The board of the American Banking Association will vote tomorrow on a plan to create a nonprofit to donate to super-PACs and funnel funds into Senate races, according to Bloomberg. The funds could be used to support candidates who favor the repeal of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Business activity in the euro zone slowed at a faster rate in August, data show, in what The Wall Street Journal describes as one of the strongest signs yet that the region is heading into recession.

Also from The Journal, on the new math in Spain's education system: “We are mortgaging the future of generations of youth that now more than ever need education,” José Campos Trujillo, the secretary-general of the teacher federation of Spain’s largest union, wrote recently. “All the supposed savings in education are going to delay our exit from this crisis.”

The U.S. slipped to seventh place in the World Economic Forum's Global Competitiveness Index.

Residential Capital, the mortgage unit of government-owned Ally Financial, will unload assets at auction next month as part of the home-lender's Chapter 11 process. Fortress Investment Group and Warren Buffett's Berkshire Hathaway are among the expected bidders.

Dutch financial firm ING Group plans to sell its stake in Capital One in a deal that may be worth $3 billion, The New York Times reports. ING acquired its 9 percent stake in the lender when Capital One bought ING's U.S. unit in February.

Deutsche Bank is said to cut 85 equities positions in Honk Kong and Tokyo, Bloomberg reports.

In spite of the billions in recent trading losses, JPMorganremains the best investment bank to work for, according to 3,500 executives surveyed by Vault.com.

Gayle Kabaker, "June Brides"

June is the most popular month of the year to get married, and not just for the Romans, who did so to honor Juno, the goddess of marriage. It is also preferred by media power couples. Three of them snuck in late-late June weddings over the weekend. 

New Republic publisher Chris Hughes and Sean Eldridge's Saturday wedding lived up to couple's reputation as the photogenic poster grooms for marriage equality. But the blow-out might have caused a scheduling conflict for fellow Facebook founder Mark Zuckerberg, whose buddy Washington Post CEO and chairman Donald Graham married Bloomberg executive editor for investigations Amanda Bennett the same day. (Luckily, their Philadelphia nuptials were family only, the Post reported.)

On the opposite side of the country, in Catalina Island, Calif., a New York Times wedding was underway: Times education writer Tanya Caldwell wed former Times reporter Jonathan Abrams. He is now a staff writer for Grantland.

That comes after a New York Times story this weekend suggesting that Zuck & Co. have been assembling hardware and software engineers to take another crack at developing a Facebook smartphone. That news in turn followed news that Facebook was struggling to generate revenue from mobile users, first in a revised S-1 filing in the days before Facebook's IPO, then—to much controversy—in Morgan Stanley research reports.

(Who knows what may be afoot? Research In Motion shares were halted in after-market trading pending an announcement—which turned out to be that the BlackBerry-maker had hired JPMorgan and RBC Capital Markets to advise on strategic options.)

If today's tumbling share price is an indication, a quick stab at tackling mobile is unlikely to change investors' minds. Short-term concerns over the revenue model, not to mention expected insider sales in mid-August when the 90-day lock-up ends, still loom.

And even if Hal Steinbrenner promptly denied the rumors: "Complete fiction," he told the News, that doesn't mean we can't imagine a new Boss in the Bronx.

Michael Bloomberg: An obvious choice, but we're not sure Mayor Mike has the patience for baseball. We're pretty sure Rudy Giuliani doesn't have the cash, but it'd be fun to watch him scurry around raising money.

Steven A. Cohen: A man who donates a tour of his personal art collection to charity has the ego to step into King George's shoes. The SAC Capital Advisers founder bought one of those token $20 million shares in the New York Mets. That would hardly stop Mr. Cohen from stepping in and...shit-canning A-Rod?

David Einhorn: Except that we always thought he pursued the Mets because he smelled a bargain, or just likes toying with a wounded animals.

Mark Zuckerberg: Knows how to overprice a product!

Zong Qinghou: Because it's about time America's preeminent sports franchise had a Chinese owner, and the fact that Mr. Zong—who is chairman and CEO of China's leading beverage company—is sometimes referred to as "the Chinese Drinks King" leapfrogs Mr. Zong past Liang Wen'gen, who made his fortune in construction machinery.

George W. Bush: Least-literate fan base gets perfect owner in America's least-literate president.

