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Dylan Ratigan's Explanation For The Crash

Tyler Durden's picture




 

...the former Fast Money lead man is actually pretty spot on. And for all you retail investors who think this market is anything but a two-tiered playground built now exclusively for Wall Street to fleece you every single day, our advice is to get the hell out. Everyone else already is... Except of course for the banks and the various 3-3,000 man quant operations, which are the only market participants left. We hope they cannibalize whatever is left of each other and blow themselves all up in the process. Whatever is left will have infinitely more credibility than the busted mockery of capital markets we have now.

 

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Sat, 05/08/2010 - 18:16 | 338360 huggy_in_london
huggy_in_london's picture

So this guy finally found religion?  That said, he's got as much credibility in my book as Cramer, although he's right in this case on the high-frequency trading, but hardly a new story... 

Sat, 05/08/2010 - 18:36 | 338385 ConfederateH
ConfederateH's picture

Huggy, I am still trying to digest the ZH outages on Thursday and Friday during the peak periods of NYSE flame out.  Tyler won't say anything about it, so at this point I have to assume that it wasn't anything as innocent as an overloaded server, a memory leak or a hardware error.

So my question is:  If TPTB can shut down ZH in the middle of a crisis, irregardless of the threats or bribes they used on Tyler,  could they not also force Tyler to change the tilt or even drop coverage of certain events?  And if this is true, how much credibility does ZH have?

Sat, 05/08/2010 - 18:45 | 338400 choob
choob's picture

Ha, that wasn't an 'outage'. Even a DoS attack would have had a bigger impact than what we had. I highly doubt anyone cares about shutting down a website.

Sat, 05/08/2010 - 18:48 | 338404 ZerOhead
ZerOhead's picture

Surely you can't be serious! After all... we are all Tyler Durden... except Ty that is... he/she/them are clearly someone else...

Sat, 05/08/2010 - 21:13 | 338546 Missing_Link
Missing_Link's picture

I AM SPARTACUS!!!

Sat, 05/08/2010 - 21:55 | 338583 faustian bargain
faustian bargain's picture

I'm Brian...and so is my wife.

Sat, 05/08/2010 - 22:40 | 338635 Bananamerican
Bananamerican's picture

for those who haven't seen it, this was Mish's take on "le crashe"


During yesterday's fast-moving midday market, NYSE specialists -- who oversee trading in individual stocks -- used their authority to call a momentary time out. The idea was to bring together buyers and sellers, and get their prices more in line with each other.

It happened in five Dow stocks, including 3M (MMM, Fortune 500) and Procter & Gamble (PG, Fortune 500), according to the NYSE, and in a good number of the listed stocks. The NYSE did not have a tally of exactly how many.

Years ago, when the NYSE dominated trading, such "time-outs" worked well at stabilizing stock prices.

But today, the NYSE accounts for only about 25% of the volume in its listed stocks. Much of the rest comes from computerized markets run by private companies -- and some of those systems did not take a time out yesterday.

So, as the NYSE paused for a minute or two at about 2:40 p.m. ET, the off-exchange computers kept searching to execute trades. They hit the best bids still standing, which in many cases were far below the prior price.

And in some cases, the off-exchange computers found no bids at all. When that happens, market-making computers see a zero bid, then offer a penny higher to capture the trade and collect a commission -- hence the trades of just one cent for several stocks, including Accenture (ACN), Boston Beer (SAM), Exelon (EXC, Fortune 500).

"Computers are looking for the best bids. The real best bids shut themselves down," one trader told CNNMoney.com.

"You had penny prints. The bid was zero. The algorithms were designed to penny the bids," said another trader.

The attempt to stabilize the market by timing out the human bidders made matters worse. The computers reacted by bidding $.01 when there were no other bids.

This was not a planned conspiracy. Rather, it was a natural occurrence after all the sell stops and buy stops executed, the NYSE paused, and the only game in town was computers bidding against computers finding no bids.

The only question is whether or not the computers did indeed in every case route orders to the best bid as required by NBBO National Best Bid and Offer rules.

I am continually amazed at how otherwise sensible people manage to come up with preposterous conspiracies when anything out of the norm happens.

Sat, 05/08/2010 - 23:38 | 338673 Clinteastwood
Clinteastwood's picture

Still......the point is that if there is so little liquidity (capital) in the market that no one wants 3M for more than a penny when everyone else is stopped out........not only is 3M stock only worth a penny.........it's game over for the stock market because almost everyone realized that it's an unsupported Ponzi scheme.  Nothing about this weekend's, or next week's artificial markets manipulations (by governments/central banks, etc.,) will change this perception.  Everyone will be heading for the exits.

Sun, 05/09/2010 - 04:11 | 338833 i.knoknot
i.knoknot's picture

exactly.

effectively, NOBODY on any of the non-NYSE market-making brokerages had ANY limit-buy orders waiting in the queue. at any price. and now we have proof. NOBODY was even fishing for deals with GTC orders. NOBODY but the top tier (prolly HFTs) are even in the game.

to me, this is bigger than the so-called conspiracy cited above. this is THE REAL nightmare any company owner who might be *needing* to raise more capital would consider the ultimate death-nell. there was no capital looking for deals. there was no capital at all.

the market is so broken, that nobody (auditably) was making their capital available to sellers. this isn't a theory.

once could argue that smart money now puts a couple of really low-ball orders on every stock in the dow/s&p, in case it happens again... but you could still lose money. this is not investment advice.

go ahead and buy low next week. dow 36000... here we come.

Sun, 05/09/2010 - 09:53 | 339070 downwiththebanks
downwiththebanks's picture

Spot on.

Sun, 05/09/2010 - 11:37 | 339213 WaterWings
WaterWings's picture

Scary. A very stunning take.

Sun, 05/09/2010 - 11:59 | 339244 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

It may be the proof we were looking for, but we already knew this anyway didn't we? Surely volume speaks for itself.

 

I still suffer Sara Connor syndrome. we still have the same problem: boobus americanus is still blind. Waiting for the new Simon Cowell show this Fall maybe?

 

Oh well Wake up the Sheeple, Save the World?

Sun, 05/09/2010 - 00:04 | 338693 Fraud-Esq
Fraud-Esq's picture

But, how could the NYSE not know that would happen? Like you said, they knew they only covered 25%, so they knew trading would continue and matters would get worse. Why pause 25% of the trading or the most efficient market and let the orders run around your system? I don't get it. If it's predictable, why did they do it? These people should KNOW this. This is what they do, 24/7. You can't tell me they don't run scenarios and tests. How could "what happens when we pause 25% of knife falling market" not be one? 

I don't buy that they paused not knowing. If so, they're incompetent. If not, you have to ask why. Perhaps they want to centralize things. They were out the same day blaming other exchanges, after all and seeking rule changes. I'd bet the devil is in the detail on this. Perhaps some people want some specific change. I don't believe they didn't know the effect of their pause.

Sun, 05/09/2010 - 15:46 | 339635 ZerOhead
ZerOhead's picture

PRECISELY!

"I am continually amazed at how otherwise sensible people manage to come up with preposterous conspiracies when anything out of the norm happens."

Personally I'm continually amazed when people ascribe "innocent causation" to multiple-sigma events that had the potential to handsomely profit those in "the know".

Just sayin'...

Sun, 05/09/2010 - 18:02 | 339915 Pat Hand
Pat Hand's picture

I'm with the non-conspiracy camp.  The NYSE only has control over their floor.  The SEC in its infinite wisdom has allowed massive fragmentation in the guise of supporting "competition".  NYSE worked, but BATS (to use an example) did not.  Call auctions work great in these situations IF all flow gets funnelled into them.

The market is broken, though, and I don't blame people for exiting.  I've just spent the weekend redistributing assets to make sure that most survive the meltdown. 

Europe has no credibility - bailout of greece will fail.

all currencies are bad, so the dollar (and yen for technical reasons) will absorb the flight from euro and sterling.  swissies are probably toast as well.

