Joe Saluzzi, expert on algorithmic trading -- also known as high-frequency trading, or HFT -- returns as a guest this week to explain how the players behind this machine-driven process act as parasites that are destroying our financial markets (and, increasingly, even themselves).
Since Joe first spoke with us last year, HFT firms have only increased in size and share of market activity. Here are some staggering statistics on how influential they have become:
HTFs make up between 50-70% of the volume seen across market exchanges today.
2% of the traders on many exchanges (HFTs, specifically) represent 80% of the volume.
A single large HFT firm (referred to as a Direct Market Maker) can account for 10%+ of a market's volume on a given day
Large HFT firms make between $8 to $21 billion a year.
HFT trades occur in milliseconds (i.e., a small fraction of the time it takes your eye to blink).
With such scale, speed, and profitability, HFTs have turned the market away from being an efficient price-setting mechanism and perverted it into a casino where the clientele of human investors gets fleeced. » Read more
Former US Senator Bill Bradley believes a better tomorrow is within our grasp, despite the economic pain the middle class is experiencing today.
He wrote his new book We Can All Do Better to address the growing despondency and resentment he sees among Americans. With the right vision, leadership, and civic participation, he believes we can work our way back to prosperity and growth.
Chris was honored and excited to speak with the former Senator, particularly to uncover what awareness there is of the Three Es among our top political leaders. Not surprisingly for a longtime insider, Senator Bradley looks through the lens of working within the current system - i.e., if we can fix its shortcomings, it will solve our problems. Potential structural limits to growth, such as Peak Oil, are less bright on the radar.
There is much to learn here about what our Congressional leaders are focused on and what they are not. Listeners will undoubtly find points to agree with, and possibly others out-of-alignment with the concerns presented in the Crash Course. We expect an animated discussion to ensue in the Comments section below.
We take it as a good sign that widely-known veteran politicians such as Senator Bradley are increasingly standing up to admit "there is a problem" -- that's the first step towards taking corrective action. And we're very thankful of the time the Senator has given to speak to our community. » Read more
Jim Puplava has made a decades-long career of interviewing hundreds of notable experts on the economy, energy, precious metals, geopolitics, agriculture and other sectors that impact our future.
The outlook he has developed as a result of all this input is less than sanguine. Jim concludes that economic growth will be constrained both by world governments' chronic addiction to spending more revenue than they take in, and by the systemically-rising costs of fossil fuel-driven energy.
In terms growth, he sees political leadership becoming less and less relevant in its ability to effect outcomes. In fact, he declares the price of oil as now being more influential in stimulating or depressing sovereign economies than central bank interest rates. In his words, "oil is the new Federal Funds rate".
At the high level, our global economic plight is quite simple to understand says noted Australian deflationist Steve Keen.
Banks began lending money at a faster rate than the global economy grew, and we're now at the turning point where we simply have run out of new borrowers for the ever-growing debt the system has become addicted to.
Once borrowers start eschewing rather than seeking debt, asset prices begin to fall -- which in turn makes these same people want to liquidate their holdings, which puts further downward pressure on asset prices: » Read more
Forty years ago, a group of researchers at MIT ran a study to address the question of how humans would adapt to the physical limitations of a finite planet. That study became the book Limits to Growth.
It should have been a starting point for a critical discussion at the national -- or even global -- level. It could have led to the birthing of many practical and then-implementable initiatives that mighthave brought our unsustainable demographic, industrial and consumptive behavior under better control. But sadly, the book instead became a lightning rod for controversy. And decades later, the issues it warned of loom larger than ever.
While there are some differences in opinion between Jorgen and Chris, particularly on the acuteness of our resource predicament, both agree that continuing to pursue the status quo will result in a poorer quality of life for most of the world's denizens. We increasingly appear to be facing a future shaped either by design or disaster, and unless we actively decide to intelligently change our behavior, the latter outcome will prevail. » Read more
Today's interview continues building on his excellent synopsis from last month that detailed the origins of the Eurozone crisis. The fundamental shortcomings warned of at the euro's creation in 1997, combined with the excessive sovereign debts run up since then, have finally expressed themselves at a scale too large to be contained any longer.
