Archive for the ‘Excess and Algorithms’ Category

Student Loan #Debt Getting Presidential Treatment

Posted: June 8, 2014 in Excess and Algorithms
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by @anarchyroll
6/8/2014

There is something about the word, and the monetary figure trillion that catches one’s attention. Trillion, as in; the total amount of student loan debt in America is $1 trillion.

A standing rule I have is that anytime the word debt and trillion are together in the same sentence, it is worth keeping an eye and an ear on.

Elizabeth Warren has been attempting to push a student loan debt reform bill through Congress. A bill that would in essence, allow debtors to refinance their student loan debt, something that is not currently allowed to happen.

President Obama has now formally put his support behind the bill.

Student loan debt has real potential to be the next bubble that busts the entire economy akin to the housing and dot-com collapses of the previous two decades.

The other important piece of the legislation is that it lowers the interest rates on the loans themselves. The first benefit of the bill helps those already in debt. The second benefit helps those yet to take out loans. Sounds like a common sense piece of win win legislation. Naturally in Washington it is facing an uphill battle with stark opposition.

Regardless of political affiliation or economic situation, $1 trillion of debt must be formally addressed with public policy of some kind to at least take a small preventive measure against a future recession or depression caused by outstanding debt on a mass scale as currently exists with student loan liabilities.

The #China Bubble

Posted: May 28, 2014 in Excess and Algorithms
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eanda logoby @anarchyroll
5/27/2014

What happens when the country that we borrow from needs to borrow from someone?

China is starting to see companies collapse and borrowing go up. Why should you care?

Because the United States of America is dependent on China whether we want to be or not, whether people know it or not. China now has to spend $4 to make a $1.

If China goes through a depression or a recession or even something resembling a recession, we are going to feel the negative effects here at home. Not just because they buy so much of our government debt, but because China is responsible for 1/3 of global economic input according to the article linked to above.

There’s no need to panic or ring a doomsday alarm. But China is in a debt crisis.When that language/terminology is used there must be cause for concern in the name of financial responsibility and fiduciary duty. Why is that the case? Why should you care about this?

China owns $1 Trillion with a T of US Government Debt.

That may not seem like a lot when you see the total amount of government debt. But a trillion dollars is a trillion dollars no matter how economists may try to justify it to themselves. Anytime a trillion dollars is involved, it’s safe to say that an eye and an ear should be paid to it at all times. Especially when a margin call from China could put us on a bullet train to a 2008 sequel. The sequel is never better than the original, but let’s keep this one in the territory of Casablanca and Old School and let the original stand alone with the test of time.

No Black Bars for #WallStreet White Collars

Posted: May 23, 2014 in Excess and Algorithms
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eanda logoajclogo2by @anarchyroll
5/22/2014

How many people went to jail for causing the 2008 economic collapse of not just the United States, but the entire global economy?

I thought the answer was zero, it turns out I was wrong. The answer is one, one person from Wall Street went to jail post 2008.

It’s not just an income inequality gap that exists and is expanding in America, there is also a judicial inequality gap. Since I’m white I’ve only noticed this recently. If I was a minority I would have likely not just written about the disparity, but would have been arrested and put in jail already.

Graph courtesy of Project.org

In America, white-collar criminal really is a double entendre. One for the type of crime, a second for the race of the criminal.

Though maybe it is time to update the image and the term. Something more appropriate would be green collar crime. Though the fact that almost all of the white-collar corporate CEO’s were/are white; it is the quantity of dead presidents in their offshore bank account that is the blade to their prison term skate.

What does it say about us as a society that we allow this kind of disparity to justice to become the norm? Is the damage caused by the architects of the ’08 collapse greater than, equal to, or less than the robbery of a single person? How about the rape of a single person? The murder of a single person? Selling drugs to a single person?

I’m not pretending to have an answer here. I am certainly not standing on a pedestal.

Was the damage caused by World Com and Enron akin to a serial robber? A serial killer? A serial rapist? A drug kingpin? How do we measure the collateral damage? Is the death by stabbing of a man in his early twenties different from a retiree who finds out they have lost all of their money in a Ponzi scheme and is destitute without the physical ability to earn for the rest of their life?

What about the people who kill themselves due to an economic depression? What if they have spouses and children? Is their loss, pain, and suffering different from a woman who gets robbed and raped at gun point walking home from the train station?

