If central bankers start all the wars,
are veterans heroes, or mercenaries and dupes?
by Henry Makow Ph,D.
When the United States and England loaned Mexico money in 1903 using its customs revenue as collateral, Illuminati banker Jacob Schiff cabled his English counterpart, Ernest Cassel:
"If they don't pay, who will collect the customs?"
Cassel replied:
"Your marines and ours." (The Life of Otto Kahn, p. 22)
Marine General Smedley Butler (1881-1940) confirmed that he was "a high class muscle man for Big Business, for Wall Street and the bankers."
In War is a Racket (1935) he wrote: "I helped make Mexico, especially Tampico, safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefits of Wall Street. The record of racketeering is long. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912. I brought light to the Dominican Republic for American sugar interests in 1916. In China I helped to see to it that Standard Oil went its way unmolested."
Flash forward to 2011 when NATO fomented and led a "revolution" in Libya, one of only four countries that didn't have a Rothschild central bank. Now Libya does.
They don't call it imperialism anymore. They call it "Our mission in Libya." Soldiers aren't mercenaries; they are "missionaries."
CENTRAL BANKERS ARE BEHIND ALL WARS
All wars are organized by the Illuminati bankers to collect or incur debt, plunder or profit, and advance their program for "world government" tyranny. They appeal to our patriotism to sucker us in. We are told we are fighting to "preserve freedom" when the opposite is actually the case.
So how should we regard veterans? Certainly a few are heroes, but usually in a bogus cause.
I think we have to regard them as dupes and mercenaries of the bankers. We have all been duped for a very long time. That gives Veteran's Day a tinge of cynicism and pathos.
On Nov. 11, we are mostly commemorating World War Two. While we were losing fathers and sons, Allied and Nazi central bankers were huddled in Basel at the Bank of International Settlements mainly financing the Nazis.
The BIS handed over to the Nazis the national treasure of Czechoslovakia, Holland and Belgium to ensure the war could go on. This gold, worth $378 million at the time, was the basis of loans to the Nazis and was never returned.
The BIS accepted and stored Nazis plunder -- art, diamonds and precious metals including dental gold and wedding rings from concentration camp inmates.
The US Federal Reserve, the Banks of England, France, Italy, Japan and the Reichsbank were all members of the BIS. The Nazi Reichsbank had most seats but the BIS President was a Rockefeller factotum Thomas H. McKittrick (1889-1970). (Significantly he has no Wikipedia entry.)
"CHANGING THE WORLD" MEANS HAVING A WORLD WAR
mckittrick,jpg.jpg(Thomas McKittrick, left)
Questioned by a US Treasury Dept official in March 1945, McKittrick said that the war had been a charade all along, with Germany taking the fall.
Asked why the Nazis had worked with the BIS, he replied, "In the complicated German financial setup, certain men who have their central bankers' point of view are in very strategic positions and can influence the conduct of the German government..."
Then he spelled it out. The war's purpose was to reposition Germany for the banker New World Order:
"McKittrick went on to say that there was a little group of financiers who had felt from the beginning that Germany would lose the war; that after defeat they might emerge to shape Germany's destiny. That they would "maintain their contacts and trust with other important banking elements so that they would be in a stronger position in the postwar world to negotiate loans for the reconstruction of Germany."
This quotation is from Charles Higham's mind blowing book, Trading With the Enemy, 1983, p. 37.
A Who's Who of corporations controlled by these bankers, had factories in occupied Europe. They underpinned the Nazi war effort and profited handsomely.
Ford, General Motors, Standard Oil and ITT provided the Nazis with essential trucks, airplane engines, materiel and technology, often giving the Nazis preference during shortages. In a telling example, the Allies bombed a ball bearing plant in Germany only to have the stock replaced by a factory in Pennsylvania (via Sweden.)
Higham refers to these bankers as "the fraternity." They are the Illuminati.
We could also show how an earlier set of bankers masterminded World War One and how they kept it going. But I think you get the picture. All wars are really waged by the Luciferian central bankers against humanity, i.e "the goyim."
In 1916, almost 1.2 million British, French and German soldiers died or were maimed in the Battle of the Somme alone. They were the cream of their generation. By participating in any war, we are accomplices in our own destruction.
The military is catching on too. A recent poll found that only 34 percent of U.S. veterans of the post-9/11 military believed that the Iraq and Afghanistan wars were worth fighting. US soldiers now generally say they are fighting "for their buddies" not for their country.
CONCLUSION
We cannot honor veterans without recognizing that, like us, they have been duped. Otherwise, we perpetuate the sinister power which holds us prisoner.
Ultimately, the New World Order is about replacing the rule of God with the rule of Lucifer. That's why "God" has become a dirty word. War is the principal means by which Lucifer's disciples, the Cabalist (satanist) central bankers, "change the world."
They have erected a police state behind the facade of freedom. We don't know this because our leaders in government, education and media are wittingly or unwitting participants. Treason to God and country is a prerequisite for success in many fields.
If honoring veterans means perpetuating a suicidal cycle of endless war, we must stop. Better to honor the dead by abolishing wars. We can do this by nationalizing private central banks, and making the bankers answer for their crimes.
Saturday, November 12, 2011
Bankers Extended WWI By Three Years.
December 1, 2007
cavell.jpg
By Henry Makow Ph.D.
(Revised & Reposted Dec. 1, 2007)
"World events do not occur by accident. They are made to happen...most of them are staged and managed by those who hold the purse strings." Denis Healey, former British Defence Minister
On Oct 12, 1915, Edith Cavell, 50, a British nurse and head of a teaching hospital in Belgium, was shot by a German firing squad. Her death inflamed anti-German feeling in the US and caused enlistment in England to double.
She had helped some British POW's escape. Normally her crime was punished by three months imprisonment. Why was she killed?
According to Eustace Mullins, Edith Cavell had stumbled upon some damaging information. On April 15, 1915, The Nursing Mirror in London published her letter revealing that the Allied "Belgian Relief Commission" (charged with feeding Belgium) was in fact channelling thousands of tons of supplies to Germany.
Sir William Wiseman, head of British Intelligence and a partner in the bankers Kuhn Loeb, demanded the Germans execute Cavell as a spy. Wiseman believed that "the continuance of the war was at stake." The Germans reluctantly agreed, thus creating "one of the principal martyrs of the First World War." (The Secrets of the Federal Reserve, pp. 72-73)
Pretty cynical you say? No more cynical than demolishing the World Trade Center, murdering over 3000 Americans to start a "War on Terror."
This example of cooperation between belligerents was accomplished because Wiseman worked closely with the head of the US Federal Reserve, Paul Warburg . Warburg's brother Max was Chief of German Intelligence and a close friend of Kaiser Wilhelm.
The London-based central bankers use wars to weaken nations and colonize the world (incl. UK, US Israel etc.). The difficulty executing WWI was that they had already bankrupted the European states by selling them battleships and other armaments. Europe couldn't afford a war!
The introduction of the US Federal Reserve and the Income Tax Act in 1913 solved this problem. US government loans financed World War One. The American people were on the hook for both sides of the conflict.
This is how it works: The banksters created money from thin air based on the credit of the US government. Every dollar they "loaned" the US government was a new dollar in their pocket.
No nation is free if it cannot control its own credit, i.e. print its own currency at will. We are not free. The central banking cartel controls us by threatening to withdraw our credit i.e. currency causing economic turmoil.
HOW THEY PROPPED UP GERMANY
Another obstacle to war was Germany and her allies did not have the resources to fight for more than a year.
As Edith Cavell's discovery suggests, the banksters solved this problem by trading with "neutral" states: Switzerland, Belgium, Holland, Denmark, Norway and Sweden. Thus the banksters allowed essential resources from England, the US and the British Empire to reach Germany indirectly.
The whole thing is documented in a book entitled, "The Triumph of Unarmed Forces 1914-1918" (1923) by Rear Admiral M.W.W.P. Consett, who was British Naval Attache in Scandinavia. His job was to keep track of the movement of supplies ("unarmed forces") necessary for the continuation of the conflict.
For example, Scandinavia was completely dependent on British coal. So the Swedish iron ore that became German submarines that sank Allied shipping reached Germany on vessels powered by British coal.
Germany needed glycerin (animal fat) for the manufacture of explosives. England had no trouble securing this substance because it controlled the seas. After the war began, the demand for these products from neutral countries "exploded." The British continued to fill these orders. They could have restricted them.
The same applies to copper, zinc, nickel, tin, and many other essential products. Consett believes that had they been embargoed, the war would have been over by 1915.
The trade of tea, coffee and cocoa to neutral countries also increased dramatically but these products often weren't available there. They all went to Germany for huge profit.
Consett's protests fell on deaf ears. The Minister of Blockade was Robert Cecil, a member of the Round Table (i.e. central banker) cabal.
Similarly, the central bankers financed the German side through their Scandinavian banks to the tune of 45 million pound sterling. (p. 146.)
The Allied nations became the banksters' debt slaves: "Despite the huge revenues raised from taxation, the British national debt rose tenfold. The government failed to use its bargaining power as the only really massive borrower in wartime to get money at low rates of interest. The French national debt rose from 28 billion to 151 billion francs ..." (Davies, The History of Money ) The US debt soared from one billion to $25 billion.
According to "The Merchants of Death" World War I was waged by 27 nations; it mobilized 66,103,164 men of whom 37,494,186 became casualties (about 7 million dead.) Its direct costs are estimated at $208,000,000,000, its indirect costs at $151,000,000,000. And these figures do not include the additional billions in interest payments, veterans' care and pensions, and similar expenses..."
Can there be any doubt that mankind is in the pernicious thrall of Satan-worshippers??
MISSION ACCOMPLISHED
As mysteriously as it began, the war ended. In Dec. 1918, the German Empire suddenly "collapsed." You can guess what happened. The banksters had achieved their aims and shut off the spigot. (Hence, the natural sense of betrayal felt in Germany, exacerbated by the onerous reparations dictated by the banksters at Versailles.)
What were the banksters' aims? The Old Order was destroyed. Four empires (Russian, German, Austro-Hungarian and Ottoman) lay in ruins.
The banksters had set up their Bolshevik go-fers in Russia. (They sponsor many "revolutionary" movements as a way to eventually control all property themselves.) They ensured that Palestine would become a "Jewish" state under their control. Israel would be a perennial source of new conflict.
But more important, thanks to bloodbaths such as Verdun (800,000 dead), the optimistic spirit of Christian Western Civilization, Faith in Man and God, were dealt a mortal blow. The flower of the new generation was slaughtered. (See "The Testament of Youth" by Vera Brittain for a moving first-hand account.)
After a grueling economic deflation and another World War, mankind was sufficiently demoralized to accept the banker-run "world government" dictatorship. Can anyone question that the bankster philosophy is satanic?
The broad sweep of history reveals the pattern. The murder of the Austrian heir Arch Duke Ferdinand by the Masonic "Black Hand" group (which began WWI) was a staged event, an "excuse" i.e. the equivalent of Sept. 11, 2001.
The banksters also supported the Nazis in World War Two as Charles Higham documents in his remarkable book, "Trading with the Enemy" (1983). For example, Rockefeller's Standard Oil supplied petroleum to the Nazis.
CONCLUSION
Modern history is the account of how the central banking cartel converts its monopoly of credit into a monopoly of power. This entails destroying our connection with nation, religion (God), race and family. It means substituting objective truth (God, nature) with their Dictat (political correctness, etc.)
It takes courage and clarity to understand we are mice in their lab experiment. We have been sold out by our "leaders", dumbed down by our media and education and spoiled stupid by the welfare state. (Everyone can be bought.) We can't even recognize what is happening, let alone act.
For now, we have prosperity and think we are free. As Aldous Huxley said:
"A really efficient totalitarian state would be one in which the all powerful executive of political bosses and their army of managers control a population of slaves WHO DO NOT HAVE TO BE COERCED, because they love their servitude. To make them love it is the task assigned, in present day totalitarian states, to ministries of propaganda, newspaper editors and schoolteachers." [Brave New World, Bantam Books, 1967, p. xii. Caps added.]
On the bright side, the knowledge that our society is a fraud is strangely liberating. No longer do we genuflect to its plastic gods. "The truth does make you free!"
cavell.jpg
By Henry Makow Ph.D.
(Revised & Reposted Dec. 1, 2007)
"World events do not occur by accident. They are made to happen...most of them are staged and managed by those who hold the purse strings." Denis Healey, former British Defence Minister
On Oct 12, 1915, Edith Cavell, 50, a British nurse and head of a teaching hospital in Belgium, was shot by a German firing squad. Her death inflamed anti-German feeling in the US and caused enlistment in England to double.
She had helped some British POW's escape. Normally her crime was punished by three months imprisonment. Why was she killed?
According to Eustace Mullins, Edith Cavell had stumbled upon some damaging information. On April 15, 1915, The Nursing Mirror in London published her letter revealing that the Allied "Belgian Relief Commission" (charged with feeding Belgium) was in fact channelling thousands of tons of supplies to Germany.
Sir William Wiseman, head of British Intelligence and a partner in the bankers Kuhn Loeb, demanded the Germans execute Cavell as a spy. Wiseman believed that "the continuance of the war was at stake." The Germans reluctantly agreed, thus creating "one of the principal martyrs of the First World War." (The Secrets of the Federal Reserve, pp. 72-73)
Pretty cynical you say? No more cynical than demolishing the World Trade Center, murdering over 3000 Americans to start a "War on Terror."
This example of cooperation between belligerents was accomplished because Wiseman worked closely with the head of the US Federal Reserve, Paul Warburg . Warburg's brother Max was Chief of German Intelligence and a close friend of Kaiser Wilhelm.
The London-based central bankers use wars to weaken nations and colonize the world (incl. UK, US Israel etc.). The difficulty executing WWI was that they had already bankrupted the European states by selling them battleships and other armaments. Europe couldn't afford a war!
The introduction of the US Federal Reserve and the Income Tax Act in 1913 solved this problem. US government loans financed World War One. The American people were on the hook for both sides of the conflict.
This is how it works: The banksters created money from thin air based on the credit of the US government. Every dollar they "loaned" the US government was a new dollar in their pocket.
No nation is free if it cannot control its own credit, i.e. print its own currency at will. We are not free. The central banking cartel controls us by threatening to withdraw our credit i.e. currency causing economic turmoil.
HOW THEY PROPPED UP GERMANY
Another obstacle to war was Germany and her allies did not have the resources to fight for more than a year.
As Edith Cavell's discovery suggests, the banksters solved this problem by trading with "neutral" states: Switzerland, Belgium, Holland, Denmark, Norway and Sweden. Thus the banksters allowed essential resources from England, the US and the British Empire to reach Germany indirectly.
The whole thing is documented in a book entitled, "The Triumph of Unarmed Forces 1914-1918" (1923) by Rear Admiral M.W.W.P. Consett, who was British Naval Attache in Scandinavia. His job was to keep track of the movement of supplies ("unarmed forces") necessary for the continuation of the conflict.
For example, Scandinavia was completely dependent on British coal. So the Swedish iron ore that became German submarines that sank Allied shipping reached Germany on vessels powered by British coal.
Germany needed glycerin (animal fat) for the manufacture of explosives. England had no trouble securing this substance because it controlled the seas. After the war began, the demand for these products from neutral countries "exploded." The British continued to fill these orders. They could have restricted them.
The same applies to copper, zinc, nickel, tin, and many other essential products. Consett believes that had they been embargoed, the war would have been over by 1915.
The trade of tea, coffee and cocoa to neutral countries also increased dramatically but these products often weren't available there. They all went to Germany for huge profit.
Consett's protests fell on deaf ears. The Minister of Blockade was Robert Cecil, a member of the Round Table (i.e. central banker) cabal.
Similarly, the central bankers financed the German side through their Scandinavian banks to the tune of 45 million pound sterling. (p. 146.)
The Allied nations became the banksters' debt slaves: "Despite the huge revenues raised from taxation, the British national debt rose tenfold. The government failed to use its bargaining power as the only really massive borrower in wartime to get money at low rates of interest. The French national debt rose from 28 billion to 151 billion francs ..." (Davies, The History of Money ) The US debt soared from one billion to $25 billion.
According to "The Merchants of Death" World War I was waged by 27 nations; it mobilized 66,103,164 men of whom 37,494,186 became casualties (about 7 million dead.) Its direct costs are estimated at $208,000,000,000, its indirect costs at $151,000,000,000. And these figures do not include the additional billions in interest payments, veterans' care and pensions, and similar expenses..."
Can there be any doubt that mankind is in the pernicious thrall of Satan-worshippers??
MISSION ACCOMPLISHED
As mysteriously as it began, the war ended. In Dec. 1918, the German Empire suddenly "collapsed." You can guess what happened. The banksters had achieved their aims and shut off the spigot. (Hence, the natural sense of betrayal felt in Germany, exacerbated by the onerous reparations dictated by the banksters at Versailles.)
What were the banksters' aims? The Old Order was destroyed. Four empires (Russian, German, Austro-Hungarian and Ottoman) lay in ruins.
The banksters had set up their Bolshevik go-fers in Russia. (They sponsor many "revolutionary" movements as a way to eventually control all property themselves.) They ensured that Palestine would become a "Jewish" state under their control. Israel would be a perennial source of new conflict.
But more important, thanks to bloodbaths such as Verdun (800,000 dead), the optimistic spirit of Christian Western Civilization, Faith in Man and God, were dealt a mortal blow. The flower of the new generation was slaughtered. (See "The Testament of Youth" by Vera Brittain for a moving first-hand account.)
After a grueling economic deflation and another World War, mankind was sufficiently demoralized to accept the banker-run "world government" dictatorship. Can anyone question that the bankster philosophy is satanic?
The broad sweep of history reveals the pattern. The murder of the Austrian heir Arch Duke Ferdinand by the Masonic "Black Hand" group (which began WWI) was a staged event, an "excuse" i.e. the equivalent of Sept. 11, 2001.
The banksters also supported the Nazis in World War Two as Charles Higham documents in his remarkable book, "Trading with the Enemy" (1983). For example, Rockefeller's Standard Oil supplied petroleum to the Nazis.
CONCLUSION
Modern history is the account of how the central banking cartel converts its monopoly of credit into a monopoly of power. This entails destroying our connection with nation, religion (God), race and family. It means substituting objective truth (God, nature) with their Dictat (political correctness, etc.)
It takes courage and clarity to understand we are mice in their lab experiment. We have been sold out by our "leaders", dumbed down by our media and education and spoiled stupid by the welfare state. (Everyone can be bought.) We can't even recognize what is happening, let alone act.
For now, we have prosperity and think we are free. As Aldous Huxley said:
"A really efficient totalitarian state would be one in which the all powerful executive of political bosses and their army of managers control a population of slaves WHO DO NOT HAVE TO BE COERCED, because they love their servitude. To make them love it is the task assigned, in present day totalitarian states, to ministries of propaganda, newspaper editors and schoolteachers." [Brave New World, Bantam Books, 1967, p. xii. Caps added.]
On the bright side, the knowledge that our society is a fraud is strangely liberating. No longer do we genuflect to its plastic gods. "The truth does make you free!"
Monday, August 9, 2010
Inside the Machine: A Journey Into The World Of High-Frequency Trading
http://www.theatlantic.com/science/archive/2010/08/market-data-firm-spots-the-tracks-of-bizarre-robot-traders/60829/
http://www.emii.com/Articles/2595257/ExchangesandTrading/Exchanges-and-Trading-Articles/Inside-the-Machine-A-Journey-Into-The-World-Of-High-Frequency-Trading.aspx
http://www.morningstar.fr/fr/etfs/article.aspx?lang=fr-FR&articleid=90332&categoryid=656
Inside the Machine: A Journey Into The World Of High-Frequency Trading
Jun-14-2010 | Source: Institutional Investor Magazine
At 2:45p.m. on Thursday, May 6, George (Gus) Sauter received a frantic call from one of his traders to get in front of a Bloomberg terminal. The Dow Jones industrial average, already down 3.9 percent that day on fears about Greece, was in free fall. In just five minutes the index plunged 573 points. Less than two minutes later, the Dow had rocketed back up 543 points, going on to finish the day down 3.2 percent.
“It was just crazy,” Sauter, chief investment officer of mutual fund giant Vanguard Group, told me a few days later. “I had to go to our fixed-income building, about a five-minute walk from my office. By the time I got there, the market had rallied.”
Crazy, indeed. The aptly named “flash crash” temporarily wiped out more than a half trillion dollars in equity value, shaking what little faith nervous investors had in U.S. markets. Shares of Dow component Procter & Gamble Co., the ultimate defensive blue-chip stock, dropped more than one third in a matter of minutes before recovering almost as quickly, all for no apparent reason. A few other large U.S. companies, including accounting firm Accenture, saw their stocks trade as low as a penny a share, only to close not far from where they had begun the day (nearly $42 a share in the case of Accenture) — again, on no news. By the time the dust settled, a whopping 19.3 billion shares had changed hands, more than twice the average daily U.S. equity market volume this year and the second-biggest trading day ever.
But for me, the single most amazing fact about the flash crash was that no one had a clue as to what had triggered it. Not that I should have been surprised, based on the conversation I’d had two days earlier with Mary Schapiro, chairman of the Securities and Exchange Commission. Schapiro, whose organization is charged with maintaining “fair and orderly” markets, explained to me how the SEC did a detailed study after the October 1987 crash to reconstruct what had happened. “We’ve lost some of the capacity to do that given the dramatic volumes of trading that exist today,” Schapiro said. “But we need to be able to do that to understand where are the vulnerabilities in our marketplace and what are the practices that have the potential to hurt investors and the marketplace in the long run.”
In 1987 the SEC had a much easier task because the vast majority of listed U.S. equities were traded in one place — on the floor of the New York Stock Exchange, where specialists employed by the Big Board’s member firms made a market based on an open-outcry auction system. Today, as a result of a series of regulatory changes designed to increase competition and make the market fairer for mom-and-pop investors, only about one quarter of all U.S. equity trading occurs through the now publicly held NYSE Euronext. And the majority of that trading is done electronically, either by the new NYSE floor specialists, called designated market makers, or on the fully automated NYSE Arca platform. The rest of the trading in U.S. equities is spread across a wide range of venues, including the three other major exchanges (Nasdaq Stock Market, BATS Exchange and Direct Edge) and dozens of broker-dealer-operated trading systems, electronic communications networks (ECNs) and dark pools, where buyers and sellers are matched up anonymously.
