They Made a Killing

[blove8.]

They Made a Killing
Did people who knew about secret, CIA-led coups use that information to game the stock market?
By Ray Fisman
Posted Tuesday, Oct. 28, 2008, at 7:07 AM ET
http://www.slate.com/id/2203121/

Quote:In 1951, Jacobo Árbenz Gúzman became Guatemala's second democratically elected president. Árbenz's authoritarian predecessors had been very sympathetic to American business interests, particularly those of the United Fruit Co. (now Chiquita), which had bought up land titles on the cheap from Guatemala's corrupt elite for its ever-expanding banana empire. Once in office, Presidente Árbenz sought to take it all back, nationalizing UFC's Guatemalan assets and redistributing them to the poor.

But UFC had friends in very high places—the assistant secretary of state for inter-American affairs, John Moor Cabot, was the brother of UFC President Thomas Cabot. The secretary of state himself, John Foster Dulles, had done legal work for UFC, and his brother Allen Dulles was director of the CIA and also on UFC's board. Thanks to the Freedom of Information Act, we now know that the various Cabots and Dulleses had a series of top-secret meetings in which they decided that Árbenz had to go and sponsored a coup that drove Árbenz from office in 1954.

With a U.S. puppet back in the president's mansion, UFC's profits were safe. But it appears the company wasn't the only beneficiary of this Cold War cloak-and-dagger diplomacy: A recent study by economists Arindrajit Dube, Ethan Kaplan, and Suresh Naidu argues that those in on the planning process also profited handsomely. By tracking the stock prices of UFC and other politically vulnerable firms in the months leading up to CIA-staged coups in Guatemala, Chile, Cuba, and Iran, the researchers provide evidence that someone—perhaps one of the Dulleses, Cabots, or others in the know—was trading stocks based on classified information of these coups-in-the-making.

This exposé is a contribution to the rapidly expanding field of "forensic economics," which tries to understand the who, what, and why of illicit transactions. Since these are activities that take place out of sight (at least when they're done right), researchers are forced to look for fingerprints left in the data by smugglers, bribe-taking politicians, and other lawbreakers.

Daniel Gross proclaimed efforts to stop insider trading by members Congress pointless. Ted Gup wrote about the CIA's increasingly corporate recruiting style. Christopher Hitchens exposed Cuba's bloodless military coup. A.L. Bardach interrogated E. Howard Hunt, one of the most notorious spies of the 20th century. Jack Shafer connected the CIA with the money-laundering Riggs bank.

Dube, Kaplan, and Naidu examine how the stock market reacted to events that no Wall Street trader should have known about: top-secret meetings of the coup-plotting cabals at CIA headquarters and presidential approvals of CIA-organized invasions. These events would have increased the expected future profits of companies like UFC—if the CIA-led coup in Guatemala were successful, for example, UFC would get its plantations back. If stock traders were privy to the coup-planning process, we would expect them to bid up the prices of affected companies in anticipation of these higher profits. These meetings and authorizations were all highly classified, however, and since you can't trade on information you don't have, UFC's stock price shouldn't have budged until the coup actually took place and the investing world learned of the regime change. (continues...)

Coups, Corporations, and Classified Information
Arindrajit Dube, Ethan Kaplany, and Suresh Naiduzx
UC Berkeley; IIES, Stockholm University; Harvard University
October 29, 2008
http://www.iies.su.se/~ekaplan/coups.pdf

Abstract
We estimate the impact of coups and top-secret coup authorizations on asset prices of partially nationalized US companies that stood to benefit from US backed coups. A small number of highly exposed and well connected arms reacted to coup authorizations classified as top-secret. The average abnormal return to a coup authorization is 1.7% over 4 days, rising to 3.4% over thirteen days. Pre-coup authorizations account for a larger share of stock price increases than the actual coup events themselves.There is no effect in the case of the widely publicized, poorly executed Bay of Pigs invasion, consistent with abnormal returns to coup authorizations reflecting credible private information. We also introduce two new intuitive and easy to implement nonparametric tests that do not rely on asymptotic sample size approximations.

[mexika]

Quote:They Made a Killing
Did people who knew about secret, CIA-led coups use that information to game the stock market?
By Ray Fisman
Posted Tuesday, Oct. 28, 2008, at 7:07 AM ET
http://www.slate.com/id/2203121/

Quote:In 1951, Jacobo Árbenz Gúzman became Guatemala's second democratically elected president. Árbenz's authoritarian predecessors had been very sympathetic to American business interests, particularly those of the United Fruit Co. (now Chiquita), which had bought up land titles on the cheap from Guatemala's corrupt elite for its ever-expanding banana empire. Once in office, Presidente Árbenz sought to take it all back, nationalizing UFC's Guatemalan assets and redistributing them to the poor.

