ΩΩI have been watching the Sudden Stock Plunge hearings. As with previous collapses, no one knows exactly why this happened. But of course, it seems to have triggered a secondary effect with investors fleeing the stock markets. Obviously, it isn’t a safe place to gamble. Can Congress fix what is wrong? This requires finding exactly what happened and unfortunately, we may be seeing an unstable system due to the top 5 game players having a far, far too big ‘footprint’. That is, the Goldman Sachs/JPM types are the true, true cause and are not being mentioned at all in the hearings so far.
ΩΩ70% of all trades are by the super-size-me investment banking houses. This lopsided system is unstable since all we need is for a tiny handful of dealers to move in total tandem with each other and we get great and sudden moves in the markets. These gigantic international dealer bankers have a very similar ideology and trading methodology and thus, move in close relation with each other. They all have to feed off of someone who has to be the loser in any deal.
ΩΩProfits come from fleecing someone else who gets a worse deal. They can’t fleece each other very easily since they know each other’s tricks, schemes and games…they create these! And notice each other’s creations very rapidly. And are highly suspicious of each other. The sheep being fleeced are mainly foreigners, little investors, pension funds and governments. Corrupting the deals via bribing or controlling governments and pension fund managers is a great way to facilitate fleecing of smaller investors.
ΩΩThe Singularity we are seeing is due to the overhead costs of doing ‘trades’ and dealing in stocks has been made ridiculously cheap for the top ten investment/banking houses in the world. That is, the staff costs have gone down while the speed of trading has shot through the roof thanks to microsecond computer trading.
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The bid and ask spread is the difference between the the price being quoted for buyers of a security and the price being quoted sellers. A trade of 1000 shares of a stock with a bid of 19.90 and an ask of 20 will incur a typical commission fee of $14.95 at your discount broker and cost 20,014.95 to execute. But turn around and try to sell that stock right away, and you’ll only get the bid price of 19.90. Add another commission to sell the stock and a Securities an Exchange Commission fee of .00307% on the principal amount of the sale, and the cost to trade in and out of the stock just jumped to $130.51. So much for low commissions.
ΩΩLittle people cannot play this game. The overhead costs are very significantly higher than the huge consortium’s costs which are virtually nil per stock traded. One guy at Goldman Sachs can supervise a million shares being shifted restlessly around per minute via his computer. He can even watch porn online while supervising this automatic computer business.
ΩΩTo increase profits, having less and less human direct supervision of deals is paramount. So while the sorcerer’s apprentices snooze, these machines are rampaging about, carrying oceans of liquidity in billions of small buckets which cause a sloshing mess that can suddenly morph into a tsunami or typhoon.
ΩΩWhen the big 10 investment houses notice something is going wrong, they double or quadruple the speed with which their computers do business. That is, activity on Wall Street and other electronic exchanges shoots upwards at a hyperbolic rate. Wailing with fear, the littler investors rush to the catastrophe and drown in the flood of big investor liquidity efforts.
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Technological singularity – Wikipedia, the free encyclopedia
Dramatic changes in the rate of economic growth have occurred in the past because of some technological advancement. Based on population growth, the economy doubled every 250,000 years from the Paleolithic era until the Neolithic Revolution. This new agricultural economy began to double every 900 years, a remarkable increase. In the current era, beginning with the Industrial Revolution, the world’s economic output doubles every fifteen years, sixty times faster than during the agricultural era. If the rise of superhuman intelligences causes a similar revolution, argues Robin Hanson, one would expect the economy to double at least quarterly and possibly on a weekly basis.[5]
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Machines capable of performing mental and physical tasks as capably as humans would cause a rise in wages for jobs at which humans can still outperform machines. However, a proliferation of humanlike machines would likely cause a net drop in wages, as humans compete with robots for jobs. Also, the wealth of the technological singularity may be concentrated in the hands of a few who own the means of mass producing the intelligent robot workforce.[5]
ΩΩThere is something in the economy that really is doubling each year or even each quarter: the Derivatives Beast! This thing which was created from the fevered dreams of a bunch of heartless and greedy individuals has grown faster than anything in the economic realm. The complicated bets on all sorts of things only remotely attached to any real physical markets grew on this monster which is a construct, not anything physical.
ΩΩA fact of life is, physical things exist in time and space and require natural growth methods which limits size and speed of growth. But imaginary things have no real constraints and can go to infinity very rapidly. When I was a baby, the Wonder Computer at the University of Chicago, Univac, was one of the marvels of the modern world.
