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$300M To Save 6 Milliseconds
whoever57 writes "A new transatlantic cable (the first in 10 years) is going to be laid at the cost of $300M. The reason? To shave 6ms off the time to transmit packets from London to New York. The Hibernian Express will reduce the current transmission time — roughly 65 milliseconds — by less than ten percent. However, investors believe the financial community will be lining up to pay premium rates to use the new cable. The article suggests that a one-millisecond advantage could be worth $100M per year to a large hedge fund."
To suck American's and other peoples' money out of their wallets from overhead. Same basic effect.
now they can lose money even faster!
Just imagine how much better gaming will be w-- oop, nevermind, just got headshotted by a chinese / russian sniper again.
Slashdot is serious business. You Brits will do anything to get first posts!
This kind of thing is the direct proof that the way the stock exchange is built is deeply flawed. Why don't they try to build it on sounder bases than "the fastest takes all" ?!?
Non-Linux Penguins ?
"...The article suggests that a one-millisecond advantage could be worth $100M per year to a large hedge fund."
I think we now have real proof that life is moving too fast when the metric to measure your performance as a large hedge fund investor is now measured in single milliseconds.
I'm glad I'm not a large hedge fund investor. Think your 30-minute lunch break is shitty? These guys don't have time to blink.
This is supposed to be sarcasm, right? Fractional reserve banking actually creates money. It doesn't create an artificial scarcity.
Be careful. People in masks cannot be trusted.
ted is as overhyped and overrated as it is useless.
At least the high frequency trading mess is leaving some usable wreckage behind that's a lot more then you can say about most of the financial institutions innovations.
"Only" a few milliseconds? Do you realize that's trillions of femtoseconds? Twenty thousand femtoseconds for each otherwise worthless dollar. Get some perspective man!
Fractional reserve banking actually creates money. It doesn't create an artificial scarcity.
Yep, it creates money and debases it in the process. So you're correct, it doesn't create artificial scarcity, but it creates real poverty in the long term for those who have a little money.
"A door is what a dog is perpetually on the wrong side of" - Ogden Nash
It only creates money if it is distributed to all. Currently it creates artificial abundance for a tiny percentage at the top and creates a scarcity for the rest of us.
Investing has always been about timing. If the timing is right, here is what happens...
Individual 1: Buys 100 shares for $10,000. Long term investment to make 5% a year.
Individual 2: Receives $10,000 from Investor 1 for 100 shares. Spends $9,500 for 100 shares. Makes 5% in a days.
Individual 3: Receives $9,500 from Investor 2 for 100 shares. Spends $9,025 for 100 shares. Makes 5% in an hours.
Computer 1: Receives $9,025 from Investor 3 for 100 shares. Spends $8,573.75 for 100 shares. Makes 5% in minutes.
Computer 2: Receives $8,573.75 from Computer 1 for 100 shares. Spends 8,145.06 for 100 shares. Makes 5% in seconds.
Computer 3: Receives $8,145.06 from Computer 2 for 100 shares. Spends 7,737.81 for 100 shares. Makes 5% in milliseconds.
==
Individual 1 receives 100 shares. $2,262.19 was skimmed off along the way.
Imagine how much more money they can make with microsecond, nanosecond, even picosecond speed trading.
This 1ms advantage is worth 100m USD, isn't relevant to transatlantic bandwidth.
The quote from wikipedia https://secure.wikimedia.org/wikipedia/en/wiki/Low_latency_(capital_markets) is
"A 1-millisecond advantage in trading applications can be worth $100 million a year to a major brokerage firm, by one estimate."
I can't find the original source of this - but IIRC its from the CTO of someone like Goldman's or BoA.
If you are doing high frequency trading on a NY or London based exchange, you don't buy the lowest latency connectivity from the exchange to you. You put your systems as close to the exchange as possible AND THEN you buy the lowest latency connectivity from the exchange to you. Your systems which trade in NY are based in NY, and your systems which trade in London are based in London.
I'm sure there is some minor advantage of NY and London being slightly closer together from a latency perspective, but I'm sure its not as much as 100M USD.
Alex
Fractional reseve banking *creates* money while the reserve requirements are being slackened (which happens during bubbles, as the regulators think everything is working), and *destroys* money while the reserve requirements are being tightened (during a crash, when they the regulators realized the *yet again* let the banks sail too close to the wind).
But the bankers don't mind, because they make outsized bonuses during the bubble, and still do OK in a crash, due the asymmetric reward profile of options and bonuses. Bankers *like* year-to-year variability and instability - it makes their fat years so much fatter that in the lean years they can lose their jobs and still retire in luxury, not that many lose their jobs.
Don't you think, though, that the people investing $300m in this cable have thought a little bit about their business model and believe it to be sound? Clearly those 6ms are really valuable to some people, and if not high frequency traders then who?
The entire finance sector fills me with equal parts revulsion and sadness. This is yet another example of enormous resources consumed for no net gain to society. At least in this case something (however unnecessary), tangible is produced as a result. Think of the huge numbers of brilliant mathematical and programming minds that have been consumed by this nonsense! Think of the resources and financial liquidity that is reinvested into this zero sum game! Every hour of work, every employee, every structure erected in praise of this wholly disgusting idol of modern nihilism, makes the rest of our society just that little bit worse. To those who would praise the enabling power of our new financial systems I say Pah! We can create better financial systems within virtual worlds. The only intrinsic value in the financial institutions is the power it gives; and this has been abused for all it is worth! Give me back my engineers! Give me back my scientists! Give me back my hope for a better future!
The reason why a low latency connection is valuable is than many identical stocks and commodities are traded in both NY and London. If you are the first one to detect a pricing difference you can make a sure profit.
Because it is made of "Monster" cables . . . http://www.monstercable.com/
However, investors believe the financial community will be lining up to pay premium rates to use the new cable. The article suggests that a one-millisecond advantage could be worth $100M per year to a large hedge fund.
So obviously, a cable made of "Monster" cables will be worth* even more! Roll out your checkbooks, all you unfeasibly large hedge funds!
*Your actual worth is subject to local regulation, taxes, palm grease, wind velocity of an unladen swallow, global warming, sea temperatures, etc . . .
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
Well, for someone trading in both Europe and the US it would probably make sense to have the lowest possible latency between their own systems to coordinate trading.
Now, if this would be worth $100M I don't know. But it does kind of make sense if you want your different systems to communicate with each other.
Greylisting is to SMTP as NAT is to IPv4
They should just have two quantum RAM blocks consisting of entangled qubits. When you set a bit at one end, the bit at the other end also flips. Literally instantaneous transmission, meaning that from a relativity point of view, the London exchange hears about events in NY before they actually happen.
It's sad to think that if this tech is ever invented, this will be among the first things it is used for....
Yep, this. GP missed the point, but, at the same time, I too am sceptical about that $100m/yr figure...
The whole HFT thing is even more stupid, what is your point ?
New things are always on the horizon
If you're in London and you know 6ms before anyone else that the price of oil in New York just shot up, you can buy oil right now and then sell it in 6ms for a tidy profit.
now they can take everyone else's money even faster!
FTFY.
I dream of a nation where a man is not judged by his skin color but by an number assigned by a credit rating agency.
Sadly, the high speed trading for which this is designed is a zero sum game - the extra dollars made by the hedge funds are shaved off someone else.
Banking has a very valid job to do: transferring money from savers to borrowers, aggregating small savings into large investments, and ironing out risk by spreading it over many loans. But these are, fundamentally, decisions made by humans, and such decisions will be made on timescales of, at the fastest, a minute or so. In order to ensure liquidity, and to even out large lumps in the trading,it is useful to have automated system which work on a timescale which is, say, ten times faster. Such banking and trading adds value. and it the reason we need banks. But any trading faster than that is purely profiting from irregularities in the system, and adds no value to the world. So any value extracted by the traders, or used to build links for such traders (as described in the article) is money wasted: a net loss to humanity.
I would like to put a drag on such trading: one which would dissuade high speed trades while not harming legitimate trades, including legitimate spreading of large risks. A nano-tax might do it - and the premium traders will pay to use this cable suggests the magnitude of such a nano-tax.
Consciousness is an illusion caused by an excess of self consciousness.
What they should do is apply a 1c tax on every trade placed with every major share market. Collect the lot, split it up and wire the funds to a basket of deserving charities. Even better if they could do it without an admin overhead - set the splits once a year and use automated transfers.
Hal Spacejock: Science Fiction with Nuts
Only if you assume the underlying economy doesn't grow. Alternatively, it would be bad if the economy grew, but not enough money was created to handle the increased value. The trick is to keep both in balance.
Indeed. And it is really no problem to remotely administrate such a system close to the exchange. The reasoning given in the article is flawed. That said, the lower delay and additional redundancy can be worth a lot.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
This has been their plan all along. Get Gold Man-Sacks to pay for world-beating ping-times.
Screw hedgefunds, those guys are going to rule in deathmatch mode.
When information is power, privacy is freedom.
Indeed.
Who would -not- gamble if winning meant netting $10 million whereas "losing" meant coming out with zero ?
How much for on of those neat ROV's to cut the line?
Just asking the logical question here, if they are going to upgrade the weapons stealing from the people, why not just destroy the whole thing?
Oh hey look over here, only $34k , (I wonder if we can rent one)
now off to find a 50 Watt underwater SAW ....
Wouldn't it be funny if HFT traders stole everything so well, that nobody was left to trade since everyone is in destitution. Time it so everything goes to Zero.
Alternatively, Cut the line at the right time.
It only debases money when government gets involved and creates fiat currencies, and does bailouts. If you had currency tied to commodity of limited supply, and banks that go bankrupt when they make to many bad loans there would be no debasement.
Banks can create as much additional money through lending as the market can support. When the markets value expand the quantity of currency expands to match, if the bank over steps the loans go bad and have to be written down, the extra money is destroyed. If the banks gets really crazy a run on it happens and the entire bank is destroyed, along with much of the leveraged capital.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
Only if you assume the underlying economy doesn't grow
Cue in the real world. The only growing economies are NOT the US and Europe. Thus we have fiscal, monetary and government policies that require growth to succeed, except there is no growth. Classic "can't see the wood for the trees" situation. Every year that the US and Europe fail to put their house in order, China grows another 10% and Latin America grows another 5. Who cares? Well for a start it means that the US and Europe are facing ever tougher competition for scarce, exhaustable resources like oil. It will suck to turn out to be the little guy when it's time to fight for the last drops of oil.
