Thursday, February 11, 2010 33 Comments

PIPE shorting and Professor Hanson's head

Thanks to the awesome editing of Monica Anderson, the Moldbug-Hanson video is up at Vimeo - so you can compare it with my report.

Some have said that the debate was actually won by Professor Friedman. Cannot one imagine him with a green lightsaber? One can, can't one? And others have expressed surprise that I don't actually wear a black cloak or have facial tattoos, and in some ways could even be mistaken for a normal person. The better to seduce you with, young rebels. It is your destiny!

Best of all, the video is timely. For there's a new development in the conflict. I believe I may finally be able to claim Professor Hanson's dried head for my mantel.

Briefly, I've spotted an actual decision market which is actually manipulated - precisely as my sinister theories predict.

If this be so, my attack is not just deductive and philosophical, but also inductive and scientific. In short: it severs the neck, at the third cervical vertebra. The seconds ice the thing, trim it lightly, and DHL it to my taxidermist - Oxford Street's best man. Like cryonics, only different! And Professor Hanson must complete his career with whatever neural matter the stump retains. I believe he has tenure, so this should cause him no undue difficulty.

Of course, the Professor still has an out. Since any such chicanery is illegal - American financial markets not being the free-market utopia some fancy - it is too much to expect undisputed evidence of decision-market manipulation. His spinal tissue will find no other point to quibble on. It can always quibble on this one. Indeed, I expect it to.

For instance, the defendants in cases such as Berlacher could be entirely innocent of any manipulative intent. They might have profited just by coincidence. It looks bad, however. As the prosecutors wrote:
Berlacher involved the same familiar fact pattern as the earlier cases: an investor purchased shares in a PIPE transaction and simultaneously sold short an equivalent number of shares in the open market.
"Familiar fact pattern." Of course, it's just an allegation. But worse - we see not only mere Federal prosecutions, but genuine, verifiable rumors. For instance, widely-disrespected financial journalist "Tyler Durden" writes:
Think of it as a PIPE investor who shorts stock of a company he/she knows will give out stock at a discount to market, a practice since banned by the SEC but being done rampantly to this very day.
Again, we cannot expect anyone to actually admit to this behavior. But as a student of history, I'm going to say: smoke, fire. There is clearly something going on here. What the hell is it? And how do my sinister theories (actually more, um, dexter) predict it?

PIPE stands for Private Investment in Public Equity. In a PIPE deal, a publicly-traded company sells a large number of shares not in the usual way, by conducting an open secondary offering (not just dumping the shares on the market, but close to it), but by selling a large block of shares to a single investor or syndicate thereof - generally, private equity.

There is nothing intrinsically wrong with this. However, one common PIPE structure has an interesting wrinkle which turns the market for this stock into a decision market. This decision market is chronically manipulated, which is at least one of the reasons that PIPE deals suck.

In practice, PIPEs are generally restricted to companies in a dire financial position. The investors who buy into them are notorious bloodsucking leech bastards - squid who feed on vampire squid. PIPE is strictly Mos Eisley finance. Not mobbed-up, but close. Just the sort of subterranean scum-market in which we'd expect to see systematic manipulation.

The way this structure works is: dolphin in dire straits comes to predatory squid. Dolphin in dire straits says: "Hello, predatory squid! I have a big problem. I need 20 million fish."

Predatory squid says: "Hello, my juicy little dolphin! I can solve this problem. I have 20 million fish for you. I'll give you 20 million fish right now, in exchange for something you can print at no cost - your own stock. What is it now, April? Whatever your stock price is on June 1, I'll take 20 million fish of it."

That sounds good to the dolphin. His stock is trading at 10, and there are 10 million shares outstanding. To save his whole dolphin pod from starvation, he accepts a mere 20% dilution.

But mysteriously, dolphin stock begins to sink. By June 1, it is down to 2 fish per share. The squid ends up with 51% of the pod. Since that's enough to do anything you want with anything, he has all the dolphins canned and sold as cat food, maximizing the return on his investment. Property rights and free-market economics!

Not that this is the government's fault, of course. It's the dolphin's fault. He never should have gotten involved with a squid-eating squid. Since he did, he needed the government to protect him. Alas, it doesn't always do such a good job of that. More regulation is needed, comrades! Not.

