Courtesy of Economic Policy Journal we now know that the majority of American states are currently insolvent, and that the US Treasury has been conducting a shadow bailout of at least 32 US states. Over 60% of Americans receiving state unemployment benefits are getting these directly from the US government, as 32 states have now borrowed $37.8 billion from Uncle Sam to fund unemployment insurance. The states in most dire condition, are, not unexpectedly, the unholy trifecta of California ($6.9 billion borrowed), Michigan ($3.9 billion), and New York ($3.2 billion). With this form of shadow bailout occurring, one can only wonder how many other shadow programs are currently in operation to fund states under the table with federal money.The full list of America's 32 insolvent states is below, sorted in order of bankruptedness.
California $6,900
Michigan 3,900
New York 3,200
Penn. 3,000
Ohio 2,300
Illinois 2,200
N.C. 2,100
Indiana 1,700
New Jersey 1,700
Florida 1,600
Wisconsin 1,400
Texas 1,000
S.C. 886
Kentucky 795
Missouri 722
Connecticut 498
Minnesota 477
Georgia 416
Nevada 397
Mass. 387
Virginia 346
Arkansas 330
Alabama 283
Colorado 253
R.I. 225
Idaho 202
Maryland 133
Kansas 88
Vermont 33
S.D. 24
Tennessee 21
Virgin Islands 13
Delaware 12
Sunday, May 23, 2010
Saturday, May 22, 2010
Hunter Parisian, Class of 2010
May the pursuit of an engineering degree at Georgia Tech over the next 4 years be the best!! You have always made your parents proud. Congratulations son.
Tuesday, May 18, 2010
Will you live to see 80?
Here's something to think about.
I recently picked a new primary care doctor ..young guy, starting out trying to pay all of his medical school debt.
After two visits and exhaustive Lab tests, he said I was doing 'fairly well' for my age.
A little concerned about that comment, I couldn't resist asking him,
'Do you think I'll live to be 80?'
He asked, 'Do you drink beer or wine?'
'Once in a great while,' I replied. 'I not a druggie, either!'
Then he asked, 'Do you eat rib-eye steaks and barbecued ribs ?
'I said, 'Not much because my former doctor said that all red meat is very unhealthy!'
'Do you spend a lot of time in the sun, like playing golf, sailing, hiking, or bicycling?'
'No, I don't golf but I go out on my boat once in a while' I said.
He asked, 'Do you gamble, drive fast cars, or have a lot of wild and kinky sex?'
'No,' I said.
He looked at me and said,... 'Then, why do you even give a shit?'
I recently picked a new primary care doctor ..young guy, starting out trying to pay all of his medical school debt.
After two visits and exhaustive Lab tests, he said I was doing 'fairly well' for my age.
A little concerned about that comment, I couldn't resist asking him,
'Do you think I'll live to be 80?'
He asked, 'Do you drink beer or wine?'
'Once in a great while,' I replied. 'I not a druggie, either!'
Then he asked, 'Do you eat rib-eye steaks and barbecued ribs ?
'I said, 'Not much because my former doctor said that all red meat is very unhealthy!'
'Do you spend a lot of time in the sun, like playing golf, sailing, hiking, or bicycling?'
'No, I don't golf but I go out on my boat once in a while' I said.
He asked, 'Do you gamble, drive fast cars, or have a lot of wild and kinky sex?'
'No,' I said.
He looked at me and said,... 'Then, why do you even give a shit?'
Sunday, May 16, 2010
Just the facts please..........
The facts behind this video are undeniable. It is time for the plain, unvarnished truth about our economy to break through the MSM/CNBC/MSNBC propaganda machine.
http://inflation.us/videos.html
http://inflation.us/videos.html
Friday, May 14, 2010
Best quote we saw all week.............
Obama is so lost that if one of the buttons fell off his shirt, he would try to take over the garment industry.
Another BLACK SWAN to ponder.........