Massive asset selloff on the way.  Stay liquid, safe and nimble.  Hint: 10Y UST are only going to be "safe" for a few months at most

Sat, 05/08/2010 - 18:52 | 338418 doggis
doggis's picture

do you know of another site that questions the system 'corrupt' that is in place - more than ZH? ZH is greater than just TD - it includes all the readers and commentators too. if TD was failing the community in anyway, this community would detect it, and this community would voice it. i find this community, ZH, and TD to be very credible.

Sat, 05/08/2010 - 22:32 | 338627 citizen2084
citizen2084's picture

+1000

Sun, 05/09/2010 - 18:04 | 339920 Pat Hand
Pat Hand's picture

Exposing a conspiracy where none exists is not credibility building.

Sat, 05/08/2010 - 19:00 | 338430 Selah
Selah's picture

Irrespective or regardless of any hypothetical threats on "Tyler", I suggest that you read the manifesto:

http://www.zerohedge.com/about

I don't think that these folks are going to roll over easily.

Sat, 05/08/2010 - 19:00 | 338433 Tyler Durden
Tyler Durden's picture

May we refer you to our Full Disclosure notice:

You should assume that at all times
we are so totally just talking our book it would shock and awe you like
the unexpected, early-morning arrival of a cluster of BGM-109C
Tomahawks (were you a believer in the importance of "optics" that is).

If
we
make a off-hand remark about New Zealand sheep herders it's because
we are long New Zealand West Island Cold Kut (NZ-WICK) Wool futures and
Kiwi brand Condoms ("For it's pleasure").  If we are joking around
about Cliff Asness, it's because we have developed a synthetic short of
ARQ.  If we jest about Joe Sixpack, it's because we are trying to hype
our cheap-American-beer holdings so we can exit quickly.  Basically, we
are telling you about a position we believe in strongly enough to
invest in.

We've
always wondered this: Why would you want to read about a position so
uncompelling that the author doesn't have the stones to put their money
where their keyboard is?  Even if you elected to read such material for
entertainment value (what else is there anymore?) why on earth would
you ever consider it "more credible."

The
reality is, critical readers should read analytic posts and the rest of
Zero Hedge with the blanket assumption that the author is totally
"conflicted."  (Phrased more logically, that the author stands to
benefit from being right- imagine that).  This turns the conversation
to the content, and away from
the author, the author's biography and the contents of their IRA
account / blind trust.  This (the content) is, of course, where the
focus should be.  If you think otherwise you might be one of those
people who thinks it was a good idea for a news program hosted by Dan
Rather, and where viewers spend 66% of the non-commercial time watching
his mug, to be in HDTV.  If you still get something out of our writing
with the assumption that we are invested in our position and stand to
gain personally from you believing us, well, we've done our job.  If
not, then our being
"unconflicted" isn't going to change the fact that we have a weak
argument or poorly reasoned prose.  At least, if you're not one of the
"optics" idiots.

People, you don't test a safe under
ideal conditions for the safe and call it good.  You test it with all
the advantages to the burglar.  And then you let the burglar cheat.  If it still remains closed after that, then it's
secure.

Plus,
we just aren't going to spend the time checking to see if the third
largest vendor of XYZ, Corporation might employ someone we once had
martinis with.  (Again: Full disclosure... isn't).  We are effectively
guaranteed to have missed something else even if we discover such a
relationship and, frankly, we've had far too many martinis over the
years for this kind of search to be non-trivial.

 

...

As for the site outage, there is nothing sinister about hittng half a million page views per day when our server is supposed to have a radioactive melt down at half that number. We hope to boost our server redundancy soon. Something tells us the market will be very volatile in the coming days and years.

Sat, 05/08/2010 - 19:12 | 338442 Miles Kendig
Miles Kendig's picture

:)

Sat, 05/08/2010 - 19:43 | 338462 WaterWings
WaterWings's picture

If you could summarize the intention of the founding fathers that possessed the highest levels integrity it would be this paragraph:

People, you don't test a safe under ideal conditions for the safe and call it good.  You test it with all the advantages to the burglar.  And then you let the burglar cheat.  If it still remains closed after that, then it's secure.

The average consumer won't believe anything until it's tearing out their throat:

http://www.youtube.com/watch?v=XcxKIJTb3Hg

My attempt to elucidate Fs and Fy is: "Look at the bones!"

Sat, 05/08/2010 - 20:19 | 338491 ZerOhead
ZerOhead's picture

Classic Python! :)

Sat, 05/08/2010 - 21:12 | 338545 Crab Cake
Crab Cake's picture

Here's a cautionary tale for "investors" these days...

Monty Python Tale of Sir Robin

http://www.youtube.com/watch?v=BZwuTo7zKM8


 

Sun, 05/09/2010 - 08:22 | 338966 Rusty Shorts
Sun, 05/09/2010 - 09:17 | 339032 FEDbuster
FEDbuster's picture

Falling Bankster Swaps (FBS) now there is something to bet on.

http://www.youtube.com/watch?v=yge311sFhC8

Sun, 05/09/2010 - 03:16 | 338800 Miles Kendig
Miles Kendig's picture

Wings - Every Ranger knows to set a place at the table for Murphy.  I am sure this holds true for Tyler, Pilots, financial observers extraordinaire and British comedians as well.  Batter up!

Sun, 05/09/2010 - 11:46 | 339226 WaterWings
WaterWings's picture

Incoming fire has the right of way.

Sun, 05/09/2010 - 15:52 | 339641 Miles Kendig
Miles Kendig's picture

And the radio battery will fail just when fire support is desperately needed.

Sat, 05/08/2010 - 19:30 | 338456 AccreditedEYE
AccreditedEYE's picture

If we make a off-hand remark about New Zealand sheep herders it's because we are long New Zealand West Island Cold Kut (NZ-WICK) Wool futures and Kiwi brand Condoms ("For it's pleasure"). 

LMAO!!!!!! Oh God, I f-ing LOVE this site! LOL!!

Sun, 05/09/2010 - 13:22 | 339434 Hephasteus
Hephasteus's picture

I know that was the funniest thing I've read in ages.

Sat, 05/08/2010 - 20:29 | 338501 msjimmied
msjimmied's picture

Half a million page views a day. Wow. I remember when there were at most 5 to 6 comments on an article. Maybe something is right with the world, when people still gravitate towards excellence. Please, don't ever change!

Sat, 05/08/2010 - 21:07 | 338542 WaterWings
WaterWings's picture

There are also those (a la Sunstein) that would employ methods in the blogosphere to reduce serious comment sections to "meaningless chatter".

Sun, 05/09/2010 - 02:36 | 338801 merehuman
merehuman's picture

WaterWings, thats why i am being quiet from now on. Learned a hard lesson about context and how easy it is to be misunderstood. Reckon this is my last sound off to let you know why. Subleties get missed. Village Idiot made me to look like a hater and i am certainly not one. I am back to being a lurker.Bye

Sun, 05/09/2010 - 03:05 | 338818 Miles Kendig
Miles Kendig's picture

I have found translation to be one of my greatest hurdles as well. Don't stay too far away.

Sun, 05/09/2010 - 04:51 | 338839 i.knoknot
i.knoknot's picture

hell mh, just grab another nick/avatar and come back later.

i'll concede that you do get a big part of your life back by lurking, but your contributions will be missed.

put on some racing leathers and come back when life allows. don't let them troll you out.

cheers.

Sun, 05/09/2010 - 11:28 | 339197 merehuman
merehuman's picture

i.Knoknot, thank you for your support. Only thing i am against is Banksters and other liars.

Sun, 05/09/2010 - 11:50 | 339229 WaterWings
WaterWings's picture

merehuman,

Hope your eyeballs always stay with us! Loved the story about waking up wet; catching trains. Keep us all updated on coastal conditions. :-)

Sun, 05/09/2010 - 03:21 | 338815 Miles Kendig
Miles Kendig's picture

Cas Sunstein.  A name dark in treachery to free people everywhere.  If there ever were efforts of an individual to despise, Sunstein's certainly rank.  Mr Judicial Exclusion himself and as Tyler illustrates, a keen observer of optics.

Sat, 05/08/2010 - 22:28 | 338587 jdrose1985
jdrose1985's picture

Or are you so impressed with authority that you give respect and credence to all that claim it? Do you read everything you’re supposed to read? Do you think every thing you’re supposed to think? Buy what you’re told to want?

