On Thu, 17 Dec 2009 21:10:31 -0600, F. George McDuffee
wrote:
snip
Well over 50% of the stock volume on the NYSE and possibly on
others is now generated by computerized high volume, high
frequency "flash" trading which is only a new "high tech," albeit
currently legal way of broker "front running" which the SEC used
to put people in jail for.
snip
Just came across this gem. Gives a whole new meaning to the
phrase "market maker."

http://www.telegraph.co.uk/finance/n...us-trades.html

Icap to pay $25m over 'fictitious' trades
Michael Spencer's Icap has agreed to pay the Securities and
Exchange Commission (SEC) $25m (£15.5m) after the American
regulator found that the world's biggest inter-dealer broker was
displaying "fictitious" trades on its screens to "attract
customer attention".
snip

How much more of the financial market run-up is due to simple
manipulation? Note that significant American financial market
news is again being only reported in the foreign media.


Unka George (George McDuffee)
...............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).

F. George McDuffee wrote:
Special for Ed and John (and anyone else that is trying to
understand what went wrong). A new study is out:

This Time is Different:
Eight Centuries of Financial Folly
Carmen M. Reinhart & Kenneth S. Rogoff
http://press.princeton.edu/titles/8973.html

For a video clip about their study see
http://www.pbs.org/newshour/business...rt-questi.html
snip
The authors dug through mountains of data on every financial
crisis they could uncover back to the 1300s, hoping to uncover
common elements. And uncover them they did: Rapid deregulation,
bubbles in real estate, and an influx of foreign savings are
often tell-tale signs of a financial crisis to come.
snip
======


Last week on Book TV Carmen Reinhart was on giving a talk about her book
and the data. Every one of the people I've seen talking about the
financial debacle say basically the same thing. It was the deregulation
of the markets that caused it. Today on Moneytalk Bob Brinker was saying
the same thing and that Glass-Steagal had to be brought back. As you
might expect the financial industry and their flunkies, the republicans,
are doing everything they can to go back to what they were doing before
the collapse. If we can't reign in the special interests who are
controlling the country we're destined to see the same things happen
again and again. God, I love democracy!


Hawke

On Sun, 20 Dec 2009 17:37:40 -0800, Hawke
wrote:

Last week on Book TV Carmen Reinhart was on giving a talk about her book
and the data. Every one of the people I've seen talking about the
financial debacle say basically the same thing. It was the deregulation
of the markets that caused it.
As I posted in response to Ed: In case you missed it see
http://www.booktv.org/Watch/11133/Th... l+Folly.aspx
whole thing is about a hour and covers their major findings. Dr.
Reinhart indicated they will be placing their data in the public
domain and posting to the web.
========
From the 700 or so years of data in their book, dating back to
the end of manorialism [1300s] and the rise of the money
economies, financial/fiscal debacles appears to be a three legged
stool in that there are three necessary factors, not just one
[deregulation].

The other two are a very significant long-term increase in the
current account trade deficit, and a huge increase in debt of all
types, particularly when this debt increase is funded from
sources external to the country.

In particular instances there are of course additional
contributing factors such as gross economic
ignorance/incompetence of the political leadership, possibly
combined with very high levels of fraud or the loss of a major
war.

You (and the talking heads) appear to be entirely correct when
you observe that Glass-Steagall must be reinstated. My only
caution is that Glass-Steagall must be expanded to cover the new
major financial institutions such as mutual funds, money market
funds, hedge fund, venture capital funds, private equity funds,
pension funds, etc., the proliferation of novel financial
instruments, and the rise of non-bank banks such as CIT, GE
Capital, and AIG. The CFTC modernization act of 2000 must also
be revoked to again regulate derivatives and commodities.
http://en.wikipedia.org/wiki/Commodi...on_Act_of_2000
http://en.wikipedia.org/wiki/Enron_loophole

Unfortunately, you also appear correct when you suggest that
these debacles will keep occurring, as there has been no
substantive legislative or regulatory changes (nor do any appear
to be scheduled) and/or high profile enforcement, i.e. Wall
Street "perp walks."