But what did the dolphin do, exactly? What was his mistake? He created a decision market. Normally, the market in dolphin stock is just a prediction market. The stock price matters, but abstractly. It does not matter directly and mechanically. It does not have profitable side effects. It does not create a conflicting incentive, which overpowers the market's predictive signal.

For the whole month of May, dolphin stock is a decision market. The decision is: what price does the squid pay for its shares? The number of shares it gets for its 20 million fish, hence the percentage of the dolphin's ass it gets, is the inverse of the stock price on June 1. A very real and palpable decision! And a profitable one. For the squid's gain, of course, is the dolphin's loss.

The squid has a clear incentive to manipulate the market. During May, he profits automatically if dolphin stock goes down. He has a non-predictive incentive to short. As one expert writes:
Hence, structured PIPEs lacking floors or caps are pejoratively labeled “death spirals” or “toxic converts,” because investors in these deals may be tempted to push down the issuer’s stock price through short sales, circulating false negative rumors, etc., so that their structured PIPEs become convertible into a controlling stake of the issuer.
This incentive may contradict the squid's own predictions for the performance of dolphin stock. If he has any. He's a squid, after all. He's not investing in dolphin because he loves dolphins. Squid love nothing. They have neither heart nor brains. They are certainly not in any way cerebral. They eat, that's all. Actual market prediction - not their cup of blood.

But, since the profit from X should exceed any losses he may expect from Y, our squid expects to eat. He expects to eat so well that he engages in this foul, predatory behavior - despite its obviously unethical and SEC-attracting nature. He's a squid. He plays the game.

Now, let's look at how Professor Hanson's theories describe this situation. To Professor Hanson, our squid-eating squid - who, by shorting, is investing non-predictively for ulterior motive - is in fact a sheep. His behavior is not predatory, but imprudent.

And why? Because the squid will not succeed in depressing the dolphin market. Rather, by investing non-predictively, he is making a wrong bet. Or at least, a bet with (according to the squid's own predictions) negative expected value. Here the Professor and I agree.

Because this bet has negative expected value, there must be an equal and opposite counter-bet with positive expected value. In Professor Hanson's universe, this will attract wolves - expert speculators, who can smell inefficiency the way a professor smells grants. The wolves home in on the counter-bet and devour the squid/sheep, quite incidentally restoring the dolphin market to its original and inevitable state of Platonic efficiency.

Here is where we disagree. I believe this scenario is plausible. Professor Hanson considers it (so far as I can tell) inevitable - at least, in a large public market.

Do PIPE deals attract wolves? Will speculators, hoping to detect (note that in Professor Hanson's spherical-cow models, positions and even motivations are visible) the inefficiencies of manipulation, buy dolphin in May? They might well. There is certainly nothing stopping them. Nor - as with the squid themselves - would we know if they did. Real markets are opaque.

For manipulation to be entirely precluded, however, the wolf counterattack must be inevitable - and of equal magnitude to the squid feeding frenzy. The latter is indeed finite, if only because there is a finite amount of dolphin! And the former potentially includes all players in the market - but only potentially. Potentially is not actually.

If this wolf army was inevitable, squid would not profit routinely from PIPE shorting - which would not be, in Mr. "Durden's" colorful phrase, "rampant." Hence, Professor Hanson has claimed that there is no such thing as a coelacanth, and I have dumped one in his inbox. The ball is in his court! But frankly, I'm already wondering where I'll put that moose head.

For the wolves to attack the squid and save the day, there need to be heavy wolves in the dolphin market, and they need to smell (squid) blood. They must be able to detect the fact that dolphin stock (remember, this is a weak, vulnerable company to begin with) should not be falling in May, and hence deduce the presence of a bet with positive expected value.

In other words, a large amount of money needs to be sitting behind a large amount of certainty. And the bigger the squid (the larger X, our ulterior motive), the larger and more confident the wolves must be. As we've seen, even with a small, simple, bounded X, wolf activity is not apparent. At least, it's not apparent to the Berlachers of the world.

Instead, the Berlachers of the world follow the "familiar fact pattern" of selling short roughly the same number of shares they expect to acquire when the deal closes. Professor Hanson's hypothetical wolves aside, any market can be manipulated downward by artificially increasing the supply of shares, which is what short-selling does.

In an ordinary market, this is not a way to produce expected profit, because to actually collect profits the manipulator must bury the corpse. He must cover his shorts by buying them back on the market. Which drives the price back up, erasing the expected profits. The Berlacher-squid, however, need not buy the shares on the market - he gets them straight off the dolphin's ass. Far from burying the corpse, he eats it.