Seven puppies were harmed during the making of this post.
After which the market collapses and a new financial crisis ensues.
New things are always on the horizon
This already happens. Except the tax is more on the order of 3 cents, and the "deserving charities" are called NYSE, NASDAQ, Goldman Sachs, JP Morgan and a few others.
Seven puppies were harmed during the making of this post.
by yours truly in 'DailyKos
Yes, that is a problem. On the other hand, the post WW-2 years would have been pretty bad if the money supply didn't keep up. It's not easy to come up with a system that works in all cases.
Even better - there are no lean years anymore. They just have to pick up the phone and the Fed will lend them billions at NO INTEREST. And if they manage to squander those in bad investments (for example Italian sports cars are really bad investments that are easy to hide inside other, larger bad investments) the worst that can happen is that the government will bail them out. Yeah the CEO might have to take his golden multi-hundred million dollar parachute but the company will be just fine. Then he can get elected to the board of directors of companies owned by his other buddies, or even run for public office. Ahh life at the top is so easy nowadays. What's that, you've been unemployed for how many months?
Seven puppies were harmed during the making of this post.
I've decided that in order to be either an economist or Libertarian one must first be utterly and completely ignorant of history.
"Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
Arbitrage
Adding delay will actually make investors worse off, because quoting will become less competitive. Let me explain this with a contrived and simplified example.
Let's say I'm a market maker quoting a derivative, a call option on wheat futures for example. I decide what I think the option is worth based on the current price of the future and my guess at volatility, and we come up with a fair price. Let's say that the fair price is $50. The fair price for the option will move when the price of the underlying contract moves. The proportion by which it moves is called delta. Let's say this option has delta of +0.5, so if the price of the future changes by $1, the fair price of the option moves by $0.50.
In order to make some money quoting it, I need to quote a spread - i.e. buy options for less than I sell them for. Let's say I want to quote a spread of 2% of the fair price, or $1 in this case. I drop our bid in at $49.50 and our offer at $50.50. You, as a wheat farmer or exporter, want to hedge yourself against fluctuations in wheat prices, so you're interested in trading these options. When I'm quoting a 2% spread, you can buy or sell options with a transaction cost of 1% of the fair price of the option, or $0.50 on a $50 option. That's not too bad.
But remember that pesky concept of delta? If the price of the wheat futures moves around, I need to move my quotes on the option. For example if the price of the future increases by $2, I need to move by quotes up by $1 on the delta +0.5 option, So if that were to happen, I'd be quoting at $50.50 bid and $51.50 offer - note that I'm still only taking a premium of about 1% of the fair price.
Hopefully you can see that if the price of the future moves around, I need to be able to keep up with it or I'll be screwed over when I try to hedge my options position. If the price of the future moves faster than I can move my quotes, I need to factor a safety margin into the spread I quote to cater for this.
Suppose you introduce a random delay of up to one second. That means I have to consider the worst case scenario. Maybe I think the price of the future might change by up to $10 in one second. Since this is a delta +0.5 option, I need to factor in a risk of a half of $10, or $5, into the spread I'm quoting, because the price of the future could move by that much before I can move my quotes.
So factoring in the $5 base move risk as well as my 2% spread that I'm trying to make money off, I'd be quoting $44.50 bid and $45.50 offer. Now your transaction cost has increased to $5.50 over the fair price per trade on the option, or 11%. It's not looking so attractive now, is it?
Introducing delays won't hurt me as a market marker - I'll just increase my spreads to cover the risk, as will all the other market makers. It will definitely harm you as the person with a need to trade. Lower transaction latencies increases competition between market makers to quote tiny spreads, minimising the transaction costs for people who need to trade. Sure, the money is being distributed differently: instead of more market makers, each with a small slice of the pie, taking a big cut of each transaction, you now have fewer market makers taking a tiny cut of each transaction, competing to get a big enough slice of the pie to remain profitable.
Er, I don't know about the rest of Europe but Germany's economy is growing. Not that strongly this year but it'll probably recover. You can't use the economic development in a recession as an argument against inflation.
Justice is the sheep getting arrested while an impartial judge declares the vote void.
The only growing economies are NOT the US and Europe. Thus we have fiscal, monetary and government policies that require growth to succeed, except there is no growth. Classic "can't see the wood for the trees" situation. Every year that the US and Europe fail to put their house in order, China grows another 10% and Latin America grows another 5.
What? Every year we've had a steady growth rate of around 2% (varying slightly... sometimes it's as high as 4% or as low as .5%, but it still averages out to about 2%). That is an ideal rate. Anything higher leads to hyperinflation and a currency that's pretty much useless. By your standards, Yugoslavia should be one of the most powerful countries in the world due to their period of hyperinflation in the early '90s. They went through 4 different currency reforms between 1989 and 1994, exchanging vast amounts of "old" currency for one unit of "new" currency. For instance in their 1993 currency reform, the government was giving people 1 new dinar for 1,000,000 old dinars... but their hyperinflation was still happening and by the end of that year they had to release a 500,000,000,000-dinar denomination. The next year, they were giving people 1 dinar for 1,000,000,000 dinars. By the end of all that madness, one single newest dinar was equivalent to about 1x10^27 pre-1990 dinars. Yeah, extreme growth is great.
... Greed and fear are the driving forces of humanity now. The only thing you and I as "mere mortals" can do now is watch until the final collapse.
Religion: The greatest weapon of mass destruction of all time
> I'd be quoting $44.50 bid and $45.50 offer
That's $55.50 offer, no?
Every MS helps to those battlefield3 servers, bullets are fast.
I need every ms too.
Liberty freedom are no1, not dicks in suits.
The US economy is growing by at least 2% every year. And it's already really huge - 2% growth is a lot of growth.
BTW, China's growth includes the parts of China that are owned by Americans and Europeans, the fastest part of that growth. At the deep costs to China's environment and labor health.
--
make install -not war
You, sir, are absolutely correct. I must be too tired - good thing I'm not trading right now, or I'm be hitting myself or quoting below theo at this rate.
So if using this connection gives $600M advantage a year over those that aren't using it, everyone will simply start using it. That way nobody will have the advantage and it's back to square one - only everyone be paying extra for the faster connection.
Only dumb birds land downwind.
Then why cant we have zero percent taxes. And the govt can 'create out of thin air' the money they need.
If they require 10% of GDP, then print it, dont steal it.
Id be happy with 0% taxes, and 10% inflation.
Simple, run it in Sims and see how you go.
Liberty freedom are no1, not dicks in suits.
This already happens. Except the tax is more on the order of 3 cents, and the "deserving charities" are neither charities nor deserving.
FTFY.
PlusFive Slashdot reader for Android. Can post comments.
Yes I agree. Germany is pretty much the only one that is growing. However if you consider Europe as a whole, German growth is counterbalanced by the PIIGS for a start... also they had a downside surprise last quarter.
Seven puppies were harmed during the making of this post.
What they should do is apply a 1c tax on every trade placed with every major share market. Collect the lot, split it up and wire the funds to a basket of deserving charities.
If there's a charity I wish to donate to, I will do it my own damn self, thank you very much. I don't need the government's guidance in deciding what charities to give my money to, and I certainly don't need to be assisted by having the money be forcefully taken from me to be distributed to them. Taxes should be solely for revenue generation, but for far too long they've been used to influence public behavior by taxing things that are bad for you and/or the environment according to some guy with money, support industries that can't support themselves by handing out subsidies and artificially lowering commodity prices, and line the pockets of politicians and large corporations with huge tax breaks and incentives for just about every industry. We don't need MORE of this bullshit, we need less of it.
I'm not sure how it works in Germany, but in the UK the statement 'the economy grew by 0.25% this quarter' is interpreted by most of the media as 'OMG recession! We're all going to be starving to death on the streets!!1111eleventyone'
I am TheRaven on Soylent News
Fractional reserve banking ONLY creates debt.
2% is anemic growth. It's no growth when you take into account inflation. And what's more I don't believe the Fed anymore. Farm prices are up 30% YEAR OVER YEAR and 68% since 2008 according to the August farm report, but the Fed is claiming 2% inflation. Go ahead and believe whoever you want to believe but the truth is that the jobs aren't coming back, the housing market is still depressed, and credit is still tight. The Fed thinks it's printing (sorry easing no sorry the new word is accommodating) its way out of recession when in fact it's just destroying the US dollar. Don't believe me? Look at gold and silver.
Seven puppies were harmed during the making of this post.
Ahh denial, that strongest and most basic of instinctual coping mechanisms. Please explain the new-found strengths in the Swiss Franc and the Japanese Yen for me if the US is in such great shape?
Americans and Europeans are not allowed to own any part of China. Any corporation created by foreign devils sorry allowed to operate in China must meet specific requirements, like having majority shareholders who are Chinese nationals. Have you actually BEEN to China - apart from the designated tourist areas I mean? Have you gotten the necessary government permits and been assigned the mandatory government interpreter/guide who will make sure you visit ONLY the areas you were allowed to visit? China has made progress but don't think you can just move there and open up a McDonald's in some small town of your choosing.
Seven puppies were harmed during the making of this post.
of the exchanges.
Only the masters of artificial wealth would complain that high frequency trading is a benefit to anyone instead of a very dangerous and slippery slope (Tuesday morning alliteration - ye Gods and little boarlets...)
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It's classic arbitrage - and this is how it works.
There are a lot of things that trade in both New York and London. Think gold, oil, stocks (BP, etc) and there is a portion of each day when both are open.
If BP is trading in New York for $1.00 and BP is trading in London for .6.34 pounds, and the USD/GBP is 1 to 6.33 a trader could squeeze out a penny by buying BP in NY and selling in London. It keeps the price in sync between the 2 markets.
Yep, it creates money and debases it in the process.
Correct. Who is this a problem for? People with cash.
but it creates real poverty in the long term for those who have a little money.
