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May 2007′s Blog Post: INSIDER TRADING: World Bank employees speculating on the Paul Wolfowitz event derivatives at InTrade-TradeSports?? -

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For Aprils’s Fool Day 2007, Kenneth Rogoff wrote the following hoax.

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ForeignPolicy.com

MEMORANDUM:
TO: World Bank Staff
FROM: Paul Wolfowitz, President of the World Bank
RE: Insider trading in “Paul Wolfowitz resignation” contracts

Dear Staff:

As long as I remain Bank President, I intend to continue enforcing my signature anti-corruption initiative at the world’s most important international development agency. My past life as Deputy Secretary of Defense under Donald Rumsfeld has taught me the importance of carrying out a plan with unwavering certainty.

In that regard, I am writing to you with a stern warning. It has come to my attention that many of you are turning your internet browsers to TradeSports.com, where there is an active market in “Paul Wolfowitz resignation” contracts for 2007. (For those of you who don’t know, this is a website where you can take bets on a variety of political events.)

I hope you understand that any attempt by World Bank Staff to buy or sell these contracts will be considered insider trading in clear violation of my anti-corruption guidelines. Your knowledge of normal World Bank personnel procedures gives you a clear information advantage in predicting whether I will be forced to resign. You must not abuse it. Please note: the Bank’s prohibition on insider trading applies not only to immediate family but also to significant others (e.g., girlfriends).

Some of you have already queried my office about whether it would still be insider trading if, when you buy “Paul Wolfowitz resignation” contracts (betting that I will leave before 2008), you also sell short “Alberto Gonzalez resignation” contracts. (This is a bet that my friend, the U.S. Attorney General, will hang on through end 2007.) My emphatic answer is no! Long Wolfowitz, short Gonzalez is only a “relative value play” that hedges out the value of loyalty to President Bush. You would still be guilty of insider trading on your Bank-specific knowledge. (And who says I don’t know enough about finance for this job!)

I hope that by now, most of you have accepted my sincere apology for the unusual pay and promotion package given two years ago to your colleague, Ms. Shaha Riza. That is, when I arrived here from my position helping to plan and manage the Iraq war for the Bush administration. I have acknowledged my mistakes (at my present job, that is), and asked for your understanding. As staff, you understand how difficult it can be to navigate the Bank’s complex rules and procedures. Please do regard my small slip as providing moral cover for poor developing-country client states that are not able to meet the good governance conditions we ask before disbursing aid.

I trust you have not been unduly influenced by the recent letter calling for my immediate resignation, signed by forty-two former World Bank managing directors, senior vice-presidents, vice-presidents, and directors. You and I can surely see through this thinly-veiled attempt to manipulate the value of “Paul Wolfowitz resignation” claims. I want to assure you that the World Bank Internal Investigations Unit will look into this matter. If any of the letter’s signatories are found guilty of price manipulation, they will be dealt with harshly. Let’s not forget who is paying their pensions…

Some of you may wonder how I can remain at the Bank when so many staff are openly seeking my dismissal. (Thank goodness most of you have tired of wearing those silly blue protest ribbons.) And what about the claim that my deputy, New Zealander Graeme Wheeler, told me I should resign at a supposedly-closed senior staff meeting last week?

Let me fill you in on the facts of life. Ever since the World Bank was founded shortly after World War II, the President of the United States has always hand-picked the President of the World Bank. That’s life; stop whining. We Americans may hold only 16 percent of the shares at the World Bank, but we insist on keeping its presidency as our birthright. So what if there might be better qualified candidates from the developing world or Asia? I am tired of hearing people say that South African finance minister Trevor Manuel would be far more effective in my job than I am. (Trevor is a good guy, but dream on. He has neither the right passport nor the right friends.)

Speaking of which: Some of you may also wonder whether World Bank staff, directors, or presidents are permitted to buy “George W. Bush Impeachment” contracts, which are also presently listed on TradeSports,com. Tricky question, but the bottom line is that your employment generally precludes political activity of this type. You will be relieved to know, however, that I have already instructed the Bank legal staff to allow exceptions to the insider trading rules for anyone who can demonstrate a truly compelling need to hedge against a change at the White House.