Jared Kushner: Um, free tickets?

Falling out? NYSE Euronext approached Facebook yesterday about listing the company's stock on the New York Stock Exchange, a move which would be a bigger blow to Nasdaq than any punishment regulators dole out for bungling the first day in Facebook trading.

Meanwhile, plaintiffs' lawyers circled the offering, with one group filing a class-action suit asserting that Mark Zuckerberg and his bankers concealed material information from some investors. The flap arose, you'll remember, when reports surfaced that research teams at Morgan Stanley and other underwriters cut revenue guidance in the days leading up to the offering—but only shared that research with more preferred clients.

Whether those moves violated securities law falls into a gray area, the experts said. If research teams at Morgan Stanley and other investment banks cut guidance based on information in the publicly-filed S-1 document, it's likely that neither Facebook nor its bankers ran afoul of regulatory law. That doesn't mean it's good law.

Morgan Stanley CEO James Gorman took the unusual step of joining a May 17 conference call to discuss the pricing of the Facebook IPO. Facebook CFO David Ebersman sought to maximize his company's haul and limit the pop to 10 percent, unnamed sources told Bloomberg.

Top secret: Prosecutors called Byron Trott, the Goldman Sachs investment banker who landed Warren Buffett's $5 billion investment in the firm in Sept. 2008, to testify in the insider trading trial of former-McKinsey CEO Rajat Gupta. The government says that Gupta, who was a Goldman director at the time, tipped hedge fund manager Raj Rajaratnam to the Buffett deal, which Mr. Trott told the jury "was about as top secret as you can get." Discretion is not a quality lightly valued by Mr. Trott, who now runs his own investment firm. He's been known to fire underlings for talking business in the elevator, according to The New York Times.

Bankia bailout: The Spanish government will inject an additional $11 billion in Bankia SA, Spain's fourth-largest lender. That's encouraging. Economy Minister Luis de Guindos told Spanish lawmakers that Bankia "is a specific case and it's not correct to extrapolate its problems to the rest of the Spanish financial system." From this distance, that doesn't sound so reassuring.

Countdown to Grexit: A Citigroup analyst Willem Buiter is targeting Jan. 1, 2013 for Greece's exit from the eurozone. An aggressive policy response will likely keep other euro-exits, but won't stave off higher borrowing costs or recession, according to Buiter.

Big moves: Citigroup named Anthony Santomero, former president of the Federal Reserve Bank of Philadelphia, as chairman of its main banking subsidiary. He replaces Michael O'Neill, was in turn replaced Richard Parsons as Citigroup chairman earlier this spring.

JPMorgan is naming Joseph A. Walker senior vice chairman of its investment-banking unit. Mr. Walker spent 22 years at the bank before leaving in 2001, and led the firm's technology, media and telecommunications unit from 1998 to 2000.

Slow lane: A start-up is trying to lure mutual fund managers to a new stock exchange by prohibiting high-frequency traders.

Triple bogey: Membership fees are down at Tokyo's three top golf clubs, signaling tough times ahead for that city's commercial real estate market.

Long shot: An Australian bookie is offering 5-to-1 odds on Facebook finishing 2012 at $38 or higher.

In the 30 seconds after the bell rang at the NASDAQ exchange, more than 80 million shares were traded, and with the IPO (really the night before, when the underwriting banks bought the stock from Facebook), Mr. Zuckerberg made $25 B.

But he wasn’t making any money off me.

I joined Facebook in 2007, back when you still had to identify your school to become a member. Carefully curated pics were promptly uploaded to my profile, and soon I was scrutinizing my future college classmates, accepting friend requests with bright-eyed, bushy-tailed pride. I was never really addicted to Facebook, but for several years I would log-on at least once daily, friend-ing old summer camp acquaintances and lustfully stalking sweet Laxers (look it up).

After a while, however, I found posting and viewing Spring break beach shots (cellulite airbrushed out, cleavage brushed in) vaguely vulgar. The entire site seemed to be based around a strange, self-branding tango of exhibitionism and voyeurism. Still, I maintained my account to keep in touch with friends, to make sure my little sister didn’t post any photos she would live to regret, and to participate in the enduring who-looked-hot/not dialogue with my peers.

