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jasonxctf

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QUOTE (Balta1701 @ Jul 10, 2012 -> 11:38 AM)
It'll end up being along with a lot more than just the British government before this is over. This was an easy way to steal billions. Every big bank in the world is going to get caught up in this. UBS and DB seem to be next on the list, and the US banks still have the fed turning the other way for now but eventually they'll have to do something when the claims start piling up.

 

Total, systemic fraud permeating the entire system, enabled and encouraged by the governments.

 

The US is completely different because such manipulations are legal, public, and done every six weeks or so.

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QUOTE (southsider2k5 @ Jul 10, 2012 -> 01:18 PM)
The US is completely different because such manipulations are legal, public, and done every six weeks or so.

I assume you're going with the Federal Reserve meetings here?

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"Now that I am out of gov't., I can tell you what I really believe.... Central banks are now so heavily influencing asset prices that investors are unable to ascertain market values....this influence is especially evident with the Fed's purchase of gov't. bonds, which has made it impossible for investors to use bond prices to learn anything about markets."

 

----Kevin Warsh, former member of the Board of Governors of the Federal Resrerve

 

 

:headbang Keep pumping boys!!

 

 

I would love for someone to ask Bernanke in his HH testimony if he would provide proof that the FED does not intervene in the equity mkts through the NY dealing desk.

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QUOTE (Cknolls @ Jul 13, 2012 -> 07:19 AM)
"Now that I am out of gov't., I can tell you what I really believe.... Central banks are now so heavily influencing asset prices that investors are unable to ascertain market values....this influence is especially evident with the Fed's purchase of gov't. bonds, which has made it impossible for investors to use bond prices to learn anything about markets."

 

----Kevin Warsh, former member of the Board of Governors of the Federal Resrerve

 

 

:headbang Keep pumping boys!!

 

 

I would love for someone to ask Bernanke in his HH testimony if he would provide proof that the FED does not intervene in the equity mkts through the NY dealing desk.

 

the entire system is rigged

 

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Ahh...yes.

 

So basically there are a few different types of energy markets in the US. There are RTO/ISO's, which are Regional Transmission Operators or Independent System Operators, there is ERCOT, which is the Electric Reliability Council of Texas, and then there is basically the WECC, which is the Western Electricity Coordinating Council.

 

All are regulated by FERC, which is the Federal Energy Regulatory Commission.

 

RTO's and ISO's and ERCOT and others are very structured. They have extremely complex software that determines how much energy coming in and going out should be priced at, and tries to encourage the most economic and reliable dispatch of the system via these pricing signals. There are all kinds of crazy rules created to try and accomplish this.

 

The CAISO, or the California Independent System Operator is sort of the gorilla in the room. At least out west. Many banks/marketing companies employ many very smart people to try and find the most optimal methods for doing business in California. They employ very smart people whose goal it is to find loopholes in the rules and exploit them. Enron was the first to really exploit the CAISO in the California energy crisis in the early 2000's. They not only found the loopholes, but then made business arrangements with small California utilities, who controlled critical transmission lines necessary for their schemes to work. They also made business arrangements with larger utilities in the WECC, such as Portland General Electric and El Paso Electric, to manage their assets - basically, to take over their trading function and take control of their generation resources to game the CAISO and then split the profits.

 

Anyways, fast forward to 2012. Banks/marketing companies are still finding ways to exploit the CAISO. I read the documents associated with JP's alleged misconduct yesterday. Disclaimer: I am not yet an expert in the CAISO market or its rules, as we have been in a legal dispute with them for 10+ years and haven't traded directly into it, however, I am learning.

 

Basically, they were exploiting California's willingness to pay startup costs and minimum run costs by playing with their bids in the Day Ahead and Real Time markets. CAISO will pay you as much as twice your actual startup costs and minimum run costs even if they never actually dispatch your power. So JP would bid in the DA market to get CAISO to dispatch their units for the following day, then they would alter their bids in the Real Time market so they rarely, if ever actually got dispatched, thus capturing double the startup and minimum run costs and profiting in the millions for generation they never dispatched.

 

FERC has been focusing on market manipulation and hammering companies with big fines in the last 24 months. Constellation, the company that Exelon just merged with, was hit with a $250 million fine a few months ago. I basically was able to leverage this current climate into creating my new position here, which is FERC Compliance for our Resource Optimization department, which is all our short term trading functions. So I am slowly but surely mastering all the FERC Orders and starting to learn the CAISO market rules.

 

Very exciting stuff. :)

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QUOTE (iamshack @ Jul 19, 2012 -> 11:06 AM)
Just another comment...I love the tone of that article :)

 

As if it is the market participants' fault for finding the best way to play the game because the rules are inefficiently designed. GMAB.

So...what happens when they are the ones who write the rules and do so in a way so that they can game them?

 

That's a pretty great summary of our entire system.

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QUOTE (Balta1701 @ Jul 19, 2012 -> 10:08 AM)
So...what happens when they are the ones who write the rules and do so in a way so that they can game them?

 

That's a pretty great summary of our entire system.

 

And an intrinsic flaw in Smith's assumption of a simulation of morality in a free market.

 

“When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.” (Frederic Bastiat).

Edited by StrangeSox
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QUOTE (Balta1701 @ Jul 19, 2012 -> 10:08 AM)
So...what happens when they are the ones who write the rules and do so in a way so that they can game them?

 

That's a pretty great summary of our entire system.

California doesn't need to be an ISO. They could be a part of the WECC and take almost all of this nonsense out of play. We rely on supply and demand and traders and analysts to make decisions as to how to best serve our own native loads. We allow marketers to come and play too. Part of the problem is the CAISO is almost entirely controlled by software systems that are easily fooled.

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QUOTE (StrangeSox @ Jul 19, 2012 -> 10:21 AM)
That doesn't mean we should accept the morality of knowingly gaming the system, though.

I don't view it as a moral subject. Perhaps there is an ethics involved, but not sure about morals.

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