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Bruce Krasting's picture




 

 

Progress

 

 

There is the appearance of progress on an important issue facing the capital markets:

 

 

Actually there is no progress at all. The CFTC’s Gary Gensler was just talking nice before the election. From the article (Link):

 

Gensler said he had a designed a broad package of potential rules, which address some of the dangers of high-speed trading, and he hoped to put it before the commission "shortly."

 

What a weasel. “Potential” rules? This is lawyer talk for “no rules”.

 

Gensler is “hoping” to put the rules before the commission? He runs the damn CFTC. Why is Gary  hoping to do something? He should just do it. And what is this business about “shortly”? The flash-crash was 30 months ago. What the hell has Gensler doing for all that time? Hoping? It gets worse:

 

This broad package, known as a concept release, is designed to initiate a public debate. Based on feedback the CFTC will get the agency may then move to propose new rules.

 

Concept release? How can they think this stuff up?

 

The “feedback” will come from the guys with the white spats who are running the robots. This topic is very complicated. There are very few outsiders who understand what is going on in nano-second land (I don’t, neither does Gensler). Tyler Durden at Zero Hedge knows as much as anyone who is an outsider. If he wrote Gensler on HFT, it would not be considered. Only insiders will write rules for this club.

 

Separately, the Chicago Fed wrote the SEC on the issue of HFT. The Chi boys are worried that the robots have no skin in the game. (What’s to worry?) Machines trade stocks in seconds, so they don’t create positions that are subject to margin requirements. The Fed’s letter summed this up pretty well:

 

"This strikes us as imprudent"

 

Imprudent? I looked it up:

 

Ill-advised, unwise, heedless, careless, rash, negligent

 

I think “negligent” is the best description of Gensler’s plan for “potential rules shortly”.

 

++

 

More Progress

 

For the past ten years thousands of accountants and lawyers have been working to design global standards for reporting financial information for publicly traded companies.

 

This is a big deal. It’s a once-in-a-century opportunity to re-write/up-date the rules for disclosure of key financial information. Uniform standards would (finally) allow investors (and regulators) to look across borders and make apples to apples comparisons.

 

Sound good? Forget about it; it’s not going to happen. “Why?” you might ask. The answer is the big US banks put the kibosh on the effort. The issue that blew the chance for global accounting transparency: (Link)

 

How to force banks to recognize losses earlier on bad loans.

 

 

 

Recognize losses early? No wonder the banks did not go for it. But tell me again why the US banks get to call the shots on this?

 

 

 

++

Incredible Progress

 

How about Face Book? The stock opened 25% higher and closed the day up a very impressive 20%. The catalyst for the big jump was evidence that the deep thinkers at FB have figured out how to make money on the back of mobile FB users.

 

The top line revenue from mobile was $115Mn for the quarter. A few seconds after the news, FB had tacked on $12Bn of market cap! It doesn’t matter that FB didn’t make a dime in selling those ads. Everybody loves the stock now. CNBC’s David Faber said (Three times!):

 

“I’m hearing that ‘Buy-side only’ funds are now getting involved.”

 

I suppose this is good news for Dave’s viewers. I’m thinking the dumb money has been in FB since the IPO, and more dumb money doesn’t make it smart.

 

Real smart guys, like Dan Niles, have played the short side of FB. Dan says he got his short off at $42 (Possible, but highly unlikely). On TV, Dan said that he covered his short a day before the big news. This guy is so smart that he not only cut his short, he put on a tidy long. I’m thinking fantasy-land.

 

With all the fast talkers, smart traders and dumb money involved at this point, the stock probably has found a floor. Me? I’m not convinced. FB is trading at 50Xs 2012 EPS and 40Xs 2013 EPS estimates. It’s currently valued at 16Xs revenue. All this for a company that figured out to put pop-up ads on a phone (and piss off its users in the process).

 

 

 

Unbelievable Progress

 

There was a terrible earthquake in Italy in 2009. 300 people were killed in Abruzzo, when the ground shook.

 

Today, the Italian justice system found six Italian seismologists guilty of manslaughter for having failed to warn the folks in Abruzzo that a quake was coming. The scientists are headed to the slammer for a six-year term.

 

The scientists were found guilty of providing:

 
“Imprecise, incomplete and contradictory information”
 

What would happen if the standard set in Italy for seismologists were applied to economists, Wall Street soothsayers, politicians and the technocrats who run everything these days?

The prisons would be full.