ΩΩAstronomers rejoiced in being able to make much faster calculations using super-immense numbers with this new machine! When Texas Instruments made the first hand calculator, my father was given one by the corporation and he marveled, ‘I have all of Univac in my hand!’ Now, we have hyper fast computers running our stock market systems on behalf of bankers who play the derivatives market above all other things since this was the main thing that was growing.
ΩΩAll of this speedy stuff is now pretty much out of control and out of hand. And interestingly, is also the key part in the creation of a sea of credit based not on hard, physical capital but rather, on previous debts coupled with differentials in interest rate loan charges by various central banks and the fluctuating values of various currencies on international markets. All of which is now computerized and working at warp speed as we see with the sudden collapse in the value of the euro, for example.
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OCC: OCC’s Quarterly Report on Bank Derivatives Activities
ΩΩI look at the quarterly OCC derivatives report and we have the 3rd quarter of 2009 and note the changes from 2008: 2009 fourth quarter deals were negative in the interest rate markets while positive in foreign exchanges which is the reverse of the previous quarter. And profits dropped dramatically in just one quarter. Note the bottom graph comparing 2008 to 2009 shows that interest rate swaps were the main money maker in 2009 while credit default swaps wiped out profits in 2008. Thus, the need for our entire tax system to be hijacked to bail out these stupid derivatives dealing ‘banks’.
ΩΩNow, one of the biggest players on this planet in all of these systems is…GOLDMAN SACHS. The big, big, super big gamester in the derivatives markets dwarfs even JP Morgan and is UNWINDING its position very rapidly. The other dealers are clearing out of their ‘risk based capital credit exposure’ (ie: they have to kill off the playing with Japanese carry trade dollars in various markets!) so they are using less ‘money’ for gaming the systems yet they remain much bigger than all other players who have been brutally punished by world market chaos.
Goldman Sachs Hands Clients Losses in ‘Top Trades’ (Update1) – Bloomberg.com
Goldman Sachs Group Inc. racked up trading profits for itself every day last quarter. Clients who followed the firm’s investment advice fared far worse.
. Seven of the investment bank’s nine “recommended top trades for 2010” have been money losers for investors who adopted the New York-based firm’s advice, according to data compiled by Bloomberg from a Goldman Sachs research note sent yesterday. Clients who used the tips lost 14 percent buying the Polish zloty versus the Japanese yen, 9.4 percent buying Chinese stocks in Hong Kong and 9.8 percent trading the British pound against the New Zealand dollar…..Goldman Sachs Group Inc. racked up trading profits for itself every day last quarter. Clients who followed the firm’s investment advice fared far worse.
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It is painfully obvious that Goldman Sachs analysts are liars. Obviously, internal analysts are singing a totally different song! Indeed, this is the ‘Liar Liar’ culture at GS: they might know something but will gladly lie about what they know because they need chumps, fools, rubes off the farm and others to cheat. Cheating is a huge segment of GS profits.
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Seven of the investment bank’s nine “recommended top trades for 2010” have been money losers for investors who adopted the New York-based firm’s advice, according to data compiled by Bloomberg from a Goldman Sachs research note sent yesterday. Clients who used the tips lost 14 percent buying the Polish zloty versus the Japanese yen, 9.4 percent buying Chinese stocks in Hong Kong and 9.8 percent trading the British pound against the New Zealand dollar.….The trade advice for customers is distributed by Goldman Sachs’s global markets economic research group. It tracks the performance of the trades in a daily research note. The time period of the recommendations is 12 months.
ΩΩWe can see from the lower two OCC graphs, Goldman Sachs is the only one which made huge profits and I believe, this was due entirely to the Federal Reserve and Treasury handing over all the losses of AIG on a silver or rather gold platter. That is, these wins were due to the US taking on all the AIG losses and paying them off, 100%. Despite the graphs showing changes in the games of the derivative player’s positions, note that the Beast continues to GROW BIGGER! And it is growing on the upper end of the short term parts, not the long term. Note how the less than a year stats have shot upwards at an insane rate. Note also that the 1-5 year or greater contracts are collapsing while the super short term contracts are rising.
ΩΩThis means, inflation is rearing its ugly head in the middle of a credit collapse. The DOW fell a great deal very suddenly this morning and now has stabilized at a lower step. This is due to a reaction to news from Europe: tightening belts means recessions. Europe is being forced into the Japanese ZIRP model and so will we…for this is the only way to keep super sized government debts floating. By lowering wages and other expenses, ‘inflation’ is kept down.
