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Guest Post: The Stock Market Is An "Attractive Nuisance" And Should Be Closed

Tyler Durden's picture




 

Submitted by Charles Hugh Smith from Of Two Minds

The Stock Market Is An "Attractive Nuisance" And Should Be Closed

The dark pool of parasitic scum known as the stock market is an "attractive nuisance" that should be shut down.

In tort law, an attractive nuisance is any potentially hazardous object or condition that is likely to attract the naive and unwary, i.e. children.

A classic example is an abandoned swimming pool half-filled with fetid water.

Since many stock market investors are demonstrably naive about the risks and unwary of the dangers posed by the stock market (the proof of this is that they remain invested in the market), it is but a slight extrapolation of the attractive nuisance doctrine to declare the stock market is clearly an "attractive nuisance" and should be closed immediately.

Is this really a legal stretch? Consider the conditions that characterize an attractive nuisance. I have edited these to pertain to the stock market and investors:

1. The market is one in which the Powers That Be (the exchanges, the Central State, the central bank, et al., the effective "owners" of the stock market) know or have reason to know that brainwashed or ill-informed investors are likely to risk their money in.

2. The market is one of which the Powers That Be know or have reason to know (and fully realize or should realize) will involve an unreasonable risk of financial loss or ruin to such investors.

3. The investors, because of their consumption of officially sanctioned propaganda and misrepresentation of market risk and return, do not discover or realize the risk involved in placing money in the stock market.

4. The utility to the Powers That Be of maintaining the condition and the burden of eliminating the danger are slight compared to the risk borne by investors.

5. The Powers That Be fail to exercise reasonable care to eliminate the risk or otherwise protect the investors from potentially catastrophic financial loss.

Can any reasonable person deny that the rigged, manipulated U.S. stock market is nothing but a predatory skimming operation that is increasingly at risk of systemic failure? If you have any doubts about the true nature of the American stock market, please read the new book Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System (print edition)   (Kindle edition) by financial reporter Scott Patterson.

Today's stock market has as much in common with the market of the 1960s as a horse-drawn carriage has with a Formula 1 race car. Most of the trading on the market is done by computers that hold shares for perhaps 11 seconds before skimming a slice from investors who lack the high-speed data flows from the exchanges, warp-speed processing power and sophisticated algorithms.

Another huge chunk of market-moving activity is officially sanctioned manipulation by the Federal Reserve (the privately owned central bank of the U.S.) and Central State agents: the "fat finger" leaps at day's end, the "stick saves" whenever gravity threatens to topple the corrupted market, and all the other interventions that are obvious to every active trader.

In effect, the stock market has become an officially sanctioned bucket shop where "ownership" of shares has been rendered meaningless. The market exists for two reasons: 1) to skim low-risk profits from naive/brainwashed investors and 2) as a propaganda front that can be lofted ever higher by authorities for the purposes of managing perceptions, i.e. the market is higher, so the economy is doing great, never mind what your own eyes and experience are telling you.

The stock market is demonstrably an "attractive nuisance" and should be closed immediately. It should never be reopened unless these conditions can be met: 1) All shares must be owned for at least four hours 2) All trading must be executed by humans on a transparent exchange where all trading activity (and open orders) is visible to all participants 3) Intervention in the market by the Federal Reserve or any Central State agency or agents is against the law.

If you insist on putting money at risk in the stock market, be aware that you are playing a rigged roulette wheel and thus you are a mark. You might win, or the entire game might collapse in a rotten heap of lies and corruption. Just remember that the market is ruled by parasites who need to keep their hosts (investors) alive so they can continue to feed off them (i.e. biotrophic parasites).

If the hosts all leave the market, the parasites will have only themselves to feed on, and they will quickly expire.

 

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Wed, 08/22/2012 - 11:34 | 2727474 Badabing
Badabing's picture

After doing a thorough analysis using OHLC charts overlaying Elliott wave principle, Fibonacci ratios, momentum rate, the 200 and 50 DMA, and resistance break out trending I have come to the conclusion that the in-depth analyses just preformed is for SHIT because the market is counterfeit!

Wed, 08/22/2012 - 11:45 | 2727537 Pladizow
Pladizow's picture

The cure for an attractive nuisance is a hanging banker!

Wed, 08/22/2012 - 11:46 | 2727542 malikai
malikai's picture

I normally find myself in agreement with CHS, but this time not so much.

I think we need less nanny state, not more of it.

Wed, 08/22/2012 - 11:52 | 2727564 Bananamerican
Bananamerican's picture

Just buy the fucking dip........in the reeking, fetid pool.

"1) All shares must be owned for at least four hours 2) All trading must be executed by humans on a transparent exchange where all trading activity (and open orders) is visible to all participants 3) Intervention in the market by the Federal Reserve or any Central State agency or agents is against the law."

By the way maliki, aint nothin' nanny bout common sense

Wed, 08/22/2012 - 11:54 | 2727578 malikai
malikai's picture

Don't think so much about the intentions.

Think about the implementation.

How many laws are rooted in common sense? Most.

How many laws are implemented with common sense? None.

Wed, 08/22/2012 - 12:08 | 2727635 NotApplicable
NotApplicable's picture

You've likely noticed that these statists always talk in "oughts" and "shoulds" rather than the "is" that occurs.

Because to them, it's the belief in the facade that's important, rather than the reality it obscures. As long as their intent is pure, they're free to commit the most heinous crimes, all in the name of humanity.

Humanity meanwhile, has only for it's defense a "love of life" based on the voluntary cooperation between free individuals.

Wed, 08/22/2012 - 12:25 | 2727690 Gully Foyle
Gully Foyle's picture

NotApplicable

You do understand that Anarchism is the only political system with the tenet "based on the voluntary cooperation between free individuals"?

