Our personal view is that one or two big trading desks just gave the futures markets a broad 'gut check' in commodities and stocks, selling oil and gold and silver, and buying equities.
Anyone who says that such things do not occur, often with an air of feigned sophistication and objectivity, is either naive or a poseur.
The 'game' is to dump a huge position into a particular market, driving down the price and running stop loss orders and small speculators and funds out, creating a short term drop in price and then buying back the positions at a cheaper price and pocketing the gain.
This scheme can be used over both short and long periods of time. Its is an old game, going back before even the great market 'pools' of the 1920's that set up the environment for the Crash of 1929 and the Great Depression.
The SEC remains blissfully asleep at the switch during the general looting of the country by the financial interests. The state of the silver market in the US under the guidance of the CFTC is a disgrace.
As traders we can live with it, but as citizens and parents we are appalled. It creates a general atmosphere of lawlessness and cynicism and amorality. It spawns larger and more sophisticated con games like Enron and collateralized debt, as the big financial houses become more greedy and emboldened. It is a source of corruption and decay in the politicial system. It corrupts regulators, politicians, and even the media.
It is one of the reasons why Glass-Steagall was enacted back in the 1930s, to prevent this predation by the large national banks using federally insured depositors funds and privileged access to cheap Federal Reserve funds as the instruments of their common cheats and frauds.
PBS: the RCA Stock Pool
The New York Times
Citigroup Regrets Bond Trades in Europe
By HEATHER TIMMONS
September 15, 2004
Citigroup told employees on Tuesday that it regretted executing a $13.5 billion bond trade that has raised the ire of rival traders in Europe and led to an investigation by regulators in Britain.
In an memorandum to all 40,000 employees of Citigroup's global corporate and investment bank, the chief executive for global capital markets, Thomas G. Maheras, said the trade was an "innovative transaction, that sought to access the liquidity in the European bond markets," but that it "did not meet our standards."
As a result, "we regret having executed this transaction," he said.
The bond sale, executed Aug. 2, caused widespread concern in Europe's markets. Citigroup sold 11 billion euros ($13.5 billion) of European government debt within minutes, mainly through electronic trades, then bought some of it back at lower prices less than an hour later, rival traders say.
Though the trades were not illegal, they angered other bond houses, which said the bank violated an unspoken agreement not to flood the market to drive down prices.
Citigroup "failed to fully consider its impact on our clients, other market participants and our regulators," Mr. Maheras said in the memo...
Citigroup Regrets Bond Trades in Europe
