Most of us have experienced PMT, either first hand if you belong to the fairer sex, or vicariously through a loved one if you don't, but when it comes to HFT, the majority of either sex are probably using that other 3 letter acronym WTF?
For those of you unfamiliar with HFT (high frequency trading) you might want to alter that state of ignorance 'tout suite' ( as our cheese fondling brethren across the Channel might say). Why? Well something has just happened that demonstrates just how fragile and exposed the stock market is to rogue algorithms, these are a bit like Rogue Trooper but far more destructive.
HFT virgin? No problem. Pop your own cherry by having a look at this. Kevin Slavin's brilliant TED lecture concludes that "We are now writing code that we can't understand, with implications we can't control". As I say in OUCH! Who could have seen that coming?
Well obviously Kevin is one, and the other 'one' is the 1 million plus viewers who have watched it. So when this all goes horribly wrong and some numpty appears declaring it to be a black swan event - the rest of us will know better.
Let's get into the nitty gritty and take Slavin's observation one step further. We might be writing code that we can't control but we are also writing code we can. The problem being the motivation behind it isn't necessarily benign as we have seen with the Stuxnet worm. The New York Times reported on 24th June 2012 that Stuxnet was deployed by the US and Israeli intelligence services to target the Iranian nuclear programme. Clearly a genius move as no-one will ever consider writing one that targets the instigators instead, right?
But let's move on from alleged politically driven cyber espionage to your personal savings. Got anything invested in the stock market? You might want to re-think that cunning plan given what's just happened to Knight Capital. As usual, Zerohedge coughs up the beans allowing us to see what happens in practice when there is 'trouble at t' algorithm mill'.
Many claim 'buy low and sell high' is the first, simplest and best mantra for investment. So when an algorithm goes rogue and does exactly the opposite you have what is often referred to as a 'minor inconvenience'. Except what happens when those trades are being enacted every millisecond and you are losing money on every one? Your minor inconvenience has just switched to an instrument of financial torture and in extreme cases potential company insolvency. So if all this is eminently possible, and with Knight Capital we have just seen the minus $440 Million practical play out of it, what is to stop anyone writing malicious code in order to manufacture these situations? Well no-one gets involved in that sort of behaviour do they?
The solution of course is to stop all the HFT nonsense either by applying a minimum time limit to all trades or applying a tax per trade so the frequency element is penalised. Will this happen in advance of any disaster? Unlikely. We generally need a cataclysmic event to shift the mindset. Are we human, or are we dancer? The puppeteers are in town - you might want to bear that in mind and check your pockets.
Thursday, 2 August 2012
Sunday, 22 July 2012
I need a dollar
Why worry about Aloe Blacc when you can be rubbed all over with Aloe Vera? Getting soothed is usually more appealing than reality checks but then sometimes ignorance isn't always bliss.
Meredith Whitney predicted in Dec 2010 that 50 to 100 Municipalities in the USA would become insolvent, saying "there is not a doubt in my mind you will see a spate of municipal bond defaults". So what? Well two points, firstly Judgment Day seems to have arrived, see here, here and here. Secondly that they are a microcosm of our whole financial system. So while you can sit back and think who cares, the fallout may be coming to a town near you sooner than you think.
The real reality check is that most Western countries are broke. This may not seem like an insurmountable problem when you can print your own currency but as you might of guessed that path is never without consequence. Zimbabwe being the most recent example of what can go wrong. As I say in OUCH! money printing isn't a cure, its another disease. 'Sore throat madam? Try two teaspoons of botulism and let me know how you get on'.
The other slight problem is that the official debt is massively understated. When you throw in all the unfunded liabilities its about 5 times the size. A recent claim for the USA was that its real debt stood at $75 Trillion. So what you have seen in some USA municipalities is replicated all the way up the chain. What stops everyone panicking about this? One word, belief. Belief because so far everything has worked out OK. Well all you need under these circumstances is a change in perception and then as Emperor Kenny might say "suddenly all my new clothes fell off". Welcome to planet Ponzi playmates.
You might therefore want to heed the following statement, In a depression 'the winner is the person who loses the least money' . How much are you personally going to lose. Well, you are about to find out. Of course you could just recognise the urgency and choose to do something about it. And that way you won't have to repeat the hookline on a street corner.
