Lightening fast stock trading in dark pools

The global stock markets have been reeling from the explosion in high frequency and lightening fast stock trading which are being conducted the the rather opaque dark pools of trading which are not under the purview of the stock exchanger of their regulator. These exotic out of sight and bound trading are are mainly played by few like Goldman Sachs, Credit Suisse, etc. the SEC and Finra are keen of expanding the volume, breadth and width of disclosures. As much as 36% of stock trading is being carried in these murky black holes.

Not much is known on the modalities of trading being carried out. We only wish these mysterious instruments and deals should not become weapons of massive financial destruction, which should further weaken the already fragile financial and banking systems in Europe and US.

Many large European banks are already under the lens of SEC. BNP And Credit Suisse have already been fined hefty penalties up to $ 10 bn for the former. BoFA is already slapped with a total penalty plus customer payments of about $ 18 bn.

All the above comes in the wake of a prolonged period of uneasy calm on the financial markets. The VIX, which is a measure of market volatility, has been stagnating at unusually low levels. This is compounded by extremely low bond rates since 2008 in US as evinced by the Feds Funds Rate Targets between 0 and 0.25%.  Europe is buffeted by below 0% real interest rates and strong deflationary conditions in about half of the nations. Japan is desperately trying to recover from low investment by reducing corporate tax rates.

The global financial markets are indeed precariously placed.  China and some of the other emerging markets like India and Indonesia seem to be the only economies which might try to offset the gloom and doom of the global financial markets

Digital age and Singularity....

Today electronic surveillance cameras are obsequiously placed everywhere. Recording all our activities. On top of that millions of smart phones are capturing our images almost round the clock being artified by Instagram. All this too is being stored in the cavernous bowels of the Cloud which like Big Brother is watching every move of us a la Truman Show style.

All our calls are being recorded, every email, message and social network post is being saved for posterity so that it can be analysed anytime. Our daily movements are being tracked from the mobiles and car gps systems. Google knows more about us, our preferences, searches, chats, friends, predilections, hobbies, etc than even ourselves. With their mega algorhytmic  analytic tools, Google mows us more intimately than even our Mothers or partners.

Increasingly houses are becoming intelligent. All the consumer durables, the electric and electronic systems, computers, cars, food providers, etc will be in synch and human will not have to do menial tasks like buying vegetables, toiletry, groceries, etc. drones will deliver the automated orders. Seamless payments will be made from the bank accounts.

All this presages the Age of Singularity. As Kurzweil as predicted that by 2029 counters will surpass human beings in intelligence. And by 2045 the age of Singularity will be ushered in where all human decisions will be taken in the Cloud. Truly the dehumanisation of the human race will have been completed.

This will be the lifestyle of the mid and upper classes. The lower classes will be largely outside the pale of this rarified digital existence. This 80% of the population will still be the tiling classes doing all the dirty physical work so that the neo digitariti can lead their vacuous lives of pleasure while the cyber network takes all their decisions.

Future Shockean Trends 1-6-14 (work in progress)

1. More single families in western world. In US and UK about 50% of households single and mothers single parent.
2. Greater dependence of humans both single and others on digital devices. Movement towards living in the cloud. And towards Kurzweil's Age of Singularity when computers and robots take over.
3. Intensifying global warming and extreme weather. In US, over the past three decades since 1983, the no of insurance claims over $ 1bn has increased from 26 to 38 and 63. Corresponding total claims have risen from $ 131 bn to $ 183bn and $ 485 bn. 
4. Most economies are living on high octane debt and deficit financing. Both cities / states and nations are facing various degrees of bankruptcies. Living on borrowed time and in the future. 
5. Healthcare will become major problem. Costs spiralling. State and insurance cannot take care. Inspite of medical advances, new diseases and obesity are making things difficult. Cancer, alziemhers, prostrate, obesity, and hearth are on rampage. 

