Slashdot Mirror
Robust Timing Over the Internet
ChelleChelle writes "The NTP (Network Time Protocol) system for synchronizing computer clocks has been around for decades and has worked well for most general-purpose timing uses. However, new developments, such as the increasingly precise timing demands of the finance industry, are driving the need for a more precise and reliable network timing system. Julien Ridoux and Darryl Veitch from the University of Melbourne are working on such a system as part of the Radclock Project. In this article they share some of their expertise on synchronizing network clocks. The authors tackle the key challenge — taming delay variability — and provide useful guidelines for designing robust network timing algorithms."
let's do away with the arbitrage, gambling, and bullshit from wall street. make them own a stock for ONE WHOLE DAY. No more of this low-latency trading bullshit. They're just skimming money off the top of the financial markets--away from the regular folks. EVERY PENNY THESE GUYS MAKE COMES OUT OF OUR POCKET.
I like the trust yourself part. I actually implemented a dirty script to restrict how much ntp can change my clock speed and I call every minute from crond ;-))
Limits are hardcoded and depend on the machine ;-))
$ cat setclockfrequency
#!/bin/sh
# 251616 = 3.839
# 269120 = 4.106
# 280448 = 4.279
# 288544 = 4.403
# 9372208 = 143.009
# 10703936 = 163.329
# 11308784 = 172.558
###let LOWLIMIT=243520
###let HILIMIT=286496
let LOWLIMIT=10072208
let HILIMIT=10408784
let FREQ=`adjtimex -p | grep frequency | cut -d ":" -f 2 | cut -c 2-`
if [ ${FREQ} -gt ${HILIMIT} ]
then
adjtimex -f ${HILIMIT}
fi
if [ ${FREQ} -lt ${LOWLIMIT} ]
then
adjtimex -f ${LOWLIMIT}
fi
Everything I write is lies, read between the lines.
TFA already points out that there are existing solutions to this problem... sure, they're expensive, but when their example of the finance industry is involved, people will happily pay six, seven figures to get an edge over the competition anyways. If it's not worth the cost, you probably don't need that level of precision. Nice to improve the system, but how much benefit will anyone see from it?
How about GPS receiver + exact known location?
I would think just eliminating an unknown latency and replacing it with a known one (radio waves generally travel at a consistent rate) would get you a pretty accurate time. If you add one more known variable which is the exact location of the device, then you should be able to get an even more accurate time.
Microsoft refuses to consider the notion of clocks accurate to within 2 seconds.
I'm surprised the article didn't mention PTPd, which is an implementation of the IEEE 1588 precision time-synchronization standard. I was under the impression that was the standard way to solve this sort of problem when NTP wasn't enough.
I don't care if it's 90,000 hectares. That lake was not my doing.
It's not clear to me the financial system needs such high precision timing.
My cynicism tells me they need it now to implement fraudulent micro-second trading, where see what you're buying, correlate with other people's buys and then buy a fraction of a second ahead of you.
At any rate, it's not clear they need it, or that giving it to them won't lead to instability.
Maybe someone should actually design a financial system, and design one that can use imprecise, or precision timing.
NTP is accurate to within 10 milliseconds in any decent connection. Get a really good, stable, low latency connection and hook yourself up to a stratum 1 server and you can cut that number down tenfold ...
Can anyone explain what kind of financial application would require bigger accuracy?
I understand that certain scientific experiments require more accuracy than that, but those guys are probably already hooked up to stratum 0 servers directly.
Why on earth would any financial system (yes, even the stock market) require 10ms time accuracy? They were able to rip us off with fucking sand clocks. NTP should be enough for them.
WTF am I doing replying to an AC at 5 A.M on a Friday night?
EVERY PENNY THESE GUYS MAKE COMES OUT OF OUR POCKET.
That's only partially true -- it only comes out of the pockets of those who regularly buy and sell. Choose an asset allocation and diversify your investments in market-wide indexes and you can bypass the vast majority of that skimming.
EVERY PENNY THESE GUYS MAKE COMES OUT OF OUR POCKET.
I see you have not the foggiest idea how "investments" and "fluidity" make the economy work.
Hint: When the Great Depression hit, the money lost by the traders on Wall Street did not suddenly spew forth into the hands of "us".
>> Standing on head makes smile of frown, but rest of face also upside down.
let's do away with the arbitrage, gambling, and bullshit from wall street. make them own a stock for ONE WHOLE DAY. No more of this low-latency trading bullshit.
