Mr. Blow looks at “The Curious Case of Chavis Carter” and says the case of a young man supposedly taking a gun and shooting himself in the head while handcuffed in the back of a police car truly “defies logic.” Mr. Nocera says “Frankenstein Takes Over the Market,” and that these runaway rapid-fire trading binges are getting out of hand. We had yet another this week! Ms. Collins, in “Congress Goes Postal,” says the House and Senate are on summer vacation. Let’s see what they accomplished before taking a five-week recess. Here’s Mr. Blow:
Let me get this straight: A young man is stopped by police, who find $10 worth of drugs on him; he had twice been searched by officers and then double handcuffed behind his back and placed in the back of a police car; yet, somehow, he retrieves a gun that both searches failed to find and uses it shoot himself in the right temple?
That is what police in Jonesboro, Ark., say happened on the evening of Sunday, July 29, to Chavis Carter, a 21-year-old African-American man from Southaven, Miss., a suburb of Memphis. They say he committed suicide with a hidden gun while handcuffed in the back of a police cruiser. According to a local CBS News report, his mother was told that he shot himself in the right temple, but she claims that Chavis was left-handed.
The strange circumstances of this case, which even the Jonesboro police chief, Michael Yates, called “bizarre” and said “defies logic at first glance,” have raised questions that sorely need answering.
First, some background on how Carter came into contact with police that Sunday night.
According to a statement released Friday by the Jonesboro Police Department, Chavis was a passenger in a “suspicious vehicle” mentioned in a 911 call because it was “observed driving down the street with its lights off” at 9:50 p.m. Three people were in the vehicle: the driver, Carter and another passenger.
According to the statement, Carter, who originally gave a false name — Laryan Bowman — was “ ‘frisked’ or ‘patted down,’ not necessarily a full search at this point” because the officers on the scene “did not know what they had nor if any arrests were to be made.” During that first search, “a small amount of marijuana and some small plastic bags commonly used to package drugs were discovered in Carter’s pocket.” According to the police report, the estimated value of it was $10.
The police then determined that Carter “had an active warrant out of Mississippi.” According to The Commercial Appeal of Memphis, a warrant had been issued for Carter’s arrest after he violated his probation. He had pleaded guilty in 2011 to one count of selling marijuana.
He was placed in the back of one of the police cars on the scene without being handcuffed.
The other two people in the car “had no drugs and no active warrants,” so they were released.
Carter was then taken out of the police car, at which point officers “cuffed him behind his back and searched his person again” and placed him back into the police car.
Then things get strange. According to the police statement:
“As the officers then returned to their vehicles to leave, the second officer entered his vehicle and noted the smell of something burning (gun smoke we believe) and noticed Carter slumped over on the passenger side of the police unit. The officer then opened the rear door and noticed Carter unresponsive with a quantity of blood on him. At this point, he ran to the other officer to prevent him from leaving and both officers returned to the second unit, opened both doors and began to attempt to assist Carter (who was still handcuffed behind his back) and summoned an ambulance. The ambulance arrived and transported Carter to the hospital where he died a short time later.”
The statement continues:
“Investigators were called to the scene and began processing the evidence, photographing and securing evidence. A small .380 caliber cobra semi-auto firearm was discovered, as well as an expended case, and a projectile (which was recovered in the rear of the vehicle).”
(The police say that the handgun had been reported stolen from a Jonesboro resident in June.)
Police say that they have interviewed “a number of witnesses” to the incident and that their “statements are consistent with the statements of the officers and the evidence reflected by the dash-cam video of the responding officer, along with audio evidence from the backup officer.”
According to the police, “the statements and video/audio evidence account for the officers’ actions from the beginning of the stop until the arrival of the ambulance and indicate that neither officer removed his weapon, fired a shot or was in a position to enter the vehicle where Carter was detained in a manner that would allow for them to injure Carter.”
Furthermore, “the windows on the patrol unit where Carter was detained were up and intact, indicating no possibility of a bullet penetrating from the outside of the patrol unit while Carter was detained.” Yet, “specifically, how Carter suffered his apparently self-inflicted gunshot wound remains unexplained.”
