Wall Street's Threat to the American Middle Class

Yes, it's from a blog. Bite me. : )

Presidential aspirants in both parties are talking about saving the middle class. But the middle class can't be saved unless Wall Street is tamed.

The Street's excesses pose a continuing danger to average Americans. And its ongoing use of confidential corporate information is defrauding millions of middle-class investors.

Yet most presidential aspirants don't want to talk about taming the Street because Wall Street is one of their largest sources of campaign money.

Do we really need reminding about what happened six years ago? The financial collapse crippled the middle class and poor -- consuming the savings of millions of average Americans, and causing 23 million to lose their jobs, 9.3 million to lose their health insurance, and some 1 million to lose their homes.

A repeat performance is not unlikely. Wall Street's biggest banks are much larger now than they were then. Five of them hold about 45 percent of America's banking assets. In 2000, they held 25 percent.

"Wall Street is one of their largest sources of campaign money" Well of course, whoever has the most money, and whoever makes the most money for MSM wins! Who didn't know that?

The American middle class needs stronger bank regulations, not weaker ones.

Last summer, bank regulators told the big banks their plans for orderly bankruptcies were "unrealistic." In other words, if the banks collapsed, they'd bring the economy down with them.

www.huffingtonpost.com...
Robert Reich, Chancellor's Professor of Public Policy, University of California at Berkeley; author, 'Beyond Outrage'

a reply to: ladyinwaiting

Good find, Lady. And no beak marks because it's a blog.
Doesn't mean it's not basically true. Brad Sherman was right.

Maybe Web Tarpley is right too... tax these clowns a solid
1% on every securities transaction. OOh the heresy... the
same people that caused the problem do the remedy.

Dodd-Frank doesn't even cover bank bets on foreign exchanges. Yet recent turbulence in the foreign exchange market has caused huge losses at hedge funds and brokerages.

This comes on top of revelations of widespread manipulation by the big banks of the foreign-exchange market.

Wall Street is also awash in inside information unavailable to average investors.

Just weeks ago a three- judge panel of the U.S. court of appeals that oversees Wall Street reversed an insider-trading conviction, saying guilt requires proof a trader knows the tip was leaked in exchange for some "personal benefit" that's "of some consequence."

Meaning that if a CEO tells his Wall Street golfing buddy about a pending merger, the buddy and his friends can make a bundle -- to the detriment of small, typically middle-class, investors.

That three-judge panel was composed entirely of appointees of Ronald Reagan and George W. Bush.

and of course.......

But both parties have been drinking at the Wall Street trough.

It's nice that presidential aspirants are talking about rebuilding America's middle class.

But to be credible, he (or she) has to take clear aim at the Street.

That means proposing to limit the size of the biggest Wall Street banks; resurrect the Glass-Steagall Act (which used to separate investment from commercial banking); define insider trading the way most other countries do - using information any reasonable person would know is unavailable to most investors; and close the revolving door between the Street and the U.S. Treasury.

It also means not depending on the Street to finance their campaigns.

Can we the people actually do anything about this? It's been discussed for years now, but nothing seems to really change.
www.huffingtonpost.com...

Robert Reich,Chancellor's Professor of Public Policy, University of California at Berkeley; author, 'Beyond Outrage'

It doesn't matter if it comes from a blog, as long as the content is correct. I was reading a lot of stuff written by economists up to about five months ago and many articles addressed the fact that the market is not acting sensibly. It is not following the directives it is supposed to follow to be solvent and semi-secure. It has a mind of it's own that makes it possible for a major collapse.

But what do I know, I am just posting in a blog.

a reply to: ladyinwaiting


frank-dodd is a corrupt joke...
the new congress should override the puppets like Obama and the federal reserve+TBTF banker/oligarch cartel and reinstate Glass-Steagall Act...& regulate derivatives & also burn that memo from the Fed for banks to maintain 2 sets of books


I had never pooh=pooed the wordpress, citizen op-eds, private commentators.... I save all my guile for the MSM cows calling themselves objective journalists

Meaning that if a CEO tells his Wall Street golfing buddy about a pending merger, the buddy and his friends can make a bundle -- to the detriment of small, typically middle-class, investors.

But...but...but....I thought insider trading was illegal?

: @@ :

originally posted by: ladyinwaiting

Meaning that if a CEO tells his Wall Street golfing buddy about a pending merger, the buddy and his friends can make a bundle -- to the detriment of small, typically middle-class, investors.

But...but...but....I thought insider trading was illegal?

: @@ :

But.. Congress legislated itself immune from prosecution for it.
I think that last line couldn't even be made up, much less get seconded.

EDIT:: in the interest of drift avoidance behavior, I know a lot of guys
small-time trading silver and small bits of gold as well for dollars. This
toilet paper we call money is about to split one last time like the
overvalued stock it really is. And please don't get me started on the
CTFC and the common knowledge gold paper is leveraged 400:1 plus.

THE Truth is........
(I hate it when someone begins a sentence with "The Truth Is" -- it sounds so arrogant.

But the Truth is... we can't do a damn thing about it. Insider trading, I mean. What are we going to do -- hack their emails, tap their phones? Put them under surveillance?

We put them on the "honor system?" heh. Like the fox in the hen house.

originally posted by: ladyinwaiting

Meaning that if a CEO tells his Wall Street golfing buddy about a pending merger, the buddy and his friends can make a bundle -- to the detriment of small, typically middle-class, investors.

