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

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

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

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/

>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 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

>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



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>	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


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*								     *
*	Opinions expressed don't necessarily reflect my own views.   *
*								     *
*	There is no way that they can be construed to represent      *
*	any organization's views.				     *
*								     *
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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*       http://members.tripod.com/~graphology/index.html             *
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