the Ryan budget basically makes poor people pay for tax cuts mostly for the rich,

You can have some austerity now, or a whole lot later. Take your pick.

The Fed wants to take a look at this recent phenomenon of banks changing their status

You’re doing yeoman’s work on this. Well done.

I’ve been meaning to write a post about High Frequency Trading, and this piece from Extreme Tech is a bit of confirmation, and opens a bit of a window into what’s at stake;

All three cables are being laid for the same reasons: Redundancy and speed. As it stands, it takes roughly 230 milliseconds for a packet to go from London to Tokyo; the new cables will reduce this by 30% to 170ms. This speed-up will be gained by virtue of a much shorter run: Currently, packets from the UK to Japan either have to traverse Europe, the Middle East, and the Indian Ocean, or the Atlantic, US, and Pacific, both routes racking up around 15,000 miles in the process. It’s only 10,000 miles (16,000km) across the Arctic Ocean, and you don’t have to mess around with any land crossings, either.

The massive drop in latency is expected to supercharge algorithmic stock market trading, where a difference of a few milliseconds can gain (or lose) millions of dollars.

My guess is that the present latency for traders in London as compared with New York is such that New York is eating their lunch so to speak.

The fact that they will spend $1.5 Billion to save 60ms (A ms is equal to 1/1000th of a second)tells you that even that very miniscule advantage is enough to tilt the board in favor of those with the fastest links and computers.

The internet in certain ways is much like the railroad system, data that moves over the internet can be thought of as consisting of trains, with the cars carrying the messages, in this case instructions for trading stocks.

If you’ve ever looked at an aerial photo of a railroad yard, you see that they have the ability to sort out many trains by pulling them off the main line and onto what’s called a siding. Now think about the fact that the trains can be pulled aside, and inspected for content so as to prioritize traffic in order to expedite important shipments, resulting in a change in the order of the trains leaving the yard, as compared to the order they were in when they entered the yard.

High-Speed trading programs have the ability to switch the order that trading instructions are executed based on information found in the stream of data entering the trading houses over the internet. These systems can read the content of the trades being submitted and make programmed decisions based on that information, all in the blink of an eye.

This is possible because, to a very fast computer coupled with a very fast connection, even a single second is a vast amount of time, enough to sort through all the trading data flowing by, and make automatic trading decisions enabling the ‘house’ to front-run their own customers.

Which basically means the market is fixed.

Reference: “Not that we needed confirmation of this, but the Ryan budget basically makes poor people pay for tax cuts mostly for the rich, weapons systems and a deficit caused by… well, tax cuts and weapons systems.”

The problem that I have with the Center on Budget and Policy Priorities is not their analysis of Ryan’s proposed cuts, but the implication that the Bowles-Simpson Fiscal Commission recommendations are somehow “reasonable,” and should be the model for reform.

About a year ago, I saw a video of an interview with Jack Lew (Financial Times) in which he states that the administration supports–his words, “all six pillars” of Bowles-Simpson.

Bowles-Simpson proposes draconian cuts to the social safety net.

Google “The Moment of Truth” (PDF). It spells out the 3 draconian cuts to social security that the administration has had on the table: (1) implementing a different CPI index which slows the growth of Social Security COLA, (2) raising the retirement age (remember, each year that the social security retirement age is raised, “across the board” all retirees who begin to draw benefits will incur an approximately 6 1/2 % (some say closer to 7%) decrease in their monthly benefit checks for each year that the retirement age is raised, and (3) the least mentioned cut, and the far more drastic one, “means testing. Several months ago now, on Sam Seder’s Majority Report, Sam interviewed a representative of a social security advocacy group (it may have been Social Security Works, I’m not absolutely sure which organization it was) who acknowledges that the Simpson Bowles Commission “reforms” will result in cuts to social security beneficiares’ checks, as high as 35%. I hardly consider that “tweaking.”

Alan Simpson has even suggested that they change the term “means testing” to “affluence testing.” Clearly, they are hoping to confuse people, and imply that “means testing” will only apply to higher income folks (like individuals that make from $250,000 to a million dollars).

The “Moment of Truth” (PDF) actually lays out the new “bend points,” and guess what, means testing cuts begin at “just over $9,000 annual income.” (Google it!)

I would be so thrilled (and grateful) if some of the economists who post here would address (in minute detail) the Bowles-Simpson Commission recommendations, especially those regarding Social Security and Individual Income Tax Reform.

From everything I’ve read, MOST ALL of the proposed “reforms” (Rivlin-Domenici, Bowles-Simpson, Ryan Plan, etc.) are at the expense of the poorest Americans. The difference is the “matter of degree.”

(Apologize in advance for typos).

Blue

Here’s an example of the austerity measures affecting major science.

The fundamentalist must be ecstatic!