Who are these mysterious impoverished people with cash?
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
But this also adds more bandwidth as well right? as well acting as a back up for other cables.
Diary of a Very Bad Year, by Anonymous Hedge Fund Manager
The Asylum, by Leah McGrath Goodman
The Big Short by Michael Lewis
-- interviews with real people who know how real hedge funds actually work in the real world, not the fantasy land of milton friedman and ayn rand.
This new cable runs Gentoo instead of <scoff>binary-only unoptimized distros</scoff>.
Good doco on how money works: http://www.truththeory.org/money-as-debt-1/
"In the absence of the ability to establish the attribute of truth they tried to establish the noble attributes."
The only growing economies are NOT the US and Europe.
How can you lump the US in with Europe? Yes, the US are approaching that level of indebtedness and we the US is a developed country, but unlike Western Europe (and even Japan or China for that matter) it has population growth, and the long-term GDP chart definitely points up, even factoring in inflation.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Just like in the 70s(?) they convinced the world that Howard Hughes' Glomar Challenger was meant to extract maganese nodules from the ocean floor when actually it was to raise a Russian nuclear sub.
So what use could the CIA/NSA/DoD have for a very low latency/high bandwidth pipe? Methinks they want to reduce the latency of their aerial drones and soon-to-be revealed robot army.
Either that or this is another reason why China will inherit the earth.
"we the US"
I sure is the literate lol.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
there is a wikileaks cable about how Canada had a 'withholding tax' that prevented US banks from creating CDOs out of Canadian assets.
their argument? This awful tax 'reduced liquidity' in Canada.
it also saved Canada from an economic meltdown. 'liquidity' is another word for 'garbage laden toxic assets that have been AAA rated through fraud and corruption'.
when will 'economic theorists' understand that your theories mean absolute shit? the crisis of 2008 destroyed practically every lie of the corrupted, conflicted pseudo-science academic economists. 'liquidity uber alles' being one of the main ones.
its like you are screaming that Mercury follows a kepler orbit. no, it doesnt, and saying that it does is ignorant and wrong.
it has population growth
Only if you count your illegal immigrants, hombre.
Seven puppies were harmed during the making of this post.
No, they need lean years. Their bonuses are based on outperforming the market. If the financial sector was reliable, their share prices would be good, but flat, so they wouldn't be rewarded much in the good years. They won't let a good crisis, rescue, recovery, or boom go to waste. But you can't exploit good but stead performance for personal gain.
My head hurts too, so that makes too of us. Rough day at work. Sure could do with a blowjob right now.
Perhaps you can illuminate us on what the point is. Alex sounded informed and well thought out to me.
So your ideal economic landscape is circa the XVIII/XIX century, in London?
Listen to their VP of Business Development when asked how many mS in a second (starts at 0:23:00) http://www.bbc.co.uk/programmes/b014f7g7
Just like in the 70s when the CIA used Howard Hughes' Glomar Challenger to try to raise a sunken Russian nuclear sub (they said they were getting Maganese nodules from the ocean floor).
If not this is another reason why China is going to inherit the earth. (We're putting money towards non-productive uses for society as a whole, never mind what the Hedge fund owners make).
Only if you count your illegal immigrants, hombre.
Your point being?
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
1817 : Major Brokerage leases building on Wall ST!
1836 : Major Brokerage house installs first telegraph!!
1890 : Major Brokerage house installs first telephone!!!
1990 : Major Brokerage house has access to internet!!!!
Sound investing is based on research but it is also based on the ability to react quickly to that information. If a company in the US announces that their CFO has been indicted, then investment firms in the UK are definitely going to pay to get that information and react to it as quickly as possible. Before you could submit bids to the fed electronically, investment firms used to place runners in pay phone booths next to the Fed so they could call them at the last minute and have them get in the best bid. Fundamentally, there is no difference between that and this.
And yes, "black box" high-frequency traders are going to be the primary users of this line but that doesn't mean there aren't valid and legitimate (as far as the average consumer is concerned) uses for this line.
My thoughts exactly. Everyone is complaining about how bandwidth is becoming more and more scarce, new cable should mitigate that as well, right?
They pay a lot of income tax, do they?
Seven puppies were harmed during the making of this post.
We have customers who trade electronically who want to colocate in racks physically next to ours just to shave milliseconds on transaction times.
If their low latency is worth that much money, I doubt the prices they charge will make the cable usable for bandwidth or as a backup.
Correct. Who is this a problem for? People with cash.
It's a problem for people on fixed salary and no savings, you moron! "People with cash" can place their savings into banks where it will "earn interest" that merely offsets the rate of inflation. People living from paycheck to paycheck -- not so much, they just can buy less and less on what remains from their ever-increasing rent.
Contrary to the popular belief, there indeed is no God.
by yours truly, here .
I just read an article in Popular Science that almost made me sick to the stomach. The headline says it all "Pricey Transatlantic Cable Could Save Milliseconds, Millions by Speeding Data to Stock Traders".
Here is $400M being spent just to give flash traders a 5 ms advantage in trans-atlantic trading. It adds nothing to the economy, just lets the Wall Street Casino operators skim more money from the economy. I addition, it diverts talent from productive projects.
Never has Matt Taibbi's description of Goldman Sachs, and by extension, all the big banks, as "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money" seem even more apt.
The problem is that it creates money for the banks, and debt for the population.
This is huge for arbitrage markets where you want to have a server close to more than one exchange (i.e. NYMEX/CME in New York and IPE in London.) Example is the spread between WTI and Brent crude is very actively traded. You can do this trade on legs (individual flat price trades on each side) or outright as a contract. Black boxes are scalping that all day long. A 6ms advantage means you can take advantage of market inefficiencies between the two exchanges before other people can, huge benefit. Heck there is even a WTI contract on IPE and one on the CME, that is a very scalpable market with the right setup.
This is actually huge news for the financial companies.
Most people don't really understand what these companies do. Ethics aside, these prop shops do largely automated trading based on extremely propietary software that monitors market conditions, news, weather, politics, etc all at the same time. It would have to be a huge hedge fund (not a smaller prop shop) to shell out $100M unless they thought they would have an advantage because nobody else could afford it. But yes, the basic premise of cuting 6ms off the time and having financial companies beating down their door to sign up for service is absolutely correct. If you can make a large trade 1ms before your biggest competitor so that you buy in cheap and they buy in higher or cancel their trade, then you can make big money. There's a whole industry creating products for these low latency trading firms with specialized switches, routers, software, etc that is tuned to support extremely low latency networks and zero dropped UDP packets.
Great!!! Less pointless trades, less artificial volatility, more incentive to keep fair price, less middlemen.
Contrary to the popular belief, there indeed is no God.
No, the price will be less fair, because the spreads will be wider. There will be more market makers (middlemen), because the potential profit on each trade will be higher. It won't cut the number of speculators - they just love to gamble. It won't cut demand from people with "legitimate" reasons to trade (the wheat farmer and exporter in my example), either, but they will be screwed over by the wider spreads.
Do children born in the US to US citizens pay any more income tax than illegal immigrants?
Both illegal immigrants and children do pay (directly or indirectly) sales taxes in states that have them.
For £200 million you could build a ship park it in the middle of the Atlantic and get a 30ms advantage over servers located on either shore. no its not my idea :-(
There is nothing wrong with fractional reserve banking as long as the banks actually do due diligence, so that money that they loan out is for business creation based on sound ideas and planning and not for gambling or buying consumer products.
Building new businesses does create wealth for everybody. If a person takes a loan and provides collateral, and builds a business with that loan and creates products that the market wants and repays the loan, then here is what happens:
1. Loan is lent out and then interest is paid, loan is repaid. Investors have made money, which is good.
2. A new business is started, products are made that the market wants to buy, which makes everybody wealthier via production of these products, which is good.
3. The businessman found a way to generate profit and increase his own wealth, so now he is better off financially, which is good.
--
Here is the problem with the way things are done now:
1. Politicians get elected based on promises of free lunch, to whoever, be it the more SS or be it more corporate welfare, at the end this helps the politician to make some cash and it always helps some special interest, while growing government bigger, which is bad.
2. The bigger the government, the more it spends, and it's impossible to shrink it, and when economy slows down and even shrinks, government only grows via taxes, loans and then debasing of money, which is bad.
3. National bank prints fiat currency to subsidize government spending, which adds to the debt and eventually prevents the economy from being fixed, because the bigger the debt, the less likely it is that interest rates will be let go by the government, because the bigger the debt, the more expensive it is to service it. At some point inflation becomes unbearable and currency can fail, which is bad.
4. Some people make a lot of money on the process of currency debasing, these are the people who are close to the government circles, they are making policy that helps them, but destroys currency and economy in the process, which is bad.
5. All of this turns the market into a casino with gamblers, rather than investors, who have all this counterfeit currency that they want to gamble with. This destroys any incentive and opportunity to build an actual viable real business, which is bad.
--
More government leads to the second outcome, less government and more freedoms lead to the first outcome.
I know where this comments is going to lead my /. account too.
You can't handle the truth.
When I'm king, I'm going to solve this problem. No more short term capitol gains taxes, because there'll be no more short term capitol gains. How? I'll impose this one rule: Any stock, bond, security, whatever, has to be held for at least one year before it can be sold. There's no end of problems this one rule will fix. When I'm king. Oh well.
Co-location
Someone forgot to do their market research...
Is this project taking advantage of government internet grant money?
I'd be pissed if the taxpayers were footing the bill for this.
2% growth is stalling, if you consider annual inflation rates.
SSC
Well when the money supply is increasing by say, 10-20% in the past year, and even measuring growth by bunk GDP figures which include money spent by borrowing and don't actually measure, you know... production - 0.25% "growth" is in reality much much worse.
I run: Windows, OS X, Linux, FreeBSD. Just because you have a hammer, doesn't mean everything is a nail.
The reserve requirement is still 10% (and 0% for certain kinds of accounts). I do not believe it has changed (though I may be mistaken).
SSC
I'm not making a moral judgement, but this is Darwinian Evolution at work. It isn't survival of the fittest, it is the pressures of survival on all.
