2011/12/20: the amount of electricity that goes to HFT activity is not only not presently a problem, but it has a very long way to go before it’s cause for concern. But my point is that, unlike other types of energy use, which have natural limits and constraints, and which deliver actual goods and services as an end product, there seems to be nothing stopping HFT from becoming a problem at some future date. There is no theoretical cap on the number of participants in the stock market, and there’s no theoretical cap on the number of trades per second that those participants can generate, and, thanks to derivatives, there’s no theoretical cap on the notional amount of money that market participants can shuffle around among themselves. So, again, the amount of power that goes into HFT activity can and will grow, and nothing can stop it.
2018/09/13: The current global expansion will likely continue into next year, given that the US is running large fiscal deficits, China is pursuing loose fiscal and credit policies, and Europe remains on a recovery path.
But by 2020, the conditions will be ripe for a financial crisis, followed by a global recession. There are 10 reasons for this.
Come 2020, the stage will be set for another downturn and, unlike in 2008, governments will lack the policy tools to manage it.
The space for fiscal stimulus is already limited by massive public debt. The possibility for more unconventional monetary policies will be limited by bloated balance sheets and the lack of headroom to cut policy rates. And financial-sector bailouts will be intolerable in countries with resurgent populist movements and near-insolvent governments.
2018/09/07: The true story of how the City of London invented offshore banking: and set the rich free
Countries that were once democracies are becoming plutocracies; plutocracies are becoming oligarchies; oligarchies are becoming kleptocracies.
In the years after WWI, money flowed between countries pretty much however its owners wished, destabilising currencies and economies in pursuit of profit.
Many of the wealthy grew wealthier even while economies fell apart. The chaos led to the election of extremist governments in Germany and, ultimately, to the horrors of the second world war.
The allies wanted to prevent this ever happening again. So, at a meeting at the Bretton Woods resort in New Hampshire in 1944, they negotiated the details of an economic architecture that would - in perpetuity - stop uncontrolled money flows.
This, they hoped, would keep governments from using trade as a weapon with which to bully neighbours, and create a stable system that would help secure peace and prosperity.
To prevent speculators trying to attack these fixed currencies, cross-border money flows were severely constrained. Money could move overseas, but only in the form of long-term investments, not to speculate short term against currencies or bonds.
And the system was remarkably successful: economic growth in most western countries was almost uninterrupted throughout the 1950s and 1960s, societies became more equal, while governments made massive improvements in public health and infrastructure.
the crisis took years to emerge. It was caused by reckless lending practices, Wall Street greed, outright fraud, lax government oversight in the George W. Bush years, and deregulation of the financial sector in the Bill Clinton years. The deepest source, going back decades, was rising inequality. In good times and bad, no matter which party held power, the squeezed middle class sank ever further into debt.
In 2018, many of those root causes remain, making another economic downturn or collapse possible.
We are creating a permanent class of unemployed Americans.
Failed bank tracker Date, Description*, Image, Place*, Location( latitude, longitude), Source*, Source URL*, Total assets of balance sheet of bank at time of failure( EUR+ orig. currency)*, Source( link for total asset of balance sheet), Corporate entity, Acquirer( public or private), Type of r...
2009/10/06; The stock market rallied today because of a slightly better than expected ISM Services number. Considering how much ‘stimulus’ the government has given to the FIRE sector it should be doing slightly better than the real economy.
Another reason the market rallied in New York today was a bullish call on the banking sector by a Goldman Sachs analyst.
Here is a somewhat different analysis of the situation by Chris Whalen of Institutional Risk Analytics. Chris believes that he sees strong evidence that the fourth quarter in the banking industry is going to be a bloodbath.
2015/05/14: If a fraudster puts out a ridiculously deceptive piece of information and nobody falls for it, is it still fraud?
Probably yes, but today’s attempted manipulation of Avon’s stock price by somebody who slipped a false takeover offer on the Securities and Exchange Commission’s EDGAR system raises the question of whether anybody – any human, that is – could have been dumb enough to believe it. Maybe that's the point: It was designed to fool word-scanning, dumb computer trading systems.
This was a fraud designed for algorithmic traders. It was not designed to fool anybody who’d actually read it. It was designed to fool some system that scans SEC filings for certain words but doesn’t actually read them.
2018/07/22: Of the world’s 100 largest economies, 69 are transnational businesses. How can we control—and ultimately transform them?
Changes in our personal consumption patterns are important, but are ultimately inconsequential compared with the impact of the transnationals that have come to dominate our global economic and political system.
countries and cities compete with each other to beg their corporate overlords for investment dollars, even it means undermining public services and legal protections for their own populations.
Tax stock trades based on the length of the holding period:
- 10% if the stock is held less than a day
- 5% if less than a year
- 3% if less than 10 years
- 1% if less than 20 years
- Zero if more than 20 years
The effects of this single step would be enormous. The financial services industry would be transformed overnight. High frequency stock trading and same-day traders would disappear.
Make no mistake, we're reliving the 1930s. Today, America's President decided to impose tariffs on steel and aluminum - and is apparently planning to "ban German luxury cars". I hope you like that
I was recently interviewed by FHM Magazine about, surprise surprise, Bitcoin, Blockchains, and cryptocurrencies. We were halfway through the discussion when I was asked a question about the
The Sanders generation and a new economic idea.
This is the English version of an article originally published by La Repubblica on August 8, 2016.
It is a sad and ironic indictment on the state of the global Left and the progressive agenda, that the very compelling reasons to support a Brexit have been lost amongst the rightful consternation...
The current flatness of the curve shows investors expect mediocre growth.
Editor's Preamble! Back in 1997 I gave a paper on crowdfunding - I believe the first ever proper paper, although there was one "lost talk" earlier by Eric Hughes - at Financial Cryptography 1997. Now, this conference was the first polymath event in the space, and probably the only one in the space, but that story is another day. Because this was a polymath event, law professor who's name escapes Michael Froomkin stood up and asked why I hadn't analysed the crowdfunding system from the point of view of transaction economics.
2015/04/20: A Web-reading bot made millions on the options market. It also ate this guy’s lunch.
On the afternoon of Friday, March 27, as several news outlets reported at the time, somebody apparently made $2.4 million from a tweet. That tweet was a bit of breaking news from Wall Street Journal writer Dana Mattioli:
Intel is in talks to buy Altera. Deal would be largest in Intel's history. Scoop w/ @danacimilluca coming to http://t.co/Q7kOQBB8Zh
— Dana Mattioli (@DanaMattioli) March 27, 2015
Quicker than any human seemingly could have done it, someone—or rather something—bought $110,530 worth of cheap options on Altera, a company that makes digital circuits.* Over the next several minutes and until the end of the day, as humans digested Mattioli’s takeover rumor at human speed, Altera’s stock price rose. When all was said and done, those cheap options had resulted in a $2.4 million profit. Speculation immediately centered on the idea that an automated program (a “bot”) had scanned the tweet, interpreted its meaning, and instantly bought those options based on an algorithm. The robot had read the tweet and made a killing on it before anyone knew what was going on.
On April 6, a Reuters report disproved the initial hypothesis. In fact, Reuters reported, the trade occurred 19 seconds before the tweet, and one second after a headline appeared on the Dow Jones Newswire.
I know a guy—a human guy—who was on the other side of that trade. And he says this wasn’t the first time it happened to him. He’s convinced someone’s figured out an algorithm that’s faster than anything he’s ever seen before. So fast, he fears, that it might eventually put him out of a job.
Why China's direct investments abroad is so important