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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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Sun, 05/09/2010 - 00:57 | 338735 WaterWings
WaterWings's picture

Caen has good crepes suzette. And nice college girls.

Sun, 05/09/2010 - 01:07 | 338744 faustian bargain
faustian bargain's picture

"Hope you make it."

heh're too kind.

Sun, 05/09/2010 - 08:34 | 338974 Miles Kendig
Miles Kendig's picture

Still dusting off your old jersey, eh?  Sure beats comparing neck tie prints.

Sun, 05/09/2010 - 08:54 | 339000 tip e. canoe
tip e. canoe's picture

"Makes me feel so....continental"

chindit, always knew you were walken in disguise:

Sun, 05/09/2010 - 01:29 | 338762 Brett in Manhattan
Brett in Manhattan's picture

Whenever I see the bald, ponytail tool in the screencap, I'm reminded of late 2007, when that same tool said that Citi was starting to look attractive AT 35!

Amazingly, all these idiots still have jobs on biz tv: bald ponytail, Mike "I have no idea what Peter Schiff is talking about" Norman, Ben "They're giving away the financials in Cracker Jack boxes" Stein, Tracy "Peter, You're so negative" Byrnes, and, of course Jim "Because of the fed's interest rate cuts, a recession in 2008 has been taken out of the equation" Cramer.

Sun, 05/09/2010 - 13:08 | 339404 Sisyphus
Sisyphus's picture

An excerpt from Mike Norman's latest blog entry.

The only real solution to this is if the ECB were to say, "We are going to buy all the debt that we need to buy to keep the system intact." (Debt monetization.) Then it would be game over, the whole problem would go away immediately. However, the ECB didn't even discuss the possibility of doing this at their meeting last week and they essentially told states like Greece, you'd better cut your spending and impose austerity measures.


Sun, 05/09/2010 - 01:31 | 338764 Fraud-Esq
Fraud-Esq's picture

I like Dylan a lot. I hope you all appreciate what's he doing with a wide audience and the implicit risks he's taking. I'm surprised he's made it this far. Doesn't GE still own near 50%? I'll do what I can if they try to nail him. It sounds like he's reading ZH too. Wouldn't surprise me. I heard about ZH just a few months ago from people plugged in who I respect. 

Sun, 05/09/2010 - 05:04 | 338844 huggy_in_london
huggy_in_london's picture

yeah every login comes complete with free tin hat, gun, ammo, duct tape, and jerry can of water....

Sun, 05/09/2010 - 10:26 | 339118 Almost Solvent
Almost Solvent's picture

You forgot the MREs and non-hybrid vegetable seeds.

Sun, 05/09/2010 - 02:09 | 338788 primefool
primefool's picture

Volatility versus Risk. Sure liquidity reduces volatility. But who cares. Volatility is not the problem. Volatility is a measure of how much things wiggle during normal times. Risk is how badly the system fails during the periodic abnormal times.

Looks like nobody chooses to see the difference. Look at the Basle regulations for banks. Look at the rationalizations for HFT.

Reducing volatility is like umm drinking the same brand of whisky every evening - no surprises. Saya nothing about your chances of a heart attack.

Sun, 05/09/2010 - 02:15 | 338789 Mark Beck
Mark Beck's picture

Nice summation.

It was asked, what is the real value of the economy?

This is a good question. But before I answer, I would have to ask, please define the word value and the word economy, as you understand them.

In broad terms when does mal-investment, crippled by inherent losses through the purchase of bad debt, dominate our economy? Well in the end, it can no longer be descriped as an economy. It is something else.


Dylan, you have almost connected the last dot.

You can do it.

The crimes have already been committed, the wall street banks are an extension of the Federal Reserve system. The FED is not outside the banking system, they are the BHC systemic regulator. The FED is only interested in enriching its member banks, and it will destroy our currency, our wealth, and the country in order to protect their member banks. These are patriots, but they do not pledge allegence to our nation or our people.

The FED has the real power in Government, because without the FED the politicians would not be able to finance waste. I do not really care what legislation you may focus on this week or next, when over the past year the FED has enriched itself and its member banks, of at least $300B +$1.35T dollars. Just take a look at the reserves at the FED, where did they come from?

Many of these banks were insolvent and somehow recovered to the point of massive reserves during a time of pathic real growth in the economy. How is this possible?