A Capital Gains Tax that started at 95% and decreased ~2.5% per month would go a long way towards fixing many problems (/avoiding them in the first place).
Phew that's OK then, it's only everyone with a fucking superannuation.
That's a really interesting (and stupid) idea. I guess the short term effect would be all Americans pulling all of their money out of any investment that had the slightest risk (stocks and bonds). Sounds like a great recipe for the next great depression!
... is there a patch or driver hack for Windows that will allow the hardware clock to be set to GMT/UTC while the time zone offset is handled by the OS as it should be? It is such a pain in my ass that I run Linux with the occasional boot to Windows and having the time wrong for Windows. And of course if I set it, the time becomes wrong for Linux. Linux is doing it "right" and Windows is doing it wrong in my opinion. But what is the fix? I'd prefer Windows change its ways, not Linux.
NTP has its limitations and to me the miracle is that it is as good as it is, given the lack of promises concerning packet delivery in a TCP/IP network [No guarantee on route, latency or even delivery]. If you need something more accurate, then use GPS as already suggested or one of the atomic clock backed radio services around the world and calibrate for transmission distances, which is a consistent correction for any location. This will take accuracy close to the theoretical limits and is potentially available cheaply enough that the cost should not be a bar to any application where this sort of accuracy really is justified. I just cannot see any point whatsoever in trying to do this over the internet when you cannot hope to meet the accuracy of existing means.
My laptop is using Radclock already!
I don't understand the need for wide-area highly accurate (less than 1ms accurate) timing. Once you get beyond a reasonable distance, the speed of light starts playing into the equation.
I use to have a funny sig, but slash cut it off, and I forgot what the punchline was.
Or they'd come up with a workaround where X holds the stock forever, and traders swap "X points".
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Agreed. When are some of these people going to realize that greed is bad. Trying to game a system is inherently wrong. Not just morally, but wrong systemically. It will always result in harm to the system. These people soothe their conscience with excuses- "We're spreading the risk and that's a good thing", "It's only fractions of pennies off of many people, nobody will notice." , etc. Until the whole thing comes crashing down because in reality the financial system is core dependent on actual investment and trust, not on gambling. To quote Chinatown:
Jake Gittes: How much are you worth?
Noah Cross: I have no idea. How much do you want?
Jake Gittes: I just wanna know what you're worth. More than 10 million?
Noah Cross: Oh my, yes!
Jake Gittes: Why are you doing it? How much better can you eat? What could you buy that you can't already afford?
let's do away with the arbitrage, gambling, and bullshit from wall street. make them own a stock for ONE WHOLE DAY. No more of this low-latency trading bullshit. They're just skimming money off the top of the financial markets--away from the regular folks. EVERY PENNY THESE GUYS MAKE COMES OUT OF OUR POCKET.
You are absolutely, painfully right and it pains me deeply that I don't have any mod points.
These jokers want time more accurate than NTP can provide but I'll bet most of them still believe time is a universal invariant. They don't need time more accurate than NTP can provide, they need to be hit in the head with a hammer until they stop moving.
Hint: When the Great Depression hit, the money lost by the traders on Wall Street did not suddenly spew forth into the hands of "us".
Because the money you mention never really existed.
If I had a thousand dollars in paper money under my bed before the great depression it would have had a certain buying power. In the middle of the great depression it would have had a much greater buying power. The value lost on Wall Street spewed forth into paper money and real physical assets.
Hi!
Last few years, most cellular operators are rolling out IP to the base stations.
For HSPA/LTE speeds, E1/T1 PDH/ATM is out of the question,
and as IP is rolled out, GSM gets there as well.
Accurate timing is essential: even transmitter frequency is synchronized over IP,
and keeping 2 GHz accurate to 100 Hz is not simple.
Local oscillator can do it short term, but external correction is needed as well.
Beside GPS (used in IS-95), several systems are used.
IEEE 1588v2 is obvious one. Works.
Some vendors do it with modified NTP: generate a lot of requests, and do some statistic processing.
Thus, most of the jitter can be compensated, and accuracy can be kept.
Normally, it works over intranets, with NTP having high priority, but it is used over internet as well
(femto and pico base stations).
