Wednesday, July 8, 2009

What Happens on Wall Street, Stays on Wall Street

At least in Las Vegas, gamblers know odds are in the house's favor. Investors got several clues that Wall Street is akin to Sin City. The Assistant U.S. Attorney prosecuting the theft of Goldman Sachs programming code said:

“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways.”

Goldman Sachs clearly knows how to use the program. Are they doing so to manipulate markets?

About 28 percent of the shares traded in the U.S. during the fourth quarter were handled by automated brokerages using algorithms to generate rapid-fire trading strategies, according to estimates from NYSE Euronext, the world’s largest operator of stock exchanges. That’s up from 17 percent a year earlier, and almost three times larger than the portion of volume generated by individual investor.
The individual could abandon investing. They'd have every right to thumb their nose at firms packaging securitized pigs with a triple A lipstick. I choose not to gamble in Vegas.

NYSE Euronext left Goldman off their most active program trading list for June 22-26. The number one firm was not listed? Dow Jones called it a snafu. It coincided with the criminal case on theft of Goldman Sachs' program trading code and a report on record setting, program trading volume on the NYSE. Batten down the hatches in the mother ship! The hull has been breached...

The NYSE will no longer provide reports on the program trading volumes outside their exchanges. This is an effort to steer program trading to NYSE Euronext. What was systemic program trading information will revert to subunit data. Who's keeping their eye on the big ball? Systemic risk, anyone?

I don't trust Wall Street, Goldman Sachs or their purchased politicians. If the big money boys can't manage their millions, why should they handle my pittance?

(HT- Economic Policy Journal & Zero Hedge)