-Tyler Durden

Sat, 05/08/2010 - 22:12 | 338605 jedwards
jedwards's picture

Tyler, I love you guys, but you have got to realize you were offline for the entire time period what was supposed to be the culmination of EVERYTHING you have been talking about for the last year.  EVERYTHING you have been preaching about came to a head on Thursday and you weren't active.

That is a bloody shame.

I know it's expensive to run servers and what not, but you have to go talk to your angel investors or whoever has deep pockets, and get some more computing resources.  You may never have as good an opportunity as last Thursday.  Or you may, if things get worse. 

Seriously, plaster even more ads, whatever it takes to get the money you need.  I will be click on ads every time I log in, which is about once ever half hour.  If you need more money, have a fund raiser, we'll donate money if you give us a breakdown of your costs so that we know how much you need.

But for fuck's sake, having your servers down on 5/6/2010 is like Rocky falling asleep before the title shot with Apollo Creed and missing the entire bout.

Sat, 05/08/2010 - 22:17 | 338613 jdrose1985
jdrose1985's picture

You can donate to ZH thru the shopping cart, you sound like a prime candidate Jedwards.

Sat, 05/08/2010 - 22:41 | 338637 jedwards
jedwards's picture

Yes, as I've already said, I've bought one of their T-shirts, and I'm hoping they give figures on how much they need so that I can figure out how much to give.  If they make enough money from ads, then I don't feel the need to donate to them, I'll just keep clicking on their ads.

Also, I'm hoping they have an anonymous way to donate so that my name isn't associated with donating money to them.  I'll mail them an envelope with money if need be.

Now, will you donate to them?

Sat, 05/08/2010 - 22:57 | 338647 jdrose1985
jdrose1985's picture

Now, will you donate to them?

Absolutely, I consider it a privelege to donate to ZH. I have also been clicking a lot of ads for the last couple of months. Any idea on how much they get every time we click one?

Tyler & Co have knocked the cover off the ball with this site, I really don't think anything like this has ever been accomplished. This site even gives simple, uneducated people like me a chance to learn about our system to protect myself and others. The most important parts are that it's free and relies heavily on users to keep the site structure honest and totally branch out on every aspect of every topic presented here for discourse.

Will definitely be donating more although I have limited means compared to most here, I reckon.

Sun, 05/09/2010 - 00:31 | 338715 Tapeworm
Tapeworm's picture

Will it kill you to kick in fifty bucks for something that you find so valuable? How about twenty cents per day for the news and entertainment?

Sun, 05/09/2010 - 01:06 | 338743 polizeros
polizeros's picture

Even Bloomberg was having trouble keeping up during the meltdown. When a zillion people hit a site at once, it's going to slow down

Sun, 05/09/2010 - 11:46 | 339224 seventree
seventree's picture

This obviously is not on the same scale, but on the morning of 9/11 most web news sites were timing out for me, including CNN and NYT. However NYT soon became available when the replaced html with a page of plain ascii text, decreasing the per-request server load. But it is impractical for any system to be scaled to handle the maximum imaginable peak load. Even emergency call centers acknowledge this.

Sun, 05/09/2010 - 02:55 | 338812 kote
kote's picture

Call me selfish, but I refuse to donate to anything that isn't nonprofit - especially when it's run by (temporarily ex-) bankers.  Give me an audited financial statement and nonprofit incorporation and I'll consider donating.  The ads on this site are already borderline ridiculous.

Per the ZH disclosure page, this site makes plenty of money and Tyler blows it all on hookers.  Anything not spent on hookers is used for travel to network with bank buddies so he can get back in the business and leave the site behind.

Sun, 05/09/2010 - 04:18 | 338835 i.knoknot
i.knoknot's picture

parasites are are part of the equation.

you and half the GS staff when they get home each night

Sun, 05/09/2010 - 11:52 | 339234 jedwards
jedwards's picture

I have no problems with donating money if they need the money, I don't care if they're a non-profit or not.  I just don't know if they are making hand-over-fist from their ads.  If they are, then that's cool, I will click on more ads for them.  If they are struggling and need money, I will donate money.  I would just like some sort of statement from them letting us know their financial situation.

 

Like I said, I would prefer an anonymous way to donate, I don't want the Feds investigating me because I'm supporting a cause that is directly against their best efforts to defraud us.

Sun, 05/09/2010 - 12:50 | 339364 Orly
Orly's picture

You can donate through PayPal.  No one but your email account knows anything about it.

Oh and get a hat, too.  Mine came the day the SEC sued Goldman.  I am sure that with all the SHTF coming, yours will arrive on an historic day as well.

:D

Sun, 05/09/2010 - 01:20 | 338756 Trainwreck
Trainwreck's picture

Bullshit. It's a trivial and inexpensive effort to set up a little web site like this on Amazon and add autoscale so the fucking web server doesn't go down under load. This is, after all, a fucking block. It's not like we're talking a dedicated HFT battleship here. Lots of guys have much bigger loads on AWS and survive. You're either Cheap, Stupid or Lying.

Sun, 05/09/2010 - 04:21 | 338836 i.knoknot
i.knoknot's picture

would u set up a ZH-like shop in the US?

maybe just use google and google-apps... yeah, that's the ticket. plenty of bandwidth and no NSA (cas and crew) peeking in to see who's involved...

you dont know what you don't know.

Sun, 05/09/2010 - 12:05 | 339254 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

You're fucking clueless Trainwreck (or being sarcastic).

 

AWS is a fucking joke. Used them for years. they have their heads up their asses. If Jeff knew how bad it was he would clean house. He doesn't.

 

Tyler  go talk to KD about infrastructure. He managed to stay up the whole time.

Sun, 05/09/2010 - 03:04 | 338816 ConfederateH
ConfederateH's picture

Thanks for the clarification Tyler, it it reassuring to know that you didn't get a phone call from the IRS on behalf of the PPT.

As Marc Faber says:  "It is very dangerous in life to be right when the governments are wrong"

http://www.youtube.com/watch?v=A_L9adtXdk

Sun, 05/09/2010 - 06:04 | 338871 Mark My Words
Mark My Words's picture

I suggest you talk to Karl Denninger at Market Ticker!  KD had more traffic than you did over the past few days and he stayed up and fast.  See the link below!  Love you guys at ZH but you have to do this!  We are counting on you!

 

http://market-ticker.org/archives/2289-Thanks-For-The-Plug-CNBC.html

 

Sun, 05/09/2010 - 08:46 | 338993 lilimarlene1
lilimarlene1's picture

It's 8:45 on Mother's Day and all I want to do is read Zerohedge. I'm in love.

Sun, 05/09/2010 - 11:33 | 339204 seventree
seventree's picture

People, you don't test a safe under ideal conditions for the safe and call it good.

Well of course not. Such a low assurance level is only sufficient for missile defense systems.

Sun, 05/09/2010 - 18:06 | 339927 Pat Hand
Pat Hand's picture

Approach everything with skepticism.  "Trust but verify" works in many situations.  "Don't trust" takes care of most of the rest.  "Oh, OK, I believe you" will lose you your candy with no compensation.

"A _______ and his money..."

Sun, 05/09/2010 - 19:14 | 340097 CombustibleAssets
CombustibleAssets's picture

"An artist is a bloke who can hold two fundamentally opposing views and still function"-

Roy Bland,

Tinker Tailor Soldier Spy

Sat, 05/08/2010 - 19:52 | 338477 Hulk
Hulk's picture

Many other Financial sites down on thursday for extended periods.

Finance.yahoo being one

Sun, 05/09/2010 - 01:56 | 338779 cbaba
cbaba's picture

Yes, i agree, everywhere was down, not only ZH .

Sun, 05/09/2010 - 03:06 | 338819 ConfederateH
ConfederateH's picture

I agree, but ZH is a much bigger thorn under TPTB's saddle blanket than Yahoo or just about every other financial blog...

Sun, 05/09/2010 - 08:47 | 338995 lilimarlene1
lilimarlene1's picture

Yahoo had an article the other day explaining why higher unemployment is good! HAHAHA.

