Stock market volatility is the new norm

Madison Ruppert, Contributing Writer
Activist Post

The rollercoaster of the stock market is just getting more stomach-churning as the days go by, and it looks like there is no end in sight.

The Dow Jones Industrial Average dropped to record lows in a single day, while in the next 24 hours it gained nearly 430 points just to see it fall another 520 the next day.

While most people who look at these statistics see nothing other than a looming economic crisis, the likes of which may be unprecedented in the United States, the mainstream media continues to point to the minor gains as triumphs.

However, with the Dow Jones Industrial Average careening at least 400 points in either the positive or negative direction on a daily basis, these gains are short-lived and too little, too late.

During the entirety of last year, only one day saw a swing in points as large as what we are seeing on a daily basis now. If this isn’t a wakeup call for those who still believe everything is hunky-dory, I have no idea what will be.

Many Americans are pulling out of the failing market system already, although some savvy investors saw this volatility coming from a mile away and got out early, like Pimco’s Bill Gross who fled Treasuries more than five months ago.

Chris McMullen, owner of a Los Angeles-based nutritional supplement made a quite candid statement to the Los Angeles Times today saying, “I’m doing the same thing right now anyone else with a brain is doing, leaving [my money] in cash, definitely not in the stock market or the real estate market.”

The above linked Los Angeles Times article briefly mentions one of the major culprits behind the current economic crisis and the stock market’s remarkable volatility: “so-called high-frequency traders”.

They mention that these traders take advantage of the rapid price swings by trading thousands upon thousands of stocks per minute based on highly sophisticated computer algorithms.

They mention that during volatile trading periods like the one in which we are currently embroiled, high-frequency traders can account for 60% of all of the trading being done in the markets.

What they fail to mention is that these high-frequency traders are not just average people with advanced computer programs; these are the largest, most powerful firms on Wall Street.

They also seem to leave out the fact that these periods of pronounced tumultuousness, which is exacerbated by the high-frequency traders, act to transfer even more wealth out of the hands of everyday Americans and into the hands of the ultra-rich corrupt Wall Street traders.

In fact, high-frequency trading, or HFT, is now dominating much of the marketplace, forcing average people out of the stock market and further consolidating wealth in the hands of the elite.

Evidence of the growing supremacy of HFT and the firms who use it is revealed by a single shocking statistic: as much as 70% of equity trading in 2010 can be attributed to HFT systems.

The unfortunate reality is that currently we do not know enough about HFT and the impact it has on the wider marketplace.

We do know that they “comprise three primary types. Some make markets. Some do arbitrage trades. And some make bets on the direction of stocks. They don’t always trade solely in equities.”

However, beyond that, the facts start to get hazy due to the response from some of the media and the high-frequency traders themselves regarding the attacks on their beloved business.

For instance, in a December 2010 Traders Magazine article, James Ramage wrote, “If the opponents of high-frequency traders are to be believed, then HFTs were responsible for the Great Chicago Fire. This is an exaggeration, of course, but not by much.”

Ramage could not be more deceitful, utilizing the role of the victim to make it seem like HFTs are some kind of marginalized group under attack from “regulators, brokers, institutions, politicians and the media.”

There is no end in sight for this patch of volatility in the stock market, in fact Jeffrey Hirsh, editor of the Stock Market Almanac, told the Los Angeles Times, “I think we’re going to be quite choppy and unstable through the fall.”

In the previous paragraph, the writer of the piece, Nathaniel Popper, declared, “With many economists now fearing the recovery is in jeopardy of reversing into recession, it may be some time before Wall Street can find its footing again.”

By many metrics, we are already in a recession, and the further consolidation of wealth in the elite through high-frequency trading and unabashed criminal activity will continue until the people of the world do something about it.