expert in the area. The contracts are probably hedging each other in such a way that one contract or the other is likely to pay off. If you hit a favourable market for your strategy you can win big. Problem is that after a while others are likley to cotton on to your strategy.
Futures trading on contracts generally show a profit? I guess you are talking about the person who sets up the trades, and takes a commission on the trades, regardless of who makes, or ( usually ) loses money.
Yes, selling rather than buying. If you buy a contract to sell gold at price X the chances are that you will lose money most of the time. Many of the industries buying those contracts are doing so to protect their exposure to price fluctuations in raw materials. Selling contracts is in effect underwritting risk of market fluctuations, most times you expect to realise a profit, but if you lose you can loose very big indeed. BTW, I'm told that margin requirements for that market are 5%. So to sell $20,000 of contracts you only need to put down $1000. Phill
Phill: On Thu, 6 Jun 1996 hallam@Etna.ai.mit.edu wrote:
circumstances. << It is something like 1 chance in 15 511 210 000 000 000 000 000 000. >> Rubbish, 2^25 is 33,554,432. How do you calculate your figures?
You have one chance in three, of showing a profit, in one trade. For 25 consecutive trades to show a profit it is 1 chance in 3^25. << Slightly lower than my original 25!, which is what the odds are, if the trades have to occur in a specific sequence. >>
If you hit a favourable market for your strategy you can win big.
_If_ is the operative word there.
Problem is that after a while others are likley to cotton on to your strategy.
Or in Hillary's case, no strategy at all, just pure, dumb luck that she caught all those successfull trades, and then quit. Can anybody replicate her trades, on any futures market, and gain anything close to the success she had? xan jonathon grafolog@netcom.com ********************************************************************** * * * Opinions expressed don't necessarily reflect my own views. * * * * There is no way that they can be construed to represent * * any organization's views. * * * ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ * * * http://members.tripod.com/~graphology/index.html * * * ***********************************************************************
I realized that there was an ambiguity in my last missive. I'd like to close that ambiguity. "Perry E. Metzger" writes:
Forgive me if I am wrong but are CFTC margin requirements not requirements placed on brokers as opposed to requirements brokers must impose on customers?
I must confess that I don't know, largely because its irrelevant, even in this case.
If you meant "brokers have to put up the margin, not customers, and they don't have to charge customers the margin" you were simply flat out wrong. Margin is a customer responsibility, not a broker responsibility. I will point out, though, that brokers face liability if their customers cannot meet their obligations -- which naturally would make any honest broker suspicious of a customer trading a highly leveraged position in which a tiny move in the market would wipe out the customer's entire net worth, thus likely exposing the broker to substantial risk. Stop loss orders, incidently, aren't any use if the damage would be done before any such order could be executed. Perry
At 4:18 PM -0400 6/5/96, hallam@Etna.ai.mit.edu wrote:
ObCrypto: Perry is only able to make allegations because the financial markets are to a degree open. If anoymous cash takes off and anonymous derivatives follow won't it make it easier to conceal the type of dealings Perry alledges?
Ah. Another bugbear emerges from the monster closet... <sfx: CREEEAAAAAK!!!!> Don't worry, Phill! I've put Jell-O all over the kitchen floor, and set the sofa on fire, too! That should hold it off until you can get under the magic covers! lub-DUB. lub-DUB. lub-DUB. lub-DUB. lub-DUB. ... I suppose it depends on what you call "open", eh, Phill? If by "open", you mean financial markets where, as Milton Freedman says, each new regulation raises the cost of entry and protects the surviving firms by killing their smaller competion with red tape, then we have "open" markets. If by "open", you mean that people can't purchase the attention of their favorite politician fair and square, without having to play zero-sum games with barnyard animals, then we have "open" markets. ;-). If by "open", you mean capital markets where we have industrial economies of scale because they're based on industrial communications technology, and thus no competition at all, then we have "open" markets. If by "open", you mean we have an ever-decreasing noose of surveillance, both by nation-states and by large government-created (see Fredman, above) oligopolies, then we have "open" markets. Nothing personal, Phill, but it does seem like it's more a question of what you're afraid of, than what *is*, right? Cheers, Bob Hettinga Now, where exactly *did* I put that chicken heart, anyway... lub-DUB. lub-DUB. lub-DUB. lub-DUB. lub-DUB. ... ----------------- Robert Hettinga (rah@shipwright.com) e$, 44 Farquhar Street, Boston, MA 02131 USA "If they could 'just pass a few more laws', we would all be criminals." --Vinnie Moscaritolo The e$ Home Page: http://www.vmeng.com/rah/
Hallam-Baker uttered:
I find Meeks' style somewhat tiresome. It is tabloid jornalism rather than reasoned argument. His dislike for the Clinton is well known - he recently accused the administration of being fascist.
Ok, I'm with you to here...
I know of no evidence that the Clinton administration has a genocide policy, it is an insult to the 10 million civilians murdered by Hitler to use the term facist simply as a term of abuse, especialy if it is being used as a substitute for an argument.
While I agree that merely branding Clinton a facist without backing it up is childish, I really don't see how it's `an insult to the 10 million civilians murdered by Hitler.' Come on now! Facist does not necessarily imply Hitler, or even Nazi. The term facist has roots that go at least as far back as the Romans, and I don't recall a `genocide policy' as a prerequisite to being facist at any point in history. Even if he had called Clinton a Nazi, how does that equate to insulting those killed by Hitler and his flunkies? Perhaps calling someone a Communist also is insulting everyone that Stalin killed? steve -- // stephen clawson sclawson@cs.utah.edu // university of utah
participants (6)
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Hallam-Baker -
hallam＠Etna.ai.mit.edu -
jonathon -
Perry E. Metzger -
Robert Hettinga -
sclawson＠bottles.cs.utah.edu