Yesterday, Liberal Democrat MP Sir Bob Russell said that English
professional football is "rotten to the core" and that a Royal
Commission is required to clean up football with "parasitic agents"
being the major problem.
If any such Royal Commission is to work then it will need to thoroughly address the six points outlined below.
Otherwise the game is up.
Also
yesterday, UEFA announced that they are drafting an 11-point plan aimed
to eradicate match-fixing, labelling it their 'top priority'.
Unfortunately,
skimming over the pitch put forward by the aptly named UEFA general
secretary Gianni Infantino, we can only expect peripheral tinkering akin
to that achieved by the British government's select committee who
reported last summer.
__________________________________________________________________________________
We are employed by clubs as leech consultants.
We protect clubs against systemic and particular corruptions against their interests.
We analyse the zeitgeist of corruption.
To us, the most astonishing aspect of the match fixing 'crisis' is
that when we have seen that government, the mainstream media, investment
banking, the police, retail banks, the utilities, many other sports are
all corrupted, there is this religious belief that, somehow, top level
football is not tainted.
Football has taken over from religion - everybody is 'Something FC 'til I Die'.
And we don't want our New Deity to be killed off just yet.
But if football really wants to save itself from the
neohyperrealities of the present systemic corruptions, it needs to
implement every single one of the points below in their entirety.
No pseudo-11 point plan but an overhaul of an entirely corrupt mechanism from top to bottom.
But starting at the top.
_________________________________________________________________________________
1. The Betting Markets and Insider Trading
The primary concern are the global betting markets.
There
are three levels of market activity - the public markets, the Dark
Pools and the illegal underground markets based largely but not
exclusively in South East Asia.
With a global network of this type, there has to be global regulation with jail sentences and life bans for miscreants.
The global betting market turnover on football is thought to have reached £1 trillion.
£1 trillion is 40% of the Britain's annual GDP!!
All markets must be public.
All trading by insiders must be registered with a Commitment of Traders body to prevent inside knowledge being exploited.
All players, referees, agents, managers should be banned from betting entirely.
All
suspicious betting must be reported to forensic analysts to detect
fraudulent behaviour - the current level of expertise exhibited by Early
Warning, Interpol/ Europol etc is not professional enough (we are able
to detect insider betting and match fixing in many more games than
0.7%!!).
All spot-markets should be banned.
All Dark Pool
activity must be regulated and made public, the same with the Asian
underground and the developing undergrounds in Dubai, the Caribbean,
numerous British offshore territories, Moscow, Tel Aviv, Tbilisi,
Nigeria, Australia, the US and Canada, Brazil, Mumbai etc.
2. Agents and the Markets
Every single football agent that I have ever met has been criminalised!
Agents
are a lubricant in the game and, in addition to leeching money from the
sport, they facilitate corruptions relating to both the betting markets
and the transfer markets.
Ownership of goalkeepers,
linkage with referees (see below), multiple ownership of players in a
game, even more extensive multiple ownership via linkage with other
agents in a fragmented cartel of illicit match fixing and betting market
activity.
Accordingly agents not only distort, corrupt and profit
from the betting markets that they exploit, they degenerate the sport
and impact upon trophies being won and relegations/ promotions etc.
The
careers of players are also affected by these corruptions and the fan
is forced to watch events where the outcome is clearly visible in
underground betting markets pre-match!
Agents corrupt Champions League games at the highest level and yet UEFA do nothing.
Agents also, as is their wont, exploit the transfer market via 3rd party ownership.
There is no regulation for agents.
And no regulation or self-regulation is pointless.
Agents
distort every single aspect of the sport and often utilise business
practices that border on the slave trade when it comes to footballers
from Africa and certain South and Central American countries.
Coercion of players relating to the betting markets is a major issue.
Additionally,
under the table payments are the norm and ownership networks are
structured similarly to the Tor proxy server concept!
Agents must be regulated.
3. Club Owners
Surely it is asking for trouble if club owners double as bookmakers.
There
will inevitably be occasions when the financial self-interest of Mr Bet
365 The Bookmaker will trump the interests of Mr Bet 365 The Football
Club (Stoke City) - the only issue is whether such self-interest is
implemented.
Additionally, this incentive to fix can result in
club owners stopping their own teams from winning to the absolute
detriment of the fans who are paying the wages and the integrity of the
game.
All club ownership should be open rather than underground and opaque.
Fit
and proper persons rulings should be robust and thoroughly implemented -
the Championship in England is a veritable Hotch Potch of
Inappropriates when it comes to club ownership...
