Shadow Rehypothecation, Infinite Leverage, And Why Breaking The Tyranny Of Ignorance Is The Only Solution
In the aftermath of the "rehypothecation" analysis exposing the quantum differences between the US and the UK, where the former at least tries to put some breaks on "fractional reserve" synthetic liquidity creation by Prime Brokers (which these days would be virtually anyone) while the latter believes that virtually boundless risk is a welcome thing, there has been a barrage of inquiries seeking further clarification of the nuances of shadow banking, a topic Zero Hedge has covered since July of 2010 (for much more see here) and which we will update on tomorrow for the latest Flow of Funds report (spoiler alert: in Q3 US shadow banking declined by at least $300 billion, a trend started at the credit bubble peak, over $6 trillion higher).
In order to bring some clarity to the matter we present two of the seminal pieces on the topic: first, fro the IMF: "The (sizable) Role of Rehypothecation in the Shadow Banking System" and then from one of the best scholars of shadow banking, Gary Gorton, "Haircuts." We will let readers digest the wealth of information contained in these two pieces on their own, however, we will point out the two key messages: on one hand we get a definitive explanation of why not NY but London is true hub of financial engineering and infinite leverage (recall that the UK is in fact the most levered nation on a GDP basis in the world when one takes into account all outstanding debt, not just sovereign - a fact well known to S&P and explaining why the UK will be the last to be downgraded as this would bring attention to the last domino in the chain) as follows: "Mathematically, the cumulative ‘collateral creation’ can be infinite in the United Kingdom" - that's from the IMF basically telling everyone that courtesy of no rehypothecation haircuts one can achieve infinite shadow leverage. And the other one comes from Gorton who explains why haircuts are the functional equivalent of information arbitrage: "Increases in repo haircuts are withdrawals from securitized banks—that is, a bank run. When all investors act in the run and the haircuts become high enough, the securitized banking system cannot finance itself and is forced to sell assets, driving down asset prices. The assets become information-sensitive; liquidity dries up. As with the panics of the nineteenth and early twentieth centuries, the system is insolvent."
And the punchline: "Liquidity requires symmetric information, which is easiest to achieve when everyone is ignorant. This determines the design of many securities, including the design of debt and securitization." Reread the last statement as it explains perhaps better than anything, the true functioning of modern capital markets and why they are terminally broken: in order to preserve the system, the banking cartel need to make everything of virtually infinite complexity so that no one has a clear understanding of what is going on! Which is where sites like Zero Hedge step in - to expose "shadowy" places where things are best left unseen.
Incidentally one of the catalysts of the market collapse in the Lehman aftermath was not some market scalar metric being breached, or a bunk shutting down physically, but the seminal report by Citi's Matt King "Are The Brokers Broken" from September 2008 which explained all of the above (and below) in clear and concise detail, in effect bringing the proverbial Eureka moment to every market participant, of why everything was terminally broken. Since we are now again at the same stage, we will shortly repost the same report from King to stop "everyone from being ignorant" and comprehend just how broken both the traditional and shadow banking systems are
... But first:
"The (sizable) Role of Rehypothecation in the Shadow Banking System"
and "Haircuts"
(20 votes)
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Look at it this way: Extend and pretend made a certain amount of sense in that time, time alone, allowed some derivatives to simply expire harmlessly--the 'weapons of financial mass destruction' (Buffet) have timers. But if the banks start piling back in, then even the modest upside of can-kicking is lost. And all the vast downside remains.
Looks like we're right back to square one, but with trillions already down the rathole.
With only a fuzzy understanding of much of this stuff, this to me seems to be a great argument against central banks. In a sense a Fed or central bank puts you in the middle of the mess. In fact, it grows and multiplies it. Banks and financial houses left to themselves can invent any crap they want but the results are fairly limited to their own money and not backed by the public.
Imagine, like the early days of our country (the USA), mulitple private currencies, no central bank and limited leverage. Add to that no way for the government to TARP or stimulus or bail out. No one thing could take "the system" down as there would be no one system and plenty of escapes for those caught in financial stupidity.
Am I wrong?
I see more. We now have an explination for why matching serial numbers of 'hard currency gold' showed up, though no duplicate bars were ever found. There are multiple first party claims on the same serial numbered asset. The bars were not duplicates; the same bar was moving into inventory multiple times. It proves that the shadow wealth is just that. It really emphasizes the importance of taking personal possession of your assets.