A lot of you are no-nuke people, but the Internet was built to survive nuclear war. We win.
Many of you, including myself, don't support greed, but it is the financial incentive to speed up network speeds, lay new lines, and expand the networks. We win. Should a disaster happen, the Internet will have to overcome lost lines or malfunctioning satellites. Imagine if we had to route via China just to reach London, Ee-gads!
When the money depends on the network, governments will protect their big interests, and be less likely to sever the lines. Again, we win.
I8-D
I would assume that the issue is moving capital between markets quickly, if trading programs spot a good selling deal in New York, then a good buying deal in London 10ms later, then they are probably racing against each other to get money across the Atlantic.
A pizza of radius z and thickness a has a volume of pi z z a
It's a problem for people on fixed salary
What does that even mean? Even the minimum wage goes up.
And yes, there are people with stagnant or declining wages - low-skill manufacturing, for instance. But if you think that "inflation" is the reason, then you need to turn that "moron" name calling on yourself. The problem for unskilled manufacturing workers is that there are people all over the world willing to work for less, and the majority of people in the developed world are more concerned with the lower prices than they are in having a manufacturing welfare system.
In other words, even with a gold standard or some other such nonsense, the same people you are claiming are getting "hurt" by inflation would have salary decreases as the value of their work declines. Same thing.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Don't you think, though, that the people investing $300m in this cable have thought a little bit about their business model and believe it to be sound? Clearly those 6ms are really valuable to some people, and if not high frequency traders then who?
You don't know many people in the financial sector, do you?
"I zero-index my hamsters" - Willtor (147206)
I'd rather see the money earned by a few hedge fund managers than distributed to all. Hedge fund managers spend the money in local restaurants which helps our economy. Your average Joe would just use the money to buy another iPod and the money ends up in China.
Migrant workers pay no income tax, legal or no. Their incomes are too low.
True if they are working for cash they pay no payroll taxes and other poor people do, but those are for Social Security and Medicare and unemployment insurance - things that they will not be eligible to collect much from, anyway. And I know at least a great deal of them are working with fake SS numbers, so money is still being put into the system - they just get no credit for it.
But again, what is your point? My comment was about population and the economy. Are you arguing that because they aren't legal, they don't contribute to the growth of the economy? Does the money that passes through their hands become unavailable for use somehow? Do the goods they produce become less valuable?
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
So they'll get it to 61ms. The speed of light from London to New York is 18.6ms by my calcs. Can anyone summarize as a list of the major percentages what makes up the rest of the 40ms?
Why OpalCalc is the best Windows calc
Please explain the new-found strengths in the Swiss Franc and the Japanese Yen for me if the US is in such great shape?
If you are going to cherry-pick economic data, then I can just turn this around on you and ask, "Please explain the historically-low yields of American government bonds if the US is in such bad shape?"
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Careful... you're gonna hurt yourself planting your tongue so firmly in your cheek...
Program Intellivision!
Map of the cable.
One would think that if it were actually worth $100 million/year to a trading firm that they would have run their own cable and not allowed access to their competitors. Of course that would mean they would have to own some actual assets rather than just piles of play money, and a three year ROI might be unacceptable to people who expect to make a gazillion dollars a month for doing essentially nothing, so perhaps that's not such a valid guess after all.
"Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
1) People are spending their own money on a risky venture that they believe will not only recoup their costs, but also allow them to make additional money in the future.
2) People are building an additional trans-Atlantic line that will provide increased capacity and lower latency to the market.
3) People are paying for the opportunity to locate price asymmetries in the global market and profit by bringing them into equilibrium.
4) No public funds are being used.
Which of these statements are people posting here having the most difficulty with? Is making money, creating value, decreasing price information latency, and keep one's hands out of the public till considered bad? Which part?
I can't tell if the people here are serious or idiots.
-Hope
A portion of the money spent on "iGear" may well go to China, but a far larger proportion (I suspect) goes to AAPL in the US. The immigrants are feeding, clothing and sheltering themselves - money spent on all that is going to the US economy, eventually.
What does that even mean? Even the minimum wage goes up.
It's not possible to survive on minimum wage, so it's irrelevant. Working poor who actually support themselves, don't get raises, so they end up sliding deeper and deeper into poverty until they can't support themselves on the salary that was acceptable before.
And yes, there are people with stagnant or declining wages - low-skill manufacturing, for instance. But if you think that "inflation" is the reason, then you need to turn that "moron" name calling on yourself. The problem for unskilled manufacturing workers is that there are people all over the world willing to work for less, and the majority of people in the developed world are more concerned with the lower prices than they are in having a manufacturing welfare system.
The problem is, that there are large groups of people whose living standard is constantly declining. This spreads poverty and crime, damaging the whole society in the process.
In other words, even with a gold standard or some other such nonsense, the same people you are claiming are getting "hurt" by inflation would have salary decreases as the value of their work declines. Same thing.
What the fuck are you talking about? Inflation is not the cause of poverty, it's merely a part of a mechanism that you ignorantly claimed to be only damaging for "people with cash".
Contrary to the popular belief, there indeed is no God.
No, there will be less middlemen because it will scare off worthless daytraders. Then only institutions with enough money to dampen the price swings and enough research to predict future prices will be able to afford this, and prices will be based on value of the product.
Contrary to the popular belief, there indeed is no God.
It creates money, devaluing all the rest. Wealth is not being generated, it is being leeched.
Working poor who actually support themselves, don't get raises
In a gold economy, or in some other model with zero inflation, those working poor would be getting pay cuts. Inflation does not factor into your salary, only your cash investments and debts.
The problem is, that there are large groups of people whose living standard is constantly declining. This spreads poverty and crime, damaging the whole society in the process.
Agreed, but the root cause is not inflation.
it's merely a part of a mechanism that you ignorantly claimed to be only damaging for "people with cash".
Inflation has nothing to do with people sliding into poverty with stagnant wages.
True, the working poor are affected by "inflation" - but in the absence of inflation they would be getting hammered by declining salaries instead. Same thing. The only people hurt by small rates of planned inflation are people who hold cash investments.
In ye olde days of the gold standard, there were still wild price swings - periods of inflation and deflation - and the poor were hurt just as badly in the short term as they are today.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
>>> Any corporation created by foreign devils sorry allowed to operate in China must meet specific requirements, like having majority shareholders who are Chinese nationals. Have you actually BEEN to China - apart from the designated tourist areas I mean? Have you gotten the necessary government permits and been assigned the mandatory government interpreter/guide who will make sure you visit ONLY the areas you were allowed to visit?
You are completely wrong. The recommended corporate structure for foreign friends is WFOEs - wholly foreign owned enterprises. You can't buy land (it's *all* on 70 year leases from the state, even if you are Chinese), but foreign businesses have essentially the same rights as Chinese ones, unless they try to do things illegally and get screwed over when they realize that the laws can actually be enforced.
As for permits, there's no need for a guide. There are some sensitivities visiting Tibet, and Xinzhang, but you can otherwise go where-ever you want. You need a visa, and you need to alert the police to where you are going (hotels do this for you), but that's no different than staying in Europe, but the enforcement is much laxer - you can stay at unlicensed hotels, if you can find them. You can go literally anywhere. I also knew a guy who drunkenly walked into a military complex, pretending to be an English teacher looking for his school. They politely guided him off the premises, and told him which way to go (it was probably too much paperwork to shoot him, or report him to the cops, and the military probably didn't want to co-operate with another government agency - actually the army is not even technically part of the government, but part of the party which happens to get government subsidies, yes, China has turf wars, they just don't announce them on CCTV, the ludicrously named official TV station).
There's no government guides. That's North Korea. If you are a visting VIP, you might get minders, I don't know. If you visit a business, they might *pretend* to send you an official guide, to make sure you don't see any of their dodgy practices, but that's not really a legal requirement (not that the government cares either way).
There's a Chinese saying - "Heaven is high,and the emperor far." The unspoken corollary is "so everyone just does whatever the f*ck they want, as long as it doesn't piss off a more immediate authority". That's China.
Because all high frequency trading does is inflate the cost for those of us who do invest in the "old-fashioned" buy-and-hold manner.
I heard it best described in this way: There's a hot new gadget that's being released today, and you *really* want to go buy one. Unfortunately, as you're walking down the street, some hedge fund investors see you coming and quickly jump in front of the store milliseconds before you get there to form a line at the door. The store opens, the investor at the front of the line buys ALL of the gadget inventory. He then turns around and sells all those units to the guy behind him for a small profit, who sells to the guy behind him for a small profit, who sells to the guy behind him, etc.
Eventually, they get back to you, but now if you're going to buy that gadget, it's going to cost you some significant percentage more to purchase for actual use. And you don't really have any option if you're going to buy one, because every store selling the gadget has a pool of financial sharks circling the entrance just waiting for another "traditional investment" sucker.
In the end, the store doesn't benefit, since they still only sold the item at the normal price, and you don't benefit because you just got your price jacked up. The only beneficiaries are the HFT scum who have played the system in such a way to artificially inflate your costs to their own benefit while adding absolutely no actual value to the product as it passed through their hands. This DOES impact you, because the more of your investment that gets siphoned out by the hedge funds, the less you have left to actually invest in the original stock.
I bet you use a credit card regularly? or even a debit card? If so, stop supporting the financial companies you despise.
I heard it best described in this way: There's a hot new gadget that's being released today, and you *really* want to go buy one. Unfortunately, as you're walking down the street, some hedge fund investors see you coming and quickly jump in front of the store milliseconds before you get there
You could have stopped right there and said, "It works like the HP touchpad fire sale"
LOL... Sorry couldn't resist..
High frequency trading is a zero sum game. Eventually, the losers will exit the market, and then winners will have no one to trade with.
That's easy: the Fed is the one doing all the buying. Don't believe me? Look it up. The biggest owner of US debt is the US government. China is merely the largest FOREIGN owner. The Fed obviously don't care about the yield - in fact they want a low yield to give the illusion of strength. Next question?
Seven puppies were harmed during the making of this post.
but if all the financial institutions jump off the old cable on to the new cable, then the old cable may have to reduce their prices.
Is 1563649 a prime number?
