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Guest Post: We Need a New Stock Market

Tyler Durden's picture


Submitted by Charesl Hugh Smith from Of Two Minds

We Need a New Stock Market

We need a new stock market exchange that is a transparent, retail-trader friendly alternative to the manipulated HFT-dominated pseudo-market we now put up with.

As I noted in The Stock Market Is an "Attractive Nuisance" and Should Be Closed, the stock market now bears little resemblance to traditional markets. Today's 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.

Can the current pseudo-market be restored to a true open market? To explore this question I contacted financial reporter Scott Patterson, author of the new must-read book Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System (print) (Kindle).

CHS: Your book poses this question: what can we do to restore the integrity of our stock markets?


Scott: This is essentially the role of the SEC, and it’s pretty clear that they’ve dropped the ball. In part this is due to the dramatic speed of the technology revolution that has completely overhauled the market. It’s easy to forget that just 10 years ago humans dominated trading. While, as I show in Dark Pools, the revolution had already begun in the early 2000s – sparked in many ways by Josh Levine and The Island ECN he build – it remained in its infancy. But now it’s clear to anyone paying attention that the market has been transformed, like a VW Bug turning into a Formula One race car, and the SEC doesn’t know what’s going on under the hood.


This conclusion isn’t up for debate. Mary Schapiro as much as admitted to Congress last year that she and her agency can’t surveille the market. That really is worrisome for obvious reasons. So what are they waiting for? It’s true that recently the SEC approved the so-called consolidated audit trail, or the CAT, which is billed as a giant eye in the sky for the market. But it’s still in the planning stages and who knows when it will actually be implemented—or whether it will actually be able to capture what’s going on.


CHS: While there are various regulatory “tweaks” that could be put in place (requiring a holding time of 1 minute for all securities, for example), I wonder if we don’t need a more fundamental “re-set” that asks what role the market should play in finance and the economy inhabited by everyday investors.


Scott: I think there are a lot of people in the industry wondering about whether there needs to be a massive overhaul. But it’s probably not a good idea for that to be imposed on the market by the SEC. The uncertainty would be potentially destabilizing. And I just don’t see it happening.


I think the change needs to come from within the market and needs to be imposed by its most important users—I mean, not the high-frequency traders, who are running the show at the exchanges in many ways—but the institutions, the giant mutual fund companies, the pension funds, the long-short hedge funds. They need to exert pressure on the exchanges to stop giving advantages to high-frequency firms.


Part of the problem is that many of these firms haven’t been paying attention to the changes, and again I point to the speed with which they have taken place. But more are waking up – I hope in part because some of them have read my book.

Thank you, Scott, for explaining the realities of the market and for your feedback on what could be done to restore a transparent, open market. It sounds like traditional market heavy-weights--institutions, mutual funds and pension funds--will only regain a say by removing their participation (and liquidity) from the current stock market: exit equities and go on strike, so to speak, until the exchanges and the SEC ban high-frequency trading, outlaw front-running and restore real transparency.

If the traditional heavy-weights abandoned the market, that would leave only the HFT firms and the Federal Reserve's proxies in the market, poaching each other in an ever-tightening circle of parasitic predation.

Removing liquidity that can be skimmed would push the present market into a highly vulnerable instability. The resulting implosion would "clear the decks" for meaningful reform.

If the traditional heavy-weights foolishly continue providing the "dumb money" that's being skimmed, perhaps retail investors could start a small, limited exchange that banned HFT, front-running and all the other manipulations. Such a market could restore one of the market original purposes, raising capital for new enterprises, and enable small retail traders access to an unmanipulated market.

Here are some common-sense rules for such a "new market":

1. Every offer and bid will be left up for 15 minutes and cannot be withdrawn until 15 minutes has passed.

2. Every security--stock or option--must be held for a minimum of one hour.

3. Every trade must be placed by a human being.

4. No equivalent of the ES/E-Mini contract--the futures contract for the S&P 500--will be allowed. The E-Mini contract is the favorite tool of the Federal Reserve's proxies, the Plunge Protection Team and other offically sanctioned manipulators, as a relatively modest sum of money can buy a boatload of contracts that ramp up the market.

5. All bids, offers and trades will be transparently displayed in a form and media freely available to all traders with a standard PC and Internet connection.

6. Any violation of #3 will cause the trader and the firm he/she works for to be banned from trading on the exchange for life--one strike, you're out.

Is such a retail-trader friendly exchange possible? There would certainly be a nice profit in it, for everyone who is tired of providing liquidity for HFT firms would flee the existing exchanges in a New York minute.

Given a choice between listing on the pseudo-market or a legitimate albeit smaller exchange (it would be a binary choice, you can only list in one or the other), many small-cap and micro-cap companies would choose the unmanipulated exchange once liquidity and demand reached critical mass.


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Sat, 09/15/2012 - 09:12 | 2798336 Cheeky Bitch
Cheeky Bitch's picture

Mary Shapiro has $9M reasons to protect the industry. Her parting gift from FINRA was $9M to make sure she continued to protect them.

Sat, 09/15/2012 - 09:48 | 2798390 malikai
malikai's picture

I know I'll get a million downvotes for this. But have a look if you're seriously considering alternatives. I know I am. It's the world's only truly free market exchange left.

Sat, 09/15/2012 - 09:52 | 2798399 Stackers
Stackers's picture

rule #3 negates the need for rule #1 and #2, which would kill human day traders

Sat, 09/15/2012 - 09:57 | 2798406 tbone654
tbone654's picture

Holding for an HOUR...  how about a minute?  That would be enough to kill HFT...

Sat, 09/15/2012 - 10:02 | 2798413 Popo
Popo's picture

Even easier:  A $0.25 Federal tax on all trades.   For any legitimate trader, a quarter isn't going to hurt.   But if you're making 500,000 per hour, you're going to run out of money pretty quickly.

Sat, 09/15/2012 - 11:07 | 2798521 malikai
malikai's picture

The danger with taxation is that it becomes a 'revenue stream' and as such is subject to abuse by pandering politicos.

Sat, 09/15/2012 - 11:19 | 2798543 cocoablini
cocoablini's picture

Nytimes.suggested a human, long only market. No shorts options flying iron condors. For a people who invest.and.want.dividends and investing in a story not momentum. I bet the real market of HFT would make derivatives or ETFs of the new market and manipulate it anyway. Everyone gamed because government has no interest in rule of law and real economies. I don't invest anymore because its all a big kabuki show lie. Stocks are too pricey and the FED/PPT are determining price discovery. The market is dying and good riddance

Sat, 09/15/2012 - 11:44 | 2798574 malikai
malikai's picture

I think there's a strong case against leverage. But options and all the plays made with them serve a very useful function in the marketplace. Options boards were created to serve the very real need for hedging tools.

Leverage, on the other hand is a hard to justify tool with, as we can all see, some very significant abuse potential.

Sat, 09/15/2012 - 12:14 | 2798610 superflyguy
superflyguy's picture

they can keep the options and short selling as long as they 1) ban naked short selling 2) require written consent of every actual share owner to allow lending out of their shares


Sat, 09/15/2012 - 12:40 | 2798666 JPM Hater001
JPM Hater001's picture

Why does no one get this.  They will just game the system another way.