With rehypothecation, your serial number does not matter. Your evidence that the wealth is yours is no better than anothers, and likely no more legitimate. Those who hold paper are about to experience the ultimate fleecing. In the past, when multilple parties held equally legitimate claims, courts usually ruled in favor of the party in possession. So, who's in possession?
If you own but do not hold, you've already lost your gold. Better trade out your paper fast to take delivery. Your gold as been taken from you, and your GLD will soon be unconvertable. Move to safety before it is too late.
So we have a fractional reserve banking system that is backed by nothing. On top of that we have a fractional reserve equity market, which always appear to be backed by someone else's assets when TSHTF. On top of that there is a shadow banking system which is funded by someone else's assets from the prime brokers in the equity market which come from clients who take their funds from the fractional reserve banking system, which is backed by nothing. On top of that there is a shadow derivatives market, where shadow banks write contracts to each other to hedge against loss, all of which is apparently backed by nothing. The shadow banks and prime brokers can rehypothecate their collateral to increase their liquidity, which is backed by nothing, by as much as $2-4 trillion in the US alone, unable to calculate in the UK because there are no limits to churning. Did I miss anything? No wonder Germany said Fuck You when they were asked to pledge their gold to backstop the ECB bailout. I am going to go give my gold a hug. Uhhh, if I had any, that is.
Switzerland about to jettison the euro-peg. Preparations for euro-collapse under way.
http://www.handelsblatt.com/finanzen/rohstoffe-devisen/devisen/schweiz-b...
“We are naturally (preparing) for possible alternatives” - Widmer Schlumpf
Naturally, we should be too.
The Rothschild BOE is the epicenter of a nearly 400 year ponzi of creditmoney. In fact, this bank is a charter member of the FRBNY. For centuries, London was the world hub of trade in real bills, the largest exchanges were there, and the Sterling Bill radiated power all across the world.
Like I said, all those Rothschild palaces did not build themselves.
Exactly. Even though it seems like all these banks are US, Italy,or Germany based, most of the leverage, and the control, is right in the City of London, where the Rothschilds have made their living since Nathan Mayer usurped control over the BOE.
pods
----- SPX > 1200 on 17Dec11
----- SPX < 1200 on 17Dec11
Not what you want.. what you think,
Once upon a time ignorance was truly bliss. Now everyone knows each other's pretending to be ignorant it's fake bliss.
And we would of gotten away with it too if it wasn't for them dam bloggers.
Senator Rockefeller even said the Internet should have never been invented. I wonder why he said that?
Clusterfucked.com
Repo markets are a potential channel for liquidity risks, given their systemic importance, inherent leverage, and short tenor. For individual financial institutions that rely on repos as a source of leverage, loss of access to repo financing can both directly undermine funding liquidity and create negative market perceptions about the institution’s financial condition. Repo market disruptions, manifested in increased haircuts, aversion towards certain forms of assets as collateral, or elevated concerns about counterparty risk, can pose broader risks to asset pricing and the functioning of the financial system.
As illustrated in a hypothetical example (see “Repo Haircut Increases: Forced Selling?” chart), increases in haircuts can compel forced selling of the underlying repo collateral. In this example, a corporate bond portfolio requiring a 5% haircut for repo financing would enable an institution to take on a $1,050 exposure backed by $50 in equity, equivalent to leverage of 21 to 1.
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=659953
Federal Reserve Earnings verse Federal Reserve Loans to the United States of America
1. How much does the Federal Reserve Bank Earn in Interest Payments? From anyone other than the United States of America.Federal Reserve $15 Trillion Dollars in Loans Bloomberg
Loans from 3 / 9 / 2008 to 3 / 9 / 2009 totaling $15,760,004,161,955.00
https://docs.google.com/spreadsheet/ccc?key=0Aq7CIo3B6RWfdDlTRWk5SnVOTUp1bG4wMXdPMnV2SUE#gid=0
Getting Bigger
Instead, the Fed and its secret financing helped America’s biggest financial firms get bigger and go on to pay employees as much as they did at the height of the housing bubble.
