Thursday, 3 April 2014

Stock markets are rigged. How surprising is that?

Of course the answer is - not very.

Michael Lewis was once a bond trader with Salomon Brothers and is now a writer. He wrote Moneyball that spawned the movie starring Brad Pitt and Jonah Hill (he also wrote Blind Side, which I thought was shite, but that was probably Sandra Bullock’s fault). He’s also responsible for other excellent books such as Liar’s Poker and The Big Short.

Michael is a talented writer and has excelled at bringing some of the finance industry’s nasty unknowns into the mainstream arena. That’s not to suggest that his writings are without flaws, but to a person like me who is constantly amazed by society’s acceptance of corruption and scandal, he at least shines a public light on the darkness that is Investment Banking and the politicians that let them do as they please.

Michael recently released another book – Flash Boys; a Wall Street Revolt, and it has caused a bit of noise, even in mainstream circles. The book is about the emergence of ‘high frequency traders’ (HFTs) on stock markets, firms who are in the business of buying and selling stocks thousands of times a day, all at lightning speed and with the aim of skimming small profits from daily trading activity. Michael has been doing the rounds promoting his book and suggesting that the ‘flash boys’ are effectively rigging the markets in their favour. The HFTs have responded by suggesting that what they do is providing more liquidity to the stock markets and that everyone should just chill out because they’re doing everyone a big favour.

My opinion is that we hardly needed more proof of investment markets' brokenness. As I’ve said previously, finance and nutrition have some things in common. One of those things is that whatever is written in the press is usually mindless bullshit. Whether the journalists actually believe what they write, I’m not sure, but I do know that anyone who truly thinks that central banks, particularly the US’ Federal Reserve, can miraculously pull a few strings, buy shitloads of bonds and ‘save’ us all from financial oblivion is deluded or stupid, possibly both. 

If you need any evidence that mainstream economics is total voodoo and about as convincing as naturopathy, then you just have to read a few articles from supposedly intelligent people who think that this is exactly the sort of omnipotent power that Central Banks have - that the solution to debt and poverty is to massively increase your debt. That you should maintain deregulation of a system that is controlled by people who pay themselves insane amounts of money to trade against their clients. That breaking windows and digging and refilling holes will solve unemployment.

Similarly with the HFT thing, if someone truly believes that this sort of activity is all ok and above board, nothing anyone says is going to convince them otherwise. Regardless, will anyone in power do anything about it? I doubt it.

Maybe everything is under control and I'm just not smart enough to understand the 'science' of economics and stock markets. This nice German fella seems to understand it all. Wordy bastard, but his opinions are more believable than most.

I will probably buy Michael’s book and read it out of interest sake, but I'm guessing it'll just make me angry at the outrageous scumbaggery that is allowed to go on. 

If it is one more straw on the zombie camel’s back, then that’s a good thing. But I'm not holding my breath in the hope of the wider community realising it is just one small part of the whole dysfunctional, broken system.

5 comments:

  1. Check this out. Some get away with literally any crime in the world. Others get life with no parole. http://www.youtube.com/watch?v=maqSFuI7Uf4&feature=youtu.be

    Eddie

    ReplyDelete
  2. Thanks Eddie. There are so many of those types of stories it is embarrassing to be a member of the human race.

    I agree with one of the comments - "too big to fail, they should be too big to exist."

    It bugs me that so many people think Obama is fantastic because he's charismatic (and handsome?), but they ignore that he's let this sort of crap continue.

    If any masochists reading this are interested in keeping up with all the bullshit these crooks get away with, you may find this site informative - http://www.zerohedge.com/

    ReplyDelete
  3. Prime Misters and Presidents rule and control nothing ! Big money rules and owns everything from Banks to Governments to politicos. The trick is letting the working man or woman think they are in control of their own destiny and 'The Big American Dream' will one days be theirs.

    The trick for us is to refuse to buy into it. Become independent and get off the grid. Not easy, but possible. How many years have we worked to collect expensive junk ? Not for me any more. Less is more, less work, less worry, less tress. better health and time to smell the roses.

    Eddie

    ReplyDelete
    Replies
    1. And that you sound (to 'people') like a paranoid tin-foil-wearing wacko saying these sorts of things shouldn't matter considering these same people think you're a weirdo for not believing mainstream nutritional advice.

      "The things you own, end up owning you." So many good quotes in that movie, I can't help using them.

      Cheers.

      Delete
    2. if you listen to the "tea-tards" you'll think that Obama is a left-wing extremist, but he's really a moderate with WAY too many ties to Big Business of all kinds. [sigh] american politics is fucked up to an amazing degree -- this is a corporatocracy, and the conservative middle- and lower-classes don't seem to have a clue. :-(

      Delete