Welcome to Capital Account. Knight Capital, the market maker that lost a reported 440 million dollars off a “technical glitch,” will get a $400 million lifeline from investors to stay afloat. Today’s version of ‘Gone in 60 Seconds’ is more like ‘Gone in 60 Nanoseconds’ with the use of high frequency trading. So what purpose does this speed serve? Is there anything keeping a Knight Capital disaster from happening again, and what are the implications for the broader economy and the financial markets? Likewise, is there any benefit that high-frequency trading brings to the market as a whole, or is it just a race to the bottom for the retail investor? We ask commodities trading veteran and former NYMEX board member David Greenberg.
Also, we look at where regulators stand on high frequency trading as a new study questions the true risk of the SEC revolving door. Is the financial incentive simply not there for regulators, since anyone who actually understands the industry would rather work there for more money than go to a government agency? We ask David Greenberg, President of Greenberg Capital, if regulators are prepared to deal with high frequency trading.
With the 2012 electionscoming up in November, the economy seems to be on everybody’s mind. Senators claim they want to focus on jobs, but lawmakers have already gone on their summer break and have taken little action in the creation of jobs and stimulating the economy in the last couple years. So does Congress actually care about this issue? Nicholas Carnes of Duke University explains.
Welcome to Capital Account. The dark Knight rises as dark pools of liquidity traded by robot computer algorithms went awry and threatened Knight Capital’s stability, costing the firm $440 million. This is just one more issue with broker dealers and markets, and one more blow to confidence in the US financial system. We hear from a former fraudster, Sam Antar, and the Commodity Customer Coalition Founders, James Koutoulas and John Roe, about how to restore faith in a broken system.
Remember ‘Crazy Eddie,’ home to the one of the largest securities frauds uncovered during the 1980s? The criminal CFO, Sam Antar, who helped mastermind the scheme, said he did it for fun and profit, and if he had not been caught, he would still be doing it today. What does this mean for the bigger picture about what is happening on Wall Street? The bad and arguably criminal actions at firms that helped cause the financial crisis have gone largely unpunished. We talk to the former Crazy Eddie CFO, Sam Antar, about it.
Plus the ECB disappoints today as Mario Draghi fails to deliver a “whatever it takes” plan. Is this back to crisis as usual and how is the private sector dealing? Well one company seems to hope sex not only sells but also shames people back into Spain’s ailing real estate market.
Welcome to Capital Account. The Federal Reserve released its interest rate decision today: extremely low rates until late 2014. Also, tomorrow, the ECB council meets about possible bond purchases and how to react to the financial turmoil in Europe. We talk to Peter Tchir, founder of TF Market Advisors, about what to expect from the central banks.
Also, the manufacturing scenario in Europe appears grim. Eurozone factory activity in July fell at its steepest rate in more than three years, according to Markit Economics’ Purchasing Managers Index. German manufacturers suffered the largest fall in new export orders of any Euro-zone country. Could this mean trouble in Europe’s economic powerhouse? We will talk to Peter Tchir about how this fits into the crisis calculus.
And when Olympians from the US get the gold medal, they will have to cough up almost $9,000 to settle with the IRS! Chances are their competitors are not in the same boat, says Americans for Tax Reform. Lauren and Demetri give you their take in today’s “Loose Change!”
Ten months ago Occupy Wall street movement kicked off in New York and for the last eight months a couple of top law schools in the country have been looking in depth at police response to the protesters. The study revealed that there was a systematic effort by police to suppress those protests even though the protesters were following the laws and being peaceful. In total there is 130 incidents of excessive or unwarranted force. John Knefel of Radio Dispatch joins RT’s Kristine Frazao from New York to explain how that could happen.
According to an investigation led by Democratic Congressman Elijah Cummings – for-profit colleges are paying executives massive salaries – not based on student achievement – but based solely on profitability. Looking at 13 different for-profit schools – the investigation found, “the single most significant measure for determining executive compensation at these schools is corporate profitability…rather than student achievement.” For-profit colleges rely heavily on government funding, with many schools receiving as much as 90% of their revenue from federal student loan assistance programs. Yet, they’re not producing good results. A quarter of all students who attend for-profit schools default after three years, while the default rate at public institutions is a mere 10%. Yet the for-profit school executives still get fat paychecks – like Strayer CEO Robert Silberman who made $41 million in 2009 alone. Educating the future American workforce used to be a part of the commons, because the economic security of the nation depends on well-educated workers. But now, the money-changers are in control – leaving students in debt, unprepared, and jobless.
US security agencies have acquired even more powers under president Obama – that’s despite his pre-election pledges to make the government more open to ordinary citizens. Instead, his administration is spending record amounts to keep its secrets – and is cracking down on whistleblowers.
Fearing the end of the single currency, many wealthy Europeans are investing in property – with London one of the favored markets. But that’s pushing up prices for locals, meaning ordinary people are struggling to get a foot on the housing ladder.
As tuition prices continue to soar, Tim explains to his pal why so many students in places like Canada are taking to the streets by the thousands to protest the rising costs of education, and how their governments are trying to stop them.
Welcome to Capital Account. The US economy slowed in the second quarter: GDP rose at 1.5% on an annualized basis according to the Commerce Department. The Wall Street Journal points out that this current economic ‘recovery’ is the second weakest rebound post World War II. Cue speculation about the Federal Reserve taking more action, or talk of how government GDP numbers aren’t reliable anyway. How does this so-called recovery lag compared to others, and when did things really start going downhill economically in the US. Was it after a peak of good times for America in the late 50s to mid 60s, with the 1959 cadillac a relic of a bygone era? We are not just talking about its iconic tail fins, but of the decent standard of living for Americans that it represents — one that was NOT built on unsustainable debt supplanting stagnant wages. Or was what sealed America’s fate the 1971 closing of the gold window by Richard Nixon? We will talk to Doug Casey, bestselling author and founder and publisher of Casey Research, for his thoughts.
Also, Spain has, for the first time, conceded it may need a full EU IMF bailout, according to Reuters. Meanwhile, Spanish unemployment has hit the highest level since its transition to democracy post-Franco. We will take stock of the Eurozone crisis with the man who literally wrote the book on Crisis Investing, Doug Casey.
