Juggling Dynamite

Ho hum…every major asset market in the world is unfairly manipulated and rigged by a few at the expense of the many in our wild west financial system. Quite a cesspool on our hands. So much for efficient markets and the power of free market forces…Ready for prosecution and serious reform anyone?

“The $4.7-trillion-a-day currency market, the biggest in the financial system, is one of the least regulated. The inherent conflict banks face between executing client orders and profiting from their own trades is exacerbated because most currency trading takes place away from exchanges…

Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice.

Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set…”

See: Traders rig currency rates to profit off clients

This is a rare brave call from a big firm strategist. He will not be loved at the office. State Street Bank & Trust’s Fred Goodwin discusses the likelihood of a global recession in 2014. Here is a direct link.

Well it has been 5 years since the banks were last begging at the taxpayer till…which historically means they are due back any day now for their next tranche of bailout. And since nothing at all has changed their risk-seeking-on-leverage behaviour since 2008, and the big banks are now bigger than ever, the recent abrupt plunge in emerging market fixed income markets and currencies (entirely predictable) is likely to trigger forced selling across all global risk markets. Here is a direct video link.

Host Sara: “Don’t banks hedge?” Answer: No they don’t; not in any meaningful way..why would they when the officials have repeatedly let them keep all their levered profits while being rescued from their rightful losses by taxpayers.