Minyanville Wed 2010-09-29 09:08 EDT

Excerpt From "Traders, Guns & Money" (Part 3)

Satyajit Das

Minyanville Professor Satyajit Das' book "Traders Guns & Money" is a wickedly comic exposé of the culture games and pure deceptions played out every day in trading rooms around the world. And played out with other people's money. Das is an international expert on financial derivatives and has more than 30 years of experience in the financial markets. Having worked on both the sell side and buy side for such banks as the Commonwealth Bank of Australia Citicorp Investment Bank Merrill Lynch and the TNT Group he now acts as a consultant advising banks and corporations and presenting

excerpts; gun; Minyanville; money; Part 3; Traders.

Mon 2010-09-20 19:04 EDT

Excerpt From "Traders, Guns & Money" (Part 2)

Satyajit Das

Minyanville Professor Satyajit Das' "Traders, Guns & Money" is a wickedly comic exposé of the culture, games, and pure deceptions played out every day in trading rooms around the world. And played out with other people's money...

excerpts; gun; money; Part 2; Traders.

Sat 2010-09-11 23:31 EDT

Excerpt From "Traders, Guns & Money" (Part 1)

Satyajit Das

Minyanville Professor Satyajit Das' "Traders, Guns & Money" is a wickedly comic exposé of the culture, games, and pure deceptions played out every day in trading rooms around the world. And played out with other people's money. Das is an international expert on financial derivatives and has more than 30 years of experience in the financial markets. Having worked on both the sell side and buy side for such banks as the Commonwealth Bank of Australia, Citicorp Investment Bank, Merrill Lynch, and the TNT Group, he now acts as a consultant advising banks and corporations and presenting seminars on derivatives throughout the world...

excerpts; gun; money; Part 1; Traders.

Mon 2010-08-23 11:11 EDT

Hussman Funds - Valuing Foreign Currencies: Currency is both a means of payment and a store of value. [2000-09-22]

John P. Hussman, Ph.D

Any currency is both a means of payment and a store of value. So when you try to determine what it's worth, you have to consider both what it can buy in terms of goods, and what it can earn if you hold it as an asset. An exchange rate is just the price of a currency...If you look at a currency as a means of exchange...you can get a reasonable idea of the "long term" tendency of the currency by tracking the movements of price indices in two countries. This is what traders refer to as the "Purchasing Power Parity" (PPP) value of the exchange rate...But PPP is only a tendency that holds loosely over the long term. Over the short term, there's another important factor: interest rates...anytime long term interest rates, after inflation (i.e. real interest rates) are expected to be higher in the foreign country than in the U.S., the foreign currency will be above PPP...

2000-09-22; currency; Hussman Funds; meaning; payment; store; valued; Valuing Foreign Currencies.

Sat 2010-08-07 19:56 EDT

Why founding a three-person startup with zero revenue is better than working for Goldman Sachs. | AdGrok

I joined Goldman Sachs in 2005, after five flailing years in a physics Ph.D. program at Berkeley...I was a pricing quant on the Goldman Sachs corporate credit trading desk...Giving sophisticated models and fast computers to traders is like giving handguns and tequila to teenage boys. Only complete mayhem can result (and as we saw recently, complete mayhem did result)....The quants were there to make sure the guns were loaded, but also to make sure the traders didn't shoot themselves in the foot...

AdGrok; better; Found; Goldman Sachs; person startup; working; zero revenue.

billy blog Fri 2010-07-02 18:17 EDT

A total lack of leadership

Bill Mitchell

Another G20 talkfest has ended in Toronto and the final communique suggests that the IMF is now back in charge...The line now being pushed is, as always, structural reform of product and labour markets -- which you read as deregulation and erosion of worker entitlements...They buy, without question the notion that ``(s)ound fiscal finances are essential to sustain recovery, provide flexibility to respond to new shocks, ensure the capacity to meet the challenges of aging populations, and avoid leaving future generations with a legacy of deficits and debt.'' But what constitutes ``sound fiscal finances'' is not spelt out. It is all fudged around what the bond markets will tolerate. But what the bond traders think is a reasonable outcome for their narrow vested interests is unlikely to be remotely what is in the best interests of the overall populace...A sovereign government is never revenue constrained because it is the monopoly issuer of the currency and so the bond markets are really superfluous to its fiscal operations. What the bond markets think should never be considered. They are after all the recipients of corporate welfare on a large scale and should stand in line as the handouts are being considered. They are mendicants. It is far more important that government get people back into jobs as quickly as possible and when they have achieved high employment levels then they might want to conclude the fiscal position is ``sound''...The G20 statement is full of erroneous claims that budget surpluses ``boost national savings'' when in fact they reduce national saving by squeezing the spending (and income generating capacity) of the private sector -- unless there are very strong net export offsets...The on-going deflationary impact on demand that persistently high unemployment imposes is usually underestimated by the conservatives...