But UFC had friends in very high places—the assistant secretary of state for inter-American affairs, John Moor Cabot, was the brother of UFC President Thomas Cabot. The secretary of state himself, John Foster Dulles, had done legal work for UFC, and his brother Allen Dulles was director of the CIA and also on UFC's board. Thanks to the Freedom of Information Act, we now know that the various Cabots and Dulleses had a series of top-secret meetings in which they decided that Árbenz had to go and sponsored a coup that drove Árbenz from office in 1954.

With a U.S. puppet back in the president's mansion, UFC's profits were safe. But it appears the company wasn't the only beneficiary of this Cold War cloak-and-dagger diplomacy: A recent study by economists Arindrajit Dube, Ethan Kaplan, and Suresh Naidu argues that those in on the planning process also profited handsomely. By tracking the stock prices of UFC and other politically vulnerable firms in the months leading up to CIA-staged coups in Guatemala, Chile, Cuba, and Iran, the researchers provide evidence that someone—perhaps one of the Dulleses, Cabots, or others in the know—was trading stocks based on classified information of these coups-in-the-making.

This exposé is a contribution to the rapidly expanding field of "forensic economics," which tries to understand the who, what, and why of illicit transactions. Since these are activities that take place out of sight (at least when they're done right), researchers are forced to look for fingerprints left in the data by smugglers, bribe-taking politicians, and other lawbreakers.

Daniel Gross proclaimed efforts to stop insider trading by members Congress pointless. Ted Gup wrote about the CIA's increasingly corporate recruiting style. Christopher Hitchens exposed Cuba's bloodless military coup. A.L. Bardach interrogated E. Howard Hunt, one of the most notorious spies of the 20th century. Jack Shafer connected the CIA with the money-laundering Riggs bank.

Dube, Kaplan, and Naidu examine how the stock market reacted to events that no Wall Street trader should have known about: top-secret meetings of the coup-plotting cabals at CIA headquarters and presidential approvals of CIA-organized invasions. These events would have increased the expected future profits of companies like UFC—if the CIA-led coup in Guatemala were successful, for example, UFC would get its plantations back. If stock traders were privy to the coup-planning process, we would expect them to bid up the prices of affected companies in anticipation of these higher profits. These meetings and authorizations were all highly classified, however, and since you can't trade on information you don't have, UFC's stock price shouldn't have budged until the coup actually took place and the investing world learned of the regime change. (continues...)

Coups, Corporations, and Classified Information
Arindrajit Dube, Ethan Kaplany, and Suresh Naiduzx
UC Berkeley; IIES, Stockholm University; Harvard University
October 29, 2008
http://www.iies.su.se/~ekaplan/coups.pdf

Abstract
We estimate the impact of coups and top-secret coup authorizations on asset prices of partially nationalized US companies that stood to benefit from US backed coups. A small number of highly exposed and well connected arms reacted to coup authorizations classified as top-secret. The average abnormal return to a coup authorization is 1.7% over 4 days, rising to 3.4% over thirteen days. Pre-coup authorizations account for a larger share of stock price increases than the actual coup events themselves.There is no effect in the case of the widely publicized, poorly executed Bay of Pigs invasion, consistent with abnormal returns to coup authorizations reflecting credible private information. We also introduce two new intuitive and easy to implement nonparametric tests that do not rely on asymptotic sample size approximations.

The war is not just happening for resource exploitation throughout the planet with democratically elected candidates in true democratic nations, but it has been going since the first beginnings of the United States 220 years ago to what is just a record repeat to other nations who are seen weak. Resource pirating, in reality it equates to waste on a mass scale to the earths supply and demand. What we have is a pathological pirate with full blown war on so called third world nations, but all of the complete earth. Where are the American people? Oh, they they having coffee with apple pie with one ear phone on an ipod and the other ear and eyes on the tube. This no left behind crap is all lies! we are being left behind and they are doing it right in front of our eyes and they have not shame. Drunk Gangster corporate pirates with no remorse to the planet or human life. Where are we going to head into? We are going into nasty times if we do not rise up or your children will ask, "what did you do about?".