Brainstorming Friday

1.The credit crunch has reached the next wave down this time triggered by sovereign defaults in Europe in America CRE will be the driving force combined with a mountain of foreclosures. 'No way out' - was a movies title and is the blunt reality as politicians are not prepared to do the necessary due to their corruptness and stupidity. Austerity and excepting a contraction after the stupid bubble building process of the FED and DC's ponzi scheme would be the only remedy. It is ann inevitable process of nature which goes through waves of expansion and contraction within a rythme which is a force of nature like the four seasons. Clinton started with the criminal scheme of creating growth which never existed by fabricating a statistical low inflation and GDP growth which never existed ( both are parameters of the same equation). To simplify it if you have 6% inflation and take it down by 4% from the one side of the equation it will automatically show up at the other side as growth of 4% - both being false. The evil trick is with a low inflation the FED can go ahead a pay low interest on the money it borrows which creates losses for Mainstreet as their savings receive interest below inflation. Plus the wages are raised according to an artifical low inflation in a way that in real terms you get lower salaries in real buying power. That is how most companies made more profit not because their SOB managers were smart but because they stole money from their workers pockets and paid themselves undeserved millions of bonus. The corporate world is not much different from the banksters - they go to Harvard to learn how they can steal money from companies legally.

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The debt crisis enveloping Greece could spread to hurt the banking systems in Portugal, Italy, Spain, Ireland and Britain, a leading credit ratings agency warned Thursday.

Moody's Investor Service said that although banks in some countries, such as Portugal and Italy, were not heavily affected by the past years' financial crisis, they could be impacted by the fiscal crisis if it spreads outside of Greece.

“A key factor determining whether contagion risk continues in this case will be the market's view of the likely success or otherwise of the recently agreed International Monetary Fund and European Union support package for Greece,” the agency said.

2. The baby HFT boys are sitting now in their wet panties and wonder what happened to their pathetic algos who seemed to make so easy money by churning the markets and creating artifical prices. What they definetly do not do is provide liquidity as we easily could see yesterday as real sellers had no buyers as all algo - machines had to stop themselves out at the same time. Goldman did loose money yesterday ( they were shorting vol all the time ) as well as most so called prop desks with the exploding volatility. This pathetic story about a fat thinger is anyway bullshit since every bank has autonatic limits for size which can not be overruled easily at all by a single trader. Yesterday was a mix of a decline overdue combined with HFT morons going wild and some smart HF might have thrown a trigger strategy for a stop loss action on top of it since they were busy put buyers the last 2 weeks. The fact that a blue chip like Accenture traded at 1 cent at some point down from 40 Dollar is a big disgrace for the American stock markets and Mr Change (Obama) should stop his phony salesmanship and get to the real stuff as his honeymoon with rising stocks is over - we all remember making him calls on the market. That was also the biggest market manıpulation I have ever seen by a government as someone loaded up tons of calls right at the low. We can without any doubt assume that PPT was active and got company by Goldman and JP Morgan as they did front-running on their orders at least but more likely they got confirmation that PPT would support the market by all means a got a free ride sponsored by taxpayers money in double sense - FED gave them money for free and PPT backstopped any risk. Most of the so called profits the banksters made were not based on skills and did not deserve any bonus therefor.

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The Day The Market Almost Died (Courtesy Of High Frequency Trading)

A year ago, before anyone aside from a hundred or so people had ever heard the words High Frequency Trading, Flash orders, Predatory algorithms, Sigma X, Sonar, Market topology, Liquidity providers, Supplementary Liquidity Providers, and many variations on these, Zero Hedge embarked upon a path to warn and hopefully prevent a full-blown market meltdown. On April 10, 2009, in a piece titled "The Incredibly Shrinking Market Liquidity, Or The Black Swan Of Black Swans" we cautioned "what happens in a world where the very core of the capital markets system is gradually deleveraging to a point where maintaining a liquid and orderly market becomes impossible: large swings on low volume, massive bid-offer spreads, huge trading costs, inability to clear and numerous failed trades. When the quant deleveraging finally catches up with the market, the consequences will likely be unprecedented, with dramatic dislocations leading the market both higher and lower on record volatility." Today, after over a year of seemingly ceaseless heckling and jeering by numerous self-proclaimed experts and industry lobbyists, we are vindicated. We enjoy being heckled - we got a lot of it when we started discussing Goldman Sachs in early 2009. Look where that ended. Today, we have reached an apex in our quest to prevent the HFT "Black Monday" juggernaut, as absent the last minute intervention of still unknown powers, the market, for all intents and purposes, broke. Liquidity disappeared. What happened today was no fat finger, it was no panic selling by one major account: it was simply the impact of everyone in the HFT community going from port to starboard on the boat, at precisely the same time. And in doing so, these very actors, who in over a year have been complaining they are unfairly targeted because all they do is "provide liquidity", did anything but what they claim is their sworn duty. In fact, as Dennis Dick shows (see below) they were aggressive takers of liquidity at the peak of the meltdown, exacerbating the Dow drop as it slid 1000 points intraday. It is time for the SEC to do its job and not only ban flash trading as it said it would almost a year ago, but get rid of all the predatory aspects of high frequency trading, which are pretty much all of them. In 20 minutes the market showed that it is as broken as it was at the nadir of the market crash. Through its inactivity to investigate the market structure, the SEC has made things a million times worse, as HFT-trading seminars for idiots are now rampant. HFT killed over 12 months of hard fought propaganda by the likes of CNBC which has valiantly tried to restore faith in our broken capital markets. They have now failed in that task too. After today investors will have little if any faith left in the US stocks, assuming they had any to begin with. We need to purge the equity market structure of all liquidity-taking parasitic players. We must start today with High Frequency Trading.