The great gaming house we call the stock market is alive and well these days as traders, relieved to hear that Ben Bernanke has saved the world, return to their gaming tables to shake those securities dice, spin the stock wheels, and pull on the levers of the grifting machines.
I've always been confounded by the antics and ploys of the "insiders" who run the markets. They engage in a whole range of behaviors that, on the surface, look to be entirely illegal. Case in point: big firms have groups of select clients that receive quietly whispered telephone tips. These movers and shakers can weigh in to move markets and fill up commission baskets in no time at all. Think of Charlie Sheen playing trader Bud Fox from the movie Wall Street as he whispers "Blue Horseshoe loves Anacott Steel..."
Ping pong is another favorite game, when a couple of traders start buying a lot of shares, trading them back and forth at breakneck speed with a computer. This creates what looks to be a huge uptick in volume and liquidity in the stock to entice unwary buyers. Then the gamers dump their offers and, as there is no real volume behind a 1000 shares changing hands over and over, the real supply and demand dynamics assert themselves and the sucker who just placed a big buy sees the price of the stock suddenly jump before his order can be processed. More commissions.
"Bear Raids" are another favorite. You short a stock to death, making money when the bears pile on and drive the stock down. But you have to be careful not to start a stampede or trigger the kind of panic in the casino we saw last year. Market shaky? No problem Prohibit short selling on the big loosers and then pump up the futures market after hours to herd the Bulls back into the pen. The old "pump and dump" never fails to amuse and delight. And they say there's no "plunge protection team." Right?
Then we have the game Goldman was running with its nifty trading algorithims that were apparently being used to front run the ticker by a few milliseconds and give GS the edge that has kept it #1 in trading volume for years--until a man named Sergey Aleynikov ripped off their secret code and exposed the trick. Suddenly Goldman doesn't even make the top 15 for trading and the NYSE decides to conveniently stop reporting those volume data points.
And speaking of #1, the former head of the NASDAQ itself is presently "sitting on ice" in the cooler--old Bernie Madoff of the $50 billion ponzi scheme fame. They still haven't found out where the money went, who lost it all, and who gained it all. But according to Gordon Gekko of Wall Street, "Money itself isn't lost or made, it's simply transferred." I might beg to differ with Gordon--it gets made first, out of thin air, then it gets transferred.
In recent months we've seen how the great money transfer works as the private consortium of banks deceptively called "The Fed" has created and quietly "transferred" over $9 trillion to .... unknown parties. Thankfully Bloomberg won a freedom of information law suit that threatens to force the Fed to reveal just who got the money and why. It's that "why" that was the cause of all the secrecy. Truth has been sold short for decades in this market. Keeping the fat cat counterparties secret is all a part of the game as well. It's the same secrecy and deception that the banks engage in when they hide withered "assets" off balance sheet and pretend they are all worth 100 cents on the dollar. Why tell the truth when lying and deception is so much more convenient, and profitable?
Isn't capitalism wonderful?
I've always been confounded by the antics and ploys of the "insiders" who run the markets. They engage in a whole range of behaviors that, on the surface, look to be entirely illegal. Case in point: big firms have groups of select clients that receive quietly whispered telephone tips. These movers and shakers can weigh in to move markets and fill up commission baskets in no time at all. Think of Charlie Sheen playing trader Bud Fox from the movie Wall Street as he whispers "Blue Horseshoe loves Anacott Steel..."
Ping pong is another favorite game, when a couple of traders start buying a lot of shares, trading them back and forth at breakneck speed with a computer. This creates what looks to be a huge uptick in volume and liquidity in the stock to entice unwary buyers. Then the gamers dump their offers and, as there is no real volume behind a 1000 shares changing hands over and over, the real supply and demand dynamics assert themselves and the sucker who just placed a big buy sees the price of the stock suddenly jump before his order can be processed. More commissions.
"Bear Raids" are another favorite. You short a stock to death, making money when the bears pile on and drive the stock down. But you have to be careful not to start a stampede or trigger the kind of panic in the casino we saw last year. Market shaky? No problem Prohibit short selling on the big loosers and then pump up the futures market after hours to herd the Bulls back into the pen. The old "pump and dump" never fails to amuse and delight. And they say there's no "plunge protection team." Right?
Then we have the game Goldman was running with its nifty trading algorithims that were apparently being used to front run the ticker by a few milliseconds and give GS the edge that has kept it #1 in trading volume for years--until a man named Sergey Aleynikov ripped off their secret code and exposed the trick. Suddenly Goldman doesn't even make the top 15 for trading and the NYSE decides to conveniently stop reporting those volume data points.
And speaking of #1, the former head of the NASDAQ itself is presently "sitting on ice" in the cooler--old Bernie Madoff of the $50 billion ponzi scheme fame. They still haven't found out where the money went, who lost it all, and who gained it all. But according to Gordon Gekko of Wall Street, "Money itself isn't lost or made, it's simply transferred." I might beg to differ with Gordon--it gets made first, out of thin air, then it gets transferred.
In recent months we've seen how the great money transfer works as the private consortium of banks deceptively called "The Fed" has created and quietly "transferred" over $9 trillion to .... unknown parties. Thankfully Bloomberg won a freedom of information law suit that threatens to force the Fed to reveal just who got the money and why. It's that "why" that was the cause of all the secrecy. Truth has been sold short for decades in this market. Keeping the fat cat counterparties secret is all a part of the game as well. It's the same secrecy and deception that the banks engage in when they hide withered "assets" off balance sheet and pretend they are all worth 100 cents on the dollar. Why tell the truth when lying and deception is so much more convenient, and profitable?
Isn't capitalism wonderful?