 

 

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Thu, 10/25/2012 - 17:45 | 2919936 Racer
Racer's picture

Why don't they just enforce the rules that are actually in place already?

Thu, 10/25/2012 - 17:17 | 2919845 Widowmaker
Widowmaker's picture

Obviously, the rules were mark-to-fantasy just like money Inc.

Thu, 10/25/2012 - 15:37 | 2919342 shovelhead
shovelhead's picture

Banjo music causes global warming and HFT flash crashes.

Outlaw Deadly Banjo Music.

The science is settled.

Naysayers need not apply.

http://profile.ak.fbcdn.net/hprofile-ak-ash4/277196_216151605108218_4872...

 

Thu, 10/25/2012 - 14:54 | 2919303 foofoojin
foofoojin's picture

what I don't understand is that i thought scientist are NOT suppost to agree completly. models change, understanding changes, rules change. eduacation and interpritation of results change. conflicting data sets happen all the time in science. figuring out what caused that conflicting data brings about new and imporved models.  but for the sake of argument lets say that criminal charges should be brought agianst those that cause earthquakes. ego this i see yesterday...

 

  http://www.ctvnews.ca/sci-tech/scientists-link-deep-wells-to-deadly-span...

 

so now do we throw all the farmers in prison or people for drinking the water. or just the goverment for allowing water to be drunk?  I guess we can now establish a cost in human lives for drinking water. do we make that a genereal tax or a city tax? or should we ban drinking water? this is heavy thinking.

Thu, 10/25/2012 - 15:33 | 2919407 Diamond Jim
Diamond Jim's picture

you got it FooFoo....when new data comes that can change models etc, scientists  publish their idea in the literature for all to see and put it up for the test by others. One reason i like working in this field. It took many years for Plate Tectonics to  be tested and accepted.

Thu, 10/25/2012 - 14:37 | 2919242 Bastiat
Bastiat's picture

I like WB7s Genssler Golum because Golum is as repulsive physically as Genssler is morally.

Thu, 10/25/2012 - 14:56 | 2919308 Panafrican Funk...
Panafrican Funktron Robot's picture

Seriously, anyone that has watched even a short video clip of Genssler would almost necessarily conclude that he is an alien.  

Thu, 10/25/2012 - 13:24 | 2918991 Joebloinvestor
Joebloinvestor's picture

They need to throw Phil Jones in jail.

Thu, 10/25/2012 - 13:17 | 2918963 Overflow-admin
Overflow-admin's picture

Hey Gary let's publish how much e-mails you already received around the theme... Let's audit you e-mail server!

An SMTP transaction consists of three command/reply sequences (see example below.) They are:

  1. MAIL command, to establish the return address, a.k.a. Return-Path, 5321.From, mfrom, or envelope sender. This is the address for bounce message.
  2. RCPT command, to establish a recipient of this message. This command can be issued multiple times, one for each recipient. These addresses are also part of the envelope.
  3. DATA to send the message text. This is the content of the message, as opposed to its envelope. It consists of a message header and a message body separated by an empty line. DATA is actually a group of commands, and the server replies twice: once to the DATA command proper, to acknowledge that it is ready to receive the text, and the second time after the end-of-data sequence, to either accept or reject the entire message.

Besides the intermediate reply for DATA, each server's reply can be either positive (2xx reply codes) or negative. Negative replies can be permanent (5xx codes) or transient (4xx codes). A reject is a permanent failure by an SMTP server; in this case the SMTP client should send a bounce message. A drop is a positive response followed by message discard rather than delivery. (Ref. RFC788)

If only I could plug next to your gateway I'd show a live statistic of RCPT acks sent to the outside and we'd have so much LULZ looking at the number of 2xx against 5xx :)))

Thu, 10/25/2012 - 13:01 | 2918927 Diamond Jim
Diamond Jim's picture

Speaking as a geologist...let me say that Climate Science is in its infancy. We have only really gathered accurate readings of temp, humidity, pollutants etc for the last 20 or so years. I would not trust data from the 1700s when ships took readings of ocean / air temp as they travelled the globe...accuracy +/- 5 or so degrees??  We have only begun to scratch the surface with data from oceans, from bouys or satellite. Atmospheric science  is just beginning to piece together how the atmosphere works (think accurate (?) weather forcasts). If climate science continues to fudge the data, who would believe them? Advances are being made, more data and time is needed. Seismology is in somewhat the same  predicament. Seismologists in Calif say an earthquake out there along the San Andreas is due, but have a wide window for error. They cannot make predictions that are accurate yet, if they started saying an EQ was due next wednesday, mass exodus would begin, if it were incorrect, lawsuits would follow, and no one would belive "chicken little" anymore. So they have learned to keep quiet and leave a big window.