Now, I remind you of the devil the Professor wanted to bridle with this weak rein. He wanted to make arbitrary sovereign decisions with his "futarchy." He wanted to control the government this way. As a student of history, I can tell you that history is just about the biggest, wackiest, least predictable thing there is - and history is the story of governments.

In short, Professor Hanson claims to draw out Leviathan with a hook. Wilt thou play with him, as with a bird? No, Professor, thou shalt not. Thou shalt be learning to eat through thy pharynx.

At least, in the game of squid versus dolphin that is a PIPE structure, the ulterior motive (X) is both bounded and well-described. The decision market is just setting a stock price. No one besides squid and dolphin have any incentive to intervene in the game - and the most the squid can win is, well, the entire dolphin. X, in short, is under control. Still Y, though potentially infinite, appears actually, empirically insufficient to dominate it. One white raven, delivered.

Sovereign decisions have no such mild X. Who has an incentive to gank the market in, say, war? Who doesn't? Obviously, if America is fighting Hitler, and Hitler can intervene in the decision market that decides whether America should surrender - to Hitler - well, a man like Hitler's not going to say no to that, is he?

Quite the contrary. Hitler will bet the whole Reichsbank - then put on leverage! American surrender, after all, is a Pascal's bet for Hitler. So, in a sovereign state controlled by decision market, we all suffer the fate of the poor dolphins, and are made into cat food by Hitler.

This is the future that Professor Hanson wanted, for you and your children! This is his "futarchy." Hitler - cat food. Cat food - Hitler. Picture it, America. That red lightsaber is looking better and better, isn't it?


Anonymous Pals said...

Game, Set, Match Moldbug.

For my crazy Anarcho-Capitalist ass, the problem with futarchy is that it is just another way of running a fundamentally and inevitably harmful process: government. Whichever way you decide to run government (democracy, futarchy, monarchy, theocracy, or traibal chieftanism) it will be bad. It fucks things up, it ruins lives, it wastes resources, and is always to serve the purposes of the governing at the expense of the governed.

Futarchy is a retarded idea because it thinks these problems can be eliminated by relying on the wisdom of crowds. For me, this is like saying rape will only be conducted through the decisions of market participants. This is not going to make rape better.

February 11, 2010 at 3:52 AM  
Blogger Porphyrogenitus said...

Get a haircut, techippie!

Or at least share some of yours with the poor, misguided, but kindly Dr. Hanson.

February 11, 2010 at 6:14 AM  
Anonymous Robin Hanosn said...

As far as I can tell, you have only described here a logical possibility of mispricing in these cases. You haven't actually shown that the prices tend to be too low. You've noted that there is a party involved with an incentive to make the price too low, but is that all your evidence consists of? Surely we've already known there are folks who want to manipulate prices.

February 11, 2010 at 1:14 PM  
Anonymous josh said...


What about the fact that insiders believe price manipulation to be rampant?

February 11, 2010 at 1:52 PM  
Anonymous Anonymous said...

Why does the moderator "Josh Hall" pronounce Mencius' name as "Men-cee-us"?

Isn't it "Men-shus"?

February 11, 2010 at 3:05 PM  
Anonymous Aggie said...

Just saw the vid.

Hanson resembles a mad scientist evil villain with his impressive dome.

February 11, 2010 at 3:12 PM  
Anonymous c23 said...

In particular, Hanson resembles "The Brain," as in "Pinky and The Brain." And he's trying to take over the world with Futarchy. Life imitates art.

February 11, 2010 at 3:25 PM  
Anonymous Lang said...

It was annoying listening to Hanson speak. He kept on doing this nerdy, nervous laugh/smile breathing thing after every sentence where he unleashed an audible gust of breath through his mouth and nose.

February 11, 2010 at 3:37 PM  
Anonymous Izzard said...

The funny thing about the video of the debate is not so much that everybody in the room looks like a giant nerd, but that everybody who spoke had like the nerdiest voice ever.

February 11, 2010 at 4:00 PM  
Anonymous The Undiscovered Jew said...

The funny thing about the video of the debate is not so much that everybody in the room looks like a giant nerd, but that everybody who spoke had like the nerdiest voice ever.

Were you expecting everyone at this debate to look and sound like A&F male models?

