Fat Fingers my #&%@?%!

Posted: May 7th, 2010 | Author: admin | Filed under: Uncategorized | Tags: , , , , , , , , , | No Comments »
Official portrait of United States Secretary o...
Image via Wikipedia

A trader with fat fingers caused the 1000 point drop in the DJIA yesterday. Someone made billions in about a half an hour. The timing and extent of the drop were perfect as they occurred in such a way as to avoid trading curbs. Was this an organic event or was the market manipulated? Will we ever know….

Fat fingers. OK, and President Kennedy was killed by a single shooter with a magic bullet. And we are the only intelligent life in the universe. OK, maybe I am subject to some hyperbola every now and again but this is my blog.

Call me a skeptic but I felt compelled to check all my keyboards and on every single one, the letter “N” separates “B” and “M”. So this trader in Chicago must have really really fat fingers or maybe a really really small keyboard. Oh, and the mistake just happened to occur after 2:30 when the circuit-breaker trading curbs on the NYSE end. And the drop just happened to fall short of the 10% mark that would automatically close the market. Perhaps this was just a coincidence. A “perfect storm” so to speak.

Coincidence is totally plausible. Its even more plausible if you happen to believe in “too big to fail”, Goldman-Sachs puts it’s clients and the country by just supplying liquidity and that then President of the Federal Reserve Bank of New York, Timothy Geithner just happened to be out of the room, every time the health of CitiBank, Merrill Lynch, Bear Stearns and their ilk were discussed. As a side bar, Secretary Geithner appeared to be setting himself up for a top job a Goldman, once he left the government. But now with Goldman’s image tarnished, he may have to pursue alternate exit strategy.

The stock market is a zero-sum system. Someone buys and someone else sells. I’d like to know who bought at the bottom yesterday. Someone made billions. Perhaps it was Goldman-Sachs, just acting as a simple market maker at 2:30 PM, absorbing excess inventory of companies like Accenture  or Excelon (which both dropped from the $40’s to pennies only to close back up in the $40’s), and then selling that inventory back into the market at 3:00 (as they testified ad naseum to Congress, they are just market makers and they are really careful about holding onto “aged” inventory).

Will we ever know what actually happened? Was the market manipulated? Were the computer driven systems gamed? Will Goldman be around in a few years? And if so, will Tim Geithner have an office there? Stay tuned……

Reblog this post [with Zemanta]

Goldman Sachs is the new Drexel Burnham Lambert.

Posted: April 21st, 2010 | Author: admin | Filed under: Uncategorized | Tags: , , , , , , , , , , , , | No Comments »
Goldman Sachs Group, Inc.
Image via Wikipedia

Talk about being “surreal”, to quote the Goldman banker at the heart of the SEC’s current investigation, this has all happened before and will likely happen again. It appears that Goldman Sachs really is the new Drexel Burnham Lambert.

Here is how I see this Lincoln/Kennedy-esque relationship unfolding: Employees from both firms clearly considered themselves the smartest guys in the room. Both firms developed innovative financial products that were eventually abused by select customers at the expense of other customers and ultimately the American taxpayer.  Both firms and their employees were the envy of Wall Street because of the huge amounts of money they were making. Both firms became synonymous with greed, lying and all that is bad in finance. Civil investigations paved the way for criminal investigations. Right or wrong, certain high profile individuals are singled out and publicly made an example. Others will fade away and still others will rise from the ashes.

What is even more ironic is that back in the 1980’s when Drexel was at its height of power and influence, I had friends who were bankers at Goldman and they hated Drexel. They thought they were immoral. They said they were doing horrible things. They said they acted arrogantly and brashly. And they relished it when the sharks began to circle and Drexel was toppled. I always interpreted the intensity of emotion with regard to Drexel as jealousy or schadenfreude. I think most of the reaction to Goldman now comes from the same place as opposed to being truly outraged due to moral lapses.

People who take jobs, who make careers on Wall Street, are not doing it for altruistic reasons. They are doing it for the money. I have no problem with that and frankly neither should anyone who derives any benefit from our economic system, which is virtually every person on the planet. I do have a problem with cheating, lying and stealing. I have an even bigger problem with the powerful abusing their positions of power and forcing the little guy not only clean up their garbage but take it to the street and eat it. And I have an even bigger problem when these powerful individuals are convinced that the garbage is no longer there solely because of their brilliance and that makes them both completely indispensable to society as well justified in taking ever larger salaries and bonuses, even as the real world is crumbling all around them.

So in the end, maybe Goldman will get what it deserves. Or more likely, even more than it deserves.

Reblog this post [with Zemanta]