I don't know anything about mathematics or finance, but this seems to assume that changing the rules would leave the premise unchanged -- i.e., that even with the delay, the prices would still swing $10 in 1 second. Is this a correct assumption?
Sorry to burst your bubble, but one doesn't "predict future prices". The future contract (i.e. contract to deliver at some future date) has a price, based on what people are currently prepared to bid/offer on it. The price of this contract is based on the value of the commodity. Options have intrinsic value from the difference between strike and current value of commodity or future, and implied volatility value. Market makers are the parties that dampen price swings and suck volatility out of the market, by quoting options based on fair price.
The "day traders" you speak of are speculators who want to gamble. They will never go away. In fact, they are far more prevalent in countries that have bans on casinos, like Korea and Hong Kong. There's a reason the KOSPI200 is the most actively traded index product in the world. You know the saying about a fool and their money? That's what happens to these speculators. They win less than half the time, because all their money gets eaten up in transaction costs.
Farmers, miners, manufacturers, investors etc. have needs to hedge against commodity price moves so they can plan activities that have long lead times. They do this by buying or writing options. They are the people who have legitimate reasons to want liquidity in the market. They are the people who would be screwed over by the wider quote spreads that would be necessitated if exchanges introduced random delays in transaction processing.
As an aside, some exchanges are implemented so poorly that they may as well have random delays in them. You don't see people flocking there for a better deal.
My Battlefield 2 skills are *still* epic and no ping will save your buttocks.
I swear to God...I swear to God! That is NOT how you treat your human!
I'm assuming that the price swings would occur at the same rate. The rate at which price swings occur depends a lot on investor mood. When the world is spinning smoothly, prices move around relatively slowly; when there's talk of another GFC or Bin Laden gets shot, investors get jumpy and prices jump around like mad. If you're expecting big price swings, you quote wider just to play it safe.
The random transaction delay won't affect the rate that prices move at. Traders would still experience the same jitters, and even though view of the base price move would be delayed with respect to when the traders input orders, the rate at which the price can change wouldn't be affected. The killer for the market maker is the delay between seeing the new price and being able to move quotes out of the way to avoid trading quotes calculated off a stale base price.
if population grows by more than the economy, the wealth per person does recess.
Alright, thanks for the answer.
In a gold economy, or in some other model with zero inflation, those working poor would be getting pay cuts.
Such a mechanism would be too expensive to implement, and it will be extremely unpopular.
Inflation does not factor into your salary, only your cash investments and debts.
Inflation only applies to prices. Debts are affected by it, and investments have nothing to do with inflation because invested money are already spent -- there is no such thing as "cash investment". It's even possible, in theory, to issue currency without affecting prices (amount of currency closely tracks expected production), the problem is, that would require precise predictions and no overhead in a financial system.
In ye olde days of the gold standard, there were still wild price swings - periods of inflation and deflation - and the poor were hurt just as badly in the short term as they are today.
I would take price swings over constant and continuous slide into poverty that society does not recognize until it's too late.
Contrary to the popular belief, there indeed is no God.
Sorry to burst your bubble, but one doesn't "predict future prices".
In a healthy market, one does -- in fact, that's the only thing that happens in a healthy market. The rest is bullshit.
Contrary to the popular belief, there indeed is no God.
Yeah, I was wondering about that. It seems like the value of lower latency would have a 1/x type of distribution, so the difference in relative value of connection A with latency 1/x vs. connection B with latency 1/(x - y) (where x > y, obviously) would be much larger for smaller x. So, if you're talking about a 6ms advantage relative to a base latency of, say 20ms-30ms, it's a much bigger deal than a 6ms advantage relative to a base latency of 64ms.
Sure, these schemes are playing on arbitrage opportunities, but the fact of the matter is that someone in New York that shaved his latency from 64ms to 58ms to London still has a pretty big disadvantage compared to someone already in London that has a latency that's probably a third of that or less.
Program Intellivision!
There really should be a minimum time that you must own stock & futures. Right now it is just all games and millisecond gambling. I mean really if you only own the stock for 1/10th of a second, why do you care if the company is doing good or failing. And if you can sell futures before they mature, how does that in any way relate to the real product that the paper represents.
Non voting stock should have a minimum 3 month ownership, if you buy stock in a company, you shouldn't be able to sell it again for a minimum of 3 months.. This would cause investors to actually investigate the stock they are buying.
And futures must be held till they come due.. If you are buying oil futures 6 months out, the actual value of the oil 6 months later should be what will determine if you gain or lose money.. You shouldn't be able to sell those futures before then.
That would put some stability back into the markets.
Of course I am just a layman and have no experience in the actual markets.
A man from Hibernian Express was on the "Today" programme on BBC R4 yesterday morning and was clearly surprised to be asked how many milliseconds there are in a second. After a bit of flapping he declared there were 100,000.
I know the truth and I know what you're thinking
No, commodity prices in the future are unpredictable. You don't know what world events will happen tomorrow. A war could start, a cyclone could destroy crops, a meteorite could wipe out Istanbul. All these things affect prices.
If you're growing wheat, you want some assurance that you'll be able to get half-decent money for it when it's ripe, so you hedge by buying put options (right to sell) with a half-decent strike price that expires around when the wheat's ready to sell. If the price of wheat drops below the strike price of your put options, you get to sell the wheat at the strike price, and your hedge has paid off. If the price of wheat ends up above the strike price of your option, you lost some money buying the hedge, but at least you can get decent money for your wheat on the open market.
If you're making flour, you hedge against undue increases in wheat prices by buying call options (right to buy), and the same logic applies in reverse. Same applies for other commodities - just substitute appropriate industries.
The premium that an option commands depends on the intrinsic value (difference between current price of commodity and option strike price), volatility (covering the risk that the price of the commodity will move unfavourably for the option position you're taking on), and the margins required for involved parties to make money.
The only growing economies are NOT the US and Europe.
How can you lump the US in with Europe? Yes, the US are approaching that level of indebtedness....
According to http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt , as a percentage of GDP (IMF 2010 numbers), the US has less debt than Greece, Italy, Iceland, Belgium, and Ireland, but more than the other countries in the EU. I think that more recent numbers has the US in a worse position.
Personally, I feel that debt (while important) is less of a problem than the dysfunctional political system we seem to have developed. Making tough choices, compromising, and working towards a positive outcome seem virtually non-existent. Posturing, fear-mongering, and constant electioneering seem to be the only activity of those we have running things. May "the good ole days" weren't always good (and as Billy Joel might say: "tomorrow isn't as bad as it seems"), but if certainly feels like in my lifetime this is as bad as it has ever been.
No, commodity prices in the future are unpredictable. You don't know what world events will happen tomorrow. A war could start, a cyclone could destroy crops, a meteorite could wipe out Istanbul. All these things affect prices.
This is why hedging exists. This is also why it's a good thing when speculators absorb the losses instead of the rest of the society -- they are expendable, producers and consumers are not.
None of this is affected by the aforementioned delays, and none of it makes the gambling you describe in any way justified.
Contrary to the popular belief, there indeed is no God.
For years I used to joke that if mankind ever does discover FTL, it'll be some computer chip maker trying to make CPUs faster.
I've changed my mind. It will be by some financial trading company trying to squeeze a few more milliseconds off a long distance transaction.
-- Alastair
Set your watch ahead by 6 ms.
For some reason it didn't show up in My Account so I thought "someone" (the CIA?) was preventing me from posting my crazy conspiratory theory! ;)
I'd think that the return on time savings is nonlinear. Once you get beat by your (closer in) competition, its not really worthwhile saving a few milliseconds to not get beat quite as badly.
Their money would be better spent on a co-location site. If this nonsense gets out of hand (everyone trying to get closer to the exchange servers), I think the SEC should extend the Fair Disclosure regulations to this issue. Dictate a minimum length of fiber optic cable between exchange and client data centers.
Have gnu, will travel.
Or you could NOT buy said gadget. Just saying....
A number of the other comments indicate that this is what is actually happening, with companies paying a premium to rent co-located server space in exchanges close to trading centres, or even in the actual server racks of the NYSE.
Don't believe me? Look it up. The biggest owner of US debt is the US government.
That's mostly Social Security Trust Fund money and the recent quantitative easing. Social Security has been dipping into the fund recently and quantitative easing ended months ago, yet the US debt is still yielding almost nothing.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
The bandwidth problem is in the "last mile" between the ISP and it's customers, and in the wireless spectrum. The ISPs designed for a "consumer" network where you download content like their digital TV offerings. Unfortunately for them (and us), they got a "peer serving" customer base, where everyone shares with everyone else.
There's no problem with transatlantic bandwidth. A large amount of existing optical fibre is dark anyway, and we're constantly figuring out new tricks to cram more data through what we have already.
It does add some redundancy, but that's about all it's value to the common man. Given that bandwidth on this cable is going to charged at a premium, it may be unlikely that you'll see traffic from consumer ISPs crossing it.
They are really charging for the low latency - in bandwidth terms it's probably going to be undersubscribed. They might sell excess capacity while reserving some channels for low-latency comms, but they'd have to build in some kind of store-and-forward artificial latency buffer or any idiot will be able to get their premium services.
You're the one talking about predicting commodity prices in the future, aka speculation, aka gambling. Market making is not gambling. Market making is about determining fair prices for derivatives using mathematical models and quoting as close as possible to the fair price while still making enough money to run a business and pay employees (developers, QA, IT operations, analysts, traders) well enough that they don't go to the competition down the road. Delays affect how close to the fair price market makers can quote, and therefore what the transaction costs for the farmers, miners, manufacturers, etc. are when they go to take out their hedges. Delays don't affect speculators who are just out looking for a quick buck by using the market as a casino for all intents and purposes.
There are two issues.
1) they may be cheating and many have reason think so.
There have been accusations that they find out about orders in advance. In this case when you sell your shares, they sell theirs first (pushing down the price) and then buy yours later (immediately taking your profit). There are even admitted cases (see this document from an HFT company) where this could happen without the HFT company even doing it deliberately, just because they have the advantage of ultra fast trading and your trade happens in an unlucky way which basically gives away information about the trade before it has been completely executed.
