Oh sure, lots of financial/econ sites will be talking about Black Friday today for retailers, but around here our focus is on all the red ink that was flowing around markets overnight. China’s Hang Seng was down more than 3/4th’s of one percent, Japan was down 4-10th’s of a percent and Jakarta was down 1.6%…so a fair bit of red in Asia.
But the real train wreck of the day is Europe where in the early going, the UK was down almost 1.6%, France was down more than 1 3/4% and even those thrifty Germans were down 1.3 percent.
So, as I got my eyes to focusing on the bleeding markets, I also noted that gold was down more than $16 earlier and that could mean that the markets are about to take a real header over the next week, or two, here in the US. Down 100 today seems possible.
One reason is the strengthening of the US dollar…whose demise has been vastly overplayed. Yes, the USA has a fair bit of debt, but consider the local conclusions about where to invest money should Europe’s Euro implode…where would you put money now if you wanted as much back in 5-years, or so? That’s the topic for Peoplenomics readers this weekend.
Long term readers will recall our investing in a gold coin back in 2001 at $275, or so per ounce. Then it was silver at $7 in 2005. What’s next? Well, we’re trying to spot something that will do at least as well…
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The New York Stock Exchange will be closing at 1 PM today, three hours earlier than normal, so this could be a very short, stomach-churning day.
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Did you happen to notice the BIGGEST financial story in a long time over the holiday? No, not that talk about the ‘insider trading’ investigation. Nice, but that’s not going to be fundamentally disruptive to the markets and the way people make money.
No, instead, I’d direct your attention to the Business News Network report that both France and the UK are talking about slowing down the frantic pace of high-frequency trading.
In order to understand why this is such a game-changer, you have to understand a bit about how such systems work: Easiest way I can think of is by just imagine that there’s a computer between you and those (supposedly, LOL) transparent markets. Whenever you place an order, say to sell 1000 shares of XYZ corp at a limit of $16.25, along comes from the high frequency trading software which then (in effect) sells your stock to someone else at $16.26 and you only get $16.25 for it.
Where does the other penny go (more usually fraction thereof) ? Into the pockets of the high speed trading computer that is front running your trade.
On the buy side, it works the opposite. You put out an order to buy 100 shares of XYZ company for a limit price of $17.10 and what does the high speed trading platform between you and the exchange do? It runs buys the stock for something like $17.09 and change and fills your order at $17.10. And again, the penny, or two, or fraction, goes into the pocket of the high frequency traders.
Now, in practice, it’s not a penny a share. Just a fraction is all that’s needed to really make a killing because such systems can print money either way – market going up, or market going down. Slick, huh?
And why would such talk scare the markets? Well, if you had a deal going where you could make millions of dollars each and every day, regardless of the direction of the market, wouldn’t you be a little worried?
Not sure if my online broker disclosures make it clear that there’s (likely) an HFT system between me and the market, but I can already hear the industry reaction: “Hey, you’re getting the price you set, dude…” Maybe, but seems to me that unless there’s disclosure to the effect that the House is making dough on the ‘action’ either way, that something about ‘transparency’ just doesn’t feel, oh, honest, you know what I mean?
Crashing Markets
Meantime, there are reports from Bloomberg that rates have been going as high as 7.52 percent to hold ten-year PIIGS papers in Europe.
All of which would make for a very interesting long-term trade, since don’t tell anyone this, but what would happen to this kind of debt should the underlying currency, the Euro happen to implode in this period?
Ultra-Rich Beggar the World, II
Don’t know as you’ve noticed, but the whole ‘concentration of power’ in the hands of the ultra-rich is going along just splendidly. Just, for example, despite all the ‘shock and awe’ of it all, part of Ireland’s ‘austerity measures’ includes a reduction in the minimum wage. In fact, Ireland is cutting the minimum wage by a whole one Euro per hour which is just plain crazy.
Why if someone said to me “George, as the People’s Economist, what would you do to make sure the concentration of power continues to accrete into the hands of the ultra-rich?” My answer would be: Cut wages and ensure that anyone remaining who has even a ghost’s chance in hell of asserting their freedoms as human’s, be brought under the economic boot. I’d be hard-pressed to out-do the EU Cabal. Not only does it drive people right back into the debt indenture, but to the extent that bad times can be made semi-permanent, the ultra-rich will ensure their continued enjoyment of a huge concentration of wealth.
U-R Beggar the World, III
Oh, and Hungary has become the latest country to force people to move their pension funds into State funds…
What’s going on in slow-motion here in the shadow governments of the world have decided to hijack high finance. So, as a result, lo9ok for markets to bring on a Greater Depression to bring governments back to heal.
Classic up/down power struggle. Out of the public light, but very real.
Next Distraction
OK, so when it looks like too many people might be ready to wake up, how do you silence dissent? Crank up something like a new war…yeah that’s it.
How about “NKorea warns region in on brink of war” for a start?
China: US “Spam Tickets”
China’s People’s Daily has an interesting piece in their Chinese online editions today. The whole article may be found here, but the piece that is really important is that in his interview with the Bank of China Monetary Policy Committee Xia, reporter Tian Li gives us China’s three-point plan to improve the global economy: Reduce the US military spending levels was the first suggestion. But the second one was that the US ought to sell gold to shore up its finances:
“Second, the United States has more than 8,000 tons of gold reserves, the recovery of the economy to raise more funds, not to expand the U.S. budget deficit, could sell a little gold? “
The Chinese would also like to see the US lift restrictions on exports of high tech equipment, although they think that US goal of doubling exports is five years isn’t realistic.
And, about why there’s a global crisis in the first place?
‘Why the outbreak of the crisis? Because the U.S. government in this century, this round of economic globalization has not fully prepared. 2000 The Nasdaq bubble burst in 2000, the long-term implementation of low interest rate policy to stimulate a huge bubble, and finally a crisis, the U.S. government’s wrong policies were causing a world crisis.’
The Google translation isn’t perfect, but what comes across is a strong message from the Chinese that the US ‘owns’ the global crisis and they’re not pleased about it.
Stuxnet for Sale?
Report on Debka this morning that a Sky TV report is that Stuxnet is for sale, from the ands of private developers, and that it could be obtained by terrorists.
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Question is still on the table: Who is behind Stuxnet and could it be turned into the ultimate terror weapon?
Oh…and wouldn’t that give the government reason to seize the internet and install a licensing system for all users and content providers?
All highly reminiscent of how the FCC seized control over what had previously been a radio free-for-all prior to the last Depression. Must be a common trait of them: Except the highly disruptive technologies before were the advent or radio and gasoline-powered car. Our modern analogs are likely to be networked computers and genetic engineering/GMO/pharma…
Troubled Favela
The police in Rio are claiming to have recaptured a shanty town that was in uprising. The majority of the fighting has been between drug lords, tgheir minions, and local police.
As an aware reader noted “GlobalRev count increasing daily.” Sadly true.
On Candid Houston
Our friends a couple of hundred miles south are about to be caught on camera as Houston installs somewhere between 250 and 300 surveillance cameras, which we must assume is just keeping up with the evolving police state mentality in New World America.
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I keep coming back to the idea of copyrighting myself, so I could send anyone taking my picture, likeness, fingerprints, and so forth, a royalty. But, of course, that’ll never go anywhere. The presumption is that if you’re ‘in public’ then whatever you do is for public consumption.
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