PALM DESERT, Calif. – The former head of the nation’s most talented set of code-breakers said Friday that the near-1,000 point plunge in the Dow Jones Industrial Average “highlights the vulnerability” of the nation’s capital markets to direct attack by extremists interested only in causing destruction.
Michael McConnell, former director of the National Security Agency, told executives attending the 2010 Securities Industry and Financial Markets Association Operations Conference that in “my personal view there is no indication” that the plunge Thursday was triggered in any fashion by an extremist attack. But ...
But, the executive vice president in the nation’s capital for consulting firm Booz Allen Hamilton, said “What it highlights is the vulnerability. So if this turns out to be a typo -- I don’t know that it will, but if it does -- you start to fathom the potential impact.”
McConnell served as director of the National Security Agency from 1992 to 1996 and the United States Director of National Intelligence from February 2007 to January 2009 during the Bush Administration and first week of the Obama administration.
At the NSA, which is charged with “breaking into other people's stuff to figure out what their secrets are,” McConnell said he learned what “we’re capable of,’’ and believes the capabilities to be replicable.
A “red team” of computer experts at the NSA had a “100 percent success” ratio of breaking, entering and taking control of the United States’ own information systems, at the root level, in any agency, small or large.
And, last year, he replicated that success, when he went into private enterprise.
“When I came into industry, (I said) I’m going to see if I can round up a dozen guys, with some pizzas and coke and do some penetration testing,’’ the Booz Allen executive said. “ Our success rate was one short of being 100 percent. The one we didn’t break into was a small government agency that had one large mainframe. And the reason we didn’t take root privileges was that they unplugged it.”
He says extremist groups do not care about getting into financial systems, making copies of records and just getting out without leaving their fingerprints. Instead, they just want to cause as much damage as possible.
They can do it by linking together different like-minded individuals in Pakistan, Turkey and Germany and launching an attack from Asia, for instance.
This won’t be poorly planned or executed, like the failed bombing attempt in Times Square last Saturday. These won’t be “average guys.” Instead, the members of this attack team will be graduates of “India’s MIT” or similar caliber institutions around the globe. Or with similar smarts, perhaps using as many tools as they can that are already spread on the Web.
And it may take more than a dozen.
“Say it’s two dozen, say it’s three dozen. I don’t know what it is,” he said. “But yesterday we lost a trillion dollars in about two and a half hours.” An extremist attack likely would lead to a higher financial toll.“
Michael McConnell, former director of the National Security Agency, told executives attending the 2010 Securities Industry and Financial Markets Association Operations Conference that in “my personal view there is no indication” that the plunge Thursday was triggered in any fashion by an extremist attack. But ...
But, the executive vice president in the nation’s capital for consulting firm Booz Allen Hamilton, said “What it highlights is the vulnerability. So if this turns out to be a typo -- I don’t know that it will, but if it does -- you start to fathom the potential impact.”
McConnell served as director of the National Security Agency from 1992 to 1996 and the United States Director of National Intelligence from February 2007 to January 2009 during the Bush Administration and first week of the Obama administration.
At the NSA, which is charged with “breaking into other people's stuff to figure out what their secrets are,” McConnell said he learned what “we’re capable of,’’ and believes the capabilities to be replicable.
A “red team” of computer experts at the NSA had a “100 percent success” ratio of breaking, entering and taking control of the United States’ own information systems, at the root level, in any agency, small or large.
And, last year, he replicated that success, when he went into private enterprise.
“When I came into industry, (I said) I’m going to see if I can round up a dozen guys, with some pizzas and coke and do some penetration testing,’’ the Booz Allen executive said. “ Our success rate was one short of being 100 percent. The one we didn’t break into was a small government agency that had one large mainframe. And the reason we didn’t take root privileges was that they unplugged it.”
He says extremist groups do not care about getting into financial systems, making copies of records and just getting out without leaving their fingerprints. Instead, they just want to cause as much damage as possible.
They can do it by linking together different like-minded individuals in Pakistan, Turkey and Germany and launching an attack from Asia, for instance.
