What’s Wall Street good for?

Paul Raven @ 23-11-2010

Following on rather neatly from yesterday’s suggestion that the “developed” economies may in fact be overdeveloped to the point of being detrimental to the overall good of society, here’s a lengthy piece at the New Yorker about Wall Street, investment banking and social good, which seems to reiterate a similar point: investment banking and securities trading isn’t actually beneficial to anyone other than the bloated financial sector itself [via MetaFilter].

It’s good to see people from within that sector starting to say so; whether we get things fixed before the next blow-out is another question entirely. A long article, but well worth the read.


The Hollywood Stock Exchange, and bands with shareholders

Paul Raven @ 26-02-2010

If investment bankers can gamble on the success of big-money projects, why can’t the rest of us? Well, of course, we can – but those sort of big-money projects aren’t the sort of thing that get us normal folk excited, nor the sort of thing we understand (or think we understand) sufficiently to throw our money after.

But if you scratch a film buff, underneath you’ll find someone who thinks they can predict how well a movie will do once it gets released… and Hollywood reckons that’s an as-yet untapped source of funding for big-budget blockbusters. Hence HSX, the Hollywood Stock Exchange, is set to re-launch in April of this year as a real-money commodity exchange [via SlashDot]:

Since 1998, HSX has allowed just-for-fun traders to buy and sell valueless shares in Hollywood films based on forecasts of what the pics will ring up. Once launched, a new HSX site will list current and imminent movie releases with their projected four-week domestic grosses and allow exchange users to take long or short positions on the films.

A formal announcement about rules and guidelines for HSX users is expected closer to the launch. The exchange hopes to lure hobbyist investors as well as industry professionals, though the latter will be prohibited from improper insider activity.

For instance, distribution execs with access to early boxoffice data will be barred from making trades on the exchange after a film has opened. But film financiers will be allowed to invest in HSX an amount equal to a minority percentage of their total investment in a movie.

(Oh, man, you just know there’s gonna be some spectacular gaming of this system at some point, assuming it lasts long enough for gaming it to be worthwhile. It’s just too tempting, especially for such a historically desperate and greedy industry.)

Investors wishing to participate in the exchange will buy “contracts” priced at one one-millionth of a film’s projected boxoffice, with films to be listed on the exchange from the time productions are announced in the industry trade papers. Trading will begin six months before a movie’s anticipated wide release.

I make no claims to financial expertise of any kind, but I think I’d still assume that the safest way to gamble on the future of Hollywood properties would be to invest in something else entirely…

But a thought occurred to me while reading about HSX, namely that something like a stock purchasing model might act as a sort of bolt-on or extension to the crowdfunding models for creatives that we were discussing the other week. Say you’re in a band, you’ve done a few national tours, self-released an album, got some buzz going. How do you take things to the next step?

Systems like the newly-in-administration SellaBand are all well and good, but there’s still an intermediary middle-man involved, and the investment is conditional as well as project-specific; so why not just float your band (or your two-person animation studio, or yourself as a writer, or your guerrilla puppetry theatre mob or whatever) like a public company, offering shares to potential investors in exchange for their influence and input on what the band does? Product replaces dividends, tours and appearances are booked according to geographical distribution of fans, etc etc… it’s a bit like Kevin Kelly’s 1,000 True Fans idea, I guess, but much more formalised, with legally-binding obligations in both directions.

I’m pretty sure someone could knock up a software suite for managing all the paperwork necessary in order to make this happen, though I’ll confess that my knowledge of buisness law is sufficiently lacking that I have no idea whether or not it is legal (let alone practical, given the lack of a trusted and reliable micropayments platform and the morass if international business law). Can anyone in the audience shed a light on some of the details?

And more to the point, would anyone like to buy shares in Futurismic? We may not be profitable, but we’ve got a warehouse full of kudos… 😉


EmoBracelet to remind traders not to be dicks

Paul Raven @ 19-10-2009

The *other* sort of emo braceletsBoy, those stock market trader guys sure can get the rest of us into a mess with their crazy high-jinks. But it’s not entirely their fault, you know – they just get a bit carried away in the heat of the moment. C’mon, we’ve all been there – emotions run high, you have to make a snap decision, and sometimes you get it wrong. Granted, for most of us there’s little chance of shafting the entire planet in the process…

But wouldn’t it be good if we could keep those traders calm? If we could lay a metaphorical cool hand of reason on their shoulders every once in a while and say “hey, maybe you’re thinking with your heart (or your dick) rather than your head”? Electronics giant Philips and financial behemoth ABN Ambro seem to think it’s a great idea, and have hence teamed up to develop a conceptual device called the EmoBracelet, which should achieve the same effect:

The gadget […]measures electrical signals from users’ skin to assess their emotional state. The technology is similar to a lie detector recognising the nervousness behind a fib.

The announcement by the two companies said online traders had nearly double the number of deals as those who traded through a broker and that online traders earned lower returns because of poor decisions.

”Driven by fear, they may sell too hastily when share prices drop. Driven by greed, they may be overenthusiastic,” the announcement said.

The EmoBracelet and another device, an EmoBowl, use electrical displays to show a person’s emotional intensity. The two items were designed to warn traders to step back and take a breather by alerting them to their heightened emotional state.

As a wearer’s emotions grow more intense, lights flicker faster on the bracelet and the colours inside the bowl change from a soft yellow to orange to a deep cautionary red.

Nice idea, guys, but I have to say that I’m not sure the EmoBracelet is going to prevent traders doing dumb things. After all, most of the folk I’ve worked with who were prone to agitation or emotional overinvolvement with their work would react rather badly to having their “heightened mental state” pointed out… and some of them would probably carry on pushing the envelope just to prove how on top of things they really were (in their minds, at least).

A version of the EmoBracelet that injected the trader with a hugely powerful soporific at the pertinent moment might be a little more useful, however… [story via Technovelgy; image by McWilliams Graphics]


Grid2.0 – electricity as commodity

Paul Raven @ 31-03-2009

electricity pylonsMuch attention is currently (arf!) focussed on making our energy grids cheaper and more efficient, with lots of new ideas being batted around. Here’s a proposal which already appears to be working in one region: start treating electricity as a commodity as well as a utility.

Treat electricity like a commodity—something for which you can gauge demand and set a price in advance. That’s what New England’s independent system operator started doing last year. In its Forward Capacity Market, the ISO projects how much power the region will need three years ahead and then runs a descending-clock auction for the right to provide it. The ISO doesn’t care whether it gets its power from increased production of megawatts or from efficiencies added to the system, so-called negawatts. The agency simply sets the starting price.

Result: money saved in power plants and wires, more stable electricity bills, and a homegrown incubator for getting bright green ideas off the drawing board.

Anything that can prevent my quarterly electricty bill from doubling in cost as it did over the winter just past sounds like a good plan to me, though I’m never astonishingly keen on introducing middleman agencies into an already costly system.

Furthermore, I’m not sure how much protection the commodity trading of electricity would grant us from the civilisation-smashing power of solar weather[image by aloshbennett]