"Cryptocurrency is coming. It could be Bitcoin, it could be something else, it could be a new trading framework that incorporates many cryptocurrencies. The important thing is that in a decade’s time, governments will have lost the ability to look into their citizens’ wealth and income.

This, in turn, means that no taxation or welfare can be based on wealth or income.

I argue that the proper way to tackle this problem from an information policy perspective is to shift the taxation base entirely to consumption and therefore shift all income tax to VAT. To keep taxation progressive, and to keep welfare systems functional, you will also need to combine it with a basic unconditional income for every citizen that amounts to some level of minimum sustenance."

"I have had an interest in tracking oil companies (for crude) and refineries (for oil products) trading in their own volume over the past 11 years. As I noted last week (in "Oil Inventories, Speculation, and Hedging"), anecdotal evidence is already emerging that vertically integrated oil companies (VIOCs) – those controlling the upstream/downstream process from field to refinery through retail outlet – were unusually active recently in trading in near-month futures contracts in their own product.
This occurred both when crude oil and gasoline prices were rising (through close on April 29) and thereafter, as crude plummeted almost 15% and gasoline over 13% as of the end of trading on May 6."

"The problem of arriving at a principled method of pricing goods and services was very satisfactorily solved for conventional goods; however, this solution is not applicable to digital goods. After taking into consideration idiosyncrasies of the digital realm, we give a market model that is appropriate for the digital setting, and a notion of equilibrium for it. We also prove existence of equilibrium for our market model."

"In the present work we introduce a novel multi-agent model with the aim to reproduce the dynamics of a double auction market at microscopic time scale through a faithful simulation of the matching mechanics in the limit order book. The model follows a "zero intelligence" approach where the actions of the traders are related to a stochastic variable, the market sentiment, which we define as a mixture of public and private information. The model, despite the parsimonious approach, is able to reproduce several empirical features of the high-frequency dynamics of the market microstructure not only related to the price movements but also to the deposition of the orders in the book."

"In 2008 and 2009 exports of debt (the toxic stuff plus the nominally non-toxic stuff (US Treasuries)), only accounted for 3%.

It is common practice to ignore exports of debt when calculating America’s balance of trade. But, conceptually, there is not much difference between selling a foreigner or a foreign government a toxic synthetic CDO (that blows up in his face) and selling him a ship-load of genetically engineered soya-beans (or melamine tainted milk).

The logic for leaving exports of debt out of the calculation is presumably that at some point in the future the CDO that was “sold” will need to be paid back, which will require funds to flow out of USA into the pockets of foreigners, who may then decide to exchange those dollars for something else."

"Spot Instances are a new way to purchase and consume Amazon EC2 Instances. They allow customers to bid on unused Amazon EC2 capacity and run those instances for as long as their bid exceeds the current Spot Price. The Spot Price changes periodically based on supply and demand, and customers whose bids meet or exceed it gain access to the available Spot Instances. Spot Instances are complementary to On-Demand Instances and Reserved Instances, providing another option for obtaining compute capacity."

"Efficient-market theory ought, with any methodological justice, to be relegated to the Museum of Nice Tries. But there is no unified replacement theory, and developing one will be arduous, involving empirical and theoretical work on all scales, from the experimental psychology of individual investors, through the institutional constraints under which money managers work, to solving for the aggregated effects of market participants’ interactions. In the meantime, efficient-market theory provides a ready basis for precise calculations, and one that is moreover now built into the academic field of finance and into the practice and even infrastructure of the markets."

Scroll all the way through, and look at every one.

For example:

"New Home Months of Supply

The months of supply is at an all time record 13.3 months in January."

"Foolish reliance on Li's model lead to disaster and it was made possible by CDS markets which convinced participants that they had many observations on the probability of default. They were convinced that prices revealed these probabilities because they had an insane mystical faith in the strong form efficient markets hypothesis and a schizophrenic simultaneous belief that they could beat the market."