Dont play the game.  You want to own a company call them up and buy in.

Not as efficient but it removes the disease spreading elements.

Sat, 09/15/2012 - 16:55 | 2799207 AldousHuxley
AldousHuxley's picture

ICE in Atlanta

CME in Chicago

Tehran Stock Exchange in Iran

Shanghai Stock Exchange in Communist China



New York banksters hate capitalism and competition....





Sat, 09/15/2012 - 21:45 | 2799668 RockyRacoon
RockyRacoon's picture

Along with all the new proposed bank rules in the article I'd like to add that everyone should play nice, share their toys, and not run with scissors.   There... that should make things just peachy.

Sun, 09/16/2012 - 10:46 | 2800438 0z
0z's picture

This "regulated" stock market (Regulated by whom?) sounds like something Hitler would have come up with.
Which reminds me of a good text. Ahh, here it is.

"Whenever you hear someone saying, "We need to..." or "If enough people..." (relating to the quest for freedom), you are observing the fallacy of "collective emancipation" being propagated." 

Just save yourselves. Save your kids and save yourselves. The collective is the smoking mirrors. There is no such thing a world freedom, only freedom of the individual. So go ahead, open your stock market, and see how much business you get. You might get some if you go to bed with the State, and use legislative powers to eliminate your competition.

Fucking Fascist.

Sat, 09/15/2012 - 14:48 | 2798978 blunderdog
blunderdog's picture

Long-only markets aren't "markets."  Price can't be discovered when you only have an "ask" and no "bid."

Sat, 09/15/2012 - 11:22 | 2798551 CH1
CH1's picture

A $0.25 Federal tax on all trades.

Fix a problem by rewarding the central cabal? Why the hell would you give money to them?

Sat, 09/15/2012 - 11:25 | 2798555 amadeusb4
amadeusb4's picture



That's precisely what would put a stop to all this nonsense. You can toss in bid/ask transparency as well if you want but this really isn't rocket science. Pretending that the solution is hard is another way of saying that there's no alternative.

Sat, 09/15/2012 - 11:30 | 2798560 malikai
malikai's picture

Why $.025? Why not $.50? Actually, since we have a budget defecit problem and a lot of poor people, let's make it $10 so we can fund welfare with it. It will only hurt those evil speculators anyway. While we're at it, we'll need to set up another regulatory agency to ensure rigid compliance of the overbearingly complex law we create to define it. We'll stock said agency up with Goldman alumni since they know the markets best.

Sat, 09/15/2012 - 13:12 | 2798753 partimer1
partimer1's picture

That's what a smart legislation looks like. One simple sentence.

Sat, 09/15/2012 - 10:15 | 2798433 Imminent Crucible
Imminent Crucible's picture

So it puts day traders out of business---so what? What do day traders add to the real economy? Zilch. Oh, yeah--now I remember; they "add liquidity". Bullshit. Any entity that doesn't really want to own a stock is false liquidity, the same as HFT quote-stuffing is false liquidity. HFT "orders" are not real orders to buy or sell, because they're flash quotes designed only to locate the stops of the competition. Likewise, day-trader "demand" for stocks is not real demand since the trader does not want to hold a single share, not even overnight. This is all gambling, and all ultimately destructive to markets.

We have FAR too many people doing paper-shuffling and other bogus jobs that add ZERO wealth to the country. Day trading for a living is no more useful than hustling poker for a living. In fact, it is exactly the same thing; trying to get wealth out of other people's pockets and into your own without providing any useful service.  We already have GOVERNMENT trailer trash for that, chumps. Losing the "benefits" of day traders to get rid of the algos is a very cheap price for fixing our markets.

Go get a REAL JOB. One potato farmer in Idaho is worth more than a thousand lazy-ass money shufflers.

Sat, 09/15/2012 - 10:20 | 2798444 malikai
malikai's picture

I don't see anything wrong with daytaders when they risk their own capital. I don't see why anyone else should either. If you believe in freedom, you don't care what other people do as long as they don't hurt or steal from you. And as best I can tell, not one single daytrader working with his own money has ever caused any problems in the market.

Now, institutional daytraders working with OPM on the other hand, now that's a different story, sometimes.

Sat, 09/15/2012 - 10:33 | 2798459 Imminent Crucible
Imminent Crucible's picture

It's probably true that no retail day-trader has ever done significant market damage, but that fact dodges the real issue. It's day traders in the aggregate, including institutional players, that severely damage the markets. How? By giving a grossly distorted picture of market depth. Look at it this way: If all the orders from algos, round-tripping scalpers and retail day traders were suddenly flushed out of the order queue, what would real market depth look like? It would look hellishly thin, and frighteningly insubstantial, with air pockets everywhere.

Then would-be "investors" could see what kind of a market they were actually buying into, before they put their savings at risk. That would be a very good thing, and probably save a lot of retirements from the HFT chipper.

Sat, 09/15/2012 - 10:43 | 2798478 Bobbyrib
Bobbyrib's picture

So your answer to problems with the stock market is to restrict day traders? I have no clue how you have so many up arrows from a website that supposedly supports the free markets. I can see restricting HFT to actually have to purchase a stock they put a bid on and not being able to pull it back within seconds, because making a bid on a stock you have no to little intention of buying shouldn't be legal. To tell someone how long they have to hold the stock once they buy it is nonsense.

Junk away, I really don't care after seeing the posts about the middle east protests at this point.

Sat, 09/15/2012 - 10:51 | 2798492 Spastica Rex
Spastica Rex's picture

To tell someone how long they have to hold the stock once they buy it is nonsense.

No, it's a proposed rule. You don't like the rule? Cool. Game rules are arbitrary, not written into the fabric of the universe.

Personally, I don't play - and won't ever play - so you can call me a socialist fag and I'll just laugh - having seen all the Randianisms a million times over at this point.

Sat, 09/15/2012 - 11:02 | 2798511 Bobbyrib
Bobbyrib's picture

Go to page 2 to see my response to the article.

Sat, 09/15/2012 - 11:18 | 2798542 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

How about making all trades even? Carbon based traders trade by the penny while silicon based trade on fractions of a penny. The playing field is not level at this point.

Sat, 09/15/2012 - 11:10 | 2798531 BooMushroom
BooMushroom's picture

A day trader is a guy who stands around the supermarket and when he sees someone reaching for a box of cereal, runs up, grabs all the boxes of cereal, and then says "oh, I'll give them to you, so you can buy them, for 10¢ each."

HFT is a guy who beats the supermarket lurker to the shelf and demands a penny from him, only HFT is so light on his feet, he manages to get between every shopper (and every day trader) and each item every shopper tries to buy.

Sat, 09/15/2012 - 12:28 | 2798635 superflyguy
superflyguy's picture

I think to put the day trader into a better perspective, it's a guy who buys up the movie tickets ahead of the regular crowd without the desire to actually watch the movie and then re-sells it to them for a higher price. Also known as scalping.

HFT is what you said.


Sat, 09/15/2012 - 10:49 | 2798486 malikai
malikai's picture

I think I see what you're saying. And I have to make it clear my distinction between retail daytraders and institutionals/hfts/etc. That line is clear, with those on the retail side being genuinely benign, while those on the other side being occasionally malignant, some chronically malignant (hft's/bank prop desks/etc).