The past decade of fragmentation and automation has given rise to a whole new type of professional trading firm: one that uses sophisticated computer algorithms, often running on servers housed right next to exchanges’ own machines, and high-speed market data feeds to buy and sell securities in rapid-fire fashion. Some of these high frequency traders place hundreds of millions, even billions, of buy and sell orders a day, continually canceling and replacing them, and are likely to be on the other side of your trade. Not that you’d know who they are — proprietary trading firms are not required to disclose their identity — or recognize their names. The bulge bracket of high frequency trading includes firms like Allston Trading, DRW Holdings, Global Electronic Trading Co. (Getco), Hudson River Trading, Quantlab Financial, RGM Advisors, Sun Trading, Tower Research Capital and Tradebot Systems.
High frequency trading has become a multibillion-dollar business, accounting for an estimated 50 to 70 percent of the total U.S. equity market volume on any given day. Since last summer it has also been a lightning rod for the populist anger directed at Wall Street, despite the fact that most of the largest high frequency firms operate far from the canyons of lower Manhattan, in places like Chicago, Kansas City and Austin, Texas. Critics accuse high frequency traders of being fair-weather market makers who, unlike the former NYSE specialists they’ve largely replaced, don’t have a legal obligation to trade during periods of stress. They also say that the growth in high frequency trading has created a two-tiered market of technology haves and have-nots that is unfair to long-term investors and poses potential systemic risks.
I grew interested in high frequency trading last year when I was writing a feature on hedge fund firm Citadel Investment Group (more on that later). As an editor, however, it wasn’t until January that I was able to dig into what I soon learned is an incredibly arcane world. My first stop was a company called Pragma Securities, an agency-only brokerage firm that aggregates more than 40 different dark pools, electronic trading venues and open market destinations into a single liquidity source for clients. Douglas Rivelli and David Mechner, Pragma’s co-CEOs, spent two hours at the firm’s spacious New York offices taking me through that world.
High frequency traders, Rivelli and Mechner explained, generally fall into one of two camps: proprietary trading shops that act as electronic market makers, using computers to generate and adjust buy and sell orders automatically throughout the day, and hedge funds that specialize in statistical arbitrage, seeking to exploit pricing inefficiencies among different securities and asset classes. The distinctions between the two sometimes blur, however, as proprietary trading firms often try to capitalize on some of the same buy and sell signals that statistical arbitrageurs use and hedge funds trade on ever-shorter time horizons. High frequency firms are best known for trading equities, but they also trade futures, options and foreign exchange — basically, anything that can be traded electronically. High frequency trading is also an increasingly global phenomenon, gaining ground in both Europe and Asia.
One thing is clear: Hedge funds don’t like to be called high frequency traders, as I quickly discovered after visiting with some of the biggest quantitative managers, including AQR Capital Management in Greenwich, Connecticut, and D.E. Shaw & Co. and Renaissance Technologies Corp. in New York.
In the wake of the flash crash, as people scrambled to determine what had triggered the market plunge, it didn’t take much longer than the 400 to 600 microseconds (millionths of a second) that high frequency traders typically need to identify and place a trade for fingers to start pointing at them. “The potential for giant high-speed computers to generate false trades and create market chaos reared its head again today,” Delaware Senator Ted Kaufman said in a statement released that same afternoon. When I caught up with the Democratic lawmaker a week later, he was even more incensed, pointing out that regulators still didn’t know what had caused the flash crash.
“We have a 300-pound gorilla in the room, and we’re saying that we’re going to keep it in a cage somewhere,” he told me. “This thing will be 600 pounds.”
“But isn’t part of the problem that there are 300 gorillas?” I asked, referring to the fact that an estimated 200 to 400 firms do high frequency trading.
“Good point,” he replied. “We have all these gorillas, and guess what? We put them in zoos where the people running the zoos don’t have enough information and authority to take care of them.”
Kaufman’s interest in high frequency trading predates mine. When he was sworn into office in January 2009 to fill the Senate seat of his former boss Joe Biden, Kaufman was hell-bent on making sure that everybody responsible for the 2008 market meltdown paid for their actions. He soon focused on short-selling, urging the SEC to reinstate the uptick rule requiring short sales to be filled at a higher price; the rule had been eliminated in 2007. He told me that when he was in business school in the 1960s, it was “an article of faith” that the uptick rule was “one of the two or three things that helped deal with predatory bear raids.” As a result of his interest in short-selling, Kaufman said, his office started getting calls from some fairly sophisticated people, including former Wall Streeters, telling him that if he thought that practice was bad, he should look at high frequency trading.
Kaufman likes to draw an analogy between high frequency trading and the swaps market. “With synthetic derivatives, you had a lot of money at stake, no transparency and then a major meltdown,” he explained to me. “If you look at high frequency trading, I think the same Kaufman formula works.”
A graduate of the Wharton School of the University of Pennsylvania, the 71-year-old Kaufman is a quick study and understands markets. If I were a high frequency trader, I’d take him seriously.
Kaufman has been high frequency trading’s loudest critic. But he’s far from alone. Seth Merrin, founder and CEO of Liquidnet Holdings, which operates an electronic marketplace that provides block trading for institutional investors, likes to compare high frequency traders to the American army during the Revolutionary War. “The institutions are the equivalent of the British army, walking down the battlefield wearing bright red,” he told me back in March in his glass-enclosed office at Liquidnet’s sleek midtown Manhattan headquarters. “The high frequency traders are the Americans hiding in the woods in camouflage, picking them off. If the British army hadn’t changed its tactics, they would have lost every subsequent war.”
Even Duncan Niederauer, who as the pragmatic CEO of NYSE Euronext has been retooling his exchange to attract more business from high frequency traders, took a swipe at them. “We as an industry have to say how much is too much of this technology,” he said during an interview on CNBC after the flash crash, undoubtedly causing some consternation among the folks at NYSE Euronext who are selling space in the company’s new, 400,000-square-foot data center and co-location facility in Mahwah, New Jersey.
High frequency traders say that any efforts to rein in technology would be misplaced. Although speed is important to what they do, the quality of a firm’s computer models for analyzing markets and identifying where and at what price to buy and sell securities is what really determines success or failure, they argue. In their defense, high frequency traders say that they increase liquidity, lower trading costs, improve price discovery and reduce risk by dampening short-term volatility.
“High frequency trading is the liquidity backbone of the equity markets,” Manoj Narang, the founder, CEO and chief investment strategist of Tradeworx, told me when I first met him, in early March. “Long-term investors are the ones who cause bubbles, as well as liquidity crises when these bubbles burst.”
Narang, 40, is one of only a handful of proprietary traders I found willing to talk openly with a journalist about what they do. Most prefer to operate in the shadows, both to protect their valuable algorithms and to avoid regulatory scrutiny. But Narang, who left Wall Street in 1999 to start Tradeworx, sought me out when he heard through a public relations contact this winter that I was working on a story on high frequency trading. His 25-person firm, which operates out of an office above a Restoration Hardware store in Red Bank, New Jersey, trades about 40 million shares a day on about $6 million in proprietary capital. Tradeworx also runs a $500 million statistical arbitrage hedge fund (which trades another 40 million shares a day) and owns a subsidiary, Thesys Technologies, which licenses its high-performance trading platform to other investors.
Narang lifted his profile on May 6 when he revealed to the Wall Street Journal that his firm turned off its high frequency trading computers during the flash crash. Tradeworx wasn’t the only one to do so. Kansas City–based Tradebot, started by BATS founder David Cummings, also stopped trading. Tradebot is one of the world’s two largest high frequency firms, reportedly trading as many as 1 billion shares a day in U.S. equities. Only Chicago-based Getco is thought to be bigger. Although Getco won’t comment on its daily trading volume, a spokeswoman for the firm did tell me that it continued to provide a two-sided market on all the electronic exchanges during the flash crash.
Most high frequency traders, in fact, kept their computers running, according to Jeffrey Wecker, president and CEO of Lime Brokerage. Wecker should know. His firm, which accounts for as much as 5 percent of the daily equity trading volume in the U.S., is the oldest and largest provider of high-speed trading solutions and access to all major U.S. exchanges for high frequency traders.
The high frequency firms that did stop trading on May 6 have been criticized for contributing to the decline by pulling liquidity from the market when it was needed most. But Narang told me that his firm had no choice because the exchanges were likely to cancel, or break, trades that were clearly erroneous (like selling Accenture at a penny a share). “If the exchanges broke all our buys and not our sells, we could have exceeded our capital requirements,” he explained. “We didn’t want to take the risk. The high frequency traders who continued to trade that afternoon made a fortune.”
In January the SEC published a concept release on equity market structure, seeking public comment on everything from high frequency trading strategies and systemic risks to co-location and dark pools. At 74 pages, the report might seem like a real snoozer, but it’s actually a great primer on how the U.S. equity markets have responded to regulatory changes, starting in 1996 with the adoption of “order-handling” rules. These new rules, which were designed to make the markets fairer following the Nasdaq price-fixing scandal in the mid-’90s, created ECNs and gave them the power to publish their stock quotes publicly alongside those of the listed markets. In 1999, Regulation Alternative Trading System (ATS) went into effect, enabling ECNs to operate as market centers without having to register as exchanges. By the following year ECNs like Island and Archipelago had taken about one third of market makers’ volume in Nasdaq-listed stocks. But it wasn’t until after April 2001 — the deadline the SEC mandated for all U.S. exchanges to switch from fractions to decimals — that electronic trading really started to take off.
As bid-offer spreads shrunk and competition increased, ECNs and exchanges adopted a “maker-taker” pricing scheme to attract liquidity. Under the maker-taker model, market participants that offer to provide, or make, liquidity by posting an order to buy or sell a certain number of shares at a particular price receive a rebate. Those that execute against that order — that is, take the liquidity — have to pay a fee. Exchanges earn the difference between the rebate they pay and the fee they charge. The SEC limits taker fees to 0.30 cents a share; rebates tend to be lower for economic reasons, but for high frequency firms trading millions of shares a day, they can make for a pretty good living.
“The maker-taker model created an arbitrage that provided incentive for those firms that could properly blend together knowledge of trading, financial economics and computers all into a single, scalable system that could handle high volumes of transactions,” Lime Brokerage CEO Wecker told me back in April when we met at his firm’s Greenwich Village offices.
The final major regulatory change was Regulation NMS (for “National Market System”), which was passed by the SEC in 2005 and went into effect in 2007. One of the key pieces of Reg NMS is the “trade-through” rule prohibiting any exchange from executing a trade at an inferior price to one quoted at another trading venue. Trade-through protection is critical for high frequency traders; it ensures that if they are the first to post the best price for a stock, they’ll get the trade.
“High frequency trading is a product of Reg NMS, decimalization and technology improvements,” says John Knuff, general manager of global financial markets for Equinix, a Foster City, California–based company that runs 87 data centers in 35 key metropolitan areas around the world. “High frequency traders are the democratic enforcers of Reg NMS’s trade-through rules.”
Under Reg NMS, exchanges are required to handle electronic orders immediately or risk having them redirected to other venues. Once the rule was adopted, the NYSE — which even after decimalization had been clinging desperately to its manual specialist system — had no choice but to embrace automation. In 2007 the NYSE switched to a system it called the Hybrid Market, expanding its automatic execution facility, Direct+, and giving specialists the power to create their own algorithms to quote and trade electronically. The hybrid system included circuit breakers, called liquidity replenishment points, that would be triggered if a stock experienced a large price swing, at which time automated trading would stop and human specialists would step in.
That’s exactly what happened on the afternoon of May 6, when the NYSE imposed a trading slowdown in Big Board stocks like P&G and Accenture. Investors who wanted to sell or buy were forced to go to other electronic exchanges or ECNs. Although Nasdaq OMX Group CEO Robert Greifeld and other competitors criticized the NYSE on May 6 for making the meltdown worse, NYSE Euronext CEO Niederauer staunchly defended its actions, pointing out that the exchange did exactly what it should have under Reg NMS. He was vindicated two weeks later when the SEC proposed instituting similar circuit breakers for all exchanges that would pause trading in any stock in the Standard & Poor’s 500 index if its price moved 10 percent or more in a five-minute period. The new circuit breaker rule, which is likely to be approved by the SEC this month, would go into effect on a pilot basis through December 10, at which point the regulator could expand it to other stocks and exchange-traded funds.
“When a stock gets overheated, some form of stock-specific circuit breaker is a very effective means for letting information repopulate in the marketplace,” Lime’s Wecker told me a few days after the flash crash. He advocates an initial short-term cooling-off period measured in seconds or minutes; if a stock suffers a subsequent steep decline in price, the next halt would be longer.
Like many of the people I have interviewed about high frequency trading over the past five months, Wecker is concerned that regulators could try to rein in the practice by putting limits on technology. After all, his business is built on speed. “The challenge with speed bumps is that you are slowing down innovation to accommodate the players who have no interest in investing in innovation,” says Wecker, 47, who spent 11 years at Goldman, Sachs & Co., including six in its famed quantitative trading group, before eventually moving to Lehman Brothers to build its electronic trading group. He left Lehman in April 2008, five months before the investment bank filed for bankruptcy, and was hired by Lime founder Mark Gorton that November.
Lime handles hundreds of millions of trade orders a day. This spring it introduced a product called LimeInside that enables customers to place an order with Nasdaq, NYSE Arca and BATS in less than ten microseconds, on average — including real-time pretrade risk checks. That’s blazingly fast, confirms Tradeworx CEO Narang. It takes his group about 20 microseconds to do a trade from the moment a stock quote enters its system, triggers a signal, determines an order and passes through risk controls. Besides Lime, the only firms that are faster than Tradeworx, Narang says, are Tradebot and Getco.
Trading in the single-digit microseconds would be impossible for firms like Lime, Tradebot and Getco if they didn’t house their algorithms near the computer matching engines that power exchanges, ECNs and other electronic marketplaces. Brokerages, proprietary trading firms, hedge funds and other asset managers can lease co-location space in exchange-owned facilities (such as the NYSE’s Mahwah data center) or those owned and operated by third-party providers like Equinix.
Co-location has been a hot-button issue for critics of high frequency trading. I wonder, however, how many have actually visited a co-location facility. In March I got the chance to do just that at Equinix’s 340,000-square-foot NY4 data center in Secaucus, New Jersey. My host was Brandon Travan, head of the information technology infrastructure, co-location and cloud-hosting services divisions for Gravitas Technology, one of the growing number of companies that provide turnkey technology solutions for high frequency traders — and one of the first tenants at NY4.
From the outside, the white, two-story, unmarked building, located 11 miles west of downtown Manhattan in an area known best for outlet shopping, looks like a suburban medical office or law firm. (I later learned that it had been an eyeglass factory.) The lobby is equally nondescript, if not a little odd — there’s not much more than a phone, a plain steel door and a biometric hand scanner. After dialing in a personal code matched against the geometry of his hand, Travan got us into an inner lobby, where three security guards sat behind bulletproof glass and Kevlar-reinforced walls. I gave them my driver’s license (which, I was told, I’d get back when I left), and after two more sets of hand scans and steel doors, we entered the co-location area.
I was glad that I had decided to wear a light coat over my suit that day, because Equinix keeps the facility at a cool 65 to 72 degrees Fahrenheit. The design itself is also very cool. Built on a concrete slab with 45-foot-high ceilings, the building is organized along a rectangular grid system, with rows and rows of servers housed in metal cages for as far as the eye can see. Yellow trays snake above the cages, carrying all types of cables. Orange “innerducts” transport fiber-optic connections within the cages. Giant air-conditioning units, located outside the co-location area in case of a water leak, pump air through large green ducts that come down over the cages, creating a giant convection loop that sends the heat from the servers and networking equipment up toward the ceiling and out through the roof.
The facility is kept dark, both to improve its energy efficiency and to protect the anonymity of Equinix’s tenants. Each cage has lights that come on automatically when someone enters, I learned when Travan typed in the code to unlock his cage. Gravitas has about 35 clients operating out of its space, including one large hedge fund firm that spent more than $1 million on computer hardware, software and setup costs. The majority of Gravitas’s clients, however, are small. The company provides all of its clients with direct high-speed connections to all the market data providers and trade execution networks, including other NY4 tenants, like Direct Edge and the International Securities Exchange.
“We make the electronic trading community of Equinix available to smaller players by taking advantage of economies of scale — helping them get in with the technology they need with almost no up-front capital,” Travan told me. “If you’ve got a coder and the next best algo for trading equities, currencies or other vehicles, instead of needing a quarter-million dollars to start up, you can simply install your code on our hosting platform or send us servers to plug in, and you’re ready to go.”
Not everybody, however, buys the democratization argument. James McCaughan, CEO of Principal Global Investors, says co-location gives high frequency traders an unfair advantage. “Co-location creates an informational asymmetry that is fundamentally acting against the interests of long-term investors,” McCaughan told me exactly one week after my visit to the Equinix data center. “I have no problem with people developing algorithms for high frequency trading as long as they’re doing it with the same information as everybody else.”
McCaughan, whose team manages $215 billion in mostly 401(k) and other retirement assets for Principal Financial Group, considers himself to be a pretty savvy investor. His equity-trading desk has six people at the company’s Des Moines, Iowa, headquarters; two each in London and Singapore; and one in Tokyo, as well as access to state-of-the-art trade-execution algorithms offered by all the leading brokerage firms and third-party vendors. Although there’s nothing stopping Principal from using co-location, McCaughan told me that for a long-term investor, it’s probably not worth the effort. “As a large, sophisticated investor, we can compete,” he said. “But it is a weaker market if you have to be that sophisticated to compete.”
High frequency trading burst into the public consciousness last summer when news broke that a former Goldman Sachs Group computer programmer had been arrested by Federal Bureau of Investigation agents at Newark Liberty International Airport for allegedly stealing software code. According to the FBI, the programmer, Sergey Aleynikov, transferred thousands of files related to Goldman’s proprietary trading program to his home computers with the intention of using them to help his new employer build a high frequency trading platform. It didn’t take long for that employer, Chicago-based Teza Technologies, to cut its ties with Aleynikov. But Teza’s co-founders soon landed in hot water themselves when just six days after Aleynikov’s arrest, hedge fund firm Citadel sued them for violating a noncompete agreement and trying to steal its trade secrets. Last fall Citadel finally got the injunction against Teza that it was seeking, but by the time the judgment was rendered, the nine-month noncompete period had nearly expired.
The Citadel-Teza lawsuit provides an illuminating window into the world of high frequency trading. The person at the center of the drama is Mikhail Malyshev, a brilliant Russian émigré with a Ph.D. in plasma physics who joined Citadel’s high frequency trading group in 2003. During Malyshev’s six years at Citadel, the firm spent hundreds of millions of dollars researching and developing high frequency trading models and building out the IT infrastructure and systems to implement them. Its market data system, for example, contains roughly 100 times the amount of information in the Library of Congress. Citadel uses this historical data to test its models, which attempt to forecast changes in the prices of securities by analyzing statistical pricing patterns, supply and demand imbalances and other factors. The signals, or alphas, that prove to have predictive power are then translated into computer algorithms, which are integrated into Citadel’s master source code and electronic trading program.
Malyshev oversaw all aspects of Citadel’s nearly 60-person high frequency business, including the approval of trading strategies. He resigned on February 16, 2009; the next day his top lieutenant, Jace Kohlmeier, left too. By April they had incorporated Teza. Last fall, while I was reporting my story on Citadel, Kenneth Griffin, the firm’s billionaire founder and CEO, told me that before the arrest of Aleynikov, he had no idea what Malyshev and Kohlmeier were doing at Teza. After all, he said, the two were still on Citadel’s payroll as part of their noncompete agreements.
Like most hedge fund firms, Citadel is secretive about its investment strategies. The fact that Griffin would pursue a very public lawsuit with Teza’s founders says a lot about the importance of high frequency trading to the $12 billion-in-assets Citadel. In 2008 its high frequency group made $1.15 billion, compared with gains of $892 million the previous year and $75 million in 2005, according to Malyshev’s testimony. The 2008 performance was especially impressive given how poorly Citadel’s large multistrategy funds did that year: Its flagship Kensington and Wellington funds were each down about 55 percent.
Benjamin Blander, who joined the firm in 2004 from Banc One Corp., now leads the high frequency group, which manages a portion of Citadel’s $1.8 billion Tactical Trading fund. Citadel, however, was the only large hedge fund firm I could find that was willing to admit that it does high frequency trading. Most say they use many of the same tools as high frequency traders — employing high-speed computer programs and co-location services to generate, route and execute orders — but that their strategies have a longer time horizon.
“Even the slowest high frequency traders are turning over their portfolios at least a half dozen times a day,” AQR principal Michael Mendelson told me when I met with him in January at the firm’s Greenwich headquarters. “We tend to hold things for at least a day or two, and usually longer.”
Mendelson was head of quantitative equity trading at Goldman Sachs before joining AQR in 2005; he oversees the firm’s statistical arbitrage strategies. He explained to me that high frequency trading doesn’t require much in the way of capital — in fact, it would be hard-pressed to put hundreds of millions of dollars to work. The typical high frequency firm, he added, is likely to have about $5 million in proprietary capital and make a few million trades a day through a specialized brokerage firm like Lime or Wedbush Securities.
High frequency trading, I learned, is a very low-margin, low-risk strategy. Traders earn less than a penny a share and rarely hold overnight positions. Profits are measured in hundredths of a cent, or “mils,” to use the industry parlance. According to Narang, high frequency traders typically earn about 10 mils, or 0.1 cent, a share trading U.S. equities. One of the attractions of the strategy is its consistency. High frequency traders rarely have losing days. They also tend to do very well during periods of high volatility. May was likely a great month for them.
Narang and other high frequency traders I spoke with gripe about the press, saying that it has often misrepresented what they do and grossly inflated the profitability of their business. They’ve got a legitimate beef. Last summer, a few weeks after the Goldman software-theft news broke, the New York Times ran a front-page story by Charles Duhigg describing how a handful of traders use powerful computers to “reap billions at everyone else’s expense.” The article went on to say that “these systems are so fast they can outsmart or outrun other investors, humans and computers alike,” using flash orders to step in front of those investors. (Under Reg NMS, exchanges were given the ability to “flash” marketable orders electronically for a split second to some professional traders before they are displayed to the broad public.) The article included the bold assertion that high frequency traders generated some $21 billion in profits in 2008.
