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Retail cannot be algorithmically driven. Great retail is all about that sense of adventure and discovery. The next wave on this space is really rich social interaction, using video, using media, to achieve that.

Jules Pieri, founder of Daily Grommet, remarking on the implicit tension between algorithmic and human curation. Eli Pariser frames a similar tension with his notion of the filter bubble: via Bloomberg

The plaintiffs’ claim against the defendant for ‘hot news’ misappropriation of the plaintiff financial firms’ recommendations to clients and prospective clients as to trading in corporate securities is preempted by federal copyright law.

We conclude that in this case, a firm’s ability to make news — by issuing a recommendation that is likely to affect the market price of a security — does not give rise to a right for it to control who breaks that news and how.

Robert Sack, U.S. Circuit Judge, writing in the joint opinion of a three judge panel, via Bloomberg. The opinion does not impact Judge Cote’s findings of copyright violations by Flyonthewall, it does undermine New York’s hot news doctrine and the enduring notion of property rights for the news.

As the Rajaratnam prosecution revealed, the “expert network” firms that produced high-level insights — allegedly by paying technology industry workers for inside information — hardly were engaging in legitimate research.

Jim Pavia, Editor, Investment News.

It’s surprising and disappointing to see Jim Pavia commit a gross failure of analysis in his review of insider trading. The Raj case wasn’t about expert networks. It was about insider trading.

Jim boldly misstates the circumstances, figuring a relationship that he thought must exist, and failing to recognize the fact that Raj was accused of insider trading based on information obtained through personal relationships with insiders, not through expert networks.

The crimes Raj has been convicted of weren’t conducted in the open. They were committed in the shadows, outside of any formal process. His information came from personal relationships and personal sources. If anything the formal compliance systems, controls, and policies of an effectively managed expert network would have scared him off and made him think twice about pressing for inside information. Knowing that an auditable record of his interactions would be on file at the network would have reminded him of his obligations to the law and society.

Yes. Insider trading is a problem. It poisons the market in a way that suggests the “game is rigged.” But one must also learn to recognize it for what it is – bad people doing bad things. Raj was convicted for gathering inside information through  personal relationships with insiders, not through expert networks.

Our biggest fear is Raj was found not guilty

Lee S. Ainslie III, managing partner of Maverick Capital: via WSJ

The expert network brand has been severely damaged. Most insider-trading investigations to date have more to do with direct, corrupt relationships between insiders and their investment brethren. But these became synonymous with the handful of exchanges alleged to have been facilitated by the likes of Guidepoint Global and Primary Global. Through a failure of analysis, insider trading and expert networks became one and the same.

Whether it was Rajat Gupta and Raj Rajratanam or the alleged extracurricular activities of various attorneys and accountants accused of passing along material nonpublic information to a scurrilous group of investors in search of an edge, though they weren’t facilitated by a network, they certainly stained the networks. The consequences will be pervasive and persistent for the industry, and we can already see a handful of changes – among them, compliance, consolidation and repositioning. Nonetheless, the consequences will be good, and they will reinforce the benefits of expert networks. Read the rest of this entry »

The New York Times headlined this advertisement in today’s DealBook. The subject line of the email was:

DealBook: How Far Will Insider Trading Inquiry Expand?

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“not one of us said, ‘Fonzie, jump a shark? Are you out of your mind,'”
Fred Fox Jr.

If you stand right fronting and face to face with a fact, you will see the sun glimmer on both its surfaces, as if it were a cimeter, and feel its sweet edge dividing you through the heart and marrow, and so you will happily conclude your mortal career. Be it life or death, we crave only reality.
Henry David ThoreauWalden

We may speculate with confidence when this band or that show jumped the shark, but do we know when Happy Days jumped the shark? No.