I'll have to think about your market depth argument; it is a good one.

I think the difference between our views is that you see 'trading' as the problem when the market is supposed to be about 'investing'. I tend to agree, but in practice, unless you're buying for dividends, isn't any purchase or sell, regardless of how long you hold it, a trade?

Sat, 09/15/2012 - 14:27 | 2798933 Imminent Crucible
Imminent Crucible's picture

I agree generally, malikai, but it's a bit more complicated than that. I don't really care at all about retail day trading, I just think it's an unproductive vocation, something like the people who made a living writing "Linda Green" on endless affidavits for $10 hr. at LPS. If people want to spend their days staring at a stock streamer, trying to beat out the sub-penny algos, it's their choice. All I was saying is, "If we have to shut down day-trading to kill the algo trade and restore functioning markets, it's no great loss." That's all, nothing less, nothing more.

The difficulty with classifying a "Buy And Hold For Retirement" stock purchase as a "trade" is that it implies that duration has no price or cost. This can't be true, or the 30 YR Treasury bond would have the same yield as the 1 MO T-Bill. The guy who adds a few shares of WMT to his IRA every month has a very different goal than the guy who buys WMT thirty minutes ahead of the retail sales report, hoping to scalp a quick pop. The former is trying to protect his retirement savings from the inflation bite by converting it to equity in a large stable corporation. The latter is looking for quick easy money.  And then there's the GS tradebot who frontruns the day-trader's ask by offering to sell for a tenth of a penny less. That tradebot needs to get hit by a freight train, as does the company behind it.

Sat, 09/15/2012 - 10:32 | 2798457 Paul E. Math
Paul E. Math's picture

Extremely well-said, IC. And 100% correct.


Sat, 09/15/2012 - 10:39 | 2798465's picture

I think you meant to say:   One potato farmer in Idaho is worth more than ALL the lazy-ass money shufflers.

Sat, 09/15/2012 - 14:04 | 2798875 Imminent Crucible
Imminent Crucible's picture

I stand corrected. That is exactly what I should have said. The potato guy is productive; the paper-shufflers are parasites.

Sat, 09/15/2012 - 15:50 | 2799090 Skyprince
Skyprince's picture

So...let's assume the potato farmer reaps  millions in farm subsidies.  Isn't that parasitic?  And as for "paper shufflers," what about most parasitic government workers who suck resources from the productive economy in order to promulgate and administer thousands of inane rules and regulations?  Shouldn't we throw all these useless parasites out with the day traders?  And while we're at it....well, hopefully you can see where this is going.  I suggest you consider that one man's passion is another's "useless" activity and who are you to decide which is allowed and which must go?  

Sat, 09/15/2012 - 16:40 | 2799178 blunderdog
blunderdog's picture

An important realization.  This also happens to be why any *completely* "capitalist" structure for society can't work long-term/sustainably/etc. 

In order for "society" to be worth HAVING, there have to be multiple and competing reward-systems, so that people whose passions and interests differ can live together. 

That's the only way you can be free to do your thing while I go do mine.  Once you start thinking that there's this ONE PERFECT RULE to guide EVERYTHING you guarantee your own failure.

Sat, 09/15/2012 - 12:50 | 2798690 LarryDavis
LarryDavis's picture

I was at one of those prop trading factories yesterday and I had the same exact thought. These fucking people are WORTHLESS. Fuck daytraders, FINRA, and all that. 

Sat, 09/15/2012 - 11:41 | 2798569 11b40
11b40's picture

Who cares about day traders, other than a handful of semi-pro gamblers?

Sat, 09/15/2012 - 14:42 | 2798593 whotookmyalias
whotookmyalias's picture

I have no issue with Day Traders but if they need to be eliminated in order to bring greater good, then so be it.  Doesn't matter because if it will benefit the common man, it will never happen.  Speculation is fun but real improvement won't happen in our lifetimes.

Sat, 09/15/2012 - 17:51 | 2799324 11b40
11b40's picture

I have no issue with day traders, either. 

The fact that they make no real contribution to society, other than to try and skim profits form some and provide profits to others, is rather immaterial in the scheme of things.  However, we can't have the rules catering to their benefit at the expense of the greater good.  When you dip the dog for ticks & fleas, there may be a few minor, non-threatening insects that get killed too, but so what.  If that's the price for killing the thicks & fleas, I wouldn't call it a problem for the dog - only the dead insects.

Sat, 09/15/2012 - 13:11 | 2798752 Papasmurf
Papasmurf's picture

"rule #3 negates the need for rule #1 and #2, which would kill human day traders"

So, what is the downside?

Sat, 09/15/2012 - 10:46 | 2798481 Urban Redneck
Urban Redneck's picture

Bitcoin has worse terms than the NYSE thieves, Corzine would be envious...

The Exchange assumes no responsibility or liability for any fraud committed on this exchange, but will do its best to prevent its occurrence.

The Exchange assumes no responsibility for the terms of assets that are traded or listed on the Exchange, or for the actions of any of the Users issuing assets that are traded or listed on the Exchange.

It is not the Exchange's responsibility to ensure that those trading, listing, or issuing assets on the Exchange are operating according to any kind of rules, regulations, laws, or standards those trading, listing, or issuing assets on the Exchange are subject to in any jurisdiction, beyond these terms of service.

The Users of the Exchange take full responsibility for their own actions, and any consequences resulting from those actions. It is the Users' own responsibility to determine the risks involved in depositing funds with the Exchange, creating assets, executing trades, or any other activity or action related to the use of the Exchange, or any of its current services.

The Exchange is currently beta release software, and as such the Exchange assumes no responsibility or liability for any losses that may be incurred if the Exchange is taken offline to deal with any problems that may arise. The Exchange makes no guarantees as to the correct functioning of its services until it is removed from beta release, although the Exchange will do its best to ensure it is functioning correctly. The Users use the Exchange at their own risk.

The Exchange will make its best effort to ensure that all data on the Exchange is properly backed up in the event of a system failure, or any other event. However the Exchange makes no guarantees. The Exchange is a best effort service and will remain so until it moves beyond the beta stage of development.

The Exchange may at its discretion ask asset creators to provide proof of identity, address, phone number, or any other information as deemed appropriate. Said information will be held securely offline and not shared with any third party.

The Exchange reserves the right to suspend trading of any asset, or suspend access to an asset creator's account, for failure of an asset creator to provide requested information, or in the event of suspected fraud.

The Exchange reserves the right to deny listing, or suspend trading, of an asset if such asset is deemed to be of a nature that potentially exposes the operations of the Exchange to unacceptable risks.

By using the Exchange, and any of its current services, the Users agree to be bound by these terms of service.
These terms of service are subject to change without notice.

Sat, 09/15/2012 - 10:56 | 2798491 malikai
malikai's picture


Caveot Emptor. Ala Free Market.

I love it.

Sat, 09/15/2012 - 09:47 | 2798392 withnmeans
withnmeans's picture

There once was a time when individuals actually invested in a company or companies that needed money to have capital to help build the business into a stable thriving entity.