Real life tests indicate it works, just do not put it over ADSL ;-)
73
Iztok
It seems to me that with all the intermediate systems and variable delays the internet isn't the right medium for clock synchronization, you'd be better off following the RF time signals broadcast by stations running atomic clocks. Much easier to synchronize those and the signal travels a known time to the receiver instead of going through a heterogeneous wire network.
Justice is the sheep getting arrested while an impartial judge declares the vote void.
No. Every penny gov't employees make comes out of "your pockets". The same gov't employees that, on average, make more than private employees. The same gov't employees agitating for tax increases so they can get pay raises.
Don't pretend its just the rich getting taxed either. That's not only silly classism, but inherently wrong. The first tax implemented by the Obama administration was a regressive sin tax. The Obamacare system contains seven seperate taxes that directly tax people making under $200k/yr, including increases to income tax.
The market, on the other hand, actually creates wealth.
Any sufficiently advanced technology is indistinguishable from a rigged demo.
GPS is accurate to about 50 nanoseconds. All kinds of devices that need precision time get it from GPS. You don't need much more than a standard receiver, just one that is designed to place a high priority on time updates. The GPS system itself keeps very accurate time since each satellite has an atomic clock, and they all sync to the master clock.
To me that would seem the best way, if accuracy is really important and the systems are high end. Have each device have its own receiver and just have them sync to that. Don't sync them to each other, since you aren't going to get anything more accurate.
While I think that's a bit extreme, I think you and the GP are both on to the right track. I think stocks should have a fairly short minimum hold time. A day would probably be fine, just something such that you aren't trying to gamble with them more or less, because that's why high speed day trading really is. It is gambling in every way that Vegas is.
I also thing a sliding tax would make sense. If you execute quick trades, you are subjected to a fairly high tax. 95% is a bit excessive, but something still fairly high. Then, as you say, the tax drops on a monthly basis until it hits zero. That would act to encourage investing, rather than gambling. It rewards people who put their money away for the future, and do so in a manner that allows it to help the economy grow. It would also still allow for quicker trades, but the government gets to take a cut in that case.
I really do think we need to start looking at something like this for three reasons:
1) Because there are companies that try to game the system. That's never a good thing. You game the system on a large scale, you'll break it. When you are talking about something highly important to the economy, that's not acceptable.
2) Because there are too many gamblers. There are plenty of traders who basically gamble on the market. They make day trades not based on anything about the company, but just to try and grab money from trends. This is not useful, and isn't what the stock market is for. It leads to unnecessary instability and thus should be discouraged.
3) To help combat people's fear response. A non-trivial part of the big drop in the stock market last year was people being fearful. They panicked because of the economic troubles and wanted all their money out. That means even if the fund managers thought it was a bad idea, they had no choice. You have to do what your client wants. That of course lead to more drops and more panic and so on. Perhaps tax incentives could help stave that off with people.
let's do away with the arbitrage, gambling, and bullshit from wall street. make them own a stock for ONE WHOLE DAY. No more of this low-latency trading bullshit.
A Capital Gains Tax that started at 95% and decreased ~2.5% per month would go a long way towards fixing many problems (/avoiding them in the first place).
So you short against the box. (buy N shares and sell N shares short collaterallizing the type two account (the account that buys the stock) with the cash in the type 3 account (the account that is short the stock)
Worst case, you have to deliver the borrowed stock before 38 months have passed, and get hit with a tax bill when you unwind the trade in a private transaction between your two accounts.
I am sure that there are other workarounds.
Work bio at MMWD
That's a ridiculous idea. It would increase volatility tremendously, increase spreads tremendously, increase mispricing tremendously, and of course destroy any semblance of liquidity for half the securities out there. Saying that arbitrageurs are skimming is like saying market makers are skimming. Partly true, but it completely ignores the positive effects of their actions for the market.
Infinite time means everything that can happen, will. You being you is absolutely incidental. You do not exist.
If only I knew what time it was, I wouldn't be so lost!
Actually this kind of trading (especially arbitrage) narrows the spread making it cheaper for ordinary people to enter the market.
So if you ban it you go back to only the big boys being able to afford to execute trades.
However, using any system, high frequency or otherwise, to deliberately manipulate the market is a different thing.
I'm sorry I'm posting as AC but it could affect my job.
Who the hell isn't greedy. If you were offered more money at work, would you turn it down. Most people wouldn't. And all your colleagues are going to get paid more.
This is all these people are doing, they are doing there jobs, and they get paid bonuses for doing it well.
