Greece Corruption…More On Yesterday’s Turmoil
Posted by admin on May 7th, 2010
Yesterday I heard an interesting story via a radio show about Greece. Apparently, Greek tax collectors canvassed wealthy neighborhoods in and around Athens asking residences if they had a swimming pool in an effort to enforce an existing swimming pool tax. So how many admitted to having a pool? 324 residents. With that said, that same tax agency decided to investigate more and even had helicopters plot the skies to count the number of pools. As it turns out there are 16,974 swimming pools in those neighborhoods! Classic…so is that massive corruption or massive resentment toward a government that takes from wage earners to support a mammoth government that provides 1/3 of the nation’s jobs? Generally speaking, the motivation to cheat and lie is enhanced by anger and frustration. Don’t get me wrong…I am not condoning you to lie and cheat. It’s just an interesting relationship that could produce similar results anywhere.
Today’s rioters will be individual investors looking to recoup losses from yesterday’s fiasco. There is no doubt this mess is going to cost a lot of money to clean up at one point during the session the market was down nearly $1 trillion dollars. That’s real money even these days. The word is that NASDAQ will cancel stock trades up or down 60% or more between 2:40 and 3:00. Here is the list of companies whose trades will be canceled. In the meantime I’ve read conflicting reports on that infamous Proctor & Gamble (PG) trade. The early word, as mentioned in yesterday’s post, was a trader at Citigroup put in a trade but hit the “B” key rather than “M” which sent the shares spiraling. The NYSE and Citigroup denied the trade ever happened. If there was in fact a bad trade, the details remain to be seen.
The other question is what happens with high frequency traders? Already a focus of regulators, its likely even more pressure will be put on this group of electronic cowboys. On April 13th, the SEC voted unanimously to tag high frequency trades with ID numbers that would give the SEC access to information. I agree that more transparency is needed. The plan will cover about 400 of the largest traders. Parameters to be tagged:
- Trading 2m shares a day or $20 million a day
- Trading 20m shares a month or $200 million a month
This all comes at a bad time for the NYSE Euronext, which is close to opening its new 400,000 square foot facility 35 miles away from Wall Street. The $250 million facility in Mahwah, New Jersey, is designed to handle the electronic trades from high frequency traders.
Enjoy your weekend! Have a drink as it’s been a crazy week.
-Samir
Posted in Economic/Financial | No Comments »
