Friday, July 31, 2009

Adolph Hitler, "The Big Lie" of 9/11

"All this was inspired by the principle- which is quite true in itself- that in the big lie there is always a certain force of credibility; because the broad masses of a nation are always more easily corrupted in the deeper strata of their emotional nature than consciously or voluntarily; and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie, since they themselves often tell small lies in little matters but would be ashamed to resort to large-scale falsehoods. It would never come into their heads to fabricate colossal untruths, and they would not believe that others could have the impudence to distort the truth so infamously. Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation. For the grossly impudent lie always leaves traces behind it, even after it has been nailed down, a fact which is known to all expert liars in this world and to all who conspire together in the art of lying."
- Adolph Hitler, "Mein Kampf"

An examination of facts, not fairy tales, coming soon...

"A Look to the Heavens"

"Was Devils Tower once an explosive volcano? Famous for its appearance in films such as Close Encounters, the origin of Devil's Tower in Wyoming, USA is still debated, with a leading hypothesis holding that it is a hardened lava plume that probably never reached the surface to become a volcano. The lighter rock that once surrounded the dense volcanic neck has now eroded away, leaving the dramatic tower.
Click image for larger size.

High above, the central band of the Milky Way galaxy arches across the sky. Many notable sky objects are visible, including dark strands of the Pipe Nebula and the reddish Lagoon Nebula to the tower's right. Green grass and trees line the moonlit foreground, while clouds appear near the horizon to the tower's left. Unlike many other international landmarks, mountaineers are permitted to climb Devils Tower."

The Economy: Bill Bonner, "We Are All Jackasses Now"

"We Are All Jackasses Now"
by Bill Bonner

"For whatever reason, the French newspaper, Liberation, chose to recall a grim event last week. On February 4, 1912 Franz Reichelt, also known as the ‘flying tailor,’ put on his contraption – a homemade outfit designed to work like a parachute – went up to the first observation level of the Eiffel Tower, hesitated…then stepped over the rail and jumped. Alas, he did not fly. Nor even float. He fell “like a stone,” the paper reported. Immortality was achieved, but not the way he had hoped. His stunt was captured by the new motion picture technology of the time. That silent film inspired the very popular Jackass videos, which show people engaged in reckless acts of mischief and mortality.

But we do not have to go to Youtube to enjoy the Jackass genre. We have only to read the news. All over the world the authorities are strapping on their absurd parachutes…and climbing to very high places. In Europe, banks borrowed 442 billion euros last month from the European Central Bank. Much of it is lent back to European governments. In America, stimulus funds are used to fix public toilets, as well as to repair Wall Street’s balance sheets. Trillions of dollars have been put at risk in these adventures – $23 trillion in the United States alone. And yet, despite the most daring experiment in stimulus ever, by the end of June, the British economy was 5.6% smaller than it had been a year before, paralleling the decline that followed the crash of ‘29. As for the United States…we await the figures…

On the evidence, stimulus programs aren’t working. In fact, where they are tried the most they work the least. For proof, we go to Stimulation Nation itself. From America last week came news that new house sales had finally turned up. They were up 11% in June, according to the papers. That was the monthly figure. According to the annual numbers, they were down 21% from the year before – at the second lowest since they began counting in 1963. And since the population is much bigger than it was 52 years ago, this was relatively the worst June in history for new house sales. And now that the economy is in a slump, the rate of new household formation has been cut in half. Faced with lower incomes and worsening jobs prospects, people are less eager to set up new households – reducing the demand for new houses.

Unemployment shows no sign of improving, either. The stimulus program was supposed to cap joblessness at 8%. Officially, the rate is now 9.5%. Economist David Rosenberg puts the real unemployment rate almost twice that high. And businesses are cutting jobs even faster than expected. Economist Arthur Okun suggested a rule of thumb for predicting unemployment levels in a downturn. But firms are not only laying off redundant workers; they are laying off workers who would normally be spared. What’s more, those who are left are working the shortest weeks ever recorded.

In the past, workers were quick to move to where the jobs were. The Sun Belt traditionally bounced back first. But Florida, California, Arizona and Nevada have been flattened even more than the rest of the nation – by record foreclosures, government cutbacks and bankruptcies. Now, the jobless stay put…and stay unemployed.

Currently, the excess capacity in the United States is staggering – both in labor and capital. Capacity utilization is only 65%; in theory, output can increase 35% before any new capital investments are made.

Recovery? “Forget it,” says Rosenberg.

Now that the facts are out of the way, we end our critique of stimulus…and turn to laugh at the stimulators. “Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back,” wrote John Maynard Keynes. And now it is Keynes’ voice they hear. “We are all Keynesians now,” said Richard Nixon as he strapped on a crash helmet.

Keynes probably got the idea of a counter-cyclical stimulus in Bible class. And a good idea it was. Simple…intuitively correct…practically demonstrated…and theoretically sound. But he and his followers still managed to screw it up.

First, Keynes’ General Theory is no theory at all…at least not in the scientific sense. It can’t be tested. The results aren’t reproducible. Instead, it’s merely an idea about how things should work, based on an Old Testament story.

Pharaoh had a dream. He dreamt he saw seven fat cows devoured by seven scrawny, misbegotten cows. He didn’t know what the dream meant, so he called for a young Hebrew man who had interpreted dreams for his master. Joseph told Pharaoh that Egypt was to enjoy seven years of abundance followed by seven years of famine. He told him what he should do about it too. He should store all the grain he could from the fat years…so he could pass it out when the going got tough.

This is a story we all know. It is easy to tell and easy to understand. But modern economists twisted it as though it were an inflation statistic. They maintain that when the business cycle turns down, it’s just like a drought. And they can counteract the effect of the drought by giving the economy stimulus – liquidity – from the public sector.

Trouble is, they missed the point completely. Do you recall any public official urging the public to stop spending so much in the bubble years? Do you remember any Treasury Secretary or Fed Chairman suggesting that the U.S. government run real budget surpluses in the fat years? Does any headline from any paper in the nation mention a storeroom in which grain or treasure was stored for the lean years? Not at all! Instead, the feds encouraged people to eat their grain! Governments ran deficits even during the bubble years, with the biggest deficit in history in 2008, just as the lean years began. Now they have no real grain to offer. So they turn to a reckless, disaster-defying stunt – passing out phony money, like sawdust muffins… Future generations will watch the video and laugh until their stomachs hurt."
- Bill Bonner,

Mary Oliver, "The Summer Day"

"The Summer Day"

"Who made the world?
Who made the swan, and the black bear?
Who made the grasshopper?
This grasshopper, I mean–
the one who has flung herself out of the grass,
the one who is eating sugar out of my hand,
who is moving her jaws back and forth instead of up and down,
who is gazing around with her enormous and complicated eyes.
Now she lifts her pale forearms and thoroughly washes her face.
Now she snaps her wings open, and floats away.

I don’t know exactly what a prayer is.
I do know how to pay attention, how to fall down
into the grass, how to kneel down in the grass,
how to be idle and blessed, how to stroll through the fields,
which is what I have been doing all day.
Tell me, what else should I have done?
Doesn’t everything die at last, and too soon?
Tell me, what is it you plan to do
with your one wild and precious life?"

- Mary Oliver
"The Summer Day"

The Daily "Near You?"

