Karl Denninger's Blog

Ah, grasshopper, that's the problem you see. It appears that Mario Draghi may have been involved up to his neck in hinky derivative deals -- perhaps dating back a very long time.

The Senate has passed, sending to The House, a bill that would impose a requirement that online merchants submit to state tax collection in states where they have no physical presence.

If you were watching your trading screen today at about noon central you got a hell of a surprise when the market suddenly collapsed on huge volume, with the S&P futures dropping from 1573 to 1558 in seconds and then recovering over the next five minutes or so all of the loss.

The problem with HFT as defined today is that it is simply a game to circumvent both The Securities Act and the alleged requirements of Reg-NMS.

It is broadly illegal to place into the market an order that one does not intend to execute. That is, you cannot place an order into the market intended to goad someone else into acting, or through any other device attempt to manipulate price except through a bona-fide offer to buy or sell the security in question.

Almost exactly four years ago the stock market began a sickening plunge that would shake the world. Declining from just over DOW 11,000 to under 7,500 in two short months, only to fall another 1,000 points in the next three, this period marked an unprecedented time of government intervention that you were told was for all of our good, and the good of our nation. You were lied to.

When Dimon made his famous "tempest in a teapot" remarks, it appears that he actually hadn't even seen the positions in question—relying instead on information from the head of the CIO unit who has now left the firm.

Oil is traded in dollars, and its price therefore rises when the value of the dollar falls, all else being equal. The Federal Reserve throughout Mr. Obama's term has pursued the easiest monetary policy in modern times, expressly to revive the housing market. It has done so with the private support and urging of the White House and through Mr. Obama's appointees who are now a majority on the Fed's Board of Governors.

Bloomberg, like the rest of the media and Bernanke himself, love to cite "core" inflation as well. But you don't live in a "core" world; you consume both food and energy. The CPI index says that for a "median" family about 15% of your budget will go to "food and beverages", with 7.8% of it being "food at home." For a median income of $50,000 this is $3,900 a year, or $325 a month. I can buy that number.

It is absolutely true that America cannot fill that demand, because at one dollar an hour you can't manage to put the food on your table for a family of four, say much less pay rent, electricity or gasoline for your car to get there and back!