Michael Lewis

We used to have notions of ‘proprietary programmed code’ but the Investment Banks learned that they could make their life a lot easier by working together instead of cross purposes.

Derivatives like credit default swaps turned a mere bubble in the US housing market into a global financial catastrophe... 

Ever since it started making complicated bets against some leveraged ETFs, Miller’s Catalyst Macro Strategies Funds has since grown from $500,000 in assets at the start of the year to about $170 million. It achieved a more than 50 percent return this year, placing it far ahead of its competitors.

"We are right back at it: trying to stimulate growth through easy money. It hasn’t worked, but it’s the only tool the Fed’s got. The biggest hope I had was that we would enter a new era of personal responsibility. Instead, we doubled down on blaming others, and this is long-term tragic..."

This, ladies and gentlemen, is what "trading" has become.

America's equity markets are broken. Individuals and institutions make transactions in rigged markets favoring short-term players. The root cause of the problem is that stocks trade on numerous venues, including 11 traditional exchanges and dozens of so-called dark pools that allow buyers and sellers to work out of the public eye. This market fragmentation allows high-frequency traders and exchanges to profit at the expense of long-term investors. Mr. Lewis was right.

"This is a dangerous movie for Wall Street, the government, and the establishment in general. ... cuts through the crap and reveals those in power to be corrupt, greedy weasels who aren’t really as smart as they want you to think they are. The finale of the movie is sobering and infuriating."

The notion of free markets, mechanisms where buyers and sellers can meet to exchange securities or various kinds of goods, in which each participant has access to the same information, is a fallacy. Transparency in trading across global financial markets is a fallacy. Not only are markets rigged by, and for, the biggest players, so is the entire political-financial system.

The WSJ reported that none other than the operator of the biggest dark pool in the US by volume, Credit Suisse and its massive Crossfinder dark pool, "is in talks with regulators to settle allegations of wrongdoing at its “dark pool” with a record fine in the high tens of millions of dollars, according to people familiar with the matter." What is grotesque about this story, is that back in December 2012, it was none other than Credit Suisse which conveniently explained and laid out all those forms of HFT manipulation which we accused virtually every HFT firm of employing since 2009... and which Credit Suisse itself is now accused of engaging in!

When Warren Buffet put $5 billion in Berkshire Hathaway funds into Goldman Sachs the week after Lehman failed, amidst total turmoil and panic, it appeared from the outside a high risk bet. Buffet had long tried to portray himself as a folksy engine of traditional stability, investing only in things he could understand, so jumping into a wholesale run of chained liabilities may have seemed more than slightly out of character. We have no particular issue with Buffet making those investments, only the pretense of intentional mysticism that surrounds them. The reason the criticism of crony-capitalism sticks is because this was not Buffet's first intervention to "save" a famed institution on Wall Street. If Buffet's convention is to stick with "things you know" then he has been right there through the whole of the full-scale wholesale/eurodollar revolution.

FLASH BOYS’ PROGRAMMER IN GOLDMAN THEFT HAS CHARGES TOSSED OUT

And just like that, Goldman wins again.

• Former House Speaker Hastert indicted on federal charges (Reuters)
• Blatter expected to win re-election despite soccer corruption scandal (Reuters)
• NYSE Looks to Ease Late-Day Pileup (WSJ)
• What Will Happen to a Generation of Wall Street Traders Who Have Never Seen a Rate Hike? (BBG)
• Japan spending slump casts doubt on central bank optimism  (Reuters)
• Unclear rules, market volatility take toll on bank capital  (Reuters)
• Greece Told Budget a Red Line for Creditors Venting at G-7 (BBG)
• The Economist Who Realized How Crazy We Are (Michael Lewis)
• Pimco Said to Have Considered Goldman’s Cohn for Top Job (BBG)

"Today, six and a half years after the collapse of Lehman, there is a Bigger Short cooking. That Bigger Short is long-term claims on paper money, i.e., bonds."

If the DOJ and CFTC is going to be consistent, then they have to indict the entire financial community from the CME, Exchanges, Brokers, Institutions, Investment Banks, Hedge Funds, Management Funds and High Frequency Trading Firms.