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Lewis Explains The Casino: "Why Are You Even Arguing" That This Is Not Rigged?
Round 2 of the HFT vs Reality death match just took place on Bloomberg TV. Once again the clear winner was Katsuyama and Lewis version of the real world as Manoj Narang finally lost all credibility with the mind-0bumbing comment that "speed matters less in today's market than it has ever mattered." But the Tradeworx CEO was a background singer compared to Michael Lewis who explained in his clearest analogy yet how the casino works and then devoured the anchor's constant efforts to play down the "rigged" market perspective... "it's very clear that people are being front run in the market... so, why are you even arguing about this?"
Plenty of good stuff in the clip but this little exchange summed up the problem perfectly...
Lewis explains the game, exposes the rigging, and slams the mainstream media's "defense" of this...
LEWIS: So of course the tourists get fleeced all the time in the poker games, because they don't know the deck is rigged. The poker players pay the casino a cut of what they make. The casinos, operators, pay the tour group - the tour group company money to bring in the tourists.
So in this case, casino's the exchange, the poker players are the high-frequency traders, and the tour group operators are the banks and the brokers that handle the stock market orders. And I think the analogy is pretty close. So is that rigged? Is that a rigged game? I think it is a rigged game.
SCHATZKER: Well, it's rigged only inasmuch as...
LEWIS: Why are you so invested in the idea this is fair? Why are you even arguing about this? It's so clear.
SCHATZKER: Me?
LEWIS: Yes, you seem to be. I mean, it's very interesting. But you seem to be - you can see, it's very clear that people are being front run in the market. There's plenty of evidence in the book.
SCHATZKER: Their orders are being anticipated...
LEWIS: Anticipated and run in front of, that's right.
Shocked...
And then Manoj Narang comes in... and the long words surge and the credibility plummets... "there are so many assertions that are provably false... oh my gosh so many..." crickets... and then finishes off all credibility with "speed matters less in today's market than it has ever mattered."
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Try: discussing the problems of a grow-or-die system hitting the growth wall. The Fed and "easy money" is a subset, one could say these are themselves just distractions.
The moment when we accept the fact that growth is finished is when TPTB pretty much lose their control. Care to crawl into a bear's den and try to remove a bear cub from a wounded mother bear?
Cognitive dissonance at its finest!
We could only hope that this is the top. I'm afraid, sadly, it's not... So, I suppose we can look forward to some even "better' stuff- more fun!
Here's why:
We were getting dangerously close to the issue of the concentration of wealth in the .01%.
We were soon going to identify WHO they are and what they're up to.
So now they give us an amorphous "bad guy" the HFT'ers.
We froth and spin... away from the real evil. The evil like this. One more day in the Shadows.
"We were soon going to identify WHO they are and what they're up to."
And we'll find it's only a "man behind the curtain." The predicament doesn't change. "What they are up to" is only what they've always been up to- holding power.
With all this intense fighting over scaps one should pause and consider that those scraps represent carcasses. Death is in the air.
The "evil" is in our minds, in our inability to be honest with ourselves that the System has a HUGE design flaw, one that we refuse to acknowledge*. The premise/assumption that's at the heart of the flaw is that the system was based on a model of perpetual growth. No specially ordained talking-heads are needed to prove this one out, no complications needed: go to a coast and look out toward the water- you will see the eaarth's curvature, a curvature means you're staning on a sphere, and spheres have a measureable dimension, which further indicates finiteness; or, if you want to make it complicated you can try measuing things yourself: http://www.wired.com/2014/03/see-curvature-earth-airport/
* The devil's greatest trick was convincing the world that he didn't exist (or so goes the saying). The greatest trick by TPTB was to convince us all that perpetual growth is possible.
Easy (?) solution (updated) : Everytime you make a bid, you can't cancel for 10 seconds; everytime you buy, you have to hold for at least 10 seconds, and timing in the milli- and submilli-seconds will matter MUCH less.
I like the solution. Only "problem" is that we're looking to create solutions for TPTB and Their problems. Our captured pension money will still be run through the casino: the game will still be rigged.
Pension money will be used to bail out the US - the Fed stops prining to safe the dollar, pension funds get swapped for "safe" treasury bills with a 1-2% interest rate, and THEN the interest rates will start to go up. That scenario is by far not restricted to the US.
Yes, I agree that this is a very likely scenario (I've figured pretty much the same). I believe, however, that there are quite a few factors that will strain it. Aging populations is the biggest. Next is energy (or lack of).
I've never been a fan of trying to peg numbers, mainly because it tends to lock on too hard and there are likely to be things that one misses taking into consideration (incomplete assumptions) In the past one could of actually seen REAL affects of lowered interest rates; however, today this is just not doing that same job. I really think that interest rates are not important, that high or low the economy is still going to be languishing; the reason being is that there's nowhere to create real growth. Yes, govts would like to get more returns on their treasury bills, but this comes back to the question of where are the buyers (when everyone is broke). It has been my speculation that, in the US anyway, interest rates would not rbe allowed to ise until after the great majority of ARMs reset: housing/real estate is STILL a big key in all of this. I'd figured that this was the deal the US govt made to allow banks to not be liquidated (let the Fed pump them up in exchange for low interest rates). Again, high or low rates, who is there to take advantage either way? Hint: we've been watching them for several years now.
I do not believe there's enough pension money to even come close to bailing out economies. Sure, they can be put toward an installment or two, but then what? The spending problem is still there: I think that it's been shown that even if ALL govt spending ceased that that wouldn't be enough to cover our debts.
So, to wrap up, yes, I believe that the scenario that you give is going to be the one that's used; however, in no way do I believe that it will, nay, COULD, succeed (if success is measured by paying off all debts and regaining an economic footing).
In the end the finite world monkey-hammers us.
Manoj did a lot better than the BATS guy from yesterday. Very calm and reasonable-sounding (even if he was peddling BS). Brad actually looked like kind of a jerk shaking his head and chuckling while Manoj was talking. Obviously that doesn't have anything to do with who's right but the perception among the hoi polloi is going to be that Manoj won.
He did pull a few obscure measurements which no one could check while he was on TV to try to bolster his case. That volatility during trading hours one I'm not sure about.
End frational reserve banking ..... and HFT ends.
Discuss?
And... we're STILL dead broke, facing declining resources AND increasing population sizes. Growth is dead; not a good thing for systems predicated on growth.
Discuss?
Both on Bloomberg now live getting the 3rd degree from the shills ...again
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