... and the Premier League is only marginally better.
4. Referees
Referees are an issue.
Relatively underpaid in a millionaire's paradise, they are ripe for corruption.
Referees
are chosen from too small a pool (only 18 for the Premier League - the
most liquid betting market on the planet, for example) and have very
long careers.
Market ownership of a referee is a big earner for both parties.
Referees
are additionally 'owned' by other participants in the game - clubs,
mafia, even UEFA chooses referees relating to its own annual marketing
plan AND the importance of allegiance to the G14(18) power base of
clubs.
If referees were selected meritocratically then corruption from this source would be harder to implement.
To
this end, the ratings of referees need to be made public and the
implementation of video technology (see next point) will enable
'under-achievers' to be rooted out and discarded.
5. Video Technology
It
is more critical for football to have video technology than cricket,
tennis or rugby yet the authorities refuse to introduce anything more
than goalline technology. Why?
An incorrect wicket in
cricket, line call in tennis or try in rugby is rarely match changing
yet those sports guard against such occurrences by using technology ...
...
in football a goal or a penalty or a sending off very frequently is a
match changing event and yet we have virtually nothing.
Up to 40 wickets in a Test Match, 240 points in a tennis match, half a dozen tries in a game of rugby...
... and one goal.
Furthermore,
because professional footballers are well aware of the corruptions
taking place, once a referee signals his intent, there is a
psychological deflation in the victim team.
The most
striking aspect of watching cricket or rugby is how fan conversation
always relates to the game itself due to the utilisation of video
technology for virtually all contentious decisions.
This serves to
produce the correct result, massively reduce corruption and act as a
measurement of performance of referees and umpires.
The argument that it would slow down the game is fatuous.
It would add excitement if marketed correctly.
UEFA
and the Premier League would be able to bombard us with messages from
their media partners while we waited to see if it is a penalty or not!
6. Whistleblowing Hotline
When
we have meetings with administrative bodies, chief executives, football
managers, club owners, analysts, bookmakers, many fans, there is
acceptance that football is corrupt but that nobody is going to do
anything about it due to both financial self-interest and fear.
Remember Mike Newell? He soon disappeared from the game!
A
global whistleblowing hotline needs to be set up to allow knowledge of
match fixing to be made available to the various bodies that will need
to be established for Points 1-5 to be achieved.
This must be anonymous and rewarded.
We are taking serious existential risks to disclose these neohyperrealities of modern football.
THIS IS NOT HOW IT SHOULD BE.
__________________________________________________________________________________
NB: Please note that myself or other members of our cellular body are available for media in this window.
You can reach us via a Direct Message at Twitter (@footballisfixed) or via email (footballisfixed02@googlemail.com).
© Football is Fixed 2006-2013
Monday, 16 December 2013
Saturday, 19 October 2013
Give The Man A Gong For Being Wrong
Eugene Fama was selected as one of the three Nobel Prize for Economics recipients this week.
His hypothesis regarding the efficiency of financial markets is indeed elegant (which sometimes is enough for an award to be made) but it is also utterly and completely wrong.
Not particularly impressed with his Fama-French Three-Factor Model either (but more on that later).
If there were no government interferences, no psychopathies, no behavioural irrationalities, no corruptions nor criminalities and if market sectors didn't always evolve towards maturity, he would be right.
But as these inputs drive all markets, the laureate is surely wrong.
Fama's Efficient Markets Hypothesis was put forward in 1970 and formed an intellectual basis for the shock doctrine disaster neo-capitalism that the world has experienced since.
By being a part of the "intellectual" framework gathered as an neo-con edifice at the University of Chicago, Fama bears some responsibility for this sociopathic system.
So, what is Gene's hypothesis and why is it incorrect?
The Efficient Markets Hypothesis is split into three levels - strong-form, semi-strong-form and weak-form efficiency.
Strong-form suggests that market prices reflect all information, public and private, and it is not possible for anyone to earn excess returns.
In semi-stong-form, prices adjust to new information rapidly and rationally.
While weak-form structures, prices simply follow a random walk.
Before we go any further we need to look at the architecture of markets.
The public markets are just the top of an iceberg of submerged Dark Pool markets - there are hundreds of unregulated Dark Pools where insiders trade against insiders in markets that the public only sees when an excess of over-enthusiasm occurs. It is in these markets that the big market plays are made not the public ones.
For all assessments of Fama's Hypothesis, therefore, it will need to be addressed on two levels - the public markets and the Dark Pools.
1) The most dominant input to the wrongness of Fama's Hypothesis is behaviouralism.
