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Lobbying to Keep the Capital Markets a Casino

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Keynes, himself a successful investor, was alert to the danger of a disproportionate level of speculative activity. His oft-repeated remark:

Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.

For many activities, what is virtuous or at least harmless in small does becomes detrimental at a larger scale. Speculation is generally considered to be valuable, or at worst neutral in its effects, because speculators provide additional liquidity to markets and often provide a counterweight to prevailing investment points of view. But excessive speculation results in prices unanchored from fundamentals, which can send false signals to the real economy. And if investors believe that financial markets are in the control of a small handful of pros that have an advantage over them, they can and will retreat to the sidelines. We see that in the US equity markets now, where retail investors are increasingly distrustful of reports of high frequency trading, the May 6 flash crash, and overly frequent pronounced end of trading day price moves, which look suspiciously like traders successfully pushing the markets around. They’ve moved to the sidelines in the face of a rally.

The latest spectacle is a push to derail efforts to curb overly speculative behavior, one of which is high frequency trading. There is ample reason to believe it played a critical role in the flash crash, much as program trading did in the 1987 crash. However, in 1987, program trading quickly became a dead letter, since the strategy failed to help stem losses as advertised. By contrast, because trades at super low prices that resulted from automated selling in the flash crash were canceled, speculators did not have their fingers burned; indeed, they’ve now learned if they really screw up, the authorities will come to their rescue. Indeed, today the New York Times reports that flash crashes continue, but in individual stocks, not across the entire market.

Not surprisingly, having become a financial force to be reckoned with, high frequency traders are fighting to preserve their questionable practices. Per Bloomberg:

Closely held companies with undisclosed profits and obscure names like Getco LLC, Hard Eight Futures LLC and Quantlab Financial LLC, are beginning to act more like Wall Street banks, cutting checks to politicians, forming trade groups and hiring lobbyists and ex-regulators. They’re looking to fend off tighter rules and appease lawmakers who say the firms disadvantage small investors and contribute to wild swings in stock prices.

While the companies, which use high-powered computers to execute thousands of trades in milliseconds, aren’t approaching the big banks in Washington spending, they have more than quadrupled their political giving over the last four years, a Bloomberg News analysis shows. The top recipients include Eric Cantor, set to become House majority leader, and several incoming senators who won in last week’s Republican rout.

“They are under attack as an industry and they are fighting back,” said James Angel, a professor at Georgetown University’s business school who is on the board of Direct Edge Holdings LLC, which operates stock exchanges. “There is an old saying in Washington that if you are not at the table, you are on the table.”

In just over a decade, high-frequency trading has evolved from a little-known investment strategy practiced by mathematicians to a force that accounts for the majority of U.S. stock trades. The companies, which prefer to be called automated proprietary trading firms, say they benefit all investors by keeping markets liquid and transaction fees low.

This spectacle is hardly new; we saw the major banks fight (and continue to fight) to block and water down legislation such as the Volcker Rule, whose intent was to limit government backstops to the socially useful parts of market activity, namely, market-making. Despite their efforts to claim they also serve a socially valuable role, HFT instead does not involve direct customer order facilitation. Even worse, it appears to exacerbate swings in liquidity, increasing it in robust times and withdrawing it when market volatility moves outside certain parameters.

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48 comments

  1. i on the ball patriot

    “And if investors believe that financial markets are in the control of a small handful of pros that have an advantage over them, they can and will retreat to the sidelines.”

    Stocks up volume down.

    Interesting parallel …

    And if voters believe that the electoral process is in the control of a small handful of pros that have an advantage over them, they can and will retreat to the sidelines.

    Election BS up volume down … 58% BOYCOTT

    Sorry, could not resist, back on message now …

    Unequal speculative trading serves no socially justifiable purpose. Flash trading is like blindfolding the competition and makes for a grossly lopsided game. Imagine how long computer card counting would be tolerated in Vegas, where all speculative trading really belongs, and even there it should be limited in its capacity for societal damage.

    Deception is the strongest political force on the planet.

    1. sgt_doom

      Exceptionally well articulated, i on the ball patriot. (Is this Chris Hedges? — Just joking about that, but not about your comments.)

  2. attempter

    They certainly serve no legitimate purpose whatsoever, but are nothing but robbers and vandals.

