The SEC's report on the flash crash of May publicly reveals its deep level of corruption and that it now longer serves the PUBLIC in its regulation of the stock exchanges. The report clearly shows that the fragmented electronic markets that the SEC has imposed simply do not work under stress. The SEC turned the stocks markets over to nameless, faceless computers, instead of people with clear responsibility and capital at risk.
The report documents that a huge trade made by a huge mutual fund [Waddell & Reed], that in fact operated like a hedge fund, cracked open the seams of the markets like the iceberg hitting the Titanic. And the markets sank, despite all those promises of better liquidity and public service the SEC promised when it forced the NYSE specialist system out of its former critical role.
In a market dominated by HUMANS, that huge order by Waddell & Reed would have been exposed to the markets and that fund would have gotten a low price and borne the cost of its lust for speed itself. Instead, the the SEC's market, they were able to secretly flood the markets with thousands of small electronic orders simultaneously, like a virus infects a being. And that wave of orders killed the market as other computer traders copied the move.
The SEC could easily stop this practice. Bring back the specialist system. Impose it on all stocks. Impose it on ETFs. Require large orders on stock futures to go to people in the pit. Then those hogs will have to pay for their greed as the counterparties price the speed & size into lower bids. Ban ALL electronic trading whenever the market is down 2% or for a stock when it is down 5%. Ban coordinated electronic waves of orders. Coordinated electronic orders are obviously market manipulation - get rid of them. Expose the large order to the market at once to attract offers, using the NYSE specialist to advertise the stock available and attract bids. That's how large orders were formerly done and that worked OK for decades.
Will the SEC do any of this? Nope. They are corrupt and in the pocket of the Street & hedge funds & their law firms. The SEC employees want high paying jobs when they leave the agency, and a sure way to get those is to do the bidding of those people while working for the SEC.
Sighhh. The Ruling Classes in DC are so corrupt. Vote them all out this November.
Word of the Day
"Entelechy" - noun [$10] Philosophical
Entelechy means 1. realization of potential; 2. the supposed essential nature or guiding principal of a living thing.
Sentence: The SEC and its employees has lost all connection with the entelechy of the agency, which is, as it is for ALL government agencies, to serve the People and the Common Man and Woman.
Showing posts with label SEC. Show all posts
Showing posts with label SEC. Show all posts
Thursday, October 7, 2010
Tuesday, May 25, 2010
Heavy Shelling ...
The Euro-beefers are bailing out, hence the severe weakness in the AM futures markets. I think yesterday's very late, massive sell-off was the precursor to the today's AM drop off. I'd guess the Street had the orders in already or knew that Euro-beefers were being liquidated, so used the firmness yesterday to front-run the moves at the close.
Of course, since all participants [except the common man investor] have learned to recognize signs of computer order floods, and to climb the trees to safety at first sight, the swings are much larger and faster than an orderly market would normally have. For all the blather about "liquidity" provided by computer trading, is it not NOW obvious to all that such "liquidity" is a phantom, and is NOT there when needed ?!
Get rid of ALL computer trading EXCEPT within very narrow market windows of time and price.
The knaves at the SEC won't do that, though. They care NOTHING for the common man investors. All they want to to line up a job with fat pay at the Street or the Street's law firms after leaving government.
Actions
Waiting. Krypto has plenty of cash to redeploy. She did a LOT of selling as the market approached the recent highs - I posted them all. Notice that UNLESS one does selling on the way up, one will not have cash to buy on big plunges. You really do have to buy low, sell high AND sell high to buy low. It will take a good bit more drop to trigger Krypto's buy programs again. Just sitting & waiting.
Mrs. B has a bit more more cash to redeploy, too. No ideas in mind for now, though. Lolol, I think she is the only buyer at her local broker's office lately.
Word of the Day
"Apophasis" - noun [$100] Rhetorical
Apophasis means denial of one's intention to speak of a subject that is at the same time named or insinuated, as "I shall not mention Caesar's avarice, nor his cunning, nor his morality."
