Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
It has been noted that one of the factors favoring the speed of the GS operation is that they "co-locate" their hardware on the floors of the exchanges.  Others also do the same, but GS seems to do it better.  By integrating their proprietary, or prop trading with their market monitoring and their market making capability it has been claimed that GS has been making $100 million per day since March.  They are being paid by the exchange and the government to "provide liquidity" both as electronic market makers by the exchange and as "Supplementary Liquidity Providers" by the government.  Providing half or more of the trades on any given day is quite a supplement.  $100 million per day at a penny or so per trade has certainly provided GS with excellent liquidity.

There were those, possibly including Tyler Durden, who complained loudly last September that Paulson was proposing a scheme in which the Fed and Treasury would pick winners and losers in the market.  Paulson was the former CEO of GS.  Surprise!  GS is a BIG winner.  Given that, it hardly would be surprising that the Fed and Treasury knew that this is what GS would do with the SLP provision and thought it was a good thing.

  From their point of view strengthening GS IS strengthening the economy.  THAT POINT OF VIEW IS THE REAL PROBLEM.  They just didn't think that this whole arrangement would be exposed so publicly.  And it is still not too bad.  Most of the MSM is still ignoring it.  This could be related to the fact that only GS has taken advantage of the incredibly lucrative opportunity provided by the SLP program, through intimidation, IMO.  Only one SLP provider at a time would be readily able to combine the fraction of a penny incentive for "market making" with the monitoring and proprietary desk trading as GS has done and GS has the mojo with Treasury.

As the saying goes "THERE CAN BE ONLY ONE!"  The others don't want to volunteer to have their heads cut off in a failed challenge.  Neither do the heads of most financially troubled MSM organizations.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Jul 13th, 2009 at 01:41:13 PM EST

Others have rated this comment as follows:


Occasional Series