I cannot emphasize enough: this is the sign of a fixed market. It is impossible that this could happen in a free market. Impossible.
This means they are extracting money from the markets, aka: from everyone who isn’t a market mover. Small traders, pension funds, trading accounts of cities, etc… Even if those actors aren’t actually in decline, they are making less money than they should as the banks make sure that their buy orders are filled at the highest price possible, and their sell orders at the lowest level possible. And, in fact, many of them will be in outright decline as a result of these games.
At this point, if you are not a market mover, you can only make money in the market by anticipating the moves of the market movers. This is now about guessing what a few people will do, so you can ride the tiger. Just don’t fall off.
The Raven
Have you seen Numerian’s analysis over at the Agonist? Do you agree with it?
Ian Welsh
Just read it. It’s one credible scenario. Certainly he’s right about HFT (that’s what I referred to when I said “they are making less money than they should as the banks make sure that their buy orders are filled at the highest price possible, and their sell orders at the lowest level possible. And, in fact, many of them will be in outright decline as a result of these games.”)
I’m not so sure about the whole hero thing, I think they knew they could rebound the market and saw it as a buying opportunity. In fact, the fact that it stopped just short of a thousand (where a lot of other people probably had buy orders in order to profit from a fall) seems suspicious to me.
lambert strether
Please don’t use tiny URLs. They aren’t transparent to users, and worse, they break the web because they’re dependent on resolution services that may fail as institutions.
anonymous
It is impossible that this could happen in a free market. Impossible.
And yet the nytimes found a perfectly innocuous “explanation” for it.
You might have a difficult time* convincing the Leisure Class of the criminality of their enterprises.
*We need a name for Upton Sinclair’s observation that it is difficult to convince someone of something when his salary depends on his not understanding it. The Sinclair Principle?
marku
Actually, the US taxpayer is subsidizing their baseline profit level, by the FED lending to the banks at zero so they can take that money, lever it up 10-20X, and buy treasuries at 3%.
If you can’t make a ton of money doing that, you are even more incompetent than the average banker.
And so you have the spectacle of the bleedin banksters awarding themselves huge bonuses and proclaiming how “smart” they are, and they “earned” their bonuses.
All courtesy of you and me. God that chaps my @ss
Hairhead
The whole stock market and the banking system is now Bernie Madoff. Remember, it was eight years ago some big investors hired a math/stocks guy to figure out how Madoff was making his consistent big returns. Math guy analyzes, sez: “It is mathematically impossible to do what he is doing. Somewhere along the line he is stealing from someone.” But his report was ignored, as the investors continued to work with Madoff, sure that they would be able to get out before Madoff’s bubble burst.
The whole market. The whole banking system. Anybody who deals with them or gives them any money is either a fool, a co-conspirator, or someone who believes they can be even more crooked than the banksters and brokers.
This will not end well.
David H.
The whole market. The whole banking system. And the whole president standing in the way of any meaningful reform.
With the takeover by big finance of DC complete, plus the SCOTUS ruling that corporations are people, too (people in need of a jail cell,) well, as you said, it ain’t gonna end well.
Hairhead: is your screen name an homage to Phil Hartman? RIP.
Hairhead
No. At one point I grew my hair down to the small of my back, and it was thick as well as long. So that’s where it came from. But I miss Phil Hartman, too, a really talented comedic actor and voice talent.