Libertarianism, at least in the US, is nothing but small government Republicanism.

Don't beleive that, then maybe Ayn Rand can set you straight

“Libertarians”

For the record, I shall repeat what I have said many times before: I do not join or endorse any political group or movement. More specifically, I disapprove of, disagree with, and have no connection with, the latest aberration of some conservatives, the so-called “hippies of the right,” who attempt to snare the younger or more careless ones of my readers by claiming simultanteously to be followers of my philosophy and advocates of anarchism. Anyone offering such a combination confesses his inability to understand either. Anarchism is the most irrational, anti-intellectual notion ever spun by the concrete-bound, context-dropping, whim-worshiping fringe of the collectivist movement, where it properly belongs.

“Brief Summary,”
The Objectivist, Sept. 1971, 1

Above all, do not join the wrong ideological groups or movements, in order to “do something.” By “ideological” (in this context), I mean groups or movements proclaiming some vaguely generalized, undefined (and, usually, contradictory) political goals. (E.g., the Conservative Party, which subordinates reason to faith, and substitutes theocracy for capitalism; or the “libertarian” hippies, who subordinate reason to whims, and substitute anarchism for capitalism.) To join such groups means to reverse the philosophical hierarchy and to sell out fundamental principles for the sake of some superficial political action which is bound to fail. It means that you help the defeat of your ideas and the victory of your enemies. (For a discussion of the reasons, see “The Anatomy of Compromise” in my book Capitalism: The Unknown Ideal.)

“What Can One Do?”
Philosophy: Who Needs It, 202

The “libertarians” . . . plagiarize Ayn Rand’s principle that no man may initiate the use of physical force, and treat it as a mystically revealed, out-of-context absolute . . . .

In the philosophical battle for a free society, the one crucial connection to be upheld is that between capitalism and reason. The religious conservatives are seeking to tie capitalism to mysticism; the “libertarians” are tying capitalism to the whim-worshipping subjectivism and chaos of anarchy. To cooperate with either group is to betray capitalism, reason, and one’s own future.

Harry Binswanger, “Q & A Department: Anarchism,”
The Objectivist Forum, Aug. 1981, 12

 

Wed, 08/22/2012 - 12:29 | 2727696 dwdollar
dwdollar's picture

I don't give a shit whether Wall Street is a bunch of parasites feeding off the money of naive investors.

What I care about is banksters (who in large part are themselves the parasites) having the power to print (debase) money because they got too greedy and ate the money of all the naive investors.

Wed, 08/22/2012 - 16:08 | 2728569 FEDbuster
FEDbuster's picture

As for the "market", GET OUT (see Ann Barnhardt).  As for the counterfeiting by the FED and banksters, trade your paper for something real.  Best assets are those you can stand in front of a defend with an AR-15 (also Ann Barnhardt).  We are in a WROL economy now, invest accordingly.

No counter party risk or rehypothication of my beans, bullets and bullion investment portfolio, bitchez!

 

FREE BRANDON RAUB

Wed, 08/22/2012 - 17:20 | 2728758 WeAreJellyfish
Wed, 08/22/2012 - 12:33 | 2727733 LawsofPhysics
LawsofPhysics's picture

Believing in absolutes in a chaotic world will get you killed.

In the absence of any real consequences for bad behavior, "isms" are irrelevant.

The only thing anyone should have any faith in now is that which cannot be sustained, won't be.

Well that and like-minded, trustworthy, innovative and hard-working employees, neighbors and friends.

Wed, 08/22/2012 - 15:06 | 2728361 GAAPpreNixon
GAAPpreNixon's picture

The only thing Ayn Rand understood was the proper method one can employ to GILD A TURD or put LIPSTICK ON A PIG!

The greedy bitch tried to put a euphemism on selfishness and egotism and came up with the cockamamie term "objectivism". She might as well have called it "One born every minutism"!

Wed, 08/22/2012 - 12:31 | 2727722 Sofa King Confused
Sofa King Confused's picture

Can you imagine if you had to hold your old lady 4 hours after busting a nut

Wed, 08/22/2012 - 12:37 | 2727750 acetinker
acetinker's picture

The closing sentence; "If the hosts all leave the market, the parasites will have only themselves to feed on, and they will quickly expire." doesn't sound statist to me- not one bit.

You got some other axe to grind with Charlie?

 

Wed, 08/22/2012 - 13:41 | 2728004 pazmaker
pazmaker's picture

try reading his article yesterday on healthcare and then tell me he is not a statist.

Wed, 08/22/2012 - 16:32 | 2728634 acetinker
acetinker's picture

There's only two viable choices on healthcare.  Either it's a single payer system where taxes go to 95% of income or Gov GsTFO altogether.

Charlie knows this.  I can't say which way he'd lean, but he seems more in the GTFO camp to me.  That's what I'd choose, anyway.

Wed, 08/22/2012 - 13:46 | 2728018 0z
0z's picture

So ... the stock market should be shut down?

By whom? Criminals?

Let me get this right ... Criminals have to shut down the stock market?

I'm not sure what the point is.

Ohh I get it! The author is  Despot!

Wed, 08/22/2012 - 15:19 | 2728408 bankruptcylawyer
bankruptcylawyer's picture

hedges is a good guy and has good ideas. but he is at root a statist. the problem with statism is not that it's so obviously WRONG most of the time, it's that it begs the question------

how do you actually protect people from monopolistic oligarchs in bed with the CIA, without somehow using the power of the state? it's a tricky dick that question. 