You try and reconcile, somehow, that this last bubble play was not the end game. But if you follow the shear massive amounts of wealth transfered to the member banks, it really does look like the last fleecing of America.

America will not recover from this loss of capital. The FED has spent our money, and as such, we cannot pay for teachers, or police officers, or schools.

You see the wealth of the country is finite. The states have been brought to their knees because there is a finite capacity to tax labor. The politicians talk about how the deficit will effect future generations, but this is just an abberation created by the FED. The fiscal actions of the administration and the squandering of wealth by the FED, will effect what happens today. The states are under forced austerity "today" while the FED has taken their citizen's wealth, and future wealth.

There it is, the truth.


I did not hear the term Front Running. But, this is what was described. It was really interesting to hear these savvy wall street guys talk, and yet they will not utter this pharse of obvious criminality.

Mark Beck

Sun, 05/09/2010 - 09:31 | 339043 FEDbuster
FEDbuster's picture

"When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes... Money has no motherland; financiers are without patriotism and without decency; their sole object is gain."
- Napoleon Bonaparte, 1815

"You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out."
- Andrew Jackson upon evicting from the Oval Office a delegation of international bankers. 1862

A "bust out" is a common tactic in the organized crime world where a business's assets and lines of credit are exploited and exhausted to the point of bankruptcy. America is being "busted out" by the Banksters.

Sun, 05/09/2010 - 10:32 | 339128 Almost Solvent
Almost Solvent's picture

Perfectly illustrated in the movie Goodfellas when they bust out that tiki restaurant then burn it down to collect the hazard insurance.

When the time is right they will burn down the stock market since there will be nowhere else to go.....

Sun, 05/09/2010 - 05:43 | 338862 pak
pak's picture

The very idea of the SPL program is to provide liquidity at tough times (on a good day, who needs "supplementary liquidity"?). However, on 6/5 SPL and HFT in general have failed to perform the functions which were thought to make them socially (economically) useful.

What makes matters worse is extreme oligopoly within the SPL, and that the mandated distinction between DMM and SPL is not being observed. That gives us one more reason to conclude that TBTF is also "too big to be taken on", which explains perfectly well the extreme arrogance we are seeing on their part.

It is true that HFT is not responsible for the crash. However, we could clearly observe two things on Thursday: 1) HFT operations serve no economic purpose other than transfer $ from "dumb money" to TBTF; 2) HFT operations are (at least potentially) a powerful TBTF blackmail tool against the society.

My points:

1) The TBTF with their massive blackmail/control/bribery arsenal cannot be taken on through any legitimate political/legal channel - which means we are moving towards pitchforks and torches. That in turn, requires a massive popular sensitization effort. So even if Mr. Ratigan is not 100% right on the causes of the crash, he performs a very socially useful function explaining the essence of HFT operations to the masses.

2) There is a clear limit to what TV shows can do. For example, they cannot tell the people to stay out of capital markets - because then nobody would need these TV shows in the first place.

Discrediting US capital markets is absolutely essential if we want to sanitize the financial system and world economy at large.

Sun, 05/09/2010 - 10:50 | 339152 Jim B
Jim B's picture


Very good piece

Sadly, the FED and US Treasury leaders have NO integrity.  They are self-dealing and corrupt.  The Politicians are clueless, but really appreciate the campaign contributions.


Any politician with an IQ greater than 50 should be forced to watch this piece, opss NEVERMIND!


This is why I am primarily invested in GOLD and foreign stocks with fingers crossed...

Sun, 05/09/2010 - 10:53 | 339161 johngaltfla
johngaltfla's picture

The systems, as designed worked perfectly. The inability of humans to understand the consequences of these designs is what created a nightmare that to this day shall only get worse, not better and continue to expand the violence when sudden moves to the downside occur.

Dylan's interpretation was well done and credit is due when it is due. And if anyone says "how could anyone know this would happen" then you are a newb to Tyler's site. He was a pioneer on the warnings and documentation of HFT and the consequences of what would happen during a black swan event. Now it's happened. Thank Tyler if you paid attention to what he wrote as he saved your ass and your portfolio if you listened.

Sun, 05/09/2010 - 11:46 | 339225 GFORCE
GFORCE's picture

So the market should be a fully efficient pricing mechanism and joe subprime can come home from work and profit from his stocks.?

Zh seems to attract bitches and losers.