Initially, I was even excited by the sharp-shot targeted ads. "Ee-gadz! I do want to check out that conflict-free diamond tennis bracelet, I do want to support Prop 19 and I do want to invest in blue-light acne treatment!" I found myself cooing over and over again. But after a while, Facebook’s apparent telepathy had me jittery. I was a 20-something, prep-school educated Californian with a hazily expressed penchant for all things acceptably unorthodox, and Mark Zuckerberg and his army of youthful-genius programmers had successfully pigeonholed me. I found myself fitting perfectly into the Facebook algorithm (or rather, it fitting perfectly into me), and no number of Grateful Dead dancing bear T-shirts could counterbalance it.

My attitude toward the site had already generally soured when I heard last February that Facebook was going public, but within a week of the news, I deactivated, permanently, and I’ll tell you why.

Aside from Facebook’s use of my clicking habits and social network connections to tailor ads, I had another unsettling realization. Facebook is a service and a product to its users. But they pay nothing to use it, and there is no native revenue stream. The value of the company—its main asset, to itself any and potential business partners—is the users themselves, and access to them and their information. What they were planning to sell shares of was me. It was you.

With 900 million users, and an initial $104 billion valuation, let’s say each Facebook profile is worth about $100. Now, the relative worth of a profile of course varies, based on level of engagement and other factors, but for argument’s sake, to Facebook, and now to its shareholding public, you are worth about as much as a matinee ticket to Rock of Ages.  But that’s just one you. It’s the collective YOU that really matters.

Of course, data gathering as a for-profit enterprise is not unique to Facebook. For instance, the other company of comparable size whose main product and asset is its users is Google. However, there is a key difference: Google is transitive, whereas Facebook is reflexive. In other words, Google and its data collection are outward moving, leading to other destinations on the web, other resources. Facebook’s project builds entirely on the sum of its users interactions with one another.

In this sense, Google could be likened to a librarian, whose services we enlist in exchange for the concession that what books we ask for will be tracked. Facebook, on the other hand, is like a party that all your friends attend, but in order to yourself, you must agree to have all of your interactions recorded. In this way, the data, the information, and ergo the value of Facebook is internally generative: the more interactions, the more information, the more the collective YOU is worth. And the rate of addition to the data value is astonishing. According to Facebook’s own numbers, more than 3 billion “likes” and comments are posted per day, along with the uploading of more than 300 million photos (per day!)

It’s then either a post-modern joke or a Marxist irony (or both at once) that we are able to buy shares of us. But either way, I don’t want you buying shares of me.

(Add to this the further irony that before the ostensible public offering of Facebook’s stock, the vast majority was spoken for by the big-ticket clients of the banks that underwrote the IPO. And of the shares that were available to retail outlets, those were distributed preferentially to clients with the biggest accounts. Poor? Join Facebook. Rich? Buy Facebook.)

In the days since the IPO, Facebook’s stock slid below its offering price—and as of this writing, is at $31 a share—but the daily stock prices are not the point, at the moment. Even as Mr. Zuckerberg’s personal fortune fluctuates in multibillion-dollar swings, his project is bigger.

Projected to have one billion users by year’s end, the sheer size of the Facebook community makes it hard to grapple with. There are few commodities, aside from air and water, used by as many people. Only Coca-Cola and Microsoft, and maybe McDonald’s, can claim comparable numbers. Fully half of all Internet users are on Facebook, and that’s a lot of eyes on ads

But display advertising has proven to be a limited source of cash, and Facebook is focusing revenue streams from other sources. As the company itself noted in its SEC filing, “In 2009, 2010 and 2011 and the first quarter of 2011 and 2012, advertising accounted for 98%, 95%, 85% and 82%, respectively, of our revenue.”
(The company also gets a growing proportion of its revenue from fees paid by third-party apps and plug-ins, including 12 percent of overall revenue from Zynga alone, the company behind the popular game Farmville.)
The solution to the diminishing ad business, it seems, is tied to making Facebook into what Mr. Zuckerberg has called an “identity layer” for the entire web. That is to say that in his ideal version of the site (and world), everything you do on the Internet will be through Facebook, including online transactions.

This is ambitious, but given the size of its user base, and how thoroughly it is already ingrained in people’s Internet habits, imminently achievable. Even a modest version of this would be an revenue juggernaut. If the company were to, say, realize a revenue rate of 1 cent a day per user, by taking a percentage of transactions from vendors, that would be roughly $10 M. a day, or $3.5 B. a year. And that seems to be on the very conservative end of the hopes.