Hawthorne, New York, USA. Thanks for stopping by.

Bertolt Brecht, "A Fable"

"A man living alone answers a knock at the door. There stands Tyranny, armed and powerful, who asks, "Will you submit?" The man does not reply. He steps aside. Tyranny enters and takes over. The man serves him for years. Then Tyranny mysteriously becomes sick from food poisoning. He dies. The man opens the door, gets rid of the body, comes back to the house, closes the door behind him, and says, firmly, "No!"
- Bertolt Brecht

"Liberals and Conservatives: Two Sides, Same Oppressive Coin"

"For many people I know - especially many young people, Native Americans, and others alienated from American dominant culture - the difference between liberals and conservatives is only in technique used to coerce conformity and gain control.
My friend Roland Chrisjohn is a psychologist and a professor in the Native Studies Department at St. Thomas University, and he is also an Oneida of the Iroquois Nation. Roland says, "Protect me from my 'friends'." While his enemies on the right murdered indigenous Americans to steal their land, Indians' so-called liberal "friends" forced assimilation through boarding schools that prohibited the use of tribal languages and customs, which made it easier to divide and conquer and then "legally" rip them off. While the right favored massacres, the liberals preferred "curing" indigenous Americans and came up with sayings like, "Kill the Indian to save the child."

I spend a good deal of time with non-Indian kids who are also not fitting into American society, specifically its schools. A few of these kids are manipulative, exploitative caricatures of a manipulative, exploitative society. But most of the kids I see are a pleasure to hang out with precisely because they don't fit into their schools and society; and for these kids, liberals and conservatives are also two sides of the same oppressive coin.

When I write articles or give talks questioning the wisdom of prescribing kids speed in order to get them to shut up in a classroom, pay attention to a boring teacher, and do their meaningless homework, I get superficially different - but essentially the same - reactions from self-identified conservatives and liberals.

The conservative reacts, "Yeah, these kids don't need medication. They need their parents to get tough with them and show them whose boss. These teachers have their hands tied by liberals. Too much coddling has ruined America."

The liberal reacts, "While I agree that some children are incorrectly diagnosed and improperly medicated, my son was getting Fs in school until he was prescribed Ritalin, and now he is going to college next fall, every parent's dream."

Similar to America's liberal-conservative "Indian problem" debate, something is missing from the liberal-conservative "problem child" debate. What's missing is the possibility that nothing is essentially wrong with these kids. What's missing is the possibility that they simply don't fit into the dominant culture that has opted for efficiency, bureaucracy, and corporate feudalism at the expense of meaningfulness, diversity, and genuine democracy. What's missing is the possibility that perhaps there is something admirable about their rebellion against authoritarian hierarchies and manipulative relationships.

The liberal-conservative media parades ex-maladaptives who are now grateful that authorities have modified them to fit in. Conservatives prefer ex-maladaptives who straightened out after their mother kicked them out of the house or father took the belt to them. Liberals prefer the ex-maladaptives who have been transformed through medical treatments.

Conservatives who have had an easy time fitting into society believe that those people who cannot fit in are lazy, stupid, or undisciplined. Liberals who easily fit into society believe that those people who cannot fit in are diseased or disordered. It is difficult for either of these conservatives or liberals to imagine that their view of progress is another group's view of insanity.

When a society worships itself, there is bigotry not only against those societies that don't share its values but also against individuals within that society who don't buy in. And so "progress" as defined in modernity means that personalities that don't buy into modernity need to be modified.

Do young people who don't comply with authorities for whom they do not respect have oppositional defiant disorder? Do kids who don't pay attention to boring authorities have attention deficit hyperactivity disorder? Do kids who feel threatened by an aggressive and competitive society have social anxiety disorder? Do these young people need to be modified by behavior modifications and medications?

Conservative-liberal American society is sure of itself. It is sure of which cultures are backwards and which personalities need to be modified. And it is sure of its technologies for transforming other cultures and the problematic individuals within it. The goal of genocide and personality-cide is essentially the same: elimination of that aspect of humanity which gets in the way of the dominant culture's view of progress.

The price for all of this arrogance and bigotry is a certain kind of karma. For genocidal practices and stolen land, Indians have certainly not received political, legal, or economic justice. However, there is a justice being meted out for forcing Indians into becoming something they are not. Because of American society's denial and its failure to make amends for this violence, American society's karma is to repeat such coercions with its own children.

American society's karma for ignoring the resentment of Native Americans for forced conformity is that it now ignores its own children's resentment over similar coercion. And American's society is being severely punished for ignoring this resentment. A society's foundation is its families, and in the United States, familial relationships are being destroyed by children's resentment, which acts like a slow-killing poison."

Bruce E. Levine, Ph.D., is a clinical psychologist and author of "Surviving America's Depression Epidemic: How to Find Morale, Energy, and Community in a World Gone Crazy" (Chelsea Green Publishing).

The Economy: "Bread And Circuses"

"Bread and Circuses"
by James Quinn

“Already long ago, from when we sold our vote to no man, the People have abdicated our duties; for the People who once upon a time handed out military command, high civil office, legions — everything, now restrains itself and anxiously hopes for just two things: bread and circuses.”
Roman Poet Juvenal – 77 AD

"British historian Andrew J. Toynbee convincingly argues that the Roman Empire had a rotten economic system from its inception and its institutions steadily decayed over time. The government didn’t have proper budgetary systems, and so it squandered resources maintaining the empire while producing little of value. When the spoils from conquered territories were no longer sufficient to cover its many expenses, it turned to higher taxes, in effect shifting the burden of the immense military structure onto the back of the citizenry. The higher taxes forced many small farmers to let their land go barren. To distract its citizens from the worsening conditions, Roman politicians played the populist card by providing free wheat to the poor and entertaining them with circuses, chariot races, and other entertainments.

The American Empire has reached the point where it now faces similar structural imbalances, but to pay its bills, it has largely chosen to borrow from foreign countries in recent years. And the bills are large. The $765 billion of annual military expenditures by the United States equals the military expenditures of the rest of the world combined.

The social safety net put in place over the decades by politicians attempting to get reelected has resulted in a large number of Americans now almost totally dependent upon the almighty state for their well-being. Threatening to rip apart the country’s social fabric, the “new American” will vote for anyone who promises to sustain his dependency even as the nation increasingly struggles under the weight of $56 trillion of unfunded liabilities.

The non-farm workforce in the United States totals 133 million people. Of that number, the government directly employs 22.5 million. Millions more are employed by industries heavily dependent on government spending, such as defense, construction, and healthcare. The annual maintenance cost of the country’s safety net now costs American taxpayers hundreds of billions.

Medicare and Medicaid annual spending: $682 billion
Social Security annual spending: $612 billion
Food stamps & other food programs: $ 60 billion
Federal unemployment payments: $ 45 billion

America has evolved from a nation of savers to a nation of consumers with a throw-away mentality and driven by little more than the desire for instant gratification. Worse, large segments of our society are convinced that they are owed something. To most, civic duty has become a quaint, outmoded concept. Happy to accommodate – in exchange for a reliable vote come election time – the government keeps the public satiated and sedated by providing them with an ever-increasing list of “public services.” Roman poet Juvenal described how the Roman citizens abdicated their duties to the state and turned to bread and circuses. The programs listed above represent just some of the bread that American citizens now feel entitled to.

