Sunday, August 25, 2013

A Few Remarks About The State Of Financial Markets With The Nasdaq Crash


Is that enough of a remark? 

I have reduced my exposure to any type of financial market over the last few years.   Why?  Because what I see frankly concerns me to say the least.  I don’t trust the markets.  Dodd-Frank?  Are you shitting me?  I’ve beat that like a rented mule.  Why don’t you ask Obama to explain the thousands of pages of horse shit he signed into law?  As if I even need to waste any energy saying this, he has no idea what he is doing and neither do Dodd of Frank or the Republican dunces who simply wanted to do nothing.

I see what 99.99% of people don’t through my involvement in markets.  The vast majority of idiots who end up on financial TV talking about now being a great time to buy any financial asset, because they make money off of your money and want your money so anytime is a good time to take your money,  or politicians who blow chunks on the TV yet have never actually participated in financial markets at a very technical and detailed level of understanding and knowledge.  

Does the Nasdaq crash surprise me?  Hardly.  I have written on more than one occasion we could wake up some morning when the back end of this crisis hits and see the equity market down thousands of Dow points or that the markets could be halted for days or longer as happened in Russia some years ago when the bleeding was literally unstoppable.  Actually, I have written many times I believe that all financial markets as we know them are likely to disappear.  If capitalism disappears, their funding mechanisms and capital markets that define them are going with it.   

There are huge gaps in liquidity in many financial markets.  Huge.  And that’s not new but it’s worsening.  Without the Frankenstein algorithmic machines that literally run markets today, if you want to call it them, and provide what is nothing more than faux, rent-seeking liquidity, I don’t have any idea how markets would even operate.   Things are that f*cked up.  Derivatives in general concern me even more because so much of that market is opaque, illiquid and manipulated and there is no guarantee of anything.  That includes no guarantee of settlement because a derivative is by definition of no intrinsic value.  

Financial markets and anything in the economy touched by finance and large corporations are a complete and utter mess.  Frankly, I’m not sure markets can be fixed.  It seems more likely that this unstable system will continue to devolve until it experiences terminal failure and then society will be forced to cobble together a system that serves some useful purpose to democracy and society rather than fixing this one.  This system serves zero purpose to society as I have remarked before.  It has become completely corrupted.  And the government is the main reason that is so. 

Rather than simply banning the vast majority of bullshit that goes on in financial markets, the government itself created the bullshit by rigging markets for legalized political bribes.  And they continue to allow this nonsense because they want to regulate this dysfunctional behavior in markets.  Why?  So they can tax it.   The state exists only through violence.  And that means the corporate state, just like the corporations it creates, seeks rent. 

This is no different than the cigarette companies.   Does anyone think the government wanted Philip Morris to go out of business when it filed a suit against the industry?  Was the government trying to stop cigarette companies from putting dozens of toxic chemicals into tobacco and selling this to Americans?  Ahem.  All bureaucracies first seek to sustain and perpetuate their power and existence whether that is a corporation, the SEC, the state or the Vatican.  The government wanted to tax cigarette makers with impunity not stop poisoning Americans.  Why?  Because it can.   Monsanto wants to sell you GMO food.  Why?  Because it can.  Coke now is running propaganda ads to tell you the chemicals it uses in its soft drinks are safe so you’ll buy of their elixir. Why?  Because they can. 

Fundamentally, this is a far, far larger issue than the endless destabilizing activity that the government condones in financial markets.   The government, or let me rephrase that, the state, allows all types of destructive and dysfunctional activity in our economy and economic markets.  Why?  Because they can.  Because it serves their purpose of collecting greater and greater taxes to wield more and more control.  The same reason corporations seek rent by selling you more and more products and services that make you sick or harm you or enslave you or steal from you.  To extract greater and greater rent or profit or taxes and thus are able to sustain themselves.   We have over 100 million useless corporate jobs in our economy.  Why do they exist?  Because the state can regulate them to collect tax on them.   The state doesn’t give a shit whether these companies serve democracy or are poisoning us.  Get real.  Where is there any evidence of their concern other than the endless political blowhards lying to us over and over again year after year, decade after decade, and doing nothing about it?   Rhetoric.  They are concerned with extending the power of the bureaucracies that megalomania creates and then presides over like our aristocratic lords. 

That’s about enough.  I think I’ve made my views clear on the Nasdaq crash.  

By the way, the crude oil market looks like it might be setting up for a crash soon enough.  A price crash.  The same algorithmic rent-seeking liquidity that defines financial markets is in commodity markets as well.  The level of speculative exuberance is unprecedented in the crude futures markets.  And forward contracts are not confirming this exuberance.  Just like gold was.  Of course, there are legitimate, albeit temporary, reasons this could be happening or maybe it’s just another part of our economy manipulated by financial and political predators.

posted by TimingLogic at 10:06 AM