Sun, 05/09/2010 - 04:44 | 338838 laughing_swordfish
laughing_swordfish's picture

Also Stockcharts.com (intermittent), BigCharts, and MSNmoney.

Thinkorswim held up OK - it's what we use here at DKM

 

KrvtKpt laughing swordfish

Awarded RitterKreuz zum Eisenkreuzen mit Eichenlauben for meritorious actions on 6 May 2010

Sat, 05/08/2010 - 20:46 | 338521 dumpster
dumpster's picture

if this is true  lol so you discredit some one by innuendo and tap dancing .

you make this assumption .. your less than a troll but a one legged toad  ConfederateH

 

Sat, 05/08/2010 - 23:45 | 338678 Pedro
Pedro's picture

Zerohedge is the only truth out there in my book.  I missed ZH during those outages.  I had to resort to listening to CNBC.

Sun, 05/09/2010 - 02:02 | 338783 spooz
spooz's picture

If you compare him to Cramer, you haven't followed him.  Ratigan was one of the first in the mainstream media  to openly criticize the bailout, Goldman Sachs, the Federal Reserve, etc.  He was becoming more and more vocal on Fast Money and finally left. Since then I try not to watch CNBC since it usually results in me yelling at my television.  Ratigan resurfaced months later with his show on MSNBC.  You may think he's simplistic, but if anybody is going to explain things to the sheeple, so they can be angry at the right people, its Dylan. 

Regarding his "house of cards" analogy, I saw a poster on Seeking Alpha who described things in a similar way (below). The steady climb in equities over the last year has had such thin volume that it was analagous to a house of cards.  As a fundamental trader who has given up trying to figure out the market, especially with the actions of the Fed and government thrown in, to me the buildup has looked suspiciously like the housing bubble, which I also chose not to participate in.  

"Since we all have the option to guess what happen yesterday I'll throw my guess at you. The market fell out of bed due to a combination of HFT and low volume rally over the last year. The HFT has been used to create a nice steady upward price appreciation but with no strength of market participation. Its a kin to building a house that looks fantastic on the outside but in realty its built with no foundation on a fault line. One little tremor and the whole thing comes tumbling down. Ouch" -chazgil


 

Sat, 05/08/2010 - 18:18 | 338363 Crook County
Crook County's picture

lol at the fake house of cards

Sat, 05/08/2010 - 19:05 | 338436 derp
derp's picture

sigh... is this really what it has come to? Any purveyor of information that can reach the masses sinks to the lowest common denominator. House of card props, big foam fingers, Vanna White display girls, rhyming headline titles? Egad we are a pathetic bunch of animals. The subject at hand concerns the very root of people's livelihoods and the only way to make it sink in is to blast them with cheesy gimmicks? For Christ's sake look at the teaser headlines MSNBC is overlaying at the bottom of the screen! "Sex in Older America"!!! No wonder no one gives this more than a fleeting thought of concern. I've tried to spread the gospel from ZH to coworkers and if the analysis is longer than a paragraph they don't bother reading. We've hit a paradox; in order to get people to pay attention, information must be entertaining. However if the information is entertaining it can be treated as passing whimsical fluff not worthy of their attention. There is a secondary side effect of this infotainment system that leads people to believe if information = entertainment, then entertainment = information. I'm not knocking Ratigan or his attempt to buck the green shoots meme the rest of the media has been touting. I just think the problem is too complex and too systemic for the average American Idol viewer to care.

Sat, 05/08/2010 - 19:39 | 338464 WaterWings
WaterWings's picture

The banksters are hiding the truth in plain sight. Even if you show Fs and Fy this clip they'll just agree as if it's common knowledge - then strawman you to death to make you shut up.

The Ratigan cabal beat you to the punch:

http://www.msnbc.msn.com/id/21134540/vp/36522064#36522064

Sat, 05/08/2010 - 18:19 | 338364 AN0NYM0US
AN0NYM0US's picture

Buiter May 8

The fiscal vacuum at the heart of the Eurosystem

http://www.voxeu.org/index.php?q=node/3333

 

El-Erian May 8

A critical weekend for Europe and the economy

http://ftalphaville.ft.com/blog/2010/05/08/224356/guest-post-el-erian-on...

Sat, 05/08/2010 - 19:00 | 338415 doublethink
doublethink's picture

 

Buiter:

 

The Fed has compromised its independence and ability to achieve price stability in the medium and long term. It has done so by taking huge amounts of private credit risk onto its balance sheet without a full Treasury guarantee or indemnity.

 

Does Buiter mean that the US taxpayer is not on the hook for toxic assets purchased during the course of the bailout? It appears that the huge increase in the Fed's balance sheet is therefore leverage accruing to the Fed's owners (i.e., the banks). This would be good news for US taxpayers.

 

Sun, 05/09/2010 - 00:43 | 338725 Fraud-Esq
Fraud-Esq's picture

Just because the United States has an account at the NYFed doesn't mean I own the Red Roof Inn. The shareholders of the NY Fed own it. But, since they control the credit of the country, I own the problem.

Not enough has been written about this issue, glad you raised it. Answering this question usually makes people's heads explode. Then they realize there's a huge piece of dark matter sitting right in the middle of their democracy.  

Sun, 05/09/2010 - 09:44 | 339056 lilimarlene1
lilimarlene1's picture

 

I have worked at jobs like that: all of the responsibility, but no authority. That's a walkaway.

This is something we can't walk away from, though.

Sat, 05/08/2010 - 18:20 | 338365 Dark Helmet
Dark Helmet's picture

It's really simple...

1) America's economy, along with most of the western world, is built to run on $20/barrel oil (in approx. Y2K dollars). Oil is NEVER going to be that cheap again, at least not in real terms.

2) Governments and private entities (e.g. pension funds) around the world have made trillions upon trillions upon trillions of dollars of promises that cannot be kept. You are probably not getting social security, except maybe in worthless hyper-inflated dollars or IOUs.

3) We are pissing away about a quarter of our production on maintaining a vast global empire that doesn't really do anybody any good except defense contractors and the military-industrial-intelligence bureaucracy.

Add those three things together, and it's not rocket surgery.

Sat, 05/08/2010 - 22:13 | 338607 moneymutt
moneymutt's picture

oil will be cheap again when TPTB want it cheap...I vaguely remember Saudis being rich in 2002 when oil was $20 barrel, might not work for Venezuela...

I think we should develope options to oil, but I don't think oil is running out or will be that expensive to get...

Sun, 05/09/2010 - 01:01 | 338738 DaveyJones
DaveyJones's picture

when oil was originally discovered, it took on average one barrel of oil to find, extract, and process about 100 barrels of oil. That ratio has declined steadily over the last century to about three barrels gained for one barrel used up in the U.S. and about ten for one in Saudi Arabia (but they are lying).

Sat, 05/08/2010 - 18:21 | 338366 doublethink
doublethink's picture

 

A budget of $8 million for Phil? Ken Starr had $40 million to look into a blowjob.

 

Sat, 05/08/2010 - 21:24 | 338558 Husk-Erzulie
Husk-Erzulie's picture

Exactly. 

Sat, 05/08/2010 - 21:59 | 338590 ToucanSam
ToucanSam's picture

Can't have regulators snooping around where they shouldn't.

Sun, 05/09/2010 - 00:48 | 338729 Fraud-Esq
Fraud-Esq's picture

that 8M says it all, doesn't it. funny thing is, if you gave Spitzer subpoena power, half that money, a courtroom, open access contributions, he'd have the whole thing nailed in 6 months. It's plain, obvious and easy. He'd end big careers with just the AIG's emails alone. Starr needed $40 to go hunting in the dark. 

Sat, 05/08/2010 - 18:23 | 338367 Frederic Bastiat
Frederic Bastiat's picture

The argument against HFT needs to be a lot more solid.  While I am skeptical that HFT is good for our markets, lets not go the way of the CNBC drones and just call it bad for no reason.  Ratigan gives 2 reasons for HFT being harmful.  1. They trade really fast.  2. They "pick people off"--which I suppose means they take the other side of legitimate trades, that for some reason the other party didn't want executed.  