Here in America, we know how to provide circuses on a grand scale. Roman citizens were satisfied with a good chariot race. In these modern times, Americans can find entertainment and distraction with 24-hour-a-day cable TV, the Internet, iPhones, iPods, Blackberries, 1.1 million retail stores, 1,100 malls, 17,000 golf courses, Britney Spears, Kim Kardashian, Housewives of Orange County, New York, Atlanta, and New Jersey, American Idol, Survivor, Rock of Love, Flip That House, 660 stations with nothing on, Las Vegas, Disney World, MLB, NFL, NBA, NHL, WWF, porn, and mega-churches all competing to fill the void in people’s lives.

There isn’t enough time in the day to take in all of the circuses, but with what little spare time we have available, we are now able to check our email anywhere on Earth and stay in constant contact with the office even in the middle of the night or, more typically these days, in the middle of dinner. And we can text and twitter our every thought to our circle of friends and followers, providing next to no lasting purpose or benefit to anyone.

Approximately 12% of the U.S. population (36 million people) is considered poor, and many of them are totally dependent upon the state. Yet that term seems out of sync with the fact that many of those individuals have cell phones ($500/yr.), cable TV ($900/yr.), Internet access ($500/yr.), cars ($5,000/yr. lease), houses ($6,000/yr.), eat fast food ($1,000/yr.), and can smoke a pack a day ($1,500/yr.)."
- James Quinn,

"If they can keep you asking the wrong questions they never have to worry about the answers."
-Edward Abbey

"Russian Navy Report on Underwater UFO's"

" reported last week that the Russian Navy has released records of its warships and subs that - officially speaking --had close encounters with UFOs. It seems that alien visitors from advanced civilizations really like the water! Not surprisingly, one hotbed of this activity was near the Bermuda Triangle. Retired submariner RADM Yury Beketov described unexplainable instrument malfunctions and interference on a sub he commanded, and underwater objects detected that moved at speeds of 230 knots. The declassified records, which go back to the days of the USSR, also detail an incident during a nuclear sub's "combat mission" in the Pacific Ocean. It was chased by six unknown underwater objects (UUOs, instead of UFOs?) which it could not elude. The captain ordered his submarine to surface. The objects continued to follow, then were seen to take off into the air and departed the scene.
I'm a fan of the idea of alien civilizations and flying saucers; scientific arguments make it seem likely that intelligent life evolved elsewhere in the universe - even the Vatican says it could all be part of God's Plan. But in any specific such situation, it pays to begin as a skeptic.

One explanation for the Bermuda Triangle's infamous effects is recurring gas seeps, perhaps solidified methane deposits rising suddenly up from the ocean floor as gas, breaking into highly energetic clouds of bubbles, and reducing ocean buoyancy near the surface or creating freak local weather disruptions. This could account for the mysterious losses of surface ships and aircraft over the years, and it would also account for what RADM Beketov describes. Any undersea ecounter at 230 knots is by definition a very fleeting, high-bearing-rate contact. Faced with a rising methane or natural gas bubble cloud, a sub's passive and active sonars could very well seem to go haywire, yet would actually be giving real data on the behavior of the rapidly rising cloud. There wouldn't be much time to interpret what was happening before the bubbles reached the surface and dissipated.

I do not doubt for a moment that Russian/Soviet submariners are as fully professional and courageous as their American and other international counterparts. But during the Cold War the Kremlin did embrace paranormal phenomena to a degree not seen in Western government-sponsored activity; such concepts were perhaps more compatible with atheistic and dialectical Communism than with the West's Judeo-Christian beliefs. Some of this surely dates back to the Soviet Union's Great Patriotic War against Nazi Germany. The Nazis were celebrated practitioners of the occult who mythologized that the Aryan Race was sired by ancient alien astronauts, and the Soviets captured some of these R&D records at the end of the war. Remember also that the CIA in the '90s continued doing practical defense and intelligence work on remote viewing, a form of ESP, as part of the now-defunct Star Gate project, cancelled by the Bush Administration after President Clinton left office.

More than one retired U.S. Navy submariner has told me in private of a possible additional reason why Germany, and then the USSR, became so interested in exotic phenomena during WWII -- and thereafter. Supposedly, it all comes from Allied efforts to disguise the existence of the code-breaking of German Enigma messages and conceal Allied successes with escort warships direction finding against microburst U-boat radio transmissions. Any captured anti-submarine warfare platform crewmen were to tell their German interrogators that Allied ships and subs now carried gifted mediums who used ESP to detect German subs! This got the Germans really turned on, and henceforth the Soviets, neither of whom realized it was all just a subterfuge. So the story goes.

Consider the Soviet nuclear sub that got chased by the six UUOs on its combat mission in the Pacific. This seems harder to explain from start to finish via any particular natural ocean phenomenon or equipment malfunction. It does sound consistent with many terrestrial UFO sightings: multiple objects moving together at high speed, sometimes following vehicles along roads, eventually zooming away into the sky. The fact that her skipper would even think of surfacing does amplify the seriousness with which he responded to the very weird undersea chase. Maybe UFOs really do exist, and they really do like the water? The premise of sci fi stories like Michael Crichton's "Sphere" might have some real basis after all.

Have American submariners also had close encounters with unidentified underwater objects? The Silent Service isn't saying. But then, after all, the UFO investigations of Operation Blue Book were done by the U.S. Air Force, not the U.S. Navy."

"Possible Origins of Life: Liquid Water in Comets"

"Evidence of liquid water in comets reveals possible origin of life. Comets contained vast oceans of liquid water in their interiors during the first million years of their formation, a new study claims. The watery environment of early comets, together with the vast quantity of organics already discovered in comets, would have provided ideal conditions for primitive bacteria to grow and multiply. So argue Professor Chandra Wickramasinghe and his colleagues at the Cardiff Centre for Astrobiology in a paper published in the "International Journal of Astrobiology."

The Cardiff team has calculated the thermal history of comets after they formed from interstellar and interplanetary dust approximately 4.5 billion years ago. The formation of the solar system itself is thought to have been triggered by shock waves that emanated from the explosion of a nearby supernova. The supernova injected radioactive material such as Aluminium-26 into the primordial solar system and some became incorporated in the comets. Professor Chandra Wickramasinghe together with Drs Janaki Wickramasinghe and Max Wallis claim that the heat emitted from radioactivity warms initially frozen material of comets to produce subsurface oceans that persist in a liquid condition for a million years.

Professor Wickramasinghe said: "These calculations, which are more exhaustive than any done before, leaves little doubt that a large fraction of the 100 billion comets in our solar system did indeed have liquid interiors in the past.
Comets in recent times could also liquefy just below their surfaces as they approach the inner solar system in their orbits. Evidence of recent melting has been discovered in recent pictures of comet Tempel 1 taken by the "Deep Impact" probe in 2005."

The existence of liquid water in comets gives added support for a possible connection between life on Earth and comets. The theory, known as cometary panspermia, pioneered by Chandra Wickramasinghe and the late Sir Fred Hoyle argues the case that life was introduced to Earth by comets."
Contact: Professor Chandra Wickramasinghe,
07-778-389-243, Cardiff University

"How It Really Is"

"Can Stress Make Us 'Creatures of Habit?'"

