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I am seeing this same sort of 'gaming the markets' across many markets and stocks that the author notes below, especially in those markets amenable to leverage and electronic manipulation such as indices driven by futures, options markets, and ETFs which more closely resemble carney games than investment vehicles.
There has always been some element of this, but it is starting to become predominant and is driving out the honest trade and investment which cannot compete, in the same manner that the mortgage frauds corrupted and distorted a major sector of the economy and drove out conventional investment, regulation, checks and balances, regulatory oversight, and finally common sense.
It is getting to be a bit much, and is going to end badly. It will end badly because, like the shadow economy which has been crafted by the same makers, it is hollow, a facade, set up for the benefit of a few who transfer wealth to themselves from the many. As someone wrote to me today:
"There aren’t really many good options for people who just want to save some money for retirement and live their lives in the meantime. Not even social security or pensions for 30-year veteran teachers are safe from pirate raids and partisan deconstruction. Everything else available to the ordinary retail and retirement saver has become a Wall Street killing floor."
This is no accident. This is no error in judgement. This is not philosophy. It is a calculated white collar crime, that has co-opted many elements of society. It hides behind slogans like 'small government' and 'libertarianism' and 'free markets' but its real intent is to subvert the law and corrupt the processes of the economy and society. It is a type of financial coup d'etat.
The problem is not that there is too much government, but rather, the government which you have is tainted with corruption and needs a thorough cleaning and reform. Knock down all the fences if you will in the name of an unsustainable ideal, and give the ravening wolves free range for their plunder. And then be surprised.
Anyone who believes that not enforcing the rules, or even simply eliminating them, will result in the natural and efficient flow of productive activity has never driven on a modern freeway. This notion is just another version of a belief in the noble savage, the view that people are naturally good and rational, but are corrupted by rules and society. And those people who espouse this think that they are cavorting in some magical world with Peter Pan, instead of with some of the oldest and basest forms of evil against which good people have continually come together throughout history for their mutual protection.
And when the next financial crisis comes along, perhaps the people will not be so complacent and gullible, and see the real culprits behind the ideological scapegoats and fog of talk show hosts. But I'm not betting on it.
From FMX Metals Connect
Editorial comment: It’s becoming increasingly annoying watching dealers buy calls and sell puts the day before we rally $20, and then the next day buy put and sell calls before we drop $20.
Yesterday’s sell off from the 1415 area seemed almost orchestrated. At the very least, the futures selling came in during the thinnest trading hours.
While exchanges herald the benefits of electronic trading there is one thing wrong with it. Electronic trading minimizes the information leakage associated with using brokers, for sure, but it is also allows oligarchic organizations to anonymously manage price movement while hiding behind digital displays.
We won’t use the word manipulate, in part because of our libertarian bent, but it’s getting ridiculous. Where there used to be 50 5-lot thieves on the floor now there are five Too-Big-To-Fail banks with infinite fed-sponsored balance sheets doing whatever they please. The idiot locals on the floor, fragmented as they were, served to keep the big banks in check because there was transparency of price and to a large extent, the players were known.
This doesn’t exist anymore and we don’t see an end to it. Instead of thinning the forest for the trees, technology, regulatory and economic factors have killed the saplings and destroyed market diversity. This translates to a narrow and deep liquidity pool in trading venues; god forbid if one of them fails.
Never fear. The Big Banks will remain on the Fed's dole, and will be receiving nearly continuous bailouts until the currency and the bonds are exhausted, if things go according to plan. And then the reivers will move on.
A Simple Economic Solution to Hunger, Poverty, and the Problem of the Poor
An old woman came down this way,
She had no bread left to eat they say,
The bread was gobbled by the corporate men,
And she fell in the gutter in the cold and rain,
And was never hungry again.
At that the birds in the forest fell silent,
On every treetop is rest,
In every hilltop can be heard
Barely a breath.
The medical examiners came down this way,
'She is not just putting on,' they say,
The starved old woman was buried six feet deep,
And was never heard from again.