It is ignorant and stupid to pretend that this situation is just that simple.
http://cr.yp.to/clockspeed.html
Easy Answer: (in most tax laws)
Any arangement who's primary purpose is to avoid taxation is illegal, and will be charged tax at the rate at which it would normally have been taxed.
Even if you diversify, you're still hit by the day-trading scumbags, just to a lesser extent.
Besides, your post boils down to "just don't live in a high crime neighborhood and you'll be fine, no need to make burglary a crime".
I hate printers.
Actually no. That's a great idea. People would leave stocks where the risk of needing to evacuate the holding within the timeframe at which capital gains tax made the return sub-optimal. This idea would not place arbitrary rules on minimum holding time, so if you needed your cash back within 24 hours for some reason, you could get it, just without much of any profits you made. No need for the tax to stay high for a long time, it could drop to normal rates within a week, to ensure that the idiots who make money by buying and selling on the same fucking day are forced out of business like they should be. Their actions add nothing to the productive output of the economy.
I hate printers.
I'm not greedy because money can't buy really cool things like immortality or space trips to other star systems.
More useless stuff is all we can buy with money.
EVERY PENNY THESE GUYS MAKE COMES OUT OF OUR POCKET.
I see you have not the foggiest idea how "investments" and "fluidity" make the economy work.
But I do.
And I see no reason to believe that the scalping that's been introduced since year 2000 has made the market work any better; it's only happening for stocks that are fluid *anyway*, and consists of transferring money from the non-institutional traders to the institutional, computer-based traders. This may well decrease overall liquidity, since it increase the risk of the main group of people that provide liquidity.
And for all I know, the grand parent may perfectly well understand this, and just didn't feel like going into the details, considering them obvious.
Eivind.
You can "solve" the time problem by not using the time. I worked with a system (up to 100 servers) in which a bad clock could do some serious damage. What I realized was that the clock was not really necessary; all we needed was a system that will provide order numbers. It could work like a dedicated server that other servers could ask for the next unused number and you would use that instead.
Versiera has the ability to monitor systems and report/alert the number of seconds hosts are out of synchronization. Gives a view into whether an environment is in synch.
it only comes out of the pockets of those who regularly buy and sell.
Right; 'cos this being Slashdot most of us can hold of buying food for a month or two and just buy electronics. Seriously; that's the whole point of this. When the price of food falls; the financial guys involved in arbitrage know in advance of the people who are buying for supermarkets and they pocket part of the money which the supermarkets otherwise wouldn't have to pay the producers.
The only way to avoid this is to ensure that they pay a transaction cost for each transaction.
=~ s,(.*),<sarcasm>$1</sarcasm>,g if any_point_you_wish();
What does timespan have to do with it? Surely if something is unethical to do over an hour, it's unethical to do over a day or a week, or six months. The problem is that people are trying to make profit based on financial patterns, rather than trying to build products and services that help others.
The authors of the RADclock article don't seem to realize that most of the issues they "solve" with their algorithm has been considered, and also more or less solved, by the NTP hackers severeal years ago.
I.e. when the article shows that in a variable-latency environment you need to filter the measurements by the minimum rtt: This is of course default behaviour for ntp as well, but only over a limited number of polling intervals (8). If this isn't sufficient then there are a number of configuration options available, like the huff-puff filter which can be configured to maintain rtt history long enough to "coast" past any expected periods of large and asymmetrical network delays.
They also give out some _really_ bad advice, like claiming that "One server is enough": This is only true if you know that this particular server can never be wrong!
If you want to survive the situation where a single servers starts to lie, you shold configure at least 4 independent sources.
Personally I have seen 3 different gps-based stratum-1 black box ntp servers go crazy, suddenly returning timestamps far into the future.
OTOH, my freebsd-based servers with Motorola Oncore UT+ timing optimized gps firmware has never returned bad time, but I still have 6 such servers spread around our corporate network.
Terje
"almost all programming can be viewed as an exercise in caching"
Are you sure about that? If you are young right now, there's a good chance you will see some pretty amazing improvements in medicine and technology. It might not be enough to acheive immortality, right away, but perhaps the average lifespan will be increased dramatically enough you will.
Singularity is upon us! Personally, I don't want to gamble on it being free.
"linux is just DOS with a UNIX like syntax" -- Galactic Dominator (944134)
I'd prefer that they wouldn't try to be Maxwell's Daemons with stocks.
