Wall Street blames China for meltdown - What is the truth?

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Chinese President Xi Jinping

Here we go again, when anything goes wrong in the world Obama, our politicians, and now Wall Street, blame China.  As I have written several times, maybe we should not rush to judgement until the facts have arrived.  In the meantime there are some truths that might suggest our economic experts continue to be wrong.

For example, ever since the second greatest stock market crash in history when President Obama took office, America has been struggling to regain an economic foothold.  In the past six years we have had one of the slowest recoveries in history and many people wonder if anything really did recover.

Well everyone on Wall Street certainly recovered including those nasty banks who manipulated the market and nearly destroyed the nation.  The greatest beneficiary was Goldman Sachs who also happened to be the largest contributor to the Obama campaign.

So great was their influence that Rahm Emanuel of Goldman became the first Obama White House Chief of Staff. A CBS News analysis of the revolving door between Goldman and government reveals at least four dozen former employees, lobbyists or advisers at the highest reaches of power both in Washington and around the world.

One would think after the loss of trillions of dollars of middle class wealth, home values, retirement funds, etc., Obama would have us prepared to manage another financial crisis. Yet in the most current economic crisis there is silence from the White House.  Come to think of it, after all these years since the last crisis, there has been virtually no prosecutions, no fat cats in jail, no banks dissolved, nothing considering the degree of the crime.

So here we are, six years later blaming China for our stock woes.  What happened to all the financial reforms?  Here is a list of  government agencies and congressional committees and subcommittees, the executive and legislative branch resources, to maintain our economy.

