The Financial Markets Now Control Everything

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The entire economic and political structure is now dependent in one way or another on the continued expansion of financial markets.

The financial markets don't just dominate the economy--they now control everything. In 1999, the BBC broadcast a 4-part documentary by Adam Curtis, The Mayfair Set ( Episode 1: "Who Pays Wins" 58 minutes), that explored the way financial markets have come to dominate not just the economy but the political process and society.
In effect, politicians now look to the markets for policy guidance, and any market turbulence now causes governments to quickly amend their policies to "rescue" the all-important markets from instability.
This is a global trend that has gathered momentum since the program was broadcast in 1999, as The Global Financial Meltdown of 2008-09 greatly reinforced the dominance of markets.
It's not just banks that have become too big to fail; the markets themselves are now too influential and big to fail.
Curtis focuses considerable attention on the way in which seemingly "good" financial entities such as pension funds actively enabled the "bad" corporate raiders of the 1980s by purchasing the high-yield junk bonds the raiders used to finance their asset-stripping ventures.
This increasing dependence of "good" entities on players making risky bets and manipulating markets has created perverse incentives to keep the financial bubble-blowing going with government backstops and changing the rules to mask systemic leverage and risk.
The government must prop up markets, not just to insure the cash keeps flowing into political campaign coffers, but to save pension funds and the "wealth effect" that is now the sole driver of "growth" (expanding consumption) other than debt.
To maintain the illusion of growth and rising wealth, the financial markets must continually reach greater extremes: extremes of debt, leverage, obscurity and valuations. These extremes destabilize markets, first beneath the surface and then all too visibly.
The technological advances of the past decade have enabled a host of financial schemes that together have the potential to destabilize the markets globally.Technology enables high-frequency (HFT) traders to only suffer one losing day per year, complex reverse-repo swaps/trades, huge derivative bets and shadow banking, where all the risks generated by these activities can pool up outside the view and control of regulators.
The entire economic and political structure is now dependent in one way or another on the continued expansion of financial markets.
This spells the end of the electoral-political control of the economy, as politicians of all stripes quickly abandon all their ideologies and policies and rush to "save" the markets from any turmoil, because that turmoil could destabilize not just the financial markets but the economy, pensions and ultimately the government's ability to finance its own profligate borrowing and spending.
This dependence on the markets is pushing central banks and states into ever-more extreme policies, even as the risks of complex swaps and trades is rising beneath the surface.
A case can be made that the technologically-enabled complexity of the shadow-banking markets is now beyond the control of the state or central bank, which leads to a sobering conclusion: the next crisis will not be controllable, and destabilized markets will not be "saved" by tricks such as lowering interest rates to zero and increasing liquidity.
The structural problem with everyone and everything now depending on the speculative returns of the financial markets is there can never be any market clearing event that exposes phantom collateral and forces the liquidation of bad debt and excess credit.
I explain the danger of continually 'saving" the markets from any market clearing event in The Yellowstone Analogy and The Crisis of Neoliberal Capitalism (May 18, 2009).
When a forest is never allowed to burn away the accumulation of dead branches and underbrush with a limited fire, the forest eventually catches fire anyway. The deadwood (of bad debt, excessive credit and leverage and phantom collateral) is now piled so high, the entire forest burns down to ashes.
This is the eventual cost of never allowing any clearing of financial deadwood because everyone is now so dependent on financial markets that the slightest swoon will bring down the entire system. This vulnerability only increases with every "save" and every new bubble.

All the "saves" have done is guarantee the financial system will burn down in a conflagration ignited by a seemingly trivial spark somewhere in the vast global system of phantom collateral


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813kml's picture

It was only a matter of time before God got demoted, he hasn't hit his numbers in a while.

TruthInSunshine's picture

All TBTF Banks should be targeted for destruction, and all their banker-welfare-wards-of-the-taxpayer executed or jailed indefinitely, and the Federal Reserve needs to be sacked as the Bastille was, with or without US Military Assistance.

Headbanger's picture

We will control the horizontal

We will control the vertical...

pods's picture

Wow, how very nebulous of Charles.  Financial markets?  

Think you might have to unroll another couple layers of the onion.  After you are done crying, you will see who controls everything.


flacon's picture

What matters is Chuck Schumer's portfolio which consists of 50% SPY and 50% DIA. 

i_call_you_my_base's picture

"Get to work (on my portfolio) mr chairman."