Wed, 08/22/2012 - 12:21 | 2727676 LawsofPhysics
LawsofPhysics's picture

Laws?  real consequences for bad behavior?  What a quaint idea.

Blah blah blah, when is the next treasury auction?

Wed, 08/22/2012 - 12:59 | 2727611 TruthInSunshine
TruthInSunshine's picture

Here's a completely legitimate & simple idea that would take a massive bite out of the massive scam that is the current equity investing racketeering operation:

 

Go back to the 'antiquated' model of investing in publicly traded corporations by having those interested in "owning" a portion of any such company and the company deal directly with each other, cutting Wall Street out of the picture completely.

If you want to invest in a public company, send your fiat to them in exchange for their shares.

All the claims about "but....but....what about market makers?....who'll provide liquidity?" are bogus anyway.  The market crashes with relatively regular frequency, and when it really crashes, you can depend on those "like, totally necessary market makers" to take you out of your $50 stop-loss order at about $30 or $15 (or less), so when it really counts, the market maker model is just a continuation of the scam.

As just two examples of the many scams this would eliminate, the best friends forever of the New York Branch of the Mother Whore Federal Reserve could kiss scalping and quote stuffing bye-bye.

Oh noes!!! But what is capitalism and what are markets without HFT & dark pools???!!!

Wed, 08/22/2012 - 13:06 | 2727857 Tortuga
Tortuga's picture

You can do that now with DRIPS.

Wed, 08/22/2012 - 13:33 | 2727969 TruthInSunshine
TruthInSunshine's picture

Well, that automatically re-invests one's dividend income into the purchase of future shares of stock, but yes, one can buy stock directly from some publicly traded companies, though this isn't exactly a widespread practice.

What I'm stating is everyone save for Wall Street and its criminal co-conspirators, who do nothing of value and everything constituting massive, daily theft via their control of the infrastructure through which shares are "traded" (where they scalp, fleece, shave, cut and pry ever larger transactional costs from the transfers, let alone rig the entire framework), would be better off by bypassing the exchanges and insist on buying shares of the corporate stock for sale & that they wish to purchase directly from the respective companies, thus completely eliminating Wall Street, which has not only failed of its original alleged intended purpose, but has transformed into one of the largest criminal enterprises, making Las Vegas or Macau casinos look like virgins in comparison.

New York City (and London, if repeated 'over there') gang members now employed by the racketeers would actually have to face the prospect of finding honest work or going hungry, and more importantly, actual capitalistic and market-oriented efficiencies would be restored.

Wed, 08/22/2012 - 14:52 | 2728296 GAAPpreNixon
GAAPpreNixon's picture

The business administration courses out there state that the purpose of issuing stock is to obtain capital for plant and equipment. IOW to grow the company and the profits of the stockholders. HOWEVER, the main reason a business INCORPORATES is to LIMIT LIABILITY. So once a business becomes a CORPORATION,  a new reason for issuing stock is added to the others. THAT REASON is to spread risk. When a corporation goes public issuing stock is MAINLY a vehicle for spreading risk and obtaining capital for plant and equipment is almost totally eclipsed. You go from a legitimate concern where anyone buying stock knows the business managers have a vested interest in keeping the business healthy to a CONTROL FRAUD operation by corporate management to scam stock buyers while they sink a public corporation, run off with the profits that limited liability allows them to steal and leave the share "holders" HOLDING the SHIT. 

THE PROBLEM IS THE "PUBLIC" CORPORATION! 

Wed, 08/22/2012 - 17:04 | 2728719 Ghordius
Ghordius's picture

+1 though changing something there is difficult
Btw "1) All shares must be owned for at least four hours"
4 hours are not enough, you would have to make it one day so that it can't cross all timezones endless times.

Wed, 08/22/2012 - 12:16 | 2727664 Texas Ginslinger
Texas Ginslinger's picture

Agreed.

BTFD.

I made a 2% gain in the first hour today on a stock that spiked down, and then back up in very rapid fashion.

Volatility is a beautifull thing....

Wed, 08/22/2012 - 12:03 | 2727618 NotApplicable
NotApplicable's picture

It's an interesting mix of Kool-Aid he's got today, that's for sure! I like this part,

1) All shares must be owned for at least four hours

Why four hours? Why not three? Or five? There's nothing rational here, merely a number he's comfortable with, which is the exact same logic driving the algobots. Time held is merely an artifact of two ends of a transaction. What matters is the perceived value gained/lost over any period. If the bot can realize the gain, then it's not really any different than the objective of a carbon-based day trader, or even Grampa's buy-and-hold strategy. All are speculating about capital appreciation (dividend's notwithstanding).

This isn't to say I think algobots are healthy for humans in general, but they do serve as an agent for specific ones. The idea that these same people can form a centralized government to control it all for everyone's' benefit is incoherent on its surface.

Wed, 08/22/2012 - 12:54 | 2727809 piliage
piliage's picture

But what about dark pools where there is no price disclosure? What about when those algos are used to manipulate price? Those things are illegal in other industries.

I don't want to sound like some occupy wall street nutcase, but HFT, and particularly dark pools, are part of the problem, not the solution.

Wed, 08/22/2012 - 17:15 | 2728747 Umh
Umh's picture

Bingo! The dark pools are a greater risk than the HFT, because some crooks have access to the information in the dark pools that is denied to most investors.

Wed, 08/22/2012 - 14:31 | 2728196 GAAPpreNixon
GAAPpreNixon's picture

 

 

If the bot can realize the gain, then it's not really any different than the objective of a carbon-based day trader, or even Grampa's buy-and-hold strategy. All are speculating about capital appreciation (dividend's notwithstanding)..

