Federal Reserve Announces New Bailout Trick

This story was very funny. Banks may now make term deposits at the Federal Reserve, earning interest. The maximum interest rate is 0.75%, the current Discount Rate. Do you see the bailout?

Large banks may borrow at the Fed Funds Rate, currently 0.25%. Therefore, large banks can borrow at the Fed Funds Rate and lend that money right back to the Federal Reserve. This is a guaranteed riskless profit for the banksters.

The interest rate on these "term deposits" will necessarily be greater than corresponding Treasury Notes. Otherwise, banks would buy Treasury Notes instead of making a term deposit at the Federal Reserve.

This program is a pure bailout for banks. They are borrowing at the Fed Funds Rate and lending at the "term deposit Rate". Only the largest banks may borrow from the Federal Reserve directly at the Fed Funds Rate. Other banks pay higher rates.

The Federal Reserve insiders keep coming up with new tricks. The reason is that an old program is too closely associated with evil. New names for "print money and give it away" must be continually invented.

I like the way the Federal Reserve spokesman says "We're removing excess liquidity." The reality is that the Federal Reserve is literally printing money and giving it away to the banksters.

Heart Disease and Brushing Your Teeth

This story had an obvious logical fallacy. Brushing your teeth regularly prevents heart disease! Do you see the error?

This is "correlation confused with causation". It's believable that people who brush their teeth regularly have good health habits overall, and are therefore less likely to develop heart disease.

This is a common mistake by the State media/science engine. Correlation is not the same as causation.

Police With Assault Rifles

I saw something amusing/offensive. In downtown Manhattan during rush hour, two policemen with assault rifles were standing in the subway, by the turnstiles.

Under what circumstances would they actually use the assault rifles? Are they really going to fire them into a crowded subway?

Even if there were terrorists, it would be one or two guys with a bomb. I can't imagine any scenario where an assault rifle would be useful.

The police were probably there for intimidation purposes. They're providing the illusion of security, while accomplishing nothing.

I thought about saying "Hey stupid! What do you think you're doing?" I didn't feel like provoking a confrontation. I don't fit their target profile. They didn't notice me.

The policemen seemed to sort of know that they were doing something ridiculous. They were standing there trying to look tough.

Someone told me that the police with assault rifles are deployed only when a VIP visits. When the President visits, there's an announcement. When other VIPs visit, there's no public announcement. Most/all people probably wouldn't even recognize them. Many high-ranking State insiders are never publicly mentioned. There may have been some VIPs visiting downtown Manhattan, on the day those police were deployed. It is interesting that State insiders are so scared that they deployed those police, even though there was no public announcement of anything important.

The police with assault rifles are an example of State waste and intimidation. I can't imagine any scenario where an assault rifle would be useful on the subway. The police were probably ordered to just stand there and look tough. They probably would not have stopped a turnstile-jumper or pickpocket, even if they noticed it.

Nobody at the SEC Knows Perl

This story was funny.

The Securities and Exchange Commission took a step Wednesday toward making that job (investigating the sudden market crash) a bit easier by proposing to unify the collection of trading data across all stock and options markets.

The SEC is requiring all exchanges to keep their logfiles in a common format. Allegedly, this will facilitate future investigations.

It would take a competent Perl programmer a couple of hours to convert an exchange's logfiles into a common format. It would be a simple Perl script to parse out the logfile and figure out who was selling during that 15 minute period. The exchanges have to keep track of the buyer and seller for each order/trade.

A FIX message literally is symbol=XYZ, price=XX.XX, quantity=X, accountID=XXXXX, buy/sell=X, time=HH:MM:SS:MMM. It's a very simple Perl script to parse that out. (There are some other minor details.) Almost every exchange keeps its records in FIX format. The other common formats are similarly parseable.

If the SEC can't figure out how to hire a competent Perl programmer, they could hire any CS grad student to assist with their investigation.

The vast majority of financial programming is "convert data from one format to another format".

The SEC seems to be covering up the true cause of the sudden market crash on May 6. This is being presented as a fake excuse for their lousy investigation. I can't believe that zero competent programmers are working for the SEC.

