How Everybody Pays The Price Of Wall Street’s Unregulated High-Frequency Trading

[TruthOut10]

During an appearance on CNBC yesterday, Charlie Munger, deputy to billionaire investor Warren Buffett, had some harsh words for high-frequency trading, the practice used by huge financial firms to trade stocks in milliseconds. “Take the rapid trading by the computer geniuses with the computer algorithms,” said Munger. “Those people have all the social utility of a bunch of rats admitted to a granary.”

As a new report from Demos makes clear, high-frequency trading definitely is the equivalent of admitting rats to a granary, as it extracts value for traders but without bolstering investment. The price of that is ultimately paid by consumers:


The increasing inefficiency of the Capital Intermediation process is in part attributable to the trading practices of [high-frequency traders] HFTs, which generate high trading volume and no investment. The cost to the system is generated by several factors. First, the illusion of market liquidity provided by HFT volume leads to the inherent instability of market pricing mechanisms. In addition, aggressive HFT tactics mislead market participants in terms fundamental price. Finally, Dark Pools, trading venues that exist because of HFTs, impair price discovery.

How Everybody Pays The Price Of Wall Street's Unregulated High-Frequency Trading | ThinkProgress

 

[Daktoria]

Do you remember the 2010 Flash Crash?

 

[boedicca]

We're paying a much larger price for the Fed's printing enormous quantities of money via QE^Infinity.

High frequency trading is a result of pumping so much liquidity into the system.

 

[TruthOut10]

We're paying a much larger price for the Fed's printing enormous quantities of money via QE^Infinity.

High frequency trading is a result of pumping so much liquidity into the system.

Huh?

This has NOTHING to do with the Fed's printing enormous quantities of money, via any damn method. You want to blame the feds so bad and without any real merit. If you want to blame them, blame them for not taxing this crap and see how it will slow down this HFT

 

[georgephillip]

During an appearance on CNBC yesterday, Charlie Munger, deputy to billionaire investor Warren Buffett, had some harsh words for high-frequency trading, the practice used by huge financial firms to trade stocks in milliseconds. “Take the rapid trading by the computer geniuses with the computer algorithms,” said Munger. “Those people have all the social utility of a bunch of rats admitted to a granary.”

As a new report from Demos makes clear, high-frequency trading definitely is the equivalent of admitting rats to a granary, as it extracts value for traders but without bolstering investment. The price of that is ultimately paid by consumers:


The increasing inefficiency of the Capital Intermediation process is in part attributable to the trading practices of [high-frequency traders] HFTs, which generate high trading volume and no investment. The cost to the system is generated by several factors. First, the illusion of market liquidity provided by HFT volume leads to the inherent instability of market pricing mechanisms. In addition, aggressive HFT tactics mislead market participants in terms fundamental price. Finally, Dark Pools, trading venues that exist because of HFTs, impair price discovery.

How Everybody Pays The Price Of Wall Street's Unregulated High-Frequency Trading | ThinkProgress

Why is it that some of those most responsible for causing the Great Recession and sudden spike in our national debt are becoming even richer?

Robert Scheer's explanation:

"Consider two stories this week that make Karl Marx look prescient: one, in The Wall Street Journal, concerns the payout of $1 billion in bonuses to nine private equity executives; the other, under a New York Times headline, states that the jobless recovery has been a boondoggle for corporate profits. 'Recovery in U.S. Is Lifting Profits, but Not Adding Jobs,' the headline reads, by way of explaining why the stock market is nearing its unprecedented high while the unemployment picture remains so dismally bleak."

'Seems like a good time to end "carried interest" tax rates of 15% as well as HFT.

Robert Scheer: Whiny Billionaires in Need of Sequestration - Robert Scheer's Columns - Truthdig

 

[Avorysuds]

It's amazing how Progressives love this "recovery" when the impending crash will prolly be worse than the 2008 crash. Only the rich playing with money handed to them are doing better, everyone else is worse off.

Yay, housing saw a piece of gravel in the road and Progressives use that as proof things are getting better! UE goes up, earned income goes down, full time work is down, but somehow, because the stock market is raging due to fake money we are having a great recovery.

 

[EdwardBaiamonte]

, the practice used by huge financial firms to trade stocks in milliseconds.

of course as a liberal you will lack the IQ to understand this subject.

