The Real Root of the Global Economic Problem
I’ve been thinking about this post all week; and have been pondering the possibility of it’s accuracy, but before I start, I need to get one thing very clear; this is speculation, based on hundreds of data points, articles, and a vast amount of research performed in my off-hours over the past few weeks. Meaning: I’m no financial expert, I’m a philosopher that thinks comprehensively with data either found or given – digests it – and builds points around it.
Overall, I’m going to try to be as comprehensive as possible, I’m going to try to explain it all as clearly as I can, but at the end of this post, you should see how Banks, all over the globe, drive the state of the working class down, perpetuate themselves, and are actually the cause of the global economic strife.
This goes beyond “the Government is bought by lobbyists”, “the Banks own everything”, “down with the large corporations”, or even “I’m the 99 percent”, this isn’t about that at all. This isn’t even about being a Democrat or a Republican. This isn’t about power-to-the-people, it’s about Algorithmic Trading.
Where it starts
Algorithmic trading is a faster-than-lightning trading approach, performed at every stock exchange, globally. It is the result of a series of computer systems placed inside the stock exchange that calculates fluctuations in the the stock market at thousandths of a second. These computer systems are owned by Investment Bank businesses.
Investment banks use these systems to drive their successes in trading. In fact they use these systems to inject their investments ahead of high volume trades, and thus generate advancement as a result of getting in ahead of a big bump in stock sectors.
If you have a computer inside the stock exchange, you can basically change and drive the outcome of trading to be in your favor. Now, I’m not talking huge leaps and bounds, I’m talking about fractions of a penny, but done to the tune of trillions of dollars. So, if I’m working with $2,000,000,000 and move the needle on 1,000 trades per day at 1/32 of a cent, I can turn out $625,000,000 a day.
Of course, that’s just hypothetical, and probably at a volume a lot greater than what is allowed.
Let’s take an excerpt from http://www.reuters.com/article/2011/02/25/deutschebank-korea-idUSTOE71O02L20110225
25th February 2011 – Deutsche Bank’s South Korean brokerage unit was fined nearly $1 million by the country’s exchange operator, the largest it has ever imposed, for failing to notify it on time about big derivative trades. [...]
In 2009, Deutsche’s corporate and investment bank generated 2.67 billion euros in revenues from the Asia-Pacific region excluding Japan compared with the almost 28 billion the bank made globally.
A special class of algorithmic trading is “high-frequency trading” (HFT), in which computers make elaborate decisions to initiate orders based on information that is received electronically, before human traders are capable of processing the information they observe. This has resulted in a dramatic change of the market microstructure, particularly in the way liquidity is provided.
Where’s it go from there?
Let’s say you’re too big to fail, and you get some $2,000,000,000 (trillion) dollars from the US government after you generated billions of dollars of financial trouble, globally, for gaming a real-estate market, both commercial and residential. Let’s say that you also took it upon yourself to sell those reckless loans to countries like Norway (all of this actually happened, let’s not forget).
What would you do with $2,000,000,000 if you could perform HFT trades in global markets? Help the public? Are you kidding? No, you’d use it to do the following:
- Lobby, you need power. Power is in deregulation, deregulation comes from Governments, you need more wiggle in your business, to drive your own economy
- Algorithmic trading, FTW!
How’s this effect the 99%?
Last I checked, none of us little people have the capital to even think about investing at the rate these Investment Banks are operating at. Not only that, even if you did, you don’t have the computers inside the stock exchanges. Even better, if you bank with these huge businesses, chances are they’re playing against their own customers’ money, well before they’re playing with anything else.
I mean, why would you want to raise any flags? If you invest against your own investments, in volume, you can make your company rich, and still give “some” results to your customers to keep them happy.
Tie it all together
The best way to make money in a world fueled by currency that isn’t based on anything tangible, but rather, perceived value, is to generate more value. The only way to do that is through stock prices. Therefore, quarterly earnings reports are gold. Thus, the highest priority for any company with a stock-ticker-symbol is the cherished opinion of their shareholders. It is within every large corporation’s best interest to appear valuable to Investment Banks, so they can become “more valuable”. In short, here’s the corporations priority list:
- Investment Banks
- Quarterly Earnings
- Company Executives
- Strategy around increasing share value
- Cover up bad press (PR)
- Building the appearance of “good business” (Marketing)
- Sending the appearance to The People (Advertising)
- Avoid lawsuits
- Avoid regulation from Governments
- Lower costs … highest cost for corporations is The People
Nowhere in that list will you find, “creating a great job market”. Creating a healthy job market doesn’t involve recursive, positive effects in any of the above points. Besides, humans are the liability in this machine. At the end of the day, money is the tune they want to play their music to, not humanity.
Humanity has nothing to do with stock prices, in fact, humans waste time, they waste money, they waste resources, and they are a cost that shareholders (read: Investment Banks) find to be a strain on their end-result — The Bottomline.
The Market is not Free
See, this is where the Right versus the Left battle comes into play. Do you regulate? Do you claim a need for socialist intervention on the money machine? How far do you take this type of action under Government control?
Well, the best part for Corporations about this is, We The People are ridiculously divided, because all we see are keywords like “joblessness”, “deregulation”, “socialism”, “Marxism”, “free markets” etc — but are never given the actual cause of the problem.
Since the people are too busy fighting over the cream at the top of the cappuccino, we’re failing to see the coffee table the mug is sitting on, and thus, too tied up in the surface, and “get the money out of politics” arguments.
We’re all being too shallow-minded with our “Left/Right wing media is biased!” and “Down with Corporate America/Socialist agenda” viewpoints. We would all be better off if we focused on the actual cause of the problems faced with, instead of the end results we’re fighting against like water over stone.
To put things into a perspective we can all roll our eyes at:
Michael Bay’s Armageddon movie has something we can all learn from, you can’t save the planet by chipping away at the surface, you have to drill down into the core of the problem, and destroy it from the inside out if you want to win.
- Corporations aren’t bad. Their priorities are.
- Their priorities are bad because too much Greed controls their priorities.
- The reward for being greedy is very high, thanks to Investment Banks controlling the markets.
- The Bottomline needs to be the wealth of a Nation, not whether or not a company looks appealing to Investors / Investment Banks.
- Mix all this with politics, and you have yourself a nightmare.
The Free Market is about allowing non-Government entities to operate and generate capital within a country for the betterment of the country – as whole. This isn’t some communistic plea to “give people what you’ve got”; it’s a simple fact – I own a company, I’m not a government employee, simple.
The Free Market mixed with an automated Money Market, not actually based on anything tangible, but rather, things that can be driven by the very hand that benefits from it – is not free. It’s a prison, and will end up being the worst crime against humanity in history if a solution can’t be reached, together, as a People.