In one high profile case, TerrorZone gang members used ticket machines at train stations to launder dye-stained banknotes obtained through cash-in-transit robberies. They purchased cheap fares, paid with high denomination stolen cash, and pocketed the “clean change.”

In another example, gang members bought their own music on iTunes and Amazon websites using stolen credit cards in order to profit from the royalties.

{ Crime and Delinquency | PDF | via MindHacks }

artwork { Jean-Micel Basquiat, Not Detected, 1982 }

One quick story: I was a venture capitalist in 2001. A company, Oingo, which later became Applied Semantics, had a technique for how search engines could make money by having people bid for ads. My partner at the firm said, “we can probably pick up half this company for cheap. They are running out of money.” It was during the Internet bust.

“Are you kidding me, “ I said. “they are in the search engine business. That’s totally dead.” And I went back to playing the Defender machine that was in my office. That I would play all day long even while companies waited in the conference room.

A year later they were bought by Google for 1% of Google. Our half would’ve now been worth hundreds of millions if we had invested. I was the worst venture capitalist ever. They had changed their name from Oingo to Applied Semantics to what became within Google…AdWords and AdSense, which has been 97% of Google’s revenues since 2001. 97%. $67 billion dollars. (…)

Ken Lang buys his patents back from Lycos for almost nothing. He starts a company: I/P Engine. Two weeks ago he announced he was merging his company with a public company, Vringo (Nasdaq: VRNG). Because it’s Ken, I buy the stock although will buy more after this article is out and readers read this.

The company sues Google for a big percentage of those $67 billion in revenues plus future revenues. The claim: Google has willfully infringed on Vringo – I/P’s patents for sorting ads based on click-throughs.

{ James Altucher/TechCrunch | Continue reading }

Computers dominate how we live, work and think. For some, the technology is a boon and promises even better things to come. But others warn that there could be bizarre consequences and that humans may be on the losing end of progress.  (…)

“Economic progress ultimately signifies the ability to produce things at a lower financial cost and with less labor than in the past,” says Polish sociologist Zygmunt Bauman. As a result, he says, increasing effectiveness goes hand in hand with rising unemployment, and the unemployed merely become “human waste.”

Likewise, (…) Erik Brynjolfsson and Andrew McAfee, both scholars at the MIT, argue that, for the first time in its history, technological progress is creating more jobs for computers than for people.

{ Spiegel | Continue reading }

unrelated { Competition among memes in a world with limited attention }

{ The primate lab is home to 10 “shockingly smart” brown Capuchin monkeys trained to trade tokens for food. Researchers wondered whether monkeys, like humans, desire an expensive item more. | WSJ | full story }

Sometime last year computers at the U.S. Social Security Administration were hacked and the identities of millions of Americans were compromised. What, you didn’t hear about that? Nobody did.

The extent of damage is only just now coming to light in the form of millions of false 2011 income tax returns filed in the names of people currently receiving Social Security benefits.

{ Robert X. Cringely | Continue reading }

Does it seem plausible that education serves (in whole or part) as a signal of ability rather than simply a means to enhance productivity? (…)

Many MIT students will be hired by consulting firms that have no use for any of these skills. Why do these consulting firms recruit at MIT, not at Hampshire College, which produces many students with no engineering or computer science skills (let alone, knowledge of signaling models)?

Why did you choose MIT over your state university that probably costs one-third as much?

{ David Autor/MIT | PDF }

photo { Robert Frank }

When Facebook goes public this year, it will raise at least $5 billion, making it the biggest Internet IPO the world has ever seen. The day it debuts on the stock exchange, Facebook will be worth more than General Motors, the New York Times Company, and Sprint Nextel combined. (…)

For roughly 65 years—say, from 1933 to 1998—the initial public offering was the engine of American capitalism. Entrepreneurs sold shares to investors and used the proceeds to build their young companies or invest in the future. After their IPOs, for instance, Apple and Microsoft had the necessary funds to develop the Macintosh and Windows. The stock market has been the most efficient and effective method of allocating capital that the world has ever seen.

