First, dark pools are not informal. Most are independent and all have a formal structure.
Second, I doubt many people are being taken by dark pools. Let’s ignore the broker’s fiduciary duty. Only large illiquid orders are put though. Generally only large sophisticated institutions make these types of orders. Generally they monitor the trade quality – both explicit and implicit factors. A unscrupulous broker might be able to get away with it once in a while.
No, a market maker is an entity willing to buy or sell an issue when others won't. That entity makes or creates a market where one would otherwise not exist
You are half right. It is a exchange helps match buyers and sells – it creates the market. It seems that you are assuming that the buyer and seller are at the market at the same time which they rarely are. A Market Maker (who is usually not part of the exchange) solves the time issue – having an inventory of stock that they buy and sell. Even Aristotle recognized the virtue of middle men. Why should a farmer wait all day in the market waiting for a buyer for their goat? They have better things to do. Sell to a middle man.
A good market should have both breadth and depth. That is lots of people on both sides of the trade (breadth) even during extreme price swings (depth)
Over the past 20 years the explicit costs have fallen by 90% thanks to spread compression. What is more impressive is that implicit costs have fallen by more than 60%. The breadth of the market has greatly expanded.
If you want to hurl a criticism at HFT you might get away with depth. There were times during the financial crisis that HFT were losing money so they just turned off their computers. Traditional market makers would always have to make a market. Of course they were guaranteed a $.125 profit on every trade they made .
It depends on which side of the transaction – one person’s debt is another person’s asset.
And by default we are not meaning “going into bankruptcy and restarting the debt.” Financial Repression would be a better word.
Let’s say I invest, save, or lend out $100. Inflation jumps unexpected by 100%. I still have $100 but it’s value is ½. If that is the case why should I bother to invest, save, or plan for the long term? Generally they don’t. Investment tends to be lower in countries with high inflation.
The rich have tactics to help mitigate some of the impacts of inflation. The poor less so. It is why inflation has been called a tax on the poor.
Expect it does not say what you think it says – this is it says:
Motorola made sub-par phones and lost money.
Motorola continued to make sub-par phones and switched to android and still loses money. Nowhere do we find proof that switching to android affected profits. (and personally I doubt you ever will.)
What I find telling is the reference to HTC and it’s 98% loss of profits. If you pick android system you will be competing with every other android maker out there. When HTC found the sweet spot and made the best phone it raked in the money. When Sumsung found a new sweet spot it raked in the money and everybody else suffered.
Of course you could always push your own OS which makes it harder for people to switch. If you got a winning product like Apple like is good – you can set your own pace. If you don’t you end up like RM’s Blackberry – a long slow but inevitable decline.
Well, we have basically had inflation and fiat money since the Great Depression so not a whole lot of time series to test. Well, there is also the panics of 1819, 1837,1857, 1907 and the recession of 1882. Just in the US. I can pull out more examples if you want to go globally - Tulip Bubble, South Sea Bubble, Japan since the 1990s, etc.
I would recommend Milton Friedman’s Monetary History of the United States, 1867-1960. It’s a good read. The US economy was growing around 5% a year while the money (i.e.gold being dug up) supply was expanding about 1% a year. When gold was found in California, South Africa, or Australia the economy hummed along fine. When there were no major gold strikes money became scare and that had a real impact.
At the very least, deflation favors 1. Financial assets over real assets. Financial assets pick up both interest income and deflation value. 2. The haves over the have nots. The haves gain wealth by doing nothing – the value of their assets just grows. The have nots have to pack back loans with more expensive dollars. Deflation skews investment away from productive actives. Then there are the cognitive and psychological factors issues with deflation. Man’s brain was not designed to go that way.
I am hard pressed to think of one major figure who thinks that deflation is good. I can think of some who think it’s better than the “politically motivated actions” of the Fed.
I would like to know your source. I don’t know of any conservative that is concerned today about wage inflation – or anybody for that matter. Wage inflation is going nowhere until unemployment and underemployment go down. Any rise in wages will result will be counteracted by this huge underutilized supply.
Now if you want to argue that conservatives are against a minimum wage (or a rise in it) – that would be true – but that is something different then wage inflation.