Stocks Worldwide Fall for Sixth Day, Euro Drops on Sovereign-Debt Concern
ΩΩLike the US, most of Europe imports energy and goods from Asia and the OPEC/Russian consortiums. Europe and the US worked like demons to strangle Iran’s oil markets as much as humanly possible so this will keep oil prices artificially high. The Gulf Oil disaster continues to destroy all natural systems in a major sector of the planet, the world’s biggest oil disaster is looking more destructive than the explosion of a Russian nuclear power plant.
ΩΩThis affects markets for this disaster should bankrupt both Halliburton and British Petroleum. Britain can’t afford to see its major oil producer company go belly up but all the fish and birds are going belly up and the clean up will cost us a tremendous amount of money which should come all, every penny, off the hides of the corporations responsible. I am betting we will get stuck with the bills because BP is ‘too big to fail’ and Halliburton has too many claws in Congress, like AIPAC.
ΩΩThe reason the DOW is falling isn’t due to Europe…it is more due to the inability to find out what exactly caused the mess when stocks fell 1,000 points in minutes. The head of CME is on TV right now, saying, his trading house had nothing to do with it and besides, nothing was wrong, either! He wants nothing fixed!
ΩΩI guess a good thing to do is to avoid the CME until this is fixed or stopped. CME’s officials are like the previous Goldman Sachs hearings: they are perfectly fine with the systems. These systems work…FOR THEM!
Back to inflation: The Hollow Euro: Specter of Inflation Haunts Europe – SPIEGEL ONLINE – News – International
It’s Friday morning, the day after Ascension Day, which is a public holiday in Germany, and most people in the country are taking the day off to enjoy a long weekend. On top of that, it’s raining in Munich, making this an ideal morning to sleep in late. But the premises are already jam-packed at Pro Aurum, a private trading house for gold and other precious metals. Business has been booming for a week now.
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Clients receive coffee and newspapers to make their wait more pleasant. They all want to buy gold bars or coins, Canadian Maple Leafs, Australian Kangaroo Nuggets and Austrian Vienna Philharmonic coins — anything, as long as it’s made of gold and will retain its value. Pro Aurum boss Robert Hartmann and his 45 employees at the Munich headquarters have barely been able to handle the rush. Hartmann even had to temporarily shut down Pro Aurum’s online shop. “We are all working to the hilt,” he says.
ΩΩGermans remember Weimar very vividly. It is a terrible thing when they run off and go to gold. Gold is shooting up relative to the euro. Here we see gold playing its ancient role as a fulcrum or balance on the scales. That is, euros can be sold against other currencies but the Germans see gold rising basically against the rising dollar and the falling euro, they go to gold.
ΩΩAlso, gold is physical. It can’t vanish in a poof. It is very durable, it doesn’t rust or degrade which is why it was used since antiquity for ‘eternity systems’ like the graves of great rulers. Gold is still a commodity but is an emotional life saver. Of course, hopes of protecting gold deals can collapse as we saw in 1982-2001. Scared Germans are dangerous. They are also very resentful of being careful when everyone else had fun.
ΩΩGold dealers make more money, honestly, on Indians buying gold but the new groups rushing into gold markets are increasing sales and if the CME guys and DOW dealers and major banking investment guys are refusing to protect investors, it makes sense to go to gold. A number of mainstream media are warning people to not go into gold but if Germans are running there, then forget about gold falling…against the euro. It might fall against the dollar as the dollar strengthens.
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Scientists forecast decades of ash clouds – Times Online
THE Icelandic eruption that has caused misery for air travellers could be part of a surge in volcanic activity that will affect the whole of Europe for decades, scientists have warned. .
They have reconstructed a timeline of 205 eruptions in Iceland, spanning the past 1,100 years, and found that they occur in regular cycles — with the relatively quiet phase that dominated the past five decades now coming to an end. .
At least three other big Icelandic volcanoes are building towards an eruption, according to Thor Thordarson, a volcanologist at Edinburgh University. .
“The frequency of Icelandic eruptions seems to rise and fall in a cycle lasting around 140 years,” he said. “In the latter part of the 20th century we were in a low period, but now there is evidence that we could be approaching a peak.”The three other volcanoes cited by Thordarson as being potentially close to a large eruption are Grimsvotn, Hekla and Askja — all of which are bigger than Eyjafjallajokull. .
