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<title><![CDATA[Comments for entry "Two Rules of Power" at Dilbert.com Blog]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/898]]></link>
<description><![CDATA[Regular thoughts and updates from Dilbert.com]]></description>
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<title><![CDATA[Comment  from Blackheart]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2006610]]></link>
<description><![CDATA[James Glattfelder recently gave a TED Talk called &quot;Who Controls the World&quot;. He provides the science to back up Scott's gut-feeling/theory. He is not a riveting speaker but his data is very impressive. It shows that about 737 &quot;players&quot; or companies control over 80% of the world's economy and that within that group of 737 players about 146 individuals control over 40% or the world's economy. He also says that these 146 act together but not in a conspiracy type of way....more like watching a flock of birds fly (or a swarm of bees).]]></description>
<pubDate><![CDATA[MonPMCDTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from drazen]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2004436]]></link>
<description><![CDATA[I don't understand this nonsense about the &quot;greedy rich.&quot; Whether or not you think they manipulate things, it's actually quite rational behavior. Let's go through it step by step: 

(1) You have something worth protecting. For the rich, this is obviously money/wealth. 
(2) You therefore, often justifiably (at least to yourself!), want to ensure that you keep that thing. 
(3) There are several sinister actors who want to take that thing away from you (criminals, governments, people who scream &quot;social justice,&quot; jealous family members, etc.)
(4) The more you have, and the more publicized it is, the more sinister actors you will attract. 
(5) Money and/or wealth alone, do(es) not protect you from the people who seek to take those things from you. 
(6) What is the only way to guarantee you hold on to something? Power, of course. That power might be a weapon, it might be the ability to hide, but the BEST source of power available is always going to be a government that presents itself as the legitimate authority upon and arbiter of all things, or at least everything it can get away with. Therefore...
(7) Human nature leads any rational actor with something of value to seek out as much power as they can find, lest it be wrested from them. Leading to...
(8) Once power is attained, a rational actor will want to strengthen that power as much as possible. 

It's not so much that power equals power. It's more like power equals power, and everything else is just a tool to attain it (money included). 

Another trick is that boards of directors always vote for huge salaries and golden parachutes. Why? All the CEOs are on each others' boards of directors, directly or indirectly. Investment funds and large companies are the largest shareholders of most everything - whose interests do you think they are primarily looking out for? I'm guessing it isn't the small investor. 

As far as controlling the markets themselves, I prefer a &quot;temporal transaction profits tax&quot; to eliminate manipulation. Hold on to a stock for less than 1 second? Oops, the capital gains rate on that becomes 99%! The rate would eventually drop all the way down to 0% for investments in a 401(K) pulled out after retirement. And of course, no more &quot;too big to fail&quot; - if your bank or company goes belly-up, that's it. No second chances, no propping up failed companies.]]></description>
<pubDate><![CDATA[FriPMCSTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from BryanK2]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2004265]]></link>
<description><![CDATA[Yes, I believe you're right. I'm not in the slightest way a conspiracy theorist, but this sounds totally plausible.]]></description>
<pubDate><![CDATA[FriAMCSTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from Admiral]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2004197]]></link>
<description><![CDATA[As Scott has pointed out, it is inevitable that at some point, the financial markets will be prisoner like a cat turd in a box.  It's happened every 10 years or so and at some point, we won't recover. Those who desire money for the sake of more money will eventually destroy the very mechanism that provides their wealth.

How about this:  Revamp the way the stock market works.  

-The Book Value of a company is what determines the stock price.  The actual value of the company as reported to the IRS.

-a certain percentage of dividends based on the profit of the company on a monthly or quarterly basis is dispersed to shareholders.  That way, even your middle to lower-middle class can reap the benefits of even a modest portfolio.

-the value of the stock is reported once a month or every quarter (same as when you get your dividend).  That's when the stock price changes, not the roller coaster of stupidity that it's based on now.  You can buy and sell your stock in the meantime.

-commodities are different, I'm talking about company stock.

-no more betting on options, derivatives, craps, roulette, or Shang-hi

-To be publicly traded, the CEO can only make 25% of the lowest salaried employee.

-bonuses are even throughout the company (based on your pay rate %).  The CEO don't do all the work, they have employees.  And they did it for their paycheck, not the CEO's.