Sentence: In modern political dialog, one often hears examples of apophasis as a way to smear an opponent with negative or even false accusations, while seeming or purporting to be clean.
[From Greek, ap'opha(nai) - to say no, deny]
Of course, since all participants [except the common man investor] have learned to recognize signs of computer order floods, and to climb the trees to safety at first sight, the swings are much larger and faster than an orderly market would normally have. For all the blather about "liquidity" provided by computer trading, is it not NOW obvious to all that such "liquidity" is a phantom, and is NOT there when needed ?!
Get rid of ALL computer trading EXCEPT within very narrow market windows of time and price.
The knaves at the SEC won't do that, though. They care NOTHING for the common man investors. All they want to to line up a job with fat pay at the Street or the Street's law firms after leaving government.
Actions
Waiting. Krypto has plenty of cash to redeploy. She did a LOT of selling as the market approached the recent highs - I posted them all. Notice that UNLESS one does selling on the way up, one will not have cash to buy on big plunges. You really do have to buy low, sell high AND sell high to buy low. It will take a good bit more drop to trigger Krypto's buy programs again. Just sitting & waiting.
Mrs. B has a bit more more cash to redeploy, too. No ideas in mind for now, though. Lolol, I think she is the only buyer at her local broker's office lately.
Word of the Day
"Apophasis" - noun [$100] Rhetorical
Apophasis means denial of one's intention to speak of a subject that is at the same time named or insinuated, as "I shall not mention Caesar's avarice, nor his cunning, nor his morality."
Sentence: In modern political dialog, one often hears examples of apophasis as a way to smear an opponent with negative or even false accusations, while seeming or purporting to be clean.
[From Greek, ap'opha(nai) - to say no, deny]
Monday, May 10, 2010
Unplug the Machines
The solution to avoid ANY more crack-ups in the markets is so simple and pure that, of course, the SEC and Congress will not do it. This potential for a disaster has been talked to death for almost 25 years since the crash of 1987.
Thursday's meltdown appears to have been purely machine driven as they took over the markets: trading algorithms, rapid-fire trading, program trades ... on and on. They moved so fast that no one had time to make rational decisions. And we all know that the "selling" was largely naked short selling by hedge funds and market makers. You know very well they did not have borrows in place. That famous "market maker" exception - that's the same fig leaf Goldman Sachs hides behind for a lot of its deceptive trades.
Sigh ... 25 years of building trouble and no one listens or does anything. That's the power of money. Wall Street and hedge fund money has bought the markets for their own playground. The seller ? The SEC, which dithers for years doing ... nothing.
The solution ?
Unplug the machines. Not permanently, as in stable markets they provide good liquidity benefits in stable or slowly drifting markets. Unplug them whenever stock has fallen (or risen) 2% or a major average has fallen (or risen) 2% from the prior day's close. Let people handle those trades. And enforce trading halts nationwide. And extend them to options and futures markets. AND to derivatives. AND "dark pools". Apply them to ALL broker-dealers for ANY trades.
I don't care if "market makers" have a tougher time. That's their problem. If they want to sell options and can't "hedge", just charge more for the risk.
I don't care if electronic exchanges have trouble and lose business. That's tough - they simply do not work fairly in rapid markets. Force all trades in fast, unstable markets onto the NYSE.
More: no short selling when a stock is down 2%. No naked shorts by ANYONE including market makers AND ETFs. And for ANY short sale not from the broker's in-house holdings, I think a borrow should be pre-arranged.
No more ETFs backed by derivatives. And get rid of the ones that exist now. The markets should be brought back to REALITY from the phantom zone.
Travel
I spent a few days in my hometown last week. What a fine place to live ! Uh .. that is, if one has a good job. Unemployment is very high and I'd guess "underemployment" is stunning. A cousin had me over for a BBQ - ahhhh ... the pleasures of burgers, baked beans and beer ! And a taco salad for multicultural diversity.