As for licensing of geologists...it takes years of experience and a long exam to get the PG. One can still get employed, but just as it takes a while to get a Masters degree to show you know something, it takes expereince to become a professional. Licensing keeps the quacks at a lower level.

Thu, 10/25/2012 - 12:51 | 2918895 silverserfer
silverserfer's picture

the sooner you realize that it is all run as a casino by gangsters with prop desk regulators the less of your money they will steal from you.

Thu, 10/25/2012 - 12:22 | 2918826 Bear
Bear's picture

The CFTC, SEC, FASB ... they all are a joke. Controlled by the DC elite, NY elite, and maximized personal greed, they will not act right. Until assets are 'marked to market', nothing is real and the lies must continue. 

Thu, 10/25/2012 - 12:13 | 2918797 ebworthen
ebworthen's picture

Dark Ages part two.

Thu, 10/25/2012 - 12:10 | 2918777 Sutton
Sutton's picture

How could Dan Niles get a short off at 42?  Wasn't it illegal to short it when it ,ahem, when it was trading at that level?

Thu, 10/25/2012 - 13:37 | 2919042 The trend is yo...
The trend is your friend's picture

You are correct, Shorting was not permitted on the IPO day.  Dan Niles is full of shit. Unless he figured out a way of naked shorting I don't knoe about

Thu, 10/25/2012 - 11:41 | 2918666 SoNH80
SoNH80's picture

The wops don't like scientists (Galileo, these unlucky geologists), do like greasy mobsters, Commie operatives, and swishy ecclesiastics.  Got it.

 

 

Thu, 10/25/2012 - 11:29 | 2918616 Shankopotomus
Shankopotomus's picture

 Lite Spam? There's the answer to what's really wrong with the world. Good Grief.

Thu, 10/25/2012 - 10:48 | 2918465 larz
larz's picture

Gary needs a raise if you compare his comp to JPM and GS its miniscule (SAR FUCKIN CASM)

Thu, 10/25/2012 - 10:47 | 2918460 SubjectivObject
SubjectivObject's picture

WilliamBanzai7:

Update the bankster faces in that old Monopoly game for us.

Thanks.

Thu, 10/25/2012 - 10:27 | 2918384 Rainman
Rainman's picture

All good stuff today, Bruce.

Gary G. is a Squid sockpuppet for Lloyd, who happens to be the top swami for all things commodities at GS to this very day. HFT is scaring away Mom and Pop retail, so this gesture of caring about what the public thinks is just bad pre-election theater....hedging a Romney win and the prospect of a Gensler, Bernank, Geithner and Schapiro wipeout.

A survey of public attitudes initiated by Wall Street is always a hoax !

Thu, 10/25/2012 - 10:26 | 2918380 moneybots
moneybots's picture

"NIST Scientists [9/11 liars]

Amazing that NIST found that the easily observable out of control fires brought down the the WTC buildings.

Amazing that the truth makes someone a liar.

Thu, 10/25/2012 - 10:18 | 2918329 Benjamin Glutton
Benjamin Glutton's picture

What would happen if the standard set in Italy for seismologists were applied to economists, Wall Street soothsayers, politicians and the technocrats who run everything these days?

The prisons would be full.

 

I must ask if you (Bruce) regard Professor William Black to be a crackpot? After all you seem to be suggesting that we require some new standard to jail Wall Streetwalkers when in fact the good Prof. and former prosecutor has asserted on numerous occasions that many tens of thousands should already be in prison.

Oh, that's right...these predators are your friends. Just blame the captured and corrupt government.

http://neweconomicperspectives.org/2012/10/the-central-fact-that-folks-d...


Thu, 10/25/2012 - 19:17 | 2918325 Zero Govt
Zero Govt's picture

there's no solution... the ingratiated mafia will see to that

you could just pull your money out of these rigged bags of muppet juice they call stock markets and the alphabet soup of decrepit weasels they call regulators

everything BIG is rotten to the core ...go small, go loco (local)

All together now, 1 fingered salute to NYSE, NAS, S&P and bubble Bens Russel 2000

Suck air 

Thu, 10/25/2012 - 09:48 | 2918259 kaiserhoff
kaiserhoff's picture

Still, yet, another Jew in charge of all things money and media, but this very relevant fact is now mostly scrubbed from official bios.  Why is that, do you suppose?