    As we’ve seen, they don’t even “provide liquidity” to any legitimate sector, but have simply stolen trillions through the Bailout and destructively gambled with it.

    Just on those grounds, the subject of this post, we should purge them completely and restitute every cent they stole.

    And yet even those crimes are minor compared to the monstrous evil of their food speculation, and all their other assaults (land grabs, gene patent grabs, globalization assaults, debt indenture, and many more) upon our literal physical sustenance. (Water too.)

    These are truly among the worst crimes in history.

  3. Mr. E

    These firms are no different than floor market makers flashing signals across the pit.

    I see very little difference between having rooms full of humans do it and rooms full of computers do it. The total amount of money made is probably the same – it is just concentrated in fewer hands. There may be inequality concerns, but as far as markets go, the differences are minor.

    I’ve yet to read one legitimate reason as to why the NYSE specialist system was better than electronic market makers and deserves to come back.

  4. Rex

    “monstrous evil of their food speculation”

    This is a part of the ubiquitous theft mechanisms that I haven’t quite groked yet. When I go to the grocery store it is obvious that prices are going up while quantities in the packages are going down — a double whammy. To my simple mind, I did not expect prices to be rising in this down economy.

    Yves’ book Econned was the key to me beginning to understand the crash of 2008. Is there a “for dummies” link (or two) that will explain to me why food prices are rising so fast?

    1. craazyman

      a few weeks ago I bought a box of Uncle Ben’s Converted Rice, which I generally like a lot because it always fluffs up by itself. I have had a hard time with normal rice, the kind in a see through plastic bag.

      I don’t want to wash it. I’m too lazy. And it cooks up all wet and sticky, like a warm snowball. It’s useless for fine rice dining.

      Uncle Ben’s just works. You boil it then put a fork in and give it a stir and it’s like some kind of magic. And it smells great too, a gentle nutty flavor.

      So the bag in the box. I opened the box when I got back home and the bag was only about half the size of the box! I couldn’t believe it. What was this shit? And it was jammed in there width-wise so it wouldn’t shake around too much. I grabbed it quick in the store and didn’t shake it to test the bag-to-box ratio. They got me.

      It was like wearing size 13 shoes with small feet. It was like clown shoes. The box. And then the rice in the bag. It was almost a practical joke. I bet they sat around and thought “How small can we make this bag before we get nasty letters?” They were probably a bunch of 28 year olds someplace in New York, deciding this. Probably laughing hysterically and making jokes about tiny little things in huge boxes.

      Fortunately for me, Uncle Ben’s has other packaging and I’m now far more judicious about what rice box I buy. Anyone can screw up once. I have more than once. But I have a few people who gave me another chance. One more time though and they’ve had it. This is inflation for sure.

    2. psychohistorian

      This is where you have both inflation and deflation simultaneously…..what I said would occur back in 2008.

      Just because the government numbers don’t report it doesn’t mean that it isn’t happening…..folks are still in denial that the music playing the American dream has stopped….the crash hasn’t happened yet but more are reporting signs of imminent collapse…..wheeee, will we get a military dictatorship front for the uber rich?

      It doesn’t have to be this way but humanistic leadership keeps getting killed so utter collapse seems to be the future for American imperialism.

      1. MyLessThanPrimeBeef

        I used to be able to waste my evening away, sorry, keep myself entertained for the night free with broadcast television (back in the days when I watched TV).

        Now, to waste the same night away, sorry, keep oneself entertained, it costs at least $2 to $3 a night($60 to $90 a month) with cable TV.

        To me, the annualized inflation rate to waste one evening, sorry, keep oneself entertained, is infinite.

    3. Jason Rines

      Devaluation of the currency has two effects. The first is that imports such as oil require more dollars to buy them. Since oil is so heavily used in manufacturing and transporation to deliver goods, the price increases can be considered trickle down in food prices.

      The second effect is speculation. In 2008 I helped conduct an experiment for Washington to determine a percentage of speculation and with the intent to help cool it off a bit.

      The experiment was run for one week which showed a 17% PPB premium. The experiment was advised to run for a month so the variance on the figure provided might be a few points higher. So if the argument for speculators is liquidity, a 17% higher oil price is an extraction, not adding liquidity.