The source of the data was TABB Group, a New York– and London-based research firm. The problem with the Times story, as I discovered when I met with Larry Tabb at his Wall Street office in early March, was that the $21 billion included a lot more than just high-frequency market making. “That number included anybody following an equities-related time-sensitive strategy that doesn’t take a significant end-of-day position,” the TABB founder and CEO explained. “It is pairs trading, options market making, futures and cash arbitrage, exchange-traded funds.” The profits for the virtual market makers in U.S. equities, he said, were roughly $8 billion in 2008 and $7.2 billion in 2009 and likely to be lower this year because of the drop in volatility and trading volume. (Tradeworx’s Narang says that high frequency trading in U.S. equities generates no more than $2 billion to $4 billion a year in profits overall.)
New York Senator Charles Schumer probably didn’t ask Larry Tabb for clarification after he read the Times article. The very same day it appeared, the longtime lawmaker fired off a letter to Mary Schapiro demanding that the SEC do something about high frequency traders and their ability to view order-flow information before the general public by using flash orders. “This kind of unfair access seriously compromises the integrity of our markets and creates a two-tiered system where a privileged group of insiders receives preferential treatment,” he wrote. If the SEC failed to curb flash trades, Schumer threatened to introduce legislation that would.
The SEC's new headquarters is a marvel of modern architecture. Conveniently located next to Washington’s historic Union Station, the building has a spectacular glass-and-steel atrium where visitors can watch the news on a giant flat-screen television while waiting to make their way into the agency’s inner sanctum. That’s exactly what I was doing one cloudy Tuesday afternoon in late March when John Nester, the SEC’s director of public affairs, came to get me. I’d taken the train down from New York that day to meet with James Brigagliano, deputy director of the agency’s Division of Trading and Markets, and several other members of his team to discuss high frequency trading. The problem was, I didn’t know in advance who was going to be in the meeting, and as Brigagliano and three other staffers from the SEC division filed into the room and quickly introduced themselves, I didn’t catch all of their names. I handed out business cards to each of them in hopes of getting them in return, but only one person (assistant director John Roeser) had brought a card.
It took me about 20 minutes into the interview to piece together the two missing names — “Dan” (who I later found out was market structure counsel Daniel Gray) and “Dave” (associate director David Shillman). Despite my initial confusion, I was impressed with the SEC staff’s knowledge of high frequency trading. We had a wide-ranging discussion, spanning everything from market structure and regulation to Washington politics and financial reform. The SEC’s interest in high frequency trading, I learned, long preceded Schumer’s famous letter to Schapiro last summer (and a similar call from Senator Kaufman for the SEC to do a comprehensive review of market structure). Brigagliano told me that the SEC began hearing about high frequency trading not long after it passed Reg NMS and that his group started working on the equity market structure concept release early last year.
The SEC has a tripartite mission: to protect investors, maintain fair and orderly markets and facilitate capital formation. Although the mandates can sometimes be at odds with one another, getting the first two right can go a long way toward ensuring the third. “We see confidence in the markets as essential for capital formation,” Brigagliano told me. “Investors are not going to commit capital if they think that the system is rigged.”
By the time I met with Brigagliano and his team, the SEC had proposed several new rules to help safeguard the market, including the elimination of flash orders and a prohibition against broker-dealers providing clients with unfiltered, or “naked,” access to exchanges and other alternative trading systems. Naked access has been popular among some speed-conscious high frequency traders because it enables them to place buy and sell orders directly with an exchange or trading venue without being slowed down by pretrade credit and risk checks. The SEC’s rule proposal, if approved, would require brokerage firms to create and maintain strict risk management controls for clients that are given direct sponsored access to electronic trading venues.
Of course, one of the biggest problems the SEC and other regulators have faced is that they simply haven’t had the tools or the data to track the billions and billions of trades that fire across the electronic exchanges and trading platforms each day. Although several of the largest high frequency players, like Getco, are registered broker-dealers and have the reporting requirements that go along with that, the vast majority of firms operate in anonymity. In April the SEC looked to change that when it voted to propose the creation of a large-trader reporting system. If the proposal is approved, any firm or individual that trades 2 million shares or $20 million in exchange-listed securities in a day, or 20 million shares or $200 million in securities in a month, will be required to identify itself to the SEC. The agency will then assign that trader a number, which its broker-dealer will use to tag all its transactions, reporting them, upon request, to the SEC.
“The large-trader reporting system will be simple to put in place,” the SEC’s Shillman told me during my March meeting at the agency. “Creating a consolidated audit trail is more complicated, and could take several years, because it requires systems changes at exchanges and broker-dealers.”
The SEC began working on a consolidated audit-trail proposal last summer, consulting with exchanges and broker-dealers on what would need to be done and how much it would cost. On May 26 the agency unveiled its new rule, which would create a consolidated order-tracking system that would enable the agency to access in real time most of the data needed to reconstruct a market dislocation like the flash crash. But progress doesn’t come cheap: The SEC estimates that it will initially cost about $4 billion to build the system and an additional $2.1 billion a year to maintain it. Taxpayers, however, won’t have to worry about footing the bill; the costs would be borne by broker-dealers, exchanges and other trading venues.
The large-trader tagging and consolidated audit-trail proposals are likely to be approved by the commission over the coming months. Although it’s wishful thinking to expect the SEC to ever be able to match the technological sophistication of high frequency traders, the new rules should eventually give the regulator the necessary tools to monitor and police their activity. I’m sure that is going to make some high frequency traders very nervous, but they shouldn’t be. Unlike some of the more vocal critics of high frequency trading, SEC chairman Schapiro knows that the technological clock cannot be turned back.
“While technology has provided benefits to the market, it has also created real issues,” she told me in early May. “We want to be very careful and thoughtful about how we approach it. The idea that you can say, ‘Let’s just unplug everything’ or ‘Let’s put something into the machines that makes everything go slower’ is probably not realistic.”
In other words, in the battle of man versus machine, both sides could end up winning.
Putting the "E" Into ETF
Deutsche Börse's Stephan Kraus on the exchange's success in attracting ETF volume and the European market's growth prospects
Ben Johnson | 01-07-10
We recently spoke with Stephan Kraus, Vice President of Institutional Equity at Deutsche Börse, about the exchange’s success in attracting ETF trading volume, the measures being undertaken to further increase on-exchange liquidity, the potential for a “flash crash” on the German exchange, and the growth prospects for the European ETF market.
Morningstar: As the leading ETF exchange by market share in Europe, can you outline some of the key factors that have contributed to the Deutsche Börse's success in this category?
Kraus: We believe that three factors have been pivotal to the success of our XTF Exchange Traded Funds segment. First of all, we have been offering a highly attractive market maker programme right from the start of the segment in order to incentivise liquidity provision in ETFs. This has played a crucial role in increasing liquidity to a level where even large institutional orders can be executed cost-effectively with minimal market impact. Secondly, Deutsche Börse has been able to benefit greatly from its vast network of Xetra and Eurex members in terms of developing a truly international trading and distribution platform for ETFs. As a consequence, the majority of order flow in ETFs today originates from outside Germany and our offering comprises the largest number of ETF listings in Europe, which demonstrates the segment’s sustained attractiveness for both investors and issuers. Finally, we have committed ourselves already at an early stage of the market development to ongoing public relations by providing educational material on the advantages of ETFs to both investors and the media. This has certainly helped to increase the awareness and eventually the trading activity in ETFs since our segment was launched.
What steps can be taken to further improve ETF liquidity?
Probably the most rewarding step for an exchange is to further increase the number of investors actually using ETFs. We therefore continue to offer educational publications, host conferences and team up with issuers for road shows and seminars in order to address the growing interest in ETFs from both retail and institutional investors. In addition, we provide the market with various statistical information on ETF trading volumes and liquidity, as many investors require a certain level of [trading] activity before considering an investment. The information provided also includes OTC data, which enables investors to arrive at a more complete picture when evaluating the total trading activity in an ETF.
What measures does the exchange have in place to prevent a "flash crash" like the one witnessed on May 6 in the US? Specifically, are there presently "circuit breakers" in place that would bring a halt to trading under a similar scenario? Are market makers obliged to actively quote bid and offer prices under these extreme circumstances? Are there any additional measures that can be put in place to prevent a similar market disruption on the Deutsche Börse?
Deutsche Börse’s electronic trading system Xetra features volatility interruptions as safeguards against potential flash crashes. Volatility interruptions are automatically initiated if the potential execution price of an order lies outside a pre-defined price range around a given reference price. Once a volatility interruption has been initiated, continuous trading is interrupted and a change in trading form to auction is triggered. Market participants are informed of this market situation and may react to it by either adding, modifying or deleting orders and quotes. Continuous trading resumes after a certain minimum duration of the auction. In case of larger price deviations, the auction is extended until the volatility interruption is terminated manually. Given the described circuit breaker mechanism, a scenario similar to May 6 in the US is impossible to happen on Xetra. This is particularly true since the calculation of the DAX is based on Xetra data only, thereby effectively taking into account trading interruptions on Xetra while other platforms may continue to trade.
How much ETF trading is still taking place over the counter in Germany?
Based on data available from Clearstream’s Cascade OTC functionality, we estimate that approximately 60% of total ETF trading takes place over the counter. However, this data also includes creation and redemption transactions of Authorised Participants.
What can be done to attract those trades to the exchange?
The average OTC order size is a multiple of the average on-exchange order size, which gives clear indication of the motivation for trading over the counter: minimising market impact when trading very large orders. In order to attract these transactions to the exchange, ETF liquidity will have to improve further. Given the advantages of trading on regulated markets, such as the existence of a clearing house and supervision by market regulators, and the continuing increase in ETF liquidity over the past few years, we are optimistic that a growing number of ETF transactions will move from OTC to on-exchange in the future.
What do you see as the largest potential growth opportunity for the ETF category (increased use by hedge funds, insurance companies, private banks, individuals, etc.)?
We firmly believe that ETFs will continue to gain popularity among all classes of investors. For example, in the United States, ETFs account for more than 6% of total mutual fund assets. In Europe, however, the ETF share of total mutual fund assets is only 3% and thus hints at the strong growth potential that can be expected from the European market in the future. The advent of fee-based investment advisory services will certainly help to support this growth as an increasing number of individual investors become more and more aware of the advantages offered by ETFs.
How might prospective changes to MiFID affect your ETF volumes? Would the promise of improved pre-trade transparency, best execution, and clearing attract more ETF volumes onto the exchange?
From our point of view, increased post-trade transparency would be beneficial for the European ETF market as it would provide investors with full transparency on the total trading activity in ETFs. Greater transparency is also likely to increase on-exchange ETF volumes, as a larger number of investors would be attracted to the product.
http://www.emii.com/Articles/2595257/ExchangesandTrading/Exchanges-and-Trading-Articles/Inside-the-Machine-A-Journey-Into-The-World-Of-High-Frequency-Trading.aspx
http://www.morningstar.fr/fr/etfs/article.aspx?lang=fr-FR&articleid=90332&categoryid=656
Inside the Machine: A Journey Into The World Of High-Frequency Trading
Jun-14-2010 | Source: Institutional Investor Magazine
At 2:45p.m. on Thursday, May 6, George (Gus) Sauter received a frantic call from one of his traders to get in front of a Bloomberg terminal. The Dow Jones industrial average, already down 3.9 percent that day on fears about Greece, was in free fall. In just five minutes the index plunged 573 points. Less than two minutes later, the Dow had rocketed back up 543 points, going on to finish the day down 3.2 percent.
“It was just crazy,” Sauter, chief investment officer of mutual fund giant Vanguard Group, told me a few days later. “I had to go to our fixed-income building, about a five-minute walk from my office. By the time I got there, the market had rallied.”
Crazy, indeed. The aptly named “flash crash” temporarily wiped out more than a half trillion dollars in equity value, shaking what little faith nervous investors had in U.S. markets. Shares of Dow component Procter & Gamble Co., the ultimate defensive blue-chip stock, dropped more than one third in a matter of minutes before recovering almost as quickly, all for no apparent reason. A few other large U.S. companies, including accounting firm Accenture, saw their stocks trade as low as a penny a share, only to close not far from where they had begun the day (nearly $42 a share in the case of Accenture) — again, on no news. By the time the dust settled, a whopping 19.3 billion shares had changed hands, more than twice the average daily U.S. equity market volume this year and the second-biggest trading day ever.
But for me, the single most amazing fact about the flash crash was that no one had a clue as to what had triggered it. Not that I should have been surprised, based on the conversation I’d had two days earlier with Mary Schapiro, chairman of the Securities and Exchange Commission. Schapiro, whose organization is charged with maintaining “fair and orderly” markets, explained to me how the SEC did a detailed study after the October 1987 crash to reconstruct what had happened. “We’ve lost some of the capacity to do that given the dramatic volumes of trading that exist today,” Schapiro said. “But we need to be able to do that to understand where are the vulnerabilities in our marketplace and what are the practices that have the potential to hurt investors and the marketplace in the long run.”
In 1987 the SEC had a much easier task because the vast majority of listed U.S. equities were traded in one place — on the floor of the New York Stock Exchange, where specialists employed by the Big Board’s member firms made a market based on an open-outcry auction system. Today, as a result of a series of regulatory changes designed to increase competition and make the market fairer for mom-and-pop investors, only about one quarter of all U.S. equity trading occurs through the now publicly held NYSE Euronext. And the majority of that trading is done electronically, either by the new NYSE floor specialists, called designated market makers, or on the fully automated NYSE Arca platform. The rest of the trading in U.S. equities is spread across a wide range of venues, including the three other major exchanges (Nasdaq Stock Market, BATS Exchange and Direct Edge) and dozens of broker-dealer-operated trading systems, electronic communications networks (ECNs) and dark pools, where buyers and sellers are matched up anonymously.
The past decade of fragmentation and automation has given rise to a whole new type of professional trading firm: one that uses sophisticated computer algorithms, often running on servers housed right next to exchanges’ own machines, and high-speed market data feeds to buy and sell securities in rapid-fire fashion. Some of these high frequency traders place hundreds of millions, even billions, of buy and sell orders a day, continually canceling and replacing them, and are likely to be on the other side of your trade. Not that you’d know who they are — proprietary trading firms are not required to disclose their identity — or recognize their names. The bulge bracket of high frequency trading includes firms like Allston Trading, DRW Holdings, Global Electronic Trading Co. (Getco), Hudson River Trading, Quantlab Financial, RGM Advisors, Sun Trading, Tower Research Capital and Tradebot Systems.
High frequency trading has become a multibillion-dollar business, accounting for an estimated 50 to 70 percent of the total U.S. equity market volume on any given day. Since last summer it has also been a lightning rod for the populist anger directed at Wall Street, despite the fact that most of the largest high frequency firms operate far from the canyons of lower Manhattan, in places like Chicago, Kansas City and Austin, Texas. Critics accuse high frequency traders of being fair-weather market makers who, unlike the former NYSE specialists they’ve largely replaced, don’t have a legal obligation to trade during periods of stress. They also say that the growth in high frequency trading has created a two-tiered market of technology haves and have-nots that is unfair to long-term investors and poses potential systemic risks.
I grew interested in high frequency trading last year when I was writing a feature on hedge fund firm Citadel Investment Group (more on that later). As an editor, however, it wasn’t until January that I was able to dig into what I soon learned is an incredibly arcane world. My first stop was a company called Pragma Securities, an agency-only brokerage firm that aggregates more than 40 different dark pools, electronic trading venues and open market destinations into a single liquidity source for clients. Douglas Rivelli and David Mechner, Pragma’s co-CEOs, spent two hours at the firm’s spacious New York offices taking me through that world.
High frequency traders, Rivelli and Mechner explained, generally fall into one of two camps: proprietary trading shops that act as electronic market makers, using computers to generate and adjust buy and sell orders automatically throughout the day, and hedge funds that specialize in statistical arbitrage, seeking to exploit pricing inefficiencies among different securities and asset classes. The distinctions between the two sometimes blur, however, as proprietary trading firms often try to capitalize on some of the same buy and sell signals that statistical arbitrageurs use and hedge funds trade on ever-shorter time horizons. High frequency firms are best known for trading equities, but they also trade futures, options and foreign exchange — basically, anything that can be traded electronically. High frequency trading is also an increasingly global phenomenon, gaining ground in both Europe and Asia.
One thing is clear: Hedge funds don’t like to be called high frequency traders, as I quickly discovered after visiting with some of the biggest quantitative managers, including AQR Capital Management in Greenwich, Connecticut, and D.E. Shaw & Co. and Renaissance Technologies Corp. in New York.
In the wake of the flash crash, as people scrambled to determine what had triggered the market plunge, it didn’t take much longer than the 400 to 600 microseconds (millionths of a second) that high frequency traders typically need to identify and place a trade for fingers to start pointing at them. “The potential for giant high-speed computers to generate false trades and create market chaos reared its head again today,” Delaware Senator Ted Kaufman said in a statement released that same afternoon. When I caught up with the Democratic lawmaker a week later, he was even more incensed, pointing out that regulators still didn’t know what had caused the flash crash.
“We have a 300-pound gorilla in the room, and we’re saying that we’re going to keep it in a cage somewhere,” he told me. “This thing will be 600 pounds.”
“But isn’t part of the problem that there are 300 gorillas?” I asked, referring to the fact that an estimated 200 to 400 firms do high frequency trading.
“Good point,” he replied. “We have all these gorillas, and guess what? We put them in zoos where the people running the zoos don’t have enough information and authority to take care of them.”
Kaufman’s interest in high frequency trading predates mine. When he was sworn into office in January 2009 to fill the Senate seat of his former boss Joe Biden, Kaufman was hell-bent on making sure that everybody responsible for the 2008 market meltdown paid for their actions. He soon focused on short-selling, urging the SEC to reinstate the uptick rule requiring short sales to be filled at a higher price; the rule had been eliminated in 2007. He told me that when he was in business school in the 1960s, it was “an article of faith” that the uptick rule was “one of the two or three things that helped deal with predatory bear raids.” As a result of his interest in short-selling, Kaufman said, his office started getting calls from some fairly sophisticated people, including former Wall Streeters, telling him that if he thought that practice was bad, he should look at high frequency trading.
Kaufman likes to draw an analogy between high frequency trading and the swaps market. “With synthetic derivatives, you had a lot of money at stake, no transparency and then a major meltdown,” he explained to me. “If you look at high frequency trading, I think the same Kaufman formula works.”
A graduate of the Wharton School of the University of Pennsylvania, the 71-year-old Kaufman is a quick study and understands markets. If I were a high frequency trader, I’d take him seriously.
Kaufman has been high frequency trading’s loudest critic. But he’s far from alone. Seth Merrin, founder and CEO of Liquidnet Holdings, which operates an electronic marketplace that provides block trading for institutional investors, likes to compare high frequency traders to the American army during the Revolutionary War. “The institutions are the equivalent of the British army, walking down the battlefield wearing bright red,” he told me back in March in his glass-enclosed office at Liquidnet’s sleek midtown Manhattan headquarters. “The high frequency traders are the Americans hiding in the woods in camouflage, picking them off. If the British army hadn’t changed its tactics, they would have lost every subsequent war.”
Even Duncan Niederauer, who as the pragmatic CEO of NYSE Euronext has been retooling his exchange to attract more business from high frequency traders, took a swipe at them. “We as an industry have to say how much is too much of this technology,” he said during an interview on CNBC after the flash crash, undoubtedly causing some consternation among the folks at NYSE Euronext who are selling space in the company’s new, 400,000-square-foot data center and co-location facility in Mahwah, New Jersey.
High frequency traders say that any efforts to rein in technology would be misplaced. Although speed is important to what they do, the quality of a firm’s computer models for analyzing markets and identifying where and at what price to buy and sell securities is what really determines success or failure, they argue. In their defense, high frequency traders say that they increase liquidity, lower trading costs, improve price discovery and reduce risk by dampening short-term volatility.
“High frequency trading is the liquidity backbone of the equity markets,” Manoj Narang, the founder, CEO and chief investment strategist of Tradeworx, told me when I first met him, in early March. “Long-term investors are the ones who cause bubbles, as well as liquidity crises when these bubbles burst.”
Narang, 40, is one of only a handful of proprietary traders I found willing to talk openly with a journalist about what they do. Most prefer to operate in the shadows, both to protect their valuable algorithms and to avoid regulatory scrutiny. But Narang, who left Wall Street in 1999 to start Tradeworx, sought me out when he heard through a public relations contact this winter that I was working on a story on high frequency trading. His 25-person firm, which operates out of an office above a Restoration Hardware store in Red Bank, New Jersey, trades about 40 million shares a day on about $6 million in proprietary capital. Tradeworx also runs a $500 million statistical arbitrage hedge fund (which trades another 40 million shares a day) and owns a subsidiary, Thesys Technologies, which licenses its high-performance trading platform to other investors.
Narang lifted his profile on May 6 when he revealed to the Wall Street Journal that his firm turned off its high frequency trading computers during the flash crash. Tradeworx wasn’t the only one to do so. Kansas City–based Tradebot, started by BATS founder David Cummings, also stopped trading. Tradebot is one of the world’s two largest high frequency firms, reportedly trading as many as 1 billion shares a day in U.S. equities. Only Chicago-based Getco is thought to be bigger. Although Getco won’t comment on its daily trading volume, a spokeswoman for the firm did tell me that it continued to provide a two-sided market on all the electronic exchanges during the flash crash.
Most high frequency traders, in fact, kept their computers running, according to Jeffrey Wecker, president and CEO of Lime Brokerage. Wecker should know. His firm, which accounts for as much as 5 percent of the daily equity trading volume in the U.S., is the oldest and largest provider of high-speed trading solutions and access to all major U.S. exchanges for high frequency traders.
The high frequency firms that did stop trading on May 6 have been criticized for contributing to the decline by pulling liquidity from the market when it was needed most. But Narang told me that his firm had no choice because the exchanges were likely to cancel, or break, trades that were clearly erroneous (like selling Accenture at a penny a share). “If the exchanges broke all our buys and not our sells, we could have exceeded our capital requirements,” he explained. “We didn’t want to take the risk. The high frequency traders who continued to trade that afternoon made a fortune.”