Meredith Whitney predicted in Dec 2010 that 50 to 100 Municipalities in the USA would become insolvent, saying "there is not a doubt in my mind you will see a spate of municipal bond defaults". So what? Well two points, firstly Judgment Day seems to have arrived, see here, here and here. Secondly that they are a microcosm of our whole financial system. So while you can sit back and think who cares, the fallout may be coming to a town near you sooner than you think.
The real reality check is that most Western countries are broke. This may not seem like an insurmountable problem when you can print your own currency but as you might of guessed that path is never without consequence. Zimbabwe being the most recent example of what can go wrong. As I say in OUCH! money printing isn't a cure, its another disease. 'Sore throat madam? Try two teaspoons of botulism and let me know how you get on'.
The other slight problem is that the official debt is massively understated. When you throw in all the unfunded liabilities its about 5 times the size. A recent claim for the USA was that its real debt stood at $75 Trillion. So what you have seen in some USA municipalities is replicated all the way up the chain. What stops everyone panicking about this? One word, belief. Belief because so far everything has worked out OK. Well all you need under these circumstances is a change in perception and then as Emperor Kenny might say "suddenly all my new clothes fell off". Welcome to planet Ponzi playmates.
You might therefore want to heed the following statement, In a depression 'the winner is the person who loses the least money' . How much are you personally going to lose. Well, you are about to find out. Of course you could just recognise the urgency and choose to do something about it. And that way you won't have to repeat the hookline on a street corner.
Tuesday, 10 July 2012
The truth is out there
TTIOT...well it might be but trying to track it down via the mainstream media seems to be getting harder and harder. Even Mulder and Scully would be struggling with this one although there is at least a plethora of conspiracy theories as a consolation prize.
We are forced to get more radical in our choices if we want to have a fuller picture. Radical...not as in, ‘let’s stuff my underpants full of semtex’ radical (who could ever have envisaged that getting your wedding tackle blown off could be turned into a negative?) but radical as in ‘can you please tell me what’s really going on?’ So in fact not radical at all.
We are forced to get more radical in our choices if we want to have a fuller picture. Radical...not as in, ‘let’s stuff my underpants full of semtex’ radical (who could ever have envisaged that getting your wedding tackle blown off could be turned into a negative?) but radical as in ‘can you please tell me what’s really going on?’ So in fact not radical at all.
Well as usual the truth ain't too pretty but what is sometimes bizarre is having to go through a strange series of hoops to find it. So, if we want to discover what's really happening it appears we have to go to RT (the 'Putin Dodgy Propaganda' tool). It’s a rum do when you have to rely on a Russian TV channel to find out what is actually going on in Wall St.
So Max Kaiser's financial war reports and Capital Account whilst being hardly unbiased do seem to occasionally churn out more truths than most of the other media outlets put together. This may not come as a great surpise to those in the know as the U.S. media has been consolidated down from 50 companies in 1983 to now only 6. The unplatable truth is that there is sometimes nearly as much media manipulation being served up in Democracies as there is in Totalitarian states. Noam Chomsky argues its more.
Its worth watching this Capital Account from April to understand what happened at MF Global. A one off you say....err no... try this for size. Makes you want to watch South Park. and then think long and hard about what comes next. OUCH! - Wake up or get wiped out people.
Wednesday, 4 July 2012
50 shades of deception
Two Diamond Jubilees in the space of one month? Anyone would think that the UK is getting got greedy. At least in the first one we celebrated, everyone was given an extra day off in return for the public donation, the 'Diamond Geezer' on the other hand has yet to cough up anything of note although his daughter seems to be a fan of the HMD cough and wobble technique -however it is yet to be seen exactly who's been pulling who's plonker. What we do know is that Bob didn't receive a happy ending, unless we include the leaving package which at current rates would entitle him to approximately 340,000 of them. Now that's what I call milking the system. As Bill Black once said "They loot it by destroying it but they walk away weathy"
Cue general public outrage at the LIE-BORE scandal (and it is) but what most people are missing is that this heroic level of deception should alas be expected. Why? Well hidden beneath the greed and self interest is a system that will potentially collapse if it isn't manipulated. Can you dig it?