Darn – I just remembered a big expectation and need to retract my prior statement – disasters. At one point during Katarina people wanted to put up drones to help spot issues but could not because the drone might run into a helicopter or something.
With the exception of air shows, the Air Force can do all of that today. They have big controlled air spaces were civilian craft are not allowed so being able to avoid other aircraft is not a big issue. No, these rules are for civilian drones.
How is this being moded as insightful? The biggest risk that bankers face is inflation. It’s basic banking 101.
Read up on “Real Interest Rates” because that drives the “Spread” that determines their profitability. Raising inflation raises costs faster than revenue – see “Duration”. We know that inflation is a risk – otherwise the “Yield Curve” would be downward sloping.
When inflation rates raise interest rates rise. When interest rates rise bonds (and loan) values fall. Bonds and loans are a bank’s primary asset.
I will agree with you that inflation does not generate wealth but it does not held “those who get hold of it first” (FYI, banks and the wealthy don’t get the money first but that is a separate issue.)
We have had inflation long before either of those 2 reasons. The Fed choses to pursue a low inflation policy because 1. It is theoretically impossible and in reality undesirable (see the history of price controls) to have zero inflation and 2. Hyperinflation and deflation both tend to destroy the real economy. Other countries that try to use inflation to get rid of their debts tend to end up in worse shape. Governments win the first round but then investors wise up and win all other rounds.
Now, I think you are talking about financial repression. One method is to get negative real interest rates. (real interest rates = nominal (or quoted) interest rates - inflation). That was used by western nations after WWII to lessen their debts (which were way over 100% of their GNP) and today. http://en.wikipedia.org/wiki/Financial_repression
Or look up Pimco’s Bill Gross. He has written some good stuff on this.
Now this has worked well since historically 1. AWI has increased faster than inflation and 2. AWI has risen faster than the ratio between retired folks and working folds has risen. This may not be true in the future.
To pick a nit - To measure inflation you need to measures the value assigned by a person – which is ordinal not cardinal. i.e. it can be ranked but not measured. CPI estimates that value but there are known flaws – it is a approximation. And this is an imporant nit.
More importantly one should not even try. See the 1970s oil crisis. If oil quadruples in price overnight that increase will show up in inflation. The jump in inflation is telling you something – that you should reallocate your scarce resources – unless everybody has a COLA built into their wages – so money floods into the system which spurs more inflation which triggers more COLA increases, etc. Soon you have a permanent high level of inflation which is not pleasant – see Brazilian currency history.
Things fall apart when everybody indexes. Kind of like the Red Queen's Race.
On balance, inflation helps borrows and penalizes lenders.
For the conspiracy minded the Fed is controlled by the banks. In theory they would love deflation – except for the economic recessions that tend to follow.
Well, this is a test run. As such nothing critical is on board. The first Dragon payload was the same thing – low priority stuff that would not be missed in case of failure.
For $500 you might get a proficient high schooled player – but not a professional musician. Then factor in rehearsal time.
Which gets back to the “making it better” and the Creative Commons license – specially the “No Derivative Works” section. They want attribution. They don’t want people dropping out a section and replacing it with another. I think both requests are resonable.
Remember, we are talking about classic works here. You may not be able to hear the difference between on performer verse another but those who are passionate can.
Misremembered the article. Other custom and low run car campiness are doing that – not BMW. BMW is using it to make tools, dies, etc. So not quite that far down in the process yet.
Well, I was trying to come up with a list of things people would pirate (violate IP laws). Most of the value that is tied up in a Warhammer figure is tied to it being “official” and not the high quality work or plastic so there is a large spread that would be tempting for some to exploit.
On a side note, BMW is increasing its use of 3d printers to print out parts due to complexity or ticks that can be done with 3d printers. In the 3d market manufactures is one of the fastest growing categories.
Well, yes and no. Current copies are relatively expensive. I could photocopy the latest bestseller but it would be cheaper to just by the book. So we use copiers because we want a article from a library journal – copying the key parts by hand is time consuming – and time is money.
If you notice there is more pirating of e-books then paper books – the cost of making copies is lower.