And the examiners smiled for the corporate men.
And the birds in the forest fell silent too,
On every treetop is rest
In every hilltop can be heard
Barely a breath...
Bertolt Brecht, Liturgie vom Hauch, 1927
The CFTC is accepting comments on the silver positions and market structure at the Comex. You may read about it and perhaps comment to the CFTC here.
From the quick bounce back it does appear that the big flash crash in silver in late day thin trading was a bear raid after all. We will know more when the Comex releases final numbers.
I had taken the opportunity on Thursday to buy the dip in silver at its gut wrenching bottom rather heavily, and with positions of leveraged instruments a little less ordinary. Most of those were sold today for a profit, and one must look forward to next week to see which way the markets wish to go. Monday is 'first delivery day' for the current contract and the ugly negotiation for cash settlements will begin in earnest.
The raid yesterday may have been a negotiation tactic. It certainly was a cheap and tawdry affair, obvious to all but the most willfully blind, and those in silent complicity. With the volume drying up in the markets making one's quota on the trade desks must be getting increasingly difficult.
It reminded me of playing a game with the little girl, who cheats in the most clumsy and obvious ways, thinking herself very clever. And if she loses, she complains and pouts incessantly until you cover her losses. Rather like the American crony capitalists, I think.
This goes out to the Boys on the Prop Trading Desks. Nice try this week, but kind of pitchy. And you definitely got no soul.
And as always, for Blythe. Thanks for breakfast, sugar bun.
A Special Request, Going Out To Max Keiser's Silver Liberation Army (SLA).
Stand and Deliver Next Week, Comex Bitchez...
John Williams of Shadowstats provides some interesting insight on the Dollar even as the US equity markets continue their levitation.
U.S. Dollar Losing Its Safe-Haven Status? With political upheaval surfacing in the Mid-East and North Africa, global capital increasingly has been moving into traditional safe-haven investments such as precious metals, or into safe-haven currencies such as the Swiss franc. What is of particular significance here is that flight capital has been seeking shelter outside of the U.S. dollar, which for decades had been the favored safe-haven currency. Against the U.S. dollar, the Swiss franc – another traditional safe-haven currency – hit a record high in the last day or so. Other than for the British pound, the U.S. currency has been losing exchange-rate value against the other major currencies (Australian dollar, Canadian dollar, Japanese yen and even the euro) during this period of mounting political instabilities. Gold has neared its all-time high, while silver recently has set a multi-decade high.
Oil prices have spiked in response to the various crises, adding further upside pressure to U.S. consumer inflation from oil supply fears and ongoing dollar weakness. As with the dollar-debasement efforts of the Fed, these inflation pressures reflect factors other than strong economic demand.
At the same time, the fragility of the faux U.S. economic recovery is becoming more obvious to the markets, with economic data increasingly surprising consensus forecasts on the downside, as seen in this week’s home sales and GDP revision reporting. In the months ahead, an intensifying “renewed” decline in broad economic activity should gain increasing market recognition.
Irrespective of whether the political turmoil spreads or dies down, irrespective of Saudi efforts to help contain panicked oil price rises, irrespective of short-lived fluctuations in exchange rates and precious metals prices, the U.S. now stands at a point where it is particularly vulnerable to an evolving global loss of confidence in the U.S. dollar. Heavy selling of the U.S. currency and panicked dumping of dollar-denominated paper assets, which could trigger U.S. financial market upheaval and the early stages of a hyperinflation, is possible at any time with little or no warning. It could be triggered by an unhappy economic or political surprise, or otherwise. Where risks remain high of U.S. financial turmoil unfolding in the months ahead, the onset of a hyperinflation still has an outside timing estimate of 2014.
Do You Need To Buy a Vowel? M_NETIZATION
Global Economic Recovery Plan 'B' - Seek Safe Havens For the Elites, Ignite the Derivatives, and Then Wait a Couple of Decades...
