Friday, June 22, 2012

Frickin' Geniuses

The foreign markets dipped sharply (overnight here), after yesterday’s downgrade of the 15 largest US banks, but today the US markets simply shrugged it off. The excuse was that the banks had set aside funds in anticipation of the downgrade. It might also have to do with the fact that proprietary trading done by these banks is a huge chunk of the daily trading. The average holding time of any single share of stock is now measured in the single digits, not years or months, but seconds.

The banks do something like 60% (or perhaps more) of total volume of stock trades on their own dark markets. That is way we have no idea who owns what stock or the trading price. In other words we don’t know what the real market is doing in the back room, and the front operation can be run up, or down, by computers trading back and forth in nano seconds. So fast is the trading and at such ridiculous volumes, that there is a real estate boom in lower Manhattan. The race to see who can get their super computers a few feet closer to the exchange floor (or rather their server), and thus a billionth of a second faster in the trades.

You also have no idea what is going on with your 401(k) in any real sense. During the 2008 crash the markets lost half their value, when they regained their previous high early in 2012, the average 401(k) had only recovered 49% of its losses. Just because the banks have all been downgraded, you might think the Masters of the Universe on Wall Street don’t deserve the $155 billion in bonuses they took last year? They are frickin’ geniuses.

The Dodd-Frank Act allows for much of this activity to be curtailed, and even done away with. So far the Republican House along with Republican appointees to the various regulatory Commissions have stalled action and refused to fund any reform. Mitt Romney has vowed to repeal this unwarranted intrusion on the Free Market. Another frickin’ genius.

The price of gasoline is collapsing, it isn’t that the oil companies and Wall Street speculators are giving Obama a gift, not intentionally. We are swimming in gasoline, you see they don’t make gasoline, it’s in the crude oil. The oil companies must sell it, or burn it to get rid of it. I suppose they could use it in Fracking Solution, that’s what they do with other refinery byproducts they can’t sell, just pump them into the ground. They used to just put all the benzene and such into the gasoline, and you got to pay them for giving you cancer.

So you see they simply have too much gasoline and must encourage consumption by cutting price. The corporate media is really talking up vacation driving, despite the boost to the economy that will produce. They are in this spot largely because of fuel efficiency gains. This has come partly because of years of high prices, but also from Obama’s Cash for Clunkers program moving consumers to buy more efficient vehicles. This in turn boosting the auto industry, that would be the same auto industry Obama saved, and Romney wanted to sell to China.

This auto recovery has helped boost the economy of Blue States, and even some Red swing states. Romney has sent out a memo to those governors to stop talking about the improving economy. He can’t win if the economy looks better because of things Obama has done. Especially with Obama pointing out that most of the new companies that Romney created were out-sourcing specialists.

Oh, and those banks, the rapidly falling gas prices will allow them to harvest money from hedge contracts they sold to all the suckers. The Republican noise machine convinced them that the price would go to $8/gallon. Quite a margin call if you can swing it. Frickin’ geniuses.