Letters to the Editor
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Honey, you shrunk my money
Analysts fail to recognize how successfully Wall Street has gotten between you and your money. After the 87'crash brokers went to street name accounts, and the brokerages went to pooled assets. Pooled assets game them a chance to play the market against their clients, something Goldman Sachs has done recently, to boost its assets.
It was an inside joke, the chief of equities at XYZ would come out and pound the table for GM stock, while his trading desk was dumping the stock into the rally. Cramer, the TV god, was accused of using CNBC to do this with stocks in his hedge fund account.
Nevermind that they were playing us for suckers, they had a piece of our paycheck, every month, our employee contribution their retirement account. They were grabbing fees left and right, not including the fees for leveraged buyouts, IPO's, etc. That wasn't enough however to keep the financial industry going, they also had the Presidents' Working Group covering their back. They had the full guarantee of the US government, to maintain market stability. Without the change to electronic trading such a bold move would have been impossible. Money would have had to be transferred directly into the brokerage account, and that would have left a trail, between the politicians and the stock market traders.
Wall Street morphed into a fee driven industry, caring little of the market goes up, or down, and actually hoping it does both, because volatility keeps the trade on. The stock market is like any market, buyers bring money to buy investment paper, each day. The growth of money brings new fees. The system is far more rational than anyone imagines. When the money supply begins to shrink, you get a correction.
When that happens a lot of Wall Streeters will feel very sad.