The fifth season of happy days brought the cast to Los Angeles. Memories of Elvis Presley’s Blue Hawaii, the Beach Boys, and Endless Summer conspired to roll the cultural archetypes of working-class

roustabouts through the waves and tribulations of a tropical setting. It was in the fifth season of an eleven season run, and many popular episodes would follow. Why, then, would an outrageous hijink from the Fonz, the otherwise unflappable assurance of cool, become synonymous with the show’s decline and inseparable from the culture’s idea of a fall from grace?

“Here we go, Fonz. I’m headed for the ramp. Are you sure you want to do it?” asked Richie Cunningham.  Fonzie gives him a thumbs up, and they plot an improbable route along the shoreline. Ralph Malph exclaims, “Look at that shark Potsie!” and points to a string of yellow buoys not more than fifty feet from the beach, marking the outline of the shark’s undersea pen. By now, the boat should have either skidded up over the sand or crashed through the nest of tall, wood stanchions holding up a not too distant pier. They hold their heads, work their hair and bite their lips. Fonz is going to do it. He’s going to jump the shark and usher into the idiom a phrase that would haunt the show and loom over many others for years to come.

The realization is said to have been made in 1987. The Iran-Contra scandal had broken the year before, and the ensuing investigation introduced C-Span to America while the many possibilities of Oliver North’s whereabouts and engagements distracted the audience from an increasingly bewildered presidency. A group of friends dropped the more the mundane engagements of a college education for the free-wheeling release of a few speculations on when Happy Days began it’s decline.

But the observation itself demonstrates one thing. The example doesn’t always fit the facts so much as fit the mold. In this case, Fonz having jumped the shark could only have happened with the onset of a general and persistent decline. It could only have happened at the end, not the beginning. But it didn’t.

To mark the decline of Happy Days with the Fonz jumping the shark relies on an accumulation of mistakes. Many years separated the group of friends and the fateful episode when Fonzie jumped the shark. The episode might have been only barely visible, mixed and spread among many others in the murky depths of their recollection – its position, unclear.

Syndication precipitated the slow erasure of sequence that had organized shows into seasons and seasons into the series. It mixed-up and confounded the series in a way that enabled one to connect jumping the shark with the end. Though the Fonz jumped the shark in season five, it could have happened anytime, so the question that fateful evening among friends wasn’t when did it happen, but when should it have happened? Though only three years had passed since the show had ceased production, the shift to syndication and its effects began earlier. Happy Days had long filled the slots before or after the evening news in an endless cycle of re-runs and run-ins between the periodically out of synch episodes – like a gropey old transmission, slipping between gears.

That night, the circle of friends conjured the decline of Happy Days irrespective of the facts. The distance in time softened the outlines of the past. Syndication took the sequence out of the series. It wasn’t in the middle. It wasn’t anywhere. Combined with the character of the show itself, it was easy to mistake its position for one closer to the end than the beginning. It was easy to mistake and agree to a reality according to the mold, not the facts.

The friends didn’t bother with the facts. The facts would have disrupted the story. And perhaps, if they had stood “face to face with a fact” and seen “the sun glimmer on both its surfaces, as if it were a cimeter [scimitar],” it would have cut right through their clever conceit of the irrepressible Fonz and his shark, concluding its career. So, in answer to Thoreau, do we only crave reality, be it life or death? Or are we just as happy to exist among the myriad inventions that underpin and imagine the relationships between the Fonz, a shark and the decline and fall of Happy Days?

this push towards things becoming more open is probably the most powerful and transformative social change… We may be the company that really leads this movement….It’s not clear that anyone else is going to manage it correctly.

Mark Zuckerberg, outlining the steady erosion of the concept of privacy in our time: WSJ

Jessica Vascellaro’s cover-story in the WSJ seats Facebook in a tension between going public and Zuckerberg’s remarkable ability to “delay gratification” and take a seat in “a long queue of tech barons with grand ambitions.” The real story, however, may be in her subtle jibes at one who might become “world’s richest twenty-something.” More than a thinly veiled personal attack, Vascellaro may be hinting at something more substantial: that the question of privacy in the 21st century will be meaningfully shaped by an ambiguous and controlling figure. Read the rest of this entry »

Tomorrow, starting tomorrow, we are going to pick Trenton up and we are going to turn it upside down

Chris Christie

The same focus I put on the issues they were concerned about four years ago, I will put on property taxes and auto insurance because those things are too high and we need to get them under control.