So, back to 3d printers which are not cheap to run. You want to find classes of objects that have a high value relative to the printing costs. . Spare parts, bobble head dolls and warhammer figurines come to mind.
I am going to disagree with you. Sometimes you want to throw cash at the CEO to go away. If you don’t they will hold on to the bitter end and they will make sure it is bitter. You are making the assumption that he ran the company into the ground. Nokia had issues before they hired Elop and I don’t think he made the situation any worse. (Nor did he make the situation better so there is that.)
I will point out that the 25m comes from the change of control clause – he would have been paid that no matter who had bought them out.
I might question the amount but not the principle.
Latest report says they have 87k employees. I don’t know how many are in the D&S division that Microsoft is buying but they do produce about ½ the revenues so I am going to guess that they have ½ the employees.
I will point out that this sale was a little different. The FDIC had already sized the bank and had chopped it up into a “good bank” (branches and deposit base) and the “bad bank” (lots of dud loans.)
This was more like vultures picking meat off the bones then anything.
No, it was the On The Books stuff that killed them.
Their MBSs and ABSs (off the book) products were shoddy – people not making their mortgage payment for the first 90 days that they were in the home. So Wachovia had to “make whole” the MBS but stuffing in more mortgages.
What happened was that the Shadow Banks (Pension Funds, Hedge Funds, etc.) stopped buying their MBSs and ABSs. What they should have done is stop making loans. Instead they kept on going, building up an inventory or shoddy mortgages – which is on the books. When the financial crisis hit the on the book stuff blew up.
Slashdot Mirror
Two points.
First, dark pools are not informal. Most are independent and all have a formal structure.
Second, I doubt many people are being taken by dark pools. Let’s ignore the broker’s fiduciary duty. Only large illiquid orders are put though. Generally only large sophisticated institutions make these types of orders. Generally they monitor the trade quality – both explicit and implicit factors. A unscrupulous broker might be able to get away with it once in a while.
No, a market maker is an entity willing to buy or sell an issue when others won't. That entity makes or creates a market where one would otherwise not exist
You are half right. It is a exchange helps match buyers and sells – it creates the market. It seems that you are assuming that the buyer and seller are at the market at the same time which they rarely are. A Market Maker (who is usually not part of the exchange) solves the time issue – having an inventory of stock that they buy and sell. Even Aristotle recognized the virtue of middle men. Why should a farmer wait all day in the market waiting for a buyer for their goat? They have better things to do. Sell to a middle man.
A good market should have both breadth and depth. That is lots of people on both sides of the trade (breadth) even during extreme price swings (depth)
Over the past 20 years the explicit costs have fallen by 90% thanks to spread compression. What is more impressive is that implicit costs have fallen by more than 60%. The breadth of the market has greatly expanded.
If you want to hurl a criticism at HFT you might get away with depth. There were times during the financial crisis that HFT were losing money so they just turned off their computers. Traditional market makers would always have to make a market. Of course they were guaranteed a $.125 profit on every trade they made .
It depends on which side of the transaction – one person’s debt is another person’s asset.
And by default we are not meaning “going into bankruptcy and restarting the debt.” Financial Repression would be a better word.
Let’s say I invest, save, or lend out $100. Inflation jumps unexpected by 100%. I still have $100 but it’s value is ½. If that is the case why should I bother to invest, save, or plan for the long term? Generally they don’t. Investment tends to be lower in countries with high inflation.
The rich have tactics to help mitigate some of the impacts of inflation. The poor less so. It is why inflation has been called a tax on the poor.
Oh – now I get what you are trying to say. Yes, “They” do get the free money.
By the way – who is “Thay”? Part of the reason why I was confused is that in the US and most G20 countries “They” are not banks or the government.
It could be both thanks to nominal value verse market value.
Let’s say I buy a Treasury future option. The underlying asset would be $100,000 in Treasuries but the option might trade for $1,000.
If the trade was done on the exchange I am going to guess that the nominal value was 600m and the actual market value was 1/100s of that value.
Expect it does not say what you think it says – this is it says:
Motorola made sub-par phones and lost money.
Motorola continued to make sub-par phones and switched to android and still loses money.
Nowhere do we find proof that switching to android affected profits. (and personally I doubt you ever will.)
