It is the Wall Street equivalent of a perfect game of baseball — 27 up, 27 down, the final score measured in millions of dollars a day.
Despite the running unease in world markets, four giants of American finance managed to make money from trading every single day during the first three months of the year.
Their remarkable 61-day streak is one for the record books. Perfect trading quarters on Wall Street are about as rare as perfect games in Major League Baseball. On Sunday, Dallas Braden of the Oakland Athletics pitched what was only the 19th perfect game in baseball history.
But Bank of America, Citigroup, Goldman Sachs and JPMorgan Chase & Company produced the equivalent of four perfect games during the first quarter. Each one finished the period without losing money for even one day.
Their showing, disclosed in quarterly financial filings, underscored the outsize — and controversial — role that trading has assumed at major financial institutions. It also drives home the widening lead that a handful of big banks are enjoying over lesser rivals on post-bailout Wall Street.
They didn’t play a perfect game. They played a rigged game.
Someone want to explain the role of high frequency trading and the other tools at their disposal to the NY Times?
New Yorker
Yeah, Bank of America making money every day isn’t akin to what Dallas Braden did, unless Braden had gotten, in advance, MLB to enforce “rules” in which Evan Longoria and co. were required to swing at every pitch, regardless of whether it was 8 feet off the plate.
Jeebus, Times.
zmullls
I look forward to an article on how Las Vegas casinos manage to make money every day, even though thousands of gamblers play and some win.
MattF
May we ask how the, y’know, customers of these banks have been doing? Has anyone in the “Go ahead, pick my pocket” world of everyday consumer finance made a profit every day of the last quarter? Well, golly…. why would anyone want to ask about that?
El Cid
Gosh! These guys must be amazing! And brilliant! They deserve a lot of money for doing this valuable work! They must be adding tons of jobs to the economy! They do all this good for us and how do we repay them? By failing to worship their brilliance and value to society in a proper fashion.
burnspbesq
@zmullls:
As requested.
http://www.americangaming.org/Industry/factsheets/statistics_detail.cfv?id=8
Mike Kay
this is Obama’s Willy Wonka moment
http://www.youtube.com/watch?v=rw_R9SS3kQ8
Admiral_Komack
coughBlackSoxcough
4tehlulz
It must be difficult, sucking on that many dicks at once.
Montysano
High frequency trading = legalized theft
Ur welcome.
Remember November
HFT’s= stock hacking. Should be illegal. These tradebots need to go to bit heaven- what do you think caused the 2:45 meltdown?
Paris
The Gambino family had many successful quarters too. Also.
MikeTheZ
So wait, they made money consistently by doing what in any other context would be considered fraud at best, and we’re supposed to be happy for them?
Ugh…
chopper
it’s easy to pitch a perfect game when you use a laser-sighted bazooka.
bkny
and this just proves that those banksters deserve every penny of their hard-earned billions… meanwhile:
May 11, 2010
In New York’s Suburbs, Teachers Feel Budget Ax
By WINNIE HU
Teachers are giving up raises in at least five Long Island districts, including Brentwood, where the 1,400 teachers will also take individual pay cuts of $900 that will be repaid to them without interest when they leave or retire.
Teachers are facing a wage freeze in 44 of the 69 Connecticut districts that reached new teacher contracts this year, something virtually unheard of in a state where the average raise has been about 2.5 percent.
And in Pelham and Scarsdale, two places in Westchester County that have long been synonymous with well-paid teachers, they voted to reopen their contracts and shave off a portion of their scheduled raises.
Such concessions come amid threats of widespread layoffs, state and local government budget cuts and insistent public calls that teachers make sacrifices in a tough economy.
“Nobody wants to give up money,” said Joe Hogan, president of the Brentwood teachers’ union, whose members unanimously agreed to give up their raises to prevent hundreds of layoffs and save music, art and sports programs. “Did everybody do this happily? I don’t think so. But did they do this because of the times we’re in? Yes.”