That is the question, isn’t it? How do police officers search a man twice and find a small amount of marijuana but miss a handgun? And how does that man, who had been handcuffed, use that gun to shoot himself in the head?
The F.B.I. is now monitoring the investigation while a nation waits for answers and wonders about a “suicide” that “defies logic.”
And the cops wonder why fewer and fewer people trust them any more. When I was a little girl I was taught that “the policeman is your friend.” Now? Not so much. Here’s Mr. Nocera:
This week, yet another Wall Street firm most people have never heard of, relying on a computerized trading program that they can’t possibly understand, shook investors’ faith in the market. This is happening a little too frequently, don’t you think?
The company, of course, was Knight Capital, a major market maker that generated an astonishing 11 percent of all the trades in the first half of this year, according to the Tabb Group. It caters to sophisticated Wall Street traders as well as small investors, whose brokers often used Knight to fulfill their trades.
Trying to stay a step ahead of its competitors, Knight rolled out some new trading software. The software wasn’t ready. Instead of fulfilling customers’ orders, Knight’s computers went on an out-of-control spree of rapid-fire buying and selling. As trading volumes swelled, the Wall Street guys jumped in. (Sophisticated traders, relying on their own rapid-fire computers, often love volatility because it leads to trading anomalies they can take advantage of.) Many retail customers, having no idea what was going on, wound up losing money. I know: shocker.
The mishap also cost Knight so much money that its future is in jeopardy. Even putting aside the havoc wreaked on customers, you’d think that self-preservation would have been enough for Knight to want to ensure that its software worked. But apparently not. Wall Street is now as blindly reliant on computers, on algorithms, on high-frequency trading, as it was once blindly reliant on the risk models that allowed “toxic bonds” to be rated Triple A. Wall Street has created its own Frankenstein. The machines are now in charge.
On the upside, as my colleague Floyd Norris noted on Friday, are lower trading costs and more liquid markets. But computerized trading, especially rapid-fire trading, which has caused its own share of market mayhem, has other consequences as well. Most rapid-fire trading has nothing to do with the core idea that drew people to the market in the first place — that if you picked good companies, and did your homework, you could make money. High-frequency trading is about buying and selling in seconds — for a trader relying on an algorithm, the “long term” is an hour. Maybe.
A second consequence, flowing from the first, is that the market feels less and less hospitable to individual investors, while becoming, increasingly, a playground for the big boys, the way it was before the creation of the Securities and Exchange Commission in the 1930s. Yes, if you can shut out the white noise — à la Warren Buffett — rapid-fire trading shouldn’t matter over the long haul. But very few of us have Buffett-like blinders.
The third consequence is that the software too often goes awry, which then reinforces the idea that the small investor’s only role in the market is to be fleeced.
Take, for instance, that other recent disaster, Facebook’s initial public offering. Yes, human beings probably priced the shares too aggressively. But it also turned out that a number of institutional investors had been given word that the company’s growth was slowing. And then Nasdaq’s computers broke down, failing to confirm orders, which led to chaos — and losses by the small investor. I don’t have that much sympathy for Facebook investors; they thought they were being handed free money. Then again, that is exactly how Wall Street views I.P.O.s. Somehow, though, with small investors participating in the I.P.O., everything went wrong.
The primary way the government has tried to restore faith in the stock market is by prosecuting a series of high-profile insider-trading cases. That’s fine, but it doesn’t do a thing about the public, sudden events that have shaken investor confidence, like computerized trading glitches. As Jason Zweig pointed out recently in The Wall Street Journal, over the last 13 months, $136 billion has been withdrawn by investors from stock mutual funds. No doubt part of the reason for the withdrawals is that investors are unhappy with their returns. But I suspect that an even more important reason is that between the glitches and the scandals, people have simply had it with the market.
What makes this particularly painful is that over the last four decades, we have built a society that has become deeply reliant on the stock market. It is how we are supposed to finance our children’s college education and our retirement. With the bursting of the housing bubble, the stock market, in some ways, is all we’ve got left. It is difficult to depend on something that seems so frequently unreliable.