Thu, 10/25/2012 - 09:40 | 2918240 Contrary Casanova
Contrary Casanova's picture

Now if they would just do the same with all the scientist promoting global warming and carbon credits. What a wonderful world this would be. I will pay the plane fare to send them to Italy.

Thu, 10/25/2012 - 09:34 | 2918230 notadouche
notadouche's picture

I wish the same trials would be for Global Warming Scientist.  A trial with Al Gore at the top.  Life in prison if your fudging numbers.  That may be the only way there is a factual accounting of this "science" led and erichened by politicians more than scientist.  It would be nice to have folks that claim doom and gloom concerning the subject have to put their freedom where there mouth's are.  Then and only then would it be more believable.  As it is now it's all about how much money they can extract from taxpayer's.  

Thu, 10/25/2012 - 13:16 | 2918962 hyperbole2000
hyperbole2000's picture

I'll take your challenge MFR. Scientist's know political bureaucrat's will review their work and dampen anything alarming.  They exclude outlyers that would increse the deviation from the average.  A form of self censorship.  MFRs like you who accuse them of fudging the data for grant money are muppet parasites and should be treated as such.

10 year after the forecasts are made the measured averages are actually higher than forecast due to the previous overzealous outlyer data cull.  This is a consistent trend that happens year after year. Do your own dillegence pinhead.

You are no better than risk hiding central bankers who gleefully priovide their orifices to the mega banks to white wash risk so that the masses can be explioited by the few.

Thu, 10/25/2012 - 14:46 | 2919269 Cathartes Aura
Cathartes Aura's picture

most scientists are in the employ of gov't. or at least peripheral funding by same.  that this fact affects their perspectives, and chosen research-es should be apparent, yet the white-coat worship is still thick.

Thu, 10/25/2012 - 09:36 | 2918219 mayavision2012
mayavision2012's picture

"Today, the Italian justice system found six Italian seismologists guilty of manslaughter for having failed to warn the folks in Abruzzo that a quake was coming."

and yet.....NIST Scientists [9/11 liars] and Christie Todd Whitman [9/11 air quality liar] are free as birds?!?  Get out the straight jackets.  We need to do some strapping up here.

Thu, 10/25/2012 - 09:27 | 2918212 MillionDollarBoner_
MillionDollarBoner_'s picture

"The prisons would be full" of ass-hats!

There...fixed it fer y'all ;o)

Thu, 10/25/2012 - 09:18 | 2918194 Water Is Wet
Water Is Wet's picture

"All this for a company that figured out to put pop-up ads on a phone (and piss off its users in the process)."

Hey, if you don't like free services, Tyler can point you to other sites and stuff!  Harumph!

Thu, 10/25/2012 - 09:13 | 2918182 sgorem
sgorem's picture

Love to read your posts Bruce. Don't always agree, but they still get the blood pumping and this one is no exception. Every time I see gary gensler's face, or hear his name, I want to kill something. "Weasel" is too polite for this scrotum sucking POS!

Thu, 10/25/2012 - 09:00 | 2918143 Mercury
Mercury's picture

If earthquake prediction is as accurate as the court seems to think it is then the obvious incentive is for seismologists to stay out jobs involving public responsibility and to get into the much better risk/reward business of trading on the info instead.

 

http://www.newscientist.com/article/dn22412-seismologists-found-guilty-of-manslaughter.html

 

Thu, 10/25/2012 - 11:49 | 2918289 Ckierst1
Ckierst1's picture

A problem with trying to stay private as a geologist is that many gummint entities are requiring that they be licensed by gummint to practice before the public (such as for permitting, hearings, documentary submissions, etc.). Those who become thus licensed are conferred the exalted title of "licensed Professional Geologist", as though they became magically "professional", a consequence of a gummint apotheosis. Really, it is a barrier to entry and an establishment guild with a conferred competitive advantage for its membership, including compensation. Competence doesn't necessarily follow. One assumes that judges would be able to dispense justice as "precisely" since they are similarly licensed??? Climate scientist??? Central banksters???

Thu, 10/25/2012 - 14:43 | 2919259 Cathartes Aura
Cathartes Aura's picture

that the "gummint" is in the business of awarding profess-shunall labels that confer "exalted titles" designed to elevate to "magically professional" is one of the gov't benefits with a long history of abuse and dis-info.

once you get the "title" you have to follow the rules, and that's where truth ends and propaganda begins - history has shown this lesson to be true, many are re-cognising the trend. . .