That was a useful function, but it’s one that IPOs no longer serve. Going public is more difficult than it used to be—Sarbanes-Oxley regulations have made filing much more difficult, and today’s investors tend to shy away from Internet companies that don’t have a proven track record of steady profitability. That has created a catch-22: By the time a company can go public, it no longer needs the cash. Take Google. It had already been profitable for three years before raising $1.2 billion in its 2004 public offering. And Google never spent the money it raised that year. Instead, it put the cash straight into the bank, where the funds have been sitting ever since. Today, Google’s cash pile has grown to more than $44 billion.

{ Wired | Continue reading }

photo { Femke Hiemstra }

Family income is associated with student achievement, but careful studies show little causal connection.  School factors – teacher quality, school accountability, school choice – have bigger causal impacts than family income per se, according to a new analysis by Harvard’s Program on Education Policy and Governance (PEPG).

{ EducationNext | Continue reading }

Conventional wisdom tells us that in the business world, “you are who you know” — your social background and professional networks outweigh talent when it comes to career success.

But according to a Tel Aviv University researcher, making the right connection only gets your foot in the door. Your future success is entirely up to you. (…)

When intelligence and socio-economic background are pitted directly against one another, intelligence is a more accurate predictor of future career success, he asserts.

{ American Friends of Tel Aviv University | Continue reading }

I’ve heard a few stories, over the years, of what happens when collectors who own art try to sell that art through a gallery. In the first instance, the gallery is always very bullish, and promises to sell it for a high price at a modest commission. But then it somehow never sells, and the consignor becomes increasingly desperate, and eventually accepts a sum of money from the gallery which is a mere fraction of the amount originally mooted. It’s a standard m.o. in the gallery world: never sell anything too quickly, and wait instead for the seller’s need for cash to be as urgent as possible. That minimizes the amount the gallery needs to pay the seller, and therefore maximizes the amount the gallery can keep for itself. (…)

In a nutshell, Jan’s no-good son Charles got desperate for cash, and so sold her Lichtenstein through Gagosian without her knowledge or consent. What’s more, his desperation was so obvious to Gagosian that he wound up getting spectacularly ripped off: while Gagosian had initially promised him $2.5 million for the piece, the final payment to Cowles was just $1 million. (…)

No matter who wins the legal case, is that the opacity, skullduggery, and information asymmetry in the art world should put off anybody who ever thinks they’re dealing fair and square with a prominent dealer.

{ Felix Salmon/Reuters | Continue reading | via Ritholtz }

Life on the organ transplant list is miserable. The wait can take years, while you work your way up a list of tens of thousands. Sixty thousand people are on the list for kidneys alone, and the average person will be there for about five years. Because the organs all work together, the failure of one of them can slowly destroy the rest, making the person sicker and sicker as the years stretch out. No one has a guarantee. In the US, about eighteen people die every day waiting for an organ. (…)

So it makes sense that there’s a black market for organs out there.

{ io9 | Continue reading }

The major investors in the diamond mines realized that they had no alternative but to merge their interests into a single entity that would be powerful enough to control production and perpetuate the illusion of scarcity of diamonds. (…)

De Beers proved to be the most successful cartel arrangement in the annals of modern commerce. While other commodities, such as gold, silver, copper, rubber, and grains, fluctuated wildly in response to economic conditions, diamonds have continued, with few exceptions, to advance upward in price every year since the Depression. Indeed, the cartel seemed so superbly in control of prices — and unassailable — that, in the late 1970s, even speculators began buying diamonds as a guard against the vagaries of inflation and recession.

{ The Atlantic | Continue reading }

images { Google search }

Weill wasn’t the first or the last Wall Streeter to deal with the pressures of high finance through the performance-enhancing highs of cocaine or with plenty of other stimulants. Just six years earlier, one of the Street’s best-known, self-made stars, Wardell Lazard, the head of his own investment firm, died naked and alone in a Pittsburgh hotel from an overdose of vodka and cocaine, just two weeks before his 45th birthday. (…)

A University of Southern California researcher, who was once herself a Wall Street banker, followed more than two dozen freshly minted MBA’s from the boot camps, or “grind mills,” of investment banks as they clawed their way toward wealth and absolute power. By the fourth year in business, they had succumbed to a litany of out-of-control behavior.