Now, this is troublesome when the head of the company has, let’s say, “innovative” ideas about privacy. In 2010, Silicon Alley Insider obtained instant message conversations from when Mr. Zuckerberg was still christening Facebook at Harvard, in which he refers to users who have voluntarily given over their personal information as “dumb fucks.” The bluster of a power-drunk 19-year-old, maybe, but in 2010, tech blogger Nick Bilton tweeted an exchange he had with a Facebook staffer. “Off record chat w/ Facebook employee. Me: How does Zuck feel about privacy? Response: [laughter] He doesn’t believe in it,” the tweet said.

And indeed last week, the company was hit with a $15 billion class action lawsuit from a group of users claiming the company violated the US Wiretap Act by tracking their Internet use after they had logged out of Facebook.

The fact is, the more information Facebook gathers about you, and the more ways it has to monetize that information, the more the company is worth. Mr. Zuckerberg wrote in his letter to investors, “Facebook was not originally created to be a company. It was built to accomplish a social mission—to make the world more open and connected.” Even taking this at face value, it doesn’t really matter anymore. It is a company, and a publicly held one at that. And even though Mr. Zuckerberg has a controlling interest in Facebook, it now has to be accountable to stockholders. The tension between user privacy and monetizing data in service of stock price is a real one—and seems unlikely to fall on the side of users.

I see congressional hearings in our future.

And what did Mark Zuckerberg, whose personal fortune is now bigger than the GDP of Jamaica, offer to the legions of users, whose time and information have imbued Facebook with its vast value? “In the past eight years,” he said magnanimously, “all of you out there have built the largest community in the history of the world. You’ve done amazing things that we never would have dreamed of and I can’t wait to see what you’re all going to do going forward. So on this special day, on behalf of everyone at Facebook, I just want to say to all the people out there who use Facebook and our products, thank you.”

He’s right, it’s all us. Which is a sweet sentiment, though not as sweet as the billions we earned him.
Despite all this, I don’t expect an exodus. A critical mass has been reached, and projections suggest the site will continue to grow in the foreseeable future. I am not fighting against Facebook; Facebook has already won. By next year, one seventh of the world’s population will have an account on the site. Facebook is not a bubble that can burst—it has become a reality unto itself. Still, I’m enjoying life as a conscientious objector. I don’t need or want a third-party to manage my personal relationships for profit.

So, if you want to catch up, just email me. But in the meantime, can you “like” this article? The button is at the top of the page.

editorial@observer.com

Borrelia burgdorferi, the causative agent for Lyme disease. Credit: Centers for Disease Control and Prevention.

A bug in JPMorgan's chief investment office led to discord. A glitch in Nasdaq's system delayed Facebook's IPO. The next big insider trading trial opens today. And more, in today's Wall Street roundup.

Down-tick: The London and New York desks of JPMorgan's chief investment office had long been at odds, and shouting matches were common at routine conference calls. The problems began when executive Ina Drew contracted Lyme disease in 2010, Dealbook reports.

Irvin Goldman, the top risk monitor in JPMorgan's chief investment office, was fired by Cantor Fitzgerald in 2007 after Mr. Goldman attracted regulatory scrutiny for trading the same stocks in his personal accounts that he traded for a Cantor proprietary account. Mr. Goldman is brother-in-law to former JPMorgan chief risk officer Barry Zubrow.

Add the Commodity Futures Trading Commission, which regulates the U.S. derivatives industry, to the list of federal agencies investigating JPMorgan's recent losses.

Jamie Dimon will address investors at 9:30 a.m. today at the Deutsche Bank conference.

Face-bug: "This was not our finest hour," Nasdaq CEO Robert Greifeld said in a conference call this weekend, after software glitches at the exchange prevented Facebook shares from trading on time. Apparently, trade requests in the 5 milliseconds before shares were set to open tripped Nasdaq's systems, despite thousands of hours of testing.

It's going to be an interesting week for Facebook stock. As the shares flirted with the offering price of $38, lead underwriter Morgan Stanley issued buy orders to support the price of the stock. Whether shares sink below $38 this week will depend on how much firepower Morgan Stanley has left, Reuters reports.

