Four years ago Mathew Goldstein at Reuters got the first part of this storyright,
…a Russian immigrant living in New Jersey was being held on federal charges of stealing secret computer trading codes from a major New York-based financial institution.
but posed the wrong question:
Did someone try to steal Goldman Sachs’ secret sauce?
based on the premise that those “secret trading codes” were part of Goldman Sachs crown jewels.
The platform is one of the things that gives Goldman an advantage over the competition when it comes to the rapid-fire trading of stocks and commodities. Federal authorities say the platform quickly processes rapid developments in the markets and using secret mathematical formulas, allows the firm to make highly-profitable automated trades.
There was a bit of head scratching at the time by Matt Taibbi and others as to why Goldman Sachs would have reported this alleged theft when it shined a public light on their high-speed trading activity. As if regulators or legislators would shut down high-speed trading if they knew more about it. As if Goldman Sachs was vulnerable.
What was more or less overlooked since then was Sergey Aleynikov who was convicted and sent off to prison. Dismissed as another (and small time) ex-pat Russian financial criminal? Like following the breadcrumbs dropped by “Curveball” instead of Hussein Kamel. Until now.
Michael Lewis, with his skill and talent for narrative, corrects this reporting oversight and through Aleynikov’s story exposes not just more of the Great Vampire Squid but also how much Goldman Sucked at high-speed trading back in 2009. It’s an explosive and head-spinning article. Illuminates much. Leaves room for discussion and new questions after reading for those interested.
The publication of that notorious article you cited strikes me as the turning point in recent history where the average citizen and retail investor got their first glimpse of the denizens of the ‘new normal’ global economy with whom they are sharing the world. It is a rude awakening; this is not your parents’ bank.
It also seems to me entirely plausible that the minority whom would have a pretty good idea where the global economy is soon headed are busily looting the place before it finally, irrevocably collapses. I see some ironies with promoting the world’s entire population to middle-class consumer status before dropping the clanger but it seems that’s the plan. I would love to be wrong about this.
Can’t disagree. And Goldman Sachs is well positioned to be one of the real “masters of the universe.” At a minimum they already direct the SEC, FED, US Treasury, and as Michael Lewis details, the US Attorney. (Convenient that the SEC and/or US Attorney has been busy taking down GS competitors?)
Have to remember that by the time Taibbi wrote that article and the subsequent book, “Griftopia: … “, (recommended) the great housing sting was history. And the first phase of looting local and state governments was complete. And the people never got how they were such perfect marks or suckers. It in part goes to the definition or expectation of what it means to be “middle-class.” Moyers Two American Families touches on that, but doesn’t specifically explore that aspect. I explored some of that in “Ownership” Societies – Part I, Part II, and Part III. Germans were far less vulnerable and that’s one reason why they fared better.
F
or confusion trying to make sense of the global economy for all the vested interests at play. Personally, I think this fairly simple presentation of world GDP growth says a lot. In the second quarter of 2010 it looked like we were moving out of recession nicely; since then it starts to look like we have some serious structural problems which no amount of BRICS growth or demand can remedy. Plotting this trend forward the global economy looks like eventually stalling altogether. Then what? Capitalism abhors contraction. Ironic that at the end there would likely be no surviving Marxists to remonstrate, “We told you so.”
Considering that we are already artificially supporting the economy with continuous stimulus and that our debt to GDP ratios are unsustainable and growing it is not hard to imagine what is likely to happen if present policy and trends continue.
Sure, there are smart phones and fridges yet to sell in Africa and Kampuchea but what then? The jobs that are ‘never coming back’ are eventually going to leave China too and probably disappear altogether before they get to Timbuktu. Small wonder that the ‘masters of the universe’ are apparently looting what remains of the global economy on very short time horizons; as George Carlin said, “It’s a big club and you’re not in it.” As far as your pension and entitlements are concerned, that ship may already have sailed. Future generations, such as they are, may look back on our innocent faith in state and corporate institutions with some bemusement.
On the bright side, we may have solved the climate change problem by voluntarily sabotaging the entire global economy until further notice. Consider me hopeful but sceptical that this is all turning out for the best.