Monday, October 11, 2010

Efficient Insanity On Wall Street

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One of my favorite clips from South Park, "The Importance of Saving Money":

This captures the inherent fraud and utter insanity underlying the fractional reserve banking system and Wall Street where financial firms seek to profit from gambling with other people's money with government/taxpayer backing in the event the given bets go wrong.

We are likely approaching the end-game of this gambit with the development of what I deem to be "efficient insanity" on Wall Street as computers have taking control of the trading activity on exchanges with the propensity for extremes of greed and fear "programmed in" to the algorithms used to make buy and sell decisions.

Here are some excellent videos revealing the "efficient insanity" that has taken shape on Wall Street starting with a 60 Minutes segment that appeared yesterday evening:

Also see: The Trillion Dollar Bet

Where will this mislead? doesn't take a quant to figure it out. We saw the first taste of what can happen with the May 6th "flash crash":

Interestingly, the flash crash occurred right after I was kicked out of my Bible study by the assistant pastor of my church. Certainly there is great truth to the following passage which we all must heed (including myself):

"Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also....No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money." [Matthew 6:19-21;24]

Literally, the "wealth" we accumulate in this ill-fated world can be gone in a "flash".

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