Work in the sixties by Daniel Kahnemann, Amos Tversky, Paul Slovic and Richard Thaler had already introduced psychology to the market and, in 1979, Kahnemann and Tversky developed Prospect Theory which represented the final psychological nail in the coffin of Efficient Markets. Investors do not behave in a rational manner in the marketplace for a whole continuum of different reasons that both exist within themselves and also interact in complex ways between themselves to produce the behaviours that we project. Market prices represent mass human psychology far more than they do unproved economic fundamentals.
So by 1979, Fama's Hypothesis should have been put to bed...
... unfortunately, it took the blinkered Chicago School until 2007 to acknowledge the impact of behaviouralism in markets, attempting to convince us in the meantime that an efficient pricing infrastructure underpinned the alleged validity of Friedmanian late capitalism..
Slavoj Žižek: "The problem is today when you have chaos or disorder, people lose their cognitive mapping."
2) All of the information is not in the market. Even if behaviouralism did not exist and we were all perfectly rational in all of our decision-making, efficient markets would be compromised on all three levels of Fama's efficiency hierarchy.
Public markets are largely inefficient being too far from the core Dark Pools to be benefiting instantaneously to the flow of real information. The public markets offer a distilled filtered form of this driving underground Dark Pool marketplace. Dark Pool trading strategies become converted into a holistic market strategy as Dark Pool liabilities are hedged in the public sphere.
What about the Dark Pools?
Are they a proof of Fama efficiencies?
No.
Behaviouralism is a "plug in" in any market, public or Dark Pool.
Additionally, the information flow in Dark Pools is, by its very nature, opaque.
Proxy trading, algorithmic distortions, hidden players away from the table, consortia strategies, disinformational trading, cornered markets etc etc.
At any given time, the market tends to inefficiency.
As mature markets might evolve into anything the primary operators desire, the price can be anything too.
Mature markets (and these are the ones most traded in the Dark Pools) are largely under the absolute control of a small grouping of operations, think OPEC. Individual members of OPEC have their own hidden agendas over and above the shared agenda with fellow members. Even when the structure is held in place with extra robustness due to government scaffolding around the market, the major player(s) is/are still able to make the market whatever they desire whenever they desire.
In effect monopolistic corruption distorts any semblance of efficiency in the market while duopolistic or cartel behaviour offers a slightly diluted version of the same.
3) Disaster capitalism undermines any efficiency in any financial market.
The Friedmanian disaster capitalism complex thrives on chaos. When a disaster strikes or, as in the case of Chile, is created, the Chicago school Hayekians move in with their shock tactics to further destabilise an already destabilised people. As US security entities move into the vacuum, the markets are utterly chaotic. Although some efficiency and robustness is added to the marketplace ironically by the strategies of these security operations (the same template being micro-adjusted from territory to territory) the holistic performance of the markets are driven by irrationalities and the efficiencies fall off the bottom of Fama's ratings chart. Andrew Haldane, who should have been made Governor of the Bank of England, refers to this inability to judge risk as "disaster myopia".
Disaster myopia in a disaster capitalism complex!
4) Private information is introduced to the market in a variety of strategies that, by their very nature, imply market inefficiencies being created for the advantage of Dark Pool operations.
Knowledge within a company, governmental or central bank policies, trading disinformation for future profits, competitive market poker play all are based around the possession of the ultimate power play for the marketplace. Just think of the variety of ways in which, say, Ben Bernanke could have utilised his absolute knowledge of the variables related to quantitative easing. An individual, with evolving strategies, could make money without the full reality hitting the market by placing trades laterally and peripherally.
Noam Chomsky would call this "cogntive regulatory capture" and it is a structure typical of late capitalism.
5) The most obvious way in which financial markets are inefficient is by their refusal to accept the cost of externalities in the price of an asset.
How on earth can a price be efficient in the holistic sense if externalities are not included in the calculation? The price can only be considered in any way efficient in short time frames as, when the true costs are included, the asset value is very different indeed. The timing of this market implosion can be an unknown variable.
Friedmanism underprices risk and ignores externalities.
The eventual impact of these externalities is infrastructurally significant.
Although Dark Pools are displaced up the efficiency hierarchy due to lack of time lag and the primary element in the insider trading, the markets increase in efficiency is only marginal and only due to corrupting inputs being introduced to the market price.
If all corrupt inputs in a mature market could be known and assessed both singly and in association with one another, only then might a corrupt market approach strong-form efficiency and in a non-regulated marketplace this is simply not going to occur.
