Flash Boys--Massive Fraud and Racketeering On Wall Street

If you are an investor in the U.S. stock markets, you need to read Michael Lewis's latest book, Flash Boys:  A Wall Street Revolt.

Revolt is right--you will be revolted by the utter greed and criminality of a small band of Wall Street gangsters who have rigged the market to skim off hundreds of billions of dollars that properly belong to investors.

In some ways, this is nothing new--shysters on Wall Street have been rigging up similar schemes for as long as stock markets have existed.  Still, it makes you sick what these guys have been up to.

Basically, Lewis shows how a group of high frequency traders (HFT's) have, since 2007, rigged the market so that their computers can skim a penny or two off every trade.  That may not sound like much, but in a market that trades trillions of dollars every year, it amounts to hundreds or billions of dollars in ill gotten gains.

What makes you really sick is the complicity of the large banks that place the trades, supposedly on behalf of the investors.  The large banks (like Goldman Sachs and Credit Suisse) got their "cut" of the action, and so, just as they did in the mortgage crisis, they screwed the people they were supposed to represent.

In typical Lewis style, the story is told through the eyes of a few key participants, a band of heroes that rebelled against the system that everyone else went along with.  The story moves along at a good clip, and is even fun at times.  It leaves you wondering about the complete misdirection of scientific and technical talent into what is essentially a vast criminal enterprise.

Will justice be done?  Doubtful--no one went to jail over the mortgage crisis, and, as Lewis notes, the only person to go to jail so far in this sordid episode is a poor Russian programmer who became a pawn of the powers that be at Goldman Sachs.  It makes you really wonder--is the U.S. justice system really rigged to protect the rich?

At a minimum, the Justice Department should launch a criminal investigation, while also considering a civil racketeering lawsuit to capture the billions in illicit profits ripped off by this gang of hoodlums.

Public Restrooms Need Automatic Doors

These days, you can get into a public restroom and do your business without touching anything (at least with your hands).

The toilet flushes automatically.

The water faucet comes on automatically (if you flail your hands around enough).

The paper towels come out, or the hand drier starts, without touching anything.

But then BAM--you're faced with that germ ridden door to get back out!!

If the door opens outward, without a latch, you can always use your elbow or hip to get out; if not, you might be able to get away with crooking a pinkie around the handle.  Otherwise, all that non-touching is wasted as you grab the doorknob to get back to the real world.

Why not have automatic doors in public restrooms?  Then the cycle will be complete!

Travel Arrangement Woes

Much as we love the ability to make our own travel arrangements online, there are times when we long for the olden days of travel agents!

We had three instances lately of weird/bad things happening while making online travel plans.

The first was with Expedia.  While researching flights for a trip to Greensboro, we were surprised to see that there were no nonstops from the Washington region.  On previous trips, we'd had a few nonstop options.  Deciding not to take "no" for an answer, we went directly to the airline websites for United and US Airways.  Turned out there were several nonstop options, some fairly convenient, we might add.  Now we don't trust Expedia's listing of available flights.

This seems consistent with a more general trend that travel websites such as Expedia, Orbitz, etc. really aren't too interested in selling you flights--they want you to book hotels, cars and vacation packages.  Flights apparently are a loss leader.  (Or maybe the airlines don't want you booking through these convenient sites that show you the competition.)

The second problem came while we were directly on the US Airways website, looking at some flight options for Florida.  We weren't quite sure if we'd be leaving from the DC area, or Charlotte (due to a potential meeting), so we had one tab on our browser looking at DC flights, and another at Charlotte.  After deciding that DC was the way to go, we started booking the flight.  We clicked the flights we wanted, went through payment, etc.  After confirming everything--and paying--we saw that the flights that were booked were from Charlotte.  We had to call US Airways and get everything changed.  They politely waived the change fee.

Later, we tried an experiment where we again had two tabs open, looking at flights to the same destination from two different departure cities.  We booked a DC flight right up to the confirmation and sure enough, the website conflated the flights with the other city.  We then just closed the browser before paying, cancelling everything.