You make a valid point but you are leaving out the fees the vampire squids running the alpos make from churn. That's a significant source of income (i.e. THEFT) for the fed's broker dealers on the taxpayer tit. I would change the 4 hour hold requirement  to 24 hours but any amount over a minute would seriously tilt the HFT algos. The point is that the deliberate attempt to extract profit from churn rather than capital appreciation is an official admission by the fed and its broker dealers that capital appreciation isn't possible!  Just like bank robbers, the vampire squids always go where the money is.

 And then there is the problem of difficulty of determining capital appreciaiton when the metric is a currency (the dollar) that is being massively inflated. Any government that creates $2.08 of debt for every $1.00 of expense is nuts.

Wed, 08/22/2012 - 11:57 | 2727590 johnQpublic
johnQpublic's picture

kim khardashian

another attractive nuisance

Wed, 08/22/2012 - 12:00 | 2727604 malikai
malikai's picture

Attractive? Yes, with a muzzle on.

Wed, 08/22/2012 - 12:02 | 2727613 johnQpublic
johnQpublic's picture

going for name recognition...my bad

 

+1 to you sir

Wed, 08/22/2012 - 12:10 | 2727643 NotApplicable
NotApplicable's picture

Kris Humphries approves of this message. (how could he be so dumb?)

Wed, 08/22/2012 - 12:17 | 2727666 macholatte
macholatte's picture

 

The cure for an attractive nuisance is ........

 

                Well, in my case it was penicillin.

Wed, 08/22/2012 - 13:03 | 2727847 Tortuga
Tortuga's picture

You're working tooooo hard. Be an "attractive nuisance" for awhile. Forward.

Wed, 08/22/2012 - 13:44 | 2728012 GAAPpreNixon
GAAPpreNixon's picture

HEAR! HEAR!

Wed, 08/22/2012 - 11:35 | 2727477 azzhatter
azzhatter's picture

I thought it was closed to retail

Wed, 08/22/2012 - 12:13 | 2727577 hedgeless_horseman
hedgeless_horseman's picture

 

 

State Street's SPDRs (Swimming Pools Diseased Ridden) are open for everyone's enjoyment! 

Dive in, kids!  Everyone is doing it.

Wed, 08/22/2012 - 11:36 | 2727478 boogerbently
boogerbently's picture

<<<<<LINK?>>>>> 

Wed, 08/22/2012 - 11:44 | 2727531 TN Jed
TN Jed's picture

"Of Two Minds" ?

Wed, 08/22/2012 - 11:46 | 2727543 machineh
machineh's picture

Yes.

And both, sadly, retarded.

Wed, 08/22/2012 - 11:36 | 2727482 Nothing To See Here
Nothing To See Here's picture

Shares should be owned for at least half a year. The purpose of the stock market should be to allow people to invest in a venture, not to speculate short term on securities without knowing the underlying stuff.

Wed, 08/22/2012 - 11:37 | 2727493 piliage
piliage's picture

"1) All shares must be owned for at least four hours"

This isn't needed. Just take away the fractional cents and round alll shareprices to increments of 10 cents. That will remove most of the nonsense electronic activity immediately.

Wed, 08/22/2012 - 17:00 | 2728714 BooMushroom
BooMushroom's picture

The stock market used to trade on 1/8 of a dollar increments, until congress changed it around y2k.
I think tenths would be fine, too. Better yet, ban electronic stock exchanges altogether.

Wed, 08/22/2012 - 11:37 | 2727494 e2thex
e2thex's picture

Thank god there is fishing.

Wed, 08/22/2012 - 13:40 | 2727796 Stuck on Zero
Stuck on Zero's picture

Your priorities are unimpeachable.

 

