Reminds me of my first "real" job, many many years ago.
I was working at a metal pipe retailer, helping them switching from one ERP/CRM to another. While moving the inventory between the systems we decided to also check the real inventory. It turned out that due to incorrectly using the previous system, there was quite a substantial shortage compared to the company's turnover. Anyway, it had to be reported somehow to the shareholders... suddenly the management "remembered" that the previous team lead from the storage department has just left a few weeks ago, everything is his fault, they put all responsibility on him (without pursuing any further actions).
This makes me think about why new more accountable systems between companies sometimes fail in implementation. Sometimes the existing players are happy with the exploitable gaps in the existing system.
Great comment. Fun theory -- companies function on personal optics internally.
When you sell software, you can get buy in easily if they can say "this'll make me look excellent to my boss" (and they have decision-making power/budget of course). Similarly, a boss will promote subordinates who will make him/her look better.
Put another way, the incentives facing any single component of a greater whole does not always align with the incentives of the organization itself. In fact, you could say that a good measure of how well an organization is run is how closely those different incentives align.
Matt Levine had a pretty entertaining explanation of a different incident earlier this year, involving futures contracts:
> JPMorgan, which does not make batteries or cars, bought bags of abstract nickel years ago. It took delivery of that nickel, not in the sense that a truck full of nickel showed up on Park Avenue but in the sense that an entry was made, on the ledger of the warehouse, saying that the bags of nickel in Row X, Shelf Y now belonged to JPMorgan.
> JPMorgan then used that nickel for its intended purposes for years. Those purposes were to write financial contracts referencing that nickel. The nickel worked perfectly well for those purposes — JPMorgan’s derivative contracts traded and paid off normally — for years, even though the nickel was not in fact nickel, just bags of rocks.
> And then one day a warehouse worker, like, stubbed his toe against JPMorgan’s nickel and was like “hmm that’s not the sound nickel makes when you kick it” and opened the bags and found rocks. And then the [London Metal Exchange] dutifully reported that some nickel was not nickel, and JPMorgan’s nickel warrants were transformed into rocks warrants. But it’s all just a random accident? The purpose of JPMorgan’s nickel was not to be turned into batteries or cars, but to sit in a warehouse. It was doing a great job of that, until someone noticed!
Also one of my favorites, futures derivative contracts are like second derivative meta on reality :-). The invention of money[1] was an example we used with our kids to explain the difference between "money" and "wealth"[2]. Because once you can internalize that distinction, you can ask yourself "is this expensive or is it valuable?" and get a reasoned answer to that.
[2] While many people associate "wealth" with "being rich" it actually has a economic definition unrelated to whether or not one possesses more or less of it than their neighbors for friends. From Investopedia, "Wealth measures the value of all the assets of worth owned by a person." which you can give an example of that owning a bicycle is "wealth" that is an asset, and you can use that asset to get to and from a job that is further than you can walk, so that asset (wealth) enhances your ability to generate capitol (money) to fund your daily needs and to acquire more assets (wealth).
The future itself is the first derivative, it's a bet on the rate of change in terms of availability and/or consumption of a resource (hence the slope of the production curve), the second derivative is rate of change in the interest in the rate of change of the availability :-).
> [2] To be clear, I’m making this up, I have no idea how the fraud was discovered and never want to find out, unless the real story is funnier than this one.
> [3] I don’t know if they were? Is JPMorgan entitled to take out the rocks? Is it required to take out the rocks? “Hey JPMorgan you have 10 days to come pick up your rocks; if you don’t we’re gonna throw them through Jamie Dimon’s window”? If someone cracks open one of the rocks and there’s a diamond inside, does JPMorgan get the diamond?
In a previous job, I did some stock taking. Quarterly, without trained people nor procedures instead of a proper cycle coint, done double blind, by a dedictaed team of people (I didn't stay long at that job). Some of the inventory we had to account for, and funny enough most of it was almost correct accounting / revenue shennenigans nothwothstanding, was stored in a huge warehouse that held aerospace grade aluminium and titanium ingots. Thousands of tons of those. All being traded on some exchanges, hardly ever leaving said warehouse.
Propably nobody would ever nice what it was until, if ever, the ingots were to be used to produce bars and other raw materials for production. And even if it wasn't aluminium or titanium by then, propably enough money was earned to just replace it with the real stuff and not worry.
I've read this four times and it feels like I'm having a stroke trying to understand it.
Edit: I think they're saying that they audited a metals warehouse and that nobody actually checked that the ingots were what they claimed to be.