Gensler is a great example of captured.

Thu, 10/25/2012 - 11:54 | 2918697 Mercury
Mercury's picture

I was thinking more along the lines of practicing before Goldman Sachs; an entity which, despite its other faults, is perfectly capable of differentiating between an official blessing and competence.

Thu, 10/25/2012 - 08:59 | 2918133 falak pema
falak pema's picture

The law courts standing on their heads to protect the Oligarchs of the political and  banking sectors.

Witness the incredibe decision in France on JErome Kerviel : 3 years behind bars and 4.9 Billion euros damages!

Can a law court be more removed from reality than that? Apparently yes, in Italy!

Where will lightning strike next to protect the bad and the ugly and frazzle the good and the innocent (this does not include Jerome)?

In Beirut, in Damascus, in MAdrid, Athens or in any other town you may choose to name; there are no more safe havens except maybe Necker Island; land of Virgins and Samson Branson; and then some! It got burnt in the past. 

Thu, 10/25/2012 - 10:55 | 2918489 Hedgetard55
Hedgetard55's picture

Nihoa and Malden Island.

Thu, 10/25/2012 - 08:45 | 2918127 Commander Cody
Commander Cody's picture

WTF?  Japanese seismologists must now commit hari kari (or sepulcu?) for not accurately predicting the 3/11/11 earthquake.  On the financial side: There is no truth in disclosure.

Thu, 10/25/2012 - 08:49 | 2918134 malikai
malikai's picture

Disclosure: Long beans and rice. Short methane.

Thu, 10/25/2012 - 08:44 | 2918125 DeadFred
DeadFred's picture

Bruce, "But tell me again why the US banks get to call the shots on this?"

You forgot rule #1

The banks control the government not the other way around.

Thu, 10/25/2012 - 08:55 | 2918145 Imminent Crucible
Imminent Crucible's picture

I love Bruce and his articles, but his one defect is that he still has a touching, if wholly unwarranted, confidence that at bottom, the system isn't completely and totally corrupt. He still (I think) believes we are better off with a central bank running our money supply. He just wants it to be an honest, disinterested and uncompromised central bank. As if there ever was such a thing.

All we need is a simple currency board that reviews the ACTUAL GDP figures--not government borrow and spend distortions--and adjusts the money supply to match the growth of the economy--not one penny more or less.  That will never happen.

Thu, 10/25/2012 - 13:51 | 2919089 Overflow-admin
Overflow-admin's picture

I also want to be a honest, disinterested and uncompromise central bank. Can I haz more gold, bitchez?

Thu, 10/25/2012 - 08:44 | 2918124 BeetleBailey
BeetleBailey's picture

Myself, I'm waiting for the latest announcement from MillionDoucheBagDoofus on here concerning FaceFart.

I wonder if he exercised his high delta puts, and placed some new Delta Force One/Chuck Norris karate-chop putcalls along with his massive stake in the fucked up "company".

I guess we'll find out, Buffet-like, after the fact (made up story).

Thu, 10/25/2012 - 08:39 | 2918116 Ar-Pharazôn
Ar-Pharazôn's picture

italian seismologist did everything well. italian giudicial system just found its scapegoat.

 

swiss seismologist said they were worried for what happened in italy because the italians followed every single rule in this particular case.

 

dont spread misinformation plz

Thu, 10/25/2012 - 08:51 | 2918139 covert
covert's picture

there is a scam behind it. flash crashes are a good thing.
this will drive business to foreign markets. maybe officials
are receiving foreign bribes?

http://covert.ias3.com/expose/

Thu, 10/25/2012 - 08:34 | 2918112 LawsofPhysics
LawsofPhysics's picture

That which cannot be sustained won't be.  An adult conversation based on facts can be had and the rule of laws and contracts restored in a civil manner, or the mob will have it's way.  History is pretty clear on where this is all headed.

Thu, 10/25/2012 - 11:52 | 2918698 AetosAeros
AetosAeros's picture

"History is pretty clear on where this all beheaded."

There, fixed it for you :)

Thu, 10/25/2012 - 08:31 | 2918108 Roandavid
Roandavid's picture

We should have some trials here in America.

I'm thinking we start with Michael Mann.

Thu, 10/25/2012 - 15:06 | 2919337 Nobody For President
Nobody For President's picture

Naw - start with Corozine

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