Total ** assets ** held by the six biggest U.S. banks increased 39 percent to $9.5 trillion on Sept. 30, 2011, from $6.8 trillion on the same day in 2006, according to Fed data
** http://www.ffiec.gov/nicpubweb/nicweb/Top50Form.aspx **
The Fed’s Secret Liquidity Lifelines
http://www.bloomberg.com/data-visualization/federal-reserve-emergency-lending/#/overview/?sort=nomPeakValue&group=none&view=peak&position=0&comparelist=&search=
2. Who are those Monies Participated Out too? That the Federal Reserve Bank Collected?Who owns the Federal Reserve?
The Federal Reserve System fulfills its public mission as an independent entity within government. It is not "owned" by anyone and is not a private, profit-making institution.
As the nation's central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.
However, the Federal Reserve is subject to oversight by the Congress, which often reviews the Federal Reserve's activities and can alter its responsibilities by statute. Therefore, the Federal Reserve can be more accurately described as "independent within the government" rather than "independent of government."
The 12 regional Federal Reserve Banks, which were established by the Congress as the operating arms of the nation's central banking system, are organized similarly to private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.
http://www.federalreserve.gov/faqs/about_14986.htm
So! The question stands.. if the Federal Reserve is collecting .25% interest on $100 Trillion Dollars a Month (minimum).. Where Does ALL!! That Money Go?!?!?!?!?!
6% here.. 6% there.. Participated Out to the Shareholders.. into their Federal Reserve Bank Accounts.
So if the Federal Reserve is Collecting 6 times more a MONTH in Interest payments than is due by the United States of America (for our National Debt of $15 Trillion).. Why are the American People having too carry that debt? When the Federal Reserve is making AT LEAST 6 Times More than the Payment Due by ALL! of us?
Henry Ford-
"It is well enough that people of the nation do not understand
our banking and monetary system, for if they did,
I believe there would be a revolution before tomorrow morning."
If the Shareholders of the Federal Reserve are collecting their 6% of the $100 Trillion (minimum) Dollars a month in Interest payments..
Then why in the FUCK! Do We the People of the United States need to be taxed to death to pay for the Bank Bailouts?
How fucking hard is this for anyone to understand?
How can I dumb it down more for you?
How many people do you think you could explain this very simple FACT too?
When do you think would be a good time to let people know this?
Never mind Baby Boomers! I know you are just trying to sneak out without having to pick up this for shit bar tab the rest of us are saddled with!
But you younger people that will have to live this fucking nightmare going forward for a good long while should take a GREAT! Amount of interest in the facts that have been dumbed down and sourced and sited for even the most simplistic of mentalities to be able to grasp, easily.
So!
Clip and Paste!
And then send it to everyone you know in your email box.. it is like you have to click the mouse 5 or 10 times total to educate everyone you know.. and feel free to let the dumbasses that you are sending this to as well know how simple it is to educate everyone they know..
And maybe..
Just fucking maybe!
We will be able to stop getting RAPED by the Federal Reserve and Washington DC via the Wall Street Lobby!
Thanks for Playing Along!
Add your name here! _____________________
At least it sounds really cool when I read it out loud in my hollywood German accent. I don't know to say this in German, French, Italian or Romansh, please hurry up so I can see what life looks like after this great collapse and I can begin the next phase of life, survival.
A survival note.
The dollar that you have "saved" in a bank (using the international CB accepted fractional reserve hypotication ratio) has been rehypothicated 9 times over. Do you really own that dollar or does someone else have a claim to it? It now all depends on where you stand in the line, before your savings and loan or credit union or TBTF bullion bank goes bankrupt. You'll notice that the MF Global customers are now sitting in the cold, outside of the shearing shed, after they've been sheared. Released back to pasture. Bleating.
Don't join the herd.
flock them.
Yup. Because of fractional reserve, he who runs on the bank first, runs best.
sheeple vs. zheeple
Unlike it's domesticated cousin, the independent zheep is both somewhat literate and contemplative; it is also a much better 'sprinter' during bank-sponsored 'runs'.
Why they pegged to the doomed Euro will always be a huge question for all of us.
Not surprised here. I still hold all of my CHF, I'm not as stupid as SNB must think.
Does that come in English - did not see a language option..(?)
Sometimes it has a problem with nuance and context but Google's translation usually works well enough:
http://translate.googleusercontent.com/translate_c?hl=en&ie=UTF8&prev=_t...
Jekyll isl. I think you have it.
Yet again we are exposed, the hard way, to the extent of manipulation the financial sector has gone to rig the game. This City of London derived scheme has nothing to do with promoting organic growth and everything to do with extracting rents and transferring wealth. What could be more blatant than putting your clients assets at risk for your personal gain. It gives a new meaning to fiduciary responsibility. And like all fascist manipulations; when things go wrong the people pay. As for Corzine, this loophole will likely protect him in this case.