This won’t be poorly planned or executed, like the failed bombing attempt in Times Square last Saturday. These won’t be “average guys.” Instead, the members of this attack team will be graduates of “India’s MIT” or similar caliber institutions around the globe. Or with similar smarts, perhaps using as many tools as they can that are already spread on the Web.
And it may take more than a dozen.
“Say it’s two dozen, say it’s three dozen. I don’t know what it is,” he said. “But yesterday we lost a trillion dollars in about two and a half hours.” An extremist attack likely would lead to a higher financial toll.“
Thursday, May 13, 2010
Albuquerque Drop-out Rate
Native Americans dropped out of this New Mexico school system at a 56% rater.
Better than one out of two who start don't make it.
Ugly numbers. Sick. Sad. If you have a solution, send me an email.
Better than one out of two who start don't make it.
Ugly numbers. Sick. Sad. If you have a solution, send me an email.
Wednesday, May 12, 2010
The finest summation of our times..........
"The trading profits of the Street is just another way of measuring the subsidy the Fed is giving to the banks. It's a transfer from savers to banks."
Grasso on weed.........
Listening to Dick Grasso on Bloomberg TV this morning is really great comedy.
Take a guy who pulled nearly a couple hundred million out of the NYSE and you will have a guy who sings to high heaven, praises for the NYSE.
You were the worlds best bullshitter for the NYSE when the floor brokers were ruling the roost (PRE IPO) and now that the floor boys sold out to the public, electronic algo guys, co-locators and dark poolers abound (traders that account for over 70% of daily volume in sub-penny increments) you are simply making the case for listing on NASDAQ.
If your market was so deep and liquid, (where the world puts their stock) the trading fiasco's to come will bury the NYSE shop. There is no leadership at the SEC Dick, it is porn star viewers gone wild. You bet your ass you better penalize market innovation (HFT), the is no one playing by the same hymnal.
The litle guy, the average American investor doesn't understand it, doesn't need it and will not be served. It's not just, not ethical and not right.
But a couple hundred million in your retirment account doesn't keep your opinions from smelling. It's foul.
Take a guy who pulled nearly a couple hundred million out of the NYSE and you will have a guy who sings to high heaven, praises for the NYSE.
You were the worlds best bullshitter for the NYSE when the floor brokers were ruling the roost (PRE IPO) and now that the floor boys sold out to the public, electronic algo guys, co-locators and dark poolers abound (traders that account for over 70% of daily volume in sub-penny increments) you are simply making the case for listing on NASDAQ.
If your market was so deep and liquid, (where the world puts their stock) the trading fiasco's to come will bury the NYSE shop. There is no leadership at the SEC Dick, it is porn star viewers gone wild. You bet your ass you better penalize market innovation (HFT), the is no one playing by the same hymnal.
The litle guy, the average American investor doesn't understand it, doesn't need it and will not be served. It's not just, not ethical and not right.
But a couple hundred million in your retirment account doesn't keep your opinions from smelling. It's foul.
Tuesday, May 11, 2010
Lobbyists galore.........
The report shows that six big banks — The Goldman Sachs Group Inc., Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley and Wells Fargo & Co. — and their trade organizations have spent $600 million since March 2008 to lobby government officials and contribute to election campaigns.
The report also found that 243 lobbyists working for the banks and trade associations came to their jobs from posts on congressional staffs or in the executive branch. The study was written by the Public Accountability Initiative and released by the Campaign for America's Future, a liberal advocacy group, and the Service Employees International Union.
The report also found that 243 lobbyists working for the banks and trade associations came to their jobs from posts on congressional staffs or in the executive branch. The study was written by the Public Accountability Initiative and released by the Campaign for America's Future, a liberal advocacy group, and the Service Employees International Union.
Monday, May 10, 2010
Simple..........
American securities regulators are killing the small guy.
I offer three answers for them. One, stop trading in sub-penney increments.