Ah, those were the days. 

Then, the shysters got their fingers into the pot, making sketchy investment vehicles, you know the crap you can buy "but most people don't understand how they work". Wouldn't it be nice to turn back the clock to a time when you bought stock, held it, and you were rewarded. These companies today are also part of the black hole problem, they are not transparent and the bottom line is normally bogus.

I have often found it interesting that if AAPL is the BIGGEST, RICHEST, company in the world, why would they need anybodies money invested in them.....

Don't get me started on banking and all of their phony derivatives.

Good Day Gentlemen and Ladies!

Sat, 09/15/2012 - 10:20 | 2798445 Seer
Seer's picture

That "time" was in the early days of the Ponzi.  Just because things were rolling then doesn't mean that it STILL wasn't a Ponzi.

Perpetual growth on a finite planet IS a Ponzi.

Sat, 09/15/2012 - 10:40 | 2798470 Urban Redneck
Urban Redneck's picture

Private Equity (and held privately companies in general, regardless of whether they are held indefinitely, or eventually flipped) by definition & function are not part of the Ponzi, since their paper is non-eligible.  It is the eligible, marginable, and LEVERAGEABLE characteristics which create the Ponzi.  The Facefuck IPO was a perfect example of what happens when a company decides to join Ponzi scheme and starts believing the hype they shovel to sell their souls.  Finding the next bigger fool is not in and of itself a Ponzi scheme, ask any Arab rug dealer if he's heard of Ponzi.

Sat, 09/15/2012 - 11:13 | 2798536 francis_sawyer
francis_sawyer's picture

Ants & grasshoppers... (& oh yeah ~ fuck the grasshoppers)...

Sat, 09/15/2012 - 14:27 | 2798932 billsykes
billsykes's picture

I have a diferent view. PE could be totally legit and things get muddy with tons of debt, but catorgoizing all transactions as sucker deals or finding the next idiot shows that you have misanthropic views and maybe you just hate people- the transaction may be secondary or a rationalization of your people hating views.  I think everyone feels that way some time, but all the time is harmful.

If I buy an apple from a farmer at the farmers market, do I say "that dirty farmer is makeing a profit, and I am paying for his venue here at the market?" No, I want an apple and to get one I need to either have an apple farm or buy an apple from someone who produces one.

Without a transaction there is no economy.

Sat, 09/15/2012 - 15:10 | 2799026 SmackDaddy
SmackDaddy's picture

I guess that depends on what that farmer is charging.  (and for some around here whether or not he's Jewish... j/k)

Sun, 09/16/2012 - 06:14 | 2800149 Urban Redneck
Urban Redneck's picture

My interaction with the PE market is different than most professionals since exit via IPO is not generally part of the strategy (vs. capturing the ongloing cash flow).  Overall, I think PE is critical to economic function, but the focus of the institutional PE industry on a 5-7 year exit via IPO (which recycles liquidity and assets right back into the monetary ponzi) is unhealthy and misallocates significant excess capital towards whatever the "hot" sector is, according to current Wall Street group think.

Sat, 09/15/2012 - 14:59 | 2798999 blunderdog
blunderdog's picture

I understand what you're saying, but I think you've got an error there.

The *monetary system* is the ponzi--any financial contracts which can be impacted by the expansion or contraction of the money supply are, therefore, "part of the ponzi."  ALL equity valuations have a natural tendency to rise as the money supply expands. 

*Any* financial instrument is "leverageable" because two parties can make whatever agreement they like about some given instrument.

Sun, 09/16/2012 - 06:07 | 2800148 Urban Redneck
Urban Redneck's picture

The money supply ponzi is a directly correlated to the balance sheets of "regulated entities" and the composition of those balance sheets is the key regulation manipulated to maintain and expand the ponzi.  If I have paper of a non-listed company I may be able to leverage that OTC, but I can't do it with regulated entity (at a reasonable cost vs. the bank's opportunity cost associated with withdrawing liquidity from their levered balance sheet ponzi, to serve as a counter-party, which is why some subprime NINJA in the US can borrow at a lower cost than an established multi-million dollar enterprise looking to expand operations in a non-eligible (Emerging or Developing) market).  Even within the confines of US borders, this drives up the borrowing cost and creates barriers to entry for new enterprises and reduces competition, for the benefit of existing enterprises large enough to be listed and leverageable.   

Sun, 09/16/2012 - 15:31 | 2801010 blunderdog
blunderdog's picture

Aha.  Gotcha, I see the distinction you're making. 

Sat, 09/15/2012 - 09:52 | 2798398 Rip van Wrinkle
Rip van Wrinkle's picture

$9 Mil?? $9 measly mil?? The whistleblower just got $104mil for coughing.


What a mug Shapiro must be.

Sat, 09/15/2012 - 10:31 | 2798456 Divine Wind
Divine Wind's picture




I like the idea put forth in the OP, but it will never happen.

Far too much money is made by far too many 'made' individuals that a serious proposal along these lines would likely get someone clipped.


Sat, 09/15/2012 - 11:22 | 2798549 Doode
Doode's picture

Those rules are fucken retarded written by a child who never worked in either execution or even in trading in general. The author needs to go get a real job probably in waste disposal management.

Sat, 09/15/2012 - 12:54 | 2798704 LarryDavis
LarryDavis's picture

execution? We really need to employ more people in execution and trade reconciliation. GET A REAL JOB.

Sat, 09/15/2012 - 16:56 | 2799211 Doode
Doode's picture

Execution is called algo trading these days - dumbass!

Sat, 09/15/2012 - 19:34 | 2799461 LarryDavis
LarryDavis's picture

You really have an expansive command of finance. As for me, I don't give a shit about Wall St. parlance. It's all the fucking same. Most statisticians and econometrics phd dudes believe the markets behave randomly with a near term memory. Do we need to make market rules so people who can code well in C++ get paid 300k to trade seemingly random or fed supplemented moves? How are hedge funds performing this year? Are the execution departments helping the US economy? Are the bollinger bands signaling a move? Did you get that neural net up and running? How is the artificial intelligence working? You should get a fucking tradestation account and "execute" some shit. As far as I can tell algos are precursors and similar in nature to HFT, so be careful what you wish for DUMBASS.   

Sat, 09/15/2012 - 09:19 | 2798344 mrdenis
mrdenis's picture

can a person with a fat finger enter orders ? 

Sat, 09/15/2012 - 09:34 | 2798368 bank guy in Brussels
bank guy in Brussels's picture

And re computer entry problems ...

On Tyler's previous post today on Bridgewater's Ray Dalio and his presentation, the crappy 'slideshare' programme there is crashing the computer for some of us every time we open the ZeroHedge page on that.

For those who would like to read the Ray Dalio presentation on 'How the Economic Machine Works: Leveragings and Deleveragings', without computer issues, you can find it directly in simpler pdf form here:

Or here:

Or you can read the presentation and interview with Ray Dalio at the CIA-affiliated Council on Foreign Relations ... quite a creepy organisation, of course:

Sat, 09/15/2012 - 10:17 | 2798438 Imminent Crucible
Imminent Crucible's picture

If your finger is fat enough, we'll hire you to give Bernanke a prostate exam.