"Can Stress Make Us 'Creatures of Habit?'"
by Ned Potter

"You may identify with the rats in a new Portuguese study. When exposed to daily chronic stress - being cooped up in a plastic tube for half an hour, say, or forced to swim for 10 minutes - they soon became lousy decision makers, relying on habit instead of actively thinking about whether to press a lever to get a food pellet. Sound familiar? The stresses we face are different - morning traffic, unsympathetic bosses, the recession - but over time they get to us. How often do we talk about burned-out people who are just going through the motions?

"Have you ever meant to stop by the grocery store on the way home after a bad day at work, and instead just forgot and went straight home?" said Rui Costa of the National Institute on Alcohol Abuse and Alcoholism, one of the study authors. "You do the automatic thing instead of doing what you had planned."

That's what happened to the rats. For three weeks they were exposed to a standard regimen of randomly timed stresses, such as being confined in a tube, or briefly "bullied" through a plastic window by intruder rats. (Scientists are sensitive about being accused of cruelty to animals, so these are practices established by the National Institutes of Health and its European counterparts.) At the same time, they were given a standardized test: press a lever to get a sugar treat. After three weeks, they were significantly worse at it than they had been at the start of the experiment. Unlike other rats, said Costa, they pressed the levers in the same pattern they always had - even if they had already had their fill of treats. They appeared to follow habits instead of making a decision about whether they were hungry for a reward. And there's more to it. The researchers found brain changes in the rats. Parts of the brain believed to control "goal directed behavior" shrank slightly - but an area thought to be important for forming habits, known as the dorsolateral striatum, actually grew.

The study, by Portuguese and American scientists, is in this week's edition of the journal "Science." The "Science" editors, perhaps playfully, suggested in a release that the rats became "creatures of habit." "I'm not at all surprised that decision-making was affected," said Dr. Sudeepta Varma, a clinical assistant professor of psychiatry at New York University's school of medicine. She was not involved in the experiment, but she has worked with people who endured the trauma of Sept. 11, and has seen how they have been affected. "One of the symptoms of Post Traumatic Stress Disorder is an effect on memory and concentration," she said. "Even after they've undergone treatment, these areas lag. They can't find their keys, they forget appointments, things like that."

Doug Casey, "Street Fighting Man" (Excerpt)

"Street Fighting Man"
by Doug Casey

"Longtime readers know my standard response to questions about the severity of the Greater Depression: It's going to be worse than even I think it's going to be. "Coming Collapse" books will undoubtedly accumulate into an entire genre in the next few years, as they did a generation ago. This time it's not just fear mongering, although things won't get as bad as in James Kunstler's book "The Long Emergency" and certainly not as rough as in the movies "Road Warrior" or "I Am Legend." But it's a good bet that a lot more is going to change than just some features of the financial system. Let's engage in a little speculation as to the shape of things to come.

I've long believed that this depression would not only be much different but much worse than the unpleasantness of the '30s and '40s. In those days, only a few people were involved in the financial markets; now almost anyone with any assets at all is a player. In those days, there were no credit cards, consumer debts, or student loans; now those things are ubiquitous. It's true that nobody will lose any money because of bank failures this time around; instead, everybody is going to suffer a loss from a collapse of the U.S. dollar, which is much worse.

In the '30s and '40s, the U.S. population was still largely rural in character, including people living in the cities. The average American was just off the farm and had a lot of practical skills as well as traditional values. Now he has skills mainly at paper shuffling or in highly specialized technologies, and it doesn't seem to me that the values of hard work, self-reliance, honesty, prudence, and the rest of the Boy Scout virtues are as common as they once were. In those days, the U.S. was a creditor to the world and the world's factories to boot; now there are perhaps 8 trillion dollars outside the U.S. waiting to pour back in, and the country is all about consuming, not producing. Even with what the New Deal brought in, there was vastly less regulation and litigation, leaving the economy with much greater flexibility to adjust and innovate; today, few people do anything without consulting counsel.

Of course things are immensely better today than 80 years ago in at least one important way: technology. I love technology, but unfortunately, improvements in that area do nothing to prevent an economic depression or many of the ancillary problems that will likely accompany this one. In fact, it can be a hindrance in some ways.
So, accepting the premise of a depression, let's examine some of its likely consequences..."

Topics examined in the full, long, article referenced below: Civil Unrest, Gun Control, Tax Revolt, War, Peak Oil, Collapse of Suburbia and the Car Culture, Unemployment, Global Smarming, The Political Future, Emigrants and Psychopaths, and A Happy Note. Folks, this is an extremely informative article, well worth reading in it's entirety.

Karl Denninger, "Politicians, Wake the Hell Up!"

"Politicians, Wake the Hell Up!"
by Karl Denninger

"From Yahoo News: "On the eve of the August recess, members are reporting meetings that have gone terribly awry, marked by angry, sign-carrying mobs and disruptive behavior. In at least one case, a congressman has stopped holding town hall events because the situation has spiraled so far out of control. “I had felt they would be pointless,” Rep. Tim Bishop (D-N.Y.) told POLITICO, referring to his recent decision to suspend the events in his Long Island district. “There is no point in meeting with my constituents and [to] listen to them and have them listen to you if what is basically an unruly mob prevents you from having an intelligent conversation.”


Well Tim, guess what: you work for your constituents, not the other way around. It would appear to this commentator that the Reps and Senators who feel "besieged" by their constituents in town hall meetings might have paid better attention in September and October when they were told by 300:1 margins not to pass the EESA/TARP bill. Or when they were told repeatedly to NOT try to advance amnesty for illegal aliens and refuse to enforce our immigration laws. Or when they were told repeatedly to quit bailing out the irresponsible, looking the other way while the populace is looted systematically by those in the banking and other "coddled" industries. There are a whole host of issues like this, and Congress seems to think (because it has gotten away with it for years) that ignoring the voters is not only acceptable, but is indeed a good idea.

Let me remind Mr. Bishop, along with the other Congressfolk, that the entirety of our government serves at our pleasure, not the other way around. Specifically, let me cite The Declaration of Independence:

'...That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness....'

Loud voices of dissent and sign-waving constituents are an unmistakable sign that our government has pressed the line of tolerance, and may, if it does not reverse course, exceed it. And before someone claims that I am some sort of "right-wing nut" or similar, let me point out that the above text is not mine - they are the words of the founders of our nation, who believed that absent consent government does not exist - that's tyranny, not government.

'Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.'

How close to the line has our government come? I have no idea, but this much I do know: I do not want to discover that the line has been crossed.