2) many think so
Your shares are worth what people think they are worth. If people believe the HFT companies are cheating then this causes the other people not to joint the market. The key currency of the stock market is trust and right now people don't trust it. This means your shares are worth less than they would be otherwise. Importantly, this means that companies can get less investment by putting out shares, so it means there is less money to be made from the stock market generally.
In other words; perception is reality; HFT damages perception, so HFT damages reality.
=~ s,(.*),<sarcasm>$1</sarcasm>,g if any_point_you_wish();
You're the one talking about predicting commodity prices in the future, aka speculation, aka gambling.
Speculation is attempting to predict something and acting on such predictions. Gambling is attempting to extract profit from unlikely events. Institutions are supposed to offset risk of their speculation with amount of capital they have, hedging and... drumroll... trading futures.
Neither have anything to do with expectation of guaranteed profit from manipulation of small quantities of commodities tied up in futures -- that would be just plain old leeching, and it contributes absolutely nothing. "Developers, QA, IT operations, analysts, traders" who expect such a thing, should not be there in the first place.
Contrary to the popular belief, there indeed is no God.
Such a mechanism would be too expensive to implement, and it will be extremely unpopular.
What on earth are you talking about? Getting a pay cut is too expensive to implement? The poor took pay cuts all the time prior to the abolition of the gold standard. Hell, they are getting pay cuts now, even with constant rates of planned inflation.
Inflation only applies to prices.
Sure - but those prices are also someone's assets.
there is no such thing as "cash investment"
??? A bank account is a cash investment. A loan is a cash investment. Taking your money and putting it in a safe is a cash investment. Bank accounts, loans, and a safe full of money all lose value with inflation.
I would take price swings over constant and continuous slide into poverty that society does not recognize until it's too late.
This slide does not occur because of inflation. It occurs because the American middle class factory worker is not willing or able to compete with a factory worker from a much poorer country - often times even when you include shipping, training, bribes, and all of the other fun when doing business in a far-away developing nation. Often they even have competition domestically in the form of robots. Inflation has very little interaction with wages, other than that people have come to expect "cost of living increases"
And then of course, there is the issue of WHAT is becoming more expensive. Oil/fuel, food, education, and healthcare are all increasing in cost at a far greater rate than can be blamed on centralized banking. And those are the very things that the middle class cares about. Going to a gold standard won't fix that.
And how would you solve hoarding? Gold is being hoarded right now. If we used a gold standard, people would be hoarding our only currency and there wouldn't be enough of it for normal economic activity. What is worse, the rich would own most of the gold and their best course of action would be to sit on it and wait as it increases in value. So working people who rely on a fair price for commodities would get less and less for their labors as deflation hit, and the rich would grow wealthier and wealthier as their gold pile grew in value. Then of course, the gold would top out and the rich would need to find other places to stick their money. As they unloaded their gold, the previously cash-starved economy would again be flush with cash and prices would skyrocket ahead of salaries. There would be runs on the bank as people desperately tried to get their money before it became worthless and to trade it in for goods that will soon be unaffordable . Farmers start holding back stockpiles of grain so that they can wait for the price to go up. Eventually the price peaks and everyone starts unloading their stockpiled commodities - gold shoots back up in value. Rinse. Repeat.
Our history is so full of panics like I just described. I have to assume that people who advocate the gold standard weren't paying attention in eighth grade history. We didn't create the Fed out of thin air - monetary policy has been an issue for hundreds of years. The middle class is not well served by huge economic swings - mostly because on the upswing their salary (if they still have a job) lags the higher costs. Steady, predictable inflation allows unions to bargain for small but steady salary increases over the long term. It discourages the rich from sitting on cash (hoarding). It's obviously not a perfect situation, but it is a hell of a lot better than the old days under the gold standard.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Faster internet woo-hooo!!!!
What on earth are you talking about? Getting a pay cut is too expensive to implement? The poor took pay cuts all the time prior to the abolition of the gold standard. Hell, they are getting pay cuts now, even with constant rates of planned inflation.
Both pay cut and pay raise requires administrative expenses. Employers would have trouble constantly adjusting low-paid employees' salary to keep up with inflation even if they wanted to, and on top of this, there is no incentive because employees do not realize how the purchasing power of their salaries is dwindling.
Also shut up about gold standard. It has absolutely nothing to do with this.
??? A bank account is a cash investment. A loan is a cash investment. Taking your money and putting it in a safe is a cash investment. Bank accounts, loans, and a safe full of money all lose value with inflation.
Cash is not an investment, it's what you spend to invest. Bank doesn't store cash and magically conjure interest on it -- only invested money produce return and therefore interest, so bank has to balance reserves and loans to provide both safety and interest. Reserves lose value with inflation while loans, being invested, are supposed to cover inflation and provide interest on top of it -- loans' interest rises and falls with inflation, and again, it's bank's job to adjust its loans' strategy to optimize interest on deposits without depleting reserves. Therefore in a healthy economy bank deposits' interest can remain somewhat constant value above inflation. This protects "people with cash" that you were boo-hoo-hooing about -- their cash is in the bank, and in healthy economy that bank's interest is above inflation.
Banks still can cheat, and either have too low interest on deposit, over-extend their investments, impose unreasonable fees, etc. -- this is why they are in a position to cause massive damage to the economy, and have to be regulated. However rate of inflation by itself neither causes nor significantly affects their operation as long as it doesn't jump back and forth in an unpredictable manner.
Working poor, on the other hand, lack any of those protections because they don't have anything in the bank. Employer may have money in the bank, and definitely has revenue stream -- both usually adjust with inflation -- however salaries do not because employer is happy to keep it that way as long as employees don't notice. On the scale of the whole country and over decades of stagnant wages, those few percents per year produce a serious detrimental effect.
Contrary to the popular belief, there indeed is no God.
65ms trans-atlantic? They don't know the luxury they're enjoying. Try online gaming with this link:
----pip.shsu.edu PING Statistics----
26644 packets transmitted, 19888 packets received, 25% packet loss
round-trip (ms) min/avg/max = 240/1177/17729.
(actual ping record from '93, on a PVP server. And yeah, I had a positive kill ratio)
High Frequency Trading is theft.
It does not provide liquidity but steals from all of us.
It distorts price discovery to the extreme and can manipulate markets up and down to the extremes.
HFT is evil.
HFT should be banned.
See maxkeiser.com for more info.
No, you're not "just saying", you're completely missing the point of the analogy.
If you actually paid attention, part of the reason why farm prices are up is due to a lot of shitty weather in other parts of the world over the past year, ruining crops. Meaning that it's not a permanent increase in prices.
So? They also pay a lot of sales tax, and a lot of gas tax. And they have kids that grow up and go to universities, getting better jobs.
Such a mechanism would be too expensive to implement, and it will be extremely unpopular.
So? How many people took pay cuts over this past downturn? Most low income workers don't have much choice where they work, and those at the top will cut anyway, because there isn't much their employees can actually do.
Post hoc reasoning - always a favorite of apologists. Meanwhile I'm sitting on quite a few hectares of coffee which last year got me $80 per hwt and now gets me $300 per hwt. No, I don't accept shitty weather as an excuse for everything being up in price. I do accept the willy-nilly printing of trillions of dollars as an excuse though. Occam's razor, and all that.
Seven puppies were harmed during the making of this post.
In online games the "game clock" is synchronized between all participants, so those with faster link or who live closer to the server do not get unfair advantage. How hard would it be to introduce a similar policy on an exchange? introduce some time marks on which transactions can be booked (say, on the minute mark every minute), and introduce some artificial lag to those with 30ms link.
SEC goes out of its way to make sure that all trading is fair and equal opportunity, that no one acts on insider information, etc. Why not this? It will definitely increase liquidity in a world where physics limitation gives an unfair advantage to some participants.
...if they kept the NSAs snooping boxes out of the link.
Also shut up about gold standard. It has absolutely nothing to do with this.
Can we please keep this civil? Do you expect to be taken seriously or not?
If you are not talking about a gold standard, what system are you proposing?
Bank doesn't store cash and magically conjure interest on it
I know the bank isn't invested in cash, but the depositor certainly is. Similarly, you mention the bank being required to hold reserves - ultimately these are just a cash balance with the Federal Reserve. That is about as much a "cash investment" as you can possibly have.
This protects "people with cash" that you were boo-hoo-hooing about
I'm not "boo-hooing". I'm pointing out that the only people hurt by constant, predictable inflation are those with cash investments - and you rightly point out that they are compensated by interest. I'm the one arguing that constant, predictable inflation is not a big problem.
Working poor, on the other hand, lack any of those protections because they don't have anything in the bank.
They also lack any exposure, since they have nothing in the bank. If they do have money in the bank, it probably bears little or no interest (like in a checking account).
however salaries do not because employer is happy to keep it that way as long as employees don't notice
I'm sure they are. But if you think that the working poor don't notice, I don't think you are listening very hard. Half of the incoherent tea party stuff is rooted in very real and legitimate grievances that working people have. They blame the wrong things (like inflation, over-regulation, immigration, and - sorry, for this but I've heard it a lot from the Ron Paul crowd - leaving the gold standard), but they are at least going after some of the right people (politicians and Wall Street). Organized disgusted middle class is a good thing for the country.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
My bank hasn't been paying inflation matching interest for the past 5 to 10 years, I think it was 5 years ago that "insured savings" rates dropped essentially to zero. You are thinking of the Regan years when you could lock in a 5 year CD at more than 8% annual interest, while inflation was running well below 4%.
From here:
mises.org/books/bubbles.pdf
"The business cycle is initially generated by some sort of monetary intervention in the market, typically in the modern world by bank credit expansion to business. However, this monetary intervention could be in the
form of the following, listed by Gottfried Haberler:
(a) An increase of gold and legal tender money.
(b) An increase of banknotes.
(c) An increase of bank deposits and bank credits.
(d) An increase in the circulation of checks, bills, and other
means of payment which are regularly or occasionally
substituted for ordinary money.
(e) An increase of the velocity of circulation of one or all
these means of payments."
I don't exactly understand how the velocity of trading increases the money supply but we sure gonna find out with that cable.
Je me souviens.
