John Maudlin's weekly email has some really good reading in it this week.
First a nice link to the scam Goldman et al are pulling on us creaming millions out of the market in fractions of pennies on a large volume of trades.
"This Is Outrageous
But first, I want to direct the attention of those in the US finance industry to a white paper written by Themis Trading, called "Toxic Equity Trading Order Flow on Wall Street." Basically, they outline why volume and volatility have jumped so much since 2007; and it's not due to the credit crisis. They estimate that 70% of the volume in today's markets is from high-frequency program trading. They outline how large brokers and funds can buy and sell a stock for the same price and still make 0.5 cents. Do that a million times a day and the money adds up. Or maybe do it 8 billion times. It requires powerful computers, complicity of the exchanges (because the exchanges get paid a lot), and highly proximate computer connections. Literally, the need for speed is so important that to play this game you have to have your servers physically at the exchange. Across the river in New Jersey is too slow. Forget Texas or California. This is a game played out in microseconds."
themistrading.com
Next a piece on Japan..
snip...
"The Land of the Setting Sun ......
..... Over the years, I have written about Japan often. Its economy is very important to the world, and its banks have funded and loaned a great deal to companies outside of Japan. Global growth would have been a lot slower without the Japanese. Up until recently, their population has saved a great deal of its disposable income, and those savings have allowed the Japanese government to run massive deficits."
and the a nice aggregation of the US debt position...
snip...
"Buddy, Can You Spare $5 Trillion?
I have been writing for months that I don't think the US can find $2 trillion dollars this year and then come back to the well for another $1.5 trillion next year without serious disruption in the markets. Where do you find that much money when all the rest of the world also wants to borrow massive amounts? How much are we talking about? The friendly folks at Hayman actually spent the time to add it all up. This is not a comforting graph.
The graph shows the US will need to issue $3 trillion in debt. "Wait," I asked, "I thought it was only 1.85" The answer is that the number has grown to almost $2 trillion (as I wrote it would). Then you need to add in off-budget items like TARP, state and municipal debt, etc. Pretty soon it adds up to another trillion. All told, Hayman estimates that the world will need to find $5.3 trillion in NEW government financing. Never mind the needs of corporations or individuals or commercial mortgages, etc."
The whole letter is well worth a read but John seems to gradually shifted his old "we will muddle through" prediction, to something rather more dire...
Copyright message from John Mauldin...
You have permission to publish this article electronically or in print as long as the following is included:
John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: frontlinethoughts.com
To subscribe to John Mauldin's E-Letter please click here:
frontlinethoughts.com |