Can you say why high speed trading is bad and low speed trading is good??

You can't; so then you have to ask yourself why you needed to parrot someone you could not even understand??

Ans:

 

[georgephillip]

It's amazing how Progressives love this "recovery" when the impending crash will prolly be worse than the 2008 crash. Only the rich playing with money handed to them are doing better, everyone else is worse off.

Yay, housing saw a piece of gravel in the road and Progressives use that as proof things are getting better! UE goes up, earned income goes down, full time work is down, but somehow, because the stock market is raging due to fake money we are having a great recovery.

When the US economy crashes loudly enough to focus American attention spans in the same way 911 did, who will you blame?

 

[EdwardBaiamonte]

It's amazing how Progressives love this "recovery" when the impending crash will prolly be worse than the 2008 crash. Only the rich playing with money handed to them are doing better, everyone else is worse off.

Yay, housing saw a piece of gravel in the road and Progressives use that as proof things are getting better! UE goes up, earned income goes down, full time work is down, but somehow, because the stock market is raging due to fake money we are having a great recovery.

When the US economy crashes loudly enough to focus American attention spans in the same way 911 did, who will you blame?

the liberals of course because they stand treasonously against the libertarian capitalist principles of our founders.

 

[georgephillip]

It's amazing how Progressives love this "recovery" when the impending crash will prolly be worse than the 2008 crash. Only the rich playing with money handed to them are doing better, everyone else is worse off.

Yay, housing saw a piece of gravel in the road and Progressives use that as proof things are getting better! UE goes up, earned income goes down, full time work is down, but somehow, because the stock market is raging due to fake money we are having a great recovery.

When the US economy crashes loudly enough to focus American attention spans in the same way 911 did, who will you blame?

the liberals of course because they stand treasonously against the libertarian capitalist principles of our founders.

Liberals like Hank Paulson and Alan Greenspan?

 

[Dugdale_Jukes]

"'Good' and 'bad', I defined these terms, quite clear - somehow...
Ahh, but I was so much older then;
I'm younger than that now..."
- BD '65

Neither form of trading is inherently "good" or inherently "bad". The reality is that law is not adequate to two modern phenomenons: 1) too big to fail, and; 2) speed-of-light securities trading.

The "flash crash" produced results similar to the crash of 2008 in that smallfry had to give back accidental profits while majors negotiated givebacks. That isn't law, that is crazy.

The bottom line is the people who caused the crash of 2008 own the presidency, the congress and four justices on the supreme court. It's a tough combination to beat.

 

[Mr Natural]

It's amazing how Progressives love this "recovery" when the impending crash will prolly be worse than the 2008 crash. Only the rich playing with money handed to them are doing better, everyone else is worse off.

Yay, housing saw a piece of gravel in the road and Progressives use that as proof things are getting better! UE goes up, earned income goes down, full time work is down, but somehow, because the stock market is raging due to fake money we are having a great recovery.

When the US economy crashes loudly enough to focus American attention spans in the same way 911 did, who will you blame?

the liberals of course because they stand treasonously against the libertarian capitalist principles of our founders.

Yeah, the damn Liberals are responsible for a everything that's wrong in our society and it's a shame that the conservatwerps have neither the brains or the balls to put a stop to them.

 

[EdwardBaiamonte]

When the US economy crashes loudly enough to focus American attention spans in the same way 911 did, who will you blame?

the liberals of course because they stand treasonously against the libertarian capitalist principles of our founders.

Liberals like Hank Paulson and Alan Greenspan?

what do you mean exactly?? Do you know what you mean??

 

[EdwardBaiamonte]

When the US economy crashes loudly enough to focus American attention spans in the same way 911 did, who will you blame?

the liberals of course because they stand treasonously against the libertarian capitalist principles of our founders.

Yeah, the damn Liberals are responsible for a everything that's wrong in our society and it's a shame that the conservatwerps have neither the brains or the balls to put a stop to them.

dear, it takes votes to get elected!!!

see why we say slow???

 

[Oddball]

During an appearance on CNBC yesterday, Charlie Munger, deputy to billionaire investor Warren Buffett, had some harsh words for high-frequency trading, the practice used by huge financial firms to trade stocks in milliseconds. “Take the rapid trading by the computer geniuses with the computer algorithms,” said Munger. “Those people have all the social utility of a bunch of rats admitted to a granary.”