Sat, 09/15/2012 - 09:22 | 2798346 TheFineKid
TheFineKid's picture

John Thaine (Goldman guy) ruined the NYSE.

Sat, 09/15/2012 - 10:14 | 2798431 LongSoupLine
LongSoupLine's picture

Thaine should be in stuff your anus hourly prison.

Sat, 09/15/2012 - 12:55 | 2798707 LarryDavis
LarryDavis's picture

He has a gorgeous house in Rye though. He can't be that bad. 

Sat, 09/15/2012 - 09:22 | 2798347 Yardfarmer
Yardfarmer's picture

that's really a nice idea, Charles. 

Sat, 09/15/2012 - 10:17 | 2798432 CH1
CH1's picture

It is a good idea.

The problem is that stock trading is a business run by violent thugs. If someone tried to set this up, they would be forcibly restrained. (In the name of "law" of course.)

The time for patches has gone. It's time to walk away and to start building better.

Sat, 09/15/2012 - 10:46 | 2798482 Seer
Seer's picture

Yup, it's the "System!"

Further, do people really want to "start over" with the "thugs" still in possession of nearly all capital?*  I have to laugh at this, as it's just like "the equal rights amendment," which, after 150 years, all of a sudden said that blacks in the US were equal, after the white oligarchs had 150 years' head start (and had firmly established control).

Do people demand a really just system? Well, we'll arrange it so that they'll be satisfied with one that's a little less unjust ... They want a revolution, and we'll give them reforms -- lots of reforms; we'll drown them in reforms. Or rather, we'll drown them in promises of reforms, because we'll never give them real ones either!!

- DARIO FO, Accidental Death of an Anarchist

Most people here on ZH don't want to admit it that this is a common theme in history in which over-concentration of "wealth" leads to "re-distribution."  And we all know that "re-distribution" is a "socialist" thing...  Just saying (not promoting or advancing any agenda, just commenting based on reality).

Sat, 09/15/2012 - 13:01 | 2798722 Cathartes Aura
Cathartes Aura's picture


Equality of rights under the law shall not be denied or abridged by the United States or by any State on account of sex.

still hasn't been passed.  there is no "equality" under "the law" in amrka.

Sat, 09/15/2012 - 15:06 | 2799017 blunderdog
blunderdog's picture

People have roughly equal ability to purchase rights/freedoms/protections assuming they have roughly equal access to money.

So that's something.  Government has already been eaten by "the markets."  Most folks just haven't realized it yet--they still think the politicians matter more than the benjamins.

Sat, 09/15/2012 - 10:36 | 2798461 DosZap
DosZap's picture

Great, only prob, never will it makes TOO much sense.

Sat, 09/15/2012 - 09:23 | 2798348 hookah
hookah's picture

"3. Every trade must be placed by a human being."

Good luck with that. Its simply stupid, unforceable and you can easily go around it. (Just use the chinese slave labor as a computer...)

Sat, 09/15/2012 - 10:50 | 2798489 Seer
Seer's picture

Yes, just like [in the US] we can't seem to get 535 people to abide by the fundamental laws of the Constitution, shit like "''The Congress shall have Power To declareWar" etc, etc...

Sat, 09/15/2012 - 09:23 | 2798349 max2205
max2205's picture

Dream on.

Sat, 09/15/2012 - 09:58 | 2798408 bigwavedave
bigwavedave's picture

Yeah. Dream on. And add that 7a) The rule of law will be applied equally to both rich and poor. 7b) Haha. Only kidding. 

Sat, 09/15/2012 - 10:16 | 2798435 DeadFred
DeadFred's picture

An hour after this new exchange opens Holder will have the place swarming with fibbies to stop their terroristic activities. The Plunge Protection Team and their e-minis are there to protect us from the bad guys (those who oppose the status quo) dontcha know. Hope and change and QE forever!

Sat, 09/15/2012 - 10:41 | 2798436 DeadFred
DeadFred's picture


Sat, 09/15/2012 - 09:25 | 2798350 Thought criminal
Thought criminal's picture

Wouldn't the HFT problem be basically solved just by introducing a small commision for placing an order and lowering the minimum tick? Those ideas mentioned above sound a little crazy to me.

Sat, 09/15/2012 - 09:39 | 2798376 Dr. No
Dr. No's picture

So a tax on every order? A commission wouldn't work, since the big brokers are the ones doing it so they would be receiving the proceeds. I am not for another tax. We already pay a tax for selling, now we need another to attempt to sell?

Sat, 09/15/2012 - 09:42 | 2798382 Umh
Umh's picture

There are many ways to provide a level playing field for market participants. You just named two possibilities. The extreme options given in the article are just intended to rouse the rabble. The bigger problem is that the influential people don't want a level playing field. The whole concept of dark pools is to allow the big players to trade without alerting the typical market participant.

Sat, 09/15/2012 - 11:16 | 2798540 rehypothecator
rehypothecator's picture

We taxpayers already have to put up with distinguishing "assets held more than 1 year" from "assets held less than one year" on our taxes, which are taxed at different rates.  Certain politicians like to talk about making The Rich, Pay Their Fair Share.  How about 50% taxes on gains on "assets held less than 1 min" and 80% taxes on "assets held less than one second" and 99% taxes on "assets held less than one millisecond"?  I don't think many poor people have to worry about gains from assets held less than one millisecond.  Then again, the criminals in Washington are drawn from the same folks as the criminals in Wall Street, so the thought that there's a chance of any laws like this being enacted ... vanish in about one millisecond.  

(OT: I much prefer the meh girl to Obama's smiling mug, at the left.)

Sat, 09/15/2012 - 13:22 | 2798774 Papasmurf
Papasmurf's picture

Going back to trading 1/8ths would solve the problem.

Sat, 09/15/2012 - 18:54 | 2799418 you enjoy myself
you enjoy myself's picture

it doesn't even need to be that dramatic - just end sub-penny trading for anything over $1.  and force all offers to stand for at least one second.  that something so simple and fair would blow up most HFT's just goes to show how disfunctional today's market is.

Sat, 09/15/2012 - 21:57 | 2799688 RockyRacoon
RockyRacoon's picture

"...something so simple and fair would blow up most HFT's just goes to show how dysfunctional today's market is."

Which is exactly why it won't happen... ever.   It'll just have to blow up first.  It's like a machine with a broken governor; it just runs faster and faster until it blows itself apart.  The governors (SEC, et al) are in place but they don't work right.  Keep your flak jacket handy.

Sat, 09/15/2012 - 09:28 | 2798352 cranky-old-geezer
cranky-old-geezer's picture



You can't legislate honesty, morality, and caring about people.  

You take on those qualities voluntarily or you grow into a selfish don't-give-a-damn-about-anyone-else asshole.

America's founders had those qualities.  But no one has them today, certainly not people in positions of power.  They're selfish don't-give-a-damn-about-anyone-else assholes, putting money and power ahead of everything else.   

It's not just a Wall Street problem.  It's a problem running rampant through our whole society.  Massive rampant selfishness at all levels.

That's why none of the problems will be fixed, and America will slide into the trashcan of history, like every other nation who turned rampantly selfish down thru history.