EdTheRed
Yeah, it was more like McGwire and Bonds’s 70+ homer seasons. “Oh, wow, no one ever did that before! These guys are historically great!”
I wonder if the Goldman Sachs folks will trot out the old “I’m not here to talk about the past” line the next time they’re testifying before Congress?
cmorenc
I think original rationale upon which HFT was later piggybacked was special traders whose role it was to “make” the market, each within a certain limited realm of stocks – their role was to act as a temporary middleman to smooth out buy and sell transactions, taking some risk of getting caught downside on a stock but being allowed enough of a small time advantage on upside fluctuations to net out what amounted to a small, steady commission. However, their fundamental role here was more analogous to the dealer in a poker game than to a player.
The real problem with HFT is that it allows big firms like Goldman to BOTH be a de facto dealer AND a player at the same time. OK, so casinos enjoy this sort of position in e.g. blackjack games, but the difference is that in blackjack, the dealer is NOT priviliged to “peek ahead” at his cards before deciding whether to play or bet or not – he must play, draw, or not based on certain inflexibly fixed rules. That’s not true for Goldman’s HFT position. They’re like a dealer who’s allowed to peek ahead into the deck and make side bets on the players hands based on their advance knowledge of the cards coming in the deck. In other words, close to a sure thing.
R. Porrofatto
Speaking of high frequency trading, howzabout a teensy transaction tax to slow ’em down a bit and help reduce the deficit?
Wag
NEWS FLASH!!!!!
The New York Yankees today played a perfect game, crushing the Douglas County HS Huskies of Castle Rock CO by the score of 98-0.
Of course the NYYs win. They’re america’s favorite team.
Right?
America’s favorite team wouldn’t cheat, would they?
Nah….
Redhand
Correct me if I’m wrong, but for the Federal bailout, didn’t these bastards recently nearly destroy themselves and our entire economy playing something less than “the Wall Street equivalent of a perfect game of baseball”?
Bullsmith
The financial sector has become a parasite that simply skims off a larger chunk of the overall economy each and every year. Used to be you put money in a bank to keep it safe, now you put it there so the bank can steal it, piece by piece.
angulimala
You say ‘Tomato’. I say ‘Giant Vampire Squid’……
rickstersherpa
I know we are all singing the same song, but deep in the story I found this quote, but apparently the editor and the reporter wanted to stay on the banksters good side and buried the lead.
“This is just, as we call it, milking the market and your captive client base.”
I hope these guys are investing in bodyguards because I think they are going to need them.
jurassicpork
Sorry, this was meant for this thread, not the birthday thread. Happy birthday, whoever you are.
When I read articles like this, I think to myself, “Sweet Jesus, do I hate America.” Except now I’m not keeping it to myself.
russell
Here is my tiny contribution to moving the Overton window on the financial sector:
It’s us vs them.
That’s not a statement of “class warfare”, it’s just a statement of the plain facts.
They don’t create enough value to justify what they take out of the productive economy.
They warp public policy through the sheer amount of money they can throw at the political process.
They demonstrate no sense of responsibility, whatsoever, to the broader public good, to the economy as a whole, or even to their own clients.
It’s us vs them, and they bring a lot of juice to the table. We need to assume that they are not acting in good faith and proceed accordingly.
If you want a billion dollars, create more than a billion dollars in value. Gates did, Buffet does, other folks do. These guys don’t.
They’ll steal your face and smile at you with it. Fuck’em.
MobiusKlein
Now I’m pissed – comparing a legit baseball feat (go A’s!) to a corrupt snakepit like Wall Street.
But that’s your “`’Liberal New York Times’`” (yes, mega scare quotes)
Evinfuilt
@jurassicpork:
Come now, tell us how you really feel. Don’t hold it back, let it out.
Some immigrant guy
Don’t think HFT has much to do with it.
