Good Times
From the good old days of bbs/uucp service on 2400bps. To installing the latest slackware from about 50 floppy disks (without X11) and then os/2 warp (damn, it had potential) to the nightmare days of trumpet winsock and frantically pinning out a connectors to hook external 28.8's to the trusty livingston pm2e (!root anyone?) Things took a quantum leap with frame relay as well as the booming days of the ISDN and PRI's hooked to the Ascend Max 4000s. Good times. If you could afford 30k/month you had yourself one T3 from UUNet (HellSouth charged 5k/month for the damn local loop alone!). Nowadays for $30/mo. we get comparable speeds to what small ISPs (T1s) were paying a few thousand a month for. We love those 50ms round-trip times to and from our trading platforms...So what in the hell does this have to do with anything?
Goldman (no, I'm not short, nor going to short Kaiser Soze)
By the time you get that packet containing ticks for your favorite issue(s), Goldman Sachs' high-frequency trading systems have already fired off 50 sub-millisecond basket orders derived from that packet they got 49.5ms prior (one of the perks of having a GigE connection to the NYSE). They are only interested in skimming a penny at a time (read: marginalize/tax every other participant) transacting up to a 'hunert-google-ka-billion' shares per day from program trading, search and destroy algos, etc. As if this isn't bad enough, they get a rebate per transaction for being a supplemental liquidity provider. If this is the type of liquidity we get, I don't want it. It's a liquidity drain, plain and simple.
When Goldman reports their earnings every [mortal/weak android] market participant, win, lose or draw should vomit knowing that Americans have taken a permanent $12T haircut in net worth and these ****suckers are setting records in both trading profits and bonuses. Supplemental Liquidity Provider or Liquidity Drainer? Sure you may think this is because the market went up eleventy-three percent but they also reported record profits in Q1 as well. How hard is it to be prophetic when you've got THE deepest pockets, the biggest following, the most clout, the most inside information and are able to bully, prop, pump and dump at the speed of light in vacuum (without recourse)? In other words, when the deck is stacked in your favor you're going to have to try and screw up really bad in order to lose. How hard is it for them to setup the trading conditions that would trigger basket orders (search and destroy)? I feel this is precisely Goldman's concern over the stolen source code. When you get to be this size you should face tougher restrictions instead of being given special exemptions, ethernet ports or a straight signaling feed from the NYSE STPs. Heck, maybe even if you had an alumnus at the NYSE you could get him to do rate shaping/QoS on the other broker's VLANs. However, be very careful mucking with the switch configs during the day because you could accidentally blackhole the trading floor's traffic and we'd have to extend trading for 15 minutes (tongue in cheek?)
How hard is it if you can short sell derivatives to their customer next door AND get AIG to naked short you CDS on those derivatives knowing full well it's gonna be double the pleasure (this may or may not be entirely correct, but it doesn't matter, they still suck)? How hard is it if you know you will be underwriting a secondary offering (fees are based on a percentage of the money raised aka: stock price) to put them on your Conviction Buy List, to give the stock a boost, underwrite the secondary and then shortly thereafter remove them from the Conviction Buy List citing deteriorating market conditions? Do I really need to pull up a chart of their 'upgraded' issues to illustrate the obvious front-running that takes place 2 days prior? How do they get away with this you might ask? Here is the disclaimer from one of their more recent REIT [correction: should read Bank but it's a form letter] shenanigans like the above:
The SEC can't be bothered, they are too busy locking up Martha Stewart for a $60k profit than to look into things like this. She goes to prison and Fed Chairman Friedman (who once ran Goldman) banks nearly $2 million (doh, now over 2 million) when he bought 37,000 (more) shares of GS a “bank holding company” and all he has to do is resign. Nice.
I understand when you are considered the “Best of GBreed” you are going to attract envy, critics and conspiracy theorists alike. But everywhere you turn you see something with Goldman that stinks to high heaven. From questionable business ethics, morals, conflicts of interests, front-running, to being implanted in every corner of government. Civil servants my ass. They are in more places than Visa.
Every time someone even thinks about imposing restrictions either GS will lobby to have it stopped or will receive an exemption as a result of the lobbying. That is greed talking. Some amount of greed is healthy but when you crap on other people to service your greed then you are no good as far as I'm concerned.
You're not seriously asking me to trust that the bigger and more powerful an investment bank becomes the more ethical and moral their practices are? Should I sleep safely knowing that our regulatory bodies are on the ball and are in no way conspiring? When is the playing field considered to be unfair for the majority of the participants? When you get to be this size you should face tougher restrictions instead of being given special exemptions and rebates.
