Europe's top stock market in 2012? Greece

Πηγή: CNNMoney

By Mark Thompson

Dec 31 2012

Few would have bet on Greece being Europe's best performing stock market in 2012, but it managed to outstrip Germany's DAX, as international support silenced speculation about an imminent exit from the eurozone.

The ATHEX composite index of Greek shares chalked up gains of 33%, despite a fifth consecutive year of recession, record unemployment and the high-profile defection of Coca-Cola bottler Hellenic from the Athens market.

But Monday's close at 908 points still leaves it more than a third lower than it was two years ago, having fallen 52% in 2011.

This year's rally came as Greece's international partners agreed on a second bailout program, and gave a new government elected in June more time to meet its budget commitments. Strong messages of support from Germany and the European Central Bank helped draw a line through talk of a "Grexit", at least for now.

Blue-chip shares in Germany, which has carried most of the cost of rescuing Greece and funding Europe's permanent bailout fund, had a banner year. The DAX gained 29%, about twice the gain seen in France and other major European indices.

While Germany's economy has felt the impact of slower growth in China, and the recession across the eurozone, it was still able to grow through the first three quarters of the year, and acted as a magnet for equity investors who reduced their exposure to weaker European markets.

The DAX was also bolstered by the performance of stocks such as Volkswagen (VLKAF)and BMW, which benefited from a recovery in global auto sales, and the relatively low exposure to financial sector compared with other leading indices in Europe, including the FTSE 100, which gained only 5.6% this year.

Furthermore, the decline in the value of the euro against most major currencies helped Germany's exporters of industrial and consumer goods.

Mysterious Algorithm Was 4% of Trading Activity Last Week

Πηγή: CNBC
By: John Melloy
Oct 8 2012

A single mysterious computer program that placed orders — and then subsequently canceled them — made up 4 percent of all quote traffic in the U.S. stock market last week, according to the top tracker of high-frequency trading activity. The motive of the algorithm is still unclear.

The program placed orders in 25-millisecond bursts involving about 500 stocks, according to Nanex, a market data firm. The algorithm never executed a single trade, and it abruptly ended at about 10:30 a.m. ET Friday.

“Just goes to show you how just one person can have such an outsized impact on the market,” said Eric Hunsader, head of Nanex and the No. 1 detector of trading anomalies watching Wall Street today. “Exchanges are just not monitoring it.”

Hunsader’s sonar picked up that this was a single high-frequency trader after seeing the program’s pattern (200 fake quotes, then 400, then 1,000) repeated over and over. Also, it was being routed from the same place, the Nasdaq [COMP 3065.02 -47.33 (-1.52%) ].

“My guess is that the algo was testing the market, as high-frequency frequently does,” says Jon Najarian, co-founder of TradeMonster.com. “As soon as they add bandwidth, the HFT crowd sees how quickly they can top out to create latency.” (Read More: Unclear What Caused Kraft Spike: Nanex Founder.)

Translation: The ultimate goal of many of these programs is to gum up the system so it slows down the quote feed to others and allows the computer traders (with their co-located servers at the exchanges) to gain a money-making arbitrage opportunity.

The scariest part of this single program was that its millions of quotes accounted for 10 percent of the bandwidth that is allowed for trading on any given day, according to Nanex. (The size of the bandwidth pipe is determined by a group made up of the exchanges called the Consolidated Quote System.) (Read More: Cuban, Cooperman: Curb High-Frequency Trading.)

“This is pretty out there to see this affect this many stocks at the same time,” said Hunsader, adding that high-frequency traders are doing anything to “tip the odds in their favor.”

A Senate panel at the end of September sought answers on high-frequency trading, as investigators look into the best way to stop wealth-destroying events such as the Knight Capital Group [KCG 2.49 -0.06 (-2.35%) ]computer glitch in August and the market “flash crash” two years ago. (Read More: Ex-Insider Calls High-Frequency Trading ‘Cheating’.)

Regulators are trying to see how they can rein in the practice, which accounts for 70 percent of trading each day, without slowing down progress and profits for Wall Street and the U.S. exchanges.

“I feel a tax on order-stuffing is what the markets need at this point,” said David Greenberg of Greenberg Capital. “This will cut down on the number of erroneous bids and offers placed into the market at any given time and should help stabilize the trading environment.”

Hunsader warned that regulators better do something fast, speculating that this single program could have led to something very bad if big news broke, or if a sell-off occurred and one entity was hogging this much of the system.

Is Another Depression Possible?: A Comparison of "The Great Depression" and "The Great Recession"

Πηγή: Global Research
by Devon DB

Sep 30 2011

In 2007, the world became engulfed in the largest economic slump since the Great Depression. The crisis was so damaging it was coined “the Great Recession” and there was much comparison of the recession to the Great Depression of the 1930s in the mainstream media. However, what many failed to do was an in-depth analysis of both the Great Depression and the Great Recession, to compare and contrast to two. Thus, this article will be a comparison of both economic downfalls, ending in an analysis of the current economic situation America finds itself in and asking the question if another Great Depression is possible.

The decade prior to the 1930s, the US was in a time of great economic boom known as “The Roaring Twenties.” Yet while the nation’s income rose about 20% (from $74.3 billion in 1923 to $89 billion in 1929), the majority of this wealth went to the richest as can be seen by the fact that “in 1929 the top 0.1% of Americans had a combined income equal to the bottom 42%” [1] and that the disposable income per capita rose 9% from 1920 to 1929, while the top 1% enjoyed a massive 75% increase in per capita disposable income. This greatly increased wealth disparity and led to a imbalance in the US economy where demand wasn’t equal to supply and thus there was an oversupply of goods as “those [the poor and the middle class] whose needs were not satiated could not afford more, whereas the wealthy were satiated by spending only a small portion of their income,” [2] which caused the US to become reliant on three things to keep the economy afloat: credit sales, luxury spending, and investment by the rich. However, the major flaw of an economy based on credit sales, luxury spending, and investments was that all three of those activities depended upon people’s confidence in the economy. If confidence were to lower, then those activities would come to a halt and with it the US economy.

The massive inequality in wealth was not solely in terms of socioeconomic status, but also extended to corporations as well. During the first World War, the federal government subsidized farms in earnest as they wanted to feed not only Americans, but also Europeans. However, once the war ended, so did subsidies for farms. The government began to support the automobile and radio industries, with help from then-President Calvin Coolidge in the form of pressuring the Federal Reserve to keep easy credit, as to allow for both industries to easily be heavily invested in.

In the 1920s, the profits of the automobile and its connected industries such as lead, nickel, and steel skyrocketed, so much so, that by 1929 “a mere 200 corporations controlled approximately half of all corporate wealth.” [3] The automobile boom also led to the creation of hotels and motels which in turn led “Americans spent more than a $1 billion each year on the construction and maintenance of highways, and at least another $400 million annually for city streets” [4] in the 1920s. In addition to the massive success of the automobile industry, the radio industry also preformed exceptionally well as “Radio stations, electronic stores, and electricity companies all needed the radio to survive, and relied upon the constant growth of the radio market to expand and grow themselves.” [5]