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Goldman Sachs, the lords of time By Julian Delasantellis Asia Times Online :: Asian news and current affairs
Good explanation of Wall Street trading and impact of high frequency trading.
Op-Ed Columnist - Rewarding Bad Actors - NYTimes.com
It’s hard to imagine a better illustration than high-frequency trading. The stock market is supposed to allocate capital to its most productive uses, for example by helping companies with good ideas raise money. But it’s hard to see how traders who place their orders one-thirtieth of a second faster than anyone else do anything to improve that social function.
Michael Lewis on A.I.G. | vanityfair.com
profile of AIG FP and speculations on why it failed, especially the personality of Joe Cassano.
Lance Mannion: Millionaires and the millionaires who love them
One financier essentially tells Sherman that the going rate for any job which involves being woken up in the middle of the night should be roughly $2 million a year — which is not the kind of attitude guaranteed to make you friends among, say, the farming community.
Human Sacrifice At The Altar Of The Cult Of Buoyancy | finem respice
So strong has been the indoctrination administered by what can only be called the "Cult of Buoyancy" that several of its most dangerous teachings slip by in broad daylight, totally unnoticed by even professionals who should know much better. The acolytes of Buoyancy, that is the unrelenting upward cultural pressure on equity prices and the marks of certain commodities (but not others), cannot be blamed entirely for the fervor of their belief. They have, after all, endured nearly three decades of constant and unwavering reinforcement until each of them has come to expect year after year of volatility-less gains, marching Madoff-like, ever upward without risk or variance.
Hussman Funds - Weekly Market Comment: Green Shoots over Thin Ice - April 13, 2009
Last year, I didn't think it was conceivable that policy-makers would attempt to address this problem by making lenders whole with public funds. This is an ethical abomination, putting the public in the position of absorbing the losses that should properly be borne by those who provided capital to these institutions. It is not sustainable. What it does is place the public in the position of losing first, but it will not, and cannot prevent the ultimate failure of the debt – for the simple reason that without restructuring, the debt can't be serviced.
Larry Summers, Tim Geithner and Wall Street's ownership of government - Glenn Greenwald - Salon.com
Bronte Capital: Watch those baskets: Why Citigroup should be allowed to merge with Wells Fargo
More bluntly I think the US should end this crisis with substantially fewer banks – which because they have a high degree of market power should be highly profitable. The high level of profitability will
(a). Reduce the incentive for banks to take excessive risks (if you have a goose that lays golden eggs it does not make sense to risk killing that goose), and
(b). Increases the chance that the banks can work through any problems that they do have (because the underlying franchise will generate enough profit to fill any holes).
Op-Ed Columnist - The Market Mystique - NYTimes.com
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But it has become increasingly clear over the past few days that top officials in the Obama administration are still in the grip of the market mystique. They still believe in the magic of the financial marketplace and in the prowess of the wizards who perform that magic.
The market mystique didn’t always rule financial policy. America emerged from the Great Depression with a tightly regulated banking system, which made finance a staid, even boring business. Banks attracted depositors by providing convenient branch locations and maybe a free toaster or two; they used the money thus attracted to make loans, and that was that.
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Much discussion of the toxic-asset plan has focused on the details and the arithmetic, and rightly so. Beyond that, however, what’s striking is the vision expressed both in the content of the financial plan and in statements by administration officials. In essence, the administration seems to believe that once investors calm down, securitization — and the business of finance — can resume where it left off a year or two ago.
To be fair, officials are calling for more regulation. Indeed, on Thursday Tim Geithner, the Treasury secretary, laid out plans for enhanced regulation that would have been considered radical not long ago.
But the underlying vision remains that of a financial system more or less the same as it was two years ago, albeit somewhat tamed by new rules.
Open Left:: Seriously, Give Us Our Bonuses, Or We Will Destroy the Economy
At the top of the list is the way that the financial services industry is directly threatening to blow up the entire private-public bailout plan unless they get their bonuses. They don't want any new regulations, any limit to their compensation, and even any angry rhetoric. They just want the government's money, no strings attached. And if their demands aren't met, they will destroy the entire country.
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This should also be a clear sign of the fatal mistake in giving the financial services industry any more money before new regulations and compensation limits are in place. Not only is getting even richer more important to them than helping the country, but the industry as a whole will actively work to bring down the country just to spite attempts to take away their bonuses. There is no way we should deal with institutions like these unless we have legal guarantees beforehand that they won't fuck us all over in 2009 just as they fucked us all over before 2009. Cries about the sanctity of contracts ring more than a little hollow when any attempt to put legally binding conditions on the money we give them are met with threats to destroy the economy.
Matthew Yglesias » Stiglitz Calls Geithner Plan “Robbery of the American People”
Meanwhile, I actually think the most distressing thing about the criticism from folks like Krugman and Stiglitz is what you can infer reading between the lines from how ferocious it is. They, and other leading critics, are acting like people who’ve been totally shut out of the consultation/communication loop. And it’s distressing to see people of their stature and expertise getting shut out while the administration works harder on kissing Wall Street’s ass to try to persuade the finance class to avoid deliberately sabotaging the economy.
US CDS above 100bps: it’s a MAD MAD MAD MAD World! « A Credit Trader
I think the confusion largely stems from people viewing CDS akin to insurance. Though this is an easy analogy to make, it is, in fact, wrong.
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- I don’t need to have a position in the entity’s bonds or loans in order to trade CDS on the same entity (while I do need to own the house I buy fire insurance on)
- As I mention above the vast majority of traders don’t trade CDS because of a view on default – they trade CDS because of their view on the level of CDS spreads expecting to lock in a MTM profit on the trade. Though you can probably save yourself some premium on fire insurance by installing sprinklers it’s clearly not as easy to do nor is it the primary motivation for fire insurance in the first place
There are two key differences between CDS and the insurance analogy:
They Tried to Outsmart Wall Street - NYTimes.com
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As Dr. Derman put it in his book “My Life as a Quant: Reflections on Physics and Finance,” “In physics there may one day be a Theory of Everything; in finance and the social sciences, you’re lucky if there is a useable theory of anything.”
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There are a thousand physicists on Wall Street, she estimated, and many, she said, talk nostalgically about science. “They sold their souls to the devil,” she said, adding, “I haven’t met many quants who said they were in finance because they were in love with finance.”
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Deep Capture Blog
Deep Capture is a work of investigative journalism examining the growing threat to our financial system posed by illegal naked short selling, stock manipulation, and the destruction of public companies.
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