Juggling Dynamite

Yet another study now confirms what many of us have known for years, that high frequency traders are gleaning profits at the expense of other legitimate participants and at the expense of the systemic integrity of markets as a whole. See: High Frequency Trading Prospers at the expense of everyone

“What that data does is help explain the frenzy in today’s markets: The most aggressive firms tend to earn the biggest profits, hence the incentive to trade as quickly and as often as possible. Furthermore, these traders make their money at the expense of everyone else, including less-aggressive high- frequency traders.

The study found that the most hyperactive trading firms earned an average daily profit of $395,875 in the e-mini S&P 500 contract over the two-year period. First and foremost among those on the losing end: small retail investors. The study found that, on average, they lost $3.49 on every contract to aggressive high-frequency traders.”

Meanwhile this chart is of interest to anyone concerned with the risk to their capital invested in the HFT-dominated equity markets today. It shows that after the latest wave of speculative ramping from algo traders over the past three months, the heavily speculated S&P 500 futures market is today the most extremely net long it has been since late 2006. Here is Zerohedge:

In Late 2006, the S&P 500 futures market traded around 1435 and the commitment of traders was at an extreme net long position. The market fell shortly after only to manage a miraculous rise in the face of hedge funds going bust and an exploding and over-leveraged credit market. In mid-2008, the S&P 500 futures also traded around these levels, from where the epic collapse really began. Six years later, the S&P 500 futures traders are the most bullishly positioned they have been since those heady over-confident days. Still believe the talking heads that there is money on the sidelines waiting to be put to work? Still convinced that there will be some epic rally if the ‘fiscal cliff’ fallacy is resolved?

This cartoon rings painfully true on many points. No doubt some will strongly disagree.

There is no question that lower tax rates have contributed to present deficits. But lower tax rates are not the main story. Lower tax rates are a symptom of the larger problem: a mindset of entitlement and lack of personal responsibility. A culture where business leaders and politicians unabashedly place their own best interests and profits ahead of everything else, leads to a world where those under them seek to do the same. A world where debt is unscrupulously added to spend far above income for certain group’s pet interests, becomes a world where every budget item seems as “affordable” as the next. Everyone comes to expect their cake and eat it too. If the country can borrow to fund greater and greater military, and greater and greater subsidies to status quo businesses and financial firms, then why shouldn’t it borrow to fund larger and larger public pension promises too. Gradually most walks of society are “on the take” in one way and another. Everyone wants great schools, roads, hospitals, pensions, energy infrastructure, sports domes, clean water–but no one wants to pay for any of them. The wealthy retreat to a world of private clubs and schools while the broader society falls into tatters. The way back must be through the shared sacrifice of broad spending cuts across the board, tighter regulation and prosecution of “white collar” offenders, and higher tax rates on the majority. The recovery mindset is one of anti-debt, fiscal restraint, hard work, innovation, wasting less and saving more.

We only “deserve” what we as a society are prepared to work, sacrifice, pay and invest in for the future.

Tax the rich: An animated fairy tale, is narrated by Ed Asner, with animation by Mike Konopacki. Written and directed by Fred Glass for the California Federation of Teachers. An 8 minute video about how we arrived at this moment of poorly funded public services and widening economic inequality. Things go downhill in a happy and prosperous land after the rich decide they don’t want to pay taxes anymore. They tell the people that there is no alternative, but the people aren’t so sure.

Here is a direct link.

Sugar Plum Fairy (The Nutcracker) by P.Tchaikovsky performed live on a glass harp. These musicians are known as Glass Duo and are from Poland. This performance was at the Chamber Music Festival in Bologna, Italy – June 2010.
Here is a direct link.