RE-HYPOTHECATION: Are Your Brokerage Accounts, Muni Bonds, Futures Contracts, Corporate Bonds... Safe?
THE ROOT OF OUR SOCIAL, ECONOMIC, MILITARISTIC WOW'S IS AN EVIL, MONETARY SYSTEM. EVERYTHING ELSE IS A SYMPTOM OR AN ACTION THAT SUPPORTS IT. AT THE HEART OF THIS SYSTEM ARE THE CENTRAL BANKS; THE FED, THOSE WHO CONTROL IT AND THEIR DISHONEST, DEBT BASED MONETARY POLICIES. AS SUCH; LAWS, THE CAPTURE OF GOVERNMENT AND THE SUSPENSION OF ACCOUNTING RULES IS FOR THEIR BENEFIT. AN ACCOUNT OF THE PEOPLE HAS NO PLACE IN IT. INDEED, IF THE PEOPLE WERE ITS PRIMARY CONCERN, THE WORLD WOULD BE MORE FREE, LESS VIOLENT AND MORE PROSPEROUS.
END THE FED
END THE FED: THE FIRST STEP IN RESTORING OUR CONSTITUTIONAL REPUBLIC
Money Power And The Central Bank: Life Is But A MEME”To the wicked, everything serves as pretext.” -Voltaire
Trillions of CDS with nothing to back it
Europe's Voluntary Haircuts?, CDS Market Sham & B of A: Less Than Zero
MF Global is a fractal in a frying pan.
Fuck me drunk. These cunts have created a complicated way to take your money. At the same time, by creating inflation, they force you to give them your hard earned money, which gives them the ability to steal it. Buy fucking tangible assets, GTFO of paper.
It does not look like it is just gld or slv, it is appearing like most brokerage account's use hypothecation. This some scary shit for all trader's to put it bluntly imo. Many have been checking there perspectus and saying there account's have verbing of hypothecation.
"It does not look like it is just gld or slv, it is appearing like most brokerage account's use hypothecation."
Correct. The first thing to do if you have securities accounts with domestic US brokerage companies is to make sure that you instruct the broker that he may not loan your securities. The second thing, assuming you're not in-and-out trading, is to take delivery of you stock certificates which you then put in a privately-owned vault -- keep no securities in "street name."
@Vint Slugs re: "take delivery of you stock certificates which you then put in a privately-owned vault"
Most brokerages now tell their customers that they don't offer delivery of stock certificates. What you say?
Teamtc321
It does not look like it is just gld or slv, it is appearing like most brokerage account's use hypothecation.
Well, lets see just how many Intelligent traders,GLD/SLV participants there are after getting a whiff of the real truth.
If nothing changes,you got yer answer...........................
If these morons just PULLED out their fiat,these bitches would just collapse,until the point the OTB that run them, declared BR, and hypothecated their Phyizzzzzzzzzzzzzzz.
Wonder how this would/could work, with GoldMoney, or PSLV/PHYS?.
I think it would be more accurate to say that ALL margin brokerage accounts use re-hypothecation. I have not seen any NON-margin account customer agreement that allows hypothecation, and there is no reason why they would. I have confirmed with Vanguard that my non-margin accounts can't be re-hypothecated.
And people laughed as if Kyle Bass was paranoid when he took physical delivery of gold. So much glib talk is spouted in the financial tv/print press. So many comments made by finance committee politicians have been revealed to be lies. If Bass didn't take delivery, I'd consider him incompetent.
@Nobody special With all this re-hypothecation and gold talk, it makes all the more sense why that supposedly "stupid Communist" Chavez recently realized Venezuela needed to take possession of it's gold, at least some of it. Better take possession of the rest of it, or he'll never see it.
Good analysis -
but maybe add to your eulogy: a population that was still knowledgeable on the farm, in the wood, and at the forge.
Break fiat and the carrots for wagon wheel repair trade ends much of our clear and present danger. While at it - please unshackle me from FDIC type assurances given by a false daddy. Life's tough - but tougher with parasites.
My surprise, verb hypothecate is in 1994 Webster's New World, in all its financial glory.
Appears after hypothec, noun form, "security or right given to a creditor over debtor's property w/o transfer of possession or title".
So re-hypothecate is appears to be typical use of financial clever strokes to move the boundaries and enable profitable chaos.
tyler, if you can, please provide a downloadable (not scribd) pdf of "Are the Brokers Broken?". thanks.
