Conspiracy To Hide Bubble-Formation

Conspiracy To Hide Bubble-Formation

Courtesy of Karl Denninger at The Market Ticker

In yet another move to make a mockery of so-called market transparency, and again with mad props to Zerohedge, we have this:

The Exchange has filed with the SEC to implement the decommissioning of the DPTR requirement following the July 10, 2009 trade date. Accordingly, the last required submission of the DPTR will be on July 14, 2009, which is the second business day after the last trade date for which the DPTR is required.

Go read the entire Zerohedge article; what this means, in short, is that the ability of people (like you and I) to see the fact that a handful of banks, most specifically Goldman Sachs, constitute the majority of NYSE trading volume – and they’re trading for their own book, not for customers, will no longer be disclosed.

This "back and forth trade" between a handful of institutions is nothing more than the old "pump and dump" game that has been played in the OTC market forever – and almost always screws the individual investor.

This is no different than you and I selling a house back and forth between us repeatedly, each time at a higher price.  We both appear to be geniuses as we’re both making a "profit", right?

Well, no.  One of us is destined to take a horrifying loss if we do not find a sucker to make the final transaction with.

The embedded scam is that real gains require real parties at interest and not a closed system of a couple of guys passing an asset back and forth in a transparent attempt to "bait" someone else into becoming the sucker to offload that asset to. 

The parallels to the housing bubble are not coincidence.  There is no "value" being created nor is there any actual value appreciation taking place when people pass an asset back and forth at ever-higher prices.  Only when there are lots of parties participating on their own, organically, does a market truly exist and does value align with price.  Otherwise the so-called "price" is nothing other than a cheap parlor trick.

Zerohedge has been documenting this game now for months as Goldman in particular has come to represent an outrageously large percentage of the entire NYSE volume.

The problem of course is that, at least on paper, market manipulation, irrespective of what form of parlor trick you choose to use, is a serious violation of the law.  Of course these violations of the law have been ignored for so long that nobody seems to care any more, but the fact remains that should the public come to believe that the NYSE has turned into nothing more than a gigantic pump-and-dump scheme operated by a handful of banks trading between themselves with publicly-guaranteed funds the consequences could be catastrophic.

So rather than stop it, the NYSE is doing what all good robber barons do – they’re obscuring the data so nobody can see it any more.

More "change we can believe in"; the blackjack dealer is once again stashing a whole bunch of aces and kings under the table for his use whenever he deems that he "should" have a blackjack, and you, once again, are the sucker just as you were in the housing bubble.

Wanna play some 21?

Update: The NYSE apparently didn’t like Zerohedge’s characterization and issued a response; my comment is the same as theirs – why not ADD to the disclosure instead of redacting the "older" format?  I’m with them on this – more disclosure always beats less.