... the real problem is to sync to a reference clock (eg. national time references).
Parent characterises the complete detachment from reality that characterises the modern "innovative" financial industry.
I operate a small business. I don't give a fsck about your claims that we need "liquidity" when I can't get a simple business loan for less than 8-9%, despite being well-capitalised, while my personal savings attract all of r pct, where 0.01 < r < 0.1. Quite the scam there. As a result, I use only retained earnings to pay for anything, which while a prudent thing to do given my situation, is hardly a recipe for large-scale economic growth. The financial industry does not fulfil its most basic imperative of funnelling capital to productive use, why should I care about whether some institutions can hold a stock for 1ms or 1 day?
I suppose things could be worse. Maybe in addition to being completely starved for capital, I may be subject to "protection" payments in the near future just to be able to stay in business at all! Financial innovation, 'Ndrangheta style! Wouldn't that be a boon for Wall Street and the City of London.
Most of the workarounds are probably possible to block the same way the one you mentioned is blocked in some countries (Norway, at least): The "short circuit" rule, where any operation done primarily to change tax status is "short circuited" to give the same tax as if the operation hadn't been done. ("Gjennomskjæring" - literally "cut through" but idiomatically closer to "short circuit".)
I think people outside of the industry don't really understand the need for day traders.
I write trading software for the futures and options industries (I was the lead architect for the CBOT's Order Routing System, and have written trading systems for other exchanges and banks). The type of day trading that you and the GP have issues with is an absolute requirement for liquid markets and the efficient working of those markets.
Let's say you are a firm that needs to buy a large number of shares or contracts (in the futures world, you buy contracts for the future delivery of product). In the type of buy and hold market that seems "fair", that large order is going to go into a market of other buy and hold traders that are only going to trade out of their positions if the trade makes sense in their long-term strategy. Huge effective tax rates are going to make that trade unprofitable unless you've held the position a very long time (increasing your risk of market volatility) or you charge a premium (increase the price) in order to offset the tax hit.
This type of "illiquid" market raises prices dramatically. You have to factor in the time value of money, the risk exposure of holding shares for a long time (increasing the likelihood of a bad market event) and tax overhead. All that means that buying shares/contracts is riskier and selling them is more expensive.
Day trading fixes this. Day traders don't really care about the long-term direction of the market - they make money on minor intra-day price fluctuations. Because of this, they are nearly always willing to take on and shed positions. And because there are a lot of them chasing the same tiny fluctuations, they "shrink the spread" - they're going to give you a very good price because they shrink the difference between the bid and offer (price to buy/price to sell).
Now, when that original firm wants to buy that large number of shares, they are doing that in a market where there is almost always a large number of shares being offered at competitive prices. The day traders will sell off shares and pick up shares all day, just trying to end the day flat (holding nothing) to reduce after market risk.
Day trading does extract a price (they are making money) on the market, but the efficiency gains that they bring outweighs that price in almost all markets. They distribute a lot of the risk involved in trading among a bunch of smaller firms, rather than concentrating all the risk in big funds. This is generally a good thing - the government and the market in general are better off when a small firm goes bust than when one of the "too big to fail" firms starts having problems.
Now, the rise of algorithmic trading is causing some stress in this pattern - I can see some real issues coming in the next few years as these algorithms become more and more precise. I'm less concerned about a rogue algorithm dragging a market down (or up) than of all the algos converging to a point where the market gets stuck because the algos are just too damn efficient. But that's a post for another day...
That is how we know the system is broke. Fuck short trading also. Fucking thieves the lot of you.
Yes, an end to day-trading would be good. In fact, I would vote for mandates requiring even longer periods of ownership. It makes "pump and dump" schemes much more difficult to pull off and at vastly greater risk to the would-be criminal.
The only way to avoid this is to ensure that they pay a transaction cost for each transaction.
Pay it to whom?
If I can be modded down for being a troll, can I be modded up for being an orc, or a balrog?
NTP is accurate to within 10 milliseconds in any decent connection. Get a really good, stable, low latency connection and hook yourself up to a stratum 1 server and you can cut that number down tenfold ...
Can anyone explain what kind of financial application would require bigger accuracy?
Where have all the nerds gone?
Why are we debating whether or not the people who think they need highly accurate time really need it? What's cool about this article is the nerdly reaching for every higher degrees of accuracy, of digging deeply into a seriously difficult technical challenge and achieving new levels. What's cool for those of us who don't work on super-accurate timescales is the opportunity to read about how those who do think about this stuff, to see what math they use and what the issues are.
I don't mind a little discussion of social implications of technology, but it'd be nice to see at least a little discussion of the technology itself.
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
This is the first actually well-informed post in this thread.
Just END THE FEDERAL RESERVE and it will take away their play money. Without even unconstitutionally restricting free enterprise!
The only really major issue with NTP is figuring out the time offset due to network latency in asymmetric network environments. The NTP protocol itself can frequency lock down to a few ppm over the internet without any problem at all. Offset errors are another matter. Over the internet 10 ms is about the best you can do. Over a LAN with a local GPS signal driving the protocol you can reduce the offset error to less than a microsecond and can probably get it down to less than 100ns without too much trouble (and without needing any hardware time stamping or netif queue prioritization), and you can frequency lock down to a few nanoseconds.
Other issues include the fact that most motherboards do not have temperature compensated timebases, and they tend to float around a few ppm (for the better MBs) to a few hundred ppm (for the stupid MBs that put crystals next to heat sources), as well as bugs in the operating systems themselves which don't get noticed until you actually try to frequency lock your timebase. This creates a multiplicative effect if you are not connected to a stratum 1 or 2 server because each server in the chain is trying to do a frequency lock against a drifting MB timebase. The result is the leaf nodes in the chain can get frequency locks but the locks are to a drifted frequency instead of to the correct frequency because the server itself can't instantly correct for its drifting timebase. This is why you see the frequency lock jump around by +/- 50ppm in a seemingly uncontrollable fashion once you get past stratum 2.
NTPD was famous for not being able to frequency lock while doing an offset correction at the same time. The NTPD program has also had many issues over years, such as not using a proper dual-staggered linear regression to control offset and frequency corrections, which is why I wrote dntpd for DragonFly. I wonder how many of these old issues with NTPD have been fixed over the years, maybe they have.
Network jitter is largely irrelevant. It isn't a problem if you use a proper linear regression over a long enough period of time. The linear regression can be used to calculate what the jitter is and thus form a good knowledge of the baseline accuracy of the protocol. A medium sized run over a few minutes will get you down to 10-15 ppm on your frequency lock and you can get down to 1-5 ppm within about 10 minutes (assuming the motherboard has an accurate timebase of its own).
The sad thing about all of this is that it takes just a single resistor to temperature compensate a crystal, a resistor most MB manufacturers don't put in. Some don't even use crystals anymore for their PLL input (and the crystal on the RTC doesn't help much because the RTC doesn't have a fine enough grain timer to poll easily). Sigh.
-Matt
If you don't want your company to be exposed to such influences, stay out of the public stock exchanges - nothing forces you to go there.....
I wish I had mod points. Would the OP rather have the government perform this function? Is that even possible?
Although the summary and the article itself seem to take pains not to mention it, a visit to the RADclock homepage (http://www.cubinlab.ee.unimelb.edu.au/radclock/) will tell you that what's actually being offered here is an improved NTP client. No changes to the NTP servers, server software or NTP protocol are required or are proposed. The client improvements are in an improved filter topology (feed forward with quality assessment) and introduction of separate concepts of absolute and difference clocks optimally supporting the different ways that time is used by applications.
"More useless stuff is all we can buy with money."
You've clearly never tried cocaine.
The offer for more money at work is part of the system. You provide a valuable service and they compensate you for it. They trust you to do useful labor, and you trust them to compensate you for it. It works because they make money off your labor and everybody is happy. If somebody was to write a program to take the .00001 cents rounded off from a company's transactions (a la Office Space) then they are trying to game the system. They are taking money without providing anything useful in return. It amounts to stealing and is in fact treated that way in law. I guess your point is taken in terms of "they" being unable to stop themselves if there is money to be made. So I rescind my call for "them" to stop being greedy and amend it to say "let's create laws to stop it". However, I will point out that many people, while wishing to have more money, would not try and game a system to get it even if they could. I would not call those people greedy.
Because the money you mention never really existed.
If something doesn't exist, how come it has an effect, either good or bad, on the real world of goods and services?