"Governor Patterson said it best when he stated that most swaps are used by speculators and for “destructive speculation” that damages “the health of targeted companies.” The proposed clearinghouse will mostly be used for naked credit default swaps and will be the biggest and most technologically advanced gambling joint in the world. And, the destructive impact of naked credit default swaps will grow.
Rather than facilitating the casino mentality that has almost ruined the economy, the SEC, CFTC and other state and Federal regulators should be outlawing naked credit default swaps as gambling contracts and regulating hedging credit default swaps as insurance contracts. And, New York shouldn’t have abandoned its effort to regulate these derivative contracts."

"Timer Seeds is a small group of timing-industry professionals (either strategy developers like me or sales/marketing) with an idea that goes something like this:

No matter how good we are at developing strategies and managing money, there are unsung developers out there, laboring away in their basements, that are even better. But because they lack either the ability or the time, their strategies never ever leave that basement. They never make the transition to becoming a professional strategy developer.

And based on that vision, we launched Timer Seeds. We find developers, take the required steps to make their programs marketable, and then place their programs with investors, financial advisors, hedge funds, and other industry professionals. The developer receives a percentage of assets under management, something that can become very lucrative for very good programs."

"Many investors believe that ETFs, especially the ultra or 3x funds, such as Direxion Shares ETF Trust Large Cap Bull 3X (BGU), are to blame for the roller coaster ride in market volatility that is being seen on Wall Street. This is actually not the case.
A research study conducted with data from LakeView Asset Management LLC, suggests that it is in fact futures that influences the activity of speculators and hedgers and therefore is the indicator for market volatility and manipulation, states Scott Rothbort for the Street.com."

"Obviously, given the 40%+ decline in major indices and close to double that for Financials, if you pick the bottom, you can realize an enormous return on the way back up. Do you think oil's headed back to $100+ when the global economy recovers? Then, ERX is the trade for you! However, picking the bottom is an act of god, so you'll definitely want to inject some caution and pragmatic thinking into your strategy.

There are various pairs/combos you can use for these. For instance, you can go long 3X with puts to create a neat hedge model, or you could use the 3X inverse to hedge the more significant long portion of your portfolio."

"Second, mortgage originators are required to retain credit risk and to perform the servicing functions, thereby properly aligning the incentives. Third, the mortgage is funded by the issuance of standardized bonds, creating a large and liquid market. Indeed, the spread on Danish mortgage bonds is similar to the option-adjusted spread on bonds issued by the GSEs, although they carry no implicit government guarantees."

"[in 1999] ...McCain had joined with other Republicans to push through landmark legislation sponsored by then-Sen. Phil Gramm (Tex.), who is now an economic adviser to his campaign. The Gramm-Leach-Bliley Act aimed to make the country's financial institutions competitive by removing the Depression-era walls between banking, investment and insurance companies.

That bill allowed AIG to participate in the gold rush of a rapidly expanding global banking and investment market. But the legislation also helped pave the way for companies such as AIG and Lehman Brothers to become behemoths laden with bad loans and investments.

McCain now condemns the executives at those companies for pursuing the ambitions that the Gramm-Leach-Bliley Act made possible, saying that "in an endless quest for easy money, they dreamed up investment schemes that they themselves don't even understand.""

"OK, got it cracked. Don’t be a shareholder, or a preferred shareholder, or even a creditor or a policyholder. Just be a counterparty to a sleazy derivatives bucket shop — AIG Financial Products (AIG), to pick a name at random — and your chips, with applicable profits, will be returned no questions asked. "

What's that old thing worth?

"Deregulation has not worked. Unfettered markets may produce big bonuses for CEOs, but they do not lead, as if by an invisible hand, to societal well-being. Until we achieve a better balance between markets and government, the world will continue to pay a

"Sam Zell is widely regarded as one of the savviest value investors around. The fact that Zell, an old hand in real estate, was cashing out was widely seen as the sign of a market top."

Paper explaining results of SEC's pilot test of limited SHO short-sale price-test removal.

It may have an effect on the underlying dynamics of market prices... but it seems like a rule of decreasing importance as the tick resolution of trading increases.