      The liquidity for the speculation in oil of 2008 was provided by the Federal Reserve at the “Discount Window” which means money conjured at little to no interest and levered through Primary Dealer banks also known now as Too-Big-Too-Fail. The CFTC was charged in 2005 with providing the answer I just gave you regarding oil speculation. But my experiment saved the taxpayers money in the form of $9 PPB in 2008 and at ZERO hard cost to implement.

      It should demonstrate that government is not doing the job taxpayers are paying them for and is intellectually and physically lazy. I theorize that this entire operation of the Discount Window and allowing global speculators to run rampant was about using a heavy hammer to recapitalize the banking system.

      I believe that is what Lloyd Blankfein of Goldman Sachs was talking about doing “God’s Work”. If that is true, I have to say I disagree, that their are better methods which require hard work and longer-term vision than such a mallet that does more harm than good to 98% of the population.

      People can car pool or in some cases telecommute but when it comes down to food, people got to eat. Speculators know that and a portion of retail investors became day traders as long-term investing is on vacation.

      In general, casino-like behavior indicates the final stages of economic reset. So the good news is that the pain will stop, perhaps in a couple of short years. The bad news is I forecast an additional 50% increase in fuel and food cost during that period. Take care of your local communities and demonstrate leadership. I view externalities as more dangerous than the couple of more years of ugly pain We the People must face.

  5. scraping_by

    According to that dangerous soldier, The General Abstract, traders bring value to the economy by supplying time and place. That is, they have the goods and services at the right time and right place to be economically useful. Since capital is just another resource, the capital traders are getting a cut for supplying when and where.

    However, one of the great economic stories of the last few decades is disintermediation. I mean, if you can log onto a manufacturer’s website and place an order, why pay wholesalers, jobbers, shippers, retailers, etc. The Net connects.

    Speculators are no longer needed for capital accumulation. Their complex derivatives serve no purpose in a market that could be replaced by a website. Dollars have reproduced faster than bacteria in a slop jar and with a little checking to keep the creeps out, borrowers could have the world bidding against the world. Perhaps the capital market is less a machine than a large vat for the dipping.

    In Western art, the straightforward Renaissance was followed by the decorated Baroque, which was followed by the overdecorated Rococo, which was followed by Mannerism, where art was a collection of snide jokes. Perhaps finance has followed the same evolution.

    1. F. Beard

      Since capital is just another resource, the capital traders are getting a cut for supplying when and where. scraping_by

      You conflate “capital” with “money” when they are in fact distinct. Tis a usual deception of the bankers.

    2. Progressive Ed

      What I think you are getting at is called the shift to “financialization of the economy”. Wikipedia has a nice evolutionary perspective on this in its entry.

    3. Jason Rines

      Brilliant analysis. What you are inferring if I read you correctly is an evolved supply chain. I have been thinking about this endlessly since 2007. The social credit idea while cool is not an attainable goal for this time period.

      That ‘website’ mentioned replacing speculators could be in the form of Peer-to-Peer lending network. But TPTB are not sure about timing of societal evolution. Doing it opens up competition and much larger supply chain meaning higher aggregate revenues but lowered net margins.

      The kicking and screaming at the process of evolution would be quite hillarious if it did not have such deadly implications. But all said and done, I do look forward to the next high time of mankind, roughly a decade away in my estimation.

  6. F. Beard

    The reason the battle is so unclear is that long ago we conceded the right for banks to create money in exchange for debt. In other words we legalized counterfeiting. And now the counterfeiters are driving up the cost of food since they have wrecked any other form of productive investment. Surprise, surprise.

      1. Liminal Hack

        The force driving food prices up (apart from acts of nature) is investors leaving risk free investments like treasuries, either because they are in risk on mode, or because not enough treasuries have been supplied to meet demand (due to QE).

        The idea is that denied a risk free rent in government bonds, these investors are going to try and capture a rent for consumers by bidding up commodity and asset prices.

        It won’t work because when consumers are pushed beyond tolerance they’ll just turn off spending which will kill those commodity investments. Then the investors rnu back for the safety of treasuries but guess what, there are not as many as there used to be and to boot they are now more expensive than when the investors sold them.

        by this means will the combination of FED and consumer defeat commodity speculation.

        1. i on the ball patriot

          The force driving food prices up is the past mismanagement of global resources created by having the power of credit creation, usury, in the hands of to few central bankers who now control global supply and demand by using that credit creation to selectively liquify and de-liquify markets at will.

