60-70% of stock volume is “Ficticious”. One way or the other, we’re screwed

( – promoted by buhdydharma )

     Crossposted at Daily Kos

hat tip to Inky99 who covered this first in his diary Stock market “Rally” is bogus, volume in market “ficticious”. I thought this subject was so pertinent it need to be expanded on.  

   From Bloomberg News, Joe Saluzzi, on July 6th, 2009

Saluzzi:     ” The volume that you see during the day right now, somedays as high as 12 million across all three exchange, is ficticious. It’s not real, okay. I’m gonna say that 60-70% of this volume that you see coming across, it’s volume, but it’s done by what is called high frequency traders. These are machines. The biggest machine wins the game.”

    More on how we are totally screwed one way or the other below the fold.

I’m not trying to be the new voice of doom, but things don’t look good.

     I wouldn’t listen to one word of Saluzzi’s bullshit politically. He seems to be one of those “I got mine, you can go eat cake” kind of rich assholes, but the man certainly has an understanding of the marketplace.

     Fresh on the heels of  bobswern‘s Rec Listed diary from yesterday NYT “Blows Cover Off Trading Scam.” Schumer Flips On Wall St. comes this news.

    So, not only are High Frequency traders manipulating prices on Wall St, but apparently more than half of the volume in the stock market can be attributed to this massive scam.

    As bobswern explained yesterday, High Frequency Trading is intended to aid liquidity, when, in fact, it is a way of manipulating prices.

   So, if HFT isn’t adding liquidity, and the bailout’s aren’t either, what the hell was the bailout for, other than bonus money?

   And the whole time this has gone on, it has done so right underneath the SEC’s nose.

   Aaand, the Federal Reserve, who is supposed to oversee our economy, well, they might have missed this one too. Elliot Spitzer has it right, in my opinion. The Fed and the banks are in on one huge Ponzi Scheme.

   Aaaaaaand, Bloomberg News not only reported this BOMBSHELL, but then moved on to the next story?!?!? Nevermind the fact that they just said that 60-70% of the market is total bullshit and manipulated to inflate prices, these stocks here are the ones you really want to get in on right now.

   Didn’t we just go through this shit with Jim Cramer Versus John Stewart?

   To put it plainly, we’re screwed.

   You see, if HFT continues, we are at the mercy of the manipulators of the market, who, as Saluzzi says

    “Here’s the trick, they can run for the trap door tommorrow, and if everybody becomes a seller, they all just go the other way, they don’t care about the prices anymore.”

   Of course they don’t care about the prices, the game is fixed, they win either way. Win or lose, the house wins everytime.

   Yeah. That Capitalism is sure worth defending. If it weren’t for free market Capitalism, where would we be?

   How about with our retriements, and still employed!

   So, that’s bad, but what about showcase number 2?

   Well, if the SEC steps in, as Senator Schumer has asked them to do, then that 60-70% of the volume disappears over night, and this clusterfuck will become a class 5 disastrofuck.

   The good thing, if there is one, is that Saluzzi doubts the SEC will do anything at all. I guess that is their job, to look the other way, since I have no idea what the hell else they do but ignore signs of disaster. Can anyone think of anything the SEC has done since the Enron/Worldcom/Adelphi disaster?

According to Saluzzi:

     “I don’t think they will reform. The SEC has already kind of said ‘Hey, you’re a big boy, you’re playing in this game, deal with it.’ “

    Well, isn’t that special.

    So, Thank the Gods for Capitalism, which we should NEVER disparage, because Lords know that Capitalism is super awesome.

    Bullshit. It’s like Homer Simpson and beer. Capitalism, apparently, is the cause of and answer to all of life’s problems.

    Unless you are a Republican, a stock broker, or a host on a financial news program.

    So, here is your choice. Either you can get screwed by the rigged, manipulated system, who will crash us again whenever they feel like it, or we can hope the SEC will act on Senator Schumer’s request to ban High Frequency Trading “flash orders” which will wipe out over half the volume on Wall St and plunge us into the economic dark ages.

    Ain’t Capitalism just grand?

    At this point, we’d be better off just bartering.

    After all of these scandals have been sorted out, if that ever happens, I think it is pretty safe to say that the current clusterfuck was probably another manipulated incident that was designed to rob all of us. This was no accident. It was deliberate. Or so I believe. I mean, it is fact that Wall St and Goldman Sachs was frontrunning the market. So why kid ouurselves into thinking it started the day after the disaster.

    Shock Doctrine, anyone?

    One point of many bobswern made yesterday that I totally agree with is that we, as progressive bloggers have been making the news, simply by being informed and reporting the news. I know, who’da thunk it.

    Keep up the great work, brothers/sisters and others. And of course, Yell Louder!

    Walter Cronkite is gone. Let’s carry on the torch. He would be proud.

    As for Capitalism, what exactly is it nowadays? Church Lady speaks through the dramatic look chipmunk/beaver for me . . .

original source for this diary can be found at docudharma.com