Lesson learned--don't try booking a flight on US Airways with two tabs open.  We haven't tried this with other airline websites.

The third problem happened with Orbitz, which we thought we'd give a try given disappointment with Expedia.  What a disaster that was!  With an impending snowstorm threatening airline havoc, we decided to move a Florida golf trip one day later.  The Orbitz website took us through a series of steps after we clicked on a link to change our flight.  After that series, which took a few minutes and appeared to put us on the cusp of booking our new flight, we reached a final screen that instructed to call an Orbitz agent.  Aaaauuuuggghhh!

Ok, so we called.  Recording says high volume due to weather delays, etc.  We enter a bunch of information over the automated phone system.  Finally, agent comes on--of course she has no access to what we entered while waiting.  With the agent, we basically start all over.

Not sure if the agent was incompetent, or what, but she was taking a long time.  Really long.  We had the US Airways website (just one tab!) up and knew exactly what we wanted.  We said we already knew about the change fee.  Nonetheless, she put us on hold to "research" the change fee and then research the fare restrictions.

Finally, about 50 minutes into the call (including waiting at the front end), she quoted a new fare--it was about $1000 higher than what the website said.  After a few moments looking at the website, we realized she had booked us into a flexible fare, instead of non-refundable (which was the original fare).

We asked her if she could just cancel the ticket (and give us a credit) so we could just book it over the US Airways website.  THEN she told us we could just go ahead and change the ticket on the website since we had a confirmation number.

Click, we hung up, after telling her she really was not at all helpful.  Five minutes later we'd made all the necessary changes on the US Airways website, with it costing us $120 difference (mainly the change fee coming back--the change fee outbound was waived due to the weather).

Lesson learned:  don't use Orbitz!

Who knows, if we learn enough other lessons, we might just hold ourselves out as travel agents to the less web savvy traveler!

Gov. McDonnell Done In By Wife's Greed

We were quite sad to see the news of former Virginia Governor Bob McDonnell's indictment on corruption charges.  On policy matters, McDonnell turned out to be relatively moderate, and he got some important things done, not the least of which was transportation funding.

Now it looks like he can add to his list of accomplishments ethics reform in Virginia!

McDonnell's downfall is largely attributable to his wife, Maureen.  It is not exactly clear how and when Maureen McD. became acquainted with Jonnie Williams, the former CEO of a small pharmaceutical supplement company called Star Scientific, but that "friendship" has proven quite costly.

(A number of years ago, the Curmudgeon ran into Williams and Star Scientific in some tobacco litigation, when the company was peddling what it marketed as a "safer" tobacco.  It was clear then that Williams and his company had some strange ideas.  Williams is a "big" personality--the kind that most wise people instinctively avoid.)

If the detailed allegations in the indictment against the McDonnells are true, then Maureen McD. apparently saw Williams as someone all too willing to provide her and her husband with extravagant gifts, while Williams saw the McDonnells as potentially willing stooges to shill for his company's questionable products.  Like a sugar daddy relationship for power and influence, instead of sex.  (We wonder how many other business executives received similar approaches from Maureen McD.--most would run at the first hint of such an obviously improper request.)

Of course, it's nothing new for a governor to promote a homegrown business--it's just part of the job at times--and it's typical for such a business to show a little appreciation, perhaps with a golf outing or a very nice meal.  But if the allegations against the McDonnells are true, they should clearly have known that they had crossed the line, big time.

In this case, Maureen McD. allegedly repeatedly went to Williams for favors.  These included cash and "loans" for as much as $140,000, and many expensive gifts, including thousands of dollars worth of designer clothing.  We love the story of Maureen telling Williams that she needed his help to purchase clothes for a swank dinner in NY.  According to the indictment, Williams then accompanied Maureen on a shopping trip where she spent more than $10,000 on designer clothes and accessories from Oscar de la Renta and Louis Vuitton.  We can just see the two of them having a good ol' time on a whirlwind tour of NY's high rent shopping district.  We wonder what the Governor knew of all this at the time.  (You also wonder if there wasn't more to her relationship with Williams, but that's pure speculation at this point.)

