John At The Center

The first mortgage is at $3.6b and there is accrued and unpaid interest piling up. The assets don’t cover the principal. But the worst news is that our pals at Fannie and Freddie are about to become one of the biggest landlords in all of NYC. This is a 60 year old property on 80 acres with 11,250 apartments. It is hard to even conceive of the cost of maintenance and infrastructure improvements. Keep in mind that this in Manhattan.

If you follow the ownership responsibility for Stuy Town it goes straight to the Treasury Department as they are the administrators of the zombies called Fannie and Freddie. A letter to the T.Sec might read:

via Bruce Krasting: Ackman Loses – Fannie/Freddie Win! Not….

As I’ve noted before, one thing I’ve learned from this recession is that it’s not as easy to increase the money supply as I thought. It’s easy to create additional bank reserves and increase the monetary base, but if the new reserves simply pile up in the banking system, then they don’t have much of an effect on the supply of money:

via Economist’s View: “Friedman was All Wrong about Japan … and the Great Depression”.

high-performance computing will begin to move toward graphics processing units or GPUs. Not coincidentally, this is exactly what China has done to achieve the world’s fastest speeds with its “Tianhe-1A” supercomputer. That computer combines about 7,000 Nvidia GPUs with 14,000 Intel CPUs: the only hybrid CPU-GPU system in the world of that scale.

“What we’re really seeing in the efforts in China as well as the ones we have in the U.S. is that GPUs are what the future will look like,” said Dunning in a phone interview Thursday. “What we’re seeing is the beginning of something that’s going to be happening all over the world.”

via NCSA director: GPU is future of supercomputing | Nanotech – The Circuits Blog – CNET News.

This gets to the real crux of this sort of government intervention in markets. It does not make people more productive, it does not create jobs, it does not increase output and it does not increase future cash flows. The Fed and BOJ hope to spark an investment and hiring boom. Unfortunately, there is no evidence that this sort of intervention can lower rates, increase borrowing or increase sustained economic activity. The conclusions should be obvious to everyone. A shuffling around of Fed assets does not alter private sector net financial assets. It might alter perceptions in the near-term, but hoping for a sustained recovery generated by the Fed’s balance sheet is sheer fantasy. Herding investors into risk assets that do not show the underlying fundamental improvement to sustain higher prices is nothing more than Ponzi finance. Or what Brian Sack prefers to call ” United States monetary policy”.

via RICHARD KOO: WHY PONZI FINANCE HAS ALWAYS FAILED | PRAGMATIC CAPITALISM.

Today, American policy makers should focus their attention not on China but on our own Federal Reserve. There has been a very public debate recently among the presidents of the Federal Reserve banks over the future course of policy and whether additional steps to ease monetary policy are warranted. Sentiment now seems to be in favor of a new round of “quantitative easing”—that is, of increasing the money supply. As Charles Evans, the president of the Chicago Fed told the Journal this week, the grim economic outlook makes him favor “much more [monetary] accommodation than we’ve put in place.” At a time of enormous excess capacity in the economy and nonexistent consumer-price inflation, additional measures by the Fed to stimulate growth should be condoned, not condemned.

I suspect that even Milton Friedman would have approved. In the 1990s, Japan was in a situation similar to the one now faced by the U.S.: no inflation (or deflation in the case of Japan) and lackluster growth after the bursting of a real estate bubble. Writing about Japan in 1997, Mr. Friedman observed: “The surest road to a healthy economic recovery is to increase the rate of monetary growth, to shift from tight money to easier money, to a rate of monetary growth closer to that which prevailed in the golden 1980s but without again overdoing it.”

via The End of Free Trade? – WSJ.com.

Meredith Whitney Is a Mere Mortal After All

She made one great call back in 2007. Since she founded her own advisory firm, about two-thirds of her picks have fared worse than market indexes

via Meredith Whitney Is a Mere Mortal After All – BusinessWeek.

One of the interesting points in the “60 Minutes” piece on high-frequency trading last night, was SEC Chairman Mary Schapiro’s statement that screwball algos have triggered some of the circuit breaker halts we’ve seen since the measures were put in place since the Flash Crash. ”A number of times that those circuit breakers have been triggered … has been because an algorithm operated in a way nobody intended for it to do, causing a stock price to go wildly out of range,” Schapiro said.

via High Frequency Trading on ’60 Minutes’ – MarketBeat – WSJ.

Doubters of the week-old “flash crash” report — which pegged trading by Waddell & Reed Financial Inc. as the trigger of the May 6 market slide — just won’t pipe down.

Market data-crunching firm Nanex LLC on Friday posted its take on Waddell’s May 6 selling of E-mini futures contracts. Nanex, which has been delving into all things flash crash of late, says its data give us the first glimpse of that big trade.

via Data Geeks Raise Questions on Flash Crash ‘Trigger’ Trade – MarketBeat – WSJ.

NASDAQ Data-On-Demand provides customers a way to cherry-pick subsets of Level 1 historical stock tick data with pinpoint accuracy. Instead of combing through very large sets of historical stock tick data, users can select very specific data sets and obtain them on-demand for almost instant analysis.

Historical Stock Tick Data Description

Currently, NASDAQ Data-On-Demand provides access to historical stock tick data including consolidated Best Bid and Best Offer and Last Sale information from the U.S. equity markets and is available T+1. This includes all Level 1 trade and quote information for NASDAQ-, NYSE- and other regional-listed securities dating back to October 1, 2009, with even earlier data coming soon. Unlike traditional means of delivery for historical stock tick data, such as feeds and files, Data-On-Demand gives customers an opportunity to pick specific data with increased accuracy.

Benefits & Features

With Data-On-Demand, NASDAQ OMX simplifies bulk data and growth impediments while increasing technical transparency for current customers. Developers, vendors, algorithmic traders, institutional investors and active investors can all benefit from access to high quality, Level 1 historical stock tick data. Users can:

* Automate back testing of trading algorithms using historical stock tick data.

* Validate internal data without committing to storing huge amounts of historical stock tick data locally.

* Reduce the costs and time associated with consuming Level 1 historical stock tick data by delivering specific trade and quote information, making it more efficient and needs-based.

* Build front-end applications (such as NASDAQ Market Replay) for integration into an external trading or market data application.

* Rely on Data-On-Demand as an outsourced back-up for Level 1 data, significantly reducing costs for storing historical stock tick data onsite.

via NASDAQ Data-On-Demand.

What a system! An investor places an order in the market to buy or sell at a price. Those quotes and sales are posted on an exchange which, in turn, sells that data to vendors and firms. The vendors resell the data to the investors. The excess profits derived from this government-mandated activity are rebated back to the high frequency firms and other trading intermediaries.

I’m told that an exchange recently suggested that investors were paying too much for quotes in today’s world; that a major exchange proposed a 20 percent fee reduction for market data. Such a fee reduction would have lowered costs of market information for all investors.

It was vetoed by members of the plan (the electronic exchanges and high frequency firms who would be harmed). You see, savings for investors require a unanimous vote of the interested intermediaries. If prices for data were reduced, then trading rebates would immediately drop.

Do we really think that tape revenues retain the same critical role in preserving competition that they once did—when the NYSE held 80 percent market share rather than 30 percent? And while trading speed doubles every 18 months at the same cost to investors (Moore’s Law), investors today pay the same or more for trading information from the major exchanges that the very same investors create with each order they put into the system.

via Man Vs. Machine: Commentary—How the SEC Helps Underwrite High Frequency Trading – CNBC.