          Its the new and improved, far more powerful, pin point accurate, red line tool, aided and abetted by; supercomputers, co-opted governments, institutional hijacking, hijacked militaries, hijacked scam ‘rule of law’, control of Mr. Global Propaganda, etc., all on roids. Instead of taking out city blocks they now work on nation state and entire business sector and commodity sector levels.

          When consumers are “pushed beyond tolerance they’ll just turn off spending which will kill” THEM, and that’s what is really driving high food prices. The intentional global herd thinning.

          A Tobin tax won’t work because it would never be passed in this totally corrupted environment. And as someone above said, at this point Flash Trading is chump change.

          Deception is the strongest political force on the planet.

      2. sgt_doom

        “..what mechanisms are driving food prices up?”

        If this is a serious question, obviously it would be commodities speculation on the exchanges, just as Goldman Sachs and Morgan Stanley did previously on ICE (InterContinental Exchange, ICE Futures, ICE Clear, ICE Europe, etc., which they financed and still own in a circuitous manner, along with Deutsche Bank, BP, Royal Dutch/Shell, et al.).

        A short FpML program for the wash sales, to drive a cluster of futures up, then down, etc., probably all absolutely automated by this point, just like the rest of HFT.

        1. Rex

          Thanks. Yes, it was totally a serious question.

          I’m not sophisticated, at all, on the intricacies of big trading. Most of what you wrote was over my head. (I just googled FpML to figure out what that was.) But I think I get the jist of what you are telling me. Basically no aspect of our lives is safe from gaming with well planned, twisted derivative bets.

          I’m thinking that the skimming in early Vegas was child’s play compared to these current top-end legitimized gangsters.

    1. Jason Rines

      Correct and if you project a few short years out onto the next logical conclusion, the blowback from people not being able to afford to eat means revolutions. Next is war as misdirection to blame the boogie man and attempt through pain to unite the population. It isn’t going to work as intended because at least in the U.S., forty years of the stick pushing to spend carries with it fear. So I believe that after the next world war, mankind will evolve.

      Malthusians should be working in the opposite direction now toward that evolution to capture the potential gains of a larger supply chain in the long-term. In the short/medium term they should be moving faster to mitigate losses from inflation by increasing the labor participation rate.

      I think hubris kills and the ends this time won’t even come close to justifying the means by such leadership. I hope I am very, very wrong about all this but I will disclose I am now hedging physically whereas I was not in 2008. Such arrangements take time if one wishes to emerge on the other side intact and wealthier. Here is to dancing until the music stops and being ready for the next record on the player.

  7. Liminal Hack

    I take a slightly different view to the article. The liquidity effects seen over the last 30 years are mostly attributable to technology. HFT wasn’t possible 10 years ago, now it is. It is hard to see how one can legislate so as to try and slow down the speed of communication in financial or any other markets.

    The price one pays for increased comms inter-connectedness is that liquidity easily defeats yield – the main purpose of money and leverage now is to hunt down yield and kill it stone dead.

    But then these are only natural market forces. Even if you supressed HFT or changed the rules a bit, extrapolate tech out 20 or 30 years and you still end up with very fast moving money that quickly equalises yields everywhere. The equalisation of yield must either translate into asset price rises or declines in income from an asset – it matters not.

    The eventual outcome is that there will be no income yielding assets, just asset price volatality. In essence, the market will ensure it is impossible to save.

    Cutting out all the ideological fud being flung about just now, this is the real reason rates have fallen and yields been depressed everywhere.

    Any idea what the average velocity of a UK GILT is?

    7.5

    when velocity of base money is, like, 1.5.

    What is the right interest rate to be paid on a risk free 25 year security that changes hands once every couple of months?

    1. Yves Smith Post author

      No, there’s a very simple solution. It’s called a Tobin tax. tax every trade, better yet according to a sliding scale based on holding times. Only regulated broker dealers would be exempt (and they’d need even stricter Volcker-rule type regulation). Firms not complying with the Tobin Tax regime would not be permitted to trade through any regulated exchange, with any broker dealer, or borrow from any bank. Broker dealers and banks would be prohibited from offering products designed to circumvent the Tobin Tax, would get big fines if they did so, and whistle blowers would get big bounties for turning in violators.

      That would do the trick.