• Stop the looting and start prosecuting. The bankers, lenders and others in the "bizness side" have been literally robbing the people for over two decades. This includes both so-called "captains of the banking industry" and government officials who have looked the other way and in some cases (e.g. OTS) actively conspired to conceal the truth. Taxpayers have lost hundreds of billions as a consequence yet nobody has gone to prison for it nor are there even outstanding indictments. There is no reason on God's Green Earth why Goldman Sachs should be allowed to keep the roughly $13 billion in AIG pass-through money, nor why they should, having elected to become a bank holding company, be able to keep using their "VaR" risk model (instead of the more-stringent BANK risk limits.) There are dozens of examples; Goldman is hardly alone in this regard.
• Quit voting FOR bills you did not read - end to end! There's no excuse for this. The Stimulus Bill, EESA/TARP and more - this is absolutely common behavior and it's outrageous. Sorry, there is no emergency that demands passing a 1,000 page bill until every member has read it from one end to the other, personally. If you need to pass something fast then it needs to be simple enough that it can be read in the hour you get before the vote! I don't care what the emergency is - if you haven't read the bill cover-to-cover the only acceptable vote is NO.
• Quit spending more than you make. We are here because we have turned into a nation of Madoffs, and nowhere is it more evident than in Washington DC. We cannot have a sustainable economic recovery until the debt-to-GDP ratio is restored to a rational and sustainable ratio. This means much less spending; promising that which cannot be paid for is how we got into this mess.
• Represent your constituents and TELL THE TRUTH. We're tired of being lied to, and government has done a LOT of lying. The idea that "the economy is improving" is just one example; go ask your unemployed constituents what they think of this claim. Fact: The economy stinks and it stinks because Washington DC conspired to blow a bubble after the 2000 tech implosion. You're culpable; take responsibility and do the right thing instead of trying to blow air into a popped balloon!

Our government has become an unacceptable and unaccountable den of liars and thieves, and the people are getting damn tired of it. The evidence of extreme dissatisfaction, which may rise beyond the soapbox and ballot box if this trend is not reversed and soon, is clear. Nobody with a shred of intelligence wants to see the inevitable outcome of a government that refuses to follow the law itself, refuses to prosecute criminal wrongdoing by favored parties, and refuses to listen to the electorate on the issues of the day, instead mollycoddling those who have committed massive fraud upon the public and giving them hundreds of billions of dollars in hand-outs funded by the very people they ripped off in the first place!"
- Karl Denninger,

Paolo Coelho

"But there is suffering in life, and there are defeats. No one can avoid them.

But it's better to lose some of the battles in the struggles for your
dreams than to be defeated without ever knowing what you're fighting for."
- Paulo Coelho

Saturday, July 25, 2009

Thank you!

Thank you all for your patience during my absence. I've read the visitor logs, and again want to thank all who visited and left kind comments. You're the reason the blog exists. And I did miss being here, a lot, and am very happy to be back. That said, where were we? Let's get back to work...

Paulo Coelho

"It's daylight, the sky is cloudy, and human beings believe that beyond the clouds lives an all-powerful God, guiding the fate of men. Meanwhile, look at your son, look at your feet, listen to the sounds around you: down here is the Mother, so much closer, bringing joy to children and energy to those who walk over her body. Why do people prefer to believe in something far away and forget what is there before their eyes, a true manifestation of the miracle?"
- Paulo Coelho

"How It Really Is"

Oliver Stone, "JFK and the Unspeakable"

"JFK and the Unspeakable"
by Oliver Stone

"The murder of President Kennedy was a seminal event for me and for millions of Americans. It changed the course of history. It was a crushing blow to our country and to millions of people around the world. It put an abrupt end to a period of a misunderstood idealism, akin to the spirit of 1989 when the Soviet bloc to began to thaw and 2008, when our new American President was fairly elected.

Today, more than 45 years later, profound doubts persist about how President Kennedy was killed and why. My film JFK was a metaphor for all those doubts, suspicions and unanswered questions. Now an extraordinary new book offers the best account I have read of this tragedy and its significance. That book is James Douglass's "JFK and the Unspeakable: Why He Died and Why It Matters." It is a book that deserves the attention of all Americans; it is one of those rare books that, by helping us understand our history, has the power to change it.

The subtitle sums up Douglass's purpose: Why He Died and Why it Matters. In his beautifully written and exhaustively researched treatment, Douglass lays out the "motive" for Kennedy's assassination. Simply, he traces a process of steady conversion by Kennedy from his origins as a traditional Cold Warrior to his determination to pull the world back from the edge of destruction.

Many of these steps are well known, such as Kennedy's disillusionment with the CIA after the disastrous Bay of Pigs Invasion, and his refusal to follow the reckless recommendations of the Joint Chiefs of Staff in resolving the Cuban Missile Crisis. (This in itself was truly JFK's shining moment in the sun. It is likely that any other president from LBJ on would have followed the path to a general nuclear war.) Then there was the Test Ban Treaty and JFK's remarkable American University Speech where he spoke with empathy and compassion about the Soviet people, recognizing our common humanity, the fact that we all "inhabit this small planet. We all breathe the same air. We all cherish our children's futures. And we are all mortal."

But many of his steps remain unfamiliar: Kennedy's back-channel dialogue with Khrushchev and their shared pursuit of common ground; his secret opening to dialogue with Fidel Castro (ongoing the very week of his assassination); and his determination to pull out of Vietnam after his probable re-election in 1964.

All of these steps caused him to be regarded as a virtual traitor by elements of the military-intelligence community. These were the forces that planned and carried out his assassination. Kennedy himself said, in 1962, after he read "Seven Days in May," which is about a military coup in the United States, that if he had another Bay of Pigs, the same thing could happen to him. Well, he did have another "Bay of Pigs"; he had several. And I think Kennedy prophesied his own death with those words.

Why does it matter? The death of JFK remains a critical turning point in our history. Those who caused his death were targeting not just a man but a vision - a vision of peace. There is no calculating the consequences of his death for this country and for the world. Those consequences endure. To a large extent, the fate of our country and the future of the planet continue to be controlled by the shadowy forces of what Douglass calls "the Unspeakable." Only by unmasking these forces and confronting the truth about our history can we restore the promise of democracy and lay claim to Kennedy's vision of peace.

But don't take my word for it. Read this extraordinary book and reach your own conclusions."
- Oliver Stone,

"Now the trumpet summons us again- not as a call to bear arms, though arms we need- not as a call to battle, though embattled we are- but a call to bear the burden of a long twilight struggle year in and year out 'rejoicing in hope, patient in tribulation'- a struggle against the common enemies of man: tyranny, poverty, disease and war itself."
- John F. Kennedy

Never more true than today...

"Ultra-Rich Trying to Kill Health Care Reform"

"Ultra-Rich Trying to Kill Health Care Reform"
by David Sirota

"Here's a truism: The wealthiest 1 percent have never had it so good. According to government figures, 1-percenters' share of America's total income is the highest it's been since 1929, and their tax rates are the lowest they've faced in two decades. Through bonuses, many 1-percenters will profit from the $23 trillion in bailout largesse the Treasury Department now says could be headed to financial firms. And, most of them benefit from IRS decisions to reduce millionaire audits and collect zero taxes from the majority of major corporations.
But what really makes the ultra-wealthy so fortunate, what truly separates this moment from a run-of-the-mill Gilded Age, is the unprecedented protection the 1-percenters have bought for themselves on the most pressing issues.

To review: With 22,000 Americans dying each year because they lack health insurance, Congress is considering universal health care legislation financed by a surcharge on income above $280,000 - that is, a levy almost exclusively on 1-percenters. This surtax would graze just 5 percent of small businesses and would recoup only part of the $700 billion the 1-percenters received from the Bush tax cuts. In fact, it is so miniscule, those making $1 million annually would pay just $9,000 more in taxes every year -- or nine-tenths of 1 percent of their 12-month haul.

Nonetheless, the 1-percenters have deployed an army to destroy the initiative before it makes progress.

