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24 comments

  1. skippy

    I thought the other co-panelist was eating a…. goat raw, whence her gob croaked… good… bad… mostly good… give me your money toil and we will…. its gone….

    Skippy… Yves… ahhh… the day you are unleashed… a dream.

    1. JEHR

      Skippy, my reaction too but you have said it so much better. The Blumont babe doesn’t want to rattle any cages!

  2. ZygmuntFraud

    I’m very suspicious about High Frequency Trading. I’ve read that milliseconds of time delay have mattered for some time already. The new frontier is smaller and smaller fractions of a second.

    I ask: who does this benefit?

    I, for one, wouldn’t write computer code designed specifically towards high-frequency-trading.

    Yves appearances on BNN are a welcome thing from
    my point of view. They aren’t very long, but
    perhaps that is to be expected on a business network.

    There was a flash crash a while back. Is it now
    puclicly known what happened in detail?

    If not, then why not?

    1. Bert_S

      If you mean Knight Capital a couple months ago, they got $400 million in private capital to keep them solvent (after the losses they took over a few minute period). Then a few days later they said they found the bug and everything is ok now.

    2. Yves Smith Post author

      Andrew Haldane said last year that the lower bound (as in fastest advertised) speed for HFT was 10 milliseconds, meaning millionths of a second. It’s likely even faster at the fast end now.

      1. carol

        Typo: milli should be micro

        “Today, this is measured in micro-seconds – millionths of a second. Tomorrow, it may be measured in nano-seconds – billionths of a second. There is effectively a ‘race to zero’ among trading technologists, as market advantage lies in being the fastest.”

        http://www.bankofengland.co.uk/publications/Pages/news/2011/068.aspx

        Also, what the heck was Veronika doing in the studio? Even worse: why was she allowed to ‘nuance’ you? Though she admitted not being an expert, she implied nothing really is the matter, so let the 1%’ers on Wall Street just continu.

        1. Yves Smith Post author

          Aargh, thanks for the correction.

          She was in Toronto, and she’d been the only one on in the previous segment, talking Canadian stock picks. They kept her on. I found her “only a few bad eggs” argument more annoying that her HFT comments.

          1. carol

            “They kept her on.”

            As an aside (as it has no bearing on the topic), but that is just a lazy attitude by BNN.

            Plus, the interviewer has spoken to you many times before, so he knows that viewers are best served by him/BNN giving you, alone, as much air time as your busy schedule (work, book, 10.000+ posts !!!!) allows.

  3. Minor Heretic

    HFT is a pointless parasitic scam. It fails on so many levels. Whether you look at it as an ordinary market participant, a retail investor, a regulator, or as a citizen bystander, it is at best a net social negative and at worst a blatant crime.

    I am reminded of that plot device in the movie “Office Space” where the main characters create a program to steal the partial-cent rounding errors from their company’s accounting system. It’s just low percentage high volume theft.

    The Tobin tax is a great idea, but even a rule that participants have to hold a stock for a few seconds before selling would do the trick.

  4. Max424

    What about Esson/Mibble? Do you like it?

    “I did. I held X amount of shares yesterday at 1:31:0000000000000001 pm. I believed in it utterly in that, almost moment.”

    “Unfortunately no, though, I can’t recommend it now.”

    “But ask me again.”

    Do you like Esson/Mib…

    Hold on… hold on… I think I do, I think I do… zzzzzt… I own it!”

    So your saying now, that Esson/Mibble is a safe…

    “”Whoa… what gave you that impression? I dumped it a long time ago.”

    “Ask me again.”

  5. Doug Terpstra

    This was very engaging and compelling, Yves. You really connect beyond the lens.

    HFT is really the new insider trading, and Blankfein’s blasé acknowledgment of this to CONgress is telling.

    The GS cult(ural) Kool-Aid recipe also lent fascinating insight into Greg Smith’s genuine naiveté, a stark example of cognitive capture. I’ve seen that in a couple of his interviews, when questioners seem puzzled and question his candor on that score. Paraphrased: “Surely you knew you were working for the ultimate vampire squid with it’s blood-funnel attached to the face of humanity!”

  6. john c. halasz

    That financial corruption in the effective Glass-Steagall era was “down to noise” is a great expression, almost poetic. But the problem is that many people, though likely none here, wouldn’t understand the reference to the noise/information distinction and its applications.

    On the other hand, in the context of HFT and the like, it’s worth reflecting on how much of the financial corruption that has infected the system is in fact based on generating and then taking advantage of a huge volume of noise rather than on the discovery and processing of information.

  7. TimR

    I don’t totally understand though – if GS is cultivating naivete or idealism a la Greg Smith, that seems to be kind of in conflict with the whole “giant blood-sucking maw wrapped around the face of humanity” side of their business…

  8. bulfinch

    It’s certainly a nice change from the numerous interjections from the host for the guest to dumb things down for the peanut gallery. Max Keiser’s On the Edge program is strong in this way: no he cuts to the chase, giving his guests ample elbow room.

    Any chance we could see an appearance by Yves Smith on OTE anytime soon?

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