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Bitcoin's Quixotic Search for Legality -- My Daily Caller Op-ed -- Part 10 Algorithmic Markets Series

If you are interested in understanding serious emerging problems with algorithmic markets, please don’t miss my Daily Caller op-ed “Bitcoin’s Quixotic Search for Legality” – here.

  • It is Part 10 of my Algorithmic Markets research series.

Algorithmic Markets Research Series

Part 1: Who's Looking Out for Investors? [6-14-01]

The Bitcoin/Virtual Currency Bubble – Beware of the Alchemy of “Abundance Economics” – Part 2 The Code War Series

Bubbles happen because people ignore economics and assume away reality in their excitement over a new idea. “Virtual currencies” could be the latest tech “economics of abundance” bubble in the making. Fans of abundance economics imagine that the free and open Internet’s near zero marginal cost of borderless transactions will ultimately slay traditional economics of scarcity.

Cyber-utopians imagine that currency, or money, is a simple function, like any other product or service that they have made openly available to everyone in the world at virtually no cost on the Internet. They imagine the only thing that matters with the business of money is how money is transmitted.

They assume creating money is just a coding and crowd-sourcing task. How hard could that be? What possibly could go wrong? It’s only money.

Why Google Thinks It is Above the Law

Google often acts as if it thinks it is above the law. That may be the most plausible explanation for why Google is under antitrust investigation on five continents, has had 35+ privacy scandals, and has been sued for eight different kinds of infringement/theft from most every content industry.

I. Cover-ups

FreePress' Latest Net Neutrality Folly -- Pushing for Shareholder Votes

FreePress' latest net neutrality folly and political agitation is pushing the SEC to make shareholders from AT&T, Verizon and Sprint vote on inappropriate, ill-advised, and unwarranted proposed shareholder resolutions in favor of wireless net neutrality in the weeks ahead.

Let me count the ways this is a waste of time and abuse of process.

First, it inappropriately and destructively attempts to politicize non-political entities, by trying to force a public political position from non-political corporate entities, whose contractual and fiduciary responsibility to shareholders is to economically/financially grow the value and profitability of the corporation.

Second, the appropriate place to have political votes is in legitimate political processes, elections or representative votes or decisions by elected officials at the appropriate local, state, and Federal level, which enjoy the constitutional, political, and relevant authority and legitimacy to decide political issues in a meaningful, substantive and productive way.

Third, the operative authority here for shareholders, the companies' shareholder agreements, corporate charter, and bylaws, are legally grounded on a contractual agreement between the company and shareholder to protect and grow the shareholders investment in the company, not to promote extra-political positions that actually could endanger the underlying purpose of the shareholders agreements.

Google's Bait and Switch Deception Exposed at Hearing

My latest Forbes blog: "Google's Bait and Switch Deception Exposed at Hearing" is here.

It describes the overarching and recurring theme of yesterday's Senate Antitrust hearing on Google, that Google built the trust of users and content owners with the bait of representations that Google Search is unbiased and only focused on the user, then once they became dominant, Google pulled the switch, and deceptively changed their business model to favor their own Google content over competitors' content, all while continuing to maintain that their search engine is still unbiased.

Google 21st Century Robber Baron

See my Forbes post "Google 21st Century Robber Baron" which briefly tells the story of Google's Robber Baron rap sheet, in advance of Google's Wednesday Senate antitrust hearing.

  • The post is documented with 79 links to the supporting evidence.

The post also explains why Google's Board of Directors have been AWOL while all this scofflaw behavior has been going on.

My Forbes Op-ed: "Google's Deceptive Practices Harm Consumers"

To see the first free-market legal argument explaining how Google's market behavior systematically harms consumers under antitrust law, read my Forbes op-ed: "Google's Deceptive Practices Harm Consumers."

  • This is important because Google and its defenders believe the benefits Google provides consumers are the bedrock of a winning antitrust defense.

Few have grasped the huge significance that it is the FTC (with its unique supplemental Section 5 authority) and not the DOJ, that is investigating Google for antitrust.

Most also have missed how vulnerable Google is to the charge that many of its marketing practices are illegal deceptive misrepresentations of its business.

My Forbes op-ed link is here.

Google Price Index: Insider Trading & Market Failure?

Google announced it is working on an economy-wide Google Price Index, but has not decided whether to make it public, per Google Chief Economist, Hal Varian, who spoke at the National Association of Business Economists conference this week.

 

  • This development has under-appreciated implications for insider trading and also spotlights how Google's online dominance of market-relevant information suggests market failure and a new potential systemic vulnerability to the integrity of global capital markets.

 

I.  Insider Trading

In March, Google CEO Eric Schmidt said: "One day we had a conversation where we figured out we could just try and predict the stock market... and then we decided it was illegal. So we stopped doing that."

Now any hedge fund (or market regulator not born yesterday) understands that if Google is actively working on a Google Price Index, Google has not stopped trying to use its uniquely comprehensive and timely, repository of sensitive market information to predict information highly useful to predicting the stock market.

 

Systemic Flash Crash Vulnerability: Financial Crisis Root Causes: Part IV

The SEC/CFTC report on the May 6th "Flash Crash" helps confirm that automated index trading technology was a contributing cause of the 2008 Financial Crisis and why recent financial reforms are not enough to address the ongoing destructive systemic vulnerability that automated index trading technology increasingly poses for financial markets going forward.

 

Google's "Total Information Awareness" Power -- A one-page graphic of all the information Google has

To help you picture both the enormity and unprecedented power of what Google knows about you and the world's information: public, private and proprietary, I have organized all the world's information types that Google collects onto a one-page chart/PDF: "Google's 'Total Information Awareness' Power."

For those who really want to understand Google and its impact on most everyone and most everything, please read and study this one-page chart/PDF, because much valuable work and insight has gone into it.

  • While the chart is visually packed with information that many may find difficult to unpack or digest, the chart itself is an apt metaphor for both how much information Google has, and also how difficult it is for all of us to get our head around all the information Google routinely collects and uses.

A short refresher on where the term "Total Information Awareness" came from and why it is aptly employed here.

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Q&A One Pager Debunking Net Neutrality Myths