Christine Todd Whitman, the last republican governor that focused on property taxes [NYT: JENNIFER PRESTON; Friday, October 24, 1997]

This link has led to the fear that the Whitman tax cut would simply result in a dollar-for-dollar rise in local property taxes, thus negating any savings that taxpayers might realize.

Tim Goodspeed, November 1997, Manhattan Institute Report, considering the link between state income tax, property tax, and school funding. Goodspeed remarks on the potential for Whitman’s income tax cuts to lead to a corresponding increase in property taxes. Because 80% of income tax revenue would go to school districts,  and 20% would go to municipal aid and the homestead rebate, a decline in income taxes could yield a corresponding increase in property taxes to maintain funding across each of these budget items: schools; municipalities; and homestead rebates.

Goodspeed goes on to suggest that the flypaper effect would mitigate increases in property taxes, and the early reports were great. Jim Saxton said, in a report to congress,

A recent study by two economists from the Manhattan Institute, Timothy Goodspeed and Peter Salins, shows that most New Jersey localities did not raise property taxes after the Whitman tax cuts. A few localities raised taxes. On average, for every dollar cut in state income taxes, local taxes rose by only twenty-two cents. A typical household saved over $200 per year in state taxes. Households still witnessed a net tax cut of $156 dollars. The well-being of the New Jersey family is that much better by controlling more of their own resources.

Nonetheless, Goodspeed’s report does assent that “higher income districts…tended to raise their property taxes by more than other districts after the Whitman tax cuts,” which would account for the few localities that raised taxes. As we now know, these were soon followed by increases across the board, belying the flypaper effect.

GOV. CHRISTINE TODD WHITMAN: Yes, property taxes are going up, but that’s a function of local spending. It is not inexorably linked to the income tax, which is what everybody wants to make it seem. When my predecessor raised taxes $2.8 billion and put $1.5 billion directly into the school districts, through the Quality Education Act, property taxes still went up.

MAN ON STREET: The fact is that income tax cut only lowered our income tax by a miniscule amount, and in order to make up for the difference for the school budgets and whatever the townships need, everybody had to get a raise in their property taxes. My property taxes in the township I live in went up 14 percent, which equated to about, uh, $475 this year, because of the fact that she cut our income tax or gave us a reduction.

PBS News Hour: Interview with Whitman and others, November 1996

Real reform is going to require really tough choices at the local level. Our citizens should be asking why New Jersey, the most densely populated state in the country, spends more than any other state to bus a child to school. Citizens should ask, ‘Does New Jersey really need 1,600 separate units of local government?’

Whitman, in a speech to lawmakers on January 26, 1999, intimates that the structural issue behind property taxes resides at the municipal level. Nonetheless, she outlined an aggressive spending plan that did little to lower property taxes aside from introducing rebates. Assembly Speaker Jack Collins, a republican from Salem County, called it “a Christmas budget…Everyone should be happy with it. I think that it touched on every segment of our society: education, crime, the elderly and tax relief. I think it should be getting bipartisan support.” Democrats, on the other hand, remained concerned, and the democratic assembly leader, Joseph Doria of Hudson County observed, “New Jersey residents will still be the most highly burdened taxpayers in the country.” Whitman, however, continued to push the property tax issue from the state to the local level, which meant asking 566 cities and towns, 21 counties, 188 fire districts, and 611 school districts to sit down and sort it out — good luck with that.

Taxes in New Jersey represent 1.74% of a home’s value, compared with the national median of 1 percent. Essex county carries the fifth highest tax burden per a person, nationally. Westchester comes in first, with Putnam County, NY [oddly] coming in at number 10.

Tax Foundation, 2009 report

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