Quote: (04-02-2014 10:48 PM)j r Wrote:
Quote: (04-02-2014 05:34 PM)scorpion Wrote:
Quote: (04-02-2014 04:41 PM)Lou pai Wrote:
You would cripple the markets if you did that because there would never be any liquidity. If you wanted to sell a stock, who would buy it?
HFT has been around for a long time and is not harming anyone. If you want we could go back to the 90s when you were paying a 100 bucks to execute a trader and there was huge markups in the stocks you traded. Scalping has been around since the invention of the stock market, the only difference it is quicker now.
Who gives a fuck if you cripple the markets? The purpose of a stock exchange is not to facilitate gambling and speculation, it's to allow investors to purchase shares of companies. If you aren't willing to hold onto your shares for at least a year then you aren't investing, you're gambling. We need to get back to an idea of actually owning shares of a company instead of just trading them like fucking baseball cards. If you own a share, you OWN it. You are a partial owner of that company entitled to a fractional share of its profits. If you don't want to become a fractional owner of the company over a long term time horizon, don't buy the stock. There is absolutely no productive reason for stocks to be changing hands as much as they do now, especially with HFT where positions can be held for fractions of a second. It's completely ridiculous and has nothing to do with actually creating wealth.
To be frank, we would be a lot better off if the modern day stock market was crippled. It has long since lost sight of its original purpose and has become nothing more than a gigantic casino and money skimming operation.
This wouldn't just cripple the stock market; it would cripple the entire economy. There is a whole shadow banking system of short-term securities that companies use to fund their day-to-day operations. It is how they make payroll, pay suppliers, etc. if you eliminated that market, companies would have to hold enormous cash positions just to operate. And that means that small and medium sized companies would all have to fold or get bought my a bigger company with deep pockets.
Companies could go to banks and get lines of credit to operate, but there is not nearly enough liquidity in the banking system for that. Plus, it would just end up giving banks even more power, which is the situation that used to exist when guys like J.P. Morgan controlled the entire economy. It's not really an improvement over the present system.
Here is the thing, now you're once again doing what I always accuse econ and finance guys of doing, you are confusing a current state with fundamentals.
Derivatives and all these fancy short term instruments do not create liquidity or capital, they are in fact only new debt and the more of them are created the less people know who is actually owing how much and to whom. That is a huge reason why the credit crunch happened. The derivative market had become so complex that an external shock essentially collapsed the entire market, because no one really knew how much outstanding debt there was.
Have you ever considered that companies, and I am not talking about (investment) banks, should grow by re-investing their profit into their business instead of being involved in all kinds of crazy market operations.
Most of the huge american businesses today grew in a time where there was none of this modern debt derivative business going on.
The boom and bust cycle of modern capitalism might even be almost eliminated if companies grew more organically and slower, while the FED kept their dirty hands out of the market.
The idea that the current financial market promotes growth is a huge lie and can be seen in job numbers, exports and new business registrations. The only ones who profit are the financial industry like quite literal leeches that suck money out of the system and into their own pockets.