And then ... Big Al had a BBQ and produced a culinary masterpiece: grilled spam burgers with cheese. Mon dieu ... c'est magnifique !!!
Actions
Krypto has many buy orders for me, as does Sky. I will do them sometime today, likely not at the open as futures indicate a huge up day on the news of the Euro-EU stabilization package. Krypto wants me to sell TIPs, and cash and buy European, Emerging market and US. Sky wants me to re-buy some resource stocks (these will be one or all of BHP, FCX and CLF).
By the way, I closed Fido Fund as a separate fund and now put those stocks in the Sky Fund, run by my fine herding dog, Sky, as directed by whistle commands from Mrs. B.
More ... Sky placed 6th and 7th in the weekend's sheep herding trials in northern New Hampshire. This was Mrs. B's (near) debut as a handler and she did very well, of course. Krypto was a bit of a goofball, but she's a beginner.
Book of the Week
The Grass Crown, by Colleen McCullough is the follow-on book to The First Man in Rome. This very fine historical novel combines good writing with solid research to produce an engaging and enjoyable story of the rise of Sulla to power in Rome. And it puts "meat" onto the dry historical accounts of the 100 years destruction of the Roman Republic. By who ? Easy ... the rich and powerful in the Senate did it by their lust for money and power. Too few had old fashioned integrity or any sense of fairness.
The Grass Crown is superb - if you are interested in Rome, read it.
Word of the Day
"Retradition" - noun [$1000] (rare)
Retradition means the action of handing back.
Sentence: Financial markets need the retradition of ALL trading in fast or unstable markets back to the NYSE where humans can stop the machines from causing disasters.
Thursday's meltdown appears to have been purely machine driven as they took over the markets: trading algorithms, rapid-fire trading, program trades ... on and on. They moved so fast that no one had time to make rational decisions. And we all know that the "selling" was largely naked short selling by hedge funds and market makers. You know very well they did not have borrows in place. That famous "market maker" exception - that's the same fig leaf Goldman Sachs hides behind for a lot of its deceptive trades.
Sigh ... 25 years of building trouble and no one listens or does anything. That's the power of money. Wall Street and hedge fund money has bought the markets for their own playground. The seller ? The SEC, which dithers for years doing ... nothing.
The solution ?
Unplug the machines. Not permanently, as in stable markets they provide good liquidity benefits in stable or slowly drifting markets. Unplug them whenever stock has fallen (or risen) 2% or a major average has fallen (or risen) 2% from the prior day's close. Let people handle those trades. And enforce trading halts nationwide. And extend them to options and futures markets. AND to derivatives. AND "dark pools". Apply them to ALL broker-dealers for ANY trades.
I don't care if "market makers" have a tougher time. That's their problem. If they want to sell options and can't "hedge", just charge more for the risk.
I don't care if electronic exchanges have trouble and lose business. That's tough - they simply do not work fairly in rapid markets. Force all trades in fast, unstable markets onto the NYSE.
More: no short selling when a stock is down 2%. No naked shorts by ANYONE including market makers AND ETFs. And for ANY short sale not from the broker's in-house holdings, I think a borrow should be pre-arranged.
No more ETFs backed by derivatives. And get rid of the ones that exist now. The markets should be brought back to REALITY from the phantom zone.
Travel
I spent a few days in my hometown last week. What a fine place to live ! Uh .. that is, if one has a good job. Unemployment is very high and I'd guess "underemployment" is stunning. A cousin had me over for a BBQ - ahhhh ... the pleasures of burgers, baked beans and beer ! And a taco salad for multicultural diversity.
And then ... Big Al had a BBQ and produced a culinary masterpiece: grilled spam burgers with cheese. Mon dieu ... c'est magnifique !!!