The foot soldiers are the Land Rover Liberals. These Democratic lawmakers secure their lefty labels by wearing pink-ribbon lapel pins and supporting good causes like abortion rights. However, being affluent and/or from affluent districts, they routinely drive their luxury cars over middle-class economic interests. Hence, this week's letter from Boulder, Colorado's dot-com tycoon Rep. Jared Polis, D, and other Land Rover Liberals calling for the surtax's death.

Echoing that demand are the Corrupt Cowboys -- those like Sen. Max Baucus, D-Mt., who come from the heartland's culturally conservative and economically impoverished locales. These cavalrymen in both parties quietly build insurmountable campaign war chests as the biggest corporate fundraisers in Congress. At the same time, they publicly preen as jes' folks, make twangy references to "voters back home," and now promise to kill the health care surtax because they say that's what their communities want. Cash payoffs made, re-elections purchased, the absurd story somehow goes that because blue-collar constituents in Flyover America like guns and love Jesus, they must also reflexively adore politicians who defend 1-percenters' bounty.

That fantastical fairly tale, of course, couldn't exist without the Millionaire Media - the elite journalists and opinionmongers who represent corporate media conglomerates and/or are themselves extremely wealthy. Ignoring all the data about inequality, they legitimize the assertions of the 1-percenters' first two battalions, while actually claiming America's fat cats are unfairly persecuted.

For example, Washington Post editors deride surtax proponents for allegedly believing "the rich alone can fund government." Likewise, Wall Street Journal correspondent Jonathan Weisman wonders why the surtax "soak(s) the rich" by unduly "lumping all of the problems of the finances of the United States on 1 percent of (its) households?" And most brazenly, NBC's Meredith Vieira asks President Obama why the surtax is intent on "punishing the rich?"

For his part, Obama has responded with characteristic coolness - and a powerful counter-strike. "No, it's not punishing the rich," he said. "If I can afford to do a little bit more so that a whole bunch of families out there have a little more security, when I already have security, that's part of being a community." If any volley can thwart this latest attack of the 1-percenters, it is that simple idea."
- David Sirota,

Something the wealthy seem to have forgotten:

"If a free society cannot help the many who are poor, it cannot save the few who are rich."
- John F. Kennedy, 1-20-1963

Karl Denninger, "My View on HFT, High-Frequency Trading"

"My View on HFT, High-Frequency Trading"
by Karl Denninger

"Senator Charles Schumer asked the U.S. Securities and Exchange Commission to ban “flash orders,” saying the transactions give high-speed traders an unfair advantage over other investors. Nasdaq OMX Group Inc., Bats Exchange Inc. and Direct Edge Holdings Inc. hold these orders for milliseconds, giving their customers the opportunity to gauge demand before traders on other exchanges get the chance to bid, Schumer said in a letter to SEC Chairman Mary Schapiro. Brian Fallon, a spokesman at Schumer’s office, confirmed the authenticity of the letter.

“Flash orders allow certain members of these exchanges to obtain access to order flow information before that information is made available to the public,” Schumer wrote. That allows “those members to use rapid trading programs to trade ahead of those orders and profit from advanced knowledge of buying and selling activity,” he added. The senator said that if the SEC doesn’t prohibit flash orders, he will introduce legislation that would.

This is my view: Getting a look at orders before someone else does is commonly called "cheating". The National Market System (NMS) was supposed to prevent that; this was the so-called "innovation" of Nasdaq, remember? No specialists, no balancing of orders to open a stock, all done by computer. Equality of access. Up until it became profitable to make some people more equal. The intent of a public stock exchange is to insure equality of access to information so that the markets are orderly, not rigged.

Using flash order information (or anything else) to front-run is illegal. In all of its forms, this is an extremely serious matter and it must be stopped. To the extent that these HFT systems are in fact using flash (or other) traffic to get in front of orders and advantage themselves they are dramatically increasing the violence of market moves. A stock trading at $20 that has a bid come in with a limit of $20.10 would normally fill (assuming sufficient depth) at $20; this does not materially move the market. But if a HFT system "sees" that order, steps in front of it and buys up all the shares at $20 and then re-sells them to the customer at $20.04 (one penny better than the next best offer at $20.05) it has caused the current "last" price to move where it otherwise would not. Multiply this by millions of shares an hour and the impact on price moves could be tremendous. While I understand that many people like the move of the last two weeks in the market, the fact remains that what goes up can also come down with equal violence.

I call upon The SEC to conduct a full and public investigation of the HFT systems in use today, along with immediately banning the "flash" traffic in accordance with Senator Schumer's request. I specifically want to know:

Have any of these HFT systems been using flash traffic to "step in front" of a flashed order?
What part did these systems play in the October and March meltdowns, along with the ramp job of the last two weeks? Specifically, were they stepping in front of orders in these cases, thereby dramatically amplifying market moves while skimming off their pennies?
Public and fair markets demand transparency. All users must obtain access to order flow at the same time, without exception, and attempts to "step in front of the line" must be met with both civil and criminal sanction for market manipulation."
- Karl Denninger,

Matthew Goldstein, "Dont Mess With Goldman"- ?!

"Dont Mess With Goldman"
by Matthew Goldstein

"Poor Sergey Aleynikov. The former Goldman Sachs programmer who allegedly stole some of the Wall Street firm’s top secret proprietary trading code picked the wrong firm to mess with–really. If Aleynikov had been an employee of UBS, he might only be facing a civil lawsuit right now–not federal criminal charges. In March, nearly four months before Goldman ran to federal prosecutors with their concerns about Aleynikov, UBS was in New York State Supreme Court filing a civil lawsuit against three former employees, charging them with doing much the same thing the ex-Goldman employee did. The only difference is no criminal charges have been filed against the three former UBS employees.

The UBS lawsuit was first reported in June by, after going unnoticed for several weeks. It’s getting more attention now in the wake of the Goldman case, which has begun to shed light on the importance of so-called high frequency trading strategies to Wall Street firms. In the UBS lawsuit, which is still pending, UBS alleged that Jatin Suryawanashi, Partha Sarkar and Sanjay Girdhar took “source code for UBS’ trade secret algorithmic trading programs.” The Swiss-based investment bank further alleged the ex-employees intended to use the information in their new prop trading jobs at Jefferies & Company.

Ever since news of Aleynikov’s arrest broke on July 4th weekend, there have been serious questions about whether federal prosecutors reacted so swiftly only because the alleged victim was Goldman. The absence of any criminal charges against the former UBS employees only adds to the suspicion that Aleynikov is getting disparate treatment. To be sure, every case is different. And there may be facts in the UBS incident that render it a purely civil matter. In fact, the former UBS employees are trying to force the dispute out of state court and into arbitration, claiming it stems from an employment issue. The ex-UBS employees, like Aleynikov, deny doing anything wrong.

If you recall, at Aleynikov’s bail hearing, his attorney suggested that offense he was charged with was really more of a civil matter than a criminal one. Obviously, federal prosecutors disagreed. But Aleynikov is due back in court on Aug. 3–the deadline for prosecutors to indict him. It will be interesting to see what happens on that day, especially if the matter with the UBS three remains a civil case."

Don't mess with the Golden Pig of Wall Street? There should be an army of SEC investigators, FBI agents and Federal Marshalls swarming all over their pig sty, followed by renditioning them to, oh, maybe Egypt, for a little bit of "intensive interrogation..."