In January the SEC published a concept release on equity market structure, seeking public comment on everything from high frequency trading strategies and systemic risks to co-location and dark pools. At 74 pages, the report might seem like a real snoozer, but it’s actually a great primer on how the U.S. equity markets have responded to regulatory changes, starting in 1996 with the adoption of “order-handling” rules. These new rules, which were designed to make the markets fairer following the Nasdaq price-fixing scandal in the mid-’90s, created ECNs and gave them the power to publish their stock quotes publicly alongside those of the listed markets. In 1999, Regulation Alternative Trading System (ATS) went into effect, enabling ECNs to operate as market centers without having to register as exchanges. By the following year ECNs like Island and Archipelago had taken about one third of market makers’ volume in Nasdaq-listed stocks. But it wasn’t until after April 2001 — the deadline the SEC mandated for all U.S. exchanges to switch from fractions to decimals — that electronic trading really started to take off.
As bid-offer spreads shrunk and competition increased, ECNs and exchanges adopted a “maker-taker” pricing scheme to attract liquidity. Under the maker-taker model, market participants that offer to provide, or make, liquidity by posting an order to buy or sell a certain number of shares at a particular price receive a rebate. Those that execute against that order — that is, take the liquidity — have to pay a fee. Exchanges earn the difference between the rebate they pay and the fee they charge. The SEC limits taker fees to 0.30 cents a share; rebates tend to be lower for economic reasons, but for high frequency firms trading millions of shares a day, they can make for a pretty good living.
“The maker-taker model created an arbitrage that provided incentive for those firms that could properly blend together knowledge of trading, financial economics and computers all into a single, scalable system that could handle high volumes of transactions,” Lime Brokerage CEO Wecker told me back in April when we met at his firm’s Greenwich Village offices.
The final major regulatory change was Regulation NMS (for “National Market System”), which was passed by the SEC in 2005 and went into effect in 2007. One of the key pieces of Reg NMS is the “trade-through” rule prohibiting any exchange from executing a trade at an inferior price to one quoted at another trading venue. Trade-through protection is critical for high frequency traders; it ensures that if they are the first to post the best price for a stock, they’ll get the trade.
“High frequency trading is a product of Reg NMS, decimalization and technology improvements,” says John Knuff, general manager of global financial markets for Equinix, a Foster City, California–based company that runs 87 data centers in 35 key metropolitan areas around the world. “High frequency traders are the democratic enforcers of Reg NMS’s trade-through rules.”
Under Reg NMS, exchanges are required to handle electronic orders immediately or risk having them redirected to other venues. Once the rule was adopted, the NYSE — which even after decimalization had been clinging desperately to its manual specialist system — had no choice but to embrace automation. In 2007 the NYSE switched to a system it called the Hybrid Market, expanding its automatic execution facility, Direct+, and giving specialists the power to create their own algorithms to quote and trade electronically. The hybrid system included circuit breakers, called liquidity replenishment points, that would be triggered if a stock experienced a large price swing, at which time automated trading would stop and human specialists would step in.
That’s exactly what happened on the afternoon of May 6, when the NYSE imposed a trading slowdown in Big Board stocks like P&G and Accenture. Investors who wanted to sell or buy were forced to go to other electronic exchanges or ECNs. Although Nasdaq OMX Group CEO Robert Greifeld and other competitors criticized the NYSE on May 6 for making the meltdown worse, NYSE Euronext CEO Niederauer staunchly defended its actions, pointing out that the exchange did exactly what it should have under Reg NMS. He was vindicated two weeks later when the SEC proposed instituting similar circuit breakers for all exchanges that would pause trading in any stock in the Standard & Poor’s 500 index if its price moved 10 percent or more in a five-minute period. The new circuit breaker rule, which is likely to be approved by the SEC this month, would go into effect on a pilot basis through December 10, at which point the regulator could expand it to other stocks and exchange-traded funds.
“When a stock gets overheated, some form of stock-specific circuit breaker is a very effective means for letting information repopulate in the marketplace,” Lime’s Wecker told me a few days after the flash crash. He advocates an initial short-term cooling-off period measured in seconds or minutes; if a stock suffers a subsequent steep decline in price, the next halt would be longer.
Like many of the people I have interviewed about high frequency trading over the past five months, Wecker is concerned that regulators could try to rein in the practice by putting limits on technology. After all, his business is built on speed. “The challenge with speed bumps is that you are slowing down innovation to accommodate the players who have no interest in investing in innovation,” says Wecker, 47, who spent 11 years at Goldman, Sachs & Co., including six in its famed quantitative trading group, before eventually moving to Lehman Brothers to build its electronic trading group. He left Lehman in April 2008, five months before the investment bank filed for bankruptcy, and was hired by Lime founder Mark Gorton that November.
Lime handles hundreds of millions of trade orders a day. This spring it introduced a product called LimeInside that enables customers to place an order with Nasdaq, NYSE Arca and BATS in less than ten microseconds, on average — including real-time pretrade risk checks. That’s blazingly fast, confirms Tradeworx CEO Narang. It takes his group about 20 microseconds to do a trade from the moment a stock quote enters its system, triggers a signal, determines an order and passes through risk controls. Besides Lime, the only firms that are faster than Tradeworx, Narang says, are Tradebot and Getco.
Trading in the single-digit microseconds would be impossible for firms like Lime, Tradebot and Getco if they didn’t house their algorithms near the computer matching engines that power exchanges, ECNs and other electronic marketplaces. Brokerages, proprietary trading firms, hedge funds and other asset managers can lease co-location space in exchange-owned facilities (such as the NYSE’s Mahwah data center) or those owned and operated by third-party providers like Equinix.
Co-location has been a hot-button issue for critics of high frequency trading. I wonder, however, how many have actually visited a co-location facility. In March I got the chance to do just that at Equinix’s 340,000-square-foot NY4 data center in Secaucus, New Jersey. My host was Brandon Travan, head of the information technology infrastructure, co-location and cloud-hosting services divisions for Gravitas Technology, one of the growing number of companies that provide turnkey technology solutions for high frequency traders — and one of the first tenants at NY4.
From the outside, the white, two-story, unmarked building, located 11 miles west of downtown Manhattan in an area known best for outlet shopping, looks like a suburban medical office or law firm. (I later learned that it had been an eyeglass factory.) The lobby is equally nondescript, if not a little odd — there’s not much more than a phone, a plain steel door and a biometric hand scanner. After dialing in a personal code matched against the geometry of his hand, Travan got us into an inner lobby, where three security guards sat behind bulletproof glass and Kevlar-reinforced walls. I gave them my driver’s license (which, I was told, I’d get back when I left), and after two more sets of hand scans and steel doors, we entered the co-location area.
I was glad that I had decided to wear a light coat over my suit that day, because Equinix keeps the facility at a cool 65 to 72 degrees Fahrenheit. The design itself is also very cool. Built on a concrete slab with 45-foot-high ceilings, the building is organized along a rectangular grid system, with rows and rows of servers housed in metal cages for as far as the eye can see. Yellow trays snake above the cages, carrying all types of cables. Orange “innerducts” transport fiber-optic connections within the cages. Giant air-conditioning units, located outside the co-location area in case of a water leak, pump air through large green ducts that come down over the cages, creating a giant convection loop that sends the heat from the servers and networking equipment up toward the ceiling and out through the roof.
The facility is kept dark, both to improve its energy efficiency and to protect the anonymity of Equinix’s tenants. Each cage has lights that come on automatically when someone enters, I learned when Travan typed in the code to unlock his cage. Gravitas has about 35 clients operating out of its space, including one large hedge fund firm that spent more than $1 million on computer hardware, software and setup costs. The majority of Gravitas’s clients, however, are small. The company provides all of its clients with direct high-speed connections to all the market data providers and trade execution networks, including other NY4 tenants, like Direct Edge and the International Securities Exchange.
“We make the electronic trading community of Equinix available to smaller players by taking advantage of economies of scale — helping them get in with the technology they need with almost no up-front capital,” Travan told me. “If you’ve got a coder and the next best algo for trading equities, currencies or other vehicles, instead of needing a quarter-million dollars to start up, you can simply install your code on our hosting platform or send us servers to plug in, and you’re ready to go.”
Not everybody, however, buys the democratization argument. James McCaughan, CEO of Principal Global Investors, says co-location gives high frequency traders an unfair advantage. “Co-location creates an informational asymmetry that is fundamentally acting against the interests of long-term investors,” McCaughan told me exactly one week after my visit to the Equinix data center. “I have no problem with people developing algorithms for high frequency trading as long as they’re doing it with the same information as everybody else.”
McCaughan, whose team manages $215 billion in mostly 401(k) and other retirement assets for Principal Financial Group, considers himself to be a pretty savvy investor. His equity-trading desk has six people at the company’s Des Moines, Iowa, headquarters; two each in London and Singapore; and one in Tokyo, as well as access to state-of-the-art trade-execution algorithms offered by all the leading brokerage firms and third-party vendors. Although there’s nothing stopping Principal from using co-location, McCaughan told me that for a long-term investor, it’s probably not worth the effort. “As a large, sophisticated investor, we can compete,” he said. “But it is a weaker market if you have to be that sophisticated to compete.”
High frequency trading burst into the public consciousness last summer when news broke that a former Goldman Sachs Group computer programmer had been arrested by Federal Bureau of Investigation agents at Newark Liberty International Airport for allegedly stealing software code. According to the FBI, the programmer, Sergey Aleynikov, transferred thousands of files related to Goldman’s proprietary trading program to his home computers with the intention of using them to help his new employer build a high frequency trading platform. It didn’t take long for that employer, Chicago-based Teza Technologies, to cut its ties with Aleynikov. But Teza’s co-founders soon landed in hot water themselves when just six days after Aleynikov’s arrest, hedge fund firm Citadel sued them for violating a noncompete agreement and trying to steal its trade secrets. Last fall Citadel finally got the injunction against Teza that it was seeking, but by the time the judgment was rendered, the nine-month noncompete period had nearly expired.
The Citadel-Teza lawsuit provides an illuminating window into the world of high frequency trading. The person at the center of the drama is Mikhail Malyshev, a brilliant Russian émigré with a Ph.D. in plasma physics who joined Citadel’s high frequency trading group in 2003. During Malyshev’s six years at Citadel, the firm spent hundreds of millions of dollars researching and developing high frequency trading models and building out the IT infrastructure and systems to implement them. Its market data system, for example, contains roughly 100 times the amount of information in the Library of Congress. Citadel uses this historical data to test its models, which attempt to forecast changes in the prices of securities by analyzing statistical pricing patterns, supply and demand imbalances and other factors. The signals, or alphas, that prove to have predictive power are then translated into computer algorithms, which are integrated into Citadel’s master source code and electronic trading program.
Malyshev oversaw all aspects of Citadel’s nearly 60-person high frequency business, including the approval of trading strategies. He resigned on February 16, 2009; the next day his top lieutenant, Jace Kohlmeier, left too. By April they had incorporated Teza. Last fall, while I was reporting my story on Citadel, Kenneth Griffin, the firm’s billionaire founder and CEO, told me that before the arrest of Aleynikov, he had no idea what Malyshev and Kohlmeier were doing at Teza. After all, he said, the two were still on Citadel’s payroll as part of their noncompete agreements.
Like most hedge fund firms, Citadel is secretive about its investment strategies. The fact that Griffin would pursue a very public lawsuit with Teza’s founders says a lot about the importance of high frequency trading to the $12 billion-in-assets Citadel. In 2008 its high frequency group made $1.15 billion, compared with gains of $892 million the previous year and $75 million in 2005, according to Malyshev’s testimony. The 2008 performance was especially impressive given how poorly Citadel’s large multistrategy funds did that year: Its flagship Kensington and Wellington funds were each down about 55 percent.
Benjamin Blander, who joined the firm in 2004 from Banc One Corp., now leads the high frequency group, which manages a portion of Citadel’s $1.8 billion Tactical Trading fund. Citadel, however, was the only large hedge fund firm I could find that was willing to admit that it does high frequency trading. Most say they use many of the same tools as high frequency traders — employing high-speed computer programs and co-location services to generate, route and execute orders — but that their strategies have a longer time horizon.
“Even the slowest high frequency traders are turning over their portfolios at least a half dozen times a day,” AQR principal Michael Mendelson told me when I met with him in January at the firm’s Greenwich headquarters. “We tend to hold things for at least a day or two, and usually longer.”
Mendelson was head of quantitative equity trading at Goldman Sachs before joining AQR in 2005; he oversees the firm’s statistical arbitrage strategies. He explained to me that high frequency trading doesn’t require much in the way of capital — in fact, it would be hard-pressed to put hundreds of millions of dollars to work. The typical high frequency firm, he added, is likely to have about $5 million in proprietary capital and make a few million trades a day through a specialized brokerage firm like Lime or Wedbush Securities.
High frequency trading, I learned, is a very low-margin, low-risk strategy. Traders earn less than a penny a share and rarely hold overnight positions. Profits are measured in hundredths of a cent, or “mils,” to use the industry parlance. According to Narang, high frequency traders typically earn about 10 mils, or 0.1 cent, a share trading U.S. equities. One of the attractions of the strategy is its consistency. High frequency traders rarely have losing days. They also tend to do very well during periods of high volatility. May was likely a great month for them.
Narang and other high frequency traders I spoke with gripe about the press, saying that it has often misrepresented what they do and grossly inflated the profitability of their business. They’ve got a legitimate beef. Last summer, a few weeks after the Goldman software-theft news broke, the New York Times ran a front-page story by Charles Duhigg describing how a handful of traders use powerful computers to “reap billions at everyone else’s expense.” The article went on to say that “these systems are so fast they can outsmart or outrun other investors, humans and computers alike,” using flash orders to step in front of those investors. (Under Reg NMS, exchanges were given the ability to “flash” marketable orders electronically for a split second to some professional traders before they are displayed to the broad public.) The article included the bold assertion that high frequency traders generated some $21 billion in profits in 2008.
The source of the data was TABB Group, a New York– and London-based research firm. The problem with the Times story, as I discovered when I met with Larry Tabb at his Wall Street office in early March, was that the $21 billion included a lot more than just high-frequency market making. “That number included anybody following an equities-related time-sensitive strategy that doesn’t take a significant end-of-day position,” the TABB founder and CEO explained. “It is pairs trading, options market making, futures and cash arbitrage, exchange-traded funds.” The profits for the virtual market makers in U.S. equities, he said, were roughly $8 billion in 2008 and $7.2 billion in 2009 and likely to be lower this year because of the drop in volatility and trading volume. (Tradeworx’s Narang says that high frequency trading in U.S. equities generates no more than $2 billion to $4 billion a year in profits overall.)
New York Senator Charles Schumer probably didn’t ask Larry Tabb for clarification after he read the Times article. The very same day it appeared, the longtime lawmaker fired off a letter to Mary Schapiro demanding that the SEC do something about high frequency traders and their ability to view order-flow information before the general public by using flash orders. “This kind of unfair access seriously compromises the integrity of our markets and creates a two-tiered system where a privileged group of insiders receives preferential treatment,” he wrote. If the SEC failed to curb flash trades, Schumer threatened to introduce legislation that would.
The SEC's new headquarters is a marvel of modern architecture. Conveniently located next to Washington’s historic Union Station, the building has a spectacular glass-and-steel atrium where visitors can watch the news on a giant flat-screen television while waiting to make their way into the agency’s inner sanctum. That’s exactly what I was doing one cloudy Tuesday afternoon in late March when John Nester, the SEC’s director of public affairs, came to get me. I’d taken the train down from New York that day to meet with James Brigagliano, deputy director of the agency’s Division of Trading and Markets, and several other members of his team to discuss high frequency trading. The problem was, I didn’t know in advance who was going to be in the meeting, and as Brigagliano and three other staffers from the SEC division filed into the room and quickly introduced themselves, I didn’t catch all of their names. I handed out business cards to each of them in hopes of getting them in return, but only one person (assistant director John Roeser) had brought a card.
It took me about 20 minutes into the interview to piece together the two missing names — “Dan” (who I later found out was market structure counsel Daniel Gray) and “Dave” (associate director David Shillman). Despite my initial confusion, I was impressed with the SEC staff’s knowledge of high frequency trading. We had a wide-ranging discussion, spanning everything from market structure and regulation to Washington politics and financial reform. The SEC’s interest in high frequency trading, I learned, long preceded Schumer’s famous letter to Schapiro last summer (and a similar call from Senator Kaufman for the SEC to do a comprehensive review of market structure). Brigagliano told me that the SEC began hearing about high frequency trading not long after it passed Reg NMS and that his group started working on the equity market structure concept release early last year.
The SEC has a tripartite mission: to protect investors, maintain fair and orderly markets and facilitate capital formation. Although the mandates can sometimes be at odds with one another, getting the first two right can go a long way toward ensuring the third. “We see confidence in the markets as essential for capital formation,” Brigagliano told me. “Investors are not going to commit capital if they think that the system is rigged.”
By the time I met with Brigagliano and his team, the SEC had proposed several new rules to help safeguard the market, including the elimination of flash orders and a prohibition against broker-dealers providing clients with unfiltered, or “naked,” access to exchanges and other alternative trading systems. Naked access has been popular among some speed-conscious high frequency traders because it enables them to place buy and sell orders directly with an exchange or trading venue without being slowed down by pretrade credit and risk checks. The SEC’s rule proposal, if approved, would require brokerage firms to create and maintain strict risk management controls for clients that are given direct sponsored access to electronic trading venues.
Of course, one of the biggest problems the SEC and other regulators have faced is that they simply haven’t had the tools or the data to track the billions and billions of trades that fire across the electronic exchanges and trading platforms each day. Although several of the largest high frequency players, like Getco, are registered broker-dealers and have the reporting requirements that go along with that, the vast majority of firms operate in anonymity. In April the SEC looked to change that when it voted to propose the creation of a large-trader reporting system. If the proposal is approved, any firm or individual that trades 2 million shares or $20 million in exchange-listed securities in a day, or 20 million shares or $200 million in securities in a month, will be required to identify itself to the SEC. The agency will then assign that trader a number, which its broker-dealer will use to tag all its transactions, reporting them, upon request, to the SEC.
“The large-trader reporting system will be simple to put in place,” the SEC’s Shillman told me during my March meeting at the agency. “Creating a consolidated audit trail is more complicated, and could take several years, because it requires systems changes at exchanges and broker-dealers.”
The SEC began working on a consolidated audit-trail proposal last summer, consulting with exchanges and broker-dealers on what would need to be done and how much it would cost. On May 26 the agency unveiled its new rule, which would create a consolidated order-tracking system that would enable the agency to access in real time most of the data needed to reconstruct a market dislocation like the flash crash. But progress doesn’t come cheap: The SEC estimates that it will initially cost about $4 billion to build the system and an additional $2.1 billion a year to maintain it. Taxpayers, however, won’t have to worry about footing the bill; the costs would be borne by broker-dealers, exchanges and other trading venues.
The large-trader tagging and consolidated audit-trail proposals are likely to be approved by the commission over the coming months. Although it’s wishful thinking to expect the SEC to ever be able to match the technological sophistication of high frequency traders, the new rules should eventually give the regulator the necessary tools to monitor and police their activity. I’m sure that is going to make some high frequency traders very nervous, but they shouldn’t be. Unlike some of the more vocal critics of high frequency trading, SEC chairman Schapiro knows that the technological clock cannot be turned back.
“While technology has provided benefits to the market, it has also created real issues,” she told me in early May. “We want to be very careful and thoughtful about how we approach it. The idea that you can say, ‘Let’s just unplug everything’ or ‘Let’s put something into the machines that makes everything go slower’ is probably not realistic.”
In other words, in the battle of man versus machine, both sides could end up winning.
Putting the "E" Into ETF
Deutsche Börse's Stephan Kraus on the exchange's success in attracting ETF volume and the European market's growth prospects
Ben Johnson | 01-07-10
We recently spoke with Stephan Kraus, Vice President of Institutional Equity at Deutsche Börse, about the exchange’s success in attracting ETF trading volume, the measures being undertaken to further increase on-exchange liquidity, the potential for a “flash crash” on the German exchange, and the growth prospects for the European ETF market.
Morningstar: As the leading ETF exchange by market share in Europe, can you outline some of the key factors that have contributed to the Deutsche Börse's success in this category?
Kraus: We believe that three factors have been pivotal to the success of our XTF Exchange Traded Funds segment. First of all, we have been offering a highly attractive market maker programme right from the start of the segment in order to incentivise liquidity provision in ETFs. This has played a crucial role in increasing liquidity to a level where even large institutional orders can be executed cost-effectively with minimal market impact. Secondly, Deutsche Börse has been able to benefit greatly from its vast network of Xetra and Eurex members in terms of developing a truly international trading and distribution platform for ETFs. As a consequence, the majority of order flow in ETFs today originates from outside Germany and our offering comprises the largest number of ETF listings in Europe, which demonstrates the segment’s sustained attractiveness for both investors and issuers. Finally, we have committed ourselves already at an early stage of the market development to ongoing public relations by providing educational material on the advantages of ETFs to both investors and the media. This has certainly helped to increase the awareness and eventually the trading activity in ETFs since our segment was launched.
What steps can be taken to further improve ETF liquidity?
Probably the most rewarding step for an exchange is to further increase the number of investors actually using ETFs. We therefore continue to offer educational publications, host conferences and team up with issuers for road shows and seminars in order to address the growing interest in ETFs from both retail and institutional investors. In addition, we provide the market with various statistical information on ETF trading volumes and liquidity, as many investors require a certain level of [trading] activity before considering an investment. The information provided also includes OTC data, which enables investors to arrive at a more complete picture when evaluating the total trading activity in an ETF.
What measures does the exchange have in place to prevent a "flash crash" like the one witnessed on May 6 in the US? Specifically, are there presently "circuit breakers" in place that would bring a halt to trading under a similar scenario? Are market makers obliged to actively quote bid and offer prices under these extreme circumstances? Are there any additional measures that can be put in place to prevent a similar market disruption on the Deutsche Börse?
Deutsche Börse’s electronic trading system Xetra features volatility interruptions as safeguards against potential flash crashes. Volatility interruptions are automatically initiated if the potential execution price of an order lies outside a pre-defined price range around a given reference price. Once a volatility interruption has been initiated, continuous trading is interrupted and a change in trading form to auction is triggered. Market participants are informed of this market situation and may react to it by either adding, modifying or deleting orders and quotes. Continuous trading resumes after a certain minimum duration of the auction. In case of larger price deviations, the auction is extended until the volatility interruption is terminated manually. Given the described circuit breaker mechanism, a scenario similar to May 6 in the US is impossible to happen on Xetra. This is particularly true since the calculation of the DAX is based on Xetra data only, thereby effectively taking into account trading interruptions on Xetra while other platforms may continue to trade.
