As a sign of Morgan Stanley's bad faith, he said, the bank had appended more than 100 of its reports with a "warning notice", claiming it had direct financial interests in LVMH. This was "false", the lawyer said: Morgan Stanley had no direct interest in LVMH. On the other hand, he said, the US bank gave no notice to its clients that it was working closely with Gucci.

mred- ok - so if this is true, its one of my favourite stories ever.

it 'suggests' that wall street is rotten to the core. it reminds me that people will do whatever it takes to gain an advantage. evolutionary psychology is so much bigger than any phallisee like the construct of morality, or a legal framework.

it also tells me how pervasive and orchestrated 'these things' can be. there were a whole bunch of people who explicitly, specifically signed off on this. it'll be fun to watch the 'plausible deniability' spinsanity.

the story also reiterates how invalid it is to take *anything* at face value. every time i hear some story the first question has to be 'why am i hearing/seeing/reading this? for what reason am i being told this story?'.

another thing about this story is that it hilites how silly rules/laws can be (disclosure rules in this case). this is not news of course - but ive always thought that rules are dumb - not in any maverick sense - but im tempted to think that they are simply a bad way of organising society - they are often ineffective, and often actually distort behaviour absurdly. im not at the point where im sure that there should be *no rules*, but there are some problems with any model that includes any rules. incrementalism seems inevitable. cheating seems inevitable. compliance is expensive. regulation is expensive. regulation is ineffective. and even the existence of regulation gives false comfort - its illusory, and the comfort is expensive. this story is case in point. ok so there is evidence of conflict of interest problems in the financial industry 5 years ago, so they introduce sarbanne/oxley which in part sez 'thou musteth disclose'. but by the time u get to defining 'thou' and 'musteth' and 'discloseth', nothing makes sense any more. what does it mean to add the disclaimer question to a fund manager interviewee on tv 'do u own any of the stocks that u r dissing?'. i dont know what the disclosure rules are like - but there are *always* ways to get around the rules. and people will always find ways to circumvent rules. i might have a massive short position on a stock and before i go dis it on the tube, i buy one share - therefore when im asked 'do u own any of this stock?', i can say 'yes', and therefore my criticisms of the company seems more credible. or i mite be a fund manager who owns every stock, but is underweight in a particular one. whatever the rule, people will find a way around it. we are good at doing that if properly motivated.

people, the whole concept of 'zero' is a myth. its completely arbitrary. our whole culture is built around the binary notion. something exists or it doesnt. our language the same - yes or no. watching the stockmarkets on tv is the same - anything in the positive cloumn is 'good' and 'green', and losses are negative and red - like a stop sign or many of natures other warning signals. if u have a rule, then u have a step function, and that creates distortions. perhaps if we imagine joschmo watching the news from the couch and every night for 2 weeks he sees that stocks are 'in the red'. red red red every nite. praps decides to sell his stock portfolio. but the mkt may have been virtually standing still - praps losing just one point per day - but the red warning signal makes joe sell. however if the mkt falls by 200 points over that period, with intermittent green days, then the person might not be as likely to sell his/her stock. unless u have an explicit rule that says '2 weeks of red days are a negative portent' then the decision making is obviously, necessarily flawed. the zero is arbitrary - just as it is arbitrary in terms of zero degrees celsius. which means nothing apart from its the temperature that water freezes. is ten degrees twice as hot as 5 degrees?

we hear of 'legislators playing catchup' - of course they are, thats the nature of the game. they will also never get to an end point - which means that the outcome will always be the same. if thats the case, then all efforts along the way are simply very expensive, very dead, and very woody. so why bother? the war on drugs is one example - its impossible to keep drugs out of jail for fucks sake. dripping with irony. at some point u just throw your hands in the air like ya just dont care. give up already. sun tsu: if u cant win, dont fight. ipso fukked-so.

at the same time, the murky enron cloud only exists because there were rules under which they could hide things. if there were no rules, there'd be no enron(s). and the entire legal and accounting deadweight would have to move to value creating enterprises. why have the rules? ken freeto lay is gonna walk anyway. meanwhile martha will be doing the other walk, the perp walk. and i see that there are currently 70 police officers raiding michael jacksons ranch on some undisclosed tip from a 12 year old. apparently not even FauxNews could make the laci peterson case sufficiently distracting. at the same time, putin is bashed because of selective application of laws re yukos. how many priests commit crimes worse than wackojacko is accused of? in any objective world, diocese would be being waco'd weekly. at the same time, we have a smear campaign on these horrible muslim skools that are, shock horror, financed by the apparently evil 'charity organisations' - i cant even remember the stupid name for them that the media uses - starts with an m - 'madras' or 'makebeleive' or some shit - probably rhymes with alqaeda or hezbollox or baathist or foreign insugents or remnants or homicide bomber or some shit. imagine if you remove the 'rule' of separation of church and state. would things get better or worse? things would be a whole lot fucking clearer. there'd be no more trojan horsing of the 'state'. it sounds like an ugly future as a liberal, but isnt 'church in states clothing' equally ugly. or more. probably more, cos we dont usually cloak ourselves with something unless it makes us look better than we really are. are we better off without the illusion?

hats off to elliot spitzer by the way. praps similar to the legend of his crime fighting namesake. he has been fighting the good fight for a while - the mutual fund thing is pretty big. each and every one of these scandals should tear down the system - but each one seems to slowly slip away. was there a single lesson learnt from s&l? a single one? dont leave the fukking cookiejar on the bench. and we know this shit has been going on forever, despite the type of lid on the cookie jar - it fails. it will always fail. it will fail if u have regulation, so why not simply take the regulation away. it simply doesnt do what its sposed to do. i dont argue that the 'little man' *should* be protected - but , counterintuitively, perhaps the best way to protect them is to remove the illusion of protection. let it be apparent that research is important and that individuals are on their own, unprotected. i cant help but wonder if this mechanism for scrutiny would be more effective in looking after the interests of the everyman than the current situation. imagine if we were relatively as involved and meticulous with managaing our 'finances' as we are when we upgrade our airconditioners. we'd spend less time juggling the tradeoffs between an extra fifty bux vs remote control, and more time looking after bigger financial issues - like whether our retirement was is at stake cos i outsourced to/ trusted a broker whose incentives and motivations are different to mine. i know how i treat my customers, and im never really convinced when i tell them that buying more of my product is in their best interest, but at the same time, i think my broker is trustworthy. and that the mgmt of the companies i invest in are acting in my interests, as a minority shareholder. wrong, and wrong.