Friday, July 24, 2009

David Whyte, "One Day"

"One Day"

One day I will say
the gift I once had has been taken.

The place I have made for myself
belongs to another.
The words I have sung
are being sung by the ones
I would want.

Then I will be ready
for that voice
and the still silence in which it arrives.

And if my faith is good
then we'll meet again
on the road,
and we'll be thirsty,
and stop
and laugh
and drink together again
from the deep well of things as they are.

- David Whyte
"Where Many Rivers Meet"

"The poem is a little myth of man's capacity of making life meaningful.
And in the end, the poem is not a thing we see -
it is, rather, a light by which we may see - and what we see is life."
- Robert Penn Warren

John Taylor Gatto

"Almost all Americans have had an intense school experience which occupied their entire youth, an experience during which they were drilled thoroughly in the culture and economy of the well-schooled greater society, in which individuals have been rendered helpless to do much of anything except watch television or punch buttons on a keypad.

Before you begin to blame the childish for being that way and join the chorus of those defending the general imprisonment of adults and the schooling by force of children because there isn’t any other way to handle the mob, you want to at least consider the possibility that we’ve been trained in childishness and helplessness for a reason. And that reason is that helpless people are easy to manage.

Helpless people can be counted upon to act as their own jailers because they are so inadequate to complex reality they are afraid of new experience. They’re like animals whose spirits have been broken. Helpless people take orders well, they don’t have minds of their own, they are predictable, they won’t surprise corporations or governments with resistance to the newest product craze, the newest genetic patent — or by armed revolution. Helpless people can be counted on to despise independent citizens and hence they act as a fifth column in opposition to social change in the direction of personal sovereignty."
- John Taylor Gatto
“Some Reflections on the Equivalencies Between Forced Schooling and Prison.”

And so it is...

"The Hedonometer: If You're Happy, Then We Know It"

"If You're Happy, Then We Know It"
by Joshua Brown

"In 1881, the optimistic Irish economist Francis Edgeworth imagined a strange device called a "hedonimeter" that would be capable of "continually registering the height of pleasure experienced by an individual." In other words, a happiness sensor. His was just a daydream. In practice, for decades, social scientists have had a devilish headache in trying to measure happiness. Surveys have revealed some useful information, but these are plagued by the unpleasant fact that people misreport and misremember their feelings when confronted by the guy with the clipboard. Ditto for studies where volunteers call in their feelings via PDA or cell phone. People get squirrely when they know they're being studied.

But what if you had a remote-sensing mechanism that could record how millions of people around the world were feeling on any particular day — without their knowing? That's exactly what Peter Dodds and Chris Danforth, a mathematician and computer scientist working in the Advanced Computing Center at the University of Vermont, have created. Their methods show that Election Day, November 4, 2008, was the happiest day in four years. The day of Michael Jackson's death, one of the unhappiest. Their results are reported this week in the Journal of Happiness Studies.

"The proliferation of personal online writing such as blogs gives us the opportunity to measure emotional levels in real time," they write in their study, "Measuring the Happiness of Large-Scale Written Expression: Songs, Blogs, and Presidents." Their answer to Edgeworth's daydream begins with a website, that mines through some 2.3 million blogs, looking for sentences beginning with "I feel" or "I am feeling."

"We gathered nearly 10 million sentences from their site," Dodds says. Then, drawing on a standardized "psychological valence" of words established by the Affective Norms for English Words (ANEW) study, each sentence receives a happiness score. In the ANEW study, a large pool of participants graded their reaction to 1,034 words, forming a kind of "happy-unhappy" scale from 1 to 9. For example, "triumphant" averaged 8.87, "paradise" 8.72, "pancakes" 6.08, "vanity" 4.30, "hostage" 2.20, and "suicide" 1.25.

The sentence "I feel lazy" would receive a score of 4.38. "Our method is only reasonable for large-scale texts, like what's available on the Web," Dodds says. "Any one sentence might not show much. There's too much variability in individual expression." But that's the beauty of big data sets and statistics. "It's like measuring the temperature. You don't care where the atoms are," Dodds says. "You want to know the temperature of this room or this town. It's a coarser scale. We're interested in the collective story."

Though blog writers do tend to be somewhat younger and more educated than average, they are broadly representative of the U.S. population, writing from most everywhere with an even split between genders and high racial diversity. Since many blogs are connected to demographic data, Dodds and Danforth's approach can let them measure the rise and fall of happiness of, say, people under 35 in California on Wednesdays, and compare to other places, age groups, and days. "We were able to make observations of people in a fairly natural environment at several orders of magnitude higher than previous happiness studies," Danforth says. "They think they are communicating with friends," but, since blogs are public, he says, "we're just looking over their shoulders."

Though their method — which they also apply to song lyrics, presidential speeches, and, recently, to Twitter messages — is generally focused on how writings are received rather than what an author may have intended to convey, it does allow them to estimate the emotional state of the blog authors. "We are thus able to present results of what might be considered a very basic remote-sensing hedonometer," they write (using a slight variant on Edgeworth's spelling). Election Day 2008 showed a spike in the word "proud." "That was the biggest deviation in the last four years," Danforth says. "To have 'proud' be the word that moves the needle is remarkable." In contrast, the day of Michael Jackson's death and the two following were some of the unhappiest, showing a significant dip in average valence scores. Each year, Sept. 11 gets a dip, as does Sept. 10, "in anticipation of the anniversary, we suppose," says Dodds.

Interestingly, their results run contrary to recent social science data that suggest that people basically feel the same at all ages of life. Instead, Dodds and Danforth's method shows a more commonsensical result: young teenagers are unhappiest with a disproportionate use of "sick," "hate," "stupid," "sad," "depressed," "bored," "lonely," "mad," and, not surprisingly, "fat." Then people get happier until they are old, when happiness drops off.

Of course, there is an ocean of philosophical questions to swim when trying to understand happiness. Though people regularly rank happiness as what they want most in life, what is it, really? Plato argued that achieving happiness was our true goal in life but recent studies suggest many people are bad at doing what makes them happy. Why? And what of the Buddhist perspective that all life is suffering? Is happiness simply a feeling?

Though Francis Edgeworth hoped to measure happiness, "exactly according to the verdict of consciousness," all science has to work with today are the tracings of a mind, not a literal mind-probe. New techniques in neuroscience seem to be moving closer to such a tool, but "we don't know what is going on in people's heads, really," says Dodds. "Our study is a data exploration," says Danforth. "It's not about developing a theory." "The big picture for me is this: I have a daughter who is three," he says, "She is going to grow up and fall in love without as much body language or visual cues. She's inheriting an electronic world. We want to develop tools to understand that world."
- Joshua Brown,

The Daily "Near You?"

Knoxville, Tennessee, USA. Thanks for stopping by.

Karl Denninger, "High-Frequency Trading Is A Scam"

"High-Frequency Trading Is A Scam"
by Karl Denninger

"The NY Times has blown the cover off the dark art known as "HFT", or "High-Frequency Trading", perhaps without knowing it. 'It was July 15, and Intel, the computer chip giant, had reporting robust earnings the night before. Some investors, smelling opportunity, set out to buy shares in the semiconductor company Broadcom. (Their activities were described by an investor at a major Wall Street firm who spoke on the condition of anonymity to protect his job.) The slower traders faced a quandary: If they sought to buy a large number of shares at once, they would tip their hand and risk driving up Broadcom’s price. So, as is often the case on Wall Street, they divided their orders into dozens of small batches, hoping to cover their tracks. One second after the market opened, shares of Broadcom started changing hands at $26.20.