How much ETF trading is still taking place over the counter in Germany?
Based on data available from Clearstream’s Cascade OTC functionality, we estimate that approximately 60% of total ETF trading takes place over the counter. However, this data also includes creation and redemption transactions of Authorised Participants.
What can be done to attract those trades to the exchange?
The average OTC order size is a multiple of the average on-exchange order size, which gives clear indication of the motivation for trading over the counter: minimising market impact when trading very large orders. In order to attract these transactions to the exchange, ETF liquidity will have to improve further. Given the advantages of trading on regulated markets, such as the existence of a clearing house and supervision by market regulators, and the continuing increase in ETF liquidity over the past few years, we are optimistic that a growing number of ETF transactions will move from OTC to on-exchange in the future.
What do you see as the largest potential growth opportunity for the ETF category (increased use by hedge funds, insurance companies, private banks, individuals, etc.)?
We firmly believe that ETFs will continue to gain popularity among all classes of investors. For example, in the United States, ETFs account for more than 6% of total mutual fund assets. In Europe, however, the ETF share of total mutual fund assets is only 3% and thus hints at the strong growth potential that can be expected from the European market in the future. The advent of fee-based investment advisory services will certainly help to support this growth as an increasing number of individual investors become more and more aware of the advantages offered by ETFs.
How might prospective changes to MiFID affect your ETF volumes? Would the promise of improved pre-trade transparency, best execution, and clearing attract more ETF volumes onto the exchange?
From our point of view, increased post-trade transparency would be beneficial for the European ETF market as it would provide investors with full transparency on the total trading activity in ETFs. Greater transparency is also likely to increase on-exchange ETF volumes, as a larger number of investors would be attracted to the product.
Friday, September 18, 2009
Tragedy and Hope – An Introduction
Tragedy and Hope – An Introduction
By Michael L. Chadwick
In 1965 one of the nation’s leading professors quietly finished the last draft of a 1311 page book on world history. He walked over to his typewriter and secured the last pages of the book and placed them into a small box and wrapped it for mailing. He then walked to the Post Office and mailed the final draft to his publisher in New York City. The editor was somewhat overwhelmed and perhaps even inhibited by the scholarly treatise. The last thing he wanted to do was to read the huge draft. He knew and trusted the professor. After all, he was one of the leading scholars in the western world. They had been acquaintances for several years. He had already signed an agreement to publish the book before it was finished. He had read several chapters of the early draft. They were boring, at least to him. He decided to give the book to a young editor who had just been promoted to his assistant. The young editor was also overwhelmed but happy to oblige the Senior Editor. The young editor was unaware of the importance of the manuscript and of the revelations which it contained. To the young editor this was just another textbook or so he thought.
Somehow one of the most revealing books ever published slipped through the editorial of offices of one of the major publishing houses in New York and found it way into the bookstores of America in 1966.
Five years later I was meandering through a used bookstore and stumbled upon this giant book. I picked up the book, blew the dust off and opened it to a page where the author stated that:
“…[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. this system was to be controlled in a feudalist fashion by the central banks of the world acting in concert by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations….
“It must not be felt that these heads of the world’s chief central banks were themselves substantive powers in world finance. They were not. Rather, they were the technicians and agents of the dominant investment bankers of their own countries, who had raised them up and were perfectly capable of throwing them down. The substantive financial powers of the world were in the hands of these investment bankers (also called ‘international’ or ‘merchant’ bankers) who remained largely behind the scenes in their own unincorporated private banks. These formed a system of international cooperation and national dominance which was more private, more powerful, and more secret than that of their agents in the central banks. This dominance of investment bankers was based on their control over the flows of credit and investment funds in their own countries and throughout the world. They could dominate the financial and industrial systems of their own countries by their influence over the flow of current funds though bank loans, the discount rate, and the re-discounting of commercial debts; they could dominate governments by their own control over current government loans and the play of the international exchanges. Almost all of this power was exercised by the personal influence and prestige of men who had demonstrated their ability in the past to bring off successful financial coupes, to keep their word, to remain cool in a crisis, and to share their winning opportunities with their associates.”
I could hardly believe what I was reading. I sat in the bookstore and read until closing time. I then bought the book and went home where I read almost all night. For the next twenty-five years I traveled throughout the United States, Europe and the Middle East following one lead after another to determine if the incredible words of the professor were really true. While serving as the Editor of a scholarly journal on international affairs, Director of the Center for Global Studies and foreign policy advisor for a key U. S. Senator in Washington, D. C., I conducted over 1000 interviews with influential world leaders, government officials, military generals, intelligence officers, scholars and businessmen, including corporate CEOs and prominent international bankers and investment bankers. I went through over 25,000 books and over 50,000 documents. I learned for myself that the professor was telling the truth.
There really is a “world system of financial control in private hands” that is “able to dominate the political system of each country and the economy of the world.” I call this system the World Trade Federation. It is an ultra-secret group of the most powerful men on the earth. They now control every major international institution, every major multinational and transnational corporation both public and private, every major domestic and international banking institution, every central bank, every nation-state on earth, the natural resources on every continent and the people around the world through complicated inter-locking networks that resemble giant spider webs. This group is comprised of the leading family dynasties of the Canada, United States, Britain, Germany, France, Italy, Japan, Russia and China. This self-perpetuating group has developed an elaborate system of control that enables them to manipulate government leaders, consumers and people throughout the world. They are in the last stages of developing a World Empire that will rival the ancient Roman Empire.
However, this new Empire will rule the entire world, not just a goodly portion of it as Rome did long ago, from its ultra-secret world headquarters in Germany. This group is responsible for the death and suffering of over 180 million men, women and children. They were responsible for World War I, World War II, the Korean War, and Vietnam, etc. They have created periods of inflation and deflation in order to confiscate and consolidate the wealth of the world. They were responsible for the enslavement of over two billion people in all communist nations—Russia, China, Eastern Europe, etc., inasmuch as they were directly responsible for the creation of communism in these nations. They built up and sustain these evil totalitarian systems for private gain. They brought Hitler, Mussolini, Stalin and Roosevelt to power and guided their governments from behind the scenes to achieve a state of plunder unparalleled in world history. They make Attila the Hun look like a kindergarten child compared to their accomplishments. Six million Jews were tortured and killed in order to confiscate billions of dollars in assets, gold, silver, currency, diamonds and art work from the Tribe of Judah–a special group of people. The people in Eastern Europe suffered a similar fate as the armies of Hitler overran these countries, murdered, enslaved, robbed and plundered the unique people who resided there. For the last two and one half centuries wealth and power have been concentrating in the hands of fewer and fewer men and women. This wealth is now being used to construct and maintain the World Empire that is in the last stages of development. The World Empire is partly visible and partly invisible today.
The chief architects of this new World Empire are planning another war—World War III—to eliminate any vestiges of political, economic or religious freedom from the face of the earth. They will then completely control the earth. and its natural resources. The people will be completely enslaved just as the people were in the ancient Roman Empire. While the above may sound like fiction, I can assure you that it is true. I wish it was fiction, but it is not, it is reality.
The above recitation is quite blunt, perhaps more blunt than the professor would have liked, but he knows and I know that what I have just written is true. However, most people do not want to know that such a Machiavellian group of men, spread strategically throughout the world, really exists. They prefer to believe that all is well and that we are traveling down the road to world peace, global interdependence and economic prosperity. This is not true.
The above professor describes the network I have just described in elaborate detail—far too elaborate for most people. That is why I am truly surprised that it was ever published. The above fictional account of its publication may not be far from the truth. The contents of the above book will probably astound most people. Most people will undoubtedly not believe the professor. That will be a great mistake. Why? Because many of the tragedies of the future may be avoided with proper action.
If all our efforts resulted in saving just one life, wouldn’t it be worth it? What if we could save 100 lives? What if we could save 1000 lives? What about 10,000 lives? What about 1,000,000 lives? What if we could free the billions of inhabitants of Tibet, China, Russia and other communist nations and ensure the survival of the people of Taiwan and Israel? Would not all our efforts be worth it? I believe so. The tragedies occurring today in Russia, China, Asia, Eastern Europe, Africa, Western Europe or the Middle East could be avoided.
The apathy and indifference of people in the Western World to the suffering, torture, misery, bondage and death of millions and millions of people around the world in the years ahead may be one of the greatest tragedies of the twenty first century.
The message of the above volume is that the last century was a tragedy that could have been avoided. The author argues that wars and depressions are man-made. The hope is that we may avoid similar tragedies in the future. That will not happen unless we give diligent heed to the warnings of the professor. Unless we carefully study his book and learn the secret history of the twentieth century and avoid allowing these same people, their heirs and associates—the rulers of various financial, corporate and governmental systems around the world—from ruining the twenty first century, his work and the work of countless others will have been in vain.
The above professor was named Carroll Quigley and the book he wrote was entitled, Tragedy and Hope: A History of the World in Our Time. It was published in 1966 and is clearly one of the most important books ever written. Professor Quigley was an extraordinarily gifted historian and geo-political analyst. The insights and information contained in his massive study open the door to a true understanding of world history in the nineteenth and twentieth centuries. In fact, if the scholar, student, businessman, businesswoman, government official and general reader has not thoroughly studied Tragedy and Hope there is no way they can understand the nineteenth and twentieth centuries. It is a work of exceptional scholarship and is truly a classic. The author should have received a Nobel Prize for his work.
In 1961 Carroll Quigley published The Evolution of Civilizations. It was derived from a course he taught on world history at Georgetown University. One of Quigley’s closest friends was Harry J. Hogan. In the foreword to The Evolution of Civilizations he wrote:
“The Evolution of Civilizations expresses two dimensions of its author, Carroll Quigley, that most extraordinary historian, philosopher, and teacher. In the first place, its scope is wide-ranging, covering the whole of man’s activities throughout time. Second, it is analytic, not merely descriptive. It attempts a categorization of man’s activities in sequential fashion so as to provide a causal explanation of the stages of civilization.
“Quigley coupled enormous capacity for work with a peculiarly “scientific” approach. He believed that it should be possible to examine the data and draw conclusions. As a boy at the Boston Latin School, his academic interests were mathematics, physics, and chemistry. Yet during his senior year he was also associate editor of the Register, the oldest high school paper in the country. His articles were singled out for national awards by a national committee headed by George Gallup.
“At Harvard, biochemistry was to be his major. But Harvard, expressing then a belief regarding a well-rounded education to which it has now returned, required a core curriculum including a course in the humanities. Quigley chose a history course, “Europe Since the Fall of Rome.” Always a contrary man, he was graded at the top of his class in physics and calculus and drew a C in the history course. But the development of ideas began to assert its fascination for him, so he elected to major in history. He graduated magna cum laude as the top history student in his class.
“Quigley was always impatient. He stood for his doctorate oral examination at the end of his second year of graduate studies. Charles Howard McIlwain, chairman of the examining board, was very impressed by Quigley’s answer to his opening question; the answer included a long quotation in Latin from Robert Grosseteste, bishop of Lincoln in the thirteenth century. Professor McIlwain sent Quigley to Princeton University as a graduate student instructor.
“In the spring of 1937 I was a student in my senior year at Princeton. Quigley was my preceptor in medieval history. He was Boston Irish; I was New York Irish. Both of us, Catholics adventuring in a strangely Protestant establishment world, were fascinated by the Western intellectual tradition anchored in Augustine, Abelard, and Aquinas that seemed to have so much more richness and depth than contemporary liberalism. We became very close in a treasured friendship that was terminated only by his death.
“In the course of rereading The Evolution of Civilizations I was reminded of the intensity of our dialogue. In Quigley’s view, which I shared, our age was one of irrationality. That spring we talked about what career decisions I should make. At his urging I applied to and was admitted by the Harvard Graduate School in History. But I had reservations about an academic career in the study of the history that I loved, on the ground that on Quigley’s own analysis the social decisions of importance in our lifetime would be made in ad hoc irrational fashion in the street. On that reasoning, finally I transferred to law school.
“In Princeton, Carroll Quigley met and married Lillian Fox. They spent their honeymoon in Paris and Italy on a fellowship to write his doctoral dissertation, a study of the public administration of the Kingdom of Italy, 1805-14. The development of the state in western Europe over the last thousand years always fascinated Quigley. He regarded the development of public administration in the Napoleonic states as a major step in the evolution of the modern state. It always frustrated him that each nation, including our own, regards its own history as unique and the history of other nations as irrelevant to it.
“In 1938-41, Quigley served a stint at Harvard, tutoring graduate students in ancient and medieval history. It offered little opportunity for the development of cosmic views and he was less than completely content there. It was, however, a happy experience for me. I had entered Harvard Law School. We began the practice of having breakfast together at Carroll and Lillian’s apartment.
“In 1941 Quigley accepted a teaching appointment at Georgetown’s School of Foreign Service. It was to engage his primary energies throughout the rest of his busy life. There he became an almost legendary teacher. He chose to teach a course, “The Development of Civilization,” required of the incoming class, and that course ultimately provided the structure and substance for The Evolution of Civilizations. As a course in his hands, it was a vital intellectual experience for young students, a mind-opening adventure. Foreign Service School graduates, meeting years later in careers around the world, would establish rapport with each other by describing their experience in his class. It was an intellectual initiation with remembered impact that could be shared by people who had graduated years apart.
“The fortunes of life brought us together again. During World War II, I served as a very junior officer on Admiral King’s staff in Washington. Carroll and I saw each other frequently. Twenty years later, after practicing law in Oregon, I came into the government with President Kennedy. Our eldest daughter became a student under Carroll at Georgetown University. We bought a house close by Carroll and Lillian. I had Sunday breakfast with them for years and renewed our discussions of the affairs of a disintegrating world.
“Superb teacher Quigley was, and could justify a lifetime of prodigious work on that success alone. But ultimately he was more. To me he was a figure—he would scoff at this— like Augustine, Abelard, and Aquinas, searching for the truth through examination of ultimate reality as it was revealed in history. Long ago, he left the church in the formal sense. Spiritually and intellectually he never left it. He never swerved from his search for the meaning of life. He never placed any goal in higher priority. If the God of the Western civilization that Quigley spent so many years studying does exist in the terms that he saw ascribed to him by our civilization, that God will now have welcomed Quigley as one who has pleased him.” (Carroll Quigley, The Evolution of Civilizations. New York: Macmillan, 1961, pp. 13-16.)
Carroll Quigley was a professor of history at the Foreign Service School of Georgetown University. He taught at Princeton and at Harvard. He had done extensive research in the archives of France, Italy, and England. He was a member of the editorial board of Current History. He was a member of the American Association for the Advancement of Science, American Anthropological Association and the American Economic Association. For many years he lectured on Russian history at the Industrial College of the Armed Forces and on Africa at the Brookings Institution. He was also a frequent lecturer at the U.S. Naval Weapons Laboratory, the Foreign Service Institute at the U. S. State Department, and the Naval College at Norfolk, Virginia. In 1958 he served as a consultant to the Congressional Select Committee which set up the National Space Agency. He was a historical advisor to the Smithsonian Institution and was involved with the establishment of the new Museum of History and Technology. In the summer of 1964 he was a consultant at the Navy Post-Graduate School, Monterey, California on Project Seabed. The project was created to visualize the status of future American weapons systems.
Tragedy and Hope will enlighten the mind of every sincere seeker of truth and will unveil the secret powers that have been carefully manipulating the Western Hemisphere, America, Europe, Asia, Russia, China and the Middle East for over 250 years.
In 1996 I published a 24 volume study entitled Global Governance in the Twenty First Century. The multi-volume work was the result of my extensive travels and research throughout the United States, Europe and Middle East. It fully collaborates the assertions and statements made by professor Carroll Quigley in Tragedy and Hope. It is my sincere hope the reader will take the time to carefully peruse and ponder the words of this rather remarkable book. And afterwards, I hope the reader will have a desire to thoroughly read and ponder the contents of Global Governance in the Twenty First Century.
[Editorial note from Jere L Hough]
I fully agree with the statements above by Chadwick. In fact, having only been in possession of the book for about a year, and having read thousands of non-fiction books during my life, I think I can safely say that this history is the most important book ever written, outside of spiritual revelations. So let me say it’s the most important “temporal” book. Having studied much history myself, I can say without hesitation that it is without equal among history books.
This book was published by a fortuitous accident of fate, or providence. It was only available on bookshelves for a short time, before the establishment realized what was in it, and had it pulled, as one commenter on Amazon said. “…faster than an exploding Easter Bunny”. The book has been so successfully suppressed that it took me a lifetime (I’m now 70) to discover it, and I’m an avid seeker of truth – temporal, philosophical and spiritual.
So I place this book at the top of my list of “must reads” for anyone hoping to “save our world” from the agenda of those now in control of world events. Quigley’s books, especially Tragedy and Hope, are the best I’ve ever seen in giving us the details of who, why, how, when and where everything really important has happened in the last 200 years. This is not just a history of names, dates, and dry events. This is a dynamic and penetrating look behind the curtain of appearances. The really important events in Quigley’s book were never intended for public consumption.
By Michael L. Chadwick
In 1965 one of the nation’s leading professors quietly finished the last draft of a 1311 page book on world history. He walked over to his typewriter and secured the last pages of the book and placed them into a small box and wrapped it for mailing. He then walked to the Post Office and mailed the final draft to his publisher in New York City. The editor was somewhat overwhelmed and perhaps even inhibited by the scholarly treatise. The last thing he wanted to do was to read the huge draft. He knew and trusted the professor. After all, he was one of the leading scholars in the western world. They had been acquaintances for several years. He had already signed an agreement to publish the book before it was finished. He had read several chapters of the early draft. They were boring, at least to him. He decided to give the book to a young editor who had just been promoted to his assistant. The young editor was also overwhelmed but happy to oblige the Senior Editor. The young editor was unaware of the importance of the manuscript and of the revelations which it contained. To the young editor this was just another textbook or so he thought.
Somehow one of the most revealing books ever published slipped through the editorial of offices of one of the major publishing houses in New York and found it way into the bookstores of America in 1966.
Five years later I was meandering through a used bookstore and stumbled upon this giant book. I picked up the book, blew the dust off and opened it to a page where the author stated that:
“…[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. this system was to be controlled in a feudalist fashion by the central banks of the world acting in concert by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations….
“It must not be felt that these heads of the world’s chief central banks were themselves substantive powers in world finance. They were not. Rather, they were the technicians and agents of the dominant investment bankers of their own countries, who had raised them up and were perfectly capable of throwing them down. The substantive financial powers of the world were in the hands of these investment bankers (also called ‘international’ or ‘merchant’ bankers) who remained largely behind the scenes in their own unincorporated private banks. These formed a system of international cooperation and national dominance which was more private, more powerful, and more secret than that of their agents in the central banks. This dominance of investment bankers was based on their control over the flows of credit and investment funds in their own countries and throughout the world. They could dominate the financial and industrial systems of their own countries by their influence over the flow of current funds though bank loans, the discount rate, and the re-discounting of commercial debts; they could dominate governments by their own control over current government loans and the play of the international exchanges. Almost all of this power was exercised by the personal influence and prestige of men who had demonstrated their ability in the past to bring off successful financial coupes, to keep their word, to remain cool in a crisis, and to share their winning opportunities with their associates.”
I could hardly believe what I was reading. I sat in the bookstore and read until closing time. I then bought the book and went home where I read almost all night. For the next twenty-five years I traveled throughout the United States, Europe and the Middle East following one lead after another to determine if the incredible words of the professor were really true. While serving as the Editor of a scholarly journal on international affairs, Director of the Center for Global Studies and foreign policy advisor for a key U. S. Senator in Washington, D. C., I conducted over 1000 interviews with influential world leaders, government officials, military generals, intelligence officers, scholars and businessmen, including corporate CEOs and prominent international bankers and investment bankers. I went through over 25,000 books and over 50,000 documents. I learned for myself that the professor was telling the truth.
There really is a “world system of financial control in private hands” that is “able to dominate the political system of each country and the economy of the world.” I call this system the World Trade Federation. It is an ultra-secret group of the most powerful men on the earth. They now control every major international institution, every major multinational and transnational corporation both public and private, every major domestic and international banking institution, every central bank, every nation-state on earth, the natural resources on every continent and the people around the world through complicated inter-locking networks that resemble giant spider webs. This group is comprised of the leading family dynasties of the Canada, United States, Britain, Germany, France, Italy, Japan, Russia and China. This self-perpetuating group has developed an elaborate system of control that enables them to manipulate government leaders, consumers and people throughout the world. They are in the last stages of developing a World Empire that will rival the ancient Roman Empire.
However, this new Empire will rule the entire world, not just a goodly portion of it as Rome did long ago, from its ultra-secret world headquarters in Germany. This group is responsible for the death and suffering of over 180 million men, women and children. They were responsible for World War I, World War II, the Korean War, and Vietnam, etc. They have created periods of inflation and deflation in order to confiscate and consolidate the wealth of the world. They were responsible for the enslavement of over two billion people in all communist nations—Russia, China, Eastern Europe, etc., inasmuch as they were directly responsible for the creation of communism in these nations. They built up and sustain these evil totalitarian systems for private gain. They brought Hitler, Mussolini, Stalin and Roosevelt to power and guided their governments from behind the scenes to achieve a state of plunder unparalleled in world history. They make Attila the Hun look like a kindergarten child compared to their accomplishments. Six million Jews were tortured and killed in order to confiscate billions of dollars in assets, gold, silver, currency, diamonds and art work from the Tribe of Judah–a special group of people. The people in Eastern Europe suffered a similar fate as the armies of Hitler overran these countries, murdered, enslaved, robbed and plundered the unique people who resided there. For the last two and one half centuries wealth and power have been concentrating in the hands of fewer and fewer men and women. This wealth is now being used to construct and maintain the World Empire that is in the last stages of development. The World Empire is partly visible and partly invisible today.
The chief architects of this new World Empire are planning another war—World War III—to eliminate any vestiges of political, economic or religious freedom from the face of the earth. They will then completely control the earth. and its natural resources. The people will be completely enslaved just as the people were in the ancient Roman Empire. While the above may sound like fiction, I can assure you that it is true. I wish it was fiction, but it is not, it is reality.
The above recitation is quite blunt, perhaps more blunt than the professor would have liked, but he knows and I know that what I have just written is true. However, most people do not want to know that such a Machiavellian group of men, spread strategically throughout the world, really exists. They prefer to believe that all is well and that we are traveling down the road to world peace, global interdependence and economic prosperity. This is not true.
