The Big Picture

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• WaPo: Anticipating the Next Black Swan
• Handspring Puppet Company: The genius puppetry behind War Horse
• How Much Damage Can Malicious HFT/Malware Cause?
• Update on Japan’s Nuclear Crisis
• Craig Newmark Revealed

WaPo: Anticipating the Next Black Swan Posted: 03 Apr 2011 09:00 AM PDT My latest Washington Post column is out in the Sunday Business section. Regular readers will recognize some of the behavioral and cyclical elements, but overall, its the first time I have combined these together all in one piece: “Emergency planning is what we do before an emergency — not during one. Being proactive, rather than reactive, allows you to avoid the emotional mistakes many people make during unexpected events. That is why you look for the emergency exits before takeoff, not when the wings fall off the plane. The best way to do this is to have a plan in place. Ideally, you design this when you are objective, unemotional and calmly contemplative. Three factors should persuade you to this conclusion: First, these "black swan" events are surprisingly common. The so-called 100-year floods come along far more often. Second, history teaches us that markets wobble then resume their prior trend. Major investment changes during this wobble are ill-advised. Third, you should have an exit strategy in place for any asset you hold, regardless of what is happening across the world. In our asset management business, we call this having a "stock prenup": We know what will cause us to divorce any position in advance (regardless of its relationship with the pool boy).” Check out the entire piece here. > Source: Anticipating (versus reacting to) the next black swan Barry Ritholtz Washington Post Saturday, April 2, 3:04 PM http://www.washingtonpost.com/business/anticipating-versus-reacting-to-the-next-black-swan/2011/03/28/AF6jZPPC_story.html

Handspring Puppet Company: The genius puppetry behind War Horse Posted: 03 Apr 2011 06:00 AM PDT More wicked cool stuff:

How Much Damage Can Malicious HFT/Malware Cause? Posted: 03 Apr 2011 05:55 AM PDT Here is a question for the paranoics out there:  Can we tell any difference between High frequency trading and cyberattacks? We have previously discussed how the NYSE allowing co-located HFT servers is the equivalent of turning our national security over to Skynet. We now have a new Robot Uprising: It is becoming increasingly difficult for exchanges to tell the difference between ordinary market disfunctions caused by High frequency trading and purposeful attacks: “New robotic-trading strategies are attempting to hack futures and equities markets — again. The suspicious activity appears unconnected to the October cyberattack on Nasdaq OMX Group (ticker: NDAQ) now being investigated by the National Security Agency. But there seems to be a new team of trading ‘bots abroad — and yes, they’re distorting prices.” Eric Hunsader, founder of Nanex, who blamed the Flash Crash on HFT, has a new concern about the latest algorithmic funny business. Some are instantly buying or selling E-mini contracts in huge quantities in about 50 milliseconds. Another algo is rapidly changing order sizes in about 20 – 40 stocks on Nasdaq for a “few milliseconds several times a day. (Each stock is traded anywhere from 2,000 to 4,000 times a second, double to quadruple the norm). The exchanges, which get paid by HFT traders, seem unconcerned. The activity has so far flooded the quote system, but has caused no harm. Yet. I am VERY curious: What security procedures occur prior to a co-located server being installed? What rules govern which overseas firms can buy a co-located HFT shop? Given the damage the creator (US/Israel/Germany/whoever) of the Stuxnet worm did to the Iranian Nuclear program, what can an HFT firm dedicated to damaging the US economy do if they attempted so? What security measures are in place to prevent this? How much mischief can HFT/malware accomplish . . . ? > Sources: May 6′th 2010 Flash Crash Analysis: Continuing Developments http://www.nanex.net/FlashCrash/FlashCrashAnalysis.html Robots Rattle Data Guru JIM MCTAGUE APRIL 2, 2011   http://online.barrons.com/article/SB50001424052970203560404576228920925930788.html

Update on Japan’s Nuclear Crisis Posted: 03 Apr 2011 05:37 AM PDT Washington's Blog strives to provide real-time, well-researched and actionable information.  George – the head writer at Washington's Blog – is a busy professional and a former adjunct professor. ~~~ The situation at the Fukushima Daiichi nuclear complex is getting worse in many ways, but better in some ways. Here’s a quick roundup. Reactor 1 Energy Secretary Steven Chu said that roughly 70 percent of the core of reactor number 1 suffered severe damage. In other words, it came very close to a total meltdown. But things appear now to be stabilizing: Mr. Chu, a Nobel laureate in physics, suggested that the worst moments of the crisis appeared to be receding, saying that the best information the United States had received from the Japanese authorities indicated that water was once again covering the cores of the stricken reactors and that pools of spent fuel atop the reactor buildings were "now under control." Reactor 2 Tepco announced that there is a crack in the concrete pit of reactor number 2 that is leaking radiation into the ocean from a crippled reactor: Tokyo Electric Power Co (TEPCO) said it had found a crack in the pit at its No.2 reactor in Fukushima, generating readings 1,000 millisieverts of radiation per hour in the air inside the pit. Reuters noted that workers were attempting to plug the crack with concrete, but were facing challenges: Public broadcaster NHK said late on Saturday that water was preventing the concrete from hardening and the pit was still leaking. Reactor 3 As previously noted, CNN reported: Authorities in Japan raised the prospect Friday of a likely breach in the all-important containment vessel of the No. 3 reactor at the stricken Fukushima Daiichi nuclear power plant, a potentially ominous development in the race to prevent a large-scale release of radiation. The New York Times pointed out: A senior nuclear executive who insisted on anonymity but has broad contacts in Japan said that there was a long vertical crack running down the side of the reactor vessel itself. The crack runs down below the water level in the reactor and has been leaking fluids and gases, he said.*** "There is a definite, definite crack in the vessel — it's up and down and it's large," he said. "The problem with cracks is they do not get smaller." And NHK notes that a giant crane fell over and probably crushed spent fuel rods at in Fukushima reactor number 3, which contain a plutonium-uranium mix: (starting around 1:40 into video). Reactor 4 Nuclear engineer Arnie Gundersen notes that the spent fuel rods in reactor number 4 have no water, and the rods are exposed: Aerial Views of the Destruction As can be seen from the following aerial photograph, there is severe damage at several of the reactors (click the images for larger, high-res versions): ~~~ Chris Martenson shows where reactors 1 through 4 are located: Other Developments Localized nuclear reactions (“re-criticalities”) have re-started at Fukushima causing “blue flashes” above the plant: There is no indication that widespread nuclear reactions will re-start. Greenpeace has measured very high levels of radiation some 40 killometers from Fukushima:

Craig Newmark Revealed Posted: 03 Apr 2011 05:00 AM PDT “Bloomberg Game Changers” profiles Craigslist founder Craig Newmark. This program features interviews with Newmark; David Vinjamuri, author of "Accidental Branding;" Christina Murphy, founder of CM Recruiting; Mark Rasch of Secure IT Experts; Peter Zollman, founder of AIM Group; Tom Rosenstiel, director of the Pew Center’s Project for Excellence in Journalism; Matt Zimmerman, senior staff attorney for Electronic Frontier Foundation; and Brad Stone, senior writer for Bloomberg Businessweek. video after the jump March 24 (Bloomberg)

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