That's probably because the ingots came from trusted sources and/or were checked via things like mass and x-ray spectrography machines before being admitted into the system.
My main takeaway is that ownership of those metals isn't translated into them being used for manufacturing, and since they generally aren't used for manufacturing and they aren't being moved when ownership transfers, there is very little reason to audit them.
So if they eventually DO end up being purchased for manufacturing but upon inspection are found to be short stocked or it's the wrong material entirely, the commenter was speculating that replacing the fake material with the real thing would be covered somehow either by the warehouse collecting storage fees or insurance.
It was avfun experience, we audited other stuff stored at the same warehouse (the reasons for that are good case study on how not to run logistics and warehouses). And I did raw material procurement, bars, plates and such, for aerospace before, so seeing the ingots sitting in a warehouse being bought and sold without being moved at all was interesting see. And we litterally thousands and thousands of ton of that stuff in a warehouse in one of the most expensive warehouse locations you can think of.
I heard a bunch of conspiracy theories about Comex warehouses and gold repositories not actually holding the precious metals that they claim.
But AFAICT, the theories were coming from political extremist influencers. (Buy these silver rounds at large premiums, so that, when the dollar collapses, and people find the warehouses are empty, and Canadian tanks roll into Washington, you'll be the alpha male.)
Would be funny if someday we learned that the demagogues were accidentally correct about the warehouse shenanigans.
Consider that the stated gold reserves in Fort Knox haven't been audited since the 1950s. Then-Treasury Secretary Mnuchin during the Trump administration, supposedly visited and in lieu of an actual audit, reported that 'yup it's there' ... Very reassuring!
Germany's central bank in 2013 was forced by those rumors to re-patriate a lot of gold formerly held in Paris and by the Federal Reserve in New York. So called conservatives seeded stories that the Fed had emptied the vaults and only paper remained. Of course that was all hogwash and the stuff has now partly been transferred to Frankfurt.
I wonder what fraction of nickel or other precious metals is effectively never used. With oil or grain, those will expire, so physical delivery is taken often.
That's like putting up a dummy fire extinghuisher to make people feel safe. It works. But if one day there is a crisis, that's when you will want the real thing.
It’s bad because it can’t be settled. If Chase is to assume the clawback from a default settlement, then they are essentially non secured contracts and could have been traded so without the extra cost of the rocks.
But in general you want the people responsible of delivery to be responsible and actually deliver even if 99% of the time the underlying is just exchanged electronically.
For the net impact to the economy it depends on few things.
What did suppliers do in response? If suppliers believed there was a nickel reserve that could potentially enter the market, they would be less likely to choose strategies such as constraining supply in order to increase prices which helps consumers of nickel. However, they also would be less motivated to store up surplus nickel of their own that would help alleviate natural shortages.
The other thing to consider is that we think the nickel did exist at some point in time, so in this case crime did pay. Therefore the thieves' ill-gotten gains will have increased their capacity to carry out future scams.
It's similar to if you provided insurance to someone and happily accepted payments knowing you could never actually pay out their insurance claim. The person making payments is a victim even if he never realizes it.
Are you though? You never had a claim that couldn't be paid out. If you needed that insurance in order to do or buy something, you were able to do or buy that thing. You have no damages. You absolutely could have, but you didn't.
If someone points a loaded gun to your baby's head but you never notice, is your baby really a victim of assault? In both situations it's irrelevant if you never knew, you were still exposed to a massive amount of risk, making you a victim.
A war starts tomorrow and you need need X to produce the stuff to protect your country. Not a problem right, you have plenty of X. Ooops, not really, it's lies and corruption all the way down.
The same JPMorgan that financed Epstein, failed to keep mandatory records, "lost" 47 million emails and were fined nearly a billion dollars for spoofing metals markets? The JPMorgan that taxpayers "gave" a $12 billion bailout to?
... Probably not your friend, unless your 'net worth' is in the 8 figures range.
In the past it was warehousing in general, itemized tracking these days has greatly increased how well we can track things.
In the late 80s my dad was a transport manager for a large and well known company. They had recently moved to a newer computer system that greatly expanded the capabilities one had in data charting and comparison. He had the idea "Hey, if I identify where our floor losses due to damages are and minimize those it will probably lead to a nice bonus", but when he began running the numbers something was very very wrong. Losses in some classes of very expensive products were orders of magnitude higher than other assumed random damages. Start coupling this with other data like the regular reoccurrence of damages to these same categories of products and things get suspicious. Then adding in the data the damages always happened on particular shifts and suddenly whispers of the word fraud show up.