Maureen also asked Williams to purchase the Governor a Rolex watch as a "surprise" present.  Surprise--you're going to jail.  Thanks a lot, honey!

Maureen allegedly told Williams on more than one occasion that she and Bob were "broke".  Well, Maureen, people who are broke shouldn't be shopping at Oscar de la Renta and Louis Vuitton!

We're not absolving the Governor on this--while his wife led the charge, he let it happen, one way or the other.  And we certainly don't buy his claim that he did nothing wrong, at least if most of the allegations can be proven.  There appears to be plenty of evidence that the Governor did favors for Williams and Star Scientific that went well beyond what any other business could expect.

And it's silly to believe that Williams, who is not some childhood or lifelong friend of the McDonnells, was just doing all this out of the goodness of his heart.  He certainly expected something for it.  In the usual case, a politician will ask someone like Williams to make donations to his or her campaign, and to campaigns of like minded politicians or organizations.  While we accept this kind of official corruption all the time, providing personal benefits to state officials in exchange for influence likely violates the law.

It is unfortunate that the McDonnells showed such gross lapses in judgment.  Up to this point, Virginia had a good reputation for "clean" politics, at least relative to other jurisdictions (such as Maryland, or NJ).  It is now up to the Commonwealth's legislative leaders to push through reforms to discourage this type of behavior from state officials in the future.

Tomorrow Is Washington's "Winter Temperature Solstice"

With another "polar vortex" working it's way into our region, we're sure some of you are wondering when it's going to warm up again.

Well, have no fear, the winter temperature solstice is upon us as of tomorrow.

What do we mean by "winter temperature solstice"?  Well, that's the point in the winter when the average temperature reaches its lowest point--kind of like the shortest day of the year.  So, tomorrow (Jan. 22) the average high temperature in DC is 43 degrees, and the average low is 28 degrees.  (Forget about the fact that the forecast high tomorrow is 18 degrees--we're talking averages here!)  The next day, Jan. 23, the average high will jump up to 44 degrees, and the day after the average low will go up to 29 degrees.  So, on average, from here on out--until mid-July--the average temperature will be rising.  Hooray.

Of course, our winter temperature solstice is not as reliable as the real winter solstice, which is absolute.  It may very well be colder--or warmer, but not this year--than average on Jan. 22.  But you get the picture--we've turned the corner, in terms of temperature averages.

It's interesting that, as a general rule, in Washington, DC (we're not sure if this holds up in other locales), the temperature runs about 30 days behind daylight.  In other words, it takes about 30 days after the shortest day for us to get to the lowest temperature, and it takes about 30 days after the longest day for us to get to the highest temperature.

This is why Fall in Washington is usually much nicer than Spring--in Spring, as the days get longer, the temperature is lagging a month behind.  Conversely, in Fall, as the days get increasingly shorter, mild temperatures continue to prevail.

Don't believe us?  The vernal equinox (the day on which the amount of daylight equals the amount of nighttime) is March 20 this year.  On that date, the average high temperature is 57 degrees.  The autumnal equinox will occur on September 23, when the average high is a much balmier 77 degrees.  It's not until late November that the average high gets back down to 57!

There you have it--it certainly is not going to feel any warmer over the next few days.  In fact, it is likely to be the coldest spell of the season, accompanied by lingering snow from today's storm.  But ever so gradually, the atmosphere is warming up, with temperatures starting to rise.  Before long it will be Groundhog Day, and we'll really know when Spring is going to start!

Time To Retire The Verizon Voicemail Lady

Every day, millions of people are required to wait their way through Verizon's forced appendage to all voicemail messages with instructions about how to leave a voicemail message.