This thread and series of modded-up comments proves that the majority of Slashdot users have no idea how financial markets work, nor how they enable society to progress to the level it has achieved today. Go back to your little cubicle to write code, go home to your wives, 2.5 kids and white picket fences, and stop making a fools out of yourselves. You made the choice to work for steady, meager wages, so stop complaining about people who make real contributions to the world and sign your 150k/year paycheques.
If that evil government goes away, the stock market will unravel in days. I agree that taxes are and have been abused, particularly "sin taxes", but that doesn't make the whole concept bankrupt.
However, I do think that the selection of "worthy" charities would likely become incredibly corrupt in short order. Thus, it should instead be applied to personal income tax on a per capita basis. That is, complete your form and then deduct the given amount times the number of people the filing covers (wage earner + dependents + spouse if filing jointly) from the tax owed. Yes, negative numbers should result in a check, if you're that poor, you deserve a break.
Even in the ideal case you mention, why should the bank collect interest on money they borrowed from the people's government for next to nothing? That's just another form of enriching the wealthy at the expense of everyone else.
The rest of us got a much better deal and a much safer retirement when the banks were forced to borrow money from us in the form of savings accounts and other interest bearing instruments if they wanted to hand out loans. It forced them to at least pretend to be upstanding and nice. These days, interest on checking and savings doesn't even keep up with inflation. Now that they can borrow from the fed for next to no interest and we can only benefit if we pay vastly inflated interest on bank loans, they have turned nasty.
He also said that it saves "5 milliseconds" which is a "10 percent saving in the route".
It's things like this that remind me why I find listening to news, rather than reading news, absolutely useless.
http://en.wikipedia.org/wiki/Maxwell%27s_demon
You're trying to extract energy from statistical noise, nothing more.
Also FatPhil on SoylentNews, id 863
If you are not talking about a gold standard, what system are you proposing?
I have not proposing anything in this discussion at all, I am explaining why your original remark about mythical "people with cash" being the only ones hurt by inflation is wrong.
I know the bank isn't invested in cash, but the depositor certainly is.
Depositor is invested in a bank, not cash. "Investment in cash" would be storing cash in a vault (or mattress) in hope that its value will rise. That only works when you have a prolonged, consistent deflation -- what means, nowhere in reality. At best one can "invest" in a currency that devalues slower than whatever currency he uses for transactions, this happens when local currency experiences runaway inflation far beyond growth of production.
Similarly, you mention the bank being required to hold reserves - ultimately these are just a cash balance with the Federal Reserve. That is about as much a "cash investment" as you can possibly have.
Reserve is the opposite of investment -- it's un-invested money that must be present to cover current and expected transactions and offset risk. Banks would love nothing more than to operate with as little reserves as possible, because reserves lose value over time. The problem is, without sufficient reserves they expose themselves and their clients to excessive risk -- short term if they can't cover current transactions, long-term if they can't offset occasional defaulted loans.
The greatest problem of recent bailout is that financial institutions tapped into public money after their reserves could not cover spectacularly bad investments. That meant, money were produced at a rate as if the system is working, however investments failed to produce any value -- economy did not grow, and excess of injected money merely diluted existing ones. Banks tout the fact that they "paid back" the bailout loans, however this is a mere distraction from the real issue -- all such loans would be "paid back" due to ever-increasing money supply, this time they just produced no growth of economy that increasing money supply relies on. This is one of many mechanisms that can produce inflation spikes, however damage to the economy comes not from inflation but from those mechanisms themselves. The fact that high rates of inflation can do direct damage to the living conditions of large groups of people, is just the cherry on top.
I'm not "boo-hooing". I'm pointing out that the only people hurt by constant, predictable inflation are those with cash investments - and you rightly point out that they are compensated by interest. I'm the one arguing that constant, predictable inflation is not a big problem.
For those people -- not a problem at all, unless banks are greedy enough to keep interest below inflation. What sometimes is the case, so those deposits are merely suffer less from inflation. Either is better than nothing at all.
They also lack any exposure, since they have nothing in the bank. If they do have money in the bank, it probably bears little or no interest (like in a checking account).
Their life is their "exposure". They are under constant risk of living expenses outgrowing their income -- and their spending is nearly absolutely inflexible. Where it is flexible, it's even worse -- trying to save on quality of food, for example, increases risk of diseases that will permanently damage their ability to work, even without taking direct medical expenses into account.
This is an extremely high risk, higher than for any other category in society. In fact, it is higher than the risk of most criminal activities, what explains why it's a perfectly rational choice for working poor to turn to crime -- their risk goes down that way.
I'm sure they are. But if you think that the working poor don't notice, I don't think you are listening very hard. Half of
Contrary to the popular belief, there indeed is no God.
I have not proposing anything in this discussion at all
s/proposing/proposed/
Contrary to the popular belief, there indeed is no God.
if 6ms can make a difference, in making money in the markets, that clearly means the system is rigged.
> > Yep, it creates money and debases it in the process
> Only if you assume the underlying economy doesn't grow.
I.e. only if you pull out of, or never join, the ponzi scheme. Keep that ponzi scheme going, and everything will be fine.
Also FatPhil on SoylentNews, id 863
No. You do not "fix" irony.
But congratulations on proving that you're clever enough to have worked out what he was saying, and thanks for explaining the joke to all those who aren't as clever as you. Your mum must be so proud of you and how clever you are. But she probably doesn't understand irony either.
Also FatPhil on SoylentNews, id 863
"If you're growing wheat"..."If you're making flour"
What proportion of the trades involve either producers or consumers of tangible goods? I'd be amazed if it was more than an insignificant proportion.
Pretending that the financial system behind options trading is there for the benefit of such ends of the chain seems like gross sophistry.
Also FatPhil on SoylentNews, id 863
I have not proposing anything in this discussion at all, I am explaining why your original remark about mythical "people with cash" being the only ones hurt by inflation is wrong.
Okay, but I made that statement in a certain context - one where we were discussing it as a downside of fractional reserve banking. In this context, it should be clear that I am talking about long-term, planned, predictable inflation. The only alternative I know is practically no long-term inflation, but wild swings in short-term inflation and deflation.
Given that context, I contend that the long-term, planned, predictable inflation is preferable to everyone except those sitting on big piles of cash. In the old days, that meant sitting on gold. Today, it means having a big pile of cash in reserves - or to a layman, in a bank account or in a mattress.
In the old days, not only were salaries up and down all the time, but prices were too. Having wages and prices rise in a less volatile fashion is good for the working poor.
The greatest problem of recent bailout... money were produced at a rate as if the system is working
We're getting a bit off topic, but money wasn't "produced" for TARP - it was borrowed. Not only that, little additional leverage was used because the government got equity stakes in the borrowers. TARP didn't really do anything to cause inflation. Quantitative easing, on the other hand, is just another way of saying "printing money". Of course, I'm not naive, and I realize that the government likely never paid back the treasuries used to fund TARP - so as a practical matter TARP could very well drive some inflation.
As to your contention that inflation makes salaries decrease over time, I dispute that. I think the diminishing need for manufacturing workers in the US is what has decreased salaries for lower-middle-class and poor workers. I have no idea what the solution to this is, but I will say that free trade and free capital is odd to have in the absence of free labor - and that is probably responsible for part of the decline, though it is hard to imagine how wages would hold up with an almost infinite supply of low-income workers in the developing world.
it's un-invested money
Dude, most of us call that cash! If you want to use a different definition, fine - then just amend my statement to say that long-term, predictable inflation really only hurts those with cash or reserves. I don't want to run around arguing about semantics if we can help it :)
unless banks are greedy enough to keep interest below inflation
They can't very well pay out more than they can earn on the money. Interest rates are only very loosely correlated to inflation, and mostly because inflation tends to increase in a good economy when money starts to get more scarce. But banks paid out interest even before the fractional reserve system was in place, so inflation still hurts cash investors compared to the older systems.
Their life is their "exposure".
I meant their financial exposure. You don't have to convince me that the working poor have a tough life.
If they noticed, they would not participate in nonsense about taxes and other ultra-conservative crap that has absolutely nothing to do with their lives.
Membership in the working class not come with a test in economic theory or history. They are acting out, even if not in their best interest. The talk show hosts and news commentators and politicians have them quite riled up.
Except, of course, it accomplishes absolutely nothing.
It's a bit early to tell - there is definitely a populist influence in congress that wasn't there before. With a little luck they will at least succeed in reforming some of the distressed entitlement programs that the poor rely on and set up the federal government to inc
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
If there is a queue of messages occupying the pipe, then we know that there is a queue lined up to transmit the message.
Suppose the message is actually occupies 0.5 ±.1 milliseconds of bandwidth, but the current users wait 100 ms for responses, it is not hard to use standard queuing theory to realize the message queue depth is in the large number of 10s of messages,
Shaving 6 milliseconds can (being an outsider looking at the situation), result in increasing the capacity 25 or more times. So, it is actually worth the cost.
Leslie Satenstein Montreal Quebec Canada
why should the bank collect interest on money they borrowed from the people's government for next to nothing?
- where did you read my endorsement of such a deal?
I am completely AGAINST government meddling with economics and currency. Banks must not be bailed out and stimulated by government lending, they must survive on their own by providing customers with products that make it beneficial for the customers to lend their money to the banks!
When you put your money into a bank, you are not just giving it to them for safekeeping (or you can do that with a safety deposit box, or only holding cash in checking account, but this doesn't even guarantee that your money isn't used by the bank for loans), but you are giving them a resource, a reserve, which they can then lend out. As long as there is no bank run, bank can make loans based on the reserves it has that come from depositors.
FDIC made it so that the bank customers stopped caring about the business practices that banks are engaged in. So instead of choosing a bank and a plan based on risk aversion, bank customers only chose banks based on proximity to their house and maybe based on the interest that they could get while their money was in savings accounts.
Government regulation in form of FDIC in this case created the moral hazard where customers of care more about which toaster brand they are going to buy rather than which bank they will lend their money to.
Funny thing is is now that some banks got the bail out money, they are now charging reverse interest on the money you hold there (negative real interest rates) based on the fact that everybody know that the moral hazard is there, so if there is another financial collapse (and it's coming), those banks WILL BE BAILED OUT AGAIN. Of-course this can only continue until the government itself collapses because the currency collapses and nobody can bail out USA with all its debts and no production capacity.