The above professor describes the network I have just described in elaborate detail—far too elaborate for most people. That is why I am truly surprised that it was ever published. The above fictional account of its publication may not be far from the truth. The contents of the above book will probably astound most people. Most people will undoubtedly not believe the professor. That will be a great mistake. Why? Because many of the tragedies of the future may be avoided with proper action.
If all our efforts resulted in saving just one life, wouldn’t it be worth it? What if we could save 100 lives? What if we could save 1000 lives? What about 10,000 lives? What about 1,000,000 lives? What if we could free the billions of inhabitants of Tibet, China, Russia and other communist nations and ensure the survival of the people of Taiwan and Israel? Would not all our efforts be worth it? I believe so. The tragedies occurring today in Russia, China, Asia, Eastern Europe, Africa, Western Europe or the Middle East could be avoided.
The apathy and indifference of people in the Western World to the suffering, torture, misery, bondage and death of millions and millions of people around the world in the years ahead may be one of the greatest tragedies of the twenty first century.
The message of the above volume is that the last century was a tragedy that could have been avoided. The author argues that wars and depressions are man-made. The hope is that we may avoid similar tragedies in the future. That will not happen unless we give diligent heed to the warnings of the professor. Unless we carefully study his book and learn the secret history of the twentieth century and avoid allowing these same people, their heirs and associates—the rulers of various financial, corporate and governmental systems around the world—from ruining the twenty first century, his work and the work of countless others will have been in vain.
The above professor was named Carroll Quigley and the book he wrote was entitled, Tragedy and Hope: A History of the World in Our Time. It was published in 1966 and is clearly one of the most important books ever written. Professor Quigley was an extraordinarily gifted historian and geo-political analyst. The insights and information contained in his massive study open the door to a true understanding of world history in the nineteenth and twentieth centuries. In fact, if the scholar, student, businessman, businesswoman, government official and general reader has not thoroughly studied Tragedy and Hope there is no way they can understand the nineteenth and twentieth centuries. It is a work of exceptional scholarship and is truly a classic. The author should have received a Nobel Prize for his work.
In 1961 Carroll Quigley published The Evolution of Civilizations. It was derived from a course he taught on world history at Georgetown University. One of Quigley’s closest friends was Harry J. Hogan. In the foreword to The Evolution of Civilizations he wrote:
“The Evolution of Civilizations expresses two dimensions of its author, Carroll Quigley, that most extraordinary historian, philosopher, and teacher. In the first place, its scope is wide-ranging, covering the whole of man’s activities throughout time. Second, it is analytic, not merely descriptive. It attempts a categorization of man’s activities in sequential fashion so as to provide a causal explanation of the stages of civilization.
“Quigley coupled enormous capacity for work with a peculiarly “scientific” approach. He believed that it should be possible to examine the data and draw conclusions. As a boy at the Boston Latin School, his academic interests were mathematics, physics, and chemistry. Yet during his senior year he was also associate editor of the Register, the oldest high school paper in the country. His articles were singled out for national awards by a national committee headed by George Gallup.
“At Harvard, biochemistry was to be his major. But Harvard, expressing then a belief regarding a well-rounded education to which it has now returned, required a core curriculum including a course in the humanities. Quigley chose a history course, “Europe Since the Fall of Rome.” Always a contrary man, he was graded at the top of his class in physics and calculus and drew a C in the history course. But the development of ideas began to assert its fascination for him, so he elected to major in history. He graduated magna cum laude as the top history student in his class.
“Quigley was always impatient. He stood for his doctorate oral examination at the end of his second year of graduate studies. Charles Howard McIlwain, chairman of the examining board, was very impressed by Quigley’s answer to his opening question; the answer included a long quotation in Latin from Robert Grosseteste, bishop of Lincoln in the thirteenth century. Professor McIlwain sent Quigley to Princeton University as a graduate student instructor.
“In the spring of 1937 I was a student in my senior year at Princeton. Quigley was my preceptor in medieval history. He was Boston Irish; I was New York Irish. Both of us, Catholics adventuring in a strangely Protestant establishment world, were fascinated by the Western intellectual tradition anchored in Augustine, Abelard, and Aquinas that seemed to have so much more richness and depth than contemporary liberalism. We became very close in a treasured friendship that was terminated only by his death.
“In the course of rereading The Evolution of Civilizations I was reminded of the intensity of our dialogue. In Quigley’s view, which I shared, our age was one of irrationality. That spring we talked about what career decisions I should make. At his urging I applied to and was admitted by the Harvard Graduate School in History. But I had reservations about an academic career in the study of the history that I loved, on the ground that on Quigley’s own analysis the social decisions of importance in our lifetime would be made in ad hoc irrational fashion in the street. On that reasoning, finally I transferred to law school.
“In Princeton, Carroll Quigley met and married Lillian Fox. They spent their honeymoon in Paris and Italy on a fellowship to write his doctoral dissertation, a study of the public administration of the Kingdom of Italy, 1805-14. The development of the state in western Europe over the last thousand years always fascinated Quigley. He regarded the development of public administration in the Napoleonic states as a major step in the evolution of the modern state. It always frustrated him that each nation, including our own, regards its own history as unique and the history of other nations as irrelevant to it.
“In 1938-41, Quigley served a stint at Harvard, tutoring graduate students in ancient and medieval history. It offered little opportunity for the development of cosmic views and he was less than completely content there. It was, however, a happy experience for me. I had entered Harvard Law School. We began the practice of having breakfast together at Carroll and Lillian’s apartment.
“In 1941 Quigley accepted a teaching appointment at Georgetown’s School of Foreign Service. It was to engage his primary energies throughout the rest of his busy life. There he became an almost legendary teacher. He chose to teach a course, “The Development of Civilization,” required of the incoming class, and that course ultimately provided the structure and substance for The Evolution of Civilizations. As a course in his hands, it was a vital intellectual experience for young students, a mind-opening adventure. Foreign Service School graduates, meeting years later in careers around the world, would establish rapport with each other by describing their experience in his class. It was an intellectual initiation with remembered impact that could be shared by people who had graduated years apart.
“The fortunes of life brought us together again. During World War II, I served as a very junior officer on Admiral King’s staff in Washington. Carroll and I saw each other frequently. Twenty years later, after practicing law in Oregon, I came into the government with President Kennedy. Our eldest daughter became a student under Carroll at Georgetown University. We bought a house close by Carroll and Lillian. I had Sunday breakfast with them for years and renewed our discussions of the affairs of a disintegrating world.
“Superb teacher Quigley was, and could justify a lifetime of prodigious work on that success alone. But ultimately he was more. To me he was a figure—he would scoff at this— like Augustine, Abelard, and Aquinas, searching for the truth through examination of ultimate reality as it was revealed in history. Long ago, he left the church in the formal sense. Spiritually and intellectually he never left it. He never swerved from his search for the meaning of life. He never placed any goal in higher priority. If the God of the Western civilization that Quigley spent so many years studying does exist in the terms that he saw ascribed to him by our civilization, that God will now have welcomed Quigley as one who has pleased him.” (Carroll Quigley, The Evolution of Civilizations. New York: Macmillan, 1961, pp. 13-16.)
Carroll Quigley was a professor of history at the Foreign Service School of Georgetown University. He taught at Princeton and at Harvard. He had done extensive research in the archives of France, Italy, and England. He was a member of the editorial board of Current History. He was a member of the American Association for the Advancement of Science, American Anthropological Association and the American Economic Association. For many years he lectured on Russian history at the Industrial College of the Armed Forces and on Africa at the Brookings Institution. He was also a frequent lecturer at the U.S. Naval Weapons Laboratory, the Foreign Service Institute at the U. S. State Department, and the Naval College at Norfolk, Virginia. In 1958 he served as a consultant to the Congressional Select Committee which set up the National Space Agency. He was a historical advisor to the Smithsonian Institution and was involved with the establishment of the new Museum of History and Technology. In the summer of 1964 he was a consultant at the Navy Post-Graduate School, Monterey, California on Project Seabed. The project was created to visualize the status of future American weapons systems.
Tragedy and Hope will enlighten the mind of every sincere seeker of truth and will unveil the secret powers that have been carefully manipulating the Western Hemisphere, America, Europe, Asia, Russia, China and the Middle East for over 250 years.
In 1996 I published a 24 volume study entitled Global Governance in the Twenty First Century. The multi-volume work was the result of my extensive travels and research throughout the United States, Europe and Middle East. It fully collaborates the assertions and statements made by professor Carroll Quigley in Tragedy and Hope. It is my sincere hope the reader will take the time to carefully peruse and ponder the words of this rather remarkable book. And afterwards, I hope the reader will have a desire to thoroughly read and ponder the contents of Global Governance in the Twenty First Century.
[Editorial note from Jere L Hough]
I fully agree with the statements above by Chadwick. In fact, having only been in possession of the book for about a year, and having read thousands of non-fiction books during my life, I think I can safely say that this history is the most important book ever written, outside of spiritual revelations. So let me say it’s the most important “temporal” book. Having studied much history myself, I can say without hesitation that it is without equal among history books.
This book was published by a fortuitous accident of fate, or providence. It was only available on bookshelves for a short time, before the establishment realized what was in it, and had it pulled, as one commenter on Amazon said. “…faster than an exploding Easter Bunny”. The book has been so successfully suppressed that it took me a lifetime (I’m now 70) to discover it, and I’m an avid seeker of truth – temporal, philosophical and spiritual.
So I place this book at the top of my list of “must reads” for anyone hoping to “save our world” from the agenda of those now in control of world events. Quigley’s books, especially Tragedy and Hope, are the best I’ve ever seen in giving us the details of who, why, how, when and where everything really important has happened in the last 200 years. This is not just a history of names, dates, and dry events. This is a dynamic and penetrating look behind the curtain of appearances. The really important events in Quigley’s book were never intended for public consumption.
Friday, July 17, 2009
Cap and Trade Emissions Bill is The Latest Pyramid Debt Scam
http://newsblaze.com/story/20090716053414zzzz.nb/topstory.html
Published: July 16,2009Send to a friend
Op-Ed Contributor
Cap and Trade Emissions Bill is The Latest Pyramid Debt Scam
By Tommy Tucci
Wall Street financial banking barons, exploitative imperious arrogant elites, and opportunistic cronies by their backing of yet another illegal controlled pyramid scam law presented to the U.S. House of Representatives implicate themselves in massive world wide criminal conspiracy and fraud in the latest debt scheme Cap and Trade Carbon Emissions Bill HR 2454.
Controlled Markets
Because emissions trading uses markets to determine how to deal with the problem of pollution, it is often touted as an example of effective free market environmentalism. The cap is usually set by a political process of government imposing a fixed policy on carbon pollutiion. Instead we have a brand new controlled monopolistic market with individual companies forced to choose how they will reduce their emissions with purchases of futures and commodities contracts.
Basically, this is government policy dictating control, giving Wall Street Barons a green light to sell worthless paper carbon tax derivatives and future commodities contract debt creation. The created market control further assists the bloated greed driven kleptocracy a new billion dollar revenue stream. This is the basis of the latest Pyramid and Reverse Pyramid Schemes.
Pyramid Scheme
At the top of this latest pyramid scam is none other than Reverse Robin Hood's Merry Men, Goldman Sachs with their $3.5 million lobby on behalf of this carbon bill. Subsequently, the masses, the public, and the victims continue to be duped into the belief that these exploitative elites and their Wall Street operative cronies are conducting complex financial transactions that continue to magically increase value for the benefit of investors, thereby saving us from a green house gas calamity.
This law will do nothing for global warming except assist the Wall Street criminal barons and elites. The Cap and Trade Emissions bill is a simple age-old pyramid debt scam which benefits the kleptocrat operatives at the top only. All pyramid schemes are zero sum scams that can never be sustained over time and inevitably collapse.
Reverse Pyramid
When the Cap and Trade Carbon Emissions pyramid scam collapses the pyramid scam is turned upside down 180 degrees. The government steps in with "To Big To Fail" illegal forced stimulus money which bails out the Wall Street Reverse Robin Hood operatives once again. The illegal forced taxpayer bailout money transfers instantly - not over decades - to the criminal gangs of Wall Street, so they get paid twice.
This is a repeat of the banking, housing, insurance, mortgage, and auto industry government forced taxpayer bailout scams. The retrofit subtle wording 400 year old pyramid debt scam repeats history c.1720 This is not a bubble, not a Ponzi scheme, nor is it complex mathematical abstract theory.
Mediocrity Is Unattainable
The new 21st Century America has reached such new low standards of accountability, corrupt moral subterfuge, lawlessness, and incompetent leadership that a comparison to the black hole of Calcutta is but a tiny pin hole. There is no bottom to the continued assault on US citizens.
The continued subterfuge manifests itself with extreme arrogance that is unparalleled. This imperious arrogance assists corrupt opportunists in controlled markets, the demise of free market systems, illegal scams, outright daily criminal theft, outrageous stereotyping, and character assassinations, negatively impacting the future world with debt slavery, world wars, destitution, famine, poverty, death and destruction.
The demise of the USA is now in effect with every minute of unfolding factual events hidden by corrupt corporate media barons with continued subterfuge, disconnect, and distraction.
Published: July 16,2009Send to a friend
Op-Ed Contributor
Cap and Trade Emissions Bill is The Latest Pyramid Debt Scam
By Tommy Tucci
Wall Street financial banking barons, exploitative imperious arrogant elites, and opportunistic cronies by their backing of yet another illegal controlled pyramid scam law presented to the U.S. House of Representatives implicate themselves in massive world wide criminal conspiracy and fraud in the latest debt scheme Cap and Trade Carbon Emissions Bill HR 2454.
Controlled Markets
Because emissions trading uses markets to determine how to deal with the problem of pollution, it is often touted as an example of effective free market environmentalism. The cap is usually set by a political process of government imposing a fixed policy on carbon pollutiion. Instead we have a brand new controlled monopolistic market with individual companies forced to choose how they will reduce their emissions with purchases of futures and commodities contracts.
Basically, this is government policy dictating control, giving Wall Street Barons a green light to sell worthless paper carbon tax derivatives and future commodities contract debt creation. The created market control further assists the bloated greed driven kleptocracy a new billion dollar revenue stream. This is the basis of the latest Pyramid and Reverse Pyramid Schemes.
Pyramid Scheme
At the top of this latest pyramid scam is none other than Reverse Robin Hood's Merry Men, Goldman Sachs with their $3.5 million lobby on behalf of this carbon bill. Subsequently, the masses, the public, and the victims continue to be duped into the belief that these exploitative elites and their Wall Street operative cronies are conducting complex financial transactions that continue to magically increase value for the benefit of investors, thereby saving us from a green house gas calamity.
This law will do nothing for global warming except assist the Wall Street criminal barons and elites. The Cap and Trade Emissions bill is a simple age-old pyramid debt scam which benefits the kleptocrat operatives at the top only. All pyramid schemes are zero sum scams that can never be sustained over time and inevitably collapse.
Reverse Pyramid
When the Cap and Trade Carbon Emissions pyramid scam collapses the pyramid scam is turned upside down 180 degrees. The government steps in with "To Big To Fail" illegal forced stimulus money which bails out the Wall Street Reverse Robin Hood operatives once again. The illegal forced taxpayer bailout money transfers instantly - not over decades - to the criminal gangs of Wall Street, so they get paid twice.
This is a repeat of the banking, housing, insurance, mortgage, and auto industry government forced taxpayer bailout scams. The retrofit subtle wording 400 year old pyramid debt scam repeats history c.1720 This is not a bubble, not a Ponzi scheme, nor is it complex mathematical abstract theory.
Mediocrity Is Unattainable
The new 21st Century America has reached such new low standards of accountability, corrupt moral subterfuge, lawlessness, and incompetent leadership that a comparison to the black hole of Calcutta is but a tiny pin hole. There is no bottom to the continued assault on US citizens.
The continued subterfuge manifests itself with extreme arrogance that is unparalleled. This imperious arrogance assists corrupt opportunists in controlled markets, the demise of free market systems, illegal scams, outright daily criminal theft, outrageous stereotyping, and character assassinations, negatively impacting the future world with debt slavery, world wars, destitution, famine, poverty, death and destruction.
The demise of the USA is now in effect with every minute of unfolding factual events hidden by corrupt corporate media barons with continued subterfuge, disconnect, and distraction.
Saturday, July 5, 2008
IMF finally knocks on Uncle Sam's door
IMF finally knocks on Uncle Sam's door
David Hirst
June 30, 2008
IMAGINE the Reserve Bank of Australia, concerned that its friends in the city of Sydney (but perhaps Melbourne) who, having wallowed in wealth all their adult lives, were no longer gainfully employable and their wildly extravagant lifestyles were in danger, and, having the powers to intervene in the market, decided to do just that on their behalf.
Imagine them offering to enter the market and buy shares that would prop up the foolish gambles of the bankers, gambles they had encouraged them, until recently, to take by providing them with cheap money.
On top of that, they told this group they would provide hundreds of billions of dollars in credits to these same profiteers on the grounds they were so big and important to the economy they were indeed too big to fail.
Then, imagine, despite pouring untold taxpayers money into stocks and allowing their cronies access to vast sums, the system continued to fail. So they announced they would need greater power and with it more secrecy.
For its growing band of critics has, perhaps unwittingly and in the interest of public good, this has become the principal function of the US Federal Reserve.
If this was to happen in Australia the International Monetary Fund would be hammering at the door of the Reserve Bank. But Australia does not have a President's Working Group on Financial Markets, commonly known as the Plunge Protection Team, that allows the US Government to prop up the markets by buying shares. But to imagine the IMF investigating the US financial system is unthinkable, or was. But, at the weekend, Der Spiegel reported that the IMF would conduct a full investigation into virtually every aspect of it.
Der Spiegel wrote that the IMF had "informed" Federal Reserve chairman Ben Bernanke of plans that would have been unheard of in the past: a general examination of the US financial system. The IMF's board of directors has ruled that a so-called Financial Sector Assessment Program is to be carried out in the US.
This, Der Spiegel wrote, "is nothing less than an X-ray of the entire US financial system", adding that "no Fed chief in US history has been forced to submit to the kind of humiliation that Ben Bernanke is facing".
The fact that the IMF is knocking on the very doors of its parents and waving legal papers about who lost the house, the car and the kids will, if the past is anything to go by, be buried in the US by pom-pom waving on CNBC telling all what a great time it is to buy.
But the news that the US Fed has now lost its last vestige of credibility did not end with the German report.
The Telegraph from London weighed in, following the Royal Bank of Scotland's statement last week (also lost on the US public) that it was time to head for the crags, and reported Barclays Capital's closely watched Global Outlook analysis that said US headline inflation would hit 5.5% by August and the Fed would have to raise interest rates six times by the end of next year to prevent a wage spiral.
If the Fed hesitates, the bond markets will take matters into their own hands. "This is the first test for central banks in 30 years and they have fluffed it," the report found. "They have zero credibility, and the Fed is negative if that's possible. It has lost all credibility."
Der Spiegel reports that the IMF is threatening to seriously study the accounts of America, something President George Bush is determined to prevent at least while he is in the White House, informing the IMF that it can begin its investigation but cannot complete it until he leaves office.
But the reckoning will come and it will shine a light in places where light has been desperately wanted for all too long.
"As part of the assessment," Der Spiegel said, "the Fed, the Securities and Exchange Commission, the major investment banks, mortgage banks and hedge funds will be asked to hand over confidential documents to the IMF team. They will be required to answer the questions they are asked during interviews. Their databases will be subjected to so-called stress tests — worst-case scenarios designed to simulate the broader effects of failures of other major financial institutions or a continuing decline of the dollar."
Under its by-laws, the IMF is charged with the supervision of the international monetary system. About two-thirds of IMF members — but never the US — have already endured this painful procedure.
Australian banks have been buffeted by the storms generated in the US, but strict standards enforced by a Reserve Bank that is independent of private banking interests has prevented such excesses, as vouched by their performance as compared with the broker-trader banks and the retail banks of the US. Shares in once-massive banks and brokerage firms have been stripped by as much as 70%, 80% and even almost 100%. We are taking a trim while US banks are getting a full haircut and shave.
Part of the problem is the US media, which has for so long pretended that all is or soon will be well, a bottom is near, a recovery awaits in the second half of the financial year that will sweep away all problems, sown over decades, in a new expansion, a cycle that is ordained to come. The latest fantasy is that with the quarter's end, new profit figures will invigorate the bull, which will seed fertility.
The next President will be handed at least two wars gone horrible wrong and, by then, an economy in similar shape. The bull will have to be a particularly fertile beast.
Der Spiegel reports: "When the final report on the risks of the US financial system is released in 2010 — and it is likely to cause a stir internationally — only one of the people in positions of responsibility today will still be in office: Ben Bernanke."
While Der Spiegel claims that IMF intervention (my expression) is a humiliation for the US, the real significance may be that this is another blow to American exceptionism.
While the examination is far reaching, and deeply intrusive, Canada, Britain, Italy, indeed two-thirds of IMF members, have participated in the program. The new President will soon discover the age of US exceptionism is over.
Meanwhile the US markets have entered bear territory, the economy has done likewise and we are at the beginning of a long and tortuous process before rebuilding can even commence.
David Hirst is a journalist, documentary maker, financial consultant and investor. His column, Planet Wall Street, is syndicated by News Bites, a Melbourne-based sharemarket and business news publisher.
http://business.theage.com.au/imf-finally-knocks-on-uncle-sams-door-20080629-2yui.html?page=fullpage#
David Hirst
June 30, 2008
IMAGINE the Reserve Bank of Australia, concerned that its friends in the city of Sydney (but perhaps Melbourne) who, having wallowed in wealth all their adult lives, were no longer gainfully employable and their wildly extravagant lifestyles were in danger, and, having the powers to intervene in the market, decided to do just that on their behalf.
Imagine them offering to enter the market and buy shares that would prop up the foolish gambles of the bankers, gambles they had encouraged them, until recently, to take by providing them with cheap money.
On top of that, they told this group they would provide hundreds of billions of dollars in credits to these same profiteers on the grounds they were so big and important to the economy they were indeed too big to fail.
Then, imagine, despite pouring untold taxpayers money into stocks and allowing their cronies access to vast sums, the system continued to fail. So they announced they would need greater power and with it more secrecy.
For its growing band of critics has, perhaps unwittingly and in the interest of public good, this has become the principal function of the US Federal Reserve.