Sun, 05/09/2010 - 12:09 | 339264 pak
pak's picture

No, they shouldn't, and they aren't, but there's a whole lotta nonsensical stuff that was 1) allowed; 2) promoted - because it was supposed to improve "efficiency" and "liquidity".

Sun, 05/09/2010 - 13:10 | 339412 Sisyphus
Sisyphus's picture

What are you? One or both?

Sun, 05/09/2010 - 13:36 | 339378 The Methanizer
The Methanizer's picture

What Really Happened On Thursday


It all makes sense. One thousand point drop caused by hitting the F10
key instead of the F9 key. You see, Bailout Bernanke has streamlined his
new portable Lenova Chinese computer, all the function keys have been
program to perform actions that pertain to his job and this analysis
has found out what they are;

F1 The increase speed button for Heildelberg 2000 F printing press.  
(Note that he has not installed the decrease button.)

F2  The exchange worthless bank CDOs for full value button.

F3 The exchange worthless sovereign debt for full value button.

F4 The buy button for US treasuries. (This key is starting to fade and is

F5 The real Federal reserve balance sheet. (When used, the computer will
usually lock up during the function.)

F6 Increase the discount rate key.( Never has been used and has a red
sticker warning " DO NOT TOUCH".)

F7 Decrease the discount rate key.( Ben keeps hitting the damn thing only to
have it return the error, " A NEGATIVE NUMBER ARE NOT POSSIBLE WITH THIS ALGORITHM",  He is contacting his fellow Chinese Keynesian to
correct this.)

F8 The Goldman Sachs button. (A standard E-mail to Goldman is generated
to show what buttons he has pressed during the past 24 hours. Some
anti-semites call this the "Jew Key".)

F9  Buy the SPY.

F10 Sell the SPY.

F11 Bernie's Fine Deli order form.

Ben, it is rumored, had just decided to order his pastrami and rye
sandwich from Bernie's (F11) and did not notice that he had hit the sell
SPY (F10) key. Only when Goldman e-mailed him asking what was going on
and why they were not informed (F8),that Ben noticed that he made the
mistake. Because of low blood sugar or something, he again tries to
order from Bernie's (F11) and unfortunately hits the Sell SPY(F10)
again. Panic ensues and Ben then hits the inform Goldman Key (F8) and
Goldman then begins to sell their proprietary holdings causing the
market to plummet. Within minutes Ben hits the buy SPY (F9) and inform
Goldman (F10) keys, Goldman relays to their clients that they should sell
at the days low and begins to buy back the proprietary equity they had
sold prior, leaving them with a tidy 5% return for the day.

Ben has moved the Bernie Deli key to the F12 spot.

We think that this mistake has been a revelation in a new trading
strategy for Goldman and will be used again in the coming month to strip
Goldman's high wealth clients on some of their money. So be careful...

Sun, 05/09/2010 - 13:48 | 339475 wackyquacker
wackyquacker's picture

as the young people say, OMG. Dude or dudette, you get the 'Gold Star of the Day' award.

Sun, 05/09/2010 - 14:21 | 339533 A_MacLaren
A_MacLaren's picture

"... deepest, most liquid markets... "

All sizzle, no steak.  Marketing hyperbole sans meat.

Next time I hear that I'm going to vomit.

Sun, 05/09/2010 - 18:11 | 339942 Gimp
Gimp's picture

Dylan is spot on showing the public the ugly truth, banksters, corrupt politicians, ineffective regulatory agencies, and fake markets controlled by HFT algos. 

I hope he does not ski, drive a car, mountain climb or engage in any other activity where an "accident" can happen. The wizards behind the curtain do not like to be exposed!

Keep it up Dylan but for God's sake be careful.



Mon, 05/10/2010 - 03:38 | 340650 wagefreedom
wagefreedom's picture

homies-- don't make this harder than it is. I wrote a slew of May puts w/VIX @40 against my shorts, and after the pop today/the next few days on the basis of nothing but hot air, I'm adding to my shorts. When the VIX is up >100% in a few days hedging with options is such a no brainer. One guy's opinion.

Mon, 05/10/2010 - 08:24 | 340923 Miyagi_san
Miyagi_san's picture

DR has redeemed himself but it was all about the, Fed Audit....the market is being held hostage.

Thu, 06/09/2011 - 17:16 | 1355802 sun1
sun1's picture

Its one of the good platform for awareness of people. Keep sharing such stuff in the future too. xbox 360 s

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