Wed, 08/22/2012 - 11:38 | 2727496 francis_sawyer
francis_sawyer's picture

On the I USED TO CARE meme... (as in, 'about stock markets')...

~~~

The girl with the big tits (in the ROAD KILL ad wearing the t-shirt printed with the above slogan) is an "attractive nusiance" too...

Wed, 08/22/2012 - 11:43 | 2727526 malikai
malikai's picture

Too bad her face ruins it.

Wed, 08/22/2012 - 11:46 | 2727541 ParkAveFlasher
ParkAveFlasher's picture

Never underestimate the value of an ugly girl.

Wed, 08/22/2012 - 11:50 | 2727555 malikai
malikai's picture

I have encountered a wise man.

Wed, 08/22/2012 - 11:52 | 2727567 piliage
piliage's picture

You pimping for Merkel?

Wed, 08/22/2012 - 12:26 | 2727695 ParkAveFlasher
ParkAveFlasher's picture

Same argument, different tack, because fat girls are like mopeds: its a fun ride until your buddies see you doing it.  Then you have to fess up. 

 

Wed, 08/22/2012 - 11:54 | 2727579 Curt W
Curt W's picture

ugly girls work it harder.

Wed, 08/22/2012 - 12:11 | 2727650 optimator
optimator's picture

All your're going to see is the top of her head anyway.

Wed, 08/22/2012 - 11:43 | 2727529 prains
prains's picture

huge tits

Wed, 08/22/2012 - 11:37 | 2727497 Snakeeyes
Wed, 08/22/2012 - 11:39 | 2727506 q99x2
q99x2's picture

I agree. Arrest those that are skimming retirement funds by buying into fraud.

 

Wed, 08/22/2012 - 11:41 | 2727513 buzzsaw99
buzzsaw99's picture

i don't mind the stupid people getting fleeced but do mind so many being forced into the market at gunpoint by pension funds and other retirement schemes. ironically the stupid are already out it is those who have no choice (like me) who are forced to remain and play the game by a fascist regime.

Wed, 08/22/2012 - 13:00 | 2727834 Tortuga
Tortuga's picture

You are not forced. You have a choice. Anyone can quit a job, at this point in time.

Wed, 08/22/2012 - 11:41 | 2727514 not fat not stupid
not fat not stupid's picture

I agree. Put a bullet in the wounded beast.

Wed, 08/22/2012 - 11:50 | 2727548 Conax
Conax's picture

 Making them hold stocks for 4 hours doesn't sound like too bad an imposition.  If wall street argues, we can just outlaw computer trading and go back to phones and runners.  Fine with me.

Wed, 08/22/2012 - 11:59 | 2727595 DavidC
DavidC's picture

Getting HFTs/algos quotes and orders have a minimum life of 1 SECOND would get rid of most of the problems.

DavidC

Wed, 08/22/2012 - 12:13 | 2727655 NotApplicable
NotApplicable's picture

Yet he never even mentions that part of the HFT game. Maybe someone should tell him about Nanex?

Wed, 08/22/2012 - 12:03 | 2727615 ThisIsBob
ThisIsBob's picture

Yea, but Goldman would just hire a some Jamacian dudes, and everybody would still be bitching.

Wed, 08/22/2012 - 12:03 | 2727619 GFKjunior
GFKjunior's picture

Or the market could just get used to them like they are supposed to. I never thought ZH would be so anti-free market but ya'll seem to hate htf's.

 

The reasons for hate are stupid too


For example: HF traders are taking value from "real" traders ("real" defined by whom?), the systems are "too fast" (compared to what?) or quoting "too much" (compared to what?), and so forth.

Exchanges already seem to be penalizing participants with very high quote-to-trade ratios, suggesting that the existing regulatory and commercial system is responding to the needs of its stakeholders.


Maybe this kind of reaction is inevitable. I'm sure that there was moralizing in ancient Greece when some entrepreneur bought a load of olive oil at a low price in Athens and ran it on a fast chariot to Thessaloniki, unfairly undercutting the honest merchants of Thessaloniki and pocketing a tidy profit through their "high-speed trading" … same thing with those who used an undersea New York - London cable to gain advance knowledge of events

Wed, 08/22/2012 - 12:16 | 2727665 MachoMan
MachoMan's picture

There seems to be a fundamental reluctance by some of us to accept the discussion we're having...  and that is, all the chips are on the table...  draft the system how you would like it to be...  some of us seem to be stuck in the, "but this way is less bad than the old ways" paradigm...  it's irrelevant to what we're discussing...  the entire structure of the markets is what is being discussed...  time to take off the pragmatist hat and put on the idealist hat... 

Wed, 08/22/2012 - 12:23 | 2727684 tip e. canoe
tip e. canoe's picture

"time to take off the pragmatist hat and put on the idealist hat... "

i/o/w Snap into a Slim Jim!!!

https://www.youtube.com/watch?NR=1&feature=endscreen&v=Lxp_3000h_U

(sorry, on a MM kick)

Wed, 08/22/2012 - 12:50 | 2727774 piliage
piliage's picture

HFT is being used by large companies (and the fed) often to control market pricing or artificially impact pricing. That is called monopoly, cartel, or price fixing. Add to that dark pools and you have a market without full disclosure - ie outright manipulation and fraud.

What you make reference to in your argument above is a supply chain breaking down geographic segmentation of pricing. You're playing hockey, we're on a tennis court.

 

 

Wed, 08/22/2012 - 12:57 | 2727815 Tortuga
Tortuga's picture

you got me. I hate you because you think because I am stupid, I hate. Grok that.

Wed, 08/22/2012 - 11:41 | 2727519 TN Jed
TN Jed's picture

"Cannonball!"

Wed, 08/22/2012 - 11:44 | 2727530 ParkAveFlasher
ParkAveFlasher's picture

Yeah but those "shankopatumus" commercials with the talking baby, those are pretty cool, right?

Wed, 08/22/2012 - 11:44 | 2727532 Confundido
Confundido's picture

WE DON'T NEED REGULATIONS OR PROHIBITIONS. HERE'S THE SOLUTION: ALLOW US HUMANS TO DECIDE, WHEN WE SEND AN ORDER, WHETHER WE WANT TO TRADE IN PLATFORMS WITH COMPUTERS OR IN PLATFORMS WITH HUMANS. IF THE EXCHANGES/BROKERS WANT TO CHARGE US DIFFERENT TRADING FEES, IF THE BID/ASK SPREAD IS DIFFERENT, WE'LL MAKE A CHOICE. 

BY THE SAME TOKEN, COMPANIES THAT ISSUE SHARES SHOULD ALSO HAVE THE CHOICE TO ALLOW THEIR SHARES TO TRADE IN PLATFORMS WITH ALGOS OR WITHOUT THEM OR ON BOTH.

THE MARKET WILL THEN SORT THIS MESS OUT.

Wed, 08/22/2012 - 12:07 | 2727632 GFKjunior
GFKjunior's picture