Sat, 09/15/2012 - 09:55 | 2798403 Harbanger
Harbanger's picture

You wouldn't be referring to the "me" generation would you?

Sat, 09/15/2012 - 10:05 | 2798419 BobPaulson
BobPaulson's picture

The trick is to try to actively override the tendency to negative selection in a society's leadership. In other words, the biggest assholes always rise to the top in a system that rewards only growth, expansion, consumption, luxury, war and waste, so you have to collectively set up structures that try to reward people who are ethical. This is very tough since the psychopaths learn to defeat your security by pretending to be ehtical by arranging to get nobel prizes or publicly taking part in organizations that claim to be eithical that aren't like churches.

What is broken about the stock market and politics is that because we're dealing with so many people now in this world, important decisions are not being made based on trusting face to face relationships between two people. We have significant skills developed over millions of years of evolution that allow us some bullshit detection face to face, but we are not able to use those skills anymore, because the important relationships are handled by proxy through complex and scientifically developed media.

Perhaps I am dreaming but there needs to be a development in our political system that can allow us to act the way we evolved: interacting in groups of no more than 100 humans, but that can at the same time address grand issues like conserving resources and wealth for generations to come.

Sat, 09/15/2012 - 13:08 | 2798745 Cathartes Aura
Cathartes Aura's picture

the "nationstate" model is working as intended, in that it does reward only a handful of controllers - the state mafia - and requires the work of multitudes to be "taxed and collected" in order to function.

add to that the enormous amounts of monies needed for the nationstate to "work" and "defend" itself, and you have the recipe for massive control - the more they collect to put into "defense" the more offensive the state becomes to other states, and eventually to the taxed-payers. 

this is baked in.  the model needs to be seen through, but the control is so tight it is all accepted as inevitable reality, when it's anything but.

Sat, 09/15/2012 - 13:27 | 2798793 malikai
malikai's picture

How about unlimited personal liability in all affairs, business, government, and personal?

Sat, 09/15/2012 - 15:10 | 2799025 blunderdog
blunderdog's picture

That could be enforced by the people TODAY if we're willing to step outside the boundaries of commercial transaction.  But it's scary out there for a lot of folks. 

Sat, 09/15/2012 - 10:57 | 2798499 Seer
Seer's picture

I agree with your general sentiment but... morality really doesn't have anything to do with what's really wrong.

What's REALLY wrong is that our "animal spirits" are feeling that we're running out of exploitable planet at the same time we're continuing to expand our population.  Those in "control" wish to distract us from spelling this out lest They become instant road-kill.

Please don't mistake my ramblings to mean that I don't give any merit to the notion of morality, I feel that I can hold my head quite high when it comes to morality, it's just that trying to ascribe some uniform set of "laws" just ain't going to work (those writing the laws will always work it such that they have a backdoor that enables them to be just a "little more equal").

Sat, 09/15/2012 - 13:00 | 2798720 LarryDavis
LarryDavis's picture

Not sure that America's founders were the best guys but other than that you are dead fucking right.

Sat, 09/15/2012 - 13:13 | 2798754 Cathartes Aura
Cathartes Aura's picture

as long as people continue to promote the idealised version of this nation's history, and see the "Founding Father" figures as something god-like from the start, then the old ways are perpetuated, the best one can hope for is yet another "amendment" to claw back any "rights" conveniently left out of the original ideas. . .

start over or live in the past.

Sat, 09/15/2012 - 09:26 | 2798353 Spaceman Spiff
Spaceman Spiff's picture

I doubt the government will ever sanction this.  Bureaucratic red tape (a new exchange will need SEC approval, no?) and threats to companies willing to list on such exchanges will keep the B.S. going on the old exchanges.



Sat, 09/15/2012 - 09:59 | 2798410 mayavision2012
mayavision2012's picture

Getting the right group of experienced and principled people together can turn things around in no time.

"Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has."  Margaret Mead

Sat, 09/15/2012 - 11:07 | 2798523 Seer
Seer's picture

A great appeasement statement if ever there was one...  It reads one way yet tends to promote the notion that somebody else will do "it."

The PROBLEM that I've ALWAYS seen when I'm within that "small group" proposing "change," is that there becomes a sense of being elevated above others (who aren't wanting to embark on making "change" happen), because, well, because you're applying energy and you should therefore get a little "something" out of it...  Anyone thinking that this isn't the case is disconnected from reality.

I think that the world doesn't need "changing:" really, time = change, so the statement is really only trite.

EVERY INDIVIDUAL JUST NEEDS TO APPLY THE NOTION OF "JUST DO IT!" (as much as I hate corporate marketing I can't help but believe that this Nike slogan really has significance [in that it should be co-opted by individuals]).

I believe that people really do know what is "right" and what is "wrong," and that any time you write it down you provide fodder for people to twist and manipulate the words to their favor, which then tends to translate to oppression of others.

Wasn't it the Mayans who turned and walked away from the "System?"  They didn't try to change it.

"You never change anything by fighting the existing. To change something, build a new model and make the existing obsolete."

- Buckminster Fuller

Sat, 09/15/2012 - 12:02 | 2798595 mayavision2012
mayavision2012's picture

"Changing" the world absolutely means building from the ground up a new possibility. 


Fuller also said "Dare to be naive".  In other words, the word "impossible" should be deleted from the mental mind.


BTW, the Mayans did walk away precisely because they understood this principle.

Sat, 09/15/2012 - 20:24 | 2799532 philosophers bone
philosophers bone's picture

We need a rethink. SEC needs to be a real regulator with real knowledge of the markets and with a real public interest mandate. As it stands, the SEC delegates regulation of brokerage firms to self regulatory organizations whose members are the brokerage firms themselves. This experiment has failed. Also the SEC shows too much deference to the SROs, exchanges and the brokerage firms on the grounds that they have intimate knowledge of how the markets work. Problem is profit motive vs. public interest motive. In many cases these are diametrically opposed. Throw out SROS and Exchange self regulation.

Sat, 09/15/2012 - 09:27 | 2798354 Dr. No
Dr. No's picture

More regulation should fix it huh?

Sat, 09/15/2012 - 11:09 | 2798527 Seer
Seer's picture

No, I think we're best off letting them police themselves... eventually it'll all hang itself.  This is what I'd prefer, anything else just preserves the built-in rot...

Sat, 09/15/2012 - 20:31 | 2799544 philosophers bone
philosophers bone's picture

Not more. Less rules but real consequences for breach.

Sat, 09/15/2012 - 09:30 | 2798355 i-dog
i-dog's picture


Rules, and more fucking rules! When will you statist central planners ever give up on setting rules, and more rules, that insiders never follow and outsiders are continually trying to bypass?

A free market doesn't need rules. HFTs could eat each other and nobody would give a fuck, because each would, in turn, go bk without government bailouts of the banks behind them.

Stop fucking around with the deck chairs!!!!!!!!!!!  Dumb fucking sheep!!!!!!

Sat, 09/15/2012 - 09:31 | 2798363 Spaceman Spiff
Spaceman Spiff's picture

Do HFT play by the same existing rules as everyone else though?   If they can flood bids/sells in nanoseconds and front run people, then you don't have a free market.