It only takes a minute to set up a free Scribd account to download the .pdf.
I checked into that and no luck.
..maybe they changed. I set one up last year.
Hipoteca == Mortgage (Spanish).
The "inversa' (reverse) versions are often predatory instruments used to steal lifetime savings. Unfortunately many of the brokers of these contracts are trusted because the have the same heritage as the clients. Of course this happens in many (minority?) subsectors of our (failing) economy.
Whoa.
Like I just said...sounds like MERS...
Whoa! The missing 'notes' were not missing, they were re-re-re-re-hypothecated! Scandalous!
Sounds like MERS.
Am I wrong?
Well it might require a little more study. The earliest days of the Republic did in fact have a central bank. In those days corporations had a limited life span dictated in their charters. Andrew Jackson finally killed the central bank by preventing the renewal of its corporate charter, although it almost killed him first. He was only saved by a double misfire of two flintlock pistols shoved in his belly. If we had sixguns in the 1830's financial history would read differently. In belated revenge, the Federal Reserve put his face on the $20 bill to remind his shade of their ultimate victory. A fairly painless way to aquaint yourself with the role of central banking in the USA is Bill Still's The Money Masters downloaded for free from Google video. All the central banks in the USA were puppets of the Bank of England. J.P. Morgan was also a puppet of the Bank of England which wasn't really documented until his death when his will was made public.
Nice historical context, El G.
(I sure miss getting to post on Automatic Earth...)
Patience, Grasshopper.
Nope! Anytime there is centralization and a hierarchy to handle that situation .... you are talking a grand scheme for control and domination on a very broad scale.
You are also talking fertile ground for shadow systems and synthetic ignorance if you will (lies and obfuscation about the truth).
But right in the intro abstract of Gorton/Metrick you can read:
"... which they maintain is a manifestationof an age-old problem with private money creation: banking panics."
Well, they are sponsored by a central bank....
There are many arguments agaist Central Banking
IF you are not a bank, a government or a nation in deficit/overspending mode
Without the FED, it would be inpossible for the USA to spend half of the military expenses of this world, just so as a reminder...
-------
So now the anti-EUR campaign is reaching the zenith while the "UK is the ugly butt of USUK" campaign begins. I expect a lot of articles about the way Soros attacked the Pound, the UnAmericanness of The City (vs blameless Wall Street), how the UK is a banker Island without other economy, etc. etc.
No idea yet how long the cycle would be, perhaps if Mr. King can induce more inflation Krugman will take him as a role model? Then we have the debate about how much which CB has really printed?
TBTF game plan: Hear no evil, speak no evil, do massive evil.
I did not have a deep understanding of how the French Revolution could produce such extreme behavior until fairly recently.
and yet, people will still think peaceful revolution is a possibility.
How much longer is it going to take before people understand 'why' things like the french revolution happen? I'll probably end up in prison for being a political dissident long before anything like that happens.
Tulips also seemed so maniacal untill you suddenly find yourself in the midst of the biggest maina in history, the Electronically Storaged Zeros and Ones World Mania of the 2000's.
Everything just feels like it is about to culminate into a deflationary collapse and people like Elliott Wave are going to have their moment. Especially hearing that the shadow banking system contracted another $600 billion. It appears the private debt contraction is overwhelming the public debt expansion, not a good sign for all assets including gold and silver in the short term. The ECB better step up or this will be over very soon. Good video from Prechter this week on Yahoo Finance:
http://www.ftense.com/2011/12/bob-prechter-discusses-next-wave-down.html
First we get the credit deflation, probably relatively imminent as you suggest. Then, because the financial institutions such as the Fed will still be standing, we get the monetary (hyper)inflation.
the problem with this thesis is that those who attempt to trade it by holding paper or eDollars are really trying to grab wallets dropped in a nightclub fire stampede from inside the nightclub while the inferno is building.
Sure, you MIGHT get rich that way, but the downside risk is immense simply because you can't guarantee a way out unless you are fucking batman.
A deflationary collapse like that will remove the moneyness of what we think of as money because underlying all of the FRNs in existence (save a small few) are unpayable debts.
In fact, what WILL happen in such a situation is that there WON'T be fire sales of assets. Look at the mortgage market if you don't believe me. People just STOPPED PAYING. And in the case of corporations, everyone will run off with all the physical assets. There won't be anything left; it'll all be looted from the CEO's desk chair down to the bathroom fixtures.