U.S. Government Executive Branch Financial Regulators

Bank and Market Financial Regulators

US Department of Treasury

US Department of Justice

Office of the Comptroller of the Currency

Office of Thrift Supervision

Securities and Exchange Commission

Federal Deposit Insurance Corporation

Commodities Futures Trading Commission

National Credit Union Administration

Non-Bank Financial Regulators

Federal Housing Finance Agency

Consumer Financial Protection Bureau

Regulatory Umbrella Groups

Financial Stability Oversight Council

Federal Financial Institution Examinations Council

President’s Working Group on Financial Markets

Non-Bank Capital Requirements

Federal Housing Finance Agency

The SEC’s Net Capital Rule

CFTC Capital Requirements

Foreign Exchange Markets

Treasury Securities

Private Securities Markets

Federal Reserve System

CFTC Is Next Agency To Consider Regulating Algorithmic Trading

By Jenny E. Cieplak on June 9, 2015

U.S. Government Legislative Branch Financial Oversight

The House of Representatives

The House of Representatives House Committee on Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit House Committee on Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Subcommittee on Energy and Water Development, and Related Agencies Subcommittee on Financial Services and General Government Subcommittee on Interior and Environment, and Related Agencies Subcommittee on Labor, Health and Human Services, Education, and Related Agencies Subcommittee on Commerce, Justice, Science, and Related Agencies, Subcommittee on Transportation, Housing and Urban Development, and Related Agencies House Committee on Armed Services Subcommittee on Emerging Threats and Capabilities House Committee on Budget House Committee on Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade Subcommittee on Energy and Power Subcommittee on Environment and Economy Subcommittee on Oversight and Investigations Subcommittee on Communications and Technology House Committee on Education and the Workforce Subcommittee on Health, Employment, Labor, and Pensions Subcommittee on Higher Education and Workforce Training Subcommittee on Workforce Protections House Committee on Ethics House Committee on Foreign Affairs Subcommittee on Africa, Global Health, Global Human Rights, and International Organizations Subcommittee on Asia and the Pacific Subcommittee on Europe, Eurasia, and Emerging Threats Subcommittee on the Middle East and North Africa Subcommittee on Terrorism, Nonproliferation, and Trade Subcommittee on the Western Hemisphere House Committee on Financial Services Subcommittee on Financial Institutions and Consumer Credit Subcommittee on Housing and Insurance Subcommittee on Capital Markets and Government Sponsored Enterprises Subcommittee on Monetary Policy and Trade Subcommittee on Oversight and Investigations House Committee on Oversight and Government Reform Subcommittee on Health Care, Benefits, and Administrative Rules Subcommittee on the Interior Subcommittee on Information Technology Subcommittee on National Security Subcommittee on Transportation and Public Assets House Committee on Homeland Security Subcommittee on Cybersecurity, Infrastructure Protection, and Security Technologies Subcommittee on Emergency Preparedness, Response, and Communications Subcommittee on Counterterriorism and Intelligence Subcommittee on Oversight and Management Efficiency Subcommittee on Transportation Security House Permanent Select Committee on Intelligence Subcommittee on CIA Subcommittee on Department of Defense Intelligence and Overhead Architecture Subcommittee on NSA and Cybersecurity Subcommittee on Emerging Threats House Committee on the Judiciary Subcommittee on the Constitution and Civil Justice Subcommittee on Courts, Intellectual Property, and the Internet Subcommittee on Crime, Terrorism, Homeland Security, and Investigations Subcommittee on Immigration and Border Security Subcommittee on Regulatory Reform, Commercial, and Antitrust Law House Committee on Natural Resources Subcommittee on Energy and Mineral Resources Subcommittee on Indian, Insular and Alaska Native Affairs Subcommittee on Federal Lands Subcommittee on Oversight and Investigations Subcommittee on Water, Power and Oceans Subcommittee on the Legislative and Budget Process Subcommittee on Rules and Organization of the House House Committee on Science, Space, and Technology Subcommittee on Energy Subcommittee on Environment Subcommittee on Oversight Subcommittee on Research and Technology Subcommittee on Space House Committee on Small Business Subcommittee on Agriculture, Energy and Trade Subcommittee on Contracting and the Workforce Subcommittee on Economic Growth, Tax and Capital Access Subcommittee on Health and Technology Subcommittee on Investigations, Oversight and Regulations House Committee on Transportation and Infrastructure Subcommittee on Aviation Subcommittee on Coast Guard and Maritime Transportation Subcommittee on Economic Development, Public Buildings and Emergency Management Subcommittee on Highways and Transit Subcommittee on Railroads, Pipelines, and Hazardous Materials Subcommittee on Water Resources and Environment House Committee on Ways and Means Subcommittee on Health Subcommittee on Human Resources Subcommittee on Oversight Subcommittee on Select Revenue Measures Subcommittee on Social Security Subcommittee on Trade