In the past, they have proved devastating. Hekla alone has erupted about 20 times since AD874, pouring out a total of two cubic miles of lava from a line of fissures that stretches 3Å miles across the mountain. .
There was a minor eruption in 2000 and geologists have reported that snow is once again melting on Hekla’s summit, suggesting that magma is rising.Grimsvotn, another highly active volcano, lies under the huge Vatnajokull glacier in Iceland’s southeast. An eruption in 1996 saw much of this glacial ice melt, causing a flood that washed away the country’s main ring road. .
It is linked to the massive Laki fissure volcano whose 1783 eruption ejected so much ash into the atmosphere that it cooled the entire northern hemisphere for nearly three years. The resulting low temperatures caused crop failures and famines that killed 2m people and helped trigger the French Revolution.
ΩΩThis will, of course, kill ‘global warming’. As well as wreck most of Europe’s economies. The key thing that happened this last month has been the grounding of much of Europe’s air transportation systems and these groundings continue on a sporadic basis. This will of course, totally disrupt all of the economies there and thanks to world trade, across the planet. This is not good news!
ΩΩIndeed, it is very bad news. I have more to say in a few hours but have to go to the doctor’s office. Will fill in later.
GS may cheat the clients but they are also cheating the shareholders who own the desks the GS workers work at…………..larhe profits and lousy dividends and falling share price?
one remembers why Harvard is more reknown than Yale ..being that in the bad times they cut expenses and downsized and fired in order to preserve principle that became endowments when a turnaround came while Yale refused to….my personal problem tho is not having anywhere to cut, so this tidbit is all the higher education on economics i have……
“Seven of the investment bank’s nine “recommended top trades for 2010” have been money losers for investors who adopted the New York-based firm’s advice”
Just like when oil was over $140/barrel in 2007 and GS was predicting $200… In other words, they were ready to exit their positions and needed chumps to take the other side of their trades. Who honestly believes anything these guys say?
The air quality now is so poor that people are getting sick….
on land and especially on the RIGS still in the Gulf!
This is going to be a HUGE
disaster. Large areas of
the gulf might have to be
evacuated. The rigs still
in the gulf might have to
be abandoned.
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Last weekend, the U.S. Environmental Protection Agency (EPA) posted its air quality monitoring data from the greater Venice, Louisiana, area.
The data showed federal standards were being exceeded by 100- to 1,000-fold for VOCs, and hydrogen sulfide, among others–and that was on shore.
These high levels could certainly explain the illnesses and were certainly a cause for alarm in the coastal communities.
http://www.huffingtonpost.com/riki-ott/human-health-tragedy-in-t_b_582655.html
‘A fact of life is, physical things exist in time and space and require natural growth methods which limits size and speed of growth.’
This is wrong. Unless you want to exclude biology in your analysis, cancerous cell lines have proven that they are not limited by the normal process of apoptosis or the normal limitations on cells growth like layering, but only limited in growth by the available nutrient supply. Since you so carelessly flung the one line formula from the Krebs cycle around, bringing back chilling memories of the second month of high school biology, I do not know why you want to omit this.
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ELAINE: I agree GS is a cancer.
As we approach the singularity ie 100% correlation of all number munching crunching computers, we have to ask.. what lies beyond that event horizon? Does it all turn into one big smudge? Like a bug on the windshield? Or are we all blended up like a milkshake?
Whatever it is, it will be a total surprise I am sure of that. Something out of left field. This is the way this universe works. The Galactic Hitchhiker is us.
Just as Johnny Cash starts playing “your own personal Jesus” on the iPod. Coincidence, I think not… haha
Expenses: reduce?
search web
‘steal this book,’ etc ‘bottom fisher . org’
load up on free lunches at houses of
worship. flee markets ‘good will.’
some cities allow/do not allow ‘dump -.
ster dirving.” ‘free gum mint cheese
in 1980′s replaced by 40 m yanks
on food stamps (av. $97/m/person).
Mo town plans to wreck 9,000 houses.
1 can camp free in nat. forrests (not parks).
I put together a few pages on the May 6 selloff. Here are the conclusions.
• There is a basic issue of whether all trading of a security should be on a single exchange, or distributed, or over-the-counter.
• Don’t buy on margin.