So, its now time for the law of unforeseen consequences to come out to play and you are invited for a front row seat. Unlike in the Warriors classic the weapons of choice are alas likely to be slightly more sophisticated but as the blame game gets underway this afternoon at the Treasury Select Committee it will be interesting to see whether its just pop that is eating itself and who remains bulletproof. Popcorn in T minus 3 hours and counting
Cue general public outrage at the LIE-BORE scandal (and it is) but what most people are missing is that this heroic level of deception should alas be expected. Why? Well hidden beneath the greed and self interest is a system that will potentially collapse if it isn't manipulated. Can you dig it?
So, its now time for the law of unforeseen consequences to come out to play and you are invited for a front row seat. Unlike in the Warriors classic the weapons of choice are alas likely to be slightly more sophisticated but as the blame game gets underway this afternoon at the Treasury Select Committee it will be interesting to see whether its just pop that is eating itself and who remains bulletproof. Popcorn in T minus 3 hours and counting
Friday, 22 June 2012
"Gizza job"
As 'austerity' is the new black perhaps we should take a minute to remind ourselves of how the job application process during tough times has morphed over the years into Great Expectations. Reality check coming to a town near you in 5..4..3..2..
Wednesday, 6 June 2012
Sunday, 3 June 2012
The Robber's Dilemma
Next year sees the 30th anniversary of the Brink's Mat robbery often touted as Britain’s ‘biggest and most
notorious heist’ in which a rather large amount of gold succumbed to a ‘five finger
discount’. Supposedly worth around £500 million at today’s prices it certainly
gave the gang that stole it a headache, or was that just a hole in the head given
the number of associated people who have been bumped off since (over 20 at the
last count). Like all thieves, as well as being ‘thick as...’ (one of the perpetrators decided
that buying a 'mansion' immediately after the event and calling their pet Rottweilers Brink’s and Mat was a good idea), they would
have had the usual dilemma - where to
stash the cash? Or as one criminal said at the time ‘the robbery was the
simple bit’.
Before we focus on good places to hide your money - that’s your hard earned cash, not any ill gotten gains - I would like to remind you of that other infamous daylight robbery that has yet to be fully resolved, our monetary system. In fact it makes the Brink’s Mat escapade pale into insignificance because as we now know the largest heist in history occurred far more recently, namely the socialising of losses caused by our favourite 'pyramid scheme' otherwise known as a bank/our Fiat money system. As one commentator recently put it, 'the banks get the stimulus, the people get the austerity'. The bad news is, that so far, what we have had is 'austerity lite' and the more overt robbery is about to take place in the not too distant future. Providing you are not asleep, this should be giving you the same level of dilemma, if not greater than the original Brink's Mat lot. It's one thing to lose money that wasn't yours to begin with, it's another story altogether if it was. And as we have witnessed in Greece, in extreme cases of desperation the hole in the head may end up being a self-administered one. This is an example of the 'collateral damage' that the financial sociopaths manage to ignore rather than link back to their own actions.
In order to lower the future suicide rate finding a place to stash your cash, before the finance industry manages to permanently 'hide' it for you, is essential. In the midst of a crisis everyone tends to panic and freak out but as Tim Price points out 'if you are going to panic, panic early'. Well today looks like a good idea, if you haven't got around to it yet. You have probably got until the start of the autumn to get your arrangements in order and that's one reason why OUCH! will be available by 17th Aug. Telling people what they should have done in hindsight is not very helpful although at this rate you might have to be good at speed reading.
The dilemma however is clear, what has represented a safe haven in the past may no longer be the case. The likelihood of bank runs across Europe have increased dramatically which means even if you go to, or are already in, cash, your money may not be safe (especially if you are in the Euro). As I point out in more detail in the book, money deposited by you at a bank does not legally belong you, it's actually the bank's property. It is still your asset and you can ask for it to be returned at any time but that doesn't bestow on you the same ownership rights as if it is under your mattress. This will come as a surprise to the vast majority of the population. So your starting point is to assume nothing is safe and then read the following. Now panic.