The Senate

The Senate Senate Committee on Agriculture, Nutrition, and Forestry Subcommittee on General Farm Commodities, Risk Management and Trade Subcommittee on Conservation, Forestry and Natural Resources Subcommittee on Horticulture, Research, Biotechnology, and Foreign Agriculture Subcommittee on Livestock, Marketing and Agricultural Security Subcommittee on Nutrition, Speciality Crops and Agricultural Research Subcommittee on Rural Development and Energy Senate Committee on Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Related Agencies Subcommittee on Commerce, Justice, and Science, and Related Agencies Subcommittee on Defense Subcommittee on Energy and Water Development Subcommittee on the Financial Services and General Government Subcommittee on State, Foreign Operations, and Related Programs Subcommittee on Homeland Security Subcommittee on Interior, Environment, and Related Agencies Subcommittee on Labor, Health and Human Services, Education, and Related Agencies Subcommittee on Legislative Branch Subcommittee on Military Construction, Veterans Affairs, and Related Agencies Subcommittee on Transportation, Housing and Urban Development, and Related Agencies Senate Committee on Armed Services Subcommittee on Airland Subcommittee on Readiness and Management Support Subcommittee on Seapower Subcommittee on Strategic Forces Subcommittee on Emerging Threats and Capabilities Senate Committee on Banking, Housing, and Urban Affairs Subcommittee on Economic Policy Subcommittee on Financial Institutions and Consumer Protection Subcommittee on Housing, Transportation, and Community Development Subcommittee on National Security and International Trade and Finance Subcommittee on Securities, Insurance, and Investment Senate Committee on the Budget Senate Committee on Commerce, Science, and Transportation Subcommittee on Aviation Operations, Safety, and Security Subcommittee on Communications, Technology, Innovation and the Internet Subcommittee on Consumer Protection, Product Safety, Insurance, and Data Security Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard Subcommittee on Space, Science and Competitiveness Subcommittee on Tourism, Competitiveness, and Innovation Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security Senate Committee on Energy and Natural Resources Subcommittee on Energy Subcommittee on Public Lands, Forests and Mining Subcommittee on National Parks Subcommittee on Water and Power Senate Committee on Environment and Public Works Subcommittee on Clean Air and Nuclear Safety Subcommittee on Superfund, Waste Management, and Regulatory Oversight Subcommittee on Transportation and Infrastructure Subcommittee on Fisheries, Water and Wildlife Senate Select Committee on Ethics Senate Committee on Finance Subcommittee on Energy, Natural Resources, and Infrastructure Subcommittee on Fiscal Responsibility and Economic Growth Subcommittee on Health Care Subcommittee on Social Security, Pensions, and Family Policy Subcommittee on Taxation and IRS Oversight Subcommittee on International Trade, Customs, and Global Competitiveness Senate Committee on Foreign Relations Subcommittee on State Department and USAID Management, International Operations, and Bilateral International Development Subcommittee on Africa and Global Health Policy Subcommittee on East Asia, the Pacific and International Cybersecurity Policy Subcommittee on Europe and Regional Security Cooperation Subcommittee on Multilateral International Development, Multilateral Institutions and International Economic, Energy, and Environmental Policy Subcommittee on Near Eastern and South Asia, Central Asia and Counterterrorism Subcommittee on Western Hemisphere, Transnational Crime, Civilian Security, Democracy, Human Rights and Global Women's Issues Senate Committee on Homeland Security & Governmental Affairs Subcommittee on Financial and Contracting Oversight Subcommittee on Federal Spending Oversight and Emergency Management Permanent Subcommittee on Investigations Subcommittee on Regulatory Affairs and Federal Management Senate Committee on Health, Education, Labor, and Pensions Subcommittee on Primary Health and Retirement Security Senate Select Committee on Intelligence Senate Committee on the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights Subcommittee on Bankruptcy and the Courts Subcommittee on The Constitution Subcommittee on Crime and Terrorism Subcommittee on Immigration and the National Interest Subcommittee on Oversight, Agency Action, Federal Rights and Federal Courts Subcommittee on Privacy, Technology and the Law Senate Committee on Small Business and Entrepreneurship Senate Committee on Veterans' Affairs

So far no word from any of these groups as to what they are going to do regarding market manipulations from the kings of Wall Street.

Ironically, when it comes to the Chinese, they are all over the news with their crackdown on corruption, unfair business practices, and market manipulations.  Why is it the Chinese are going after the American companies who are introducing American crooked business practices to the Chinese market, assuming the Chinese will never figure out what went wrong.

Of course it is a safe assumption since the dozens and dozens of American regulators seem to have no interest in stopping the practices here.  Look at the headlines the Chinese have generated around the world while we sit on our butts and cast stones.

Leadership is the first requirement for fixing things and Chinese President Xi Jinping has launched one of the largest and most aggressive anti-corruption campaigns in the world. First he took on those throughout the government and now he is focusing on those who have undermined the Chinese efforts to improve the quality of life for the people.
  
As for the stock market, in China, it only takes one agency to do what the dozens of US agencies cannot do and that is the China Securities Regulatory Commission.  Once again President Jinping has attacked the problem where it is needed.  Maybe they can come here and show us what to do.

These are the headlines around the world concerning the Chinese effort to drive the crooks out of the financial markets.