J S Bach's picture

"The Financial Markets Now Control Everything"


The Protocols are all moving forward swimmingly.


mtndds's picture

I am going to predict that the market will whip saw today when the FED makes its announcment and will either end up flat or green at the close.  Every bad news that comes out is TRANSITORY.

ilion's picture

When you give 1:500 leverage to Forex traders, just as an example, then effectively you can control the market with even a small investment. Volatility has come back to stay. All explained in this video.

aPlayer's picture

Citadel is doing exactly this with a backstop from the Fed. Leverage can kill you but it can also give huge possibilities to the traders that know how to use it.

Majestic12's picture

"The Financial Markets Now Control Everything"

Am I dreaming, or do the Tylers finally admit that "private industry" controls [butt-licking] Government?

I don't want to be a "conspiracy theorist", but perhaps a few can now see how similar Liberals and Libertarians are....

Solve how a people can avoid exploitation and control by a "ruling class" and we all get freedom and liberty.

No?  Too far...too soon?...[sigh]...


It won't come crashing down...until "we" help start it...

optimator's picture

If the Protocols were fake they sure are following them closely.

WhackoWarner's picture

 Protocols Fake?  Too close for comfort IMHO,  Not each and every one but like a roadmap,  and I am not fond of the ending.

MonetaryApostate's picture

A roadmap to economic terrorism, where the wealthy become insanely wealthy, and everyone else shrivels and dies, though I'm not a master novelist I've tried to explain it some in this blog post, please feel free to give some feedback or tips to help me improve it. (Constructive criticism welcome)

JRobby's picture

Jailed indefinitely? Why? We have guillotines.

We don't need these animal sitting in cells promising to squeal. Exterminate.

TruthInSunshine's picture

Cattle bolt guns used in slaughterhouses are fine with me - ammo prices are too high as is.

Majestic12's picture

"Cattle bolt guns"

"Anton Chigurh: What's the most you ever lost on a coin toss."


Lets Buy The Dip's picture

What i find interesting, is that ZH posts those margin debt charts almost every week, expecting a crash. And I see their point, however. 

 In April this month, NYSE margin debt sat at $476.4 billion, up from $464.9 billion at the end of February. And the wrinkle is that margin debt rose during March even as the S&P 500 dipped nearly 2 percent.

While so many novice investors keep posting that NYSE margin debt chart without really understanding what they actually mean!. So this will clear it all up for you in 2 minutes. This Chart here will open your eyes =>   quite astoudning! 

legend247's picture
legend247 (not verified) This is it Apr 29, 2015 10:12 PM

I freelance over th? internet and earn about 80-85$ an hour. I was without a job for 7 months but last month my paycheck with big fat bonus was $15000 just working on my computer from my home for 5-6 hours. Here's what i have been doing...

gwar5's picture

Bankers need to be publicly shot and banks need to be turned into public utilities. Sound money is a human right.


KnuckleDragger-X's picture

Be careful about using the term "human rights". That term is usually used to justify tyranny. The general population has been convinced that the leadership knows what its doing right up until said leadership declares a dictatorship. We are now hitting that point but suppressing the world is going to be a bit tougher than they think......

El Vaquero's picture

Oh, you sayd tyranny, not 'tranny.'  Sorry, I just had to deal with a bitchy chick who, upon further research, it turns out that she is or was a he.  She was very confused regarding people's intentions, to say the least.

crisrose's picture

Nothing that someone else has to PROVIDE for you is a "right."  You can demand it, burn something down, stick a gun in someone's face, but that doesn't make it a right. 

You want sound money?  Make your own.

Don't like banks and bankers?  Don't use them or their Federal Reserve Notes.

MeelionDollerBogus's picture

Sound money provided by yourself directly is a right: and is illegal.

homebody's picture

Same problem with social services - corruption has taken over and no one wants to clean out the blood suckers. 

Antifaschistische's picture

LOL...MSNBC last night...the problem in Baltimore was that there wern't enough "Recreation Centers" and "Community Centers" and "Places for people to get a meal" (insert "free" meal)

Yep...the whole problem was that "other peoples money" wasn't providing enough "free stuff" for the kids of Baltimore.

