Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
Political Week Presurres US Stock Market - 25th Mar 17
London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - 25th Mar 17
Will Washington Risk WW3 to Block an Emerging EU-Russia Superstate - 25th Mar 17
Unaccountable Military Industrial Complex Is Destroying America and the Rest Of The World Too - 25th Mar 17
Silver Mining Stock Fundamentals - 24th Mar 17
A Walk Down the Dark Road of Bad Government - 24th Mar 17
Is Stock Market Flash Crash Postponed Until Monday? - 24th Mar 17
Stock Market Bubble and Gold - 24th Mar 17
Maps Of Past Empires That Can Tell Us About The Future - 24th Mar 17
SNP Independent Scotland's Destiny With Economic Catastrophe, the English Subsidy - IndyRef2 - 24th Mar 17
Stock Market VIX Cycles Set To Explode March/April 2017 – Part II - 23rd Mar 17
Is Now a Good Time to Invest in the US Housing Market? - 23rd Mar 17
The Stock Market Is a Present-Day Version of Pavlov’s Dog - 23rd Mar 17
US Budget - There’s Almost Nothing Left To Cut - 23rd Mar 17
Stock Market Upward Reversal Or Just Quick Rebound Before Another Leg Down? - 23rd Mar 17
Trends to Look Out For as a Modern-day Landlord - 23rd Mar 17
Here’s Why Interstate Health Insurance Won’t Fix Obamacare / Trumpcare - 23rd Mar 17
China’s Biggest Limitations Determine the Future of East Asia - 23rd Mar 17
This is About So Much More Than Trump and Brexit - 23rd Mar 17
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17
Physical Metals Demand Plus Manipulation Suits Will Break Paper Market - 20th Mar 17
Stock Market Uncertainty Following Interest Rate Increase - Will Uptrend Continue? - 20th Mar 17
Precious Metals : Who’s in Charge ? - 20th Mar 17
Stock Market Correction Continues - 20th Mar 17
Why The Status Quo Is Under Increasing Attack By 'Populist People Power' - 20th Mar 17
Why the SNP WILL Destroy Scotland, Exit UK Single Market for EU - IndyRef2 - 19th Mar 17
Crypto Craziness: Bitcoin Plunges on Fork Concerns, Steem Skyrockets and Dash Surges Above $100 - 19th Mar 17
What ‘Ice-Nine’ Means for Your Money - 19th Mar 17
Stock Market 4 Year Cycle - 18th Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

Time To Breakup Goldman Sachs

Politics / Credit Crisis 2009 Apr 13, 2009 - 06:20 AM GMT

By: Mike_Shedlock

Politics Best Financial Markets Analysis ArticleIt's time to breakup Goldman Sachs, Citigroup, and for that matter any bank or holding company deemed too big to fail. It's not just the "too big to fail" hazard that is troubling, it's also the power these corporations have and the potential to abuse that power that is also troubling.

Please consider the article Incredibly Shrinking Market Liquidity as posted on the Zero Hedge blog.


A very interesting data point, also provided by the NYSE, implicates none other than administration darling Goldman Sachs in yet another potentially troubling development. The chart below demonstrates the program trading broken down by the top 15 most active NYSE member firms. I bring your attention to the total, principal, customer facilitation and agency columns.



Key to note here is that Goldman's program trading principal to agency+customer facilitation ratio is a staggering 5x, which is multiples higher than both the second most active program trader and the average ratio of the NYSE, both at or below 1x. The implication is that Goldman Sachs, due to its preeminent position not only as one of the world's largest broker/dealers (pardon, Bank Holding Companies), but also as being on the top of the high-frequency trading/liquidity provision "food chain", trades much more often for its own (principal) benefit, likely in tandem with the other top dogs on the list: RenTec, Highbridge (JP Morgan), and GETCO.

In this light, the program trading spike over the past week could be perceived as much more sinister. For conspiracy lovers, long searching for any circumstantial evidence to catch the mysterious "plunge protection team" in action, you should look no further than this.

Readers know that I am not a subscriber to Plunge Protection Team (PPT) theory. However, I am open to the idea that it is possible for Broker Dealers or Bank Holding Companies to be trading their own accounts ahead of customer accounts and/or advising clients (or the public) one way (and trading the other), on purpose.

