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Good point, I was thinking about reviews, but ended up writing about everything. My point is that full disclosure is generally a worthless charade. Even though this is specifically about investments it's the best explanation of the sham of full disclosure I've seen.

In answer to your question, it was because they were afraid of defaults, which they are still liable for...sort of. What has happened is that we have gotten into a situation where the "too-big to fail" banks are able to lend, but only because of implicit baking from the government. The thing is, they don't because they know they will lose money in such transactions (even if the losses are backstopped--they don't get bonuses). It is better for them to take advantage of the interest that the Fed is paying them to not lend money (how much sense does that make?) by leaving reserves on deposit with the Federal Reserve. Why do you think excess reserves have risen by a factor of 1000 or more?

If you don't believe me, here it is from the horse's mouth.

In addition, the money that has been given to US banks in the form of zero interest loans has been finding its way into the stock market. This is bourn out by the evidence, ie the cash value of stocks purchased has not been accompanied by a decline in purchasing power in money market funds, which is always the case when a rally is from people moving money into the market rather than the market simply being an outlet for inflation.

quote from referenced NYT:

At a bail hearing three days later, a federal prosecutor asked that Mr. Aleynikov be held without bond because the code could be used to "unfairly manipulate" stock prices.

So let me get this straight. GS has code to unfairly manipulate stock prices? Mr. Aleynikov is getting prosecuted because he liberated code which is being used for unfair HFT? I suppose stealing from the mafia is a crime, too.

I understand the IP issues involved. He should do time for stealing. But, it's ok for GS to be able unfairly manipulate stock prices? Apparently, we trust a for-profit investment bank a heck of a lot more then we trust Mr. Aleynikov.

GS would never unfairly manipulate the markets. http://www.zerohedge.com/article/goldmans-42-100mm-trading-days-q2-absolute-unprecedented-record-just-two-days-trading-losses

The truth is that this recession has been driven by two things. The primary factor is that people panicked. EVERYONE freaked out, THE SKY IS FALLING. The second factor is simply a side effect of the first one, banks backed off on giving credit, even to people who were low-risk.

No, this is not what's driving the recession. What's driving the recession is that the amount of debt in the economy, especially the American economy, has reached critical mass. You really need to start reading some blogs like The Market Ticker, Mish's Global Economic Trend Analysis, and Zerohedge to get a true picture of what's going in the economy.

As for this particular "cash for clunkers" program, all it's doing is pulling forward demand for new vehicles. It will cause a short-term rise in demand now, but once the program expires or runs out of cash again, that demand will vanish and there will be nothing to replace it. Sales will have to return to their previous level or even go lower, as the people who buy new cars under this program certainly won't need to do so again for a few years.

At the macro level, all the debt in the system has produced a similar effect. All the demand, all the growth we've seen for years now, has been fuelled by debt. The debt just can't grow any more; everyone's maxxed out and now trying to pay it down. There's so much debt out there that clearing it out is going to be a long, painful process, and during that process we'll be lucky to stave off an outright market crash, let alone actually return to a growing economy.

If Ebay allowed a third party to secretly bid and resell to capture the difference between a sellers reserve price, and the top buyers maximum bid, do you think that would be fair? It's called front running and it's illegal, unless you've been given regulatory dispensation, which the SLPs have been. http://en.wikipedia.org/wiki/Front_running

Maybe that's why wild senator firebrand Schumer informed the SEC that if they didn't stop it 'flashing', there would be a law to make the current method and practice more explicitly illegal. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ajcRCWFi5MLs

Interesting... what are the Supplemental Liquidity Providers, except for privileged powerful wealthy day-traders? Why do they deserve a 1% cut of every trade on every fast moving stock? This is in addition to the commission that you pay. Why are monopoly interests PAID 0.15 to 0.25 cents for every trade by the exchange for stocks above $1? This preserves the illusion of liquidity, but note that its less than the 0.35 cents actual DMM (designated market makers) get for taking real risk. Why are they given preferential sub second looks at others prices, and paid to trade in smaller blocks at lower latency than anyone else? Couldn't all bids and asks just be available to everyone for 1 outrageously full second so that the field was level? Why do the big firms trade in "Dark Pools" for exactly this reason? http://en.wikipedia.org/wiki/Dark_pools

The volume of SLP trading has grown significantly in just the last few months to the point where Goldman is responsible for some 20-30% of all trades on the NYSE (not in a single name... all trades) and almost are done for themselves (principal) rather than for others (agency). http://www.zerohedge.com/sites/default/files/images/7.13.09.jpg You don't think this moves markets? Do you think they're trading leveraged?

"In any event, positive-feedback trading is likely to increase volatility substantially. If one wants to design regulatory interventions that will decrease volatility, one must think about measures that will discourage positive-feedback trading rather than negative-feedback trading. Positive-feedback trading is substantially discouraged when traders using that strategy suffer massive losses, which is what one observed after the crash. Everyone who had been pursuing positive-feedback strategies bought more and more as the market went higher and higher, thinking that their portfolio insurance would enable them to get out. They were wrong. It's clear that the crash reduced volatility by reducing the attractiveness of positive-feedback trading." Larry Summers Previous Treasury Sec in 1988

This kind of liquidity doesn't improve markets. The next exchange closing event will be measured in seconds rather than hours or minutes. Thanks :^)

...for a while. A post from several days ago - The Day That Was - HFT's Superdominance. Extra points to them for the Fight Club motif!

Zero Hedge is awesome. Thanks to blogs like that you can get real financial news instead of corporate sock puppets of CNBC and the likes.

...for a while. A post from several days ago - The Day That Was - HFT's Superdominance. Extra points to them for the Fight Club motif!

If you had RTFA'd you might have gone to http://zerohedge.blogspot.com/2009/07/is-case-of-quant-trading-industrial.html and read the affidavit - http://www.zerohedge.com/sites/default/files/Complaint_--_Aleynikov.pdf, you would see that (a) they have proof that the file was transfered (b) they know *exactly* which server the files were uploaded to and (c) Sergey Aleynikov has already confessed to copying the files.

Should be interesting to see how the police "generate" and prove the evidence on this one.

It's all there in the affidavit.

"A server in Germany" is hardly and exact location...

If you had RTFA'd you might have gone to http://zerohedge.blogspot.com/2009/07/is-case-of-quant-trading-industrial.html and read the affidavit - http://www.zerohedge.com/sites/default/files/Complaint_--_Aleynikov.pdf, you would see that (a) they have proof that the file was transfered (b) they know *exactly* which server the files were uploaded to and (c) Sergey Aleynikov has already confessed to copying the files.

Should be interesting to see how the police "generate" and prove the evidence on this one.

It's all there in the affidavit.