Today, Alasdair details in depth the huge and serious challenges facing Greece and the major Eurozone countries and the likely impacts of the fast-dwindling options left remaining.
He sees no happy ending to this story, no outcome in which serious pain and permanent behavior change can be avoided. And for those looking for shelter from the unfolding economic storm, he sees few options besides the precious metals (which he believes are severely underpriced at the moment): » Read more
I want to take the lowest risk approach to the future. So much is riding on it.
Personally I feel that the scientific progress we have made over the last few hundred years is astounding. I don’t want to lose that. I think that is a gift to the future and I don’t want to run the risk of a collapse that could destroy all that we have.
Even if you think the collapse is a low probability -- let’s say it's 5%, 10% probability -- it is an asymmetric risk. The downsides of not treating it seriously are huge.
I mean, you buy fire insurance for your house even if it is a 0.1% probability that your house will burn down in your lifetime. But the consequences are so negative that you do it. And when you are talking about the accomplishments of all civilization, you need to buy insurance and treat that with the respect it deserves.
Tom Murphy -- associate professor of physics at the University of California, San Diego -- has mapped the distance between the earth and the moon to within a millimeter, and built instruments to study colliding galaxies. We feel comfortable saying he's a pretty smart guy, as well as an optimist about what human ingenuity and technology can do for the advancement of society.
In 2004, he became intrigued with the global energy situation and brought his disciplined, empirical approach to bear. He set out to determine which new sources were going to pick up the slack once fossil fuels began becoming scarce. Looking back, he says the theme underlying his findings was "disappointment."
The math showed him that there simply will not be nearly enough BTU yield from alternative energy sources to meet the rising global demand. In fact, if anything, his investigation made him realize how few minds today are truly aware of the extraordinary energy throughput we are getting from fossil fuels. » Read more
Alasdair Macleod, publisher of Finance and economics.org, sees little room for a happy ending to the worsening European credit crisis.
In this interview, he builds on his excellent synopsis from earlier in the week that detailed how the crisis originated, essentially embedding a fundamental structural shortcoming into the entire Eurozone construct starting back in 1997. This flawed monetary model was exploited for temporal gain and it worked very well as long as the pie was expanding and nobody was looking too carefully at the mounting imbalances created as it chugged along beautifully. Everybody was getting rich on their Mediterranean villas going up in price almost daily.
This whole thing was bound to work until, mathematically, it couldn’t work. » Read more
Bill Black is a former bank regulator who played a central role in prosecuting the corruption responsible for the S&L crisis of the late 1980s. He is one of America's top experts on financial fraud. And he laments that the US has descended into a type of crony capitalism that makes continued fraud a virtual certainty - while increasingly neutering the safeguards intended to prevent and punish such abuse.
In this extensive interview, Bill explains why financial fraud is the most damaging type of fraud and also the hardest to prosecute. He also details how, through crony capitalism, it has become much more prevalent in our markets and political system.
A warning: there's much revealed in this interview to make your blood boil. For example: the Office of Thrift Supervision. In the aftermath of the S&L crisis, this office brought 3,000 administration enforcements actions (a.k.a. lawsuits) against identified perpetrators. In a number of cases, they clawed back the funds and profits that the convicted parties had fraudulently obtained.
Flash forward to the 2008 credit crisis, in which just the related household sector losses alone were over 70x greater than those seen during the entire S&L debacle. So how many criminal referrals did the same agency, the Office of Thrift Supervision, make?
Harvey Organ has been analyzing the bullion markets closely for decades. The quality and accuracy of his work is respected enough to have earned him an invitation to testify before the CFTC on position limits for precious metals back in 2010.
And he minces no words: Gold and silver prices are suppressed. With extreme prejudice.
In this detailed interview, Harvey explains to Chris the mechanics of how he sees this manipulation occurring, why he predicts this fraudulent pricing scheme will collapse soon, and why it's critical to be holding physical (vs. paper) bullion when it does. » Read more