Yes!! Exactly!!

 

No one is forcing you to participate in the market. I love how no one responds these type of posts, like mine above. 

Wed, 08/22/2012 - 12:42 | 2727760 ParkAveFlasher
ParkAveFlasher's picture

If you work for a corporation, and have a retirement plan, then yes, you are forced, because the alternative is to not participate and simply bank what you don't spend, but guess what, banks are not banks, and it's gone.  It's gone.

Wed, 08/22/2012 - 11:44 | 2727535 Racer
Racer's picture

Definitely agree about this... look at the fake comments from Draghi-gher for example

Wed, 08/22/2012 - 11:48 | 2727545 JustObserving
JustObserving's picture

Shut down the SEC and the CFTC.  They have been captured by powerful interests. US markets are a scam now.  Why are they letting this scam continue?

Wed, 08/22/2012 - 12:19 | 2727672 NotApplicable
NotApplicable's picture

I take it you've never been paid to beat-off to porn all day?

If so, you'll soon realize why they delve into the 'kinky' areas of trannies and whatnot, as one can only watch so many hours of "normal" porn before "the thrill is gone."

The rest of us, meanwhile, have to make do by hitting the refresh button over and over again at ZH while awaiting the next black swan. ;-)

Wed, 08/22/2012 - 11:49 | 2727551 paddy0761
paddy0761's picture

A non tax-deductable "Tobin Tax" of $1 per trade. Problem solved.

Wed, 08/22/2012 - 12:07 | 2727631 Racer
Racer's picture

and also applies to cancellations of orders over a set low number say 10/day.

After all it is already illegal to put an order in place where you don't intend to keep it in place until it gets executed... that would take away hundreds of thousands of fake orders immediately

Wed, 08/22/2012 - 12:44 | 2727766 smiler03
smiler03's picture

 ."A non tax-deductable "Tobin Tax" of $1 per trade. Problem solved."

 

9 upvotes at the last count. I can't believe it, I'm stunned, ZHers thinking a tax is good? Am I in the right universe?

 

WOW 

Wed, 08/22/2012 - 17:35 | 2728785 Umh
Umh's picture

Not that I think I repesent ZH, but a brake of some sort is required. The brake could take the form of a tax, time delay or something else that will prevent abuse. I prefer the time delay, perhaps because it's not a tax. I believe that even a delay between order and cancel of 1 second would rein in the trading algo's. I also believe that making people eat their bad trades would fix the algo's. As things stand now the algo's get a "get out of jail free card" when they fuck up.

Wed, 08/22/2012 - 16:00 | 2728551 pd45
pd45's picture

It won't work, think of Mutual funds, ETF, indexes. All it'll do is kill US capital market. The machines will simply relocate.

 

Wed, 08/22/2012 - 11:49 | 2727552 Bluntly Put
Bluntly Put's picture

I thought the stock market served a function in the economy, namely:

1) Price discovery and

2) Capital formation.

It no longer serves either function, it is now an abberation or mutation of advanced computers/programming and fallible human interference through abuse of the currency unit. Such a beast of unthinkable power, contrived by human ingenuity while ignoring human fallibility, is a recipe for disaster.

Wed, 08/22/2012 - 12:05 | 2727617 MachoMan
MachoMan's picture

I'll take issue with #2...  capital is formed through production, something that is the basic antithesis of the stock market...  I think capital compilation or congregation would be much more accurate (i.e. it allows people to pool their capital for a particular venture, rather than somehow inherently create capital).

And, I agree that it largely does not serve this funtion any longer given it is management (directly) and boards of directors (directly and/or indirectly) who manage to take the spoils, not shareholders [although, capital, in general, has completely dominated this round of the eternal struggle between capital and labor].  I guess to rephrase, the market fails to follow through with the implicit promise that shareholders have some benefit from the arrangement...  although, technically, it does allow capital to be pooled with the organization, at least initially and sometimes thereafter. 

Wed, 08/22/2012 - 11:49 | 2727554 ThisIsBob
ThisIsBob's picture

Sending in the Orkin man to exterminate the HFT techno-parasites would be a good start.

Wed, 08/22/2012 - 12:03 | 2727569 Badabing
Badabing's picture

“The market exists for two reasons: 1) to skim low-risk profits from naive/brainwashed investors and 2) as a propaganda front that can be lofted ever higher by authorities for the purposes of managing perceptions, i.e. the market is higher, so the economy is doing great, never mind what your own eyes and experience are telling you.”

And the big three

3) to control the price of commodities regardless of true market value to make inflated fiat currency look stable.  

Wed, 08/22/2012 - 14:04 | 2728085 Muppet
Muppet's picture

very clever profile pix.   well done.

Wed, 08/22/2012 - 15:20 | 2728409 Badabing
Badabing's picture

Thanks, its just more fake numbers for the muppet's.

Thu, 08/23/2012 - 09:04 | 2729862 SoundMoney45
SoundMoney45's picture

Then just HAARP a drought to explain the price increases caused by monetary base expansion.

Wed, 08/22/2012 - 11:53 | 2727572 fresno dan
fresno dan's picture

Next thing you know, this guy is gonna want the gubermint to represent the people and not just f*ck the people for the good of the bankers.

Ha, Ha, Ha  ....OW!  I hurt myself laughing

Wed, 08/22/2012 - 11:54 | 2727580 diogeneslaertius
diogeneslaertius's picture

great article

Wed, 08/22/2012 - 11:56 | 2727583 wcvarones
wcvarones's picture

Far be it from me to defend the centrally planned market, but...

1) The HFT stuff affects traders, not long-term buy-and-holders (aside from possibly eating a few basis points on your entry or exit, but retail gets screwed on transaction prices with or without HFT and it is de minimis for long-term holders).

2) TPTB still have to keep the market up for the banks, the pensions, etc.  Therefore, the central planners will continue the policy of stocks up, dollar down.  I'd rather be along for the ride than holding Zimbabwe Ben Bucks.

 