Thank you for your kind attention, and I appreciate your continuing to focus on your important work in relieving poverty during this unfortunate episode.

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Ultimately, Paul Wolfowitz resigned from the World Bank on a Saturday. The next Monday, he was back at the American Enterprise Institute —the nest (with the Heritage Foundation) of all neo-cons and warmongers who have destroyed the Republican Party.

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Paul Wolfowitz’s profile at the American Enterprise Institute

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- How the neo-cons drove the United States of America into the unecessary Iraq war

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Previously: The CFTC is going to close the comments in 15 days. We have 15 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges, and counter the evil petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowitz, the bright masterminder of the Iraq war).

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[...] In theory, a quiet, dispersed buy of these very cheap contracts coupled with a well-timed leak could be a quick way to get some cash into the Palestinian Authority’s bare coffers. And Hamas wouldn’t even have to recognize Israel: Just whisper in the ear of a New York Times reporter that a deal is in the works, sell when the price spikes, and then deny the story. [...]

I’m not sure the InTrade-TradeSports (or BetFair) event derivative traders would rush to buy just after reading just one story based on one leak. Before putting their money at stake, they would research the issue. There is a space of two or three days, I believe, between the date a story surfaces and the date the prediction market begins to become vibrant.

Plus, selling quick in thin markets is not that easy, as Alex Forshaw will tell you.

Previous: FAKE WORLD BANK MEMO: Harvard professor of economics Kenneth Rogoff laughs in Paul Wolfowitz’s face. + INSIDER TRADING: World Bank employees speculating on the Paul Wolfowitz event derivatives at InTrade-TradeSports??

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Work Experience

President of World Bank: 2005-2007
Responsibilities: Reining in European lefties, raining tax-free money on Arab girlfriend, and giving anti-corruption efforts a bad name.
Achievements: Paralyzed the international lending apparatus to the point where small countries had to max out their Visa cards to pay for malaria medicine. Learned the traditions of many cultures, including those of Turkey, where you apparently are not supposed to take off your shoes at mosques to reveal socks so full of holes that both big toes poke blasphemously through.

Deputy Secretary of Defense for President George W. Bush: 2001-2005
Responsibility: Starting a war.
Achievements: Mismanaged the world’s most powerful army. Shattered the system of international diplomacy that kept the peace for 50 years. Undermined the credibility of American intelligence operations. Needlessly brought humankind to the brink of nuclear war. Destroyed Iraq.

Demented Visionary: 1993-2001
Responsibility: Concocting a delusional plan for regime change in Iraq with pals like Shaha Riza, Ahmad Chalabi and his merry band of Iraqi exiles who conjured up phony intelligence about Saddam’s W.M.D.
Achievements: Imagining an Iraq that didn’t exist.

Free, pirated version of the column here. THE SITE IS NOT SAFE FOR WORK.

Previous: FAKE WORLD BANK MEMO: Harvard professor of economics Kenneth Rogoff laughs in Paul Wolfowitz’s face. + INSIDER TRADING: World Bank employees speculating on the Paul Wolfowitz event derivatives at InTrade-TradeSports??

Static chart from InTrade-TradeSports

Contract expired to 100.

Max Keiser (ex-HSX): MARKETS SAY WOLFOWITZ IS TOAST!

This neo-con is soon to be ousted, it seems. I won’t cry for him. What a bastard.

Previous: Does Paul Wolfowitz have a future at the World Bank? + FAKE WORLD BANK MEMO: Harvard professor of economics Kenneth Rogoff laughs in Paul Wolfowitz’s face. + INSIDER TRADING: World Bank employees speculating on the Paul Wolfowitz event derivatives at InTrade-TradeSports?? + Harvard Professor of economics Kenneth Rogoff wants meritocraty at the World Bank.

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Paul Wolfowitz to announce his resignation on/before 30th June 2007 [*]

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[*] InTrade could write: “before June 30, 2007, midnight, ET”.

Wolfowitz, as much as anybody, started one of the stupidest wars in history. It’s hardly surprising that the employees of the World Bank don’t want to be shamed by having such a leader. That, knowing how many enemies he has made, he then engaged in corruption on behalf of the girlfriend [*] who encouraged his delusions about the Middle East only shows what horrible judgment the man has.