Is this really necessary?  Of course not--it's 2014 and people know how to leave a message without a nice female voice telling them to "please record your message" at the tone, and then either hang up or press "1" for more options.

Some messages add even more--letting you know that if you press a particular number, you can leave a "callback message."  I asked a sampling of friends if they had ever left a callback message for anyone--none had; most (including me) admitted to not even knowing what a callback message is.

Recently, I heard one message (might not have been Verizon) explaining that you could press another number to leave a text message.  Well, if I wanted to send a text message, I would've just done that.

This Verizon addendum adds 6-10 seconds to each voicemail greeting.  That means that if there were just 1 million messages a day (we're sure that's on the low side), then over the course of a year there would be 365 million messages extended by up to 10 seconds, for 3.65 billion seconds of lost time, which is more than 42,000 days of lost productivity.

I looked on the web for ways to remove the Verizon appendage, but it looks like Verizon doesn't give you that option.  (If I'm wrong, let me know!)

At one time, when Verizon charged callers by the minute, adding this addendum may have made economic sense (only for Verizon) by extending calls into an extra minute.  But with most callers now on unlimited plans, it doesn't even make sense for Verizon.

It's time to retire the voicemail instructions from the nice Verizon lady.  At a minimum, Verizon should offer it's subscribers a way to opt out.

Shame on VA Schools Closed Due to Cold Weather

Bah on the administrators of many Virginia school districts today, which are closed due to a little bit of cold air.  And congrats to the leaders of schools in DC and MD for showing some backbone by calling it a regular school day.

The facts:  school systems in Fairfax, Loudoun, Prince William and Stafford Counties, among others, are closed today due to very cold weather.  Arlington and Alexandria schools opened two hours late.  Across the river, however, where it was a tad colder, DC school and Montgomery County schools opened on time. They made the right call--their Virginia counterparts should be ashamed.

Yes, it is cold today, with temperatures dropping to levels not seen in nearly 20 years.  But 20 years ago, this type of weather was not that uncommon--happened about every other winter, in January, and usually lasted several days.  And it did NOT result in closing schools.

School administrators are the biggest wimps in the world when it comes to weather.  And very shortsighted. Someone should point out to them that it costs a lot of money--many millions of dollars--to shut down schools.  Parents have to make alternative work arrangements, or miss work entirely, and the schools themselves incur huge costs in lost productivity.

Further, just because kids aren't in school doesn't mean they aren't potentially exposed to cold, or snow, or whatever reason the schools decided to shut down.  In many ways, the kids are probably less safe out of school than in school.

But let's look at today's decision.  In many other parts of the country, winter temperatures in the single digits are fairly common.  Yet, they cope.  All it takes is dressing sensibly, making sure to cover up exposed skin. Hats and gloves, a scarf, and an extra layer of clothing beyond what you'd wear on a morning with temps in the 20's (common around here) is all that is needed.  Of course, you don't STAY outside for long periods of time.  A little common sense goes a long way.

So, if schools in other parts of our country, including big east coast cities like Philly, NYC and Boston, can regularly deal with this level of cold, and if DC area schools could regularly deal with this 20 years ago without closing, why the big panic today?

Part of it is media hype.  Nothing is more over hyped than the weather, because it sells newspapers, blogs and local television news.  Around here, it is common for television newscasters and weather blogs such as the WaPo's Capital Weather Gang, to trumpet potential snow a week out based on some not particularly reliable weather model.  We haven't had an "official" snowstorm (as measured at Reagan National Airport) of more than 2" in three years here, yet the word "snow" comes up almost every day of winter in someone's "forecast."

School administrators need to learn to see through the hype.  Their working assumption should be that school will stay open unless it absolutely HAS to be closed--for example, if there is a blizzard.  A cold snap, or 2-4 inches of snow, should not be enough to waste millions of dollars.

Back To Blogging

Hi Everyone--

It's been awhile since I blogged regularly, but time to get back into it--hoping I'll also start writing again, whether a new novel or something non-fiction!