When entire neighborhoods and towns are put into foreclosure. Hundreds, thousands, millions without work, shelter, food, water, or hope for the future…are the people responsible for causing so much human tragedy somehow less evil, deserving less scorn, and less judicial prosecution than a teenager who runs over a kid while texting and driving? What about drinking and driving?

When blood is spilled, lives taken, innocence stolen in violent crimes we as a society hunt down the criminals, lock them up, throw away the key, and turn the other cheek while they are habitually raped in prison. Victims of violent crimes and their families are forever changed, unable to ever fill the hole created by an evil person that took something that can never be given back.

But is that psychological damage not shared by victims of massive financial crimes against society like in 2008? When we aren’t talking about a single person losing a job or life’s savings but a large percentage of the global population. Are the strains placed on society not akin to that placed on the immediate friends and families of violent crimes?

If not, can we at least as a society agree that we should lock up hedge fund managers, investment bankers, and Ponzi schemers that cause global recessions and depressions as strictly and regularly as we lock up drug dealers and users?

Thomas Piketty 101: In His Own Words

Posted: May 4, 2014 in Excess and Algorithms
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by @anarchyroll
5/4/2014

Do you know who Thomas Piketty is? If not, get to know him because anyone who has any real influence on the world at large is reading his book, meeting with him, or seeing him speak live. He is being praised by the 99% as a harbinger for what the future of economics should look like and demonized by the 1% as another crazy socialist in a suit.

Thomas Picketty is a French economist and author. His recent book Capital in the Twenty-First Century is breaking tradition from past economic books and actually selling really well. He is a believer an evolved, progressive taxation to battle income inequality that has become a global pandemic over the past thirty years. The Guardian recently followed Picketty on a speaking tour of London. The video below contains the meat and potatoes of what you need to know about Picketty’s viewpoints, theories, and demeanor in his own words, in less than five minutes. Click on the picture to be directed to the video. Enjoy!

High Volume Trading = Rigged Stock Market

Posted: April 28, 2014 in Excess and Algorithms
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by @anarchyroll
4/27/2014

The stock market in the United States is rigged like crooks who have the fix in on a casino table game.

Many skeptics and people who have lost money have been saying this under their breaths at bars and loudly at family gatherings for decades now. But since the economic collapse of 2008, many people who have watched even the most sanitized network news show that Wall Street is an insider social club with insider language, insider trading, meant for only those in the club to benefit at the expense of those on the outside.

Do you know what flash trading is?

Whether or not you have any money in the stock market you need to know about it. Because if you’re smart, then one day, you will have some money in the stock market. Like it or not, most wealth generation is created by people who are able to make money in the stock market. The US stock market, though rigged, is the gold standard of using money to make more money in the world we live in. High Frequency Trading or Flash Trades leverages technology to rig the game for those in the know.

A con using fiber optic cables is still a con. The great author Michael Lewis recently exposed flash trades to the world for the con that it is. If flash trading wasn’t/isn’t a con, then why are both the SEC and Congress already looking to enact laws to make it illegal?

If flash trading isn’t as shady as it gets, why has a separate stock exchange called the IEX opened for business on a foundation of being able to prevent flash trading? If flash trading isn’t a con, why has the IEX gotten both so much positive press, high level start-up capital, and high-profile clients/traders?

I first heard of flash trading when the Flash Crash of 2010 become public knowledge. I also remember reading an article in TIME about buildings in Manhattan being bought and turned into server farms. Considering the price of Manhattan real estate, the fact that buildings would be bought and not turned into residential or commercial property to collect rent of any kind should raise an eyebrow.

Flash trading is the epitome of why my economics blog is called Excess and Algorithms. Excess and Algorithms is what flash trading is all about. Flash trading symbolizes what Wall Street has become over the past 25 years. Shady, dishonest, illegal but allowed to exist because of high level bribery, blackmail, and under the table handshakes between those in power and those in the know. The pervasiveness of flash trading in turning the stock market into a rigged game shows why the movement was called Occupy Wall Street. #OWS tried to teach and preach many things. Their critics would argue, too many. Two of the aspects related to business and Wall Street were/are:

  • Bailouts for citizens > Bailouts for banks
  • Jail for economic collapse architects > Bonuses paid to economic collapse architects
  • Cash > Credit
  • Credit Unions > Banks

Now, thanks to Michael Lewis we know one more thing about Wall Street to adapt to going forward:

  • IEX > NYSE & NASDAQ

Act accordingly…

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