LawsofPhysics's picture

LOL!!!!  The laws of physics and Nature disagree.  The planet will be fine.

Mister Delicious's picture
Mister Delicious (not verified) Apr 29, 2015 11:08 AM

But who controls the financial markets?

Illumminati? Jesuits? Space Lizards?

Off topic, but HoffPo put together a really useful guide:

According to the U.S. Census Bureau, white people have another 30 years to enjoy being America's majority race. But come 2045, the white population will make up less than 50 percent of the American population for the first time ever.

So what's a privileged white person to do? Luckily for Caucasians everywhere, "The HuffPost Show" put together a helpful guide to ease the white transition into life as a minority.

Remember, it's "racist" to want to remain a majority.

It is also racist to be white.

Sorry, I don't make the rules...

29.5 hours's picture



"It is also racist to be white."

You are feeling sorry for yourself? Pathetic. I feel sorry for you too.

Most people would call me white too, altho I am kind of dark from working in the sun for so many years. Get over being white. Whites have always been a minority within the human race. We are still here. We are not going to disappear. Nothing to worry about.

However, if you are racist, you will probably continue feeling bad...



Mister Delicious's picture
Mister Delicious (not verified) 29.5 hours Apr 29, 2015 11:21 AM


usednabused's picture

I agree with 29.5. You really should quit the divide tactics asshole. Then fuck off too.

Mister Delicious's picture
Mister Delicious (not verified) usednabused Apr 29, 2015 11:42 AM

No - fuck YOU.

Way to argue with yourself over things I never said or alleged {or thought}. And you didn't bother, I'm sure, to actually WATCH THE FUCKING VID.

You are a bitch. The sort of bitch who equates the sarcastic recommendation of a glib video about demographic change with some sort of racial supremacism?

Quite a leap - and since you're only doing it because its about "whites" - that makes *you* the racist, pal - not me.

I was simply pointing out the cuntiness of another left wing, hypocritical, and white, as it happens, bitch like you, who doesn't have the brains to think things through, just makes decisions based on political correctness and lazy assumptions.

Friend of yours?

JRobby's picture

According to ancient legend the white race results from a nuclear explosion in what is now the Gobi desert some 30,000 years ago. The civilization and techniques which made the explosion possible were wiped out. The only survivors were slaves marginal to the area who had no knowledge of its science or techniques. They became albinos as a result of radiation and scattered in different directions. Some of them went into Persia northern India Greece and Turkey. Others moved westward and settled in the caves of Europe. The descendants of the cave-dwelling albinos are the present inhabitants of America and western Europe.

In these caves the white settlers contracted a virus passed down along their cursed generation that was to make them what they are today a hideous threat to life on this planet. This virus this ancient parasite is what Freud calls the unconscious spawned in the caves of Europe on flesh already diseased from radiation. Anyone descended from this line is basically different from those who have not had the cave experience and contracted this deadly sickness that lives in your blood and bones and nerves that lives where you used to live before your ancestors crawled into their filthy caves. When they came out of the caves they couldn't mind their own business. They had no business of their own to mind because they didn't belong to themselves any more. They belonged to the virus. They had to kill torture conquer enslave degrade as a mad dog has to bite. At Hiroshima all was lost. The metal sickness dormant 30,000 years stirring now in the blood and bones and bleached flesh.

He cut himself shaving looked around for styptic pencil couldn't find one dabbed at his face with a towel remembering the smell and taste of burning metal in the tarnished mirror a teen-aged face crisscrossed with scar tissue pale grey eyes that seemed to be looking at something far away and long ago white white white as far as the eye can see ahead a blinding flash of white the cabin reeks of exploded star white lies the long denial from Christ to Hiroshima white voices always denying excusing the endless white papers why we dropped the atom bomb on Hiroshima how colonial peoples have benefited from our rule why look at all those schools and hospitals overgrown with weeds and vines windows melted dead hand frayed scar tissue lifted on a windy street lying white voices from the Congo to Newark the ancient mineral lie bleached flesh false human voices slow poison of rotting metal lies denials white papers The Warren Report he picked up a shirt white wash flapping in the cold spring wind Oppenheimer wipes a tear from one eye with one long finger.

William S. Burroughs - Exterminator! "The Evening News"

TeethVillage88s's picture

You got me on this one. I like to use my imagination and write/think.