You are not a brain: http://books.google.com/books?id=2oV61CeDx-YC
Day trading fixes this. Day traders don't really care about the long-term direction of the market - they make money on minor intra-day price fluctuations. Because of this, they are nearly always willing to take on and shed positions. And because there are a lot of them chasing the same tiny fluctuations, they "shrink the spread" - they're going to give you a very good price because they shrink the difference between the bid and offer (price to buy/price to sell).
So basically, at the poker table of share trading, day traders are the designated suckers?
You are not a brain: http://books.google.com/books?id=2oV61CeDx-YC
hmm, or is it more like there's a big high-stakes poker game going on (the long-term investors), but then there's a secondary game of bookies and punters (the day traders) betting on the outcome of each hand? And with the ability for the high rollers to borrow funds from the bookies, and/or buy each other's hands?
But then there are syndicates among the bookies (the hedge funds) which are themselves so big that they become high rollers in themselves... they have no stake in the main game but are looking to clean up from whatever movement happens, up or down.
And then the chips they're betting with turn out to be their monthly pay cheques, and they all have starving wives and kids at home, and no matter who wins, someone's going home drunk and in a beating mood.
You are not a brain: http://books.google.com/books?id=2oV61CeDx-YC
Wouldn't they just back a company they knew, trusted, and had some reason to believe in, and stay with that company throughout its life? Wearing the damage if that enterprise fails? (Because everyone else will - a failed enterprise is a failed enterprise, especially if it causes social and environmental damage on the way down.)
Why does supporting causes you believe in require liquidity? Why the need to jump in and out of positions in the first place? It takes years for companies to gear up infrastructure - wouldn't it be a good thing if investors needed to show the same kind of patience and vision that founders have to have?
Making markets might minimise risk to investors by virtualising their involvement with companies - but does it minimise actual risk to the actual people involved in those companies and their operations?
You are not a brain: http://books.google.com/books?id=2oV61CeDx-YC
Examine the concept of "god" and you'll see the answer.
"god" does not exist in reality ; the concept exists perfectly well, but in physical reality there ain't no such puppy ; however even an convinced atheist can't deny that the non-existent entity "god" has real effects on life, the universe and 42. Richard Dawkins, amongst others, makes a steady income selling books pointing out how much damage this concept has caused.
The power of the non-existent thing "god" to have effects in the real world comes from the fact that some people think that "god" exists, and this changes their behaviour.
Similarly, the belief of market people, economists etc in the existence of "money" affects their behaviour and their behaviour has real-world consequences.
Birds are not dinosaur descendants;birds are dinosaurs, for all useful meanings of "birds", "are" and "dinosaurs"
"Let's say you are a firm that needs to buy a large number of shares or contracts ... "
Let's say you're not. Real growth comes from real products. The whole idea of a stock exchange is just financial masturbation. Real investments aren't rushed because of a CNN story, at best negotiations get cancelled.
With a stock market where liquidity isn't really a problem, responsibility vanishes, because investors just dump the stock as soon as the investment turns out to be a bad horse, causing the real factory somewhere at the end of the money trail to close, fire workers, ruin lives.
Liquidity is important for commerce, so free-market forces can affect prices, just as investments, to help producers scale up or down. But mashing and bluring the two is a bit dangerous in my opinion.
Maybe a bit slowing down investments wouldn't hurt. Also, I know it's very idealistic, but dismantling the luxury world of the financial corporations, stopping money to dominate our lives would go a long way too.
Parent characterises the complete detachment from reality that characterises the modern "innovative" financial industry.
Actually the parent you refer to understands the difference between the equity market and the debt market. Imposing a restriction that stocks must be held for a day or other restrictions on equity trading would have costs that those proposing them don't understand. That is not directly connected to the consumer portion of debt markets you later refer to when you say you can't get a business loan at a rate you like or earn an interest rate you want. Actually since debt instruments can be bundled and sold like equities, imposing equity restrictions and extra costs would raise the cost of borrowing as well.
I operate a small business. I don't give a fsck about your claims that we need "liquidity" when I can't get a simple business loan for less than 8-9%, despite being well-capitalised, while my personal savings attract all of r pct, where 0.01 < r < 0.1. Quite the scam there. As a result, I use only retained earnings to pay for anything, which while a prudent thing to do given my situation, is hardly a recipe for large-scale economic growth. The financial industry does not fulfil its most basic imperative of funnelling capital to productive use, why should I care about whether some institutions can hold a stock for 1ms or 1 day?