You may now hit the -1.

Wed, 08/22/2012 - 11:58 | 2727597 Confundido
Confundido's picture

Well, I hear you. Then, one solution here too would be to eliminate the coercive saving from pension funds.

Wed, 08/22/2012 - 12:08 | 2727633 MachoMan
MachoMan's picture

or actually allow price discovery, which would then lead to change regarding contributions...

Wed, 08/22/2012 - 12:04 | 2727625 buzzsaw99
buzzsaw99's picture

you are doing this from a well informed free will position and i support your right to play it as you see it

Wed, 08/22/2012 - 12:35 | 2727741 wcvarones
wcvarones's picture

Thanks -- and let me clarify that's stocks along with a lot of gold, silver, food, and ammo.

Wed, 08/22/2012 - 16:17 | 2728603 resurger
resurger's picture

You are right, it affects speculators and day traders (Both Bears and Bulls)

Wed, 08/22/2012 - 12:00 | 2727596 i-dog
i-dog's picture

1) All shares must be owned for at least four hours

2) All trading must be executed by humans on a transparent exchange where all trading activity (and open orders) is visible to all participants

3) Intervention in the market by the Federal Reserve or any Central State agency or agents is against the law.

More fucking [unenforceable] rules! Stop fucking around with the deck chairs!!

Will you statists please just go away, crawl under a rock, and let consenting adults take care of the world for a change!?!

Wed, 08/22/2012 - 12:17 | 2727667 alangreedspank
alangreedspank's picture

+1 on that. Weirdly, I can't bang this comment up.

Wed, 08/22/2012 - 12:00 | 2727601 aleph0
aleph0's picture

 

Formatted :

1) All shares must be owned for at least four "hours"
2) All trading must be executed by humans on a transparent exchange where all trading activity (and open orders) is visible to all participants
3) Intervention in the market by the Federal Reserve or any Central State agency or agents is against the law.

I could think of a lot more, but that's a great start.

Basically , it means getting rid of "secrecy" .. the #1 tool of WallStreet / FED / Govt.

How about keeping it simple ... 1 RECORD for EVERY trade made , that contains all relevant infos starting with the Trader-ID ... 
.... & of course their GPS position !
;-)

Wed, 08/22/2012 - 11:59 | 2727602 diogeneslaertius
diogeneslaertius's picture

but considering how the exchanges and power structures came into being

 

it would be folly to imagine that anything short of massive political will can take the pee out of the ocean

you dont create a holographic economic death star for nothing!

it took a lot of time and effort to get it in there and swap out the real economy...

think of all the editors alone who had to be bought off just to get to where they are today

 

no, until a large enough minority of politically active people put their feet down...

 

it takes a lot of time and effort to set up such an elaborate con game and you have to realize that "TPTB" (yes NWO is hard to say i know, even though the enemy says it openly) see this as a military occupation by other means

 

you do not simply walk into mordor

 

Wed, 08/22/2012 - 12:02 | 2727616 diogeneslaertius
diogeneslaertius's picture

"If the hosts all leave the market, the parasites will have only themselves to feed on, and they will quickly expire"

i wish it were still true and i fear the matrix has overgrown the machinery

i honestly am terrified that we will never get a correction, we will instead get 20 years of a slow britain/japan-esque pressure cooker as whats left of western civilization is slowly, inexorably dissolved

 

indeed, our enemies are incrementalists and have devsied a machinery capable of delivering a render-state viability via a holographic matrix

we are talking INFINIMONEY here people

it honestly can go on as long as people VOLUNTARILY REMAIN ON THE PLANTATION

 

Wed, 08/22/2012 - 12:03 | 2727623 diogeneslaertius
diogeneslaertius's picture

they created a holographic economic deathstar and swapped it for the real economy like indiana jones in raiders of the lost ark with the golden idol

 

the golden idol is gone folks

all thats left is a bag of digital sand and our serfdom - they can keep this mofo running on fumes AND take us to war...

Wed, 08/22/2012 - 12:06 | 2727629 diogeneslaertius
diogeneslaertius's picture

the NWO is openly telling you to your face: THOU SHALT NOT HAVE GDP LEST THOU ART COMMUNISTetc. (centrally-planned, which really means "effective NWO module on boardwith Our Agenda")

 

look at Q4 data and 2011, its as plain as the nose on your face

 

the only place you will have growth is where HUMAN LIFE IS NOT ONLY CHEAP, BUT WORTHLESS.

Wed, 08/22/2012 - 12:08 | 2727637 diogeneslaertius
diogeneslaertius's picture

its a biotrophic free for all, the structure is sick - that much alone is certain

and as long as we are shutting down the out of control instrumentation con game, lets shut off the IRS as well and introduce competing currencies alongside the dollar (like gold, bitches)

Wed, 08/22/2012 - 12:10 | 2727641 q99x2
q99x2's picture

But, if you start following Art Cashin's advice that he has recently been leaking over at CNBC you will do ok on trading. Very suspicious that for the last few months his calls have been so correct. Seems like GS is supporting CNBC by leaking info out through Cashin.

Wed, 08/22/2012 - 12:23 | 2727685 NotApplicable
NotApplicable's picture

Pied Piper?

Wed, 08/22/2012 - 12:12 | 2727651 Totentänzerlied
Totentänzerlied's picture

America is an "attractive nuisance", which by the way is one of those things that makes you think "are lawyers really fucking evil and/or idiotic enough to believe this shit?", no wonder the tort system is FUCKED.

Wed, 08/22/2012 - 12:14 | 2727662 alangreedspank
alangreedspank's picture

No, no and no. Because of governement propaganda, people are (re)discovering the dangers of stock markets. They ALWAYS were and when the Dow opened its floor, only individuals very educated about the markets they were involved in were present there. Speculators could not create panics because of this.

Wed, 08/22/2012 - 12:24 | 2727686 johnjkiii
johnjkiii's picture