Mark Zuckerberg and longtime girlfriend Priscilla Chan tied the knot this weekend. In spite of the disappointing IPO, we guess the couple was feeling financially secure.

Inside job? Former McKinsey boss and Goldman Sachs director Rajat Gupta stands trial today, charged with sharing corporate secrets with Raj Rajaratnam, the Galleon Group manager serving an 11-year prison sentence after being convicted of insider trading last year. Mr. Gupta's lawyer said the government has the wrong guy, and is expected to shift blame in Goldman's direction; Lloyd Blankfein, Gary Cohn and David Viniar are among the Goldmanites who may be called to testify.

Slo-mo run? After Greek depositors withdrew 700 million euros in a single day last week, central bankers confronted fears of a region-wide run on the banks. The scenario: In the event of a Grexit, regulators would prevent Greeks from moving funds out of the country. Savers in Portugal, say, or Spain, might see the writing on the wall and start emptying accounts, less they get stuck holding a bag of devaluing pesetas.

Back to business: The week-long controversy that lead to the ouster of Yahoo chief resume fudger Scott Thompson didn't prevent the company from moving on with a major deal. Yahoo will sell one half of its stake in Alibaba back to the Chinese Internet company for about $7.1 billion. Yahoo is expected to use the windfall to buy back shares.

Managing Assets: Barclays intends to sell its entire $6.1 billion stake in BlackRock as the lender attempts to boost return on equity. BlackRock will buy back a $1 billion stake.

Big data: Reuters spends some time with Winton Capital's David Harding and finds that broader and less traditional data are crucial weapons in the race for algorithmic supremacy.

Start your engines: Formula One was approved for a Singapore IPO. The auto-racing circuit will start pre-marketing the offering tomorrow, and may raise as much as $3 billion.

JPMorgan fallout:

Crisis experts liked Mr. Dimon's forthright response to the billions in trading losses JPMorgan disclosed last week. Lucas van Praag chimed in: "From a communication perspective, the approach is smart, although I'm sure their legal team would probably rather pursue a bunker mentality."

Simon Johnson parses Tim Geithner's NewsHour interview and hears the Treasury secretary asking Mr. Dimon to resign from the board of the New York Fed.

JPMorgan's losses are "the way America works," Mitt Romney in an interview Wednesday with Ed Morrissey. “The $2 billion JPMorgan lost, someone else gained.”

How high? Your guess on Facebook's closing price is as good as ours. Reuters finds a 15 to 20 percent pop credible, which puts the price in the mid-$40s; the average estimate of analysts polled by Morningstar was $50. On twitter yesterday, it wasn't hard to find pundits pushing estimates well into the $70s (those higher marks seemed less serious, more sneering).

Meanwhile, Facebook will pay it's underwriters $176 million in fees, or 1.1 percent of the $16 billion offering, a hefty discount to the median 3.6 percent that the 10 previous biggest U.S. IPOs paid investment bankers.

Not breaking up? Greek voters are returning to pro-bailout parties, a new poll finds. The prospect that the leftist Syriza coalition, whose leader Alex Tsipras has threatened to "tear up" the existing rescue plan, increasing fears that Greece may leave the eurozone.

Still, a commercial printer is drawing up plans to produce drachma banknotes, in the contingency of a Grexit.

Spanish steps: Moody's downgraded 16 Spanish banks, and the two biggest by three grades each. A little perspective: Morgan Stanley said that a three grade cut by two ratings companies would force the firm to post an additional $9.6 billion in collateral.

Spain tapped Goldman Sachs to value nationalized lender Bankia SA.

A-list: Goldman executives Lloyd Blankfein, Gary Cohn and David Viniar, American Express CEO Kenneth Chenault and former Proctor & Gamble CEO A.G. Lafley are among the financial industry titans to receive invites to the insider trading trial of Rajat K. Gupta.

Oracle offered: Warren Buffett kicked the tires on ResCap, Ally Financial's mortgage unit, before the embattled home lender filed for bankruptcy, according to Bloomberg. Buffett sought to avoid a ResCap filing because his firm, Berkshire Hathaway, held unsecured debt in the lender.

[Photo by Mario Tama/Getty Images]

Which begs the question: What the hell are you thinking?

Seriously. We'd like to hear from you.

