…- and so the IEM honcho condemns the Cantor Exchange.
I disagree.
–
Jeremy Liew:
I predict that media buyers will focus on both a flight to quality and a flight to surety. This will benefit three types of startups: companies with large audiences, companies that sell direct-response advertising, and companies that offer valuable niche content.
–
A short post to thank all the people who e-mailed me to assure me of their support for this long-term endeavor.
There are so many luminaries and organizations who have said they were “-interested”- by this institute project that I am starting to think that this idea just can’-t fall apart —-the expectations are now too high, and our duty to the next generations is to succeed.
That said, I don’-t have yet the first cent for this institute, and 2009 will undergo the worst economic recession in our lifetime —-but who cares about the harsh reality, as long as we have sweet dreams. 
–
Financial Times:
After Enron, Hollywood bets on its own script for future profits
Published: December 20 2008 02:00 | Last updated: December 20 2008 02:00
From Mr Max Keiser.
Sir,
The potential for mischief with Cantor’s new box office futures contracts is enormous (“All eyes on Hollywood futures”, December 13). When I was running the Hollywood Stock Exchange during the 1990s I was constantly approached by the Hollywood studios asking me to move up the prices of their MovieStocks to influence the perception of their films in the weeks just before a movie was released at the box office.
I believe that when these box office futures contracts become available these same studios will redirect millions of dollars they spend on marketing to buy and sell futures contracts in order to drive the price, and therefore perception, of their own and competing studios’ films, higher or lower.
Perception is the currency in Hollywood, and pricing perception, while putting the price discovery mechanism for perception into the hands of the same hedge fund and futures trading industry that has, by and large, been responsible for the mess the global financial system now finds itself in, portends a new kind of disaster film none of us wants to see.
How long before taxpayers in the US will be asked to bail out the Hollywood studios after they have bankrupted themselves making risky futures bets trying to influence the perception of their own and other studios’ films? Does the US really need a new way to destabilise its economy with more dodgy derivatives? I think I have seen this movie before. It was called Enron.
Max Keiser,
Paris, France
Former CEO and Co-Founder, HSX Holdings/Hollywood Stock Exchange
–
Financial Times: All eyes on Hollywood futures
–
Previously: Cantor Exchange
Previously: Should the Hollywood Stock Exchange become a real-money betting exchange? – 2007-10-04
–
New York Times:
Revelation Rocks Bank in Ireland
By MATTHEW SALTMARSH
Published: December 19, 2008
A major Irish bank was shaken Friday by the revelation of 87 million euros, or $125 million, in undisclosed personal loans to the bank’s chairman — prompting his resignation as well as that of the bank’s chief executive. Sean FitzPatrick, chairman of Anglo Irish Bank, announced his resignation late Thursday after regulators discovered that he had hidden the personal loans from shareholders. The bank’s chief executive, David Drumm, also resigned. The scandal sent the shares in the bank plummeting […]
A statement Friday from the regulator, the Central Bank and Financial Services Authority of Ireland, said it became aware this year of “matters surrounding loans from Anglo Irish Bank to Sean FitzPatrick.”
“While it does not appear that anything illegal took place in relation to these loans, the financial regulator was of the view that the practices surrounding these loans were not appropriate,” the statement said.
Analysts said the scandal could affect the pace of the government’s support for the banking sector. […]
–
InTrade:
Where is my money held?
Your funds are held in segregated accounts with Irelands largest banks including National Irish Bank, and Anglo Irish Bank which. Your funds are completely separate and distinct from the Exchanges own reserves.
To provide additional transparency we have introduced a unique service where an individual member can have a specific account established at our bankers within the suite of segregated accounts. Contact us for more details.
–
Do become a member of our LinkedIn group on Prediction Markets, today.
we are now 173.
More information here.
Tonite, I will send an out e-mail to 2 or 3 persons to ask them, if they are kind enough, to review the mission statement of the Open Institute Of Prediction Markets and give me feedback. Many prediction market people and prediction market companies already told me that the concept is very “-interesting”-. It is a good start.