These obviously are crappy arguments, and if we want HFT stopped, then we either need to fuel the a propaganda campaign against it...or come up with some real reasons.  

 

Sat, 05/08/2010 - 18:33 | 338380 huggy_in_london
huggy_in_london's picture

yeah his reasons are stupid.  He should have said its giving a false sense of liquidity etc rather than say stuff like "pick people off"... but thats much more emotive isn't it!

Sat, 05/08/2010 - 18:33 | 338381 Clycntct
Clycntct's picture

In a effort to be civil.

Frederic Bastiat Go back and study the function of HFT and rephrase your corrected comment.

Sat, 05/08/2010 - 19:49 | 338474 Cheeky Bastard
Cheeky Bastard's picture

OK; if you have any doubts left about the role of HFT Algos, can you explain this to me; if their main and only purpose is to provide liquidity for the market as a whole and thus insure we DONT see the volatility as we did [or the down and ups] on May 6th then why the fuck was there a 30 second period where not even 1 bid was done. WTF was that all about, and where the hell were the HFT Algos for those 30 seconds. Also, can you explain to me how come a basket of stocks went down more than 60% and some stocks [Accenture for example] almost got wiped the fuck out and traded for a 0.01$ [the same amount the aforementioned HTF Algo books as a profit each time it front runs you because FUCK YOU HUMAN BEING HA HA HA]. The truth is that HFTs surve one purpose and one purpose only, to book a profit for the proprietary equity desk and to ramp the market higher by artificially bidding up a price. Mission fucking accomplished for both the FED, the Government and WS. Thank you very much; your next question please.

Sat, 05/08/2010 - 22:14 | 338608 moneymutt
moneymutt's picture

yeah, what you said.,,

Sat, 05/08/2010 - 22:37 | 338633 SantosLhalper
SantosLhalper's picture

The problem was that HFT pulled out of the market.  You can't have it both ways.  How can HFT have caused the crash if the crash occured b/c HFT wasn't there?  The problem was LRP's were hit on New York and rather than wait for New York to reopen, people routed away to ECN's where they are not guaranteed a fair and orderly market.  The market function properly.  The prints away from the market were all on ECN's while NY was halted.  Be careful what you wish for.  The specialists on NY are way bigger thieves than HFT'ers.  The option to trade on ECN's has greatly reduced the Specialists margins, which is money in the pocket of off floor traders.

Sat, 05/08/2010 - 23:04 | 338651 Cheeky Bastard
Cheeky Bastard's picture

How can HFT have caused the crash if the crash occured b/c HFT wasn't there?

Exactly. HFT is three of the four pillars which support US equities trading and the specialists account for sub-10% of the daily NYSE volume. Given that the dominating low volume days are completely dominated by HFT and the synthetic trading i can blame them directly for not providing the liquidity in a market where there should not be symmetry breaking [orderly bid-offer correspondence]. The absence of HFT during those 30 seconds yesterday does not free them from the guilt of causing high volatility and fast multi handle drops [at moments 10 sec charts showed -50 pts on 5 occasions]. If the argumentation for allowing the HFTs to dictate trading volume with the, almost monopolistic position, is providing the necessary liquidity so that days like these do not happen i see no need for them at all if they do not fulfill their supposed role and the role which, by the way, legitimizes their position in the market. How csn it be that there is not one bid in over a minute on the biggest exchange on the Planet Earth. Statistically there should have been some bids even if the djia was down 10k bips if by no one else then by some day-trading schmuck. But no since every bid gets frontrun by the algos and there was no algos to display bids yesterday even though i suspect there were bids done by market participants. This just shows you the vulnerability of the market and its dependence on algos. Well not dependence, more of a blackmail done by the big boys; its either give us what we want [front running, fatter margins] and all will be well, shut us down we bring down everything. It really is that simple, no ifs, ands or buts. Also the biggest proposal concerning the monetary policy, size of the banking institutions and WS regulations was voted on yesterday. Do you want to guess what the vote turned out to be. 

Sun, 05/09/2010 - 00:26 | 338710 SantosLhalper
SantosLhalper's picture

Firstly, day trading schmucks did provide bids in stocks during the free fall.  Traders in my office made small fortunes providing liquidity when no one else would.  Secondly, ECN's do not guarantee a fair and orderly market.  NYSE does.  When NY halts, and you rout away, you are guaranteed nothing.  This is the responsibility of the trader to know.  The crazy outside the market prints on ACN, RDN, EXC, and other stocks were off NY while NY was halted due to LRP being hit.  If you don't want to deal with HFT, rout to NYSE and deal with the specialist, who is a crook and his job is to steal money.  If you don't mind trading in the wild west, rout to wherever you want whenever you want.  Just know that ECN's  make no guarantees of fair and orderly markets.  Traders/investors need to take some responsibility, understand the market structure, and stop bitching about how the computers stole their money.  Get rid of HFT's and ECN, and you're back to specialists arriving at the exchange via helicopter.  Be careful what you wish for.  Would you rather have the option to trade with fast computers or thieves or be forced to trade with thieves?  HFT didn't cause a no bid market.  NY halted and people routed away to markets with no bid.  Liquidity providers don't cause market crashes.  Liquidity takers do.  Only those taking can affect the price.  

Sun, 05/09/2010 - 04:41 | 338837 i.knoknot
i.knoknot's picture

i'm not sure this response is in argument... what you say sounds better than most of what i've read. but...

those small fortunes your friends made were in the noise - i assume a coupla hundred-thousands... good on them. seriously. they were ready, they pressed the buttons, that was *real risk*. and they won.

and what if the market had kept going down. it could have.

the market we've been led to understand 'broke'. the real market 'spoke'. as it should be.

it does have a way of fixing itself, but that's not always pleasant.

i wish you well in all of your investments.

Sat, 05/08/2010 - 22:52 | 338643 leftcoastfool
leftcoastfool's picture

Man, Cheeky, you're firing on all cylinders today!

Sat, 05/08/2010 - 22:58 | 338648 nmewn
nmewn's picture

If one comes at this from the perspective that everything happens for a reason, no one can discount the possibility that the system needed fiat...real fiat, being held outside of the system.

What better way, than to devalue an "asset" for a short period of time...accumulate said "asset"...and then ramp the "asset" back up for later sale.

Fat fingers and "m" & "b's"...I usually use decimal points or percentages when transacting over ONE share...LOL.

Sat, 05/08/2010 - 22:07 | 338600 ToucanSam
ToucanSam's picture

What do you think most retail investors will understand more readily:

"HFT is really fast and pick people off"

or

HFT is the ability of very fast computers running highly sophisticated computer algorithms that scan all of bid/ask data to try to determine where the paper is trying to get in the market.  Then these systems could come in front of these participants to scalp tiny bits of their money by front-running their order before anyone can notice.  They do this every sub-millisecond, generating tremendous profits for no real purpose except to force themselves in between the market and the participant.  HFT is neither a market maker nor a liquidity provider as they claim, but a mosquito, a parasite, a virus.  Always on the hunt for a host to suck off while providing no benefit and potentially sickening the host, maybe killing them.

Simple explainations keep people's attention and if they're curious, will seek out more information.

Sat, 05/08/2010 - 22:21 | 338617 moneymutt
moneymutt's picture

its interesting that technology took away Wall Street's overly compensated middle man positions in trading and they are now using technology in the form of HFT to take back same overly compensated skimming on transactions in supposed open markets.

Its also interesting when they lost their previous easy money they also turned to swaps, so they book major profits from old fashioned middle man activity in opaque, crony derviative markets.

Sat, 05/08/2010 - 22:17 | 338611 trav7777
trav7777's picture

HFT is bad because their predatory order flow interception led to the mass departure of liquidity providers and market neutral players.  WTF is the point of being a market-maker if an IB is out there with a HFT intended to destroy your spread and take it for themselves?  This is why liquidity has vanished.  The HFT phenomenon was never about cheating "retail," it was about capturing the bid/ask spread provided by neutral players by front-running the order flow and manipulating price to eat into that margin.

Sat, 05/08/2010 - 18:40 | 338372 ZerOhead
ZerOhead's picture

Awesome delivery! Looks like a coherent easily understandable message is finally getting out to the sheeple.