February 11, 2010 at 4:39 PM  
Anonymous Anonymous said...

The Blackadder Says:

I would agree that the debate was won by Professor Friedman. He demolished Mencius with his first set of comments, then finished off Hanson on the second go.

February 11, 2010 at 6:34 PM  
Blogger alexi de sadesky said...

Ooooo, zat's a bingo!

And yes, everyone in that video was a fucking nerdlinger. Looked like a real party

February 11, 2010 at 8:40 PM  
Blogger Mitchell said...

It looks like that last question was asked by Michael Vassar of SIAI, not Michael Anissimov (the name appearing in the subtitle).

February 11, 2010 at 10:35 PM  
Anonymous Anonymous said...

Lay off the comments about how the participants look and sound, people. That is irrelevant to the validity of their arguments.

February 11, 2010 at 11:33 PM  
Anonymous Elias said...

Lay off the comments about how the participants look and sound, people. That is irrelevant to the validity of their arguments.

Well yeah.

But it is interesting as sociology. I mean a good proportion of those people in the video seriously believe that their minds will be encased in laptops 20 years from now and that they'll be living for eternity. They're just waiting for it, on the edge of their seats, like Bible thumpers lusting for the Rapture.

And Mencius sounded like and came off as the most normal and least nerdiest among that crowd.

February 12, 2010 at 1:13 AM  
Blogger alexi de sadesky said...

Could you use the buying of credit default swaps and shorting as another example or am I terribly misguided here? I understand that PIPE is a bit more diabolical because you actually gain ownership of a company and then do with it what you please (i.e. slaughter dolphins and sell their carcasses to dogs or what have you) but, aren't CDS coupled with shorts like a less evil twin brother?

February 12, 2010 at 5:23 AM  
Anonymous pwyll said...

Yep, it was one of the nerdiest gatherings I've been too, and I went to a very nerdy college. Mencius was indeed one of the (if not *the*) least nerdy person there, which was awesome. Still, video of people we're used to seeing only in print can definitely be jarring - it's a good example of how blogging can help spread ideas without personal details distracting (rightly or wrongly) from the message.

February 12, 2010 at 10:09 AM  
Blogger Porphyrogenitus said...

I may have set off the commentary on apperance. I meant mine as humor but the thing became a series of off-topic ad-homenims, so I apologize.

I'll just add that it's quite possible if not likely that everyone posting about how nerdy everyone there was would probably fit right in at such a confab (myself included), so the comment thread degenerated into a sort of "Nerd Kristalnacht" with glass houses being demolished all around.

On the substance, I do think Moldbug won, if only because very few policy decisions can be boiled down to a simple digital choice ("do X or not"), and if it is, real power is left in the hands of those who define the range of choices.

Take Health Care, where the real choice isn't "do Obamacare or Not" (buy/sell Obamacare!) but several different Democrat Bills, plus or minus various tweeking amendments, several different Republican bills, plus or minus tweeking amendments (though they weren't given a chance), and more than several options that aren't even "on the table" (which commenters will probably note, asserting their favorite reform isn't on offer by either party).

Even if it were possible, the vast majority of people in the market would have no idea whether this or that health reform would be best or worst, judging by the fact that even knowledgable people are idiots on this. But lets say they are - the same people also think they're qualified to participate in a market on war/foreign policy, and any other policy one can name. Hardly any of them can be experts on everything but they're the pool of investors on everything in "Futarchy".

And Hanson dismisses out of hand that intereseted people have much more incentive to manipulate things to their advantage while the rest of the market will tend to be indifferent, which is odd for anyone who has probably studied public choice theory.

Trying to digitalize this is absurd, it does require judgement, and I don't think anyone addressed this except perhaps by handwaving it away.

February 12, 2010 at 10:19 AM  
Blogger TGGP said...

Re public choice theory: that describes a "bidding war". As was explained by David Friedman in the video, futarchy is significantly different from a bidding war. If there are opposing interests, they may try to push in opposite directions (in both a bidding war and futarchy), though public choice theory suggests that the smaller & more cohesive group may more easily do so. Mencius used the variables "X" and "Y" to describe manipulators/"sheep" and speculators/"wolves", respectively. The opposing interests serve to decrease X. But the larger X is in futarchy, the larger we should expect Y to be. There is no Y in a bidding war. Because everyone who likes making money is a potential source of Y, its reservoir is practically unlimited. In contrast, the resources behind those who want a particular outcome is quite limited (even if that interest is Microsoft or Uncle Sam).

