Apr

9

A lamentable aspect of the American criminal justice system is that a fourth of all the felons scheduled for trial fail to show up at the appointed date. One year subsequent to the first failure to appear, 30% of these felons have still not been located. Various incentive systems have been developed to get the felons to appear, the most common being a private system of bail bonds, along with bounty hunters who bring back those who fail to show. There is also a competing public bail system called "deposit bond," and another set, based on judges' decisions, where the felons are released on their own recognizance.

Eric Helland and Alexandar Tabarrok in "The Fugitive Evidence on Public Versus Private Law Enforcement" have compared the effectiveness of the various systems.

"When a defendant does skip, bond dealers hire bounty hunters to return the defendants to custody. We compare the effectiveness of the systems by examining failure to appear rates, fugitive rates, and capture rates, and conclude that the private system of bonds dealers and bounty hunters works best.

After Dr. Tabarrok's presenation at the Junta last night, and inspired by an effervescent crowd of optimists in the audience celebrating yet another new high in stocks, as well as the good fortunes of the predictions of imminent decline in the American Economic System by the attendant adventure travelist, I could not help but try to derive some insights into the state of the world and markets by the mechanisms that the market mistress has derived, to maintain failure to appear rates, fugitive rates, and capture rates in her bailiwick.

Many of us have been introduced to bounty hunters by the television series about Dog. His most famous capture was of Andrew Lasker, who was convicted of raping about 100 women while on drugs, and tried to escape bail in Mexico only to be captured by Dog. Dog, however, was then arrested for violating the very sacred capture and escape laws of Mexico.

As of April 2007, Mr. Chapman is still fighting extradition back to Mexico to face their "vigilant " attempts at justice. Mr. Dog Chapman should have known that it is very dangerous to interfere with the monopoly that those in law enforcement wish to maintain on their activities. Dog should also have known of their unhappiness when something is done to show the utter ineffectiveness of it.

I have often felt that my attempts to show the abuses and weak links of the market system, that takes such great pleasure in the escape of markets from new highs, would be subject to similar recrimination and retaliation. After all, unless there were a system to bemoan every failure to return to a new high every day, with the tension and abuse of those who guaranteed the return, then the public would not have that tendency to lose so much more than they have, by having the risk premium on equities taken away from them and being induced to sell to the big brokers at the wrong time.

Every new high in the market is accompanied by a system of bondsmen who insure that the market will return to these levels. If the bondsmen provide a high level of security that the market will return, I claim that the chances of a return are much higher than if the bondsmen are not involved. The recent high in the market on April 6, where the S&P is at 1459, but bondsmen are only ready to provide a 110 1/2 level of security in conjunction with the rise, (a two month low) seems to me a much less certain indicator of return than the usual where the new highs are made with much higher levels of bonds. Furthermore, most market participants are going to have to divert their attention in the next week with a form of payment to the service which often distracts them from meeting their obligations to return.

It has always amazed me how whenever the market doesn't set a new high every day, nay every hour, a host of nattering nabobs of negativism comes out of the woods to decry the woes of the economy and the market. One faced this for six years, as one nay-sayer after another talked about the bear market we were in since the S&P hit 1500 in Sep 00. We've not gone 6 1/2 years without the market returning.

It is common practice to look at statistics on the percentage of felons who return within a year under the various systems and the conditional probabilities that they will return given that they failed to return within a year. A comparable set of survival statistics should be made for random walks and compared to the actual figures that occur when the market sets a new high.

The question of what the expectations and hazard rates of the market are when there has been a failure to return to a new high for various months has to be considered. Also, whether there is a change in the distribution without a return after a year has passed. And what the concomitants of a market high are at a given time, that would determine the relative livelihoods and distributions of return once a high has been set.

In considering these statistical exercises, I will be trying to find an explanation for our inordinate tendency to focus on failures to return. Is it hard-wired in the human condition to return to home? And does the unholy media emphasis (with almost palpable ecstasy) on failures of markets to return represent pure schadenfreude, or a much deeper hard-wired tendency within us all?

James Lackey writes:

How about a return too quickly? "Too far too fast" has a googol of market references on Google. The bulls did not receive enough prison or torture? The rally back was too fast? Like the old guru the old generals call it a disgrace.


Jack Jacobs military analyst,

"The capture, internment and repatriation of the British sailors and marines can only be described as a shoddy spectacle. From start to finish, the Brits heaped nothing but ignominy on themselves, and one can recall few instances in recent memory in which a group of uniformed service members acted with less professionalism and more dishonor."

"Many of us know brave American troops, prisoners of former wars, who endured years of captive isolation without disclosing any information, even under torture. And England has its own Greatest Generation, troops who fought a determined and superior enemy while vowing never to surrender. As Churchill observed, that was England's finest hour. This isn't."

There is fury as the hostages sell stories.

"The 15 British military captives who were released by the Iranians have been authorised by the Ministry of Defence (MoD) to sell their stories.

MoD officials claimed that the move to lift the ban on military personnel selling their stories while in service was justified because of the exceptional circumstances of the case. The hostages are expected to earn as much as GBP250,000 between them.

Flight Lieutenant John Nichol, the RAF navigator tortured by the Iraqis after being taken prisoner in the first Gulf war, was told by the MoD not to talk to anyone about his experience but was allowed to write a censored book a year later while still in the service."

If they can get this story out in a controlled manner I have no problem with that, he said. No one complains if a general writes his memoirs. But there is a snobbery about a junior rank telling their story.

One of the hostages, Dean Harris, 30, an acting sergeant in the Royal Marines, told a Sunday Times reporter yesterday: I want GBP70,000. That is based on what the others have told me they have been offered. I know Faye has been offered a heck more than that. I am worth it because I was one of only two who didn't crack.


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