That is not a direct accusation. Instead it is a statement of what is possible due to lack of sufficient separation between trading groups, advisory groups, and a myriad of hedge funds sponsored by the broker dealers and bank holding companies.

That Goldman, Citigroup, and the now defunct Bear Stearns and Lehman, etc, could ever be in a position to front run trades based on analysis they know they are going to publish, and/or to purposely make recommendations to ignite short squeezes or selloffs based on positions they hold is simply wrong.

Citibank to Investors: We Suggest You Bet Against Us

Please consider the following horrendous advice last week by Citigroup. Flashback March 31, 2009 Citibank to Investors: We Suggest You Bet Against Us.

March 31 (Bloomberg)Investors should buy put options on financial companies because derivatives-market trading suggests the industry will retreat after a 43 percent surge since March 6, Citigroup Inc. said. He recommended puts giving the right to sell the Financial Select Sector SPDR Fund [XLF], an exchange-traded fund that tracks a basket of bank stocks, for $8 before May 15.

XLF Daily Chart



With Citigroup, one should never rule out sheer incompetence as the most likely answer for anything it says or does, but one also cannot help but wonder if Citigroup was on the winning side of that recommendation as a market maker.

Inquiring minds will note that Citigroup's advice came out just before a ruling on mark-to-market accounting that was expected to be (and was) very favorable to every company in the XLF. The chart shows that XLF exploded North.

Was this sheer incompetence by Citigroup or something more sinister? What about recommendations from Goldman? Can anyone say for sure? Even if someone thinks they can, are the answers believable?

Goldman Harasses Mike Morgan

Blogger Mike Morgan of MorganFlorida and owner of website GoldmanSachs666 is being threatened by Goldman Sachs. Please consider Goldman Sachs hires law firm to shut blogger's site.

Goldman Sachs is attempting to shut down a dissident blogger who is extremely critical of the investment bank, its board members and its practices.

The bank has instructed Wall Street law firm Chadbourne & Parke to pursue blogger Mike Morgan, warning him in a recent cease-and-desist letter that he may face legal action if he does not close down his website.

Florida-based Mr Morgan began a blog entitled "Facts about Goldman Sachs" – the web address for which is goldmansachs666.com – just a few weeks ago.

In that time Mr Morgan, a registered investment adviser, has added a number of posts to the site, including one entitled "Does Goldman Sachs run the world?". However, many of the posts relate to other Wall Street firms and issues.

According to Chadbourne & Parke's letter, dated April 8, the bank is rattled because the site "violates several of Goldman Sachs' intellectual property rights" and also "implies a relationship" with the bank itself.

Foolish Tactics By Goldman Sachs

I am not a lawyer but I suggest Goldman is about to make fools out of themselves. To allege the site "implies a relationship" with Goldman Sachs is complete nonsense. The opening statement on Morgan's website is "This website has NOT been approved by Goldman Sachs, nor does this website have any affiliation with Goldman Sachs."

If I was the judge handling this case, I would throw out the lawsuit, chastise Goldman's lawyers for wasting court time, order Goldman to reimburse Mike Morgan, and fine Goldman for good measure to make sure they do not do this again to anyone else.

If nothing else, Goldman's tactics are going irritate others into digging into what Goldman is doing and publicizing it. In fact, Goldman's ridiculous harassment of Mike Morgan, is what inspired this post.

I hope Karl Denninger at The Market Ticker, Yves at Naked Capitalism, and Barry Ritholtz at the Big Picture Blog all chime in on both aspects of this post:

1) The potential for improprieties at the Broker Dealers and Bank Holding Companies.
2) The ridiculousness of Goldman's lawsuit against Mike Morgan and various (equally ridiculous) lawsuits against Aaron Krowne at Mortgage Lender Implode-O-Meter. Please see Scrappy Mortgage Blogger Fights Bad Court Ruling as well as New Hampshire Court Tramples on Constitution for details.

Citigroup, Goldman, etc, all maintain their trading units are adequately separated from their research units and those units do not talk to each other. Really? Even if it is true, who can believe it? The only way to permanently get rid of allegations of improprieties is to break up the corporations so that it is physically impossible for such improprieties to occur. Goldman Sachs and others need to be broken up.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2009 Mike Shedlock, All Rights Reserved

Mike Shedlock Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife