Posts Tagged ‘markets’

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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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by @anarchyroll
3/5/2014

A lot has been written about student loan debt, but apparently not a lot of research has been done into the subject. The Department of Education releases default rates once a year, but that is just about it. Are you surprised at this? So was the New York State Federal Reserve Bank. Two analysts working their essentially had to do a bulk of the research that is now often cited by the media and protest groups.

They found that the percentage of 25-year-old college graduates with student loan debts essentially doubled while the average loan balance increased 91% from 2003 to 2012.

Economists are looking at education borrowing as the next bubble that could burst and drag down the US economy along with it. Much like the housing bubble, there are a lot of government backed loans being given away with a rubber stamp to large amounts of people who are unable to immediately if ever repay. Government officials are openly comparing student borrowing to the mortgage-backed security crisis of 2008. And remember, this article opened with the fact that there has been little study and even less data available on the subject.

Mortgage backed securities, credit default swaps, and derivatives trading are all complicated things. Let’s keep the education bubble concept simple.

Student loan debt in America = $1.2 trillion (with a T) more than any other form of consumer debt.

Much like the series of articles written about quantitative easing (QE), there will be multiple articles written about student loan debt as well as the debate over raising the minimum wage. These are the three economic issues I feel most passionately about and wish to shine light upon. Let those numbers listed above wash over you for a bit. Do you know anyone dealing with student loan debt? How are they doing? What is their quality of life?

It’s not just the loan or the interest, it is the unemployment, underemployment, or complete non-existence of careers in the fields thousands if not millions of students are graduating with each year. It’s not just the monthly payment on the loan(s). It’s the monthly payment on the loan plus rent, utilities, food, transportation, etc.

The Education Bubble and the student loan debt crisis are one and the same. They are intertwined, they are two terms describing essentially the same thing.

How is higher education a bubble akin to the dot-com, real estate bubbles, and other asset bubbles? We’ll cover that in part 2…