And in other news... looks like Louisianas "The Big Easy" is about to meet BP's "The Big Oily" (TM) in a no-holds barred deathmatch... Result?... "The Big Greasy" (Just have to wait for "The Big Breezy")

http://fromtheold.com/news/trajectory-bp-oil-spill-2010050818063.html

 

Sun, 05/09/2010 - 00:52 | 338727 WaterWings
WaterWings's picture

Yes. Would suck to be a smoker during "The Big Breezy".

Stop. Drop. and Roll:

http://online.wsj.com/article/SB1000142405274870396110457522547257751341...

Sat, 05/08/2010 - 18:31 | 338378 faustian bargain
faustian bargain's picture

I still maintain that the "flash crash" was a brief controlled glimpse of fundamental economic reality, and the ramp back up was the retreat back into Plato's Cave. The old Hank Paulson nuclear option. "Without us, you're toast."

Sat, 05/08/2010 - 18:42 | 338387 huggy_in_london
huggy_in_london's picture

"Economic reality" is trading a stock at zero or 1c?  Nah, I don't think so.  More like some program trying to dump something and is programmed to sell at market if px move is more than x% away (and obviously there weren't bid in the crappy electronic markets).  Mind you, I am not saying what happened was nothing for concern - it clearly is, but i think for different reasons than most would have you think.

Sat, 05/08/2010 - 22:19 | 338616 faustian bargain
faustian bargain's picture

Economic reality is the market is broken without the prop-up of the Fed, government, and Big Finance. They broke it, and they can't fix it. They can only maintain an ever-thinner facade of apparent functionality.

Sun, 05/09/2010 - 08:30 | 338969 tip e. canoe
tip e. canoe's picture

"They broke it, and they can't fix it."

all the king's horses and all the king's men couldn't put humpty together again!

Sat, 05/08/2010 - 18:47 | 338403 King_of_simpletons
King_of_simpletons's picture

Yup, the "flash crash" was the evil wink. Time to start fresh. First we need a good firing squad.

Sat, 05/08/2010 - 20:40 | 338518 Problem Is
Problem Is's picture

"First we need a good firing squad."

We HAVE ONE!
The SEC... better known as:
The Gang That Couldn't Shoot Straight

Sat, 05/08/2010 - 22:09 | 338601 ToucanSam
ToucanSam's picture

Reminds me of Stormtroopers and their extremely accurate blaster.

Sat, 05/08/2010 - 23:48 | 338681 WaterWings
Sat, 05/08/2010 - 19:11 | 338439 waterdog
waterdog's picture

I agree, this was just a dry run to see how the machines will react and what the floor stooges will do. Terrorist have nothing over us. Liquidty by 2:56 PM?, no problem.

 

Sat, 05/08/2010 - 18:48 | 338406 SantosLhalper
SantosLhalper's picture

Blaming the market selloff on HFT does not hold water IMO.  I was at my desk watching a bunch of Level II's during the selloff and here is what I think happened.  As the market began to selloff vertically, institutional selling instigated more and more institutional selling due to stops being hit and margin being called.  The sell volume was so extreme that 2 things occured.  1) Many widely held institutional stocks (ie PG) hit their liquid resistance points (LRP's) on NY.  The specialists or DMM's halted these stocks to reopen them when they could find the right price at which to do so.  When LRP is hit on NY, ECN's still trade as traders speculate on where the NY reopen will occur.  But since the volume and volatility was so extreme, the ECN market makers, primarily HFT's, shut off their machines and stopped trading.  This meant that the ECN market for stocks while NY was halted was extremely thin.  Professional traders were not the ones printing way away from the market as they would not have re-routed off NY to the ECN as that would have been suicidal.  However, if you place a stop order in a retail account you do not have the option of where you route.  So these far away retail stops were triggered off New York because the discount brokers send those orders to wherever they can get filled.  Since HFT's were off, there was no liquidity in some stocks and these stops ripped all the way down the book, in some cases to zero.  So, IMO, it was not HFT that caused the meltdown.  It was the failure of the specialists to make markets for those 90 seconds, and the inability of retail players to choose where they rout their stop orders.  This is just speculation but I think it's more comprehensive than many of the current explanations being offered.

Sat, 05/08/2010 - 19:11 | 338438 huggy_in_london
huggy_in_london's picture

thats basically what the NYSE say happened....except what i saw from them wasn't so detailed!

Sat, 05/08/2010 - 20:51 | 338529 Gen X Gen Y Hybrid
Gen X Gen Y Hybrid's picture

This is to me the most logical write-up on this, which makes sense and is more than just a theory.

The big question that is banging around in my head is "can't all of these trades be easily researched?"  For example, all you would need to do is trace who was on the buy and sell side of some "spot check" transactions (e.g. the penny trade incident).  Can't these be traced all the way back not just to the brokerage but to the consumer or place the trade happened from?

 

I have found in my profession when doing data analysis and solving software and program problems is that you take one example and explain it from 360 degrees and usually when you fix that one, it solves all the rest.  Of course, this is exponentially more complicated, but don't we have regulatory bodies who have the authority AND ability to trace these "suspect" transactions back?

Sat, 05/08/2010 - 20:57 | 338534 SantosLhalper
SantosLhalper's picture

All of these transactions can be traced back to the firm that initiated them and the clearing firm.  I have no doubt that NYSE, NASD, CME, and the ecn's have done exactly that.  What they claim, that the market's functioned as they should have, I believe them.  Since they are all SRO's, they busted trades anyway b/c they want to instill confidence in their markets and the circumstances were extenuating.  The public will never know who initiate the trades b/c 1) the exchanges do not share this type of information, and 2) it's likely irrelevant. 

Sat, 05/08/2010 - 21:36 | 338572 Gen X Gen Y Hybrid
Gen X Gen Y Hybrid's picture

I agree with #1, but #2 (irrelevant) I do believe it is relevant.  FOr example, what if it is found out that a non HFT inside bank trading account was the only one who was able to put in those buy orders during the fall.  They bought up shares cheap where no one else could even get orders placed and when they orchestrated the fall.

I read on another Blog about a guy who was not around but had stop orders on AAPL at 223.  It filled at 212 or so and when you look around it was way back above that.  Tell me who was able to buy those AAPL shares at 212?  Finding this information out for me will be telling.  Since this price wasn't 60% outside of the trading, the order stood.....

Sat, 05/08/2010 - 21:59 | 338589 TimmyM
TimmyM's picture

 "However, if you place a stop order in a retail account you do not have the option of where you route."

I believe most brokers will accept a "NY only" order. Maybe it is more a matter of knowing to do so? Tell me if I'm wrong.

Sat, 05/08/2010 - 22:23 | 338621 SantosLhalper
SantosLhalper's picture

I have a retail account that does not have this option.  Maybe some do, but I doubt Joe Sixpack who is long 800 shares of Accenture knows to rout to NY in times of extreme volatility.  With regards to the relavancy of who was trading during the market collapse:  All trades more than 60% away from the 2:39 price were busted.  The guys stepping in on the way down were speculators, day traders, and specialists.  Some of them were in my office.  A guy who sits across from me went market on AAPl at 200, got filled at 215, and piked out at 235.  The trades at these levels were coming from major clearing firms b/c all trades come from major clearing firms.  The market functioned as it should have.  Those willing to step in when no one else was got paid.  Those following the herd and dumping stock when everyone else did got burned.  the market's a bitch, isn't it?

Sat, 05/08/2010 - 22:23 | 338620 trav7777
trav7777's picture

This is a plausible explanation.

HFT was not to blame for the crash itself, it was to blame for the *conditions* which led to the crash, those being the mass exodus of market-neutral liquidity providers.  HFT has systematically chased them out of the market by finding ways to exploit the order flow to capture their margins.  If being market neutral turns no profit, then you exit and with you whatever liquidity you may have provided.  Then, when something like 5/6 happens, there literally is nobody standing there to make any kind of market.

Sat, 05/08/2010 - 22:25 | 338624 SantosLhalper
SantosLhalper's picture

Totally agree, but the market is what it is...  Blaming market structure for a selloff is sort of like blaming beach erosion on the ocean.