I have a lot more on this thought, but the general idea is to start removing the greed from our daily lives and business.  Focus on the business, not making the shareholders happy.  If you have a strong business, the profit will follow, not the other way around (as illustrated in almost all Dilbert strips pertaining to how the business is run).

So much corruption, scandal and just plain evil is so interspersed throughout our society, no wonder why we can't seem to get ahead very fast for very far.

I'd love to hear what some people would think on this idea.  Again, it's in very short form, but I hope the idea gets across.   I want to get a feel for the reaction to certain ideas I have, so when I run for Governor then President, I'll know what hill or mountain stands before me.  

Thanks.
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<pubDate><![CDATA[FriAMCSTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from erictedesco]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003839]]></link>
<description><![CDATA[Could you snap some pics of the next ultra-rich &quot;reveal the indicator&quot; gathering and post them on your blog? It must be a sweet party.]]></description>
<pubDate><![CDATA[ThuPMCSTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from hankfu]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003838]]></link>
<description><![CDATA[Scott, I agree with your analysis though I suspect evidence will be hard to come by.  Keep in mind that trading algorithms are programmed by smart people who make mistakes.  After 9/11, the panic button on those algorithms were pushed and the market nosedived in the months following.  However, if you had held your nose and jumped into the general market with an index fund at the depths of the sell-off, you would have been guaranteed a couple hundred-fold return on your investment in about two years.  

Also, if technology and approach converges, it creates self-fulfilling prophecies.  If a certain stock meets the general &quot;sell&quot; criteria in a computer algorithm, then everyone using a similar algorithm sells and the stock plummets.  A smart trader could then scoop in and buy at rock-bottom prices and make a fortune.  That is why it is a market.  

Where you are right is your comment regarding data points.  However, I would even take that further to say the data points themselves are manipulated.  Look at inflation and unemployment for example.  CPI is typically reported ex-food and energy...what?  Isn't the point of inflation measures to gauge the spending power of individuals and companies?  Energy and food have shot up over the past 4 years in case you've been paying attention.  This decreases the purchasing power of people and companies and thus impacts the economy.  Unemployment that is reported in the news is measured based upon people activitly looking for work...what?  Isn't the point of unemployment metrics to measure the productivity of the citizens?  What about the &quot;real&quot; unemployment rate of 15% of Americans of working age who cannot find a job and are therefore unemployed regardless of whether the labor says they are or not?  Big difference between 15% and the publicized 7.8% (or so).  

As an aside, I would propose a new set of metrics to measure the economy that would include the general status of the people.  My proposed measure would weight traditional GDP numbers, unemployment rate, purchasing power (not CPI), plus measures that determine whether economic growth is really positive based upon whether we are producing goods to replace worn/obsolete goods or actual new goods are being produced.  The current GDP of 2% would in my proposed metric actually be negative as I would discount phony spending (government throwing money/liquidity into the economy) designed to make the GDP look good.]]></description>
<pubDate><![CDATA[ThuPMCSTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from delius1967]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003837]]></link>
<description><![CDATA[Your second premise is wrong, especially with regard to information technology.  As long as it is equitably distributed, information serves the people much more than the government, or whatever power cabal you are worried about.  The Arab Spring is just one example; WikiLeaks is another.  Even the Drudge Report qualifies.

The key is how difficult and expensive it is to propagate your message to the world.  Once upon a time, the only methods of mass communication were slow and expensive.  In the 20th century, with the advent of radio, and later television, mass communication became much faster, but was still very expensive.  The Information Age has moved it to being fast AND cheap.  the thing is, centralized blocs of power (CBPs?) actually prefer that communication be expensive, because then they can afford it but no one else can.

This is why I never understood why some people fret over the loss of privacy that has been happening in the last few decades.  They equate &quot;privacy&quot; with &quot;freedom&quot; but that's totally false.  We're freer than we've ever been even while the government and corporations amass huge amounts of data about us.  We're freer, because the technology that erodes our personal privacy can also shine a spotlight on the shenanigans of the CBPs, restricting them and giving us more freedom than we ever had before.  That's a tradeoff I'll gladly make.