Turns out a number of employees, middle managers, and a vendor where all involved in a kickback scheme that had been going on for years.
A nice gold watch and no bonus even. Then the next year they internally announced to management they were going to downsize a good portion of the staff, but they couldn't tell anyone.
So he left the meeting. Told everyone he managed, and never went back.
I was born in yugoslavia, so could be a local peculiarity.
Wherever there was a large (communism, so government owned) company, if you needed something that company either had (raw materials) or produced, you just needed to find someone who worked there, and they would sell you whatever you needed. Friend works in iron works/steel company? Need steel sheets, just call him. Need some end products? Just call him. Need cement? Or cement blocks? Just call someone who works at a cement factory, he'll take a few blocks home every day, and after a week or two, you go to his house, pay and pick them up. It was never stealing trucks full of stuff, but with 1000+ workers, having 200, 300 workers that steal a bit every now and then (like pens and post it notes in the "west"), after a few years, you get whole neighbourhoods built using stolen bricks and cement, and all the fences were built out of iron rods, that were destined to become something else.
Amusing, vaguely similar story about a company that made loans based on collateral related to a ships that were to be broken up, that completely ignored the ship vanishing from tracking for years: https://markets.businessinsider.com/news/stocks/yieldstreet-...
To be fair, it sounds like insider based "embezzlement" right? Someone signed off on the scrap metal samples and didn't bother to have any testing of future deliveries? Or perhaps had someone sign off on future deliveries without checking their base metal content? Either way, insiders exploiting weak internal controls to personally profit is certainly one of the more common "thefts" mode, whether its employees taking things home from the store or accounts writing checks to their cousins against fake invoices.
I often wonder if there is a correlation between companies with higher pay inequity and this sort of theft. One leg of the fraud triangle is because the fraudster has a sense that they "deserve it" after all.
Sometimes, if Im quick enough, pressing the reader view on my phone shows the whole article. It doesn’t work on every site just some that are lazy and just throw a divider up on the screen without hiding the actual content. That worked for me here. Otherwise, I just use the archive links HN users post.
Somebody posted this in HN, if use save it as the URL of a bookmark and run it on a page with a divider on screen it will delete it often enough that I keep on my bookmarks bar.
javascript:(function()%7Bdocument.querySelectorAll(%22body%20%22).forEach(function(node)%7Bif(%5B%22fixed%22%2C%22sticky%22%5D.includes(getComputedStyle(node).position))%7Bnode.parentNode.removeChild(node)%7D%7D)%3Bdocument.querySelectorAll(%22html%20%22).forEach(function(node)%7Bvar%20s%3DgetComputedStyle(node)%3Bif(%22hidden%22%3D%3D%3Ds%5B%22overflow%22%5D)%7Bnode.style%5B%22overflow%22%5D%3D%22visible%22%7Dif(%22hidden%22%3D%3D%3Ds%5B%22overflow-x%22%5D)%7Bnode.style%5B%22overflow-x%22%5D%3D%22visible%22%7Dif(%22hidden%22%3D%3D%3Ds%5B%22overflow-y%22%5D)%7Bnode.style%5B%22overflow-y%22%5D%3D%22visible%22%7D%7D)%3Bvar%20htmlNode%3Ddocument.querySelector(%22html%22)%3BhtmlNode.style%5B%22overflow%22%5D%3D%22visible%22%3BhtmlNode.style%5B%22overflow-x%22%5D%3D%22visible%22%3BhtmlNode.style%5B%22overflow-y%22%5D%3D%22visible%22%7D)()%3B%0A
Disabling javascript generally works too. I actually browse default js disabled, and if it seems like a site isn't working, I enable JavaScript for that domain.
Yeah I hear you. I’m pretty sure though I’ve come across sites that on a timed refresh have truncated the article. So the whole article was there until some process ran to check sign in status. Maybe that doesn’t happen anymore. I haven’t really noticed.
are you using an adblocker or ad-filtering VPN such as Blokada or Pi-hole? Then temporarily turn them off, solve the captcha one more time. Then it should successfully progress to archive.ph/.to memento.
F9 toggles reader mode. Frequently the paywalled content disappears as soon as you hit F9, but will reappear if you hit F5 while reader mode is in effect.
Google got into trouble for copyright reasons for quoting too much of news stories in search results, so I assume this will cause HN (and the sites doing the paywall removal) some expensive trouble as soon as anyone with relevant power notices.
There is an extension that I use that helps with those. It is inconsistent but it does give you cached links at the top when available. Bypass Paywalls on gitlab. Open-source.