The financial punditry has been banging out a Facebook-will-be-overpriced beat for so long, that developments like Zuck & Co. increasing the size of the offering or upping the price range can be a little startling. Who are these people clamoring for the stock, and why aren't they asking themselves this:

If shares allocated at the current $34-$38 price range are going to be reserved for the institutional investors (mutual funds, hedge funds, pension funds that generate fees for investment bankers);

And if the shares that do get allocated for people like you (perhaps 5 to 30 percent, depending on who you ask) typically wind up in the hands of brokerages' most preferred (read: fee generating) customers;

Then: who do you think you're buying the stock from?

Well. It could be the same institutional investors who were treated to first helpings and now stand to profit as you and your aunt touch grubby fingers to mouse pad and goose the People's Company to valuations liable to make the entire Fast Money team rasp and gasp their way to a collective heart attack. Or it could be the financial collossi: Tiger Global Management, which is selling 53.8 million shares in the offering, or Goldman Sachs, which is selling 66 million. Or else the VCs: Peter Thiel is selling 44.7 million shares, Accel Partners 201.4 million.

In any case, it may behoove some introspection: If you're buying from the smart money, does that make you...dumb?

Maybe not! Which is the great thing about this (capitalism, America, etc.): Facebook seems to add 100 million users every other month and maybe the naysayers are reading the wrong playbook. In case of which contingency we ask you, dear muppets, what do you know that the pundits don't? Please tell.

[Photo: Ross Hawkes]

Road show: Mark Zuckerberg slipped into the midtown Sheraton through a side door to address investors yesterday, and left in the company of "a dozen beefy security guards," the Journal reports, as Facebook kicked off its IPO road show. The presentation opened with a 30-minute video presentation available here. Following a delay while Facebook's 27-year-old CEO was apparently having a hard time finding his way back from the bathroom, Zuck, Chief Operating Officer Sheryl Sandberg and Chief Financial Officer David Ebersman fielded questions on the company's strategies for China, mobile revenues and its recent $1 billion Instagram acquisition. With excitement building, analysts have been quick to offer opinions on Facebook, with Sterne Agee slapping a buy on the company and Wedbush Securities assigning a $44 price target to the stock.

So sorry: Yahoo! CEO Scott Thompson apologized to employees for lying on his ... wait, no, for the distraction caused by the "disclosure of my academic credentials." You can find the whole letter (addressed "Yahoos:") over at Dealbook. Third Point Capital's Dan Loeb has been calling for Mr. Thompson to step down since last week, when the hedge fund manager asserted that the executive lied on his resume.

Trader exodus: Nearly two dozen of Wall Street's most profitable credit traders have defected from banks in the past 13 months, Bloomberg reports, as lenders cut bonuses and regulators seek to limit the types of trading banks can engage in.

Chopping red tape: Bank of America data chief John Bottega has a fourth-degree black belt in Okinawa karate, so watch what you say about consolidating bank data, a cause Bottega championed in a previous position at the New York Fed.

Fashion finance: Barney's New York will escape bankruptcy after swapping about $540 million in debt for equity with Richard C. Perry's Perry Capital and Ron Burkle's Yucaipa Companies. The fashion retailer, which filed Chapter 11 in 1996, was acquired by Istithmar, the Dubai-based private-equity firm, for $942 million in 2007. Mr. Perry is known for his "sharp style," and shop's at Barney's, according to Dealbook. No word on Mr. Burkle's fashion sense.

Bailout bonus: The Government Accountability Office said the U.S. could turn a $15.1 billion profit on its bailout of AIG, and Forbes breaks down some of the math. The government had $46.3 billion outstanding in the insurer as of March 22, including the Treasury's $35.9 billion equity stake and $8.3 billion owed to the Fed.

Government nod: Ally Financial has the Treasury's support to put its ResCap mortgage-lending unit into bankruptcy, an Obama administration official told Bloomberg. The auto lender, which was bailed out to the tune of $17 billion, is 74 percent owned by the U.S. government.

Check yourself: The SEC has called for an independent investigation into charges of sexual misconduct against current and former staff in the watchdog's own inspector general's office, sources familiar told the Journal. David Kotz, who was the agency's inspector general during the time the misconduct is said to have occurred, told the paper "as far as I know, the allegations do not involve me."

[Photo by Arnaldo Magnani/Getty Images]