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How Wall Street Rigs The Markets And Screws You

October 23, 2013


There is no word in the english language foul enough to describe the venomous, demonically possessed money serpents at Goldman Sucks.

Among their crimes against humanity is fraud and grand theft. We're not talking $$$thousands or even $$$$$$millions of dollars. They're looting billions. Using computerized high-frequency trading programs, the money serpents have been busy 'front running'.

Wall Street guru Max Keiser and his TV co-host Stacy Herbert call it “rigged market capitalism”. All markets today are subject to manipulation for private gain.



Also called High Frequency Trading (HFT) or “black box trading,” automated program trading uses high-speed computers governed by complex algorithms (instructions to the computer) to analyze data and transact orders in massive quantities at very high speeds.  Like the poker player peeking in a mirror to see his opponent’s cards, HFT allows the program trader to peek at major incoming orders and jump in front of them to skim profits off the top.  Note that these large institutional orders are OUR money — OUR pension funds, mutual funds, and 401Ks.

Front running has morphed into a monster, says Keiser, who maintains that computerized front running with HFT has become the principal business of Wall Street and the primary force driving most of the volume on exchanges, contributing not only to a large portion of trading profits but to the manipulation of markets for economic and political ends.

Until recently, most market making was done by brokers but market making that was once done with a “broker’s book” — something that could be examined and audited — is now done by an unseen, unaudited “black box.” 

For over a century, the stock market was a real market, with live traders hotly bidding against each other on the floor of the exchange.  In only a decade, floor trading has been eliminated in all but the largest exchanges, such as the New York Stock Exchange (NYSE); and even in those markets, it now co-exists with electronic trading.  

Alternative trading systems allow just about any sizable trader to place orders directly in the market, rather than routing them through investment dealers on the NYSE.  They also allow any sizable trader with a sophisticated HFT program to front run trades. 


Flash trades” are flash orders that use a regulatory loophole that allows exchanges to show orders to some traders ahead of others for a fee.  An incoming order is revealed (or flashed) to a trader for a fraction of a second before being sent to the national market system.  If the trader can match the best bid or offer in the system, he can then pick up that order before the rest of the market sees it. 

The flash 'peeking' reveals the trade coming in but not the limit price – the maximum price at which the buyer or seller is willing to trade.  So......the HFT program figures that out for the high-frequency trader who gets to peek at the other player’s cards.  That means high-frequency traders can do more than just skim hefty profits from other investors.  They can actually manipulate markets. 

They high-frequency programs because they say it “improves liquidity,” but that's hogwash.  They have turned the market into a rigged game so that institutional orders from you, Mr. and Mrs. Joe Public, who you buy or sell mutual funds are routinely screwed for the benefit of Goldman Sachs and major international banks. The HFP are removing liquidity not imroving it by removing free and fair trading that depends on open and transparent auction markets to work. 


Tyler Durden says the HFT game is dominated by Goldman Sachs, which he calls “a hedge fund in all but FDIC backing.”  Goldman was an investment bank until the fall of 2008, when it became a commercial bank overnight in order to capitalize on federal bailout benefits, including virtually interest-free money from the Fed that it can use to speculate on the opaque ATS exchanges where markets are manipulated and controlled. 

Unlike the NYSE, which is open only from 10 am to 4 pm EST daily, ATSs trade around the clock; and they are particularly busy when the NYSE is closed, when stocks are thinly traded and easily manipulated.  Tyler Durden writes:

“[A]s the market keeps going up day in and day out, regardless of the deteriorating economic conditions, it is just these HFT’s that determine the overall market direction, usually without fundamental or technical reason.  And based on a few lines of code, retail investors get suckered into a rising market that has nothing to do with green shoots or some Chinese firms buying a few hundred extra Intel servers: HFTs are merely perpetuating the same ponzi market mythology last seen in the Madoff case, but on a massively larger scale.”  

HFT rigging helps explain how Goldman Sachs earned at least $100 million per day from its trading division, day after day, on 116 out of 194 trading days through the end of September 2009.  It’s like taking candy from a baby, when you can see the other players’ cards.


Resurrecting the free market to make markets fair again means;

1. Prohibiting flash trades

2. Banning HFT and installing a computer program in all the exchanges establishing the true market price automatically and foreclosing both human and electronic manipulation. 

The SEC is proposing rule changes but we all know who buys the puppets at the SEC. Don't hold your breath.

3. Stop trading 

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