      1. Liminal Hack

        I used to believe in the tobin tax too. To put my cards on the table I’m a digital/semiconductor techie not a trader or finance bod so I’m neutral here. That said:

        If you put a tobin tax on then all it will do is ensure that the income from the asset in question will end up being depressed so the yield will still be equalised to within the market noise floor with all the other income yielding assets.

        The yield on the asset will thus be the same.

        It seems to me that the vanishing of yield really scares everyone and various people want to re-instate and essentially fiat yield (e.g. ‘let there be yield’) by various schemes such as tobin taxes, re-introducing the gold standard, raising the bank rate etc etc. These are a selection of ‘right wing’ and ‘left wing’ solutions to the same problem and all are doomed to fail.

        You can’t have a ‘fiat’ yield.

        THis is why IMO interest rates have approached zero over the last 30 years.

        1. Yves Smith Post author

          Your argument has a lot of factual and logical holes. Interest rates most decidely have NOT approached zero over the last 30 years, for starters.

          In addition, there are plenty of markets that are not terribly liquid where you see the same results you’d see from a Tobin tax, due to wider bid-asked spreads. And you can look at pretty much any market (save Treasuries) pre, say, 1998 or so, and you would see how more functional, less speculative markets operate.

          Separately, having the real economy be distorted by the behavior of the financial economy is too high a price to pay.

          1. Nullpointer

            I think I understand what Liminal Hack is saying. In a world with zero cost of money (to those with first access), fiat currencies, and open markets the fastest computer is king.

            Now that I think about it… it makes perfect sense. All investing is arbitrage based on informational asymmetry. Most information has been commoditized, such that picking investment has become algorithmic. As wealth concentrates in the hand of a few, the goal becomes just to leverage up as much as possible and then earn a small win. If you leverage up 10^6 times and then earn a .05% yield it’s still quite a bit of return on your capital.

            HFT is simply the natural continuation. I see streams of electronic hot money seeking out small arbitrage opportunities. We’re already seeing it in the carry trade and other sorts of similar manifestations.

          2. Rex

            Looking at HFT attacking all through our financial system, my unsophisticated eye sees a strong analogy to cancer. Looking like normal productive trading but growing much more quickly than necessary and crowding out normal productive activity. It seems to really be metastasizing. Are we in stage IV yet?

        2. Jason Rines

          Liminal is making a very cojent evolutionary argument regarding technology. The first-in always have the advantage of such and use it for personal gain. I imagine when the telegraph came out the operater was never supposed to use the information read on the telegram for personal gain. But I am sure it happened and safeguards had to be built to prevent cheating.

          Your argument Yves for the Tobin tax is appropriate, for laws must be established to slow down the cheating from inside information and market manipulation of those new technologies or all confidence is lost.

          Einstin said all it took for evil to succeed is for good men and (and women of course) to do nothing. I feel loss mitigation is always a healthy form of ensuring a return to a virtuous growth cycle.

          The general problem with other economic blogs are that the authors allow the commentators to promote the use of violence as a remedy when in an armed society altering our government is the first set of instructions in the Declaration of Independence. I believe you understand this and do a wonderful job here at NK. And with your powerful criticism, comes solutions meaning it is obvious you are attempting to add value to this world.

          I hope a portion of your thoughts are dedicated to how our market segment normalizes Social News and is proactive about forming a group to pass laws to self-regulate. If not, international government will decide for us.

  8. Liminal Hack

    the interest rate trend has been choppy but down. Any chart of nominal rates over the last 40 years will demonstrate that.

    sure, in illiquid markets a yield can be obtained better than in liquid markets. But there seems to have been a trend to transform illiquid markets into liquid ones. Isn’t that what MBS are about?

    Would you agree that the reason this removal of illiquidity is ocurring is both a result of technology combined with the existence of nominal risk free assets such as treasuries and insured bank deposits?

    As I asked above, what is a fair rate of interest for a 25 year nominal (e.g. risk free) bond that changes hands once every couple of months?

  9. Liminal Hack

    nullpointer – exactly. Its obvious when you think about it, dare I say.

    the endgame of this is that:

    1) money can only be a unit of account – something that is measured but not exchanged – and thus cannot be scarce and thus must earn 0. This applies to all forms of the unit of account including government bonds.