As a new report from Demos makes clear, high-frequency trading definitely is the equivalent of admitting rats to a granary, as it extracts value for traders but without bolstering investment. The price of that is ultimately paid by consumers:


The increasing inefficiency of the Capital Intermediation process is in part attributable to the trading practices of [high-frequency traders] HFTs, which generate high trading volume and no investment. The cost to the system is generated by several factors. First, the illusion of market liquidity provided by HFT volume leads to the inherent instability of market pricing mechanisms. In addition, aggressive HFT tactics mislead market participants in terms fundamental price. Finally, Dark Pools, trading venues that exist because of HFTs, impair price discovery.

How Everybody Pays The Price Of Wall Street's Unregulated High-Frequency Trading | ThinkProgress

CHA-CHINGGGG!...Another trip to the pay window for SpamOut10!

 

[Wry Catcher]

, the practice used by huge financial firms to trade stocks in milliseconds.

of course as a liberal you will lack the IQ to understand this subject.

Can you say why high speed trading is bad and low speed trading is good??

You can't; so then you have to ask yourself why you needed to parrot someone you could not even understand??

Ans:

You're an arrogant little jerk.

High volume trading creates instability in the markets, the best way to resolve this sort of behavior is to charge .15 cents for every trade, no matter the size. The money might be used to rebuild the nations infrastructure and/or be safely invested to shore up social security.

 

[EdwardBaiamonte]

[

High volume trading creates instability in the markets,

if so why are you so afraid to explain how or why it does that?

Does middle speed trading create instability too or once again must you admit as a liberal you lack the IQ to say? Notice how a liberal thinks he can comment on everything just because he has a feeling about it.

Sorry dear, as a libturd you don't know that a feeling is not a thought.

 

[Wry Catcher]

[

High volume trading creates instability in the markets,

if so why are you so afraid to explain how or why it does that?

Does middle speed trading create instability too or once again must you admit as a liberal you lack the IQ to say? Notice how a liberal thinks he can comment on everything just because he has a feeling about it.

Sorry dear, as a libturd you don't know that a feeling is not a thought.

An arrogant little jerk and fatuous too. Why would I be afraid to explain a self evident outcome? The herd mentality, we see the market react to IPO's and riots in Greece - panic and greed are the yin and yang of market instability. With instant trading one can play 'craps' and many individual and institutional traders do. As the markets swing emotions replace reason and those who profit by every trade are on the phone and the TV moving the herd to and fro.

 

[EdwardBaiamonte]

[

High volume trading creates instability in the markets,

if so why are you so afraid to explain how or why it does that?

Does middle speed trading create instability too or once again must you admit as a liberal you lack the IQ to say? Notice how a liberal thinks he can comment on everything just because he has a feeling about it.

Sorry dear, as a libturd you don't know that a feeling is not a thought.

An arrogant little jerk and fatuous too. Why would I be afraid to explain a self evident outcome? The herd mentality, we see the market react to IPO's and riots in Greece - panic and greed are the yin and yang of market instability. With instant trading one can play 'craps' and many individual and institutional traders do. As the markets swing emotions replace reason and those who profit by every trade are on the phone and the TV moving the herd to and fro.

too perfectly 1000% stupid and liberal !! it has nothing whatsoever to do with phone and TV. Hi frequency trades might occur 10,000 times a day by computer and so have nothing to do with TV and phone. Anyone can trade based at regular speed based on what people say on phone or TV.

See why we say 100% slow, and more importantly too slow to have any idea how slow you are!!

 

[georgephillip]

Are we smart enough to spell P-I-G?

"A Pigovian tax (also spelled Pigouvian tax) is a tax applied to a market activity that generates negative externalities.

"The tax is intended to correct the market outcome.

"In the presence of negative externalities, the social cost of a market activity is not covered by the private cost of the activity. In such a case, the market outcome is not efficient and may lead to over-consumption of the product.

"A Pigovian tax equal to the negative externality is thought to correct the market outcome back toward efficiency.[1] An much-cited example of such an externality is for environmental pollution.[2]"

Pigovian tax - Wikipedia, the free encyclopedia