Modi Magic

Since his resounding election success and installation as PM, Modiji has launched a series of out of the box policy changes which have taken the rather slow moving, hierarchical and bureaucratic powers that be in the capital by a virtual storm. Time bound ten point program's for PMO, and similar programs for defence etc for the first 100 days has given the slothful babus a laser show in shock and awe. All departments are busy preparing PowerPoint presentations structured with strengths, weaknesses, etc.
Today 100% FDI in defence has been mooted. Thus snooking at of one of the holy cows of the government. This has really sent shock and awe through the establishment.
Talking first with the Chinese PM was a master stroke in diplomacy. In one stone trying to get closer to the highest incremental GDP country of the world. Also it will defuse simmering border tension.
All this within the first three days of office. Surely augurs well for the country. Jai Ho.

Spiralling climate insurance claims

May 22, 2014

There has been a spate of low frequency high impact flood impacts over the past decade or so in US, Europe and Asia. Unfortunately there has been a high degree of bunching of these events which have made a mockery of all historical trends.

The past decade has seen an exponential growth in national flood insurance claims in US. Katrina, Rita, Wilma and Superstorm Sandy have pushed the debt of the insurance companies by $24 bn since 2005. Earlier the claims which were minuscule compared to these we're funded by premiums and federal subsides. There are increasing cases of double and multi claims.

With steadily rising seas, more super storms, tornadoes and twisters, etc it is going to be difficult to meet the catapulting insurance claims. The position in Europe and elsewhere is worse. Steep premiums beyond affordability are a possible solution. But how many can afford the new premiums? It's really a Hobson choice. Climate is truly a frightening game changer. Mankind is a helpless spectator.

Coming Armageddon

March 18, 2013

The bailout of Cyprus has been like nightmare unfolding before the world. The consequences are numbing. The is a crippling overhang of unserviceable debt of $ 21 trillion in the western developed nations. Cyprus's $ 13 billion is chicken feed, a mere 0.062% of the entire debt abyss facing Europe and US.

There is a possibility that about 29% of the financial wealth of the citizens would be taxed one time to square off this gigantic debt in order to avoid hurtling over the fiscal cliff. This would cascade into a whorl of spending contraction which will lead successive rounds of shrinking GDP, which in turn will hike up unemployment to unsustainable levels, leading to widespread civil unrest.

One of the major precipitating factors has been the quantitative easing which US has been doing over past few years. The US has pumped $ 4 trillion into its economy by printing dollars, which effectively has devalued the dollar by 25%. Meanwhile most of the economies which have size able foreign exchange reserves are moving away from dollars to each others currencies and gold.

China has probably increased it's old reserves to about 3000 tons. They plan to hold 2% of their 3.3 trillion dollar forex reserves in gold. In that case they may be targeting to reach about 5000 tons of gold in a few years. They would also like the dollar exchange rate be closer to its intrinsic value. This will a fairer valuation of their mega forex reserves. Plus the price of gold could go up appreciably.

With this an imminent devaluation of the US dollar could be an outcome and with the large trade deficits of US, there will limits to further quantitative easing in order to kick start economic growth which will only intensify the debt crises. Hence both Europe and US will have to bite the bullet and adopt harsher monetary options to tackle the mounting debt overhang.

All this will impact overall global trade as the western  world slashes its imports which will put brakes on the growth momentum of the developing countries. The later in order to overcome this have increased trade in between themselves and are also increasing domestic demand.

The second act of the Greek drama unfolds before us.

Population at risk due to climate change

April 19, 2013: Climate change

Past mid April. Severe thunderstorms, tornados, snow still swamping most of US - unprecedented. Four inches of rain. US is facing the brunt of the climate change. Like the frogs in water heating gradually, where they meet their end. Frightening scenario.

India reeling under heat wave. China where pollution has already claimed 7 lakh lives. Earthquakes frequency and intensity increasing. Iran two massive quakes in past two weeks or so.

Sometimes I think that at the rate climate change is intensifying and compounding, the next ten fifteen years are going to be crucial with 20% of the global population at high risk of annihilation.