    2) the economy under such conditions must always be operating at maximum leverage, which implies minimum yield.

    viewed in this light the heightened equity PEs since the advent of electronic trading and the fallnig nominal bond yields make perfect sense – the most liquid items and the items most useful as collateral go to zero yield first – hence the hosuign bubble. Carry trades will spread this logic everywhere quickly.

    I’ve expanded on all this in more detail on my blog.

    1. Rex

      I was about to google for this esoteric term “hosuign bubble” to figure out what other things I was missing. Then I realized it was “housing bubble”. I know that one.

    2. Toby

      I’ve come (as a non-finance techie kind of a guy) to the same conclusion as your 1). We need a new money design that strips from society any and all means of treating money as a commodity — it should enable complex exchange and nothing else. It should not be seen nor function as a store of wealth. This is not an easy trick to pull off though, since money will always have utility value, which in economic activity is more or less all there is. Hence demurrage as promoted around a century ago by Silvio Gesell is probably necessary (‘rotting’ money via negative interest rates), and more recently by Bernard Lietaer and Charles Eisenstein, both of whom I highly recommend.

      As usual and as always, this is not a silver bullet. Much else would have to be adapted for this to work, but that is where we are in my opinion. We are tasked with revolutionizing society from the ground up. The current system is profoundly broken.

  10. D. Lowell

    High frequency trading is skimming. When the Mafia did this in Las Vegas they called it racketeering. Fill up Levenworth with these walll street crooks.

    1. Rex

      Interesting. I just posted a reference to Vegas skimming, up a few comments, and then scrolled down to see your post.

      1. D. Lowell

        Its not childs play its the gvmnt aiding and abeting these scheme’s that is disgusting beyond belief.

        Afew days ago I read that the SEC had voted 5 to 1 to ban HFT but have heard nothing since. The average investor has doubts about wall street and have stayed out of the market. Good for them I say.

  11. john

    I just saw Mary Shapiro address HFT this evening at Northwestern Law. Never fear! She knows that the markets are for the American people to support American companies by providing them with capital. (She wasn’t clear as to what or hows, but it sure sounded good.) She said there are nascent ideas being tossed around. She made air quotes around the words “market maker”. I’m sure the two Republicans, two Democrats and one independent on the Commission will consider the consequences and act in the interests of the investing public.

    She also said that financial literacy is imperative! That we need high school classes on financial literacy. That’ll fix things, I’m sure.

    1. Lyle

      Actually the financial literacy makes sense. For example how many folks could really define a capital gain? Clearly we saw in the subprime mess that people are willing to trust others to tell them what is good for them in a financial sense. I would teach that everyone in the financial services industry is out to get you and that you need to be afraid very afraid of them (paranoia is a good idea here).

      1. john

        The *primary* problem is a question of regulation (not education) of the participants. The most “financially literate” among us are the ones who caused the problem.

        1. Lyle

          The financially acute took advantage of those who don’t know anything. (How could anyone who knew anything think that at 25k a year they could afford a 600k+ mortgage). They just trusted the people they dealt with. My financial education would include a lot of trust no one, they are all shysters out to get you and your money.

          1. john

            If a garage door crushed, say, half a dozen kids heads, would we say “people should learn more mechanical engineering”?

            Saying people should be more money-smart is, of course, a given and impossible to argue with. But for this particular regulator to say it is her biggest takeaway after the scale of what we went through, it is hard for me not to roll my eyes into their opposite hemisphere.

    1. dd

      There is no need to lobby. The regulatory agencies are on board (except perhaps Warren; but in time the “systemic risk” overlord power will silence her). Dodd-Frank and all the regulatory jawboning is a marketing ploy.
      The real outcome is that shadow banking will be consolidated via taking out the lesser hedge funds and forcing consolidation to the favored entities the Fed and Treasury rely on to obfuscate the continuing crisis. The confidence game continues.

  12. Ajax

    This lobbying effort comes as no surprise to me.
    Following the Valukas report on Lehman Bros.
    practices, and repo 105s especially, there was some
    sort of indignation among bloggers that such accounting
    gimmicks existed. Max Abelson interviewed ex-Lehman
    executives about repo 105 agreements.

    Max Abelson wrote in the Observer:
    ‘The only people who would worry about using an old trick to reduce leverage from 13.9 to 12.1, the second executive said, are “yappers who don’t know anything.” ‘

    James Kwak at the Baseline Scenario wrote about these
    interviews on March 17th.

    Same old, same old.

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