Billy Blog; leadership; total lack.

zero hedge Sun 2010-04-25 14:23 EDT

Exclusive: Second Whistleblower Emerges - A Deep Insider's Walkthru To Silver Market Manipulation

A second whistleblower speaks. As the topic of physical delivery has gained prominent attention recently, it is crucial to complete the circle and show how this weakest link in the PM market is (ab)used by the big boys: Phibro and Warren Buffet. Pay particular attention to the analogues between the methods employed in the 90's commodity market and how the PM (and equity) market is being gamed currently. And to think that each new generation of traders believes it has discovered something new...As a market maker in silver options from 1989 to 2000 I was present during both the 1994 and 1997 silver events. They were seminal in my education of gamesmanship in trading and how probabilities can come up short...

Deep Insider's Walkthru; exclusive; Silver Market Manipulation; whistleblower emerging; Zero Hedge.

Jesse's Café Américain Mon 2010-04-12 14:18 EDT

NY Post: Trader Blows Whistle On Gold and Silver Price Manipulation

Jesse

...The crux of the scandal is that the Banks and hedge funds have been selling what they do not have in order to manipulate the price and cheat investors, in this market as they have been shown repeatedly to have done in other markets...the players filed a motion claiming immunity because they were acting in partnership with the Treasury and the Federal Reserve...Thanks to the NY Post [whistleblower commodities trader Andrew Maguire testimony]

gold; Jesse's Café Américain; NY Post; Silver Price Manipulation; Trader Blows Whistle.

Jesse's Café Américain Tue 2010-03-09 17:42 EST

Are Traders Demanding US Credit Default Swaps Payable in Gold?

Jesse

...I have a great deal of respect and admiration for Janet Tavakoli and her knowledge in this area. If she is seeing a new demand for Credit Default Swaps on the US payable in gold I would credit it since this is her area of expertise and industry connections...if the existence of CDS on the default or downgrade of US sovereign debt payable in gold bullion be true, who would be in a position to stand behind these Credit Default Swaps with any reliability, and what buyer would be in a position to make such a demand of a credible source?

Credit Default Swaps Payable; gold; Jesse's Café Américain; Traders Demand.

The Full Feed from HuffingtonPost.com Tue 2010-03-09 17:30 EST

Janet Tavakoli: Washington Must Ban U.S. Credit Derivatives as Traders Demand Gold

Janet Tavakoli

Congress should act immediately to abolish credit default swaps on the United States, because these derivatives will foment distortions in global currencies and gold. Failure to act now will only mean the U.S. will be forced to act after these "financial weapons of mass destruction" levy heavy casualties. These obligations now settle in euros, but the end game is to settle them in gold. This is so ripe for speculative manipulation that you might as well cover the U.S. map with a bull's-eye...

Ban U.S. Credit Derivatives; com; full Feeds; HuffingtonPost; Janet Tavakoli; Traders Demand Gold; WASHINGTON.

The Guardian World News Wed 2009-11-25 10:31 EST

What was really behind the crash?

John Cassidy

In an exclusive extract from his new book, John Cassidy explains why the huge salaries of Wall Street bosses created a culture that helped trigger the financial crisis...In the wake of last year's crash, even some top bankers have conceded that Wall Street remuneration schemes lead to excessive risk-taking...But without direct government involvement, the effort to reform Wall Street compensation won't survive the next market upturn. For although the financial sector as a whole has an interest in controlling rampant short-termism and irresponsible risk-taking, individual firms have an incentive to hire away star traders from any rivals that have introduced pay limits. Compensation reforms, therefore, are bound to break down. In this case, as in many others, the only way to reach a socially desirable outcome is to enforce compliance. And the only body that can do that is the government.

Crash; Guardian World News; really.

naked capitalism Thu 2009-11-19 10:41 EST

Fed Authorized 100% Payout by AIG on CDS

It had generally been assumed that the AIG payouts of 100% on credit swaps (when the insurer was under water and bankrupt companies do not satisfy their obligations in full) was the result of some gap in oversight plus traders at AIG exercising discretion (they were unhappy about bonus rows and had reason to curry favor with dealers, who were potential employers). The article makes clear that AIG had been negotiating to settle on the swaps prior to getting aid from the government, and was seeking a 40% discount. The Fed might not have gotten that much of a discount, but there was clearly no need to pay out at par. This massive backdoor subsidy to the likes of Goldman, DeutscheBank was authorized by Geithner while he was at the New York Fed.

AIG; CDS; Fed Authorized 100; naked capitalism; payout.

Thu 2009-11-19 10:26 EST

Goldman left foreign investors holding the subprime bag | McClatchy

Greg Gordon

Goldman sold more than $57 billion in risky mortgage-backed securities during a 14-month period in 2006 and 2007, including nearly $39 billion issued from mortgages it purchased. Meanwhile, the firm peddled billions of dollars in complex deals, many of them tied to subprime mortgages, in the Caymans and other offshore locations...Goldman's traders also made huge bets that those securities would lose value by buying insurance-like contracts, called credit-default swaps, with private parties. Beginning early in 2007, they bought swaps on a London-based exchange.