Don't be fooled by anecdotal evidence; the reason you hear about more and more incidents of freedom being taken away isn't because there ARE more of them, it's because there are more spotlights out there.  Anyone with a camera in their phone and an Internet connection -- i.e. pretty much everyone -- can be a reporter.  It is becoming harder and harder for CBPs to get away with what they have gotten away with for, really, centuries.
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<pubDate><![CDATA[ThuPMCSTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from Dil_doh]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003836]]></link>
<description><![CDATA[I declare EMU's contribution to this discussion invalid as it appears he may know what he's talking about.]]></description>
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<title><![CDATA[Comment  from Quizblorg]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003835]]></link>
<description><![CDATA[Tom Clancy has written a good novel in 1994 with part of that market manipulating thing. Japanese nationalists infects Wall Street with a computer virus that causes an instant crash in the economy because it triggers the algorithms of the trading computers. This was a good novel, a sequel to the The Sum of all Fears (that also made it to an excellent movie later).]]></description>
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<title><![CDATA[Comment  from RavenBlack]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003833]]></link>
<description><![CDATA[Your &quot;technology concentrates power&quot; argument makes no sense - increasing the power of terrorists or small armies isn't concentrating power, it's distributing power. It might have looked like a good argument if you had just kept quiet on that front and stuck with the &quot;government gets more power&quot; position. Alternatively you could argue that technology increases power only for the wealthy, since the poor can't afford the newest technology, and thus concentrates power. Neither way is really true, but they both make for a better argument than &quot;technology concentrates power because look, more distributed power!&quot;]]></description>
<pubDate><![CDATA[ThuPMCSTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from RavenBlack]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003832]]></link>
<description><![CDATA[Why would a powerful person risk trying to manipulate the market post-hoc by their sales, rather than simply making friends with Bernanke, getting a heads-up whenever he's going to announce &quot;we might stop quantitative easing soon&quot;, sell everything, and buy it all back inexpensively the day after the announcement but before the subsequent &quot;I didn't mean *now*&quot; announcement.

Given that it's virtually guaranteed that these announcements will cause predictable stock market fluctuations, and there is no actual point to the announcements *other than* causing stock market fluctuations, it seems reasonable to assume that this is one of the methods used by the wealthy to consolidate more wealth from the suckers who play in the stock market and aren't friends with Bernanke.

I believe that's legal too; not insider trading because there's no &quot;insider&quot; knowledge of any particular stock being transmitted.]]></description>
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<title><![CDATA[Comment  from Dingbat]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003827]]></link>
<description><![CDATA[I prefer to believe that the rapidly increasing concentration of wealth (and therefore power) in the hands of a few is random chance.

http://www.youtube.com/watch?feature=player_embedded&amp;v=QPKKQnijnsM

To believe otherwise, is....sort of uncomfy.]]></description>
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<title><![CDATA[Comment  from MrAndrew]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003826]]></link>
<description><![CDATA[Scott, your theory isn't that far fetched at all.  I think a small scale version of this may have happened with Dendreon (a biotech firm) stock on April 28, 2009.  Businessweek posted a story commenting on the strangeness of it all the following day.

http://www.businessweek.com/investing/insights/blog/archives/2009/04/dendreons_myste.html]]></description>
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<title><![CDATA[Comment  from EMU]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003819]]></link>
<description><![CDATA[Sorry, I still don't see it.

I am assuming you imagine this as a way to fleece the robotraders (quant fonds).
So you've got a bunch of autistic geniuses programming secret algos for quant fonds. These guys don't talk to the rich people because they don't talk to anyone except the psychologists paid to keep them happy.

Then you've got some pundits, bought by your billionaires who guess what those autistic geniuses tell their secret algos to react to, how much this will depress prices and then spread the rumors.

Then you hope that all the quant fonds react in the same way AND leave the billionaires enough time to buy at the bottom AND don't cause circuit breakers to butt in at the exchanges.

Sorry, I don't think so. Mainly because surely some quant fonds will buy before the billionaires. Any algo that does value investing, for instance. And your billionaires are probably not stupid enough to think they can reliably outthink the quant fonds.

In my opinion markets are chaos (in the mathematical sense) overlaying some long term trend. Or, what George Soros calls a &quot;historic process&quot; which means much the same, namely a nonlinear system bumping along a trend. This means you'll get Minsky moments whose arrival you just can't predict.