Two, make the best bid-best ask show across every exchange. If we can put men on the moon and allow Goldman to rule the financial universe surely we can come up with the technology to have one central algo to show best bid, best offer from every tom, dick and harry exchange out there.
Three, eliminate co-location trading and get a handle on HFT. (The SEC doesnt' have a clue)
Today, the lies coming from the NYSE are of such magnitude that Congress may actually believe them. They haven't mentioned how the NYSE has been hailing their “circuit breaker” slow model but is about to open a 400,000 square foot data center in Mahwah, NJ that caters to HFT, High Frequency Trading for those of you in Mandaree.
There is a clear lack of a common set of rules that apply to everyone. Simple.
I offer three answers for them. One, stop trading in sub-penney increments.
Two, make the best bid-best ask show across every exchange. If we can put men on the moon and allow Goldman to rule the financial universe surely we can come up with the technology to have one central algo to show best bid, best offer from every tom, dick and harry exchange out there.
Three, eliminate co-location trading and get a handle on HFT. (The SEC doesnt' have a clue)
Today, the lies coming from the NYSE are of such magnitude that Congress may actually believe them. They haven't mentioned how the NYSE has been hailing their “circuit breaker” slow model but is about to open a 400,000 square foot data center in Mahwah, NJ that caters to HFT, High Frequency Trading for those of you in Mandaree.
There is a clear lack of a common set of rules that apply to everyone. Simple.
The new mulch..........
AUSTIN, Texas — Pistol-packing Texas Gov. Rick Perry has a message for wily coyotes out there: Don't mess with my dog.
Perry told The Associated Press on Tuesday he needed just one shot from the laser-sighted pistol he sometimes carries while jogging to take down a coyote that menaced his puppy during a February run near Austin.
Perry said he will carry his .380 Ruger — loaded with hollow-point bullets — when jogging on trails because he is afraid of snakes. He'd also seen coyotes in the undeveloped area.
When one came out of the brush toward his daughter's Labrador retriever, Perry charged.
"Don't attack my dog or you might get shot ... if you're a coyote," he said Tuesday.
Perry, a Republican running for a third full term against Democrat Bill White, is living in a private house in a hilly area southwest of downtown Austin while the Governor's Mansion is being repaired after a 2008 fire. A concealed handgun permit holder, Perry carries the pistol in a belt.
"I knew there were a lot of predators out there. You'll hear a pack of coyotes. People are losing small cats and dogs all the time out there in that community," Perry said.
"They're very wily creatures."
On this particular morning, Perry said, he was jogging without his security detail shortly after sunrise.
"I'm enjoying the run when something catches my eye and it's this coyote. I know he knows I'm there. He never looks at me, he is laser-locked on that dog," Perry said.
"I holler and the coyote stopped. I holler again. By this time I had taken my weapon out and charged it. It is now staring dead at me. Either me or the dog are in imminent danger. I did the appropriate thing and sent it to where coyotes go," he said.
Perry said the laser-pointer helped make a quick, clean kill.
"It was not in a lot of pain," he said. "It pretty much went down at that particular juncture."
Texas state law allows people to shoot coyotes that are threatening livestock or domestic animals. The dog was unharmed, Perry said.
Perry's security detail was not required to file a report about the governor discharging a weapon, said Department of Public Safety spokeswoman Tela Mange.
"People shoot coyotes all the time, snakes all the time," Mange said. "We don't write reports."
The governor left the coyote where it fell.
"He became mulch," Perry said.
Perry told The Associated Press on Tuesday he needed just one shot from the laser-sighted pistol he sometimes carries while jogging to take down a coyote that menaced his puppy during a February run near Austin.
Perry said he will carry his .380 Ruger — loaded with hollow-point bullets — when jogging on trails because he is afraid of snakes. He'd also seen coyotes in the undeveloped area.
When one came out of the brush toward his daughter's Labrador retriever, Perry charged.
"Don't attack my dog or you might get shot ... if you're a coyote," he said Tuesday.