[*] “Girlfriend” or mistress??

Previous: Does Paul Wolfowitz have a future at the World Bank? + FAKE WORLD BANK MEMO: Harvard professor of economics Kenneth Rogoff laughs in Paul Wolfowitz’s face. + INSIDER TRADING: World Bank employees speculating on the Paul Wolfowitz event derivatives at InTrade-TradeSports?? + French daily LE MONDE falls into the FAKE WOLFOWITZ MEMO trap. + Harvard Professor of economics Kenneth Rogoff wants meritocraty at the World Bank.

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As an outsider it is hard to judge many aspects of Wolfowitz’s tenure. I take his continuing unwillingness to resign to be the biggest argument against his managerial abilities. He has lost the public relations battle and can no longer be effective. Why should he want the job any more? The obvious hypothesis is that he is emotionally committed to a losing battle, and is not placing much weight on the long-term interests of the institution he is running.

Previous: Does Paul Wolfowitz have a future at the World Bank? + FAKE WORLD BANK MEMO: Harvard professor of economics Kenneth Rogoff laughs in Paul Wolfowitz’s face. + INSIDER TRADING: World Bank employees speculating on the Paul Wolfowitz event derivatives at InTrade-TradeSports?? + French daily LE MONDE falls into the FAKE WOLFOWITZ MEMO trap. + Harvard Professor of economics Kenneth Rogoff wants meritocraty at the World Bank.

External Link: In this Aljazeera segment on YouTube, Max Keiser (co-founder of the Hollywood Stock Exchange) investigates whether the World Bank really alleviates poverty.

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The World Bank executive board has concluded that the bank’s president, Paul D. Wolfowitz, broke ethics rules in engineering a hefty pay raise for his girlfriend, and plans to try to end his tenure next week, senior bank officials said yesterday. Board members do not want to vote to fire Wolfowitz, the officials said, since that might provoke a rupture with the bank’s largest shareholder, the United States. Instead, they are inclined to adopt a resolution saying they have lost confidence in him, hoping that will persuade him to resign. [...]

Previous: Does Paul Wolfowitz have a future at the World Bank? + FAKE WORLD BANK MEMO: Harvard professor of economics Kenneth Rogoff laughs in Paul Wolfowitz’s face. + INSIDER TRADING: World Bank employees speculating on the Paul Wolfowitz event derivatives at InTrade-TradeSports?? + French daily LE MONDE falls into the FAKE WOLFOWITZ MEMO trap. + Harvard Professor of economics Kenneth Rogoff wants meritocraty at the World Bank.

UPDATE: In this Aljazeera segment on YouTube, Max Keiser (co-founder of the Hollywood Stock Exchange) investigates whether the World Bank really alleviates poverty.

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Previous: Does Paul Wolfowitz have a future at the World Bank? + FAKE WORLD BANK MEMO: Harvard professor of economics Kenneth Rogoff laughs in Paul Wolfowitz’s face. + INSIDER TRADING: World Bank employees speculating on the Paul Wolfowitz event derivatives at InTrade-TradeSports?? + French daily LE MONDE falls into the FAKE WOLFOWITZ MEMO trap. + Harvard Professor of economics Kenneth Rogoff wants meritocraty at the World Bank.

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I wonder whether those InTrade-TradeSports are dated correctly. I’m writing this blog post on Friday, May 11, 2007, in the early morning (3:00 AM ET), and I see that the transactions for the 11th of May are already breaking a record. Bizarre. It was yesterday‘s volume, probably. I have already noticed this on Midas Oracle, and no action was taken to correct this bug.

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Brad DeLong

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Previous: Does Paul Wolfowitz have a future at the World Bank? + FAKE WORLD BANK MEMO: Harvard professor of economics Kenneth Rogoff laughs in Paul Wolfowitz’s face. + INSIDER TRADING: World Bank employees speculating on the Paul Wolfowitz event derivatives at InTrade-TradeSports?? + French daily LE MONDE falls into the FAKE WOLFOWITZ MEMO trap. + Harvard Professor of economics Kenneth Rogoff wants meritocraty at the World Bank.

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