Sat, 05/08/2010 - 18:49 | 338407 tranchefoot
tranchefoot's picture

Nah.  Dylan's wrong.  The real reason for the flash crash is that the primary dealers contracted though the Supplemental Liquidity Program to provide liquidity in just such a scenario decided to go on "strike".  Why?  To send a message to Congress about Brown-Kauffman.

Sat, 05/08/2010 - 18:54 | 338421 Conrad Murray
Conrad Murray's picture

Egg-Sachtly

Sat, 05/08/2010 - 18:52 | 338417 bayoutradder
bayoutradder's picture

If Dylan keeps this up he will be taken off MSNBC. Didn't he learn his lesson on CNBC?

Sat, 05/08/2010 - 18:55 | 338423 Conrad Murray
Conrad Murray's picture

Good.  Then FBN could pick him up and I wouldn't have to feel dirty whenever I wish to see what he has to say.

Sat, 05/08/2010 - 20:37 | 338512 FEDbuster
FEDbuster's picture

I DVR the show now.  Never thought I would DVR an MSNBC show, but Dylan is doing some good work.  Glenn Beck has his days, too.  Both are like watching porn, just fast forward to the good parts.

Sat, 05/08/2010 - 21:47 | 338577 Husk-Erzulie
Husk-Erzulie's picture

Bloody brilliant.  Should be a primer for anyone intending to involve themselves with politics or finance.  (pun intended ;-p )

Sun, 05/09/2010 - 08:34 | 338975 tip e. canoe
tip e. canoe's picture

"The proper strategy is diversion. Sharks can be diverted from their organized attack in one of two ways. First, sharks as a group, are prone to internal dissension. An experienced swimmer can divert an organized attack by introducing something, often minor or trivial, which sets the sharks to fighting among themselves. Usually by the time the internal conflict is settled the sharks cannot even recall what they were setting about to do, much less get organized to do it."

good stuff

Sat, 05/08/2010 - 19:16 | 338449 10044
10044's picture

man, this guy is playing with fire. he's gonna get assasinated (I mean suicide!!)

Sat, 05/08/2010 - 19:20 | 338450 exportbank
exportbank's picture

There is no reason why liquidity should always be there. No law gaurantees that a buyer will be there when shares are dropping like a rock.. They turned off their computers so you can see the true value of those pieces of paper (or bits and bytes) that you own... It was a lesson in reality.

Sat, 05/08/2010 - 20:00 | 338481 7buy7
7buy7's picture

The Magician's Cave.

Wallstreet's New HFT Datacenter
http://wallstreetandtech.com/photos/NYSE-Datacenter/index.jhtml

I wonder how the security is...

Sat, 05/08/2010 - 20:34 | 338506 Problem Is
Problem Is's picture

"People, you don't test a safe under ideal conditions for the safe and call it good..."

Timmay G of US Treasury Fame Respectfully Disagrees
Or maybe Timmay disagrees with a screaming flip out a la the Sheila Bair episode...

In fact Lill' Timmay has made an entire program and career out of safe n' lame testing..

Stress test that on a ZH mug and smoke it...

Sat, 05/08/2010 - 20:41 | 338511 Mark McGoldrick
Mark McGoldrick's picture

I like Dylan.  He appears to have taken an entirely new direction with his career as a television personality since he joined MSNBC. 

But...

I cannot shake the idea that he was one of the most prominent talking heads on CNBC for years.  He anchored and popularized Fast Money--one of the most dangerous financial shows on television. Fast Money encouraged the gullible general public to treat their investments like a sporting event--The Fast Money Half Time Report (so gay), the cheesy knuckle bumps, constantly moving camera angles, investment advice that had a shelf-life of 12 hours, and the inability to stay on topic for more than 90 seconds.  Imagine John Madden producing a financial show. And what's with the pony tails on bald guys?

Ethically, what is the difference between Wall Street bookies who gamble with your pensions, and a knuckle-bumping TV host who encourages you to treat your portfolio like a fast moving sporting event?        

While I applaud Dylan's recent efforts to expose the dark corners of Wall Street, it will take some time for me to forget that he--just a short time ago--was responsible for luring his viewers into believing that the stock market is a game. It is not, especially if you're not capable of following the market tick by tick, like the pony-tail wonder twins.

Promoting that attitude about the market was careless and irresponsible, and created enormous damage that is difficult to quantify.       

 

Sat, 05/08/2010 - 20:47 | 338524 Problem Is
Problem Is's picture

"And what's with the pony tails on bald guys?"

You mean the greazzzy used car salesmen with bad ties and obnoxious sport jacket look?

Makes you need a shower just watching those Fast Money creeps...

Sat, 05/08/2010 - 21:00 | 338537 Caviar Emptor
Caviar Emptor's picture

Don't you get it? Dylan was that way when the show started, in October 2007! Those were the days of new highs on the Dow. He learned as America learned during 2008 just how deep the Wall Street/Washington rabbit hole goes and he unplugged from the Matrix. Now he's broadcasting the pirate signal in a way that's accessible to average Americans. May seem superficial to ZH heads but reaches out to and enlightens ordinary people who would otherwise be left in the dark.

Sat, 05/08/2010 - 21:30 | 338565 Rick64
Rick64's picture

+10

Sat, 05/08/2010 - 21:19 | 338555 Rusty_Shackleford
Rusty_Shackleford's picture

Well played, sir.

Sat, 05/08/2010 - 22:33 | 338628 moneymutt
moneymutt's picture

I think Dylan grew up, and he once put his conscience aside to do what he thought everyone wanted...when he realized he could make money saying what he really thought and people actually wanted to hear it for a change, he ran with it...kinda like a guy who started out his career selling wine coolers he hates to drink and then he gets a chance to sell his favorite beer...doesn't mean he had no integrity, just a creature of bull market, now a creature of bear market...

Like everyone was all happy about Matt Taibbi piece on GSacs in Rolling Stone...but really, people were exposing stuff like that 10 and 20 years ago, and Rolling Stone was not running financial stories back then...and would Matt be doing this if he didn't realize it was somewhat interesting to someone...

Sun, 05/09/2010 - 13:33 | 339453 Hephasteus
Hephasteus's picture

There's a process to understanding anything. Fight it, cooperate with it, ignore it. Until you do all those things. You don't know exactly what something is and what it is doing in your life. Some people are quicker than others though and don't have to do it all to see the whole of the moon.

Sat, 05/08/2010 - 21:04 | 338528 Caviar Emptor
Caviar Emptor's picture

Sorry guys, I got a different take on the causes of the crash. And I was experiencing it in real time, trading the entire day glued to my screens and all media, including during the crucial 20 minute period that NASDAQ used to bust trades (1440-1500). 

It was the real thing. It was a classic crash pure and simple, a crush for the exists with nobody on the bid. The system didn't fail so much as it worked too well as a "rational market". The physics could not have been any simpler: sellers overwhelming buyers in a massive and sudden way. It must have felt like that on Black Thursday, October 1929. 

ZH readers were already aware going into the day that the manic, 14 month rally was wobbling. Traders were taking off risk across the board. Troubling signs were beginning to appear that brought on PTSD from 2008. But one thing, one huge thing hiding in plain sight stands out to me as being the proximate cause of the panic that snowballed fast starting from around 1330 when I went aggressively bearish, going long naked puts, and it was this: The image of class warfare unfolding in real time on screens across the world as the giant demonstrations in Greece turned violent and ugly once more. 

The bids and supplemental liquidity providers got caught flat footed, lulled by months of silly low volume rallies to absurd valuations. In the final days of the rally there were clear signs of bubble behavior a la 1999. Yup. Even the Evil Empire and Squiddy have one vulnerability: when they get caught believing their own bullshit. They didn't gun the SPYs as the snowball was gathering steam. Then all hell broke loose as panic gripped longs and stops got triggered. 

It's very telling that they reacted so fast spreading phony rumors (that later got exposed) about "fat fingers" wirhin minutes after the crash. Then blamed computers. Then blamed each other (!) NASDAQ versus NYSE (next morning on CNBC). The level of denial is also telling: "It's just TOO much" (on the SPY pit tape presented here on ZH) and Cramer "PG just doesn't trade that way". Yeah. They must have said that on Thursday, October 24th 1929. I know I heard it before on October 19th, 1987.