Perry, a Republican running for a third full term against Democrat Bill White, is living in a private house in a hilly area southwest of downtown Austin while the Governor's Mansion is being repaired after a 2008 fire. A concealed handgun permit holder, Perry carries the pistol in a belt.
"I knew there were a lot of predators out there. You'll hear a pack of coyotes. People are losing small cats and dogs all the time out there in that community," Perry said.
"They're very wily creatures."
On this particular morning, Perry said, he was jogging without his security detail shortly after sunrise.
"I'm enjoying the run when something catches my eye and it's this coyote. I know he knows I'm there. He never looks at me, he is laser-locked on that dog," Perry said.
"I holler and the coyote stopped. I holler again. By this time I had taken my weapon out and charged it. It is now staring dead at me. Either me or the dog are in imminent danger. I did the appropriate thing and sent it to where coyotes go," he said.
Perry said the laser-pointer helped make a quick, clean kill.
"It was not in a lot of pain," he said. "It pretty much went down at that particular juncture."
Texas state law allows people to shoot coyotes that are threatening livestock or domestic animals. The dog was unharmed, Perry said.
Perry's security detail was not required to file a report about the governor discharging a weapon, said Department of Public Safety spokeswoman Tela Mange.
"People shoot coyotes all the time, snakes all the time," Mange said. "We don't write reports."
The governor left the coyote where it fell.
"He became mulch," Perry said.
Saturday, May 08, 2010
Best quote I saw all week.............
The US Senate is the largest collection of senile, useless, bribe taking, corrupt, treasonous whores found anywhere on Planet Earth.
This was the second best quote...........
Trusting the govt. with money is like trusting a drug addict not to smoke crack.
This was the second best quote...........
Trusting the govt. with money is like trusting a drug addict not to smoke crack.
Friday, May 07, 2010
Congratulations to Arizona
'In the first place, we should insist that if the immigrant who comes here in good faith becomes an American and assimilates himself to us, he shall be treated on an exact equality with everyone else, for it is an outrage to discriminate against any such man because of creed, or birthplace, or origin. But this is predicated upon the person's becoming in every facet an American, and nothing but an American....There can be no divided allegiance here. Any man who says he is an American, but something else also, isn't an American at all. We have room for but one flag, the American flag... We have room for but one language here, and that is the English language.. And we have room for but one sole loyalty and that is a loyalty to the American people.'
Theodore Roosevelt 1907
Theodore Roosevelt 1907
Duncan Niederauer of the NYSE
Sir, just what planet are you from? Oh yea, PLANET SQUID, I forgot.
Look, the bullshit you are espousing on CNBC this morning is the worst. Telling the world that Mary Shapiro is going to FIX the system is so 90's. Your rant yesterday on accusing other exchanges of having different "business models" that were not as effective is rather 80's.
You will not address High Frequency Trading, dark pools or the hundreds of algo shops that desire co-location in the ass-end of the corner of Wall and Broad.
The little guy, the average American investor is raped again.
Market Commentary from our friends at Themis Trading
May 6, 2010 – The day that will change market structure
Today’s action left us amazed, and we have been warning about this stuff since December 2008. Where do we even start? Yesterday afternoon and evening all the business programming focused on how the markets were in turmoil, and Greece this, and overdue correction that, and fat finger the other thing. They couldn’t even recognize the story, as even the business media doesn’t understand that the markets are a changed structure and beast. The story is not a key-punch error. The story is a failed market structure. The market failed today.
