Road to Roota XVII

I thought it would be a good time to put the market manipulation problem into a sort of historical context. Below I did a search on the History of Computer Trading and came up with a very interesting list of articles. Almost every one of them alluded to a problem related to abnormal market gyrations blamed on computer trading programs. Don’t get me wrong, I am not a technophobe but is it really possible to have a freely traded market with fair price discovery if over 95% of all trades are run off computers programmed to buy and sell to each other without limit? What ever happened to One buyer and One seller trading One asset in a fair and open exchange?

A few items to consider while pondering this question:

1) Computer trading has been a huge problem for over 20 years and has grown more prevalent and more complex as the technology improved.

2) There are no serious regulatory limitations to computer market trading thus no limitations on computer market rigging.

3) In the past 20 years profits from computer trading/rigging have towered over the profits of honest businesses that produce goods and services. The consequences of this should not be understated including indirectly forcing the exportation of US manufacturing overseas. Computer trading/rigging is an “industry” that produces nothing of economic value for society while absorbing the riches of the nation until there is nothing left. This begs the question…why does any country allow computer market trading if it serves no benefit except to transfer wealth to a select few?

4) Two of the past heads of major market exchanges branched off to start their own private computer trading companies. The first is Bernie Madoff and the second is Vincent Viola. The first is now in jail admitting to the largest financial scam in history and the second is still in business and functioning as a "Market Maker" in almost every market as well as an "Authorized Participant" in the gold and silver ETF's.

5) Alan Greenspan was literally the inventor of Financial Computing and introduced the concept to the US Government which was unfortunately taken over by the Banking Cabal. Although I believe his intentions were honorable, the unintended consequences were obviously detrimental to the vast majority of US Citizens and the reason we find ourselves on the edge of the abyss today.

6) The Goldman Sachs admission that their stolen computer program could “manipulate markets in unfair ways” is just the tip of the iceberg when it comes to problems faced when “free markets” and “computer programmed trading” meet in a dark ally.

My Conclusion:

America will die in poverty very soon if Computer Market Manipulation/Trading is allowed to continue.

If we want to SAVE AMERICA we must turn off the computer trading programs for good!

Bix Weir

A GOOGLE HISTORY OF COMPUTER TRADING PROBLEMS
http://www.google.com/search?q=history+of+computer+program+trading&hl=en&sa=X&tbo=p&tbs=tl:

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Jun 22, 1986 - Concern of market regulators in Canada and the US is also growing over so-called "program trading," in which computer programs flash buy or sell signals that can trigger huge volumes and record- breaking moves on the markets within minutes. Analysts stress that small investors ...

Mar 24, 1987 - In those two days, the Dow Jones industrial average fell 120.78 points, in what was then the heaviest trading in Wall Street history. Many on Wall Street said that program traders, who use sophisticated computer programs and execute orders based on the price relationship between stock ...

Nov 2, 1987 - Such "program trades" may have played a role in making Black Monday the worst day in Wall Street history. ... The term program trading is misleading: it derives not from the fact that trades are executed by computer programs but that they involve the systematic sale of portfolios of ...

Apr 7, 1988 - For a brief ''magic moment,'' in the words of one trader, other stock trading stopped as well. Wall Street professionals sat back and waited to see what would happen once the program traders were forced out of the computer. ''The market just stopped,'' said Jeffrey S. Tabak, ...

Jul 26, 1990 - Also undermining confidence was the nettlesome influence of computer program trading. A circuit breaker that briefly halted stock index futures trading Monday was credited with braking the market's decline. Wednesday, Treasury Secretary Nicholas F. Brady called for immediate ...

Mar 10, 1994 - By then, a huge computer-driven trading program was beginning to affect prices, according to Birinyi Associates, a Greenwich, Conn., ... Whose computer program affected trading will not be known until stock brokerage firms release their trading records weeks or months from now. ...

Oct 7, 1997 - Their main concern: program trading, when professional money managers trade a portfolio of stocks at the same time they trade the matching derivatives. Using computer programs for maximum speed, those pros can make a quick profit by taking advantage of price discrepancies among the ...

Aug 6, 1998 - ... ... this time" and stocks will continue to track ever upward, battling those who believe "this is the most overvalued market in history." ... Another factor in the volatility of the markets involves the influence of computer program trading. Large brokerage houses program their ...

Jun 15, 2002 - Traders say the bursts of volatility come from program trading -- computer programs that buy or sell tens or even hundreds of thousands of shares ... A fear voiced on Wall Street was that some...participant in program trading, tired of being...most powerful in Wall Street history, had. ...

Aug 9, 2005 - Algorithms are trading instructions imbedded in a computer program that break large orders into smaller pieces. ... One of the fastest-growing algorithmic trading strategies involves "statistical arbitrage." A computer program monitors the spread between the current price of, say, ...

Sep 1, 2006 - Hundreds of program traders responded by hitting the sell button, and the Dow Jones industrial average took the largest one-day plunge in its history -- 508 points, or 22.6 percent. Within hours, commentators and regulators had fingered computer-assisted trading as the villain in the ...

Oct 29, 2007 - The New York Stock Exchange said it would no longer impose curbs on computer-program trading that were put in place after the crash of 1987, saying they were no longer as effective in damping swings in prices. The exchange would stop prohibiting brokerage houses from entering some ...

Nov 5, 2008 - TIME: I think he was saying merely that computers made possible the creation of sophisticated risk models and trading programs that turned out to ... Computers didn't invent things like flawed program trading — people did. Program trading simply followed algorithms that people wrote. ...

Jul 31, 2009 - Program trading executed by computers at automated exchanges has been around for decades and can be done by day traders sitting at home using an E-trade account. What's different now is the speed, the sophistication of the algorithms and the volume of trading. ...


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