If I were to fleece &quot;the markets&quot;, I'd use the Goldman Sachs method. Send your people as finance ministers, FED bosses and advisors into the white house. No cigars required and the profit is even legal.]]></description>
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<title><![CDATA[Comment  from Melvin1]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003817]]></link>
<description><![CDATA[Very interesting and plausible-sounding conspiracy theory, but I'm still not buying it.  Plus, I recognize your mind-manipulation games.  You overstated &quot;It has always been true that power finds power&quot; too often.  And power usually competes with power.  This is true in markets as well.  Institutional investors make up the vast majority of the markets, and to game it, you would need to do the opposite of what the majority is doing.  The folks you talk about are in competition with each other, not collusion.

And for those discussing high-frequency trading, I'm unsure whether it should be allowed, but... if you're a long-term buy-and-hold investor (like Buffett), it doesn't affect you.  He has owned Coca-Cola for decades; someone getting in and out fifty times yesterday has zero impact on anyone who didn't trade yesterday; and then it's a tiny fraction of a penny.]]></description>
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<title><![CDATA[Comment  from rambis]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003812]]></link>
<description><![CDATA[Close, but it's not quite like that. Me and Warren Buffett sit around smokin' fatties, listenin to Snoop.  Branson rolls up with some Cristal and is all like, whaddup wit apple?  That last quaterly statement was whack!]]></description>
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<title><![CDATA[Comment  from j_l_Larson]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003806]]></link>
<description><![CDATA[All technology is a two edged sword.  Have you already itemized the indicators?  That might be interesting.]]></description>
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<title><![CDATA[Comment  from lgriot]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003720]]></link>
<description><![CDATA[Your first post on this was very clear, i am surprised that you had to spell it out again. Did you get a lot of feedback saying it is impossible?]]></description>
<pubDate><![CDATA[ThuAMCSTE_Rthth]]></pubDate>
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<title><![CDATA[Comment  from de_economist]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003626]]></link>
<description><![CDATA[I agree that the &quot;stock market&quot; is probably more manipulable than people believe but I don't find the mechanism Scott suggests to be convincing. 

Coordination without explicit communication is a very difficult thing. Even when there is explicit communication, promises like &quot;I will go all-in on the stock market if unemployment falls below 9.7%&quot; is cheap talk since there is not much to lose by not keeping the promise. It's also not clear how the manipulators can deal with multiple &quot;leaders&quot; making conflicting promises. Surely there is an advantage in being the leader hence lots of billionaires will want to claim to be the guy who will start the avalanche. There are just too many actions, too many big players and too many time points for such tacit collision to be likely. 

How do the billionaires know that the it is now time to buy back in? Maybe the avalanche has just started? How do you (and the billionaires) know that the super computers follow the algorithm &quot;sell if market falls 1%&quot;? Because if they actually buy following a fall they might correct the market and make a quick profit by buying at a low price. Also the super computers might go &quot;sell if index falls 1% then buy again if falls 5%&quot; while the billionaires are waiting for the market to settle at 6%. Then this increase may get inflated in the financial news and the market soars. So the computers help the market recover from the fall while the billionaires were waiting.

My point is that there are just millions of possibilities. And to claim that &quot;someone&quot; can confidently bet on what other greedy billionaires, all the financial pundits and the majority of the trading algorithms of thousands of funds from all around the world are gonna do because that someone ,half drunk, told in a meeting last year to watch out the unemployment rate is a bit far fetched.

I was initially convinced about the part on the power of few financial pundits in creating a self fulfilling prophecy. But if you think a bit deeply you realize that the manipulators not only need a few pundits to side by them but also all the other ones to stay put. That is just too risky.
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<title><![CDATA[Comment  from hbmindia]]></title>
<link><![CDATA[http://dilbert.com/blog/entry/2003617]]></link>
<description><![CDATA[In different paragraphs, You state in your post:
a) The government of the United States becomes more powerful because technology....
b) Terrorists become more powerful because technology....

I assume the US govt and the terrorists are on different sides of the fence. In which case, the increase in power in one is nullified by the increase in power in the other.

Likewise in the financial markets, if technology increases the power of the billionaire manipulators, it also increases the power of the not so rich small investors.

Status quo.]]></description>
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