P.S. It won’-t be called the “-Open Institute Of Prediction Markets”-, actually. (You think I am stupid enough to tell all publicly?)
–
For being mentioned among the best most prominent European entrepreneurs.
AskMarkets will be a founding partner of the Open Institute Of Prediction Markets —-I hope very much so.
–
Barack Obama has named Gary Gensler, a former Treasury official under President Bill Clinton, to take over the Commodity Futures Trading Commission (CFTC).
–
New York Times:
Mr. Obama has vowed to reverse the deregulatory stance of the Bush administration and overhaul the entire system of financial supervision. Though Mr. Obama’s team has not mapped a specific plan, advisers on his transition team said reining in derivatives would be one of the biggest and most complicated parts of that effort.
–
Wall Street Journal:
–
Is deregulation to blame? – by Reason Magazine
2) The Commodity Futures Modernization Act of 2000 guaranteed that high-risk tools such as credit default swaps remained unregulated, opting instead to encourage a “self-regulation” that neverhappened.
In late September, Securities and Exchange Commission (SEC) Chairman Christopher Cox estimated the worldwide market in credit default swaps —pieces of paper insuring against the default of various financial instruments, especially mortgage securities— at $58 trillion, compared with $600 billion in the first half of 2001. This is a notional value- only a small fraction of that amount has actually changed hands in the market. But the astounding growth of these instruments contributed to the over-leveraging of nearly all financial institutions.
In the late 1990s, the fight over these and other exotic new derivatives pitted a committed regulator named Brooksley E. Born, head of the Commodity Futures Trading Commission, against the powerhouse triumvirate of Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert E. Rubin, and Securities and Exchange Commission Chairman Arthur Levitt Jr. Unsurprisingly, Greenspan, Rubin, and Levitt won. The result was the Commodity Futures Modernization Act of 2000, which gave the SEC only limited anti-fraud oversight of swaps and otherwise relied on industry self-regulation. The Washington Post has closely chronicled the clash, concluding that “derivatives did not trigger what has erupted into the biggest economic crisis since the Great Depression. But their proliferation, and the uncertainty about their real values, accelerated the recent collapses of the nation’s venerable investment houses and magnified the panic that has since crippled the global financial system.” In other words: The absence of a regulation didn’t cause the crisis, but it may have exacerbated it.
Part of the problem was a technicality. Instruments such as credit default swaps aren’t quite the same thing as futures, and therefore do not fall under the Commodity Commission’s purview. But the real issue was that Greenspan, Rubin, and Levitt were concerned that the sight of important figures in the financial world publicly warring over the legality and appropriate uses of the derivatives could itself create dangerous instability. The 2000 law left clearing-house and insurance roles to self-regulation. Without a clearinghouse, the market for credit default swaps was opaque, and no one ever really knew how extensive or how worthless the derivatives were.
In congressional testimony on October 23, Greenspan seems to have admitted error: “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform. But Greenspan still wasn’t convinced that regulation is the solution: “Whatever regulatory changes are made, they will pale in comparison to the change already evident in today’s markets,” he said at the same event. “Those markets for an indefinite future will be far more restrained than would any currently contemplated new regulatory regime.”
–
Previously: New SEC Chief
–
BACKGROUND INFO:
– CFTC’s Concept Release on the Appropriate Regulatory Treatment of Event Contracts…- notably how they define “-event markets”-, how they are going to extend their “-exemption”- to other IEM-like prediction exchanges, and how they framed their questions to the public.
– American Enterprise Institute’s proposals to legalize the real-money prediction markets in the United States of America
–
What a great pick.
Out of the gate, Ms. Schapiro faces potential controversy. In 2001 she appointed Mark Madoff, son of disgraced financier Bernard Madoff, to the board of the National Adjudicatory Council, the national committee that reviews initial decisions rendered in Finra disciplinary and membership proceedings. Both sons of Mr. Madoff have denied any involvement in the massive Ponzi scheme their father has been accused of running.
–
What a visionary regulator: inviting the fox inside the chicken house, that’-s clever, indeed.
Jason Ruspini, will Barack Obama replace the CFTC head, too?
–