If you're in a company in collapse, steal all the pens and free sticky notes you want. This is in fact exactly what happens to foreclosed homes. They get stripped.
After a deflationary collapse, in EVERY CASE, you find a worthlessness of the notes of the bankrupt State, and a permanent reset higher in the aggregate price level. This is because the law of positive ROI remains.
"...not NY, but London is true hub of financial engineering and infinite leverage..."
Recall the financial engineering that produced buccaneer, whereby the UK created legalized piracy on the high seas to acquire gold/silver from the Spanish traesure ships enroute from the New World.
The buccaneers operated by Queen's agreement to divy the takings between the Crown and the merchants. This funded the construction of the British fleet that later destroyed the Spanish Armada.
A financial engineering classic.
Speaking of antisocial cleverstrokes of antisocial clever-strokes...
Does anyone here still believe Tony Blair was GWBush' lap-dog?
really, it matters not anymore...the financial powers that be are cousins who jet across the Atlantic back and forth from these two centers.
Each has its place.
yes , "england" unleashed the pirates on the spaniards. who was it that told a certain group of people to de ass the area in 1492? what goes around comes around, correct?
Tyler(s),
Thank you for sharing this. Very eye opening and disturbing.
Many, many things explained by the consequences of this.
The system is broken, it broke in 2008, and it will collapse, inevitably.
What a fantastic thought for a weekend.
Got gold?
Yes Tyler thank you very much for sharing this. I helps me to understand what is happening and what to avoid. Tulli your correct I do have gold!
This stuff is better then what an author of a good fiction book could write. This is scary to me and when I talk to friends they think I am the crazy one.
"Financial engineering" is like "aerial flight" or "jumbo shrimp". There is no business model, the whole banking cartel now deals in obscurantism or worse, outright fraud.
It always seemed strange that banks would accept accounts receivable as loan collateral, but not inventory. Now it makes sense - inventory is too real.
That which is real can be stolen, wither, rot, age, depreciate, fall out of favor, or die. Convert into a journal or book entry, and its value becomes more opinion than fact.
Add levereage and securitize to preference.
I would sooner believe that SANTA CLAUS or the TOOTH FAIRY exist than believe the balance sheet of a bank or the promises of a politician. Fraud is now the accepted and expected norm of behavior and the basis upon which the world is built.
Umm, how about god?
For about 50 years I have used the guideline I heard from my father. "If you can explain it, I can understand it. If you can't expalin it, I'm not interested." That works well on the micro level, but too bad we don't have the ability to escape macro manufactured complexity.
And Exter's Pyramid is looking more and more top heavy...
And Kondratief winter draws closer and closer..
To walk in money through the night crowd, protected by money, lulled by money, dulled by money, the crowd itself a money, the breath money, no least single object anywhere that is not money, money, money everywhere and still not enough, and then no money or a little money or less money or more money, but money, always money, and if you have money or you don't have money it is the money that counts and money makes money, but what makes money make money?
- Tropic of Capricorn (1939)
+1 for Henry Miller. A great spirit.
'I see America spreading disaster. I see America as a black curse upon the world. I see a long night settling in and that mushroom which has poisoned the world withering at the roots.'
Henry Miller
Hear ye, hear ye!
+++ For Miller!
Hear ye, hear ye! ?????
You might want to go back and read from the start. This hypothecation IS a UK child, correct me if I am wrong here...............U.S. has a 10-1 rule and UK is unlimited is what I am understanding.
Anyone familiar with this?
http://dismagazine.com/discussion/26423/htmlhtml/
What does it mean to be the most active trader on Wall Street nowadays? Like infinity, the breadth of high-volume trading is hard to grasp. Before computers came along, or more to the point “algorithm processors,” trading frequency had a natural limit based on two factors: the number of shares that individual traders were willing to buy or sell, and the number of trades those folks could actually book in a given day. As investor money flowed into the US economy, and the number of traders on Wall Street increased, so too did overall trading frequency. But as with so many other things in modern life, computers, to put it mildly, changed the game.