 

Sat, 05/08/2010 - 21:20 | 338556 Implicit simplicit
Implicit simplicit's picture

I don't think it has to be either this reason or that reason. Things this complicayed are never black and white. many reasons sound logical and thweyn all proabaly have some truth.

Which butterly was it that flapped its wings in South America that caused that hurricane in Kansas again, or was it Texas?

Sun, 05/09/2010 - 10:05 | 339086 Reflexivity
Reflexivity's picture

+100.

The best 'reason' the media could give for the cliff dive in the markets:  The Dow was down 1,000 points at one point day because....well....because the markets are unknowable and are therefore unpredictable.  We have no 'reasons' to sell here.  If you want a cause for this affect, go somewhere else!

 

To be smart: admit your ignorance.  To be stupid: admit your intelligence.

 

Sat, 05/08/2010 - 22:44 | 338641 SantosLhalper
SantosLhalper's picture

From my seat on my trading floor I saw the same thing.  I've seen hundreds of charts that look exactly like the SPY from May 6th, they were just individual stocks were someone went market a huge amount of stock and overwhelmed the MM.  It was just that this was market wide and there were many large institutions dumping.  We will see many more charts just like this one in the coming years IMO.

Sat, 05/08/2010 - 23:59 | 338685 Rick64
Rick64's picture

I have a couple of questions  and observations regarding this reasoning. I looked at a chart of ACN there is 479,000 shares being traded at 12:36 p.m. (CT) this is very abnormal volume and the price fluctuated very little. The average looks to be around 55k . I am estimating the average(BTW this is on a 1 min. chart). Then at 1:48 p.m. CT we have it dropping to a penny from 40 something dollars on 57,942 volume. I know some of the orders got cancelled, but this still doesn't add up. This company is considered pretty solid.

 P&G considered a solid stock also had abnormal volume at 15:01 CT on may 5th 480,000. Yet on the following opening day the price didn't fluctuate that much. Then at 13:46 CT we have it dropping to 47.51 from 60 something on 257,000 volume.

I could see AIG or some of the other crap falling like this, but these were stable stocks and all of a sudden they free fell. Does this not look like someone gamed the system, is sending a message or both? Look at the volume for NYSE. Who benefits from this added volume? Rhetorical

 Volume on the NYSE has not broken 2 billion shares in back-to-back sessions in more than one year. What's more, neither of those two sessions have been options expirations sessions.

Sun, 05/09/2010 - 02:20 | 338794 SantosLhalper
SantosLhalper's picture

This happened b/c NY halted these stocks and traders routed to ECN's where there was no liquidity.  The HFT market makers on the ECN's turned their boxes off b/c the volatility was getting too extreme.  So NY halts, people rout away and go market on exchanges were there is no bid.  Therefore any volume rips down the book.  My charting package can show you NY prints vs ECN prints and the NY chart looks very different than the ECN+NY chart.

Sun, 05/09/2010 - 15:02 | 339587 Rick64
Rick64's picture

Regarding ACN

Ok so why the 479,000 at 12:36 p.m. CT and very little price fluctuation then at 13:12 CT 148,479 and almost no price fluctuation. About 36 min. later it nose dives to .01 . The market makers whole objective is to provide liquidity so during this time they just shut down? Looks like a concerted effort.

Sun, 05/09/2010 - 08:31 | 338972 Miles Kendig
Miles Kendig's picture

The soft underbelly of those who believe that the development and deployment of dynamic myths of the nation to rule forget that it leads folks to believe their own bull shit as Caviar so ably demonstrates. This condition lasts long after the myths that underpin the ruling elite have been reduced to steaming piles of crap laid bare to the whole of society, the ruling elite and willingly gullible excepted.

Sat, 05/08/2010 - 21:24 | 338560 Reese Bobby
Reese Bobby's picture

Plentiful credit at very low rates and a black-box driven stock market.  I for one am shocked that could have ended badly!

Sat, 05/08/2010 - 21:29 | 338564 P-K4
P-K4's picture

If you wanted to give "US Capitalism" a bad name and make a case for socialism, then a major screw up in the market (read: "a crisis is never to be wasted") provides an excellent opportunity, no matter how many insiders were profiteering from this.  Financial reform, like the Dark Side it is, will promise to save the individual investor and pension funds, much like the health care bill promised to  1.) reduce the budget, 2.) allow you to keep your own doctor, 3.) reduce fraud & wastes, etc.  

Financial reform will mean nothing but a takeover of monies in 401K, 403C, IRA, and Roth plans. It will again reward the guilty and punish the innocent. TBTF will become TBTFW (too big to phuck with).  Last but not least, it will create another 50,000 government jobs at the fed, state and municipal levels.

Sat, 05/08/2010 - 22:02 | 338593 Reese Bobby
Reese Bobby's picture

Good Point.  Your comment reminds me the Bush-Clinton-Bush-Obama crew are all about the power-grab.  And really, how much farther down the road will it be before "redistributing" individual capital become a "core value" of our one-party Federal Government.  Unless the voters would just wake up and...nah, that will never happen.  Must Have iPad...Must Have iPad...

Sat, 05/08/2010 - 22:03 | 338596 Buck Johnson
Buck Johnson's picture

I've always wondered what happened to Dylan Ratigan leaving CNBC and his show on that channel.  He most likely got quit/fired from the network, and he's telling alot about the market being on MSNBC.

Sun, 05/09/2010 - 02:12 | 338790 FEDbuster
FEDbuster's picture

Just a heads up, both channels end in "NBC".  Same network, different focus.  Dylan doesn't have to put on his cheerleader uniform at MSNBC, he can boo the players and the refs from the press box.

Sat, 05/08/2010 - 22:41 | 338638 moneymutt
moneymutt's picture

By the way, when Dylan was at CNBC he asked the question that the Office of Thrift Supervision and federal law enforcement should have been asking for over a decade: If you take insurance premiums on something that you can never make good on, "...Is it theft?" It was obviously a rhetorical question. He kept asking it...I suppose knowing if he said it rather than posing as a question he would be toast. I think Dylan saw behind the current and was happy to talk about it on MSNBC.

Sun, 05/09/2010 - 00:05 | 338695 chindit13
chindit13's picture

I am reminded of the Efficient Market Hypothesis, which essentially states that stock prices at any given time reflect all publicly available information.

On Thursday, Accenture traded $42 at about 14:40.  A few minutes later it traded $32.  Seven seconds later it traded .01.

Efficient Market Hypothesis.

But it has to be right;  I can prove it with mathematics and statistics!  Here, here....listen.  I'll explain...

First, assume infinite liquidity............(hey, it almost worked for Myron Scholes and Dave Modest at LTCM)

Disclaimer:  they were my professors.

Oh well, on to another topic......

---------------------

Dear Mr. Trichet,

I know things are a little tough this weekend, and you got the boys out dumpster diving for aluminum cans and such, but I have one small suggestion to put some capital back in Europe, albeit not necessarily in your bastard stepchild...er, the euro.  Call the Nobel Committee and tell them they are entitled to clawbacks on a couple of Economics Prizes.  Reality is not quite what we all thought it was, or rather the Unified Field Theory and quantum mechanics have as much to do with equity prices as publicly available information.  And frankly, while you're at it with Nobel, ask them to illuminate the criteria used in selecting the Peace Prize recipient.  That one seems even more odd than the Economics Prize.

I might also suggest that you consider selling off some of your artwork.  You folks have all manner of lovely paintings and such.  Too bad those nasty Brits walked off with the marbles they call Elgin, as the Greeks could hold quite the yard sale if they still had them.  If I may offer a little more advice:  don't be bad mouthing those speculators.  Some of them are HUGE in the art market, you know what I mean?  Just saying, you might need the customers.

Good luck scavenging.  You all have a nice little continent there.  I especially like those apple tarts I can get on the Champs Elysees with an espresso, a little Charles Aznavour in the background.  Makes me feel so....continental. Hope you make it.

 

 

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