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Gee, you mean that really is a government function and the FOIA really does apply?

Aug. 23 (Bloomberg) -- A U.S. appeals court refused to reconsider a ruling that requires the Federal Reserve Board to disclose documents identifying financial firms that might have failed without the largest U.S. government bailout.

Of course you have to expect they'll go to the SCOTUS for a final attempt, and ask for a stay, which (assuming they appeal) they will almost-certainly get.

But the options for the thieves guild, er, Clearing House Association (the organization that represents large commercial banks like BOA, Citi, etc) are running short.  Beyond the Supreme Court there's only contempt and compliance left.

The Fed argued in the case, which was brought by Bloomberg LP, the parent of Bloomberg News, that disclosure of the documents threatens to stigmatize borrowers and cause them “severe and irreparable competitive injury,” discouraging banks in distress from seeking help. The appeals court panel rejected that argument.

The court is exactly right.

Once you stick your hand out and threaten the end of the world unless the government intervenes, which is exactly what these banks did in 2008, you have no more room for "secrecy" or "comity."

You've come hat-in-hand and literally told the government (and its surrogates) that if they don't provide help you will fail, and in doing so you will destroy the nation's economy.

That was the gist of the argument they ran.

The courts have held, correctly in my opinion, that one cannot at the same time demand secrecy and a government bailout.

Let's hope the Supreme's also see it this way - that the people's money is what's in play here, and it does not belong to The Fed, or to Treasury - it belongs to the American public, and we have every right to know how it is being used.

On Hindenburg Omens, market structure, the shills all over the mainstream media, real estate and much more. 

3:30 Central today at http://blogtalkradio.com/marketticker

"Free markets"?

"Honest markets"?

Where?

Gee, certainly not here:

Then something very disturbing dawned on us. If the average or base quote rate is around 10,000/second, then it only takes an additional 10,000 quotes/second to reach the magic 20,000 quotes/seconds where a corresponding delay is seen in CQS. This 10,000 quotes/second can be in any stock or combination of stocks that NYSE sends quotes to CQS for.

The high occurrence of strange crop circles we have noted elsewhere, are suddenly beginning to make sense.

Oh really?

Let me decipher this for those who are not up on the "lingo":

There appears to be a limit beyond which the rate of quotes "overloads" the commodity - "everyone but a few" - quote services that virtually all investors and traders have access to.

This limit has been "discovered."

This fact now allows those people who buy a premium quote product from the exchanges to discern a market price that is different than everyone else sees.

And that, in turn, would allow those same participants to create a dislocation in pricing that they can then exploit - effectively creating a "front running" opportunity that would not otherwise exist.

Let's decipher this chart: It shows a massive spike in quote volume at a time when there is no change in price.  The change in price follows the quote spike, strongly implying that a quote-dislocation was caused, and then that dislocation was exploited. 

Repeatedly.

The obvious questions that arise from such a discovery are:

• Why is it legal to sell a "premium" quote product that has as it's only reason to exist and thus its only value being "more current" than the standard consolidated product offered to everyone else?  Is this not a direct and blatant violation of the fundamental precept of a public securities market - that is, open, fair and even access for all participants?
  
  
• If market manipulation is illegal, and if quotes are being inserted into the market in bulk that are not intended to be executed, but rather are being rapidly inserted and canceled, and given that it appears divergence between CQS-disseminated quotes (that which 99+% of the market sees) and "premium" quotes (which 1% of the market sees) can be forced by this sort of activity, how is it that this does not evidence intent to manipulate the market?  It is one thing to take advantage of a pricing disparity.  That, provided you do not participate in causing the dislocation, is probably not unlawful.  But if you do cause it, either directly or in concert with others who also are issuing the quote flow that creates the dislocation in the first place, is it not clear that you're acting like an ambulance company that drums up business by reprogramming the traffic lights at an intersection so they all show "green" at the same time?

NANEX is doing yeoman's work here in analyzing that which nobody else is willing to look at, bringing it into the light of day.

Again I ask: Where the hell are the cops?

For those of us who are in the 99% of investors and traders you need to consider carefully how you can reasonably invest or trade in what is increasingly being documented as a rigged casino with willfully-blind "regulators" that have and continue to refuse to enforce both the letter and spirit of the law that is supposed to protect your right to fair dealing and equal market access?

What sort of bone-smoking idiocy is this?

Bob Walters, chief economist of the online mortgage firm Quicken, acknowledges that the recent collapse will create a “mind scar” just as the Great Depression did. But he argues that housing remains unique.

“You have to live somewhere,” he said. “In three or four years, people will resume a normal course, and home values will continue to increase.”

Notice who this firm is - one of those who profits when you flip your mortgage, whether you go bankrupt doing it or not.

Home values will continue to increase?  You have to live somewhere?

Well, the second is true.

The first?

Look, the laws of economics on this are simple: Home prices cannot ascend, over long periods of time, faster than real wages.  That is, you cannot afford more house unless you make and bring home more money, in terms of dollars.

Further, with interest rates now at extreme low levels, the "payment buyer" (that's nearly everyone) is buying at a secular high in affordability as measured by payment.

The $200,000 loan at 4.5% interest for 30 years carries a P&I (principal and interest) payment of $1,009.58.  The same loan at 6% carries a P&I of $1,193.14.

Put a different way that same $200,000 loan is only a $169,232 loan when - not if - rates go from 4.5% to 6%.

You don't buy things on long-term amortization schedules unless you intend to run the clock on the schedule when rates are very low.  You buy them when rates are high, because then affordability of those payments is at its worst and is likely to get better.