On another note, Mencius is incorrect to note in the video that the purpose of the subsidy is to ensure that Y > X. Hanson considers X itself to be a subsidy, he thinks that the corporation should subsidize the market precisely because of the possibility of low (or zero) X! The subsidy increases Y indirectly, functioning as a "sheep" that will attract "wolves".

You are probably tired of my carping on MM's style, but I think it's relevant here. Does the translation of canning a dolphin into tuna equate to dismantling a corporation? In that case I'd imagine that the "squid" is not a "sheep" at all: it correctly predicts that the corporation is going out of business! It does not need to engage in any subterfuge, it should openly say "I am going to suck this company dry and spit it out!" after signing the PIPE deal and shorting the stock.

February 12, 2010 at 8:10 PM  
Blogger Zimri said...

The parable is not constructed according to a three-act structure. That makes it hard to read. (The squid morphing into a sheep didn't help either.)

It needs to start with this: "By the end of April, Dolphin stock is trading at 10, and there are 10 million shares outstanding."

But then Dolphin gets into that strain of "dire straits" which require 20 million fish. (Presumably "Latest Trick" more than "Money For Nothing".) Dolphin COULD sell 2 million shares on the open market. But that might cause chaos. So he keeps it on the DL, not telling anyone.

On 30 April, dead of night, he's off to meet the squid in the underwater vampire cave. Squid says, "Whatever your stock price is on June 1, I'll take 20 million fish of it."

So Dolphin takes possession of the actual fish, while Squid takes a legally binding IOU for "20 million fish, payable in stock, 1 June". Dolphin thinks, if he just holds out, he's only out 2 million shares.

Some point around here is Moldbug's "20% dilution".

Of course by June, "it is down to 2 fish per share", not 10. We're not told how (but we suspect Squid did something). Squid shows up wearing the IOU as a bib. Dolphin gives up 10 million shares.

Without the dilution that's not 51%; that's 100%. So I take it that Dolphin actually had slightly less than 20 million shares by 1 June.

I'm confused.

February 12, 2010 at 8:49 PM  
Blogger Chris said...

You really have to analyze this article, e.g.

"We’ve been telling the people, if you want to leave your houses, it’s up to you, and if you want to stay here and get killed by NATO and Afghan forces, you can stay in your houses," said Hashimi, the Taliban commander, despite that other than indigenous "Afghan" soldiers who constitute the "majority" of the (invasion) force, the major element is, it's an American invasion of its little opposition.

February 12, 2010 at 10:33 PM  
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February 12, 2010 at 10:34 PM  
Blogger River Cocytus said...

It would seem that a market must be highly established and 'legit' for the decision market to work 'correctly' - IE for your (Hanson) wolves to take the sheep. Whether a market will work seems to depend a lot on the players involved. Unfortunately, isn't this the identical problem that democracy has? Works fine if people are already educated and somewhat well-ruled, works poorly if they're not? It's still a GIGO system.

February 13, 2010 at 10:12 AM  
Anonymous The Unnamed said...

Forensic economists investigate the effect of CIA-led Coups on the stock market.

Summary: A recent study argues that those who planned the Guatemala coup on behalf of United Fruit Co. also profited "handsomely" from playing the market.

February 13, 2010 at 4:08 PM  
Blogger Prakash said...

Are we talking about shorting or naked shorting?

I think legal shorting requires the shorter to borrow the shares and then sell them right? How could they have borrowed the shares, who would be lending the shares to them?

naked shorting requires nothing of the sort, and it increases the shares outstanding in the market. Hence, naked shorting is generally considered harmful.

February 13, 2010 at 7:44 PM  
Anonymous Anonymous said...

Back to the human component of the thing, I'm decidedly more articulate and socially cooler than everyone there but I'm not gonna lie, hanging with that group of folk would likely be an absolutely awesome evening for me.

Continuing on the human component, the guy who introduced the program should have been strangled a few seconds in. He has no right to be allowed to utilize the power of speech, never mind hold an audience captive as he wraps his fumbling set of hands around a microphone.

Furthermore, had I have been speaking on the stage I'd like to think that I would have had balls enough to first kick Frankenstein off it. Had she (he? it?) been an interlocutor, all's good and well, but as nothing but a piece of scenery it was distracting to the nth degree and should have been removed.