An Example of State Waste

This story was interesting.

At a fundraising dinner in New York City last night, President Obama raised more $1.3 million for the Democratic Congressional Campaign Committee.

President Obama arrived via helicopter during rush hour in downtown Manhattan.

Do you see the huge waste of money/wealth? I'll give you a chance to figure it out on your own.

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President Obama raised $1.3 million for the Democratic party. How much did his security arrangements cost? What was the cost of blocking highways and streets during rush hour? A lot of police get paid overtime. A lot of police travel with the President to provide security.

It was one huge waste. It would have been cheaper to have the Federal government pay the Democratic party $1.3M, than to pay the cost of Obama's security. Of course, that would make the corruption more obvious.

The security team protecting the President is an evil fnord. It provides the illusion "This guy is important!" The President is a figurehead and an interchangeable cog.

Strengthening the EU

I was watching the Communism Channel and saw an interesting pro-State troll. He was talking about the Greek debt crisis.

He said "The problem is that the EU central government doesn't have enough power! Each individual member country shouldn't have the power to make its own budget!"

That answers a question I'd been wondering about. "How are State parasites going to claim more power, via the Greek debt crisis?" Obviously, the EU isn't going to fall apart. Once a government is created, insiders won't voluntarily give up their power.

Via "Problem! Reaction! Solution!", State parasites will use the crisis they created to claim more power. The solution is not "The EU was a bad idea." The solution will be "The EU central government needs more power!"

State parasites win either way. If things go well, it's due to their brilliant leadership. When things go poorly, that's an excuse to claim more power. In fact, the occasional crisis is desirable. That keeps the slaves scared and demanding more State power.

Germany Allows Naked Short Selling

This story was pretty funny. German's stock market regulator announced a ban on naked short selling for 10 German financial stocks. They also banned the short selling of certain government bonds.

The obvious response is "So it's OK to naked short sell other stocks?"

In an honest short sale, the trader borrows shares from someone else. The person buying get actual shares. The person lending consented to the loan. For a naked short sale, shares are not borrowed. The person buying is forced to lend the seller shares. Some traders naked short sell on purpose, to manipulate prices.

Naked short selling is already illegal. It's illegal, but the law is not enforced. A stock trade is just an entry in a database. If there's a "failure to deliver" or naked short sale, the policy is to merely carry the position forward to the next day. There's no penalty for naked short selling.

If something is illegal, but there's no penalty or enforcement, then it's effectively legal. State parasites declare that possession of marijuana is illegal. They don't merely say "Please don't do it!" A lot of police are searching for people who sell/grow/smoke marijuana. They will assault violators. There's no enforcement of the naked short selling ban.

Financial industry insiders love naked short selling. They can push down the stock of any corporation controlled by someone they don't like. For example, suppose Sumner Redstone didn't behave as CEO of CBS/Viacom. Then, the banksters would naked short sell the stock, pushing down the price. Then, they'd arrange for a leveraged buyout and hostile takeover. Sumner Redstone would be forced to vote for the merger, lest his shareholders sue for cheating them.

Naked short selling is an excellent stock market manipulation tactic. Via "captured regulators", the banksters lobbied for lax enforcement of the naked short selling law.

If I tried to naked short sell, my broker wouldn't let me. Only the banksters may naked short sell. That makes the partial naked short selling ban ironic. The only person who can naked short sell is someone who works for a large bank! Naked short selling is banned, but only for bank stocks!

It's like the banksters agreed "It's OK to steal. However, we agree to not steal from each other!"

Contrast this with what the SEC did during the recent financial crisis. They banned *ALL* short selling of financial stocks, and not merely naked short selling. A market maker has to be able to short sell.

For example, an options market maker buys a call option, and then short sells the underlying to hedge. If all short selling is banned, then the market maker can't hedge the options he already bought/sold.

Germany's partial naked short selling ban is very offensive. It's like they declared "We're only enforcing the law when someone steals from a bankster." Naked short selling is counterfeiting and fraud. Naked short selling is already illegal. However, this law is not enforced.