In an annual survey conducted by the economists Robert J. Shiller and Karl E. Case, hundreds of new owners in four communities — Alameda County near San Francisco, Boston, Orange County south of Los Angeles, and Milwaukee — once again said they believed prices would rise about 10 percent a year for the next decade.

These people are on drugs, and that drug is being put on the table in front of them by Real Estate "professionals", who just like all other salesmen and women have never seen a crappy time to buy whatever they're selling.

Well, I'll say it if they won't - it's a crappy time to buy a house. 

The only way you "win" when rates are those low is if they go even lower.  But the only way that rates will continue to sink to new lows is if the economy likewise sinks further and further into Depression.  In that case rates will indeed continue to decline, but if nobody has a job who's going to buy your house from you?

If you believe that the economy is actually recovering (I do not) then rates have one one direction to go - higher.  As such what your mortgage payment buys today in terms of principle amount is at the high point you will see in your lifetime.

Indeed, if rates just go back to 6% your home's value, as determined by what a given payment will buy, will depreciate by 15% instantly.

Homes are still overvalued by 50% or more in most of the country, and that's a fact.

Don't be a fool.

Oh, so now after several articles, including a video Ticker, we start to see some mainstream media exposure?

“We live in a day when things are measured in milliseconds,” said Sang Lee of the Aite Group, a financial services consulting company. “It is meant to be a level playing field, but if you have better technology you will have the edge.”

Oh gee, nothing like talking out both sides of one's mouth, eh?

Then of course there's this....

Traders at BMO Capital Markets in Toronto said they had also identified a “data deluge” a few minutes before the crash. They said people in the markets were poring over Nanex’s colorful charts.

A few minutes before?  Hmmmm...

He and others are tempted to go further, hypothesizing that the bizarre patterns might have been the result of a Wall Street version of cyberwarfare. They say high-speed traders could have been trying to outwit one another’s computers with blizzards of buy and sell orders that were never meant to be filled. These superfast traders might even have been trying to clog exchanges to outflank other investors.

Could have?

Look, let's cut the crap.  The markets are supposed to be fair, open to all, and available on equal terms.  You are supposed to get your quotes at the same time I get my quotes.  We are all supposed to see the same prices, disseminated to all of us at the same time, and we are all supposed to have the same ability to respond. 

The premise of a fair market - indeed, the entire word market - is that it is a mechanism to further price discovery.  That is, it is supposed to answer the question "What is a fair price for a share of Frobozz corporation?"

But to answer that question one must have fair markets.  That is, when I enter an order to buy 100 shares of Frobozz, I must actually intend to buy 100 shares.  I must enter a bid with a fundamental purpose and intent of execution of that order.

Likewise, when I enter an order to sell 100 shares of Frobozz, I must actually intend to sell 100 shares, whether they're shares I actually own or ones I have borrowed and want to sell short.  I must enter that sell with a fundamental purpose and intent of execution of that order.

Inherent in that intent is market risk.  That is, any time I enter an order with an actual intent of execution I am taking the risk that the market price - the "true price" if you will - will go the opposite direction of my entered order.  That is, I will lose money.

If any part of my intent in entering that order is to earn a risk free return - that is, if I have knowledge or take an act that makes my entry of that order free of market risk, then in the general sense I have probably violated the law.

"Front running" is one of the manifestations of this sort of unlawful activity.  When one "front runs" one has actual and specific knowledge that an order at a higher (or lower) price is about to be made known to the marketplace.  The unlawful act is inserting oneself in front of that other order so as to earn a risk-free "profit" - not through price-discovery (the lawful way in which one profits at someone else's expense in the market) but through what amounts to theft.

The reason this activity is theft is that the person who you get in front of is entitled, as a matter of law, to the better price that you steal from them. 

That is, if you know that I am about to enter an order to buy Frobozz with a limit price of $100 a share, and the current market price is $99/share - that is, there are people willing to sell shares at $99, I am entitled to the dollar of price improvement.  When you insert yourself in front of my order so as to buy the shares at $99, whether you then immediately sell them to me at $100 or not you are stealing from me, in that you are "cutting in front of the line."  The persons whom you cut in front of are deprived of their lawful and proper place in the order queue.

Front-running is as old as the markets.  In the days of telephones and teletypes on the floor of the stock exchanges, where actual buying and selling took place by open outcry of people, it was common for brokers to learn of a large order and to insert their own order in front of the customer's, so as to be "right there" when the big order moved the price up or down.  This has been illegal since at least the Securities Act of 1934, which has extremely broad anti-fraud language in the form of Section 10b(5).

Technology doesn't change the inherent nature of an act. 

If your particular "high frequency strategy" obtains it's advantage by being first, then you are inherently attempting to front-run.  Whether such activity finds some loophole (or more likely simple willful blindness on the part of regulators) doesn't change the intent of the law, nor does it change the intent of your act. 

Indeed, the very fact that exchanges and other trading venues sell "premium" quote services which have as their primary attraction that they are more-current - that is, faster - than the "standard" means by which quotes are disseminated - should be sufficient evidence standing on its own that there is intent to profit not through the taking of market risk but rather by inserting one's activity in front of others before they become aware of the market's movement in price.

Whether this technically meets the "fine definition" of a violation of the laws against front-running isn't the issue.

The issue is that it damn well should, as it is quite clear that the intent is to insert one's activity in front of that which you know is going to occur - and thus by intent such activity clearly meets the common-sense definition.

To the extent such loopholes exist they must be closed, and to the extent that such actions violate existing laws they must be prosecuted.