One wonders if Wall Street itself is beginning to question if it can rely on the monster it has created — and which it no longer seems able to control. In the immortal words of the screenwriter William Goldman, “Nobody knows anything.” He was talking about Hollywood. But the same could be said today for Wall Street and its fixation with computerized trading.
Now here’s Ms. Collins:
Congress is gone. Yeah, I miss them, too.
All the members are off on a five-week recess, after which they’ll return for a few days, then go away again, then hobble back as lame ducks. This is going to do terrible things to the Congressional approval rating, which had climbed all the way up to 17 percent at one point this year. Now it’s sunk to BP oil spill level, and it’s only a matter of time before we’re back to the point where poll respondents say they have a more favorable attitude toward “the U.S. becoming communist.”
You are probably wondering what your elected officials have been up to. Well, the best news is that House and Senate leaders worked out a plan to avoid a government shutdown for six more months by agreeing to just keep doing whatever it is we’re doing now.
This is known as “kicking the can down the road.” Failure to kick the can down the road can lead to “falling off the fiscal cliff.” There are so many of these crises looming that falling off a cliff should be reclassified as an Olympic event.
Just this week, Congress failed to protect the Postal Service from tumbling, and the service defaulted on a $5.5 billion payment for future retiree health benefits. It was the first time that the U.S. mail system failed to meet a financial obligation since Benjamin Franklin invented it.
The Postal Service has multiple financial problems, and, earlier this year, the Senate passed a bipartisan bill to deal with them. It would not have fixed everything, or even resolved the question of whether the strapped agency would be allowed to discontinue Saturday mail delivery as a cost-savings measure. “It’s not perfect,” admitted Senator Tom Carper of Delaware, one of the sponsors.
At this point, the American public has been so beaten down by Congressional gridlock that “it’s not perfect” sounds fine. In fact, we’d generally be willing to settle for “it’s pretty terrible, but at least it’s something.”
The Senate plan would have definitely been preferable to the Postal Service default, which could be followed by an all-purpose running-out-of-cash later this fall. Carper was pretty confident that if the House passed a postal bill of any stripe, the two sides could work out a compromise during the long August vacation. That would presumably be a watered-down version of imperfection, which, as I said, is exactly what we’re currently dreaming about.
But the House leadership wouldn’t bring anything up for a vote. Speaker John Boehner never said why. Perhaps he was afraid voters would blame his members for the closing of underused post offices. There is nothing Congress cares more about than post offices, 38 of which the House has passed bills to rename over the past 18 months.
So, no Postal Service bill. You can’t deal with every single thing, and the House had a lot on its to-do list, such as voting to repeal the Obama health care law on 33 separate occasions.
Meanwhile, the national farm program was teetering on the cliff.
The farm bill has long been a classic Congressional compromise, combining aid to agriculture with the food stamp program, so there’s pretty much something for everybody. The Senate recently voted 64 to 35 to approve a new five-year authorization, which reformed some of the most egregious bad practices, like paying farmers not to grow crops. It was, I hardly need mention, not perfect.
Then, the House Agriculture Committee passed a bipartisan farm bill itself. Yes! In the House, people! Everybody was on board!
Then, the House leadership refused to allow it to go up for a vote. Boehner told reporters, “no decision has been made” about what to do next, without giving any hint as to when said decision might be coming along.
The problem appears to be Tea Party hatred for the food stamp program. But who knows? Boehner isn’t saying. Maybe his members want the power to rename the farms.
The House Agriculture Committee chairman, Frank Lucas, just kept making sad little noises. Lucas is from Oklahoma. His state is having a terrible drought. It’s been more than 100 degrees there forever. As a gesture of appeasement, the leadership did allow passage of a narrow bill providing disaster relief to cattle and sheep ranchers. The Senate dismissed it as too little, too late.
Meanwhile, several attempts to get a bill passed on cybersecurity for the nation’s power grid, water supply and financial systems failed entirely.
Maybe Congress will pick up the ball when it comes back to town for a couple of weeks this fall before the election. But it already has a full agenda of futile, symbolic votes plus the crucial kicking the can down the road.
Maybe it’s possible to have a negative approval rating.
They should start asking polling questions along the lines of “how much do you hate Congress?”