The slower traders began issuing buy orders. But rather than being shown to all potential sellers at the same time, some of those orders were most likely routed to a collection of high-frequency traders for just 30 milliseconds — 0.03 seconds — in what are known as flash orders. While markets are supposed to ensure transparency by showing orders to everyone simultaneously, a loophole in regulations allows marketplaces like Nasdaq to show traders some orders ahead of everyone else in exchange for a fee.

In less than half a second, high-frequency traders gained a valuable insight: the hunger for Broadcom was growing. Their computers began buying up Broadcom shares and then reselling them to the slower investors at higher prices. The overall price of Broadcom began to rise. Soon, thousands of orders began flooding the markets as high-frequency software went into high gear. Automatic programs began issuing and canceling tiny orders within milliseconds to determine how much the slower traders were willing to pay. The high-frequency computers quickly determined that some investors’ upper limit was $26.40. The price shot to $26.39, and high-frequency programs began offering to sell hundreds of thousands of shares.'

But then the NY Times gets the bottom line wrong: 'The result is that the slower-moving investors paid $1.4 million for about 56,000 shares, or $7,800 more than if they had been able to move as quickly as the high-frequency traders.'

No. The disadvantage was not speed. The disadvantage was that the "algos" had engaged in something other than what their claimed purpose is in the marketplace - that is, instead of providing liquidity, they intentionally probed the market with tiny orders that were immediately canceled in a scheme to gain an illegal view into the other side's willingness to pay.

Let me explain. Let's say that there is a buyer willing to buy 100,000 shares of BRCM with a limit price of $26.40. That is, the buyer will accept any price up to $26.40. But the market at this particular moment in time is at $26.10, or thirty cents lower. So the computers, having detected via their "flash orders" (which ought to be illegal) that there is a desire for Broadcom shares, start to issue tiny (typically 100 share lots) "immediate or cancel" orders - IOCs - to sell at $26.20. If that order is "eaten" the computer then issues an order at $26.25, then $26.30, then $26.35, then $26.40. When it tries $26.45 it gets no bite and the order is immediately canceled. Now the flush of supply comes at, big coincidence, $26.39, and the claim is made that the market has become "more efficient."

Nonsense; there was no "real seller" at any of these prices! This pattern of offering was intended to do one and only one thing - manipulate the market by discovering what is supposed to be a hidden piece of information - the other side's limit price! With normal order queues and flows the person with the limit order would see the offer at $26.20 and might drop his limit. But the computers are so fast that unless you own one of the same speed you have no chance to do this - your order is immediately "raped" at the full limit price! You got screwed, as the fill price is in fact 30 cents a share away from where the market actually is.

A couple of years ago if you entered a limit order for $26.40 with the market at $26.10 odds are excellent that most of your order would have filled down near where the market was when you entered the order - $26.10. Today, odds are excellent that most of your order will fill at $26.39, and the HFT firms will claim this is an "efficient market." The truth is that you got screwed for 29 cents per share which was quite literally stolen by the HFT firms that probed your book before you could detect the activity, determined your maximum price, and then sold to you as close to your maximum price as was possible.

If you're wondering how this ramp job happened in the last week and a half, you just discovered the answer. When there are limit orders beyond the market outstanding against a market that is moving higher the presence of these programs will guarantee huge profits to the banks running them and they also guarantee both that the retail buyers will get screwed as the market will move MUCH faster to the upside than it otherwise would. Likewise when the market is moving downward with conviction we will see the opposite - the "sell stops" will also be raped, the investor will also get screwed, and again the HFT firms will make an outsize profit.

These programs were put in place and are allowed under the claim that they "improve liquidity." Hogwash. They have turned the market into a rigged game where institutional orders (that's you, Mr. and Mrs. Joe Public, when you buy or sell mutual funds!) are routinely screwed for the benefit of a few major international banks.

If you're wondering how Goldman Sachs and other "big banks and hedge funds" made all their money this last quarter, now you know. And while you may think this latest market move was good for you, the fact of the matter is that you have been severely disadvantaged by these "high-frequency trading" programs and what's worse, the distortion that is presented by these "ultra-fast" moves has a nasty habit of asserting itself in an ugly snapback a few days, weeks or months later - in the opposite direction.

The amount of "slippage" due to these programs sounds small - a few cents per order. It is. But such "skimming" is exactly like paying graft to a politician or "protection money" to the Mafia - while the amount per transaction may be small the fact of the matter is that it is not supposed to happen, it does not promote efficient markets, it does not add to market liquidity, the "power" behind moves is dramatically increased by this sort of behavior and market manipulation is supposed to be both a civil and criminal violation of the law.

While the last two weeks have seen this move the market up, the same sort of "acceleration" in market behavior can and will happen to the downside when a downward movement asserts itself, and I guarantee that you won't like what that does to your portfolio. You saw an example of it last September and October, and then again this spring. As things stand it will happen again.

This sort of gaming of the system must be stopped. Trading success should be a matter of being able to actually determine the prospects of a company and its stock price in the future - that is, actually trade. What we have now is a handful of big banks and funds that have figured out ways around the rules that are supposed to prohibit discovery of the maximum price that someone will pay or the minimum they will sell at by what amounts to a sophisticated bid-rigging scheme.

Since it appears obvious that the exchanges will not police the behavior of their member firms in this regard government must step in and unplug these machines - all of them - irrespective of whether they are moving the market upward or downward. While many people think they "benefited" from this latest market move, I'm quite certain you won't like it if and when the move is to the downside and the mutual fund holdings in your 401k and IRA get shredded (again) by what should be prohibited and in fact result in indictments, not profits."


"So live your life so the fear of death can never enter your heart. Trouble no one about their religion; respect others in their views, and demand that they respect yours. Love your life, perfect your life, beautify all things in your life. Seek to make your life long and of service to your people. Always give a word or sign of salute when meeting or passing a stranger if in a lonely place. Show respect to all people, but grovel to none. When you arise in the morning, give thanks for the light, for your life and strength. Give thanks for your food and for the joy of living. If you see no reason for giving thanks, the fault lies in yourself. Touch not the poisonous firewater that makes wise ones turn to fools and robs them of their visions. Prepare a noble death song for the day when you go over the great divide. When your time comes to die, be not like those whose hearts are filled with fear of death, so that when their time comes they weep and pray for a little more time to live their lives over again in a different way. Sing your death song, and die like a hero going home."
- Tecumseh

"A Look to the Heavens"

"NASA's Spitzer Space Telescope has captured a galaxy located 50 million light-years away. Like the Milky Way Galaxy, it is spiral-shaped but the "eye" at the center of it is a gigantic black hole surrounded by a ring of stars.
The black hole, NASA says, is about 100 million times the mass of our sun. "The fate of this black hole and others like it is an active area of research," said George Helou, deputy director of NASA's Spitzer Science Center at the California Institute of Technology in Pasadena. "Some theories hold that the black hole might quiet down and eventually enter a more dormant state like our Milky Way black hole." NASA's Jet Propulsion Laboratory, Pasadena, Calif., manages the Spitzer Space Telescope."