The market melted down and “liquidity providers” quickly pulled all bids. According to today’s Wall Street Journal, high frequency firm, Tradebot, closed down its computer systems completely, as did New Jersey’s own Tradeworx, who was so critical of our silly market structure comments in their SEC comment letter. By the way, if you don’t know who or what Tradebot is, it is the proprietary trading engine that used to be part of the BATS exchange. In fact the reason BATS was rolled out as an exchange to begin with was to lower costs and facilitate trades for Tradebot (Tradebot’s 1251 NW Briarcliff Pkwy Kansas City address is next door to BATS’s North Mulberry Drive address fyi). In the WSJ article Mr. Cummings said his Tradebot system was designed to stop trading when the market becomes too volatile, because he “doesn’t want to compound the problem.” Too bad he doesn’t understand that that was and is the problem. To make matters worse, while some high frequency firms shut down yesterday and pulled their bids, as we warned they would do for over a year and a half, other high frequency firms turned from being liquidity providers to liquidity demanders, as they turned around and indiscriminately hit bids like Randolph and Mortimer Duke.
We are just plain outraged, and think every investor and market participant in the USA should share this outrage. They were sold a lie. How many times over the last year have we all heard that HFT liquidity was a blessing that lowered costs and helped investors, and that it would be there in stressful markets just like the market makers and specialists they replaced were there? How many times have you read in the big media that HFT helped the markets perform brilliantly during the global meltdown in 2008 and 2009? We said it before and we say it now. Lies.
Not so long ago, if our markets experienced severe stress, and certainly a "fat finger", human wisdom would intervene. Reasons for the stress would be ascertained, trading in affected stocks would be slowed or halted, stabilizing bids would be initiated as needed, and severe volatility would be dealt with in a calm and reasoned manner. Today, the human specialist model has been replaced by an automated market maker model. Our market structure has evolved. It has evolved, not by design,?or a well-thought and reasoned plan, but it has evolved to cater to masters of expensive technology, deployed unfettered by participants whose only concern is to squeeze out every last picosecond and fractional cent before they move on to other countries’ markets and asset classes. The for-profit exchange model at every chance sacrifices the protection of long term investor interests for the profitability of serving hyper-leveraged intraday speculators. By the way FLASH orders are still utilized at Direct Edge, but that is here nor there.
Today's price swings in a great number of stocks highlight the inherent and systemic risk of our automated stock market, which has few checks and balances in place. Once the market sensed stress, the bids were cancelled and market sell orders chased prices down to the lowest possible point. Investors who thought they were protecting themselves with the prudent use of stop orders were left with fills that were far away from the closing price. In some stocks like our SAM example above, this was $0.01. We warned of the potential for HFT to behave this way when we met with and showed our regulators the NY Fed study that highlighted HFT's vanishing act around stressful news announcements in the currency markets.
We read this in a recent comment letter to the SEC about HFT and couldn't agree more: "When markets are in equilibrium these new participants increase available liquidity and tighten spreads. When markets face liquidity demands these new participants increase spreads and price volatility and savage investor confidence."
The EXCHANGES’s response late yesterday was to cancel trades that moved by more than 60%. Yes 60%. SO if you bought a stock at $21, put in a stop-loss market order at $20 (expecting to get filled in a market decline of somewhere less than but close to $20), and got filled at $10 (yes this happened and worse), your trade stands! And if you bought this same company’s stock (that fell from $20 to $3 before closing back at $18) at $3 and sold it at $14 thinking you made a big profit, your buy is cancelled, you are short stock at $14, you have a loss, and the futures are green this morning. Inspires investor confidence, right? With this wise remedy and redress by our exchanges, along with their other maneuvers (stay tuned for our coming Data Feed White Paper), one can’t help but be confident in playing ball on this level playing field. NOT.
Today's severe market drop should never have happened. The US equity market had at been hailed as the best, most liquid market in the world. ?The market action of May 6th has demonstrated that our equity market has major systemic risks built into it. There was a time today when folks didn't know the true price and value of a stock. The price discovery process ceased to exist. High frequency firms have always insisted that their mini-scalping activities stabilized markets and provided liquidity, and on May 6th they just shut down. They pulled the plug, as we always said they would, and they even admit it in the papers this morning. We need a new mousetrap. This is not an isolated incident, and it will happen again
Look, the bullshit you are espousing on CNBC this morning is the worst. Telling the world that Mary Shapiro is going to FIX the system is so 90's. Your rant yesterday on accusing other exchanges of having different "business models" that were not as effective is rather 80's.