• If you are going to make a sell-at-the-market order you should also use directed trading, to the exchange the security is listed on. (Some companies list themselves on two or more exchanges.)
• If you direct your trade to the NYSE you will get a fairer trade. Safer, during the May 5 selloff.
• Arguably, you should not use market orders, or ones that turn into one when triggered – like a “trailing stop loss” order – except on the NYSE.
All 7 pages are here.
HERE:
http://chasegalleryconnect.org/FNC_C/Data/Personal%20Finance,%20Investing,%20Estates,%20Retirement/MacroEconomics/Markets,%20Business%20Cycle/2007%20-%2020xx%20Financial%20Crisis/20100506%20Stock%20Market%20Selloff.doc
(I wish I could find a less-ugly way to use a URL on wordpress!)
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ELAINE; If we click on any part of your url, it works. So don’t worry about it. Thanks for the links, by the way, Frederick! Good writing. I recommend people go to this link.
“…… Sudden Stock Plunge hearings. As with previous collapses, no one knows exactly why this happened.”
Oh, we know what has happened. A strong woman has grabbed the ruler and slammed it down of the “Lord of the Flies” boys club of unmerciful, unrestrained, nation-destructive behaviours.
May 18 (Bloomberg) — Germany will temporarily ban naked short selling and naked credit-default swaps of euro-area government bonds at midnight after politicians blamed the practice for exacerbating the European debt crisis. The ban will also apply to naked short selling in shares of 10 banks and insurers that will last until March 31, 2011
“In some ways, it’s a battle of the politicians against the markets” and “I’m
determined to win,” Merkel said May 6. “The speculators are our adversaries.”
President Obama needs to recite this daily: “The speculators are our adversaries.”
HAHAHA. Only she did this this week not last week.
“This [Elaine's growth analogy] is wrong. Unless you want to exclude biology in your analysis, cancerous cell lines have proven that they are not limited by the normal process of apoptosis or the normal limitations on cells growth like layering, but only limited in growth by the available nutrient supply”-Pay Attention
Do you in fact ever pay attention? You prove Elaine’s point by bringing up perhaps nature’s most destructive biological phenomenon. Yes, the unchecked growth of cancer cells will destroy the host thus the danger. Likewise the Derivative Beast where humanity and its economic systems are the threatened “host”.
Ah! I see you’ve addressed it Elaine. Agreed.
Fred,
Tinyurl.com is a good way to shorten urls.
quality of capitol on margin against investments
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http://video.google.com/videoplay?docid=-181259944046452879&q=iluminati&total=111&start=0&num=10&so=0&type=search&plindex=4
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natural cycles
Video Description
May 19 – Pakistan’s Telecommunication Authority blocks Facebook indefinitely because of an online competition to draw the Prophet Mohammad.
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a million miles away from some do-hickey webpage of a curious artists driven to express thought and creativity is pissing off a billion muslims
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i saw the art… i like the one where the soda pop, strawberry, milk carton, firemans hat, and fork are claiming to be the real picture of Mohammad… that is so funny i never even thot about how simple art is… pictures worth a thousand words
GS shouldn’t be above the law, unless GS’s representatives make the law….
IN the U.S.: Money buys power; in China, Power generates money…
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Gohttp://www.atimes.com/atimes/China_Business/LE19Cb01.html
me breathes easier as Huang jailed
By Olivia Chung
HONG KONG – The fall from grace of Huang Guangyu, the founder of Chinese retailing giant Gome and once ranked China’s richest man, is now surely complete, after he was sentenced in Beijing on Tuesday to 14 years in prison on charges of bribery, insider trading and illegal business dealings. His wife was also jailed on insider trading charges.
Huang, 41, known in Cantonese as Wong Kwong-yu, was also fined 600 million yuan (US$88 million) with another 200 million yuan worth of property being confiscated, a statement from Beijing No 2 Intermediate People’s Court said. Two of Huang’s companies, Gome and Beijing Pengrun Real Estate Development, were fined 5 million yuan and 1.2 million yuan respectively for giving bribes.
The GOM oil spill is to be the U.S.’s Chrenobyl: link
And a military buildup in the Middle East (zero hedge):
Correct, Rob. The US is on a mad rush to dominate the world via our vast and very expensive military. Before we lose it all when we go bankrupt.
We plan to cut off oil exports from Iran and this will piss of China and…JAPAN. Who is suffering from high oil costs already and is the one country that is at the heart of our collapse into a global depression.