Unka George (George McDuffee)
...............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).

F. George McDuffee wrote:

You (and the talking heads) appear to be entirely correct when
you observe that Glass-Steagall must be reinstated. My only
caution is that Glass-Steagall must be expanded to cover the new
major financial institutions such as mutual funds, money market
funds, hedge fund, venture capital funds, private equity funds,
pension funds, etc., the proliferation of novel financial
instruments, and the rise of non-bank banks such as CIT, GE
Capital, and AIG. The CFTC modernization act of 2000 must also
be revoked to again regulate derivatives and commodities.
http://en.wikipedia.org/wiki/Commodi...on_Act_of_2000
http://en.wikipedia.org/wiki/Enron_loophole

Unfortunately, you also appear correct when you suggest that
these debacles will keep occurring, as there has been no
substantive legislative or regulatory changes (nor do any appear
to be scheduled) and/or high profile enforcement, i.e. Wall
Street "perp walks."

The thing that bothers me the most about this whole financial fiasco is
that the one thing we cannot afford to do is to say, whew, that was a
close one, and then go right back to what we were doing. But that is
what it is starting to look like that's happening. There are those who
want to impose new and stricter regulations on what the wheeler dealers
on Wall Street do. But there is the other side that wants a free
wheeling environment in which they can take all the risks they want and
if they lose their losses are covered by the government. The big
financial firms all want to go back to the old ways and as quick as they
can. The reason the big banks are paying back the TARP funds so fast is
just for this reason. They don't want any controls on them. The fat cat
bankers have the republicans and their lobbyists working feverishly to
prevent any new regulations from being imposed on them. The outcome of
this battle is going to end one of two ways. The financial industry wins
and they get to go back to the pre-crash days or they get put under
government control. If I was betting on the outcome my money would be on
the financial industry. That, in a nutshell, pretty much sums up
everything that is wrong with this country.

Hawke

On Tue, 22 Dec 2009 18:08:18 -0800, Hawke
wrote:
snip a bunch of interesting stuff
The fat cat
bankers have the republicans and their lobbyists working feverishly to
prevent any new regulations from being imposed on them. The outcome of
this battle is going to end one of two ways. The financial industry wins
and they get to go back to the pre-crash days or they get put under
government control. If I was betting on the outcome my money would be on
the financial industry. That, in a nutshell, pretty much sums up
everything that is wrong with this country.

Hawke
=========
Just in case you thought that this was somehow just a
national/federal problem, or that just one political party was
involved see
http://www.bloomberg.com/apps/news?p...d=aw3mVUS5Fx9w
snip
Dec. 23 (Bloomberg) -- State and local finances are in the worst
shape since the Great Depression, according to the National
Association of State Budget Officers, and you can’t blame it all
on the economy.

Irresponsible and negligent borrowing practices that wouldn’t be
tolerated in Singapore are costing school districts and
municipalities across the nation millions of dollars in extra
financing costs and termination fees. Nobody wants to talk about
it.
snip
Since the state authorized school districts and local governments
to use swaps and derivatives in 2003, Bethlehem has entered into
13 Qualified Interest Rate Management Agreements, the most of any
school district in the state.

Like so many municipalities across the nation, Bethlehem’s swaps
have wound up costing it money. On the two swap agreements
examined by the auditor (they have been terminated, the bonds
refinanced), the district paid $10.2 million more than if it had
sold a fixed-rate bond, $15.5 million more than variable-rate
debt without a swap. That $15.5 million would buy a new Dell
Studio 15 model laptop for each of the district’s approximately
15,000 students.
snip

Also remember that this is just one school district in one state,
and even there this is just the "tip of the iceberg." One of the
reasons that the state and local taxes have to keep going up.


Unka George (George McDuffee)
...............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).