Pretty simply, when you can effectively borrow for free and liquidity is a given, investment becomes a whole frickin’ lot easier. What the 61-day streak tells you is that the banksters are taking their spread-loot and sprinkling it across their daily pnl to smooth out the crappier days. It’s really not rocket science when you have a guaranteed positive funding spread.
The Fed policy, in case is isn’t already clear, is to help banks earn their way out of a hole – by throwing free money at them for as long as necessary. The obvious questionn to ask is, if it works for banks, couldn’t it work for the country as a whole?
melmoth
@4tehlulz:
Not when you’re so used to it.
Maude
It wasn’t a fat thumb that caused the mini panic last Thursday.
Someone is going to have a hard time over this.
Waynski
When you borrow from the government at 0% and lend it back to them by buying Treasurys at 5%, you could make Trig Palin the CEO of Citibank and still have a winning quarter. If the Fed hadn’t being holding these guys up since fall 08, they’d all be sitting around their Connecticut mansions wondering how it all went wrong, just like Dick Fucking Fuld. The TARP was chump change compared to the Fed actions.
IronyAbounds
@Maude: My hope is that someone is going to DO hard time over this, but then, I’m a Bills’ fan and every year I hope they will win a Super Bowl. The odds are way better the Bills will accomplish that than someone even getting their hand slapped over the market manipulation.
jl
We don’t make things (or provide services) in the US anymore, we make deals.
The Big Banks Really Own it All
mcjoan, Daily Kos
Wed May 12, 2010
http://www.dailykos.com/storyonly/2010/5/12/865596/-The-Big-Banks-Really-Own-it-All
The Secret of the Banks’ Success
Paul Krugman, NY Times blog
April 14, 2010
http://krugman.blogs.nytimes.com/2010/04/14/the-secret-of-the-banks-success/
I’ve been skeptical of people warning about another bubble and financial panic in the making, perhaps because the prospect was too awful to contemplate seriously.
But now I am having my doubts.
As you see from Krugman blog entry from earlier this year, profits in US are again dominated by financial firms. No one has figured out what service they provide that can honestly account for so much of the total domestic profitability in the US. So, what is it? Is it government giving them free money and they can buy poltical influence that allows them to make deals, and profit off from transactions of questionable value?
dollared
Classic. Remember, these guys report on the Yankees over at their sports page. They think all games are rigged and the New York guys always win.
Nevertheless, completely amazing how these guys can turn direct, incontrovertible proof of corruption into an exciting story of sports heroism.
All Praise to the Narrative!
Ruckus
@jl:
Is it government giving them free money and they can buy poltical influence that allows them to make deals, and profit off from transactions of questionable value?
You really weren’t looking for an answer, just conformation, right?
Yes. SATSQ
jl
@Ruckus: No, that was a serious question, and I was not looking for confirmation.
I was pointing out that the combination of record profitable trading days, and climbing proportion of domestic profits by financial industry, and continued success of fianncial lobbying effort was cause for concern, not just the first of those three, which Cole seemed to suggest in his post.
I myself, in my comment, pointed out my skepticism about continued bubble like behavior in the financial sector, until I heard today’s news about record profitable trading days and remembered Krugman’s post.
So, were you asking a serious question, or making a cheap point?
Ruckus
@jl:
Probably both.
What I’d like to know is what are the remedies? Because for me this is way past concern. I was somewhat going for snark, not directed at you but at the situation.
If anyone has workable theories, is there any way they can be applied in the current political environment? I think the answer to that is no. I’d like to be wildly surprised. What I’m expecting is flowery laws that sound good but have the typical loopholes you could drive a corrupt financial system through. Right now the money has all the power and the power has all the money. Please tell me how that’s going to change whatsoever without major disruption far greater than the last 2-3 years.
Snark is all I have left, but I’ll try to be better.
DMD
Chris Matthews cited this story, approvingly, on Hardball last night.