As already suggested in the first post on 11th May why anyone would want to be in the stock market currently is beyond me. It's an accident waiting to happen and 2012 is looking like Crash but without the paraphilia bonus. The number of real safe havens can be counted on one hand and that doesn't include your bank. So if you hold cash in one at least make sure it isn't over the £85,000 threshold and if you hold more than one account (the sensible option) make sure it doesn't belong to the same group or institution as you are only covered once. This doesn't guarantee you won't lose your money (government promises are not always fulfilled) but in theory it should give a greater level of protection. A better one is gold as it offers the ultimate insurance against financial mismanagement and feckless governments but we will return to that point in a later post.
Plan for the worst, hope for the best. But the worst involves not only your savings being wiped out, it might also mean your pension (if you have one). Have you asked yourself recently where they have that stashed? Oh yes, in bonds of insolvent governments - no need to worry then. It may prove to be a short term safe haven but would you lend money to a bankrupt with a gambling problem? Check your pockets, Victim Support is a great resource that if you are lucky, you'll never have to use. Happy stashing.
Before we focus on good places to hide your money - that’s your hard earned cash, not any ill gotten gains - I would like to remind you of that other infamous daylight robbery that has yet to be fully resolved, our monetary system. In fact it makes the Brink’s Mat escapade pale into insignificance because as we now know the largest heist in history occurred far more recently, namely the socialising of losses caused by our favourite 'pyramid scheme' otherwise known as a bank/our Fiat money system. As one commentator recently put it, 'the banks get the stimulus, the people get the austerity'. The bad news is, that so far, what we have had is 'austerity lite' and the more overt robbery is about to take place in the not too distant future. Providing you are not asleep, this should be giving you the same level of dilemma, if not greater than the original Brink's Mat lot. It's one thing to lose money that wasn't yours to begin with, it's another story altogether if it was. And as we have witnessed in Greece, in extreme cases of desperation the hole in the head may end up being a self-administered one. This is an example of the 'collateral damage' that the financial sociopaths manage to ignore rather than link back to their own actions.
In order to lower the future suicide rate finding a place to stash your cash, before the finance industry manages to permanently 'hide' it for you, is essential. In the midst of a crisis everyone tends to panic and freak out but as Tim Price points out 'if you are going to panic, panic early'. Well today looks like a good idea, if you haven't got around to it yet. You have probably got until the start of the autumn to get your arrangements in order and that's one reason why OUCH! will be available by 17th Aug. Telling people what they should have done in hindsight is not very helpful although at this rate you might have to be good at speed reading.
The dilemma however is clear, what has represented a safe haven in the past may no longer be the case. The likelihood of bank runs across Europe have increased dramatically which means even if you go to, or are already in, cash, your money may not be safe (especially if you are in the Euro). As I point out in more detail in the book, money deposited by you at a bank does not legally belong you, it's actually the bank's property. It is still your asset and you can ask for it to be returned at any time but that doesn't bestow on you the same ownership rights as if it is under your mattress. This will come as a surprise to the vast majority of the population. So your starting point is to assume nothing is safe and then read the following. Now panic.
As already suggested in the first post on 11th May why anyone would want to be in the stock market currently is beyond me. It's an accident waiting to happen and 2012 is looking like Crash but without the paraphilia bonus. The number of real safe havens can be counted on one hand and that doesn't include your bank. So if you hold cash in one at least make sure it isn't over the £85,000 threshold and if you hold more than one account (the sensible option) make sure it doesn't belong to the same group or institution as you are only covered once. This doesn't guarantee you won't lose your money (government promises are not always fulfilled) but in theory it should give a greater level of protection. A better one is gold as it offers the ultimate insurance against financial mismanagement and feckless governments but we will return to that point in a later post.
Plan for the worst, hope for the best. But the worst involves not only your savings being wiped out, it might also mean your pension (if you have one). Have you asked yourself recently where they have that stashed? Oh yes, in bonds of insolvent governments - no need to worry then. It may prove to be a short term safe haven but would you lend money to a bankrupt with a gambling problem? Check your pockets, Victim Support is a great resource that if you are lucky, you'll never have to use. Happy stashing.
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