Sat, 09/15/2012 - 10:00 | 2798405 i-dog
i-dog's picture

In a free market, there would be competing exchanges using innovative investor safeguard mechanisms to compete for listings and investors. Who, in their right mind, would invest on any exchange that allowed insider HFTs co-located on the exchange floor (with or without 5-minute or 1-hour rules)?

The only reason that exchanges like the NYSE have any flow at the moment is because of GOVERNMENT MANDATES on where insurance, pension, retirement and various other fund types can invest. Without those dictates, no sane human -- other than the usual mindless gamblers looking to make (ie. lose) a quick buck -- would be "investing".

Entrepreneurs looking to raise capital in a free market should be listing on vehicles like Craigslist or eBay ... with prospectuses certified by reputable private peer-reviewed rating organisations. A free market would find innovate new solutions. The current rigged game is a joke.

Sat, 09/15/2012 - 10:00 | 2798411 malikai
malikai's picture

See my post above about GLBSE. It's pretty damn close.

Sat, 09/15/2012 - 10:19 | 2798441 BobPaulson
BobPaulson's picture

Agreed, though not sure Craigslist and Ebay allow the heavyweights to play. Those guys are all now into angel investing where you meet the startup team face to face before money goes down. I know where I live there is a network of them through word of mouth and friends. Sadly most of that investment money gets pulled into resource plays because the best risk/return ratios are there, thus squeezing out things like technology and othe ventures. Even then, the old boys clubs like those are always looking for an angle on changes in government regulations (environmental regulations, OHS rules, etc) through an opaque and unchanging political party that runs the place.

I don't think rules are the problem as much as the lack of transparency in rules. I hear a lot of ZH'ers rant about how bad rules are, but you do need some structure to protect the average Joe's from the ultrarich and the religious faith in markets to do everything does not cut it IMHO.

Sat, 09/15/2012 - 10:48 | 2798480 i-dog
i-dog's picture

I used Craigslist and eBay as tongue-in-cheek examples of innovative new market types that satisfy particular needs for the "little guys". The big boys are equally capable of finding and funding innovative new approaches to their needs in the absence of government restrictions on what they can and cannot do.

The purpose of an exchange is to match buyers and sellers of negotiable stock certificates - in a manner that gives a large enough liquidity pool to ensure quick turnaround. I'm sure that innovative solutions would be found by creative entrepreneurs, and adopted by seekers of a liquid market for their shareholders, that are neither mutually exclusive nor one-size-fits-all, if the straight jacket of government oversight were to be removed from each feudal fiefdom.

There is certainly no transparency, regulation or protection in the current straight jacket cabal of "licensed" exchanges, SEC, "licensed" market makers, dark pools and congress insiders.

Sat, 09/15/2012 - 13:24 | 2798781 Cathartes Aura
Cathartes Aura's picture

while I realise this "conversation" is pertaining to the stock market, your idea of using Craigslist (as an "example") is not so far-fetched. . .

years ago there were many creative ways of financing small businesses like coffee shops & local restaurants, using, for example, coupon books whereby the customer paid in advance and got a discount on future purchases.  I've also participated in buying "shares" of a local shop in order to work with others to keep it open, ongoing.

most likely our laws 'n' rules-happy .gov have made all of that too dangerous and forbidden, but it was working there for a while, and most likely could be applied going forward.

unless, of course, it's too late.

Sat, 09/15/2012 - 11:12 | 2798534 Seer
Seer's picture

"In a free market, there would be competing exchanges using innovative investor safeguard mechanisms to compete for listings and investors."

You're missing REALITY!

There are NO "free markets." (unless practiced at the local level, which would obviate any big computer-controlled exchange, no?)

Power doesn't cede itself!  You're NOT going to compete against it!  At best it will only "allow" you to do something at a scale that isn't a threat.  Any momentum and it gets co-opted or, drone'd.

Sat, 09/15/2012 - 14:26 | 2798931 omi
omi's picture

Absolutely agree on the mandated forced redirection of everyoen's funds to support financial industry. Remove this and the financialization of everything will shrink.


Also agree on the last point that most of capital raising for companies is done by primate means, exchanges act mostly as a vehicle to pick up when it got dumped.


Bonds are still far largest market, and it's semi-private exchanged.

Sat, 09/15/2012 - 09:58 | 2798409 Sathington Willougby
Sathington Willougby's picture

Your horse keeps shitting everywhere and pissing everyone off.  I'm sure that the car craze will pass one of these days though. 

Sat, 09/15/2012 - 11:16 | 2798541 Seer
Seer's picture

Funny... I'm not sure if you were aware of the connections here, but back when the automobile was first being pushed one of the "selling/marketing" points was that it was more environmentally friendly than all the horses which were shitting in the streets (which required wagons to gather up the shit).

Anyway, the planet's finite so, yes, the "car craze" will end one day.  Even if "resources" are still available there's still the little detail of the next glacial period coming along, which, I'd figure, would tend to make cavorting around the countryside in the jalopy a little bit difficult.

Sat, 09/15/2012 - 11:57 | 2798585 Harbanger
Harbanger's picture

"back when the automobile was first being pushed one of the "selling/marketing" points was that it was more environmentally friendly than all the horses which were shitting in the streets "

I thought the affordable price of Fords model T (assembly line) was the selling point. Did you ever hear of the Horse manure crisis of the 1890’s? The Urban planners predicted that 20th century cities were going to be buried in horse shit by 1930 because of horse population growth. Even though cars had already began to be manufactured commercially, they couldn’t imagine how cars could ever replace horses.  Classic planner mentality.

Sat, 09/15/2012 - 09:30 | 2798356 EvlTheCat
EvlTheCat's picture

New or old, money changers are money changers...

Sat, 09/15/2012 - 11:19 | 2798544 Seer
Seer's picture

Yup, and as long as they have the masses tuned to their channels (think iCrap) they'll have the ability to hold off any opposition.  Any "new" way will require advancing to Their cash-out window, which, as it always has, extract tolls sufficient to keep them in their positions.

Sat, 09/15/2012 - 09:30 | 2798358 valkir
Sat, 09/15/2012 - 09:50 | 2798394 malikai
malikai's picture

Can someone please remind me again why all those people move to countries which are "western" when they clearly hate it?

Sat, 09/15/2012 - 10:13 | 2798429 Eally Ucked
Eally Ucked's picture

Don't you think it's a bit silly question? It's like asking "what do you prefer being ripped-off or rip off somebody else?"

Sat, 09/15/2012 - 10:57 | 2798498 groundedkiwi
groundedkiwi's picture

Remind me again why the USA has bases in countries that they hate?

Sat, 09/15/2012 - 11:04 | 2798516 malikai
malikai's picture


Well, if those indigenous peoples would just leave so we could move ExxonMobil in, everything would be fine!

Sat, 09/15/2012 - 11:26 | 2798556 Seer
Seer's picture

That's the direct approach.  It's only used when the in-direct -humanitarian [govt OR (Western) religion] approach has failed (outright or is just too slow).

“I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.”
? Smedley D. Butler, War is a Racket: The Antiwar Classic by America's Most Decorated Soldier

Sat, 09/15/2012 - 11:34 | 2798567 malikai
malikai's picture

I guess that one goes in the list of must reads for me.