But...but...but....I thought insider trading was illegal?

: @@ :

It is only illegal if you get caught and there is evidence

The congress won’t bring back Glass-Stegle or do anything else to rein in Wall Street.

They couldn’t or wouldn’t do it with a democratic congress and they sure won’t do it with a GOP congress.

Folks you don’t realize it but were finished…

Obama, the phony on one side, and the whores of the GOP on the other side.

It's only going to get worse.

The market is manipulated by the Creature from Jekyll Island, using computer generated trades. The system is rigged.

I don't agree with much of Elizabeth Warrens policies but she's right about Wall Street. Come 2016 there's a very high chance that I would vote for either Warren or Sanders based on their policies towards Wall Street, they're some of the few that not just recognize the issue but want to do something about it.

a reply to: Willtell

I agree Willtell. A recent Tweet from Robert Reich states:

Wall Street is too big to fail, jail, or curtail.

Thanks for the reminder to read his Tweets! Also this:

Biggest future political divide in America not Republicans vs. Democrats but big corporate Wall Street complex vs. middle class and poor.

Robert Reich Tweet

Also of note: "We learned last week that Goldman Sachs has been on a shopping binge, buying cheap real estate stretching from Utah to Spain, and a variety of companies".

Reminds me of the current thread about the 1% buying properties to put air strips on, thinking they might need a quick get-away.

~

originally posted by: HUMBLEONE
The market is manipulated by the Creature from Jekyll Island, using computer generated trades. The system is rigged.

But who rigs the computer generated trades?

Wall Street is too big to fail, jail, or curtail.


Holy Cow. : (

originally posted by: ladyinwaiting

originally posted by: HUMBLEONE
The market is manipulated by the Creature from Jekyll Island, using computer generated trades. The system is rigged.

But who rigs the computer generated trades?

Programmers and some people that understand market trends. The entire system is on autopilot and uses what's known as HFT - High Frequency Transactions. Basically what happens is that the large banks have purchased computers very close to the Wall Street servers, Wall Street sold this space because they lease it out at a premium. These computers look at the stocks others are buying and can see a transaction as it's going through the network. They then use the knowledge of knowing that demand is momentarily increasing, as well as their closer physical proximity to buy the stock before the other person can. Afterwards they sell at the now slightly higher price. It generates fractions of a cent in profit per transaction, but over trillions of transactions makes A LOT of money.

In addition to this there are many automated systems that create a complicated series of stoplosses which check a thousand times a second if a stock has dropped too much in value, if it does it automatically sells and waits for things to stabilize. It does all this far faster than any humans can react.

If you have some programming knowledge there's actually nothing preventing you from doing the same thing, except your gains are far smaller. It's actually a popular hobby among engineers to create their own trading algorithms (they think it's a system they can solve, unfortunately Wall Street doesn't run on logic) that act on some of the smaller and slower markets that the banks simply have no interest in. Most people get it wrong though, and because of physical distance you can never beat the large companies if they do take an interest. Well, that and Wall Street charges a pretty steep fee that goes beyond what most individuals can afford for that type of information.

a reply to: Aazadan

Firstly, thank you for that detailed explanation. I needed it, as you can see, as some others will benefit from it also.
So, applause!

I think I knew this:

In addition to this there are many automated systems that create a complicated series of stoplosses which check a thousand times a second if a stock has dropped too much in value, if it does it automatically sells and waits for things to stabilize. It does all this far faster than any humans can react.

And I understand the reasoning. It's like shutting off the engine on your car, right before it blows up, so not a bad thing.

But this doesn't seem like such a good thing to me:

These computers look at the stocks others are buying and can see a transaction as it's going through the network. They then use the knowledge of knowing that demand is momentarily increasing, as well as their closer physical proximity to buy the stock before the other person can. Afterwards they sell at the now slightly higher price. It generates fractions of a cent in profit per transaction, but over trillions of transactions makes A LOT of money.

In fact, it sounds like cheating, and avoiding insider trading policies. What do you think?

originally posted by: ladyinwaiting
In fact, it sounds like cheating, and avoiding insider trading policies. What do you think?

I think it is cheating. Every good stock trader I've ever met, and there have been a few of them have agreed with me. It's the closest thing in this world to a guaranteed get rich quick scheme other than possibly government taxes.

I think that automated trading is simply a facet of the world that we have to accept, but I see some problems with this system when it comes to equality of information which is something that insider trading is supposed to stop. For example the type of HFT's the big banks do, I believe is insider trading. They get information on what others are going to buy and sell before the rest of the market and can react accordingly. This information is privy only to a handful of companies and they use it to make billions of dollars.

The information the rest of us can get must to be competitive among individuals must be purchased from the stock exchange at a premium, and that gives those people an advantage of a few seconds or a minute or whatever it is. I'm not sure if this is insider trading or not but I don't agree with it. If someone can make a good algorithm and trade based on it, more power to them but free markets depend on information being provided to all interested parties on an equal basis and we don't currently have that.

High Frequency Trading

In Military terms it's called "being inside the enemies decision making cycle" it is the surest way to victory, and one of the prime justifications for gathering intelligence in the first place.

Outlawing high speed trading would be akin to outlawing the Torrent file sharing protocol. As is so rightly pointed out in this very discussion it becomes a question of how close joe-street can get to the wall. My advice... buy the old school stocks that pay dividends, and hold them for decades. Day trading is asking to have your own fat trimmed.


Mike Grouchy