“People working 120 hours a week, for prolonged periods of time, go through harsh psychological transformations,” says Alexandra Michel, a professor at USC’s Marshall School of Business, who findings appear in the current Administrative Science Quarterly. (…)

Her research examines how organizations influence white-collar workers’ psychological processes and performance. She is particularly interested in the way knowledge-based workers—not just on Wall Street, but in the media, law, consulting, technology and countless other fields—perceive themselves as autonomous, but in fact they are under unspoken organizational control.

That control is veiled by the perqs offered to white collar workers. “The bank erased distinctions between work and leisure by providing administrative support 24 hours a day, seven days a week, encouraging leisure at work, and providing free amenities, including childcare, valets, car service, and meals,” Michel writes. “Some of the banks’ embodied controls focused on managing employees’ energy and included providing free caffeine and meals during ‘‘energy slumps,’’ hiring young people, focusing on energy as the main hiring criterion, and firing low performers because of their energy drain.”


As they became overtaxed, 80 percent of Michel’s workers said they were struggling to control their bodies. As one vice president put it: “I wouldn’t call it control; I am at war with my body.” They were also at war with their private lives. Michel saw highly educated and highly motivated people willing to miss a child’s birthday or cancel on parents visiting from overseas to instead help with a client’s hostile corporate takeover.


To cope, bankers developed addictions and compulsions, such as eating disorders, as well as embarrassing tics, such as nail biting, nose picking and hair twirling. Normally mild-mannered people flew into out-of-control rages at the least provocation. (…)

To maintain their performance, bankers pushed harder, trying to reassert control over their bodies, writes Michel: “One banker combated her eating disorder by fasting and exercising more, training for a marathon even after midnight.” Bankers sought distraction through compulsive shopping, partying and watching porn to counteract the numbness (‘‘I need something to feel passionate about”), to achieve control (‘‘These are all ways to control something’’), and to escape (‘‘It is a way to escape, so that I cannot even ruminate about my problems if I wanted to’’).

Addiction and self-flagellation went hand in hand. One banker said, ‘‘The only way I can keep myself up nights in a row is through a mix of caffeine pills and prescription meds.’’ She even ignored serious injuries to her body. ‘‘I fell on my way to a meeting,” she recalled for Michel. “The leg changed color and I had pain but I chose not to think about it until after the meeting.’’ Her leg was actually broken in two places. (…)

High-finance intervention specialists, like Curry, have seen an uptick in drug abuse on Wall Street since 2008. It’s not necessarily because these guys are stressed. Just the opposite: It’s because many of them are bored.

{ The Fix | Continue reading }

photo { Daniel Ribar }

These two charts represent what is arguably the biggest thing that is changing in the U.S. economy these days. Not only is the price of natural gas declining significantly, but it is getting cheaper relative to crude oil by leaps and bounds. And it’s all thanks to new drilling technology (fracking) that has resulted in huge new natural gas discoveries and production in the U.S.

{ Scott Grannis | Continue reading | MoneyCNN }

Oil and gas production in the United States and North America is going to skyrocket in the next 8 years due to strides in natural resource extraction, write Citi analysts in a report published yesterday. In fact, they went so far as to call North America “the new Middle East,” at least in terms of oil production. (…)

Citi economists expect total liquids production to as much as double for the continent in the next decade, and predict that the U.S. could overtake both Russia and Saudi Arabia in oil production by 2020.

{ BusinessInsider | Continue reading }

In a Wall Street Journal op-ed article, titled “Move Over, OPEC — Here We Come,” Ed Morse, a former deputy secretary of state for international energy policy, said: “I’m thinking that actually the U.S. is the fastest-growing oil-producing country in the world, the fastest-growing gas-producing country in the world, and yes, it’s happening mostly on private lands,” he said. “This has happened despite whatever politics have intruded on it.”

{ CNBC | Continue reading }

quote { Fernandel in Marcel Pagnol’s Le Schpountz, 1938 }

The speculation of what Apple is going to do with all their cash has long been a favorite topic in the tech and financial press. (…) What’s the point of having all that money if you’re not going to spend it?