You will not address High Frequency Trading, dark pools or the hundreds of algo shops that desire co-location in the ass-end of the corner of Wall and Broad.
The little guy, the average American investor is raped again.
Market Commentary from our friends at Themis Trading
May 6, 2010 – The day that will change market structure
Today’s action left us amazed, and we have been warning about this stuff since December 2008. Where do we even start? Yesterday afternoon and evening all the business programming focused on how the markets were in turmoil, and Greece this, and overdue correction that, and fat finger the other thing. They couldn’t even recognize the story, as even the business media doesn’t understand that the markets are a changed structure and beast. The story is not a key-punch error. The story is a failed market structure. The market failed today.
The market melted down and “liquidity providers” quickly pulled all bids. According to today’s Wall Street Journal, high frequency firm, Tradebot, closed down its computer systems completely, as did New Jersey’s own Tradeworx, who was so critical of our silly market structure comments in their SEC comment letter. By the way, if you don’t know who or what Tradebot is, it is the proprietary trading engine that used to be part of the BATS exchange. In fact the reason BATS was rolled out as an exchange to begin with was to lower costs and facilitate trades for Tradebot (Tradebot’s 1251 NW Briarcliff Pkwy Kansas City address is next door to BATS’s North Mulberry Drive address fyi). In the WSJ article Mr. Cummings said his Tradebot system was designed to stop trading when the market becomes too volatile, because he “doesn’t want to compound the problem.” Too bad he doesn’t understand that that was and is the problem. To make matters worse, while some high frequency firms shut down yesterday and pulled their bids, as we warned they would do for over a year and a half, other high frequency firms turned from being liquidity providers to liquidity demanders, as they turned around and indiscriminately hit bids like Randolph and Mortimer Duke.
We are just plain outraged, and think every investor and market participant in the USA should share this outrage. They were sold a lie. How many times over the last year have we all heard that HFT liquidity was a blessing that lowered costs and helped investors, and that it would be there in stressful markets just like the market makers and specialists they replaced were there? How many times have you read in the big media that HFT helped the markets perform brilliantly during the global meltdown in 2008 and 2009? We said it before and we say it now. Lies.
Not so long ago, if our markets experienced severe stress, and certainly a "fat finger", human wisdom would intervene. Reasons for the stress would be ascertained, trading in affected stocks would be slowed or halted, stabilizing bids would be initiated as needed, and severe volatility would be dealt with in a calm and reasoned manner. Today, the human specialist model has been replaced by an automated market maker model. Our market structure has evolved. It has evolved, not by design,?or a well-thought and reasoned plan, but it has evolved to cater to masters of expensive technology, deployed unfettered by participants whose only concern is to squeeze out every last picosecond and fractional cent before they move on to other countries’ markets and asset classes. The for-profit exchange model at every chance sacrifices the protection of long term investor interests for the profitability of serving hyper-leveraged intraday speculators. By the way FLASH orders are still utilized at Direct Edge, but that is here nor there.
Today's price swings in a great number of stocks highlight the inherent and systemic risk of our automated stock market, which has few checks and balances in place. Once the market sensed stress, the bids were cancelled and market sell orders chased prices down to the lowest possible point. Investors who thought they were protecting themselves with the prudent use of stop orders were left with fills that were far away from the closing price. In some stocks like our SAM example above, this was $0.01. We warned of the potential for HFT to behave this way when we met with and showed our regulators the NY Fed study that highlighted HFT's vanishing act around stressful news announcements in the currency markets.
We read this in a recent comment letter to the SEC about HFT and couldn't agree more: "When markets are in equilibrium these new participants increase available liquidity and tighten spreads. When markets face liquidity demands these new participants increase spreads and price volatility and savage investor confidence."