Actions
Krypto has many buy orders for me, as does Sky. I will do them sometime today, likely not at the open as futures indicate a huge up day on the news of the Euro-EU stabilization package. Krypto wants me to sell TIPs, and cash and buy European, Emerging market and US. Sky wants me to re-buy some resource stocks (these will be one or all of BHP, FCX and CLF).
By the way, I closed Fido Fund as a separate fund and now put those stocks in the Sky Fund, run by my fine herding dog, Sky, as directed by whistle commands from Mrs. B.
More ... Sky placed 6th and 7th in the weekend's sheep herding trials in northern New Hampshire. This was Mrs. B's (near) debut as a handler and she did very well, of course. Krypto was a bit of a goofball, but she's a beginner.
Book of the Week
The Grass Crown, by Colleen McCullough is the follow-on book to The First Man in Rome. This very fine historical novel combines good writing with solid research to produce an engaging and enjoyable story of the rise of Sulla to power in Rome. And it puts "meat" onto the dry historical accounts of the 100 years destruction of the Roman Republic. By who ? Easy ... the rich and powerful in the Senate did it by their lust for money and power. Too few had old fashioned integrity or any sense of fairness.
The Grass Crown is superb - if you are interested in Rome, read it.
Word of the Day
"Retradition" - noun [$1000] (rare)
Retradition means the action of handing back.
Sentence: Financial markets need the retradition of ALL trading in fast or unstable markets back to the NYSE where humans can stop the machines from causing disasters.
Tuesday, April 20, 2010
Disappointing ...
.... to hear that the SEC vote to charge Goldman, Sachs was 3 to 2. Here's the actual complaint ->
http://www.sec.gov/litigation/complaints/2010/comp21489.pdf
In that complaint, one will read that Paulson & Co. paid Goldman, Sachs $15 million to set up the transaction that led to over $1 billion in losses (see paragraph #5). Goldman, Sachs has not yet denied that charge. If true, in my thinking that is a smoking gun for the guilt of Goldman, Sachs ... and Paulson & Co. in an insidious conspiracy to defraud investors. One simply cannot take undisclosed money from one party while purporting to work for another. Since Paulson & Co. paid the "fee" - how can they not be responsible, too ?
Why would an SEC commissioner vote not to proceed ? Both were Republicans. I suppose IF I was a conspiratorialist, I'd think they were paid off or in the pocket of the rich & powerful Wall Street crowd. But as I like to joke (with truth), I've seen black helicopters, so if I can't see a conspiracy, it's likely not there. In this case, I think not.
Perhaps they wanted the SEC to try to settle first. That is the prior SEC modus operandi aka m. o. aka method of operation. Maybe. But after the Panic of 2008 and all that pain caused by Wall Street and the beefers, why keep that old m. o. ? That did NOT serve the public in the past, but was a means for the clique of ruling class lawyers to keep nefarious deeds as quiet as possible. Hence IF that was their reason, it was wrong.
Some Republicans (and even some liberals) have a knee-jerk anti-government reflex action. That's not so bad to have. I have it, too, as a good Fraternal Libertarian. Government fails in so many things it purports to do. BUT any Republican or anyone else with a bit of historical knowledge should know that great Republican President, Theodore Roosevelt, led the fight to bust the big trusts who were strangling the nation to get more wealth for themselves. And one should note that the first Republican President, Abraham Lincoln, favored well-structured internal improvements. The simple fact noted above should have neutralized any knee-jerk reflex against a strong SEC move. Hence IF their knee-jerk anti-government philosophy was the cause for voting no, that was wrong, too.
Therefore I'm disappointed in the Republicans, just like I was on the first TARP vote, which they defeated for incorrect knee-jerk anti-government reasons. That was a massive error that helped let the Panic of 2008 grow to epic size. The markets have only just recovered to pre-first-TARP vote levels. The public really needs an open hearing on all the crimes of Wall Street. This should be a start.