China crackdown over rout chills market

China turns up heat on market players

Beijing scraps large-scale stock buying

Authorities to step up crackdown on those ‘destabilising’ market

China says 197 punished in crackdown on online rumors

China stocks slide as crackdown on speculators spreads, lose 11 percent in August

SHANGHAI

China warns securities industry as crackdown on stock market irregularities expected to intensify

Securities regulator orders industry to step up supervision after brokerage staff, officials and journalist are detained over unethical trading

China arrests nearly 200 in stock market crackdown

Shadow lending crackdown looms over China’s stock market

China stock exchanges step up crackdown on short-selling

China’s (Renewed) Crackdown on Insider Trading

Avic Units Targeted In China's Crackdown On Sell-Offs

China accuses brokers of manipulating share prices during stock market crisis

Beijing’s police ministry said it has launched a criminal investigation into unlicensed companies that financed speculative trading

China accuses trading firms of manipulating stocks

Wall Street Breakfast: China Heightens Curbs In Market Crackdown

Aug. 4, 2015 7:06 AM ET
   
China has unveiled more rules that make it harder for speculators to profit from hourly changes in stock prices. Under the new guidelines, short sellers must wait at least one day to cover their positions and repay loans used to buy shares.

Behind enemy lines - foreign hedge funds thrive in China

China stock exchanges are stepping up a crackdown on short-selling
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The Stock Market - Machines versus Man and Womankind - the People have no chance!

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It sure is great to know that President Obama solved our economic woes and saved the American public from the greed mongers on Wall Street.  He brought solid growth to our economy and stability to our markets.  Drove the unemployment rate down and kept the interest rate low.

Well, at least that is the political spin.

The truth is quite the opposite if truth were exposed to the people but that will never happen with the corporate, political, news media merger of special interests assuring no one is in a position to tell the truth.

Take our financial crisis now underway in which the American stock markets have lost over Four trillion dollars in eight days, most likely the greatest loss of value in history.  Not a single word from our President, Treasury Secretary, nor Chairwoman of the Federal Reserve Bank.

The world is in a financial meltdown and NOTHING from our president!  Makes one wonder who he is trying to protect?

High Frequency Trading (HFT) has taken over our stock markets and taken down the world financial system and our leaders have not even blinked.

Do you know what HFT means to us?  It means no more brains, with a heart and soul, can control the market trends.  It means our banks have insulated themselves so well they have no responsibility for what happens to the market.

It means market volatility is imbedded in a market that was supposed to maintain stability.

In short, our government and our banks have sold their souls to the Devil and the Devil is in the shape of an algorithm.

An algorithm (pronounced AL-go-rith-um) is a procedure or formula for solving a problem. The word derives from the name of the mathematician, Mohammed ibn-Musa al-Khwarizmi, who was part of the royal court in Baghdad and who lived from about 780 to 850.

Contribution of Al-Khwarizmi to Mathematics and Geography

By: N. Akmal Ayyubi

Muhammad ibn Musa Al-Khwarizmi is one of the greatest scientific minds of the medieval period and a most important Muslim mathematician who was justly called the 'father of algebra'. Besides his founding the science of jabr, he made major contributions in astronomy and mathematical geography. In this article, focus is laid on his mathematical work in the field of algebra and his contribution in setting the foundation of the Islamic tradition of mathematical geography and cartography.

Introduction

Islam gave birth to a new civilization that spread from China in the east, India in the south east, Russia in the north, and Anatolia in the west of Asia, to East and North Africa up to the Mediterranean regions of Southern Europe. This civilisation was marked by a deep interest in science. In the heart of the Islamic scientific tradition lays the queen of sciences, mathematics, where the scholars of bilad al-Islam (lands of Islam) excelled in all its branches practiced in pre-modern times.

One of the greatest minds of the early mathematical production in Arabic was Abu Abdullah Muhammad ibn Musa al-Khwarizmi (b. before 800, d. after 847 in Baghdad) who was a mathematician and astronomer as well as a geographer and a historian. It is said that he is the author in Arabic of one of the oldest astronomical tables, of one the oldest works on arithmetic and the oldest work on algebra; some of his scientific contributions were translated into Latin and were used until the 16th century as the principal mathematical textbooks in European universities. Originally he belonged to Khwârazm (modern Khiwa) situated in Turkistan but he carried on his scientific career in Baghdad and all his works are in Arabic.