What I find telling is the reference to HTC and it’s 98% loss of profits. If you pick android system you will be competing with every other android maker out there. When HTC found the sweet spot and made the best phone it raked in the money. When Sumsung found a new sweet spot it raked in the money and everybody else suffered.
Of course you could always push your own OS which makes it harder for people to switch. If you got a winning product like Apple like is good – you can set your own pace. If you don’t you end up like RM’s Blackberry – a long slow but inevitable decline.
Well, we have basically had inflation and fiat money since the Great Depression so not a whole lot of time series to test. Well, there is also the panics of 1819, 1837,1857, 1907 and the recession of 1882. Just in the US. I can pull out more examples if you want to go globally - Tulip Bubble, South Sea Bubble, Japan since the 1990s, etc.
I would recommend Milton Friedman’s Monetary History of the United States, 1867-1960. It’s a good read. The US economy was growing around 5% a year while the money (i.e .gold being dug up) supply was expanding about 1% a year. When gold was found in California, South Africa, or Australia the economy hummed along fine. When there were no major gold strikes money became scare and that had a real impact.
At the very least, deflation favors
1. Financial assets over real assets. Financial assets pick up both interest income and deflation value.
2. The haves over the have nots. The haves gain wealth by doing nothing – the value of their assets just grows. The have nots have to pack back loans with more expensive dollars.
Deflation skews investment away from productive actives. Then there are the cognitive and psychological factors issues with deflation. Man’s brain was not designed to go that way.
I am hard pressed to think of one major figure who thinks that deflation is good. I can think of some who think it’s better than the “politically motivated actions” of the Fed.
I would like to know your source. I don’t know of any conservative that is concerned today about wage inflation – or anybody for that matter. Wage inflation is going nowhere until unemployment and underemployment go down. Any rise in wages will result will be counteracted by this huge underutilized supply.
Now if you want to argue that conservatives are against a minimum wage (or a rise in it) – that would be true – but that is something different then wage inflation.
Darn – I just remembered a big expectation and need to retract my prior statement – disasters. At one point during Katarina people wanted to put up drones to help spot issues but could not because the drone might run into a helicopter or something.
With the exception of air shows, the Air Force can do all of that today. They have big controlled air spaces were civilian craft are not allowed so being able to avoid other aircraft is not a big issue. No, these rules are for civilian drones.
How is this being moded as insightful? The biggest risk that bankers face is inflation. It’s basic banking 101.
Read up on “Real Interest Rates” because that drives the “Spread” that determines their profitability. Raising inflation raises costs faster than revenue – see “Duration”. We know that inflation is a risk – otherwise the “Yield Curve” would be downward sloping.
When inflation rates raise interest rates rise. When interest rates rise bonds (and loan) values fall. Bonds and loans are a bank’s primary asset.
http://en.wikipedia.org/wiki/Real_interest_rate
http://en.wikipedia.org/wiki/Net_interest_spread
http://en.wikipedia.org/wiki/Bond_duration
http://en.wikipedia.org/wiki/Yield_curve
I will agree with you that inflation does not generate wealth but it does not held “those who get hold of it first” (FYI, banks and the wealthy don’t get the money first but that is a separate issue.)
We have had inflation long before either of those 2 reasons. The Fed choses to pursue a low inflation policy because
1. It is theoretically impossible and in reality undesirable (see the history of price controls) to have zero inflation and
2. Hyperinflation and deflation both tend to destroy the real economy.
Other countries that try to use inflation to get rid of their debts tend to end up in worse shape. Governments win the first round but then investors wise up and win all other rounds.
Now, I think you are talking about financial repression. One method is to get negative real interest rates. (real interest rates = nominal (or quoted) interest rates - inflation). That was used by western nations after WWII to lessen their debts (which were way over 100% of their GNP) and today.
http://en.wikipedia.org/wiki/Financial_repression
Or look up Pimco’s Bill Gross. He has written some good stuff on this.
Social Security is already indexed to the Average Wage Index.
http://en.wikipedia.org/wiki/Social_Security_(United_States)#Primary_Insurance_Amount
Now this has worked well since historically 1. AWI has increased faster than inflation and 2. AWI has risen faster than the ratio between retired folks and working folds has risen. This may not be true in the future.