The guy is a crank and an unattractive nuisance. The markets are the fault of the do-gooders and other assorted pests that want to regulate every phase of life on the theory that THEY and they alone know how we all should live our lives. The market is effed up because we let it and its regulators become corrupt. Every market has within it the seeds of its own destruction or success. The current regime has sewn the destruction variety for years and it will soon enough destroy itself. If Two Minds Smith wants to avoid the risk, he should stay out and shut himself up. However, he would then have nothing to justify his life.

Wed, 08/22/2012 - 12:25 | 2727694 El_Puerco
El_Puerco's picture

Beijing Gives China's Banks the
Green Light to Dump Dollars!...... 
China's central bank has always been able to sell dollars… Until NOW… For the first time, every commercial Chinese bank has been given official approval to DUMP and even SHORT the U.S. dollar!

What does this mean for U.S. dollar holders (you)? One word: CATASTROPHE. The conspiracy between Obama and China is deeper than you ever imagined.

US media no report to help to prepare ....

China and Washington are conspiring to bankrupt you!....

Saludos...

Wed, 08/22/2012 - 13:17 | 2727887 El
El's picture

Do you have a link for this? What is your source?

Wed, 08/22/2012 - 14:22 | 2728162 El_Puerco
El_Puerco's picture

C/P:

Here's a Special Message From
Our Friends at Weiss Research

Link i hope it works...http://finance.uncommonwisdomdaily.com/reports/RWR/DEC-VSP/dec-vsp-49.php?ccode=&em=&sc=PLIB&ec=5234102

 

Saludos...


Wed, 08/22/2012 - 20:42 | 2729112 El
El's picture

I'll take that as a no. You don't have a source.

Wed, 08/22/2012 - 12:30 | 2727718 RobinHood73
RobinHood73's picture

The market is destroying itself anyhow.Volumes dwindlling. Polarization and fragmentation in price discovery  seemingly accelerating with reduced retail involvement. The only thing holding it up is APPLE algos ,given its sheer market cap size . It is the manipulation tool of choice as the tail can now wag the dog.

Wed, 08/22/2012 - 12:32 | 2727727 Karlus
Karlus's picture

Gosh, we should have Big Brother limit all risky activity like starting a business, getting behind the wheel, getting married.

 

The role of individuals is to assess risk and make a decision. For those that are not bright enough to properly assess their risk, well they get to pay the "stupid tax" similar to having a bad credit score or an ugly wife.

 

No more nanny state. If you dont know that the oven is hot, touch it and figure it out. If the market is too manipulated or difficult for you to understand, stay clear of it.

Wed, 08/22/2012 - 13:38 | 2727989 jay28elle
jay28elle's picture

Totally missed the whole point of the article there, Karlus...  the mom & pop retail traders are being lied to and deceived throughout the entire financial reporting spectrum, and are being led to believe all is good (ect).  The sources they have learned to admire and trust through the years are all complacant in the conspiracy to conceal.  

 

 

Wed, 08/22/2012 - 13:01 | 2727790 ebworthen
ebworthen's picture

"All shares must be owned for at least four years."

 

 

Wed, 08/22/2012 - 13:14 | 2727881 El
El's picture

I disagree. You all have known (or should have known) for some time that the market is rigged. If you choose to play in it anyway, then the fault of any losses lies with you. I choose not to play in it, but I don't think anyone should tell you that you can't. Hey, it's your funeral.

Clearly I am not here to defend this market in any way, but if we want capitalism, then government needs to get out of the way and let the market fail. The answer isn't to have government step in and add yet more regulation or ban the market along with raw milk. (Hell, they don't enforce the laws they do have if it benefits them!)

In a capitalistic system, THIS market would fall on its own. Pull your money out, don't play the game, exchange your fiat for gold or silver and watch it come down. Want to play a different game? Then stop playing this one.

Wed, 08/22/2012 - 13:22 | 2727912 Freedom In Your...
Freedom In Your Lifetime's picture

If people were actually taught what really went on there wouldn't be a problem. Once enough people actually see that the stock market is only there for the purpose of benefiting an unproductive parasite class and doesn't actually provide any additional productive capacity to the companies in most cases, it will become the next embarrassing case study for the madness of crowds next to tulips where it belongs.

But that would mean either the education system would have to teach something, or that people would have to take the initiative to study on their own. And that is a whole other can of worms.

Wed, 08/22/2012 - 13:38 | 2727991 Liberty2012
Liberty2012's picture

Great analogy - with one exception. The real problem representing the base line departure from reality is fractional reserve banking. Money is a one to one trade - work traded for work. The distortion of that relationship leads to all manner of problems. That is where the "rake" starts and the only place to end it.

Freedom / Capitalism requires truth / honest money.

Wed, 08/22/2012 - 13:49 | 2728029 jay28elle
jay28elle's picture

IMO, like so many other things we are becoming use to the new normal, and pretty soon will have accepted it.

As long as 401ks keep going up, everything else is fine n dandy.

Wed, 08/22/2012 - 14:01 | 2728076 Carnegie_IB
Carnegie_IB's picture

disagree with point 1 

restricting choices is an element of gambling. 

the market being rigged? not sure. what is the proof?

Wed, 08/22/2012 - 14:39 | 2728239 monad
monad's picture

Caveat Emptor and stop locking the windows above the 4rth floor. Evolution does not require your faith to happen.

Wed, 08/22/2012 - 15:03 | 2728350 Uncle Remus
Uncle Remus's picture

Why you try so hard guy?

Wed, 08/22/2012 - 15:18 | 2728402 reader2010
reader2010's picture

Stock markets are one of wealth redistribution tools.

Wed, 08/22/2012 - 15:51 | 2728524 Unbezahlbar
Unbezahlbar's picture

Corzine could not be reached for comment.

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