If this was to happen in Australia the International Monetary Fund would be hammering at the door of the Reserve Bank. But Australia does not have a President's Working Group on Financial Markets, commonly known as the Plunge Protection Team, that allows the US Government to prop up the markets by buying shares. But to imagine the IMF investigating the US financial system is unthinkable, or was. But, at the weekend, Der Spiegel reported that the IMF would conduct a full investigation into virtually every aspect of it.
Der Spiegel wrote that the IMF had "informed" Federal Reserve chairman Ben Bernanke of plans that would have been unheard of in the past: a general examination of the US financial system. The IMF's board of directors has ruled that a so-called Financial Sector Assessment Program is to be carried out in the US.
This, Der Spiegel wrote, "is nothing less than an X-ray of the entire US financial system", adding that "no Fed chief in US history has been forced to submit to the kind of humiliation that Ben Bernanke is facing".
The fact that the IMF is knocking on the very doors of its parents and waving legal papers about who lost the house, the car and the kids will, if the past is anything to go by, be buried in the US by pom-pom waving on CNBC telling all what a great time it is to buy.
But the news that the US Fed has now lost its last vestige of credibility did not end with the German report.
The Telegraph from London weighed in, following the Royal Bank of Scotland's statement last week (also lost on the US public) that it was time to head for the crags, and reported Barclays Capital's closely watched Global Outlook analysis that said US headline inflation would hit 5.5% by August and the Fed would have to raise interest rates six times by the end of next year to prevent a wage spiral.
If the Fed hesitates, the bond markets will take matters into their own hands. "This is the first test for central banks in 30 years and they have fluffed it," the report found. "They have zero credibility, and the Fed is negative if that's possible. It has lost all credibility."
Der Spiegel reports that the IMF is threatening to seriously study the accounts of America, something President George Bush is determined to prevent at least while he is in the White House, informing the IMF that it can begin its investigation but cannot complete it until he leaves office.
But the reckoning will come and it will shine a light in places where light has been desperately wanted for all too long.
"As part of the assessment," Der Spiegel said, "the Fed, the Securities and Exchange Commission, the major investment banks, mortgage banks and hedge funds will be asked to hand over confidential documents to the IMF team. They will be required to answer the questions they are asked during interviews. Their databases will be subjected to so-called stress tests — worst-case scenarios designed to simulate the broader effects of failures of other major financial institutions or a continuing decline of the dollar."
Under its by-laws, the IMF is charged with the supervision of the international monetary system. About two-thirds of IMF members — but never the US — have already endured this painful procedure.
Australian banks have been buffeted by the storms generated in the US, but strict standards enforced by a Reserve Bank that is independent of private banking interests has prevented such excesses, as vouched by their performance as compared with the broker-trader banks and the retail banks of the US. Shares in once-massive banks and brokerage firms have been stripped by as much as 70%, 80% and even almost 100%. We are taking a trim while US banks are getting a full haircut and shave.
Part of the problem is the US media, which has for so long pretended that all is or soon will be well, a bottom is near, a recovery awaits in the second half of the financial year that will sweep away all problems, sown over decades, in a new expansion, a cycle that is ordained to come. The latest fantasy is that with the quarter's end, new profit figures will invigorate the bull, which will seed fertility.
The next President will be handed at least two wars gone horrible wrong and, by then, an economy in similar shape. The bull will have to be a particularly fertile beast.
Der Spiegel reports: "When the final report on the risks of the US financial system is released in 2010 — and it is likely to cause a stir internationally — only one of the people in positions of responsibility today will still be in office: Ben Bernanke."
While Der Spiegel claims that IMF intervention (my expression) is a humiliation for the US, the real significance may be that this is another blow to American exceptionism.
While the examination is far reaching, and deeply intrusive, Canada, Britain, Italy, indeed two-thirds of IMF members, have participated in the program. The new President will soon discover the age of US exceptionism is over.
Meanwhile the US markets have entered bear territory, the economy has done likewise and we are at the beginning of a long and tortuous process before rebuilding can even commence.
David Hirst is a journalist, documentary maker, financial consultant and investor. His column, Planet Wall Street, is syndicated by News Bites, a Melbourne-based sharemarket and business news publisher.
http://business.theage.com.au/imf-finally-knocks-on-uncle-sams-door-20080629-2yui.html?page=fullpage#
Monday, October 1, 2007
WHAT DID EZRA POUND REALLY SAY?
Sunday, 30 September 2007
WHAT DID EZRA POUND REALLY SAY?
From 1945 through 1958 America's iconoclastic poet—the flamboyant Ezra Pound, one of the most influential individuals of his generation—was held in a Washington, D.C. mental institution, accused of treason. Pound had merely done what he had always done—spoken his mind. Unfortunately for Pound, however, he had made the error of criticizing the American government in a series of broadcasts from Italy during World War II. For that he was made to pay the price. The July 1995 issue of The Barnes Review told the story of Pound's travails. Here, however, TBR presents a fascinating in-depth overview of precisely what Pound had to say in those now-infamous broadcasts. Was Pound a traitor—or a prophet? Read his words and judge for yourself.
By Michael Collins Piper
Dec. 1997 Barnes Review
American students have been taught by scandalized educators that famed American poet and philosopher Ezra Pound delivered "treasonous" English-language radio broadcasts from Italy (directed to both Americans and to the British) during World War II. However, as noted by Robert H. Walker, an editor for the Greenwood Press: "Thousands of people have heard about them, scores have been affected by them, yet but a handful has ever heard or read them." (1)
This ignorance of Pound's most controversial political rhetoric is ironic, inasmuch as: "No other American—and only a few individuals throughout the world—has left such a strong mark on so many aspects of the 20th century: from poetry to economics, from theater to philosophy, from politics to pedagogy, from Provencal to Chinese. If Pound was not always totally accepted, at least he was unavoidably there." (2)
One critic called Pound's broadcasts a "confused mixture of fascist apologetics, economic theory, anti-Semitism, literary judgment and memory" (3) Another described them as "an unholy mixture of ambiguity, obscurity, inappropriate subject matters [and] vituperation," (4) adding (grudgingly) there were "a few pearls of unexpected wisdom." (5)
Despite all the furor over Pound's broadcasts—which were heard between January of 1941 through July of 1943—it was not until 1978 that a full-length 465-page compendium of transcriptions of the broadcasts was assembled by Prof. Leonard Doob of Yale University in association with aforementioned Greenwood Press. Published under the title "Ezra Pound Speaking"—Radio Speeches of World War II, the volume provides the reader a comprehensive look at Pound's philosophy as it was presented by the poet himself in what Robert Walker, who wrote the foreword to the compendium, describes as "that flair for dramatic hyperbole." (6)
What follows is an attempt to synthesize Pound's extensive verbal parries. Most of what is appears here has never been printed anywhere except in the compendium of Pound's wartime broadcasts. Thus, for the first time ever—for a popular audience—here is what Pound really had to say, not what his critics claim he said.
When he was broadcasting from Italy during wartime, Pound evidently pondered the possibility of one day compiling transcriptions of his broadcasts (or at least expected—quite correctly—that one day the transcripts would be compiled by someone else). He hoped the broadcasts would show a consistent thread once they were committed to print.
Pound recognized relaying such a massive amount of information about so many seemingly unrelated subjects might be confusing listeners less widely read than he. However, the poet also had very firm ideas about the need of his listeners to be able to synthesize the broad range of material that appeared in his colorful lectures.
Pound was sure his remarks on radio were not seditious, but were strictly informational and dedicated to traditional principles of Americanism—including the Constitution, in particular. In response to media claims that he was a fascist propagandist, Pound had this to say:
If anyone takes the trouble to record and examine the series of talks I have made over this radio it will be found I have used three sorts of material: historical facts; convictions of experienced men, based on fact; and the fruits of my own experience. The facts . . . mostly antedate the fascist era and cannot be considered as improvisations trumped up to meet present requirements. Neither can the beliefs of Washington, John Adams, Jefferson, Jackson, Van Buren, and Lincoln be laughed off as mere fascist propaganda. And even my own observations date largely before the opening of the present hostilities.
I defend the particularly American, North American, United States heritage. If anybody can find anything hostile to the Constitution of the U.S.A.in these speeches, it would greatly interest me to know what. It may be bizarre, eccentric, quaint, old-fashioned of me to refer to that document, but I wish more Americans would at least read it. It is not light and easy reading but it contains several points of interest, whereby some of our present officials could, if they but would, profit greatly. (7)
Pound's immediate concern was the war in Europe—"this war on youth—on a generation" (8) which he described as the natural result of the "age of the chief war pimps." (9) He hated the very idea that Americans were being primed for war, and on the very day of Pearl Harbor he denounced the idea that American boys should soon be marching off to war: "I do not want my compatriots from the ages of 20 to 40 to go get slaughtered to keep up the Sassoon and other British Jew rackets in Singapore and in Shanghai. That is not my idea of American patriotism," he added. (10)
In Pound's view, the American government alliance with British finance capitalism and Soviet Bolshevism was contrary to America's tradition and heritage: "Why did you take up with those gangs?" he rhetorically asked his listeners. "Two gangs. [The] Jews' gang in London, and [the] Jew murderous gang over in Moscow? Do you like Mr. Litvinov?" [Soviet ambassador to Britain Meyer Wallach, alias Litvinov, born 1876.—Ed.]
"Do the people from Delaware and Virginia and Connecticut and Massachusetts . . . who live in painted, neat, white houses . . . do these folks really approve [of] Mr. Litvinov and his gang, and all he stands for?" (11)
There was no reason for U.S. intervention abroad, he said: "The place to defend the American heritage is on the American continent. And no man who had any part in helping [Franklin] Delano Roosevelt get the United States into [the war] has enough sense to win anything . . . (12) The men who wintered at Valley Forge did not suffer those months of intense cold and hunger . . . in the hope that . . . the union of the colonies would one day be able to stir up wars between other countries in order to sell them munitions." (13)
What was the American tradition? According to Pound: "The determination of our forbears to set up and maintain in the North American continent a government better than any other. The determination to govern ourselves internally, better than any other nation on earth. The idea of Washington, Jefferson, Monroe, to keep out of foreign shindies." (14)
Of FDR's interventionism, he declared: "To send boys from Omaha to Singapore to die for British monopoly and brutality is not the act of an American patriot." (15) However, Pound said: "Don't shoot the President. I dare say he deserves worse, but . . . [a]ssassination only makes more mess." (16)
Pound saw the American national tradition being buried by the aggressive new internationalism. According to Pound's harsh judgment: "The American gangster did not spend his time shooting women and children. he may have been misguided, but in general he spent his time fighting superior forces at considerable risk to himself . . . not in dropping booby traps for unwary infants. I therefore object to the modus in which the American troops obey their high commander. This modus is not in the spirit of Washington or of Stephen Decatur." (17)
Pound hated war and detected a particular undercurrent in the previous wars of history. Wars, he said, were destructive to nation-states, but profitable for the special interests. Pound said international bankers—Jewish bankers, in particular—were those who were the primary beneficiaries of the profits from war. He pulled no punches when he declared:
Sometime the Anglo-Saxon may awaken to the fact that . . . nations are shoved into wars in order to destroy themselves, to break up their structure, to destroy their social order, to destroy their populations. And no more flaming and flagrant case appears in history than our own American Civil War, said to be an occidental record for size of armies employed and only surpassed by the more recent triumphs of [the Warburg banking family:] the wars of 1914 and the present one. (18)
Although World War II itself was much on Pound's mind, the poet's primary concern, referenced repeatedly throughout his broadcasts, was the issue of usury and the control of money and economy by private special interests. "There is no freedom without economic freedom," he said. "Freedom that does not include freedom from debt is plain bunkum. It is fetid and foul logomachy to call such servitude freedom . . . Yes, freedom from all sorts of debt, including debt at usurious interest." (19)
Usury, he said, was a cause of war throughout history. In Pound's view understanding the issue of usury was central to understanding history: "Until you know who has lent what to whom, you know nothing whatever of politics, you know nothing whatever of history, you know nothing of international wrangles. (20)
"The usury system does no nation . . . any good whatsoever. It is an internal peril to him who hath, and it can make no use of nations in the play of international diplomacy save to breed strife between them and use the worst as flails against the best. It is the usurer's game to hurl the savage against the civilized opponent. The game is not pretty, it is not a very safe game. It does no one any credit." (21) Pound thus traced the history of the current war:
This war did not begin in 1939. It is not a unique result of the infamous Versailles Treaty. It is impossible to understand it without knowing at least a few precedent historic events, which mark the cycle of combat. No man can understand it without knowing at least a few facts and their chronological sequence.
This war is part of the age-old struggle between the usurer and the rest of mankind: between the usurer and peasant, the usurer and producer, and finally between the usurer and the merchant, between usurocracy and the mercantilist system . . .
The present war dates at least from the founding of the Bank of England at the end of the 17th century, 1694-8. Half a century later, the Londonusurocracy shut down on the issue of paper money by the Pennsylvania colony, A.D. 1750. This is not usually given prominence in the U.S. school histories. The 13 colonies rebelled, quite successfully, 26 years later, A.D. 1776.(22)
According to Pound, it was the money issue (above all) that united the Allies during the second 20th-century war against Germany: "Gold. Nothing else uniting the three governments, England, Russia, United States of America. That is the interest—gold, usury, debt, monopoly, class interest, and possibly gross indifference and contempt for humanity." (23) Although "gold" was central to the world's struggle, Pound still felt gold "is a coward. Gold is not the backbone of nations. It is their ruin. A coward, at the first breath of danger gold flows away, gold flows out of the country." (24)
Pound perceived Germany under Hitler as a nation that stood against the international money lenders and communist Russia under Stalin as a system that stood against humanity itself. He told his listeners:
Now if you know anything whatsoever of modern Europe and Asia, you know Hitler stands for putting men over machines. If you don't know that, you know nothing. And beyond that you either know or do not know that Stalin's regime considers humanity as nothing save raw material. Deliver so many carloads of human material at the consumption point. That is the logical result of materialism. If you assert that men are dirty, that humanity is merely material, that is where you come out. And the old Georgian train robber [Josef Stalin—ed.] is perfectly logical. If all things are merely material, man is material—and the system of anti-man treats man as matter. (25)
The real enemy, said Pound, was international capitalism. All people everywhere were victims: "They're working day and night, picking your pockets," he said. "Every day and all day and all night picking your pockets and picking the Russian working man's pockets." (26) Capital, however, he said, was "not international, it is not hypernational. It is subnational. A quicksand under the nations, destroying all nations, destroying all law and government, destroying the nations, one at a time, Russian empire and Austria, 20 years past, France yesterday, England today." (27)
According to Pound, Americans had no idea why they were being expected to fight in Britain's war with Germany: "Even Mr. Churchill hasn't had the grass to tell the American people why he wants them to die, to save what. He is fighting for the gold standard and monopoly. Namely the power to starve the whole of mankind, and make it pay through the nose before it can eat the fruit of its own labor." (28)
As far as the English were concerned, in Pound's broadcasts aimed at the British Isles he warned his listeners that although Russian-style communist totalitarianism was a threat to British freedom, it was not the biggest threat Britain faced:
You are threatened. You are threatened by the Russian methods of administration. Those methods [are not] your sole danger. It is, in fact, so far from being your sole danger that I have, in over two years of talk over this radio, possibly never referred to it before. Usury has gnawed into England since the days of Elizabeth. First it was mortgages, mortgages on earls' estates; usury against the feudal nobility. Then there were attacks on the common land, filchings of village common pasture. Then there developed a usury system, an international usury system, from Cromwell's time, ever increasing." (29)
In the end, Pound suggested, it would be the big money interests who would really win the war—not any particular nation-state—and the foundation for future wars would be set in place: "The nomadic parasites will shift out of London and into Manhattan. And this will be presented under a camouflage of national slogans. It will be represented as an American victory. It will not be an American victory. The moment is serious. The moment is also confusing. It is confusing because there are two sets of concurrent phenomena, namely, those connected with fighting this war, and those which sow seeds for the next one." (30)
Pound believed one of the major problems of the day—which itself had contributed to war fever—was the manipulation of the press, particularly in the United States: "I naturally mistrust newspaper news from America," he declared. "I grope in the mass of lies, knowing most of the sources are wholly untrustworthy." (31)
According to Pound: "The United States has been misinformed. The United States has been led down the garden path, and may be down under the daisies. All through shutting out news. There is no end to the amount of shutting out news that the sons of blood who started this war, and wanted this war, and monkeyed around to get a war started and monkeyed around to keep the war going, and spreading. There is no end to the shutting out and perversions of news that these blighters ain't up to, and that they haven't, and aren't still trying to compass." (32) Pound believed press manipulation was a historic phenomenon:
I ask my compatriots of my own age to note that the very high percentage of articles printed in American magazines contains a joker, that is a silent point, a basically false assumption. I don't mean they all contain the same false assumption. I point out that there is no public medium in the United States for serious discussion. Every [one] of these publications has subjects which its policy forbids it to mention or to mention without falsification. And I ask the men in my generation to consider the effects, the cumulative effect of this state of things which does not date from September 1941, but has been going on ever since we can remember. (33)
Pound believed it was vital for the American people to circumvent the controlled press and to investigate current events—and history—for themselves.
Long before anyone ever conceived of C-SPAN's daily broadcasts of congressional activity Pound suggested one way for the American people to have a better view of what was happening in official Washington: "You could put Congress on the air. Then you would know more of what your representatives are putting on you." (34)
The poet noted that the press was so controlled it was virtually impossible to express opinions contrary to those of the controllers of the media of the day: "You can't talk it over with me; because none of you can get to a radio. You can't print stuff like this in your papers, because the newspapers are not there to inform the people." (35) Pound harkened back to the old Committees of Correspondence that existed in the American colonies prior to the American Revolution when he suggested: "You have got talk to each other, you have got to write letters one to another" (36) in order to be able to discuss the real issues of the day.
Pound also noted another press phenomenon: the fact that the American press had failed to tell its readers that in Europe the Masonic order was a widely discussed issue. Pound told his listeners it ought to be news in America, but it wasn't: "Nothing will come as a greater shock to America in general," he said, "but in particular to honest men who compose the greater part, numerically, of American Masonry, than the view held concerning that order in Europe." (37) Regarding the Masonic order, Pound had his own questions: "What are the Masons? Where do they get their money? And who controls them?" (38)
As far as the all-important question of money creation was concerned, Pound also saw the controlled press—and the academic establishment—covering up the truth. He was intrigued by the fact that there was precedent, in history, for the governments of nation-states to create money rather than relying upon private, special interests to do so:
For years economics professors have been lying, even going so far as to deprecate loans by the state, when the fleet that won the battle of Salamis was built with money lent by the Athenian state to the ship builders, instead of mortgaging the whole nation to . . . swine and enemies of the people as has been done in damn near every nation ever since the Stank [Bank] of England was founded. Well, states have lent money, and the Pennsylvania Colony lent it. And the French . . . are lending it. So the British fire on their late allies. And every damn possible thing is done to prevent the American in Utah or Montana from learning economics or history. And our Constitution does give Congress the right to determine prices, though it is worded, "right to determine the value of money," which is the same thing. (39)
In Pound's judgment, the American people had fallen down on the job and relied upon the greatest protection they had against the moneyed interests—the U.S. Constitution. "You have not kept the Constitution in force," he said. "You have not developed it according to its own internal laws . . . The main protection of the whole people is in the clause about Congress issuing money . . . but you have not wanted to maintain the Constitution. You have not wanted, that is, you have not had a will, to maintain the Constitution or to maintain honest, just government." (40)
The U.S. Constitution, Pound said, was "for more than a century, in fact for 130 years, far and away the best on earth. I had always thought we could get all the social justice we need, by a few sane reforms of money, such as Adams and Lincoln would have thought honest and Constitutional. The grafters would rather throw you into a ten years war and kill off five or ten million young men than even let the discussion of monetary reform flower on the front pages of the American papers. (41)
All of these warnings by Pound about the money system have been suppressed or ignored or forgotten.
Despite his international travel, his choice to live abroad, his fluency in foreign tongues, his cosmopolitan associations, Pound was very much an American nationalist and a patriot in the truest sense. American culture and history were the foundation of his thinking, and he was the first to proclaim it. At the same time, Pound felt the American people were badly misinformed about the realities of European history:
"The Americans are unqualified for intervention," he said. "They are disqualified by reason for their intense, abysmal, unfathomable ignorance of the state and past facts of Europe. Even my colleagues in the Academy of Social and Political Science have no competent perception of the difference, the basic difference between the American problem and that of Europe. And most of them have not made any adequate use of even such fragmentary fragments of knowledge as they possess." (42)
As far as the Jewish question was concerned, Pound was never an advocate of mass extermination or of any program of discrimination against the Jews—contrary to what modern day "historians" might contend. Pound did perceive communism as an outgrowth of ancient Judaic teachings. He called communism "the left hand of Judah" (43) (the right hand, presumably, being international finance capitalism) and declared that "The Bolshevik anti-morale comes out of the Talmud, which is the dirtiest teaching any race ever codified. The Talmud is the one and only begetter of the Bolshevik system." (44)
Pound sometimes resorted to the use of ethnic slurs, but earthy expressions and salty language were integral to the poet's style. Pound's real target was the international banking establishment—many of whose leaders were, in fact, Jews. But he was not an enemy of the Jewish people: "Don't start a pogrom," he said. "That is, not an old-style killing of small Jews. That system is no good whatsoever. Of course if some man had a stroke of genius and could start a pogrom up at the top, there might be something to say for it. But on the whole legal measures are preferable." (45)
Pound traced many historical problems to the direct involvement of Jewish financiers. For example, he pointed out: "Nobody with any historical knowledge says that the French revolution occurred without Jewish assistance. Nor that since that somewhat bloody upset and series of subsequent upsets the Jew weren't cock-a-hoop in the French capital. A knowledge of the French commune would have helped us to understand the Russian November revolution If we had had it. But handy and useful knowledge has an easy way of getting mislaid. Now what causes that?" (46)
Of the much-discussed Protocols of the Learned Elders of Zion, Pound had the following intriguing comment:
If or when one mentions the protocols alleged to be of the Elders of Zion, one is frequently met with the reply: Oh, but they are a forgery. Certainly they are a forgery, and that is the one proof we have of their authenticity. The Jews have worked with forged documents for the past 24 hundred years, namely ever since they have had any documents whatsoever.