- You remind me:

- Mahenjo Daro, Ancient Ruins said to have Glass sand Nuclear Evidence
- Harappa, Ancient Ruins said to have Glass sand Nuclear Evidence
- Rig-Veda Stories of Ancient War in the Skies, and a sky God
- Terrence McKenna
- Graham Hancock
- Joe Rogan imaginings that the Catholic Religions Insiders as well as other ancient peoples may have used Mushrooms, indigenous plants as drugs, and used psychedelics to find consciousness, may have fed them to domestic animals as well, and a shared global shamanic experience may have enabled communication with a teaching entity

But the Chinese, Tibetans, and Mongols ancient history are somewhat unknown in the west

Niall Of The Nine Hostages's picture

About 30,000 very rich people, mostly white males. That's a big reason white males are their scapegoat of choice. Any one of them with average intelligence and a modicum of ambition is a potential threat to their rule and their bank balance.

They don't all know each other, and they're not all members of any secret club. They're not all Jews or Jesuits, much less lizards. On the contrary, few are the least bit loyal to anybody but themselves.

Mister Delicious's picture
Mister Delicious (not verified) Niall Of The Nine Hostages Apr 29, 2015 11:41 AM

Jews are 3% of the population.

Are they 3% of your 30,000 - or are they MANY TIMES 3%?

Now - what about "Jesuits"?

crisrose's picture

Blaming jews makes as much sense as blacks blaming whites for their failures.


Jonesy's picture

That's correct, blacks should be blaming Jews as well, not whites.

Fun Facts's picture

Who runs Hollywood? C’mon
December 19, 2008 | JOEL STEIN | LA Times
How deeply Jewish is Hollywood? When the studio chiefs took out a full-page ad in the Los Angeles Times a few weeks ago to demand that the Screen Actors Guild settle its contract, the open letter was signed by: News Corp. President Peter Chernin (Jewish), Paramount Pictures Chairman Brad Grey (Jewish), Walt Disney Co. Chief Executive Robert Iger (Jewish), Sony Pictures Chairman Michael Lynton (surprise, Dutch Jew), Warner Bros. Chairman Barry Meyer* (Jewish), CBS Corp. Chief Executive Leslie Moonves (so Jewish his great uncle was the first prime minister of Israel), MGM Chairman Harry Sloan (Jewish) and NBC Universal Chief Executive Jeff Zucker (mega-Jewish). If either of the Weinstein brothers had signed, this group would have not only the power to shut down all film production but to form a minyan with enough Fiji water on hand to fill a mikvah.

*note= Barry Meyer now works for the San Francisco Federal Reserve

The 50 most influential Jews of 2014 | Jerusalem Post

1. Jack Lew, Secretary of the United States Treasury

2. Janet Yellen, Chairwoman of the Federal Reserve

14. Stanley Fischer, Vice chairman of the US Federal Reserve Bank-former head of the bank of Israel

Jonesy's picture

Bullshit, they are loyal to Israel, isn't that right Niall?

Mister Delicious's picture
Mister Delicious (not verified) Jonesy Apr 29, 2015 12:16 PM

Niall wants Jewish kings to rule all over the nations - in accordance, it so happens, with fundamentalist Jewish eschatology.

Niall be crazy, yo.

TeethVillage88s's picture

R U Saying we can connect Social Phenomena together to see who might have motive or responsibility for current trends?

- Like

- Rise of Anti-Semitism
- Global Financial Crisis of 2008 - 2010
- Current Global Economic Malaise
- Racism of Blacks toward Whites
- Racism of Whites Police or Elites against Blacks
- US & NATO Wars against Brown Skinned People with Resources, or White People in Iran & Afghanistan

- Greed of White People with Strong Militaries to financialize every resource including people, foreign people, assume all peoples debts, mislead global farmers to put them into debt, and to scheme to get political control of any country with energy reserves or other important resources

So like if there is a rise of Anti-semitism then there could be a big regional war or Race Riots to follow if not a Financial Crisis.

ali-ali-al-qomfri's picture

I am free, no matter what rules surround me. If I find them tolerable, I tolerate them; if I find them too obnoxious, I break them. I am free, because I know that I alone am morally responsible for everything that I do. - R. Heinlein.