THROUGH THE FINANCIAL LOOKING GLASS… PART TWONovember 22, 2019
Yesterday, you'll recall, I blogged about the financial "musical chairs" game that's going on with respect to negative interest rate bearing bonds and other securities. I hinted that there was possibly more to the story, and today I want to expand on yesterday's high octane speculation, by adding a bit more to it courtesy of this article shared by G.B.:
Now, before you start worrying about walking into your neighborhood Deutsche Bank to cash a check or make a deposit and being confronted with a robot for a teller, relax. Besides, if you're a Deutsche Bank customer or client, you should be worried already, robots have nothing to do with it. But as I said, relax, you're not going to be transacting with a robot at the teller's window. Far from it:
Mark Matthews, head of operations for Deutsche's corporate and investment bank, told Financial News that machine learning algorthms 'massively increased productivity' and "redistribute capacity.'
The London-based news organization said that Deutsche is pushing to 'automate large parts of its back-office' via a new strategy called 'Operations 4.0,' as part of its $6.6 billion savings initiative over the next three years.
And then comes the end of the Zero Hedge article, which forms the context for my high octane speculation today:
Why stop at 18,000? Please consider my 8 step proposal to get rid of everybody.
Just Fire Everybody
1. Who needs proprietary equity traders? Fire them all. Machines do all the trading anyway.
2. Who needs stock analysts? Let computers determine the "Strong Buys."
3. Who needs credit analysts? Computers already do the scoring.
4. Derivatives? What a mess. Unwind them all and stay away. Fire everyone involved.
5. Real Estate Appraisls? That's what Zillow's for.
6. Credit cards processing? Outsource 100% of it.
7. Statement processing? Outsource that too.
8. Loans? Let computers decide which loans to make. Then keep none of them. Instead, securitize 100% of them.
An appalling list to be sure, but one in line with my oft-stated problem with algorithmic trading, and the financial capitalism sector's growing reliance upon it: as more and more is done by machine, the markets, and finance in general, no longer reflects a human activity; if humans are not involved in risk assessment, cost-benefit analysis, loan-making, or securities or commodities trading, then prices themselves cease to function as a valid indicator of value... to humans.
But of course, those algorithms are all programmed by... humans, and thus they become the primary and principle means of market manipulation. \
And that brings me to today's high octane speculation, and to yesterday's game of "financial musical chairs." Recall that yesterday I pointed out an article that stated that all the trading in negative interest rate securities is a game of musical chairs, these instruments being nothing but "trading instruments" that one does not want to hold on to: one does not want to be the custodian of those instruments when the music stops. I pointed out that because of this, it's yet another financial scam invented by the financial crony crapitalism sector as a wealth-stealing device, a technique.
But I left the question of "who's controlling the music?" hanging in the air. If you're planning another theft of trillions of dollars, and more "bail ins", it's probably a good idea to have a patsy. Enter the roboticized, mechanized, computerized financial sector: it wasn't us, it was those danged machines, it was a flash crash, it was a flaw in the system, a fluke in the program, our good old friend, the glitch ex machina.
Or to put my high octane speculation "country simple" (I am, after all, just a hack from South Dakota), it appears to me now that the move to algorithmic trading that began in the 1980s, may have had a very long term goal in view, a deliberate design, from the outset: namely, to provide cover and "plausible deniability" when the biggest theft of all was staged. And that phrase, "plausible deniability" also suggests that the biggest baddest guys may not even be the banksters, but even more deeply embedded parasitical ticks in the financial system. (Maybe that's why the parasites are so determined to take everyone's guns.)
See you on the flip side...