Cheers for that.

Sat, 09/15/2012 - 10:56 | 2798497 ThorAss
ThorAss's picture

Capsicum Spray LOL

Sat, 09/15/2012 - 09:38 | 2798359 Democratic koolaid
Democratic koolaid's picture

Stipulation #6 is contradictory and hypocritical "one strike, you're out." Thats A very  totalitarian clause which provokes thoughts of a very un-human thing.  Guest poster needs to lay off the koolaid.


Sat, 09/15/2012 - 11:32 | 2798563 machineh
machineh's picture

'1. Every offer and bid will be left up for 15 minutes and cannot be withdrawn until 15 minutes has passed.'

Nobody who has actually traded using limit orders would write something so ignorant.

I used to pen naive 'the government should do X' essays in junior high school.

Chas Hugh Smith is an arrogant little statist who never grew up. 

Sat, 09/15/2012 - 12:10 | 2798602 Seer
Seer's picture

Based on the overwhelming DOWN ARROWS that you seem to get isn't it clear yet that you're in the wrong fucking place (troll)?

Well, you are working on your second week as a "participant" here...

Sat, 09/15/2012 - 15:15 | 2799036 blunderdog
blunderdog's picture

There's an election coming up.  Spraypainting "Democrats suck" all over the place is the best some folks can manage.

They'll tell you graffiti is part of the the political discourse.

Sat, 09/15/2012 - 09:31 | 2798360 icanhasbailout
icanhasbailout's picture

I proposed an "integrity-based" market not long after I learned about HFT something like 2 years ago. We don't need a new market, we need a market.

Sat, 09/15/2012 - 10:18 | 2798439 Eally Ucked
Eally Ucked's picture

Just ban options, which are clearly casino feature.

Sat, 09/15/2012 - 10:43 | 2798475 icanhasbailout
icanhasbailout's picture

The problem is the fraud, not the instruments.

Sat, 09/15/2012 - 10:53 | 2798494 Eally Ucked
Eally Ucked's picture

Fraud needs instruments

Sat, 09/15/2012 - 11:08 | 2798525 Sofa King Confused
Sofa King Confused's picture


Sat, 09/15/2012 - 16:20 | 2799135 Umh
Umh's picture

Criminals and politicians commit fraud without instruments all the time. The instruments only make it easier for someone to buy something they don't understand.

Sat, 09/15/2012 - 12:12 | 2798606 Seer
Seer's picture

The "problem" is that it's human nature!  Humans are OF nature, and nature, by design, is deceptive.  Fraud, then, is built-in...

BIG = FAIL (all other equations are subjugated)

Sat, 09/15/2012 - 09:31 | 2798361 SoundMoney45
SoundMoney45's picture

The current market is neither in the best interests of the listed companies with a real business, nor investors who want to invest.  Today, to invest, one must target non-public companies.  An alternate stock exchange in a location other than the US could work with the rules above, and companies could chose to list there.  What investor or corporate executive wants to watch their company's valuation reduced to zero by a market maker selling infinite counterfit stock?

Sat, 09/15/2012 - 09:32 | 2798364 jbvtme
jbvtme's picture

leave it the way it is.  it will fade away like a worn out video game.  trading stocks is like playing golf.  pretty much a waste of a good day.

Sat, 09/15/2012 - 13:59 | 2798863 Umh
Umh's picture

If you are spending that much time at it you are doing something wrong. Maybe you just like the frustration?

Sat, 09/15/2012 - 09:33 | 2798367 Carmagnole
Carmagnole's picture

The "must be made by a human" rule is not very rational. As the communication is made through computers, based on informations gathered via computers, there is no way to determine exactly the amount of human decision in the process.

If you try by this rule to ban mechanisms made to cheat the system due to their reaction speed, simply enforcing human-friendly reaction times should be sufficient

Sat, 09/15/2012 - 09:43 | 2798384 Democratic koolaid
Democratic koolaid's picture

Guest Poster must be on a cruisade against Computers, or thinks he's neo in the Matrix.

Sat, 09/15/2012 - 11:07 | 2798524 Urban Redneck
Urban Redneck's picture

There's also the cost factor, depending on how many computerized steps you remove from the process.  Remove too many and it makes GS exhorbitant comissions look cheep and prices most of your target audience out of the market

Sat, 09/15/2012 - 09:34 | 2798371 nasdaq99
nasdaq99's picture

better focus on what CAN happen.  congress has billion$$$$$$$$$$ of reasons why this will NEVER happen.  i've written to my congresspeople and get 2 page responses why they are only working on angles that will prevent another flash crash.  they don't give a damn about what they percieve as daytraders issues.


he's just daydreameing.

Sat, 09/15/2012 - 09:37 | 2798372 Tom Green Swedish
Tom Green Swedish's picture

It'll never happen.  Congress just passes a law in April that banned them from insider trading.  You think they care about the HFT's?

Sat, 09/15/2012 - 11:21 | 2798547 Tortuga
Tortuga's picture

or that their ho politicians wrote a law.

Sat, 09/15/2012 - 09:40 | 2798377 babylon15
babylon15's picture

The problem with the stock market isn't the stock market.  The stock market's purpose is so a company can raise capital by selling something valuable - itself.  Well, with zero percent interest rates and permanent unlimited QE, why should any company sell itself?  They can raise as much money as they want by going to the Federal Reserve.  They can get unlimited amounts of cash at 0.00% at any leverage ratio they desire.  They don't need investors.

Sat, 09/15/2012 - 12:15 | 2798615 Seer
Seer's picture

And there it is!  The "System" doesn't need or want us to be involved (other than to be force-fed its "products" so that it can continue to keep us distracted and Them in control).

Sat, 09/15/2012 - 14:04 | 2798876 Umh
Umh's picture

Because most companies aren't in the free money club. Most companies are paying interest when they borrow. While it is true that big companies like Norfolk Southern can borrow at low interest for long terms they are still paying interest.The 0% interest case seems to be reserved for government favorites and banks.

Sat, 09/15/2012 - 09:41 | 2798378 Winston of Oceania
Winston of Oceania's picture

Decouple from the beast and invest in YOUR local economy.

Sat, 09/15/2012 - 10:21 | 2798447 BobPaulson
BobPaulson's picture

Bingo. The trouble is you actually have to do some work to do that, so it is not suitable for most investors.

Sat, 09/15/2012 - 12:29 | 2798637 Seer
Seer's picture

When it comes to the "local" "investing" takes on a completely different meaning.

Those in "suits" need to stay away from the real world...

Sat, 09/15/2012 - 10:33 | 2798460 Eally Ucked
Eally Ucked's picture

I want to do that and stock market can help you. But not in current situation when options and derivatives are the most important thing. I want to invest 50$ I saved in company A, I think it has future, can I do it? No, and why not because some fucked up minds in financial world has all those instruments to get 25$ of your investment, to themselves, and build US GDP. 

Sat, 09/15/2012 - 11:21 | 2798548 Bobbyrib
Bobbyrib's picture

Perhaps I'm missing something. Please explain how $50 of your investment goes to $25, because of instruments from the fucked up minds in the financial world.

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