That thinking is what we saw when Apple recently announced their cash plans. (..) “Saddened by Apple’s plan for a huge dividend. Apparently, they have nothing truly capital-intensive in the product pipeline.” (…)

Even after issuing dividends and repurchasing shares, Apple’s cash reserves will likely grow this year. They added more than $35 billion in cash and equivalents last year alone. There’s nothing “capital-intensive” that they can’t do, short of opening an Apple Store on the moon. (…)

The idea floating around before Apple’s Monday announcement that they would be buying a company like Foxconn or building factories of their own seems to make sense, since Apple is one of the more vertically integrated consumer electronics companies in the world. And they are, after all, notorious for both control and quality. But they’ve managed to lead the industry on the latter without owning a significant portion of their supply chain. (…)

Apple has this enormous negotiating power, and they use it, I am told by our sources, very aggressively to come in and basically say, “Show us your entire cost structure, every single part of what you pay and what you… and we are going to give you a razor-thin profit margin that you’re allowed to keep.

In other words: Why buy the cow?

Apple also, more importantly, finances the factories by loaning them cash and buying significant amounts of components in advance. This “Bank of Apple” strategy further establishes control over the factories, locks out competition and seems to be why competitors can’t seem to match Apple’s cost structure for products like the iPad. (…)

This brings us to those who think Apple has run out of ideas on what to do with their cash. The fevered result of this are the acquisition talks — hence the recently oft-mentioned and largely nonsensical suggestion that Apple should buy a company like Twitter. But Apple’s approach to acquisitions has always been extremely conservative, especially compared to their brethren. Since 2010 Apple’s bought a grand total of nine companies. In that same period Google has bought 52.

{ TechCrunch | Continue reading | Thanks Glenn }

related { The FBI made public a background investigation of Steve Jobs in 1991, when he was being considered by the George H. W. Bush administration for a spot on the President’s Export Council. }

Most of the songs played on Top Forty radio are collaborations between producers like Stargate and “top line” writers like Ester Dean. The producers compose the chord progressions, program the beats, and arrange the “synths,” or computer-made instrumental sounds; the top-liners come up with primary melodies, lyrics, and the all-important hooks, the ear-friendly musical phrases that lock you into the song. “It’s not enough to have one hook anymore,” Jay Brown, the president of Roc Nation, and Dean’s manager, told me recently. “You’ve got to have a hook in the intro, a hook in the pre-chorus, a hook in the chorus, and a hook in the bridge.” The reason, he explained, is that “people on average give a song seven seconds on the radio before they change the channel, and you got to hook them.”

The top-liner is usually a singer, too, and often provides the vocal for the demo, a working draft of the song. If the song is for a particular artist, the top-liner may sing the demo in that artist’s style. Sometimes producers send out tracks to more than one top-line writer, which can cause problems. In 2009, both Beyoncé and Kelly Clarkson had hits (Beyoncé’s “Halo,” which charted in April, and Clarkson’s “Already Gone,” which charted in August) that were created from the same track, by Ryan Tedder.

{ The New Yorker | Continue reading }

illustration { Jordan Metcalf }

Realistically, your chance of winning the jackpot is zero. Technically, it’s one in 175,711,536, or 0.000000569%. Which is statistically the same as zero. But it’s not psychologically the same as zero — and that’s what counts. When you buy your lottery ticket, it’s impossible not to dream of all the things which might happen if you won. (…)

By far the easiest way to funnel more of your income back to the government is to buy lottery tickets. It really is a voluntary tax. (…)

If you move from lottery tickets to scratch cards, something else happens — they pay out with enough predictability that they can actually be used for money laundering. Take your dirty dollars, buy a bunch of scratch cards, redeem the winners, and you’ve got nice clean legitimate money. If the games weren’t so incredibly lucrative for the states, they’d be made illegal in no time just for this reason alone.

{ Reuters | Continue reading }

We’ve learned that Mike Daisey’s story about Apple in China - which we broadcast in January - contained significant fabrications. We’re retracting the story because we can’t vouch for its truth. This is not a story we commissioned. It was an excerpt of Mike Daisey’s acclaimed one-man show “The Agony and the Ecstasy of Steve Jobs,” in which he talks about visiting a factory in China that makes iPhones and other Apple products.

{ This American Life | Continue reading | More: Mike Daisey’s Lies About China }

Access to the carpool lane while driving solo: $8. (…) The right to shoot an endangered black rhino: $250,000.

{ The Atlantic | Continue reading }

photo { JeongMee Yoon/NY Times }