Goldman left foreign investors holding; McClatchy; subprime bag.

naked capitalism Sun 2009-10-11 17:06 EDT

Asian Countries Intervene to Prop Up Greenback (Dollar Bind Edition)

An unannounced but evidently coordinated effort to arrest or at least slow the fall of the dollar is underway. The Financial Times indicated that Asian central banks were aggressive dollar buyers on Thursday, but the information came via currency traders rather than an official pronouncement. Thailand, Malaysia and Taiwan made substantial purchases; Hong Kong and Singapore also intervened today. The action may also have a secondary objective of rejiggering their currency values versus China's, since China repegged the renminbi against the dollar...

Asian Countries Intervene; Dollar Bind Edition; greenback; naked capitalism; prop.

zero hedge Sun 2009-10-11 16:45 EDT

Interview With A Mad Hedge Fund Trader

...Mad Hedge: Stay away from natural gas. The volatility will kill you. If you are a masochist, then buy it only when it's cheap, on big dips, in the $3/MBTU range. In the last three years, thanks to the new ``fracting'' technology used in oil shales, we have discovered a 100 year supply of natural gas sitting under the US, and the producers have not been able to cut back fast enough. So now we have a supply glut, and we are almost out of storage. This is what took us down from $13 to $2.40 in 18 months. The lack of hurricanes has not helped demand either. Producers have been cutting back like crazy, trying to balance supply and demand, with a breakeven point of $2. They need a cold winter to help bring things back into balance. If the industry gets organized, then gas can become the 20 year bridge we need, until energy alternatives kick in. That makes me a big supporter of the ``Pickens Plan.''

interview; Mad Hedge Fund Trader; Zero Hedge.

TraderFeed Sat 2009-10-10 13:48 EDT

Quick Look at TIPS and Beyond

Brett Steenbarger, Ph.D.

U.S. Treasury Inflation-Protected Securities (TIP; above) are making multi-month highs, amidst the weak dollar and strong gold. I've noticed a tick up in inflation talk among traders as well. With unemployment--not inflation--making the headlines, the Fed hardly has the political cover to begin serious talk of rate increases. With the Reserve Bank of Australia hiking rates, however, there are concerns that we are just a bit closer to the long-awaited exit from monetary ease. Meanwhile, higher Aussie rates only fuel the carry trade that has traders selling U.S. dollars and finding higher yielding alternatives elsewhere.

quick look; tip; TraderFeed.

Rick Bookstaber Sun 2009-08-30 12:07 EDT

Not with a Bang but a Whimper -- The Risk from High Frequency and Algorithmic Trading

Rick Bookstaber

``There is a general view that one way or another the end result of all the high frequency and algorithmic trading will be a blowup. But I don't think the risk is as big as many are making it out to be...the risk of a cataclysm is constrained by the lack of feedback and lack of tight coupling...As the field gets increasingly crowded, market impact will rise and opportunities will diminish'' First, let me point out the difference between high frequency trading and algorithmic trading. Both execute using computers, and since computers work really fast, both can be accused of whatever sins are embodied in millisecond trading. High frequency trading is a type of proprietary trading. The trader (or his computer) sees a profit opportunity and trades accordingly. This profit opportunity...

algorithmic trading; bang; High Frequency; Rick Bookstaber; Risk; Whimper.

Tue 2009-04-21 00:00 EDT

naked capitalism: Cuomo Asserts That Traders Looted Merrill

Cuomo Asserts; naked capitalism; Traders Looted Merrill.

Tue 2009-04-21 00:00 EDT

naked capitalism: On Traders Behaving Badly and Cognitive Bias

``traders will cheat to maximize their bottom line, which makes sense, since they are screened and incentivized to be the sort that will seek aggressively to extract as much as they can''

cognitive biases; naked capitalism; Traders Behaving Badly.

Wed 2009-04-01 00:00 EDT

naked capitalism: Traders Betting on Euro Plunge

euro plunges; naked capitalism; Traders bet.

Wed 2008-07-16 00:00 EDT

naked capitalism: Did Goldman Traders Manipulate Bear, Lehman Stock?

Goldman Traders Manipulate Bear; Lehman stock; naked capitalism.

Wed 2008-07-09 00:00 EDT

naked capitalism: Credit Default Swaps Traders Downgrade Fannie and Freddie

Credit Default Swaps Traders Downgrade Fannie; Freddie; naked capitalism.

Thu 2008-06-12 00:00 EDT

naked capitalism: How Big Traders Can Extract Excessive Profits

index roll congestion "date rape" by Goldman Sachs in the commodities market via GSCI (Goldman Sachs Commodities Index); 2007-02-07

big traders; Extract Excessive Profits; naked capitalism.

Wed 2008-05-21 00:00 EDT

naked capitalism: Defective Moody's Program Issues Billions of Erroneous Aaas

"banks have rogue traders,...rating agencies have rogue computer models"

Defective Moody's Program Issues Billions; Erroneous Aaas; naked capitalism.