Broken Markets (by Intervention and Manipulation)
It was a “strange” Friday session. European Trading started off in a quite no volume HFT manner, as is usual during these days. As news flow started increasing during the course of the day, investors had to digest news of Stark resigning, Greece going bust, Trichet’s confusing conference from Thursday, Italian banks halted, renewed spikes in European CDS prices etc. Suddenly the boring session turned into mini Flash Crashes across Assets. As the Euro started sliding, the DAX accelerated the fall, JPY began trading very flashy, while safe heaven Gold lost 50 USD in 5 minutes.
The Market is starting to show some very “disturbing” patterns. Manipulation and Intervention is causing an ever increased volatility in the Market, and risks bringing the system down. With correlations at historical highs, highest correlation levels in the SPX since the crash of 87, all moves are even more exaggerated by the HFT Community. The Market Microstructure is broken by the multiple interventions and manipulations of Assets. We are risking the big breakdown as resonance in the Market increases.
“After rallying nearly 100 USD last week from 1795 to 1895 with demand coming from the official sector and some leveraged players rebuilding length following the severe prior correction we traded to new all time highs of 1922 on Tuesday shortly before the Swiss Franc intervention.
The immediate aftermath was in complete contradiction to prior recent episodes of intervention and what anyone would have expected. Instead of spurring a further gold price rally on the basis that it was one of the few remaining safe haven “currencies” we saw a 50 USD collapse in minutes.
The source of this flow seems hard to pin down with some speculating over whether “authorities” were concerned about the signals of an accelerating gold price and its impact on other fragile markets. Soon after, much of the losses were recovered but the psychological damage had been done and there followed a series of liquidations from within the leverage space with gold closing down 50 USD on the day. This was then exacerbated by a near 60 USD flash crash within 2 minutes during the Asian session.”
Goldman Sachs
Live From Hellas-Revolution 2.0
The revolution of capitalism
Was Marx so wrong? At least he was right about capitalism. John Gray by BBC;
As a side-effect of the financial crisis, more and more people are starting to think Karl Marx was right. The great 19th Century German philosopher, economist and revolutionary believed that capitalism was radically unstable.
It had a built-in tendency to produce ever larger booms and busts, and over the longer term it was bound to destroy itself.
Marx welcomed capitalism’s self-destruction. He was confident that a popular revolution would occur and bring a communist system into being that would be more productive and far more humane.
Marx was wrong about communism. Where he was prophetically right was in his grasp of the revolution of capitalism. It’s not just capitalism’s endemic instability that he understood, though in this regard he was far more perceptive than most economists in his day and ours.
Full article, here.
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