The EXCHANGES’s response late yesterday was to cancel trades that moved by more than 60%. Yes 60%. SO if you bought a stock at $21, put in a stop-loss market order at $20 (expecting to get filled in a market decline of somewhere less than but close to $20), and got filled at $10 (yes this happened and worse), your trade stands! And if you bought this same company’s stock (that fell from $20 to $3 before closing back at $18) at $3 and sold it at $14 thinking you made a big profit, your buy is cancelled, you are short stock at $14, you have a loss, and the futures are green this morning. Inspires investor confidence, right? With this wise remedy and redress by our exchanges, along with their other maneuvers (stay tuned for our coming Data Feed White Paper), one can’t help but be confident in playing ball on this level playing field. NOT.
Today's severe market drop should never have happened. The US equity market had at been hailed as the best, most liquid market in the world. ?The market action of May 6th has demonstrated that our equity market has major systemic risks built into it. There was a time today when folks didn't know the true price and value of a stock. The price discovery process ceased to exist. High frequency firms have always insisted that their mini-scalping activities stabilized markets and provided liquidity, and on May 6th they just shut down. They pulled the plug, as we always said they would, and they even admit it in the papers this morning. We need a new mousetrap. This is not an isolated incident, and it will happen again
Thursday, May 06, 2010
Market melt-down
Things are in place for more of this volatility. The algo's, dark pools, HFT action, NYSE EuroNext nonsense, congressional incompetence, the euro's demise, the list goes on and on. Watch this blame get tossed around. The Nebraskan surely was able to find some buy-points today.
The algo's are alive and well. $16,000,000,000 of the S & P E-Mini's traded in a nanosecond or two.
A beautiful shit-show all around. Thanks Congress, thanks SEC, thanks Obama, thanks NYSE technology, thanks algo's, thanks HFT. The contagion will continue.
The algo's are alive and well. $16,000,000,000 of the S & P E-Mini's traded in a nanosecond or two.
A beautiful shit-show all around. Thanks Congress, thanks SEC, thanks Obama, thanks NYSE technology, thanks algo's, thanks HFT. The contagion will continue.
Wednesday, May 05, 2010
Bear Stearns
Watching the shit-show with the esteemed J. Cayne of the now-defunct, Bear Stearns LIVE from Capitol Hill is a real treat. Insane or delusional, I say both.
Day after day, forum after forum, I can't find a single one of these big dogs belch out a modicum of truth. Even ex-con,Michael Milken the other day was harping about the government and how they took down the firm I used to work for, Drexel Burnham Lambert.
It wasn't Dean Parisian taking down Drexel Burnham Lambert. I didn't want to leave that firm. My office in LaJolla suited me just fine. I loved the view of migrating whales and gorgeous women.
It was Michael Milken who took down Drexel Burnham Lambert, not the government.
Paying hundreds of millions in fines so that your brother doesn't make it to the next cell over isn't the governments fault. Mike took it for Lowell.
Day after day, forum after forum, I can't find a single one of these big dogs belch out a modicum of truth. Even ex-con,Michael Milken the other day was harping about the government and how they took down the firm I used to work for, Drexel Burnham Lambert.
It wasn't Dean Parisian taking down Drexel Burnham Lambert. I didn't want to leave that firm. My office in LaJolla suited me just fine. I loved the view of migrating whales and gorgeous women.
It was Michael Milken who took down Drexel Burnham Lambert, not the government.
Paying hundreds of millions in fines so that your brother doesn't make it to the next cell over isn't the governments fault. Mike took it for Lowell.
Monday, May 03, 2010
Humbling..........
What happens when you point the Hubble Space Telescope to a seemingly blank patch of sky?
A view that takes you to the edge of the universe!
http://www.flixxy.com/hubble-ultra-deep-field-3d.htm
A view that takes you to the edge of the universe!
http://www.flixxy.com/hubble-ultra-deep-field-3d.htm
Great rainy Monday quote..........
Alcohol, Tobacco, and Firearms should be a convenience store - not a government agency.