COMPUTERIZED FRONT RUNNING: HOW A COMPUTER PROGRAM DESIGNED TO SAVE THE FREE MARKET TURNED INTO A MONSTER

While the SEC is busy investigating Goldman Sachs, it might want to look into another Goldman-dominated fraud: computerized front running using high-frequency trading programs.

Read more here –
http://www.webofdebt.com/articles/computerized_front_running.php

8 Responses

  1. No wonder No Rating agency or stock annalist could see the bubble coming or knew something was not adding up . Man when you put this together with a Bunch of Unqualified lending practices , no wonder we saw this debt build up without see the leading indicators signal this , and we must wonder how much of a player the FED was with all this , because you no they knew about Goldmans Trading Technology , but when ahead and kept keeping interests rates low artificially …. my question is why ?????

  2. HAS THERE EVER BEEN A BIGGER REASON TOO AUDIT THE FED ???????
    This is a manipulation of the Stock market overall , by the Biggest Bank in USA history , and they are abusing our Dollar as Reserve Currency

    • I quite agree. Banks and hedge funds were speculating with money leveraged 40 to 1 at the height of the mania, and where did that money come from? It was created on the books of the lending banks, which ultimately drew their reserves from the Fed. Ellen

  3. Maybe this crisis will educate the public, with help from Ellen, to the point that people will begin to rethink the purpose of a stock exchange. The Wall Street players glibly refer to their role in allocating capital, and when you listen to a former Lehman Bros bond trader, such as Larry McDonald in his book “A Colossal Failure of Common Sense”, you get the impression this activity is not only the key function of the economy, but it is also “holy”..

    It’s difficult to see how gaming the system serves any useful social function at all. The financial market serves itself primarily and no Wall Street banker will ever be canonized,, but mysteriously enough, the players will say, an invisible hand converts all this selfishness of thousands of hogs at the trough into a just and fair allocation of capital so that liquidity is available for all those entrepreneurs in the non-financial sector who need it to make the economy grow..

    But it’s clearly not working. The system of capital allocation nearly collapsed and brought down the whole economy. The invisible hand didn’t work. It never has and it never will. Only a visible hand that regulates the financial markets can guarantee the productive allocation of capital. The so called free market gives us nothing but periodic credit freezes and deflation. The vaunted financial “innovation” Greenspan was so fond of amounts to little more than gaming the system.

    We are gaining financial intelligence. We have the capability of creating a regulatory system that will efficiently allocate capital. “Front running”, “naked short selling”, the whole class of “derivatives”, and even the “securitization” market, and any and all financial activity that does not function to put money into the hands of those who will use it productively, should be simply eliminated.

    If money is a public utility that we all must have to live a civilized life, then it must be regulated under a public authority. We can bring the Fed into the Treasury and take the money power out of private hands. We can create regulatory algorithms that will drive a financial market in the public interest. If we can send a man to the Moon ( as the saying goes, and if we actually did send a man to the Moon ), we can certainly create a financial system that works in the public interest.

    Of course, our dominant financial class does not want this to happen and will do everything in its power to prevent it.

    • while they allocation capital which is printed at the fed at the leveraged expense of the tax payer to bet on risk trades at their idea of what is a Good trade , at the same time they skim off a Nice big commission , that pay all these huge bonuses , so now we know where the term ” EASY MONEY ” came from , because they can’t lose they get a bailout , if they screw up and the SEC gets a porn subscription to watch porn instead of watching the traders ….. Talk about gaming the system …..

  4. A good reason why Jane and Joe Public should never participate in the stock market. At this point in time, they are just being taken advantage of.

    • I will disagree about that ‘generalized’ statement about Jane and Joe.

      But they should know what the heck they are doing before jumping in. I recommend a year of part time study before they put a dime in… and then only in companies they know the product line and management.

  5. It seems that a “market” system which has reached the nth degree of unfreeness and unfairness might become free and fair if its unfreeness and unfairness were reduced to merely the (n-3)th degree.
    What if the very first degree of the “market” system is unfree and unfair?
    The very core of this system is fraudulent.
    Trade? What a sick joke!
    Fair trade needs a unit of account which is trustworthy.

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