Which brings us to the conclusion of yet another aspect of the fake of Friedmanism.
Fama's only other claim to fame is the already mentioned Fama-French Three-Factor Model.
This attempts to replace the old Capital Asset Pricing Model (which, by the way, is also inadequate).
Needless to say the Three-Factor model doesn't work as it ignores corruption and behaviouralism.
Entertainingly, Foye, Mramor and Pahor (2013) have shown an improvement in the performance of the Fama-French model if one of the terms is replaced by a term that acts as a proxy for accounting manipulation!
These papers are amongst the first tentative steps of economics crawling towards holistically analysing the hyperreality.
Benoît Mandelbrot: "Financial economics, as a discipline, is where Chemistry was in the 16th century: a messy compendium of proven know-how, misty folk wisdom, and unexamined assumptions and grandiose speculation."
As a former pupil of Mandelbrot, Fama should know better...
... grandiose models, unexamined inputs, misty economic wisdom mixed with the status quo.
And, anyway, as economics in rather dubious fashion claims to be a science, let's address it as such...
Michel Foucault: "If one recognises in science only the linear accumulation of truths or the orthogenesis of reason, and fails to recognise in it the discursive practice that has its own levels, its own thresholds, its own various ruptures, one can describe only a single historical division, which one adopts as a model to be applied at all times for all forms of knowledge."
For many more itemised angles on corruption follow us on Twitter @FootballIsFixed
© Football is Fixed 2006-2013
His hypothesis regarding the efficiency of financial markets is indeed elegant (which sometimes is enough for an award to be made) but it is also utterly and completely wrong.
Not particularly impressed with his Fama-French Three-Factor Model either (but more on that later).
If there were no government interferences, no psychopathies, no behavioural irrationalities, no corruptions nor criminalities and if market sectors didn't always evolve towards maturity, he would be right.
But as these inputs drive all markets, the laureate is surely wrong.
Fama's Efficient Markets Hypothesis was put forward in 1970 and formed an intellectual basis for the shock doctrine disaster neo-capitalism that the world has experienced since.
By being a part of the "intellectual" framework gathered as an neo-con edifice at the University of Chicago, Fama bears some responsibility for this sociopathic system.
So, what is Gene's hypothesis and why is it incorrect?
The Efficient Markets Hypothesis is split into three levels - strong-form, semi-strong-form and weak-form efficiency.
Strong-form suggests that market prices reflect all information, public and private, and it is not possible for anyone to earn excess returns.
In semi-stong-form, prices adjust to new information rapidly and rationally.
While weak-form structures, prices simply follow a random walk.
Before we go any further we need to look at the architecture of markets.
The public markets are just the top of an iceberg of submerged Dark Pool markets - there are hundreds of unregulated Dark Pools where insiders trade against insiders in markets that the public only sees when an excess of over-enthusiasm occurs. It is in these markets that the big market plays are made not the public ones.
For all assessments of Fama's Hypothesis, therefore, it will need to be addressed on two levels - the public markets and the Dark Pools.
1) The most dominant input to the wrongness of Fama's Hypothesis is behaviouralism.
Work in the sixties by Daniel Kahnemann, Amos Tversky, Paul Slovic and Richard Thaler had already introduced psychology to the market and, in 1979, Kahnemann and Tversky developed Prospect Theory which represented the final psychological nail in the coffin of Efficient Markets. Investors do not behave in a rational manner in the marketplace for a whole continuum of different reasons that both exist within themselves and also interact in complex ways between themselves to produce the behaviours that we project. Market prices represent mass human psychology far more than they do unproved economic fundamentals.
So by 1979, Fama's Hypothesis should have been put to bed...
... unfortunately, it took the blinkered Chicago School until 2007 to acknowledge the impact of behaviouralism in markets, attempting to convince us in the meantime that an efficient pricing infrastructure underpinned the alleged validity of Friedmanian late capitalism..
Slavoj Žižek: "The problem is today when you have chaos or disorder, people lose their cognitive mapping."
2) All of the information is not in the market. Even if behaviouralism did not exist and we were all perfectly rational in all of our decision-making, efficient markets would be compromised on all three levels of Fama's efficiency hierarchy.
Public markets are largely inefficient being too far from the core Dark Pools to be benefiting instantaneously to the flow of real information. The public markets offer a distilled filtered form of this driving underground Dark Pool marketplace. Dark Pool trading strategies become converted into a holistic market strategy as Dark Pool liabilities are hedged in the public sphere.
What about the Dark Pools?