You cannot nor should you try.
To pick a nit - To measure inflation you need to measures the value assigned by a person – which is ordinal not cardinal. i.e. it can be ranked but not measured. CPI estimates that value but there are known flaws – it is a approximation. And this is an imporant nit.
More importantly one should not even try. See the 1970s oil crisis. If oil quadruples in price overnight that increase will show up in inflation. The jump in inflation is telling you something – that you should reallocate your scarce resources – unless everybody has a COLA built into their wages – so money floods into the system which spurs more inflation which triggers more COLA increases, etc. Soon you have a permanent high level of inflation which is not pleasant – see Brazilian currency history.
Things fall apart when everybody indexes. Kind of like the Red Queen's Race.
On balance, inflation helps borrows and penalizes lenders.
For the conspiracy minded the Fed is controlled by the banks. In theory they would love deflation – except for the economic recessions that tend to follow.
For historical context read about the Cross of Gold speech – or read the Wizard of OZ: http://en.wikipedia.org/wiki/Cross_of_Gold_speech
Well, this is a test run. As such nothing critical is on board. The first Dragon payload was the same thing – low priority stuff that would not be missed in case of failure.
For $500 you might get a proficient high schooled player – but not a professional musician. Then factor in rehearsal time.
Which gets back to the “making it better” and the Creative Commons license – specially the “No Derivative Works” section. They want attribution. They don’t want people dropping out a section and replacing it with another. I think both requests are resonable.
Remember, we are talking about classic works here. You may not be able to hear the difference between on performer verse another but those who are passionate can.
Misremembered the article. Other custom and low run car campiness are doing that – not BMW. BMW is using it to make tools, dies, etc. So not quite that far down in the process yet.
Well, I was trying to come up with a list of things people would pirate (violate IP laws). Most of the value that is tied up in a Warhammer figure is tied to it being “official” and not the high quality work or plastic so there is a large spread that would be tempting for some to exploit.
On a side note, BMW is increasing its use of 3d printers to print out parts due to complexity or ticks that can be done with 3d printers. In the 3d market manufactures is one of the fastest growing categories.
http://www.economist.com/news/technology-quarterly/21584447-digital-manufacturing-there-lot-hype-around-3d-printing-it-fast
Well, yes and no. Current copies are relatively expensive. I could photocopy the latest bestseller but it would be cheaper to just by the book. So we use copiers because we want a article from a library journal – copying the key parts by hand is time consuming – and time is money.
If you notice there is more pirating of e-books then paper books – the cost of making copies is lower.
So, back to 3d printers which are not cheap to run. You want to find classes of objects that have a high value relative to the printing costs. . Spare parts, bobble head dolls and warhammer figurines come to mind.
I am going to disagree with you. Sometimes you want to throw cash at the CEO to go away. If you don’t they will hold on to the bitter end and they will make sure it is bitter. You are making the assumption that he ran the company into the ground. Nokia had issues before they hired Elop and I don’t think he made the situation any worse. (Nor did he make the situation better so there is that.)
I will point out that the 25m comes from the change of control clause – he would have been paid that no matter who had bought them out.
I might question the amount but not the principle.
Or maybe 575?
Latest report says they have 87k employees. I don’t know how many are in the D&S division that Microsoft is buying but they do produce about ½ the revenues so I am going to guess that they have ½ the employees.
I will point out that this sale was a little different. The FDIC had already sized the bank and had chopped it up into a “good bank” (branches and deposit base) and the “bad bank” (lots of dud loans.)
This was more like vultures picking meat off the bones then anything.
No, it was the On The Books stuff that killed them.
Their MBSs and ABSs (off the book) products were shoddy – people not making their mortgage payment for the first 90 days that they were in the home. So Wachovia had to “make whole” the MBS but stuffing in more mortgages.
What happened was that the Shadow Banks (Pension Funds, Hedge Funds, etc.) stopped buying their MBSs and ABSs. What they should have done is stop making loans. Instead they kept on going, building up an inventory or shoddy mortgages – which is on the books. When the financial crisis hit the on the book stuff blew up.