Republicans, think about Theodore Roosevelt's leadership. Stop being stupid and rigid. Adopt some of Theodore Roosevelt's populism. That is the key to winning elections now. You have to be more "Pro common man" .. well, perhaps more like a Fraternal Libertarian :)
Word of the Day
"Marry" - interjection [$10] - this is use #2 in dictionaries; archaic (often used in Shakespeare plays as an interjection.
Marry (2) means expressing surprise, asseveration, indignation, etc. [Middle English from (the Virgin) Mary]
Sentence: Marry, why did those Republicans votes against charging Goldman, Sachs ?
Analogy for understanding its usage: mild interjections that are very common today are "Christ!" and "jeez" (from Jesus), or even "Jesus H. Christ" !! Even "gosh" and "golly" arose from "God!". In Shakespearean times, an interjection that arose from Mary was ... marry !
http://www.sec.gov/litigation/complaints/2010/comp21489.pdf
In that complaint, one will read that Paulson & Co. paid Goldman, Sachs $15 million to set up the transaction that led to over $1 billion in losses (see paragraph #5). Goldman, Sachs has not yet denied that charge. If true, in my thinking that is a smoking gun for the guilt of Goldman, Sachs ... and Paulson & Co. in an insidious conspiracy to defraud investors. One simply cannot take undisclosed money from one party while purporting to work for another. Since Paulson & Co. paid the "fee" - how can they not be responsible, too ?
Why would an SEC commissioner vote not to proceed ? Both were Republicans. I suppose IF I was a conspiratorialist, I'd think they were paid off or in the pocket of the rich & powerful Wall Street crowd. But as I like to joke (with truth), I've seen black helicopters, so if I can't see a conspiracy, it's likely not there. In this case, I think not.
Perhaps they wanted the SEC to try to settle first. That is the prior SEC modus operandi aka m. o. aka method of operation. Maybe. But after the Panic of 2008 and all that pain caused by Wall Street and the beefers, why keep that old m. o. ? That did NOT serve the public in the past, but was a means for the clique of ruling class lawyers to keep nefarious deeds as quiet as possible. Hence IF that was their reason, it was wrong.
Some Republicans (and even some liberals) have a knee-jerk anti-government reflex action. That's not so bad to have. I have it, too, as a good Fraternal Libertarian. Government fails in so many things it purports to do. BUT any Republican or anyone else with a bit of historical knowledge should know that great Republican President, Theodore Roosevelt, led the fight to bust the big trusts who were strangling the nation to get more wealth for themselves. And one should note that the first Republican President, Abraham Lincoln, favored well-structured internal improvements. The simple fact noted above should have neutralized any knee-jerk reflex against a strong SEC move. Hence IF their knee-jerk anti-government philosophy was the cause for voting no, that was wrong, too.
Therefore I'm disappointed in the Republicans, just like I was on the first TARP vote, which they defeated for incorrect knee-jerk anti-government reasons. That was a massive error that helped let the Panic of 2008 grow to epic size. The markets have only just recovered to pre-first-TARP vote levels. The public really needs an open hearing on all the crimes of Wall Street. This should be a start.
Republicans, think about Theodore Roosevelt's leadership. Stop being stupid and rigid. Adopt some of Theodore Roosevelt's populism. That is the key to winning elections now. You have to be more "Pro common man" .. well, perhaps more like a Fraternal Libertarian :)
Word of the Day
"Marry" - interjection [$10] - this is use #2 in dictionaries; archaic (often used in Shakespeare plays as an interjection.
Marry (2) means expressing surprise, asseveration, indignation, etc. [Middle English from (the Virgin) Mary]
Sentence: Marry, why did those Republicans votes against charging Goldman, Sachs ?
Analogy for understanding its usage: mild interjections that are very common today are "Christ!" and "jeez" (from Jesus), or even "Jesus H. Christ" !! Even "gosh" and "golly" arose from "God!". In Shakespearean times, an interjection that arose from Mary was ... marry !
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