He was summoned to Baghdad by Abbasid Caliph Al-Ma'mun (213-833), who was a patron of knowledge and learning. Al-Ma'mun established the famous Bayt al-Hikma (House of Wisdom) which worked on the model of a library and a research academy. It had a large and rich library (Khizânat Kutub al-Hikma) and distinguished scholars of various faiths were assembled to produce scientific masterpieces as well as to translate faithfully nearly all the great and important ancient works of Greek, Sanskrit, Pahlavi and of other languages into Arabic. Muhammad al-Khwarizmi, according to Ibn al-Nadîm and Ibn al-Qiftî  (and as it is quoted by the late Aydin Sayili), was attached to (or devoted himself entirely to) Khizânat al-Hikma.

It is also said that he was appointed court astronomer of Caliph Al-Ma'mun who also commissioned him to prepare abstracts from one of the Indian books entitled Surya Siddhanta which was called al-Sindhind in Arabic. Al-Khwarizmi's name is linked to the translation into Arabic of certain Greek works and he also produced his own scholarly works not only on astronomy and mathematics but also in geography and history. It was for Caliph al-Ma'mun that Al-Khwarizmi composed his astronomical treatise and dedicated his book on Algebra.

Muhammad ibn Musa Al-Khwarizmi is one of the greatest scientific minds of the medieval period and the most important Muslim mathematician, justly called the 'father of algebra'. He wrote the Kitâb al-Jem wa'l Tafrîq bi Hisâb al-Hind also called Kitâb Hisâb al-adad al-Hindî on arithmetic in which he used Indian numerals including zero in place of depicting numbers by the letters of the alphabet and the decimal notations or numeration by position for the first time. It deals with the four basic operations of addition, subtraction, multiplication and division as well as with both common and sexagesimal fractions and the extraction of the square root. The original Arabic text of the book is lost and only its Latin translation is available.

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Now you know, our financial trading system consists of High Frequency Trading formulas based on the work of a Persian Islamist developed over 1,500 years ago.

These algorithms enable a select number of super computers to buy and sell stock at a speed far beyond the human capacity to direct, let alone manage. On a normal trading day High Frequency Trading is responsible for about 50% of the trades and seven billion shares are about the number traded daily.

Black Monday of this week saw 13.9 billion shares traded, almost double the normal volume, as the market began a wild three-day spiral that ended a week of high tension investing and left traders staggering at what happened.  The vast majority of those trades were by HFTs. 

Most of the increased volume was HFT, which is formula not human driven.  Events took place showing humans have clearly lost control of our markets.  Stocks dropped over 1,000 points in less than an hour, far more than the greatest single day loss in history of 777 points.

In just two days, the S&P 500 lost $900 billion in value, and total losses across the world for just the last week were over FOUR TRILLION DOLLARS.  That is more than the entire United States budget ($3.8 trillion) for 2015.  In the US alone over $2.1 trillion was lost in six days.

Imagine that, the market lost 1,000 points before anyone could react.  All the new gimmicks the Obama administration ordered to protect stock manipulation failed because the algorithms knew exactly when to stop driving the market up or down to avoid detection by the SEC.  On Tuesday the market lost almost 700 points the last 30 minutes.

   

So what about the circuit-breakers that are supposed to suspend trading and calm the market, well on Monday there were 1,200 market stops and they had no control over events that took place.  It was still the largest market loss in history.

Installed after the May 2010 flash crash, the so-called circuit breakers are designed to slow down dramatic selling or buying. They are typically triggered when stocks dive or spike by a certain amount in a matter of minutes. Think of it as a time out. Trading is halted for five minutes, giving investors a chance to calm down and allowing cooler heads to step into the market.

China is blamed for our troubles but in truth, greed is feeding the market and the High Frequency Trading is stealing billions for a very limited number of beneficiaries.  Our loss of control is so severe Congressional and Justice Department investigations should be launched, but are not even being discussed by our elected officials.

Where is the outcry?  Where are the protectors of the people?  Have we finally lost control to the machines?

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