Yes, so if you can make a return on investment greater than 8-9% net of costs, then you should still take that loan. Sorry it's not at the terms you wish it were at, but we all want more right? Or was greed bad? Perhaps you just meant other people's greed is bad.
I suppose things could be worse. Maybe in addition to being completely starved for capital, I may be subject to "protection" payments in the near future just to be able to stay in business at all! Financial innovation, 'Ndrangheta style! Wouldn't that be a boon for Wall Street and the City of London.
Wait, I thought you were well capitalized. I understand that the huge spread between loan and savings rates is frustrating. I'm not a fan either, but the answer isn't to impose restrictions on trading in the way naively suggested here. The current illiquidity in the debt markets won't be solved by adding illiquidity in the equity markets.
Let's tax each transaction. Given the immense amount of money traded every day, I suspect a .0001% tax on each transactions, merger, CDO sale would provide all the money the Feds need to operate. Taxing may also slow down the speed of trading somewhat which would help resist bubbles and the popping of them.
You sell the tax to Wall Street and the International Community by stating it is payment for using the American Legal System to enforce your contracts. The other thing it does is force the government to pay attention to economic activity, not income.
You are right, my rant did go astray and I realize that debt and equity are not the same thing. I am, however, trying to explain things from the perspective of a small business owner, you know, the little guy that the financial industry is walking all over.
If we reverted to a very old fashioned banking system, 3% on deposits, 6% loans, bankers on the golf course at 3pm, i would be better off. With all the "innovation" and technology giving us "liquidity" in the debt and equity markets, what do i see? My deposits at 0.1% and loans up at 10 or higher. I wouldn't dream of putting good money into what is clearly a rigged equity market. How can I support anything that continues to push in that direction when my most basic financial needs are being neglected?
Give me capital at a decent price, (i.e. stop looting it into bonus pools) and you'll have my support to "innovate" all you want.
And regarding being well-capitalised, I have money and cash-flow, but I wanted to get a credit line so that I could have a life line while taking on some riskier jobs. Of course, at 8-9%, I consider it unacceptably expensive to do so, and so I operate much more conservatively than I otherwise would.
Welcome to game theory!
It's a sort of shared dream (or lately nightmare) that fools refuse to wake from. Consider, before the bubble popped and after, we had the same people available to work, the same consumer demands and the same needs and transportation channels. The bubble popping didn't change the consumer demand, transportation channels, need, availability to work, or any other factor that should have any effect on the economy, but suddenly it's in the dumper.
It's as if we have put 5 year olds in charge of the country and now, because someone is being a 'doodie head' they're getting revenge by vandalizing real goods.
Think used car salesmen are bad? It mqy be stretching the truth to call that hunk of metal a car, but at least they're actually selling a real thing. If they adopted the "Wall street way", they'd just show you a picture of a broken down wreck (photo shopped to look new) and disappear before you found out it's not really there. They'd probably pick your pocket as you handed over the cash as well.
Or we could just dump that entire "market". I use scare quotes because the people in it do not have any capacity whatsoever to take delivery of the goods or to actually provide them on demand (other than to order someone else to send 'their' commodity to another destination). In fact, if even a tiny fraction of what they buy and sell were actually delivered to them, it would be an un-mitigated disaster.
Howsabout if company A needs a commodity they buy it from one or more producers of that commodity?
Our economy would be better off if every commodities trade resulted in a 'roll of the dice'. If your number comes up, you WILL take physical delivery of the goods before you can sell them. Bought a million barrels of oil? It's gioing in your swimming pool, bathtub, pots and pans, and the doggie dish! If that won't cover it (and it won't), we fill the basement until it overflows onto the lawn. If you wanted to play big bad oil distributor, you should have built a tank farm. Bought 20 tons of pork bellies? It's going to get a bit smelly around the ol' estate if you don't find a freezer fast!
So, no, we do not need parasitic day traders except to maintain an imaginary market that gets in the way of productive people.
No, some of them knowingly set the company on the path to ruin in order to maximize their position. They don't care because they plan to deploy the golden parachute long before the crash.
Most people would accept a freely offered raise consequence free. Fewer would take the raise if they were told one of them would be fired to pay for it. Fewer still would demand the raise and suggest firing someone, particularly if they already had enough money to retire comfortably on.
So, no, most people aren't that greedy.
Us.
Make it an excise tax.
Crap. What did the new CSS do with the "Post anonymously" option??