At this point having just been such an asshole that I dared to refer to the unmistakenly grotesque look of a female as such I think I can hardly say the following with a straight face so I'll preface it by noting that I myself am not as good looking as I once and hope that minor self-deprecation suffices to make the following point, to wit: When I first started watching the video and noticed the exceedingly Jewy looking Shloimie all short, fat, badly-dressed and with endless tics I was relieved to see that our Mencius was likely not as inhuman as he comes across in his endless capital-based writings that care not a whit for the capitalistically less-capable or capitalistically less-lucky (including, I would gather, many of us) but as soon as he got a hold of the microphone, uhms notwithstanding (ums, uhhhs and uuuhhhhmmmmms notwithstanding too) the mad inhuman dictator's voice spoke with authority and without equivocation and without the least hint of sentimentality in either timber or facial expression. Fuck, his body didn't even move. a thing made all the more frightening by the nausea inducing bounce and jerkiness of his body and face when not in possession of the conch of authority.

This dude is one scary and dangerous motherfucker. I take a backseat to no man in appreciating (and appreciating my debt to) this shloimie's brain but he's an enemy to the vast majority of living men if ever there was one.

I take comfort in his lack of charisma and hope that remains always the case so that he can continue to enrich my life and the lives of most of his readers for many decades to come from before the solitude of his holey keyboard rather than turning all of our lives into a brief living hell from the solitude of his Bay Area Berchtesgaden as the rest of the world is pulverized by his mad commands.

Did I over-reach there? May godwin have mercy on my soul. And on his. Mencius is sufficiently enthralled by the Nazis and their mechanisms to be worth discussing in the same context. His "ideal" would leave all of us but his biggest sycophants dead.

All hail the GDP and our most Perfect Dictating Sovereign.

February 13, 2010 at 7:51 PM  
Blogger Prakash said...

Trades which {change the sovereign/change the market itself/are related to existential threats} may not be allowed by the exchange. Because there is a question about how these trades would be settled.

So, "America should go to war against Germany" will be a valid contract, but "America should surrender" would not be a valid contract. The former has only a possibility of changing the sovereign, the latter has a certainty in one outcome.

Now Hitler or Japan would pour a lot of money in trying to prevent America from going to war, but they would have to decide whether this is the best use of their money.

February 13, 2010 at 8:47 PM  
Blogger Monica Anderson said...

I corrected the problem with mislabeling MIchael Vassar. My apologies to both Michaels.

February 16, 2010 at 2:26 AM  
Anonymous azmyth said...

I always imagined that you wore a top hat and a cape. Your rhetorical style is very garish and exaggerated, which often makes it fun to read. I don't know who I thought "won" the debate, but there was much interesting tidbits to think about. To Professor Hansen's credit, he did say he would try it out on a small scale first. At least the damage of failure (if any) would be small.

February 17, 2010 at 3:17 PM  
Anonymous Anonymous said...

OT; from the professors-as-ruling-class dept.:

"One woman reported, “Guys with the best jobs are the cheapest. The others (farmers, etc) are more lenient with their money.” Another woman spoke of a professor who was caught by police after he had sex with her and was apprehended upon leaving the establishment. The police did not believe that he actually had engaged in the sex, and told her to give him back his money. “They didn’t want the prominent professor at the college to have his name in the papers. He had a family and this would mess up his career.”

February 17, 2010 at 9:29 PM  
Blogger Steve said...

Since people with tenure no longer depend on their reputation for their future income, their opinions should be ignored - they no longer have an interest in being correct.

February 18, 2010 at 3:12 AM  
Anonymous Anonymous said...

I'm watching the video, and i... Well, doesn't in the case of government X = Y by definition? Since government is basically the higher authority in a society then EVERYTHING this society has is subject to it by definition and therefore all the subdisize the nation can provide, which is all it has, is exactly the same as the stakes? By definition? As in, is bound to not be exactly that way but so close it doesn't matter? Following, that, obviously, futarchy can never achieve stability?

February 25, 2010 at 9:02 AM  
Anonymous Dystopia Max said...

Disappointed that no one's made the obvious "Futanarichy" joke now that trannies are out-competing homosexuals.


They might have to give it a goat head though, in order not to offend the furries.

March 11, 2013 at 2:31 PM  

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