Comments on: Dance through a rogue programmer scandal at Goldman-Sachs?

By: RKeane

RKeane — Fri, 28 Aug 2009 04:03:30 +0000

Decimal Place Trading caused the recession of 2008
This recession was caused by the manipulation of stock prices on Wall Street through naked short-selling, flash trading, high-frequency trading, secret software, super-fast computers and what I feel was the main cause of this corruption: “Decimal Place Trading.” As I write this article today, much of this corruption is now slowly coming out through social media outlets such as Twitter and Facebook, along with bloggers on the internet, Yahoo bulletin boards, and the movie Stock Shock. The news media is also to blame for what has taken place in this country — including the near-collapse of Wall Street and the banking industry.
There are many things to point fingers at or place the blame on, and I can think of a few off-hand that I would like to cover — the first being Wall Street’s regulation changes. I am no expert — I am not even a writer — but decided to tell this story since the business news media was not telling it. These Wall Street regulation changes contributed to the aforementioned problems in many ways, with the first being the removal of fractions in stock pricing. On January 29, 2001, the New York Stock Exchange, or NYSE, went to four-decimal-place trading. On March 12, 2001, the National Association of Securities Dealers Automated Quotation, or NASDAQ, followed suit. This new rule had the best of intentions as we headed toward the computer and digital world, but over time it was manipulated and companies like Goldman Sachs figured out how to take advantage of the new system. I am not sure how it happened, whether it was lobbied for years or what — but along came the biggest mistake of all with the elimination of the uptick rule in July of 2007. This rule had been implemented after the great depression, and had been in place since 1938. How could the Securities and Exchange Commission, or SEC, abolish a rule that had been in place for close to 70 years, and had worked? Put these two changes together, and you get a simple equation: greed plus corruption equals recession.
Reports have been released on the web that Goldman Sachs made over 100 million dollars per day in 46 out of 64 trading days in Fiscal Year 2009, second quarter (April, May and June). Let me say that again. They made over 100 million dollars per day, and are still doing it as I write this letter today. But the question remains, how did they do it? There has been no report of this by any of the news media. How can this be? This corruption is 100 times the gravity of the Bernie Madoff story, and yet there has been no coverage by CNBC or Bloomberg News. Why? Goldman Sachs, upon Wall Street transitioning to fractions and the abolishment of the uptick rule, designed secret software and used this software to gain an advantage on every potential investor. Basically, Goldman Sachs became a Las Vegas poker dealer in New York City on Wall Street, turning profits on investors every trade with their super-fast computers and software.
Richard Keane August 26th, 2009 Revised version

By: soundwash

soundwash — Tue, 07 Jul 2009 16:25:11 +0000

wooo, the “golden formulae” Oookay now..

“Hey, Look over here!”

lets not discuss how G&S have a small
force of affiliates, ex-exployees, alumni
and notable “customers” neatly installed in top-level government and the white house.

Having A Goldman thug in control of the treasury/Fed since Greenspan and beyond
is of little concern in the conflict of interest arena, yes?

here is just a small sample of names of the real “program” G&S is using..

Robert Rubin, Timothy Geithner, Lawrence Summers, Alan Greenspan, Stephen Friedman, Henry Paulson, Stephen Rattner, Ben Bernanke

and for a spin, I add, ex-co-ceo Gov. Corzine of New Jersey..which gives oversight of one of the biggest sea ports in the U.S. -very handy.

as if this all doesn’t suck enough, Congress is
thinking about giving The Fed/G&S the power to decide who is a threat to the economy (ie “to Big to Fail”)

anyway, i would love to see the “conflict of interest” code in the program. no doubt it compliments G&S’s “human confliction” quite nicely.

failing all that..

Hey!, Look Over Here!

-s

By: EasyComeEasyGo

EasyComeEasyGo — Tue, 07 Jul 2009 02:37:46 +0000

Check out the Bloomberg news story – Goldman claims with this code in the wrong hands that markets could be manipulated. Geez, I wonder how they know that? Maybe from their own experience?

Maybe its not a bad idea to require that all code used by the Wall St. firms for trading be public domain as a safe guard against using software to manipulate the market.

By: father time

father time — Mon, 06 Jul 2009 22:53:15 +0000

MikeN has provided a good example of arbitrage. Of course time is a key component, you have to execute the purchase and sale before the equation reverses itself, or perhaps there is some way you can sell & buy naked shares (I don’t know how).

laxdude, how is the market not zero sum when you consider that if I sell you something at $1, and you turn around and sell it at $1.50, that I haven’t lost the potential for a $0.50 gain – which is a loss as real as buying at $2, and selling at $1.50? If there was no inflation, then the loss would be of less consequence, but inflation forces the player to make money on each trade just to keep up with the falling value of the dollar. When inflation hits 10% per year, this will greatly increase the pressure for positive price moves.

But returning to the question, how is the stock market different from a Ponzi scheme?

By: MikeN

MikeN — Mon, 06 Jul 2009 22:11:22 +0000

1)Someone is selling for X at place A.
2)Someone is buying for X+k at place B.

Computer monitors all places, sees 1 and 2, buys at place A and sells at place B.

Now let’s write it up as something sinister.

By: laxdude

laxdude — Mon, 06 Jul 2009 21:27:28 +0000

[Duplicate comment deleted. Please don't double post! - ed.]

By: laxdude

laxdude — Mon, 06 Jul 2009 21:27:09 +0000

father time, the stock market and monetary system are not zero-sum systems. So both sides in a deal can proffit. You do not have to have a looser in the deal.

By: father time

father time — Mon, 06 Jul 2009 20:58:00 +0000

Makes sense now.

However, every cent earned requires some other player to lose a cent (or the potential to have made that cent). If an organization played the market that deftly, no one would buy or sell to them because it would be a sure bad bet. Yes? Maybe the market is functional because it is suboptimal, or maybe it is undistinguishable from a Ponzi scheme?

By: amodedoma

amodedoma — Mon, 06 Jul 2009 20:25:12 +0000

Allow me to elucidate. If I had enough capital I could hire the best lobbyists in Washington to guarantee that my investments have the advantage of favourable legislation. Or the fact that many industries affect each other. I could for example invest in a biofuel refinery and since I know they’ll need corn buy up agricultural interests. I’m sure there are many other options, but it seems obvious that the more money you’ve got to invest, the safer it is.

By: bob

bob — Mon, 06 Jul 2009 19:55:30 +0000

father time, you’re just flat incorrect. These guys are heavily invested in their own products, that’s a matter of black and white.

By: father time

father time — Mon, 06 Jul 2009 19:45:46 +0000

Amo, your last sentence is not logical.

By: amodedoma

amodedoma — Mon, 06 Jul 2009 19:33:58 +0000

Funny how they needed 10 billion of our tax dollars last year. Hell anybody’s successful that way. Obviously there are methods of investment for those that have enough capital that can guarantee large returns.

By: father time

father time — Mon, 06 Jul 2009 19:25:51 +0000

This story is a bunch of crap.

GS makes money by charging fees on the trades it makes. End of story.

There are no magical formulae that predict markets, or manage risk.

The market is fundementally a Ponzi scheme.

By: Sea Lawyer

Sea Lawyer — Mon, 06 Jul 2009 18:59:55 +0000

Need to protect these systems for enabling arbitrage.

By: Rich

Rich — Mon, 06 Jul 2009 17:13:52 +0000

I say they blow that algorithm all over the Internet while they’re at it. I’d like to see it.