It turns out that Tower isn’t just the former employer of Faucon. Latour Trading, LLC appears to be affiliated with Tower in some way. They share a telephone number, and both companies are listed at the same address, two floors apart. Fisher tells me this would be “not necessarily inconsistent with [Gorton’s] approach to have people spin off and form companies.” Mark Gorton is more well known as the founder of Lime Group, which owns Lime Brokerage LLC, a brokerage house, LimeWire, the formerly popular file-sharing app, LimeMedical LLC, a medical software company, and Tower Research Capital LLC. Almost immediately Fisher warned me, “I have enormous suspicions about Tower.”
well, it is still a blank white page, which apparently is a big Fuck You from Latour to the rest of the world.
Somehow I think a blank black page would be more appropriate.
bash-4.1$ whois latourtrading.com
Registrant:
Tower Research Capital
377 Broadway
Fl. 11
New York, New York 10013
United States
La Tour = the tower, in French.
Wonder if they mean the Tarot card by that name. It usually depicts a dark tower, on fire from a lightning strike, with one or two figures jumping or falling out of it, and "is considered an ill omen."
https://secure.wikimedia.org/wikipedia/en/wiki/The_Tower_%28Tarot_card%29
And check this one out...[cue Twilight Zone theme...]
http://www.keen.com/documents/works/articles/tarot/the-tower-tarot-card.asp
“Founded in 1998, Tower develops proprietary trading algorithms by using rigorous statistical methodology to identify non-random patterns in the behavior of markets. Exploiting these inefficiencies allows the firm to earn exceptional returns while mitigating risk.”
==================================================================================
seems they have developed a program that can accurately predict Securities pricing based on real time analysis of bid processing patterns of exchange software. No doubt each transaction is fully modeled in advance to 90+% over the short time spans in which they occur.
"rigorous statistical methodology to identify non-random patterns in the behavior of markets" = our software knows what your software is going to do based its non random processing habits and our hardware is fast enough to exploit those low security(non random)patterns.
I'm sure the Tylers are compiling a file. As usual ZH was there firstest with the mostest.
I bet the SEC staff got a lot of porn using LimeWire, so is that a form of influence?
this already appeard in zh.
The head of the snake, London, is the most bankrupt of it all... SHOCKER! NOT!
Check this old article out.. JPM move that ties Lehman, AIG and London.
Well, at least we know where about $1B of TARP went.
http://www.businessweek.com/news/2010-12-21/jpmorgan-buys-lehman-s-london-office-for-769-million.html
This is great analysis and all but whats the catalyst that lights the fuse that blows up trillions of dollars in bad bets? What is to say that the game can't go on for a long long time? Burning a lot of the sky is falling shorts (like me) in the process? They lent 7.7 trillion to the banks 3 years ago that we are just finding out about now. Maybe they just lent another 20 trillion last week that we will read about 5 years from now. No one will care as long as the fdic says they don't need to worry.
Gillain tett did a nice article on this in the ft a while back. I was writing her and attempting to find out how the market was going up and up and up when money was being taken out. I think that was the 'answer I got" it really says somethging about how fucked up the markets are when money can be pulled, but they cabn still go up. this is one reasons, another of course are the algo's tyhat can ramp up instead of trading a block.
And this
http://hotair.com/archives/2011/12/10/sec-warns-lightsquared-figure-of-p...
SEC warns LightSquared figure of potential fraud probeIf the name Philip Falcone sounds familiar, it should be — considering that I wrote about his LightSquared firm this morning. This probe is separate from the issues surrounding LightSquared, however, but it involves more than just the $50 million Falcone apparently allowed Goldman Sachs to withdraw while preventing other investors from cashing out of Harbinger. They have already begun probing a loan Falcone took from the Harbinger fund, as well as “market manipulation,” but it’s apparently the Goldman Sachs withdrawal that has the SEC most exercised at the moment.
I think one of the best ways to end the tyranny of ignorance is to ignore what economists say about the issue. In the main, they are devoted to theory and are unconnected to the praxis, which always spells trouble. And quite often they will say nearly anything in pursuit of revisionist history that serves their academic careers.
Speaking of which, Gary Gorton has a very special place in the troubled history of AIG.
Yes! we should ignore numerical facts and follow our Guts!
Just like Rush Limbaugh!
I haven't forgetten your threat against my family. One day I'm going to find out who you are and press charges.
My Names is James Edward Workman!
and I didnt threaten your ignorant spawn(s).
I said that the World would be a better place without you and your ignorant kind..
so! other than you are a Liar, Coward and Stupiddddddddddddddddddddd as the day is long.. I dont know what you have to offer?
more Lies?
More Stupidity, like your post above?
what? drivel will you spew next?