Now that they can borrow from the fed for next to no interest and we can only benefit if we pay vastly inflated interest on bank loans, they have turned nasty.
- banks needed to fail.
When I write comments that explain how wrong the monetary policy of money destruction is, I get moderated in ways, as if I am proposing that everybody starts molesting children and kittens, so now I decided to write more in the journal instead.
You can't handle the truth.
I was thinking of the fed loaning out to the banks, which tends to be part of a fractional reserve banking system. Without that, some other means is necessary to inject currency into the economy. I'm fine with an alternative, but it will be interesting to find one that doesn't create moral hazards of their own. I'm guessing you wouldn't want the fed to loan direct to consumers. If we implement a basic income system, it could be distributed that way, but I'm guessing you're not a fan of basic income.
The FDIC was a necessary step because a lot of people were seriously harmed financially during the big crash before the depression. People had no ability to evaluate the banks business practices to find a suitable one (and they still don't, are you REALLY going to audit BoA's books to open a savings account?). But note, the FDIC must be exclusively insurance to the consumer. They should hound the banks to the end of the Earth to get any funds paid out bank. If there was any impropriety, they should pierce the corporate veil and hound the execs. The moral hazard comes from practically guaranteed bailouts. The bailouts, in-turn are based on banks being "too big to fail". So declare once and for all that too big to fail means too big to be allowed. Perhaps we should consider the chinese walls to be perforations for the purpose of break-up.
If you want to stop the bank problem, make them again dependent on people saving money with them to have anything to loan out. No more cheap money from the fed. Have the government develop and maintain a suitable electronic currency. It should be usable anywhere a debit card can be used now at least. Deposit insurance is a must. The world of finance is even more complex now and consumers have even less time and ability to audit a bank when choosing one to entrust their money to.
What IS basic income? If you have federal reserve print 10,000USD (federal reserve notes, IOUs, which in the past meant those were promises to give GOLD for the note), then you basically set the reference price on USD.
10,000 USD = 0.
Money does not come from thin air, it must be earned - products must be made, and then it can be either consumed or it can be saved (under-consumed) and it can be invested if it's not spent.
Government cannot create actual wealth - products that people want, so it can't legitimately make money - profit. It cannot do it unless basically it's a command economy, like the kind I was born in (USSR), and it fails, because nobody is smart enough, no system is smart enough to understand all of the intricacies of what people, individuals = markets want or need.
How would a bureaucracy KNOW to attempt building iPads? How?
I don't want everything to come down to me from some government, I want free market of ideas. I just wrote a comment on how the Internet is the last bastion of actual free market in the world, and that's why I don't hire people, but I do pay people on the Internet to do jobs for me. I don't even know who I paid, they don't even know who they worked for. We exchanged: I gave them money, they gave me the product. It's a world wide free market economy at its best. Without this the depression would have started in early 90s and would have been incredibly terrible.
The FDIC was a necessary step because a lot of people were seriously harmed financially during the big crash before the depression
-
1. FDIC was solving a non-issue. Only about 2% of bank deposits were actually lost. However the deflation made the remaining 98% of deposits that were not lost much more valuable, because much more could be bought with that money (and gov't tried everything to keep prices for agriculture products up, just like they are doing since 2008 in housing).
2. The recession of 1929 has its roots in 1925, when US federal reserve started printing USD to buy bad UK debt, which created too much money and inflated the bubble in agriculture stocks.
3. FDIC cannot solve a problem, no government regulation can solve any problem. The concept is "blowback" - everything backfires and does the opposite of what was intended EVEN if the intention was "good".
People had no ability to evaluate the banks business practices to find a suitable one (and they still don't, are you REALLY going to audit BoA's books to open a savings account?).
- of-course!
You don't have to do it YOURSELF, you ask to see the private insurance underwriter report before you put your money their.
Do you know all the paper YOU have to sign when you buy a house and a bank gives you a loan?
IT IS THE SAME PRINCIPLE IN REVERSE.
You are giving a bank money, you must be careful who you are giving money to. Gov't can't remove risk, it can't.
It's the same problem with people not understanding the concept of health insurance. It's why when Ron Paul was asked in the last debate in Tampa: "Do you let a 30 y.o. person die if they have no insurance?"
He said "no", he gave his answer based on his medical experience of taking care of patients without insurance.
I, on the other hand, am not a doctor. I would have said this:
You CANNOT base policy on CORNER CASES. Because if you base your policy on corner cases, you are going to corner the entire system.
Yes, in certain cases people need to be let go of, the market economy requires that we are allowed to do things that are not very smart, so that some of us can be examples to others of what is not a good idea. Some people would die, well, some people die today in the current system in all countries.
You can't handle the truth.
Providing an electronic currency IS minting in the digital age. Private currencies tend to run into trouble. I never claimed that government creates wealth, it creates money. The actual unit of trade. Other forces decide how much of what that money is worth. Government can cause redistribution through running off money, but it doesn't actually create the wealth. That's not it's job.
If your world makes opening a savings account as complex as buying a house, I don't want to live there and neither do a lot of other people. That kind of overhead doesn't come for free either you know.
You CANNOT base policy on CORNER CASES. Because if you base your policy on corner cases, you are going to corner the entire system.
A person with no insurance but in need of life saving medical care is HARDLY a corner case. The question (and the related problem) doesn't just go away because you wave your hand derisively and proclaim it a corner case. At least Ron Paul didn't try to weasel out of answering the very legitimate question.
Providing an electronic currency IS minting in the digital age.
- OK, it's a bit contrived.
Private currencies tend to run into trouble.
- currencies are not money. Currency is a coin or a note. Money is gold or maybe silver. If currencies are undermined by counterfeiting, they will run into trouble, private or not. That's what all currencies today are showing - they are all in trouble due to government counterfeiting.
I never claimed that government creates wealth, it creates money.
- government doesn't create wealth or money.
Government is supposed to MINT coins out of money that YOU own already. So you bring your gold nugget to mint, and they'll make a coin out of it for you.
Today, on the other hand, government counterfeits CURRENCY, not money. Currency - an IOU, a federal reserve NOTE.
If your world makes opening a savings account as complex as buying a house, I don't want to live there and neither do a lot of other people. That kind of overhead doesn't come for free either you know.
- that's what competition is for. I am NOT smart enough to know what's best for economy at any point of time, what's best for consumers, what's best for market.
I am smart enough to understand that the individual will make choices based on their understanding and this a much better, safer, flexible system, than what you have now.
A person with no insurance but in need of life saving medical care is HARDLY a corner case.
- in free market it is a corner case.
Ford was paying $5/day to his employees in 1914 I believe because of high turnover. So he came up with a way to address the market regulation (high turnover) by paying twice as much as anybody else at the time, by reducing working hours to 8/day and by reducing work week to 5 days.
This was at the time when gold was just under $20/troy ounce, so in a week that was 1.25 ounces of gold, which is about 2500USD today, or over 130K/year.
That's without unions. That's without income taxes. That's without SS. That's without payroll taxes. That's without any of the regulations you have today. That's at a time, when private health insurance was around $2/month and a visit to a doctor was 1-2 dollars. The point is that in that system a person not making enough money to pay for insurance and to pay for doctor out of pocket (like they ALL did at the time and they paid for tuition out of pocket too), would have been a corner case.
Corner cases are handled by other corner cases, and it's wrong to base policy on this. That's why Ron Paul answered as he did: we didn't turn anybody away. Well, that's because there were so FEW people without insurance or money to pay out of pocket.
I left a comment long ago on this, with a lot of government data showing how popular and cheap private health insurance was prior to 1965, that it was more popular than public offerings (blue shield/cross), before government jumped in with all the money and which means with all the corruption, that allowed prices to skyrocket.
At least Ron Paul didn't try to weasel out of answering the very legitimate question.
- he always answers question unlike every single other R or D out there. He is the only legitimate statesman, nobody else can claim that title in the race on any side.
You can't handle the truth.
If the growth rate were any slower, it wouldn't even keep up with the population growth rate.
So the people who actually hold the item being bought and sold will make money easier than the people who offer to sell things they don't own yet?
Sounds like a simpler market, and boohoo for the guys who made all their money as middlemen. Why should we protect their industry?
It collapses if you look at it just like the real thing. Why do you think SEC avoids doing any actual investigations?
So you accept your bullshit, "I think this is it" no logic at all reasoning, rather than an actual event you can point to that would cause it, and would take many, many crops out of the equation, thus driving up prices.
There is no way Occam's Razor even comes close to your explanation.
Ford was an aberration. He was a great example of the sort of enlightened self interest we WISH was common. If he had been anything like the norm, there would have been no unions and no regulations would have come into being. The fact is, there was one Ford and a bunch of company stores in the world. It stands to reason that a return to the policies of that time will bring a return of the conditions of that time, which would in turn, bring a return of strong unions, violent clashed between scabs, strike busters, and union workers, finally followed by a return of regulations in hopes of ending the violence before it becomes full blown revolution.
You baldly claim that a free market magically makes inability to afford health care a corner case without even a show of logic, much less evidence. The LAST thing we need in politics and statecraft today is more hand waving. Meanwhile, we DO have to take care of the corner case somehow, lest we all become "corner cases". If a "corner case" robs someone to pay for his health care, will we pardon him based on the assurance that the robbery was just a "corner case" and not at all in his usual nature?
As for the complexity of opening a savings account, I fail to see how the free market is supposed to address that other than by creating a niche for overpriced "banking consultants" with a million weasel words in their contracts (eventually necessitating banking consultant consultants ad nauseum). I have the utmost confidence that the banking industry is capable of creating a confusopoly the likes of which the telcos cannot even imagine.
I will be the first to agree if you say the FDA does it's job poorly and with an excessively heavy hand (particularly in the areas where it makes every effort to expand beyond it's charter). However, that means it needs reform. Going back to the days of poison cough syrup won't fix it.
Just beat the speed of light, by pre-calculating many scenarios, such that you don't need to calculate anymore once the fresh parameters arrive.