Are they a proof of Fama efficiencies?
No.
Behaviouralism is a "plug in" in any market, public or Dark Pool.
Additionally, the information flow in Dark Pools is, by its very nature, opaque.
Proxy trading, algorithmic distortions, hidden players away from the table, consortia strategies, disinformational trading, cornered markets etc etc.
At any given time, the market tends to inefficiency.
As mature markets might evolve into anything the primary operators desire, the price can be anything too.
Mature markets (and these are the ones most traded in the Dark Pools) are largely under the absolute control of a small grouping of operations, think OPEC. Individual members of OPEC have their own hidden agendas over and above the shared agenda with fellow members. Even when the structure is held in place with extra robustness due to government scaffolding around the market, the major player(s) is/are still able to make the market whatever they desire whenever they desire.
In effect monopolistic corruption distorts any semblance of efficiency in the market while duopolistic or cartel behaviour offers a slightly diluted version of the same.
3) Disaster capitalism undermines any efficiency in any financial market.
The Friedmanian disaster capitalism complex thrives on chaos. When a disaster strikes or, as in the case of Chile, is created, the Chicago school Hayekians move in with their shock tactics to further destabilise an already destabilised people. As US security entities move into the vacuum, the markets are utterly chaotic. Although some efficiency and robustness is added to the marketplace ironically by the strategies of these security operations (the same template being micro-adjusted from territory to territory) the holistic performance of the markets are driven by irrationalities and the efficiencies fall off the bottom of Fama's ratings chart. Andrew Haldane, who should have been made Governor of the Bank of England, refers to this inability to judge risk as "disaster myopia".
Disaster myopia in a disaster capitalism complex!
4) Private information is introduced to the market in a variety of strategies that, by their very nature, imply market inefficiencies being created for the advantage of Dark Pool operations.
Knowledge within a company, governmental or central bank policies, trading disinformation for future profits, competitive market poker play all are based around the possession of the ultimate power play for the marketplace. Just think of the variety of ways in which, say, Ben Bernanke could have utilised his absolute knowledge of the variables related to quantitative easing. An individual, with evolving strategies, could make money without the full reality hitting the market by placing trades laterally and peripherally.
Noam Chomsky would call this "cogntive regulatory capture" and it is a structure typical of late capitalism.
5) The most obvious way in which financial markets are inefficient is by their refusal to accept the cost of externalities in the price of an asset.
How on earth can a price be efficient in the holistic sense if externalities are not included in the calculation? The price can only be considered in any way efficient in short time frames as, when the true costs are included, the asset value is very different indeed. The timing of this market implosion can be an unknown variable.
Friedmanism underprices risk and ignores externalities.
The eventual impact of these externalities is infrastructurally significant.
Although Dark Pools are displaced up the efficiency hierarchy due to lack of time lag and the primary element in the insider trading, the markets increase in efficiency is only marginal and only due to corrupting inputs being introduced to the market price.
If all corrupt inputs in a mature market could be known and assessed both singly and in association with one another, only then might a corrupt market approach strong-form efficiency and in a non-regulated marketplace this is simply not going to occur.
Which brings us to the conclusion of yet another aspect of the fake of Friedmanism.
Fama's only other claim to fame is the already mentioned Fama-French Three-Factor Model.
This attempts to replace the old Capital Asset Pricing Model (which, by the way, is also inadequate).
Needless to say the Three-Factor model doesn't work as it ignores corruption and behaviouralism.
Entertainingly, Foye, Mramor and Pahor (2013) have shown an improvement in the performance of the Fama-French model if one of the terms is replaced by a term that acts as a proxy for accounting manipulation!
These papers are amongst the first tentative steps of economics crawling towards holistically analysing the hyperreality.
Benoît Mandelbrot: "Financial economics, as a discipline, is where Chemistry was in the 16th century: a messy compendium of proven know-how, misty folk wisdom, and unexamined assumptions and grandiose speculation."
As a former pupil of Mandelbrot, Fama should know better...
... grandiose models, unexamined inputs, misty economic wisdom mixed with the status quo.
And, anyway, as economics in rather dubious fashion claims to be a science, let's address it as such...
Michel Foucault: "If one recognises in science only the linear accumulation of truths or the orthogenesis of reason, and fails to recognise in it the discursive practice that has its own levels, its own thresholds, its own various ruptures, one can describe only a single historical division, which one adopts as a model to be applied at all times for all forms of knowledge."
For many more itemised angles on corruption follow us on Twitter @FootballIsFixed
© Football is Fixed 2006-2013
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