Am I supposed to believe the $10B in TARP they received was due to either a) they were no longer the best in breed or b) not to create a stigma among other banks? I'm going with c) it was insurance from Tank Paulson in case there were problems bailing out AIG. If AIG filed it stood to leave a huge hole in Goldman's balance sheet. Even though you know they had to of hedged (naked short the underlying, naked short other banks, standard operating procedure) because, after all, they are the “Best in Breed”? In the meantime, while the AIG Conduit was being erected Goldman, in risk-free fashion, put the insurance money to good use filling supertankers and buying equities in hopes to double up. Once the AIG check cleared the conduit Goldman was more than happy to return the TARP. By the time this is all said and done Goldman will probably have been paid 2-3 times for one bet. “Best in Breed”. The only thing that gets under my skin more than Goldman Sachs is an unnamed (D-MA) that talks like Elmer Fudd. But then again there is Dennis Kneale.
Dennis Kneale / CNBC
[I do not care what he has to say and I'm sure he would value what I say no more than a warm bucket of spit. Do not mistake this as attempt to grab attention from this clown. I have no such desire.]
I was amazed to learn that Kneale now has his own prime time show with CNBC. At the same time I was disappointed the show wasn't co-hosted by Bob Pisani. I think the “Kneale and Bob Show” would be a more appropriate title for the network. Who knows, with a name like that they may even attract an entirely new demographic from the PPV channels. This demographic enjoys getting “screwed” and should feel right at home over at CNBC. I would recommend strategically placing Mad Money in the rear time slot.
Recently Kneale has set out on a mission to discredit the blogosphere. He has tried to take issue with the anonymity surrounding them. He has went as far as calling them 'digital dickweeds' for taking issue with him lipsticking every piece of economic data that comes out. After he figured out that not even a teleprompter could save him he then focused his attack on anonymity. His thesis is that he does not get to hide. You see, Kneale has his own legal team, a teleprompter and a producer(wtf? rofl). Even though there is no such thing as anonymity on the internet, “Bloggers” still have the fear of having $1000/hr legal E's implanted in their backside or the Government making their life a living hell because someone brought to light questionable data, business practices and/or fraud. In the crime world this will get you murdered (this sure looks like crime to me).
I'll have you know that without blogs I would not have received the education that got me out of the market Q3/4 2007 (and short thereafter). Instead, I would still be watching CNBC, probably broke. I would have missed getting those Fannie Mae $25/put leaps (till zero). I would not have been able get short REITS (q1/08), or Citigroup at 20 (sold them too quick). This is about the same time CNBC was marching bobbleheads out one at a time (or in an octabox) saying GOLDILOCKS is going to narrowly skirt this one (phew, that was close).
The fact of the matter is that all of this is irrelevant and it's obvious Mr. Kneale's agenda is motivated by ratings. Gee, would you rather watch a show that was telling you the world was going to hell in a hand basket or one that says the recession is over (we're going to narrowly skirt...I mean shallow...I mean v-shaped...I mean U-shaped)? In Dennis' world you are not bona fide until you've written for Forbes Magazine pumping tech when they were cruising near the International Space Station. When I used to watch CNBC I felt he was by far the most unqualified personality on the network and would just assume hear the cameraman's thoughts (who was no doubt a subject matter expert in comparison). I might not be the sharpest saw in the shed but you would've had to of been standing on your head to misinterpret the data (along with everyone else who claims nobody could have seen this coming).
Nonetheless, I'm deriving great pleasure seeing the likes of ZH and Ticker learn Mr. Kneale a thing or two (read: total beat down). Even funnier is that I can honestly say Mr Kneale was the reason (or the straw) I stopped watching CNBC way back. It was the day I heard him stand there on Power Lunch and call the sellers FRAIDY CATS and exclaim that he is still actively investing in ETFs (dollar cost averaging, lol). That's correct Ladies and Gents, at Dow 12000 one Mr Kneale had hope and fortitude (not to be confused with aptitude). Do you remember this CNBC slogan?
If you feel inclined you can search for the FRAIDY CAT video because I would rather be chained in front of a television and made to watch back-to-back marathons of Ice Road Truckers than have to witness that again. If you do watch this guy just pretend he's not trying to get you help his underwater portfolio. He's probably averaged down by now to at least Dow 10k and a $500 cost basis in GOOG (sorry sw).
Rewind:
Dennis Lets Zero Hedge Have It
Kneale: You Asked For It....
(Video) Denninger Goes On Air, One Minute Twenty Seconds Of Airtime Ensues
(Video) Follow-Up To Dennis Kneale And CNBC