And no one can qualify as a historian of this half century without having examined the Protocols. Alleged, if you like, to have been translated from the Russian, from a manuscript to be consulted in the British Museum, where some such document may or may not exist . . .
Their interest lies in the type of mind, or the state of mind of their author. That was their interest for the psychologist the day they first appeared. And for the historian two decades later, when the program contained in them has so crushingly gone into effect up to a point, or down to a squalor. (47)
Pound saw the ongoing war as an enemy of culture and he acknowledged his goal was stopping the war, if he could: "Oh yes, I want it to stop. I didn't start it. I should like to conserve a few art works, a few mosaics, a few printed volumes, I should like to shore, or bring to beach what is left of the world's cultural heritage, including libraries and architectural monuments. To serve as models for new construction." (48)
Contrary to his modern reputation for "racism," Pound resented racist attacks on the Japanese by the Allies. Shortly after Pearl Harbor he remarked that: "A BBC commentator somewhere about January 8 was telling his presumably music hall audience the Japs were jackals, and that they had just recently, I think he said within living men's lifetime, emerged from barbarism. I don't know what patriotic end you think, or he thinks, or the British authorities think is served by such fetid ignorance." (49) Pound told his audience the United States had, "with unspeakable vulgarity . . . insulted the most finely tempered people on earth, threatening them with starvation, threatening them with encirclement and telling them they were too low down to fight." (50) The result, he said, was Pearl Harbor and American intervention in the war.
Pound also recognized Japan's Chinese enemies were as much victims of the international money lenders and intriguers as were the Japanese. In colorful language evoking lively imagery that only Pound could conjure up, he declared:
"There are millions of Chinamen, many of them living on very short rations in the interior and about as much interested in Chiang Kai-shek as they are in the White Socks and the Phillies, if there still are any Phillies. You could get more enthusiasm out of those Chinks for a Hot Dog Championship on the Northside than you could for Chiang's foreign party in China. A lot of China is not pro-Kai-shek. A lot of China is not for that gang of foreign investors." (51)
Pound was very much attuned to the nationalist instincts of other peoples. He was himself an American nationalist who knew there were nationalistic strivings all across the globe—that nationalists everywhere wanted their peoples to be free of the big money interests:
Parts of the world prefer local control, of their own money power and credit. It may be deplorable (in the eyes of Wall Street and Washington) that such aspirations toward personal and national liberty still persist, but so is it. Some people, some nations, prefer their own administration, to that of Baruch and . . . the Sassoons, and the problem is: how many more millions of British, Russians, and Americans of both the northern and southern American continents, plus Zulus, Basutos, Hottentots, etc. and the lower, so-called lower races, phantom governments, Maccabees and their sequelae, are expected to die in the attempt to crush out European and Japanese independence? (52)
Pound also had a profound respect for the European contribution to civilization. He told his listeners: "Europe is an organic body, its life continues, its life has components and nearly every damn thing that has made your lives worth living up to this moment, has had its origins right here in Europe." (53) In Pound's view, the rise of fascism in Italy and Germany was an exclusively European phenomenon and one that should be of no concern to America:
Europe with systems of government less modern than ours, Germany and Italy with the leftovers of earlier centuries, especially Germany, saw revolutions. Worked out a new system suited to Europe. It is not our American affair. We could with honor advocate freedom of the seas. For Europeas well as for a few Jew controlled shipping firms. We could, with honor advocate natural commerce; that is, a commerce wherein each nation would exchange what it has, what it has in superfluity or abundance, with what other nations can or will spare. We could stand for that sort of commerce instead of trying to throttle it. Why do we not? Why should all men under 40 be expected to die or be maimed in support of flagrant injustice, monopoly and a dirty attempt to strangle and starve out 30 nations? (54)
Pound felt there was much to be said for the social and economic achievements of Italy and Germany and that they could prove a model for the rest of the Western World: "Every social reform that has gone into effect in Germany and Italy should be defended," he said. "And the best men in England know that as well as I do. The time of calumny is past, and its passing should be seen very clearly." (55)
Conscious of the reforms effected in Italy and Germany, Pound saw similar possibilities for the American system. Pound believed the U.S. Constitution itself provided Americans the mechanism for change. However, he said, "You have not made use of the machinery provided in the Constitution itself, to keep the American government modern." (56) Pound suggested:
You could keep the Constitution, and under that Constitution every state in the Unioncould reorganize its system of representation. Any or every state could elect its Congressmen on trade basis . . . Any or every state could organize its congressional representation on a corporate basis. Carpenters, artisans, mechanics, could have one representative; writers, doctors, and lawyers could have one representative.
You could perfectly legally and constitutionally divide up the representatives of any or every state on the basis of trades and professions and the life of that state, every man in it, would gain representation in Congress; and Congress would take on an honesty and reality no American in our time has dreamed of.
Present Congressmen are mostly so ignorant that some people have thought it might be useful to have a bit of congressional education. Insist on Congressmen being able to pass an exam in at least some of the subject matters they are expected to vote on . . . I think the representation by trades and profession would be a better way out, with, if you like, different exams for the different trades and professions.
That could do no harm whatsoever. Man to represent steel workers, to be able to show he knows the working of steel; miner to know the workings of mines; professional to represent his profession, really to represent his profession, the best qualities, most acute knowledge of his profession. That would certainly lead to efficiency. Health regulations would be decided by someone who knew something about sanitation. Rules for mining coal, rates per day, decided by someone who knows coal don't just crawl out of a mine, while somebody sits round playing pinochle . . .
"I am telling you how to oil up the machine," he said, "and change a few gadgets so that it would work as the founders intended." (57)
Quick and certain to draw distinctions between U.S. and European traditions, however, Pound declared: "Class war is not an American product, not from the roots of the nation. Not in our historic process. And the racial solution, which is Europe's solution, which is IN Europe's process, rooted deep down, un-uprootable." (58) He told his listeners it was vital they study the evolution of the American system, and why the American Revolution took place to begin with—yes, it had to do with money:
Colonies, pretty much racially homogeneous, evolved. They found a solution for the problem of money, not of fields against money, not of colonists, farmers fighting money, but of fields and money working together, and they found it in Pennsylvania , and the world said, "How marvelous." And an unjust, usurious, monopolist government shut down on the money—money handed out to the colonists to facilitate their field production, the repayment not going to a set of leeches and exploiters. And the unjust monopolist government, namely the British, was hoofed out [of] the colonies 30 years later. (59)
Full of contempt for those whom a real historian—his friend, Dr. Harry Elmer Barnes—called the "Court Historians" of the day, Pound recognized people could not make correct decisions about the course of their future if they were being lied to about their past: "You have a half-dozen historians but not all of them, by any means, are able to take out the facts and show how they hitch together." (60) He wondered, however, why people could not look at recent events that took place within their own time frame and see why things were happening as they were. To the people of war-torn England he addressed this poignant inquiry:
Have you no . . . eyes, no knowledge or . . . memory of events that have happened before you? Do you know only watery pools where were the cellars of London, only the material ruins, having no knowledge of . . . deeper causes, of why these things have come on you, or what you have done, or in most cases omitted, and which have caused these things to come on you, and have you no wish to know why this has happened? (61)
Pound suggested some good reading for his American listeners who might have a desire to bring back American tradition: "Two great friendships, at the base of American history. John Adams and Jefferson, Van Buren and Andy Jackson. You can pass the time reading that history. It will make the boys better citizens. Make any young man more American if he sticks to seeing American history first before swallowing exotic perversions." (62)
Knowledge—basic historical knowledge—was vital, according to Pound. That theme—that knowledge was critical—was central to all of his wartime broadcasts. He urged his listeners to know who they were and why the world was in crisis. To his listeners, Pound urged this much: "Don't die like a beast. If you are dead set to be sunk in the mid-Atlantic or Pacific or scorched in the desert, at least know why it is done to you. To die not knowing why is to die like an animal . . . To die like a human being you have at least got to know why it is done to you." (63)
Pound's graphic words could well be a warning to modern-day Americans in this age when American soldiers are being asked to fight and die in endless brush-fire wars around the globe—wars that enrich their real enemies—the very plutocrats Pound so fiercely condemned.
Pound's defense attorney, who found the transcripts of the broadcasts "dreary," later summarized them as follows:
There was no criticism of the allied war effort in the broadcasts; nothing was said to discourage or disturb American soldiers or their families. Pound's main concern was with usury and other economic sins which he conceived were being committed by an international conspiracy of Jewish bankers who were the powers behind the throne of England and had succeeded in duping the government of the United States. The broadcasts were in essence lectures in history and political and economic theory, highly critical of the course of American government beginning with Alexander Hamilton . . . The American people were told they did not understand what was going on in Europe and if they did, the war would not have been necessary."(64)
Was Pound a traitor—or a prophet?
NOTE: The dates cited in the following footnotes refer to the dates of radio broadcasts by Ezra Pound excerpted from the volume, "Ezra Pound Speaking"—Radio Speeches of World War II, the singular source for the information appearing in this article. The page numbers which follow refer to the location of the broadcast in the published compendium.
1"Ezra Pound Speaking"—Radio Speeches of World War II. Edited by Leonard Doob. (Westport, Connecticut: Greenwood Press, 1978). p. ix.
2. .Ibid.
3. .Ibid. 427.
4. .Ibid.
5. .Ibid.
6. .Ibid., p. ix.
7. .1942 (undated script), p. 393.
8. .November 6, 1941, pp. 16-17.
9. .Ibid.
10. .December 7, 1941, p. 21.
11. .March 6, 1942, p. 54.
12. .March 30, 1942, p. 80.
13. .February 26, 1942, p. 44.
14. .February 3, 1942, p. 30.
15. .February 19, 1942, pp. 42-43.
16. .February 18, 1943, p. 221.
17. .July 20, 1943, p. 370.
18. .April 30, 1942, p. 113.
19. .February 19, 1943, p. 226.
20. .Early 1941 (undated script), p. 382.
21. .May 23, 1943, p. 319.
22. .March 25, 1943, p. 259.
23. .March 2, 1942, pp. 48-49.
24. .March 8, 1942
25. .Ibid.
26. .March 8, 1942, p. 55.
27. .Ibid.
28. .October 26, 1941, p. 7.
29. .May 23, 1943, p. 318.
30. .May 23, 1943, p. 319.
31. .April 30, 1942, p.113.
32. .January 29, 1942, p. 24.
33. .February 17, 1942, p. 39.
34. .July 13, 1942, p. 203.
35. .Ibid.
36. .Ibid.
37. .April 30, 1942, pp. 114-115.
38. .Ibid.
39. .1941 (undated script), p. 390.
40. .June 1, 1943, p. 331.
41. .November 6, 1941, p. 19.
42. .June 14, 1942, p. 170.
43. .May 31, 1942, p. 155
44. .May 4, 1942, p. 117.
45. .April 30, 1942, p. 115.
46. .July 17, 1942, p. 207.
47. .April 20, 1943, p. 283.
48. .Ibid.
49. .January 29, 1942, p. 26
50. .February 3, 1942, p. 30.
51. .October 2, 1941, p. 5.
52. .July 17, 1943, p. 369.
53. .October 26, 1941, p. 9.
54. .November 6, 1941, p. 19.
55. .May 23, 1943, p. 319.
56. .June 1, 1943, p. 331.
57. .July 13, 1942, pp. 204-205.
58. .May 28, 1942, p. 153.
59. .May 28, 1942, p. 153.
60. .February 3, 1942, p. 30.
61. .May 28, 1942, p. 151.
62. .May 9, 1942, p. 121.
63. .1943 (undated script), p. 409.
64. .Doob, p. 427.
Labels: Communism, Poets
WHAT DID EZRA POUND REALLY SAY?
From 1945 through 1958 America's iconoclastic poet—the flamboyant Ezra Pound, one of the most influential individuals of his generation—was held in a Washington, D.C. mental institution, accused of treason. Pound had merely done what he had always done—spoken his mind. Unfortunately for Pound, however, he had made the error of criticizing the American government in a series of broadcasts from Italy during World War II. For that he was made to pay the price. The July 1995 issue of The Barnes Review told the story of Pound's travails. Here, however, TBR presents a fascinating in-depth overview of precisely what Pound had to say in those now-infamous broadcasts. Was Pound a traitor—or a prophet? Read his words and judge for yourself.
By Michael Collins Piper
Dec. 1997 Barnes Review
American students have been taught by scandalized educators that famed American poet and philosopher Ezra Pound delivered "treasonous" English-language radio broadcasts from Italy (directed to both Americans and to the British) during World War II. However, as noted by Robert H. Walker, an editor for the Greenwood Press: "Thousands of people have heard about them, scores have been affected by them, yet but a handful has ever heard or read them." (1)
This ignorance of Pound's most controversial political rhetoric is ironic, inasmuch as: "No other American—and only a few individuals throughout the world—has left such a strong mark on so many aspects of the 20th century: from poetry to economics, from theater to philosophy, from politics to pedagogy, from Provencal to Chinese. If Pound was not always totally accepted, at least he was unavoidably there." (2)
One critic called Pound's broadcasts a "confused mixture of fascist apologetics, economic theory, anti-Semitism, literary judgment and memory" (3) Another described them as "an unholy mixture of ambiguity, obscurity, inappropriate subject matters [and] vituperation," (4) adding (grudgingly) there were "a few pearls of unexpected wisdom." (5)
Despite all the furor over Pound's broadcasts—which were heard between January of 1941 through July of 1943—it was not until 1978 that a full-length 465-page compendium of transcriptions of the broadcasts was assembled by Prof. Leonard Doob of Yale University in association with aforementioned Greenwood Press. Published under the title "Ezra Pound Speaking"—Radio Speeches of World War II, the volume provides the reader a comprehensive look at Pound's philosophy as it was presented by the poet himself in what Robert Walker, who wrote the foreword to the compendium, describes as "that flair for dramatic hyperbole." (6)
What follows is an attempt to synthesize Pound's extensive verbal parries. Most of what is appears here has never been printed anywhere except in the compendium of Pound's wartime broadcasts. Thus, for the first time ever—for a popular audience—here is what Pound really had to say, not what his critics claim he said.
When he was broadcasting from Italy during wartime, Pound evidently pondered the possibility of one day compiling transcriptions of his broadcasts (or at least expected—quite correctly—that one day the transcripts would be compiled by someone else). He hoped the broadcasts would show a consistent thread once they were committed to print.
Pound recognized relaying such a massive amount of information about so many seemingly unrelated subjects might be confusing listeners less widely read than he. However, the poet also had very firm ideas about the need of his listeners to be able to synthesize the broad range of material that appeared in his colorful lectures.
Pound was sure his remarks on radio were not seditious, but were strictly informational and dedicated to traditional principles of Americanism—including the Constitution, in particular. In response to media claims that he was a fascist propagandist, Pound had this to say:
If anyone takes the trouble to record and examine the series of talks I have made over this radio it will be found I have used three sorts of material: historical facts; convictions of experienced men, based on fact; and the fruits of my own experience. The facts . . . mostly antedate the fascist era and cannot be considered as improvisations trumped up to meet present requirements. Neither can the beliefs of Washington, John Adams, Jefferson, Jackson, Van Buren, and Lincoln be laughed off as mere fascist propaganda. And even my own observations date largely before the opening of the present hostilities.
I defend the particularly American, North American, United States heritage. If anybody can find anything hostile to the Constitution of the U.S.A.in these speeches, it would greatly interest me to know what. It may be bizarre, eccentric, quaint, old-fashioned of me to refer to that document, but I wish more Americans would at least read it. It is not light and easy reading but it contains several points of interest, whereby some of our present officials could, if they but would, profit greatly. (7)
Pound's immediate concern was the war in Europe—"this war on youth—on a generation" (8) which he described as the natural result of the "age of the chief war pimps." (9) He hated the very idea that Americans were being primed for war, and on the very day of Pearl Harbor he denounced the idea that American boys should soon be marching off to war: "I do not want my compatriots from the ages of 20 to 40 to go get slaughtered to keep up the Sassoon and other British Jew rackets in Singapore and in Shanghai. That is not my idea of American patriotism," he added. (10)
In Pound's view, the American government alliance with British finance capitalism and Soviet Bolshevism was contrary to America's tradition and heritage: "Why did you take up with those gangs?" he rhetorically asked his listeners. "Two gangs. [The] Jews' gang in London, and [the] Jew murderous gang over in Moscow? Do you like Mr. Litvinov?" [Soviet ambassador to Britain Meyer Wallach, alias Litvinov, born 1876.—Ed.]
"Do the people from Delaware and Virginia and Connecticut and Massachusetts . . . who live in painted, neat, white houses . . . do these folks really approve [of] Mr. Litvinov and his gang, and all he stands for?" (11)
There was no reason for U.S. intervention abroad, he said: "The place to defend the American heritage is on the American continent. And no man who had any part in helping [Franklin] Delano Roosevelt get the United States into [the war] has enough sense to win anything . . . (12) The men who wintered at Valley Forge did not suffer those months of intense cold and hunger . . . in the hope that . . . the union of the colonies would one day be able to stir up wars between other countries in order to sell them munitions." (13)
What was the American tradition? According to Pound: "The determination of our forbears to set up and maintain in the North American continent a government better than any other. The determination to govern ourselves internally, better than any other nation on earth. The idea of Washington, Jefferson, Monroe, to keep out of foreign shindies." (14)
Of FDR's interventionism, he declared: "To send boys from Omaha to Singapore to die for British monopoly and brutality is not the act of an American patriot." (15) However, Pound said: "Don't shoot the President. I dare say he deserves worse, but . . . [a]ssassination only makes more mess." (16)
Pound saw the American national tradition being buried by the aggressive new internationalism. According to Pound's harsh judgment: "The American gangster did not spend his time shooting women and children. he may have been misguided, but in general he spent his time fighting superior forces at considerable risk to himself . . . not in dropping booby traps for unwary infants. I therefore object to the modus in which the American troops obey their high commander. This modus is not in the spirit of Washington or of Stephen Decatur." (17)
Pound hated war and detected a particular undercurrent in the previous wars of history. Wars, he said, were destructive to nation-states, but profitable for the special interests. Pound said international bankers—Jewish bankers, in particular—were those who were the primary beneficiaries of the profits from war. He pulled no punches when he declared:
Sometime the Anglo-Saxon may awaken to the fact that . . . nations are shoved into wars in order to destroy themselves, to break up their structure, to destroy their social order, to destroy their populations. And no more flaming and flagrant case appears in history than our own American Civil War, said to be an occidental record for size of armies employed and only surpassed by the more recent triumphs of [the Warburg banking family:] the wars of 1914 and the present one. (18)
Although World War II itself was much on Pound's mind, the poet's primary concern, referenced repeatedly throughout his broadcasts, was the issue of usury and the control of money and economy by private special interests. "There is no freedom without economic freedom," he said. "Freedom that does not include freedom from debt is plain bunkum. It is fetid and foul logomachy to call such servitude freedom . . . Yes, freedom from all sorts of debt, including debt at usurious interest." (19)
Usury, he said, was a cause of war throughout history. In Pound's view understanding the issue of usury was central to understanding history: "Until you know who has lent what to whom, you know nothing whatever of politics, you know nothing whatever of history, you know nothing of international wrangles. (20)
"The usury system does no nation . . . any good whatsoever. It is an internal peril to him who hath, and it can make no use of nations in the play of international diplomacy save to breed strife between them and use the worst as flails against the best. It is the usurer's game to hurl the savage against the civilized opponent. The game is not pretty, it is not a very safe game. It does no one any credit." (21) Pound thus traced the history of the current war:
This war did not begin in 1939. It is not a unique result of the infamous Versailles Treaty. It is impossible to understand it without knowing at least a few precedent historic events, which mark the cycle of combat. No man can understand it without knowing at least a few facts and their chronological sequence.
This war is part of the age-old struggle between the usurer and the rest of mankind: between the usurer and peasant, the usurer and producer, and finally between the usurer and the merchant, between usurocracy and the mercantilist system . . .
The present war dates at least from the founding of the Bank of England at the end of the 17th century, 1694-8. Half a century later, the Londonusurocracy shut down on the issue of paper money by the Pennsylvania colony, A.D. 1750. This is not usually given prominence in the U.S. school histories. The 13 colonies rebelled, quite successfully, 26 years later, A.D. 1776.(22)
According to Pound, it was the money issue (above all) that united the Allies during the second 20th-century war against Germany: "Gold. Nothing else uniting the three governments, England, Russia, United States of America. That is the interest—gold, usury, debt, monopoly, class interest, and possibly gross indifference and contempt for humanity." (23) Although "gold" was central to the world's struggle, Pound still felt gold "is a coward. Gold is not the backbone of nations. It is their ruin. A coward, at the first breath of danger gold flows away, gold flows out of the country." (24)
Pound perceived Germany under Hitler as a nation that stood against the international money lenders and communist Russia under Stalin as a system that stood against humanity itself. He told his listeners:
Now if you know anything whatsoever of modern Europe and Asia, you know Hitler stands for putting men over machines. If you don't know that, you know nothing. And beyond that you either know or do not know that Stalin's regime considers humanity as nothing save raw material. Deliver so many carloads of human material at the consumption point. That is the logical result of materialism. If you assert that men are dirty, that humanity is merely material, that is where you come out. And the old Georgian train robber [Josef Stalin—ed.] is perfectly logical. If all things are merely material, man is material—and the system of anti-man treats man as matter. (25)
The real enemy, said Pound, was international capitalism. All people everywhere were victims: "They're working day and night, picking your pockets," he said. "Every day and all day and all night picking your pockets and picking the Russian working man's pockets." (26) Capital, however, he said, was "not international, it is not hypernational. It is subnational. A quicksand under the nations, destroying all nations, destroying all law and government, destroying the nations, one at a time, Russian empire and Austria, 20 years past, France yesterday, England today." (27)
According to Pound, Americans had no idea why they were being expected to fight in Britain's war with Germany: "Even Mr. Churchill hasn't had the grass to tell the American people why he wants them to die, to save what. He is fighting for the gold standard and monopoly. Namely the power to starve the whole of mankind, and make it pay through the nose before it can eat the fruit of its own labor." (28)
As far as the English were concerned, in Pound's broadcasts aimed at the British Isles he warned his listeners that although Russian-style communist totalitarianism was a threat to British freedom, it was not the biggest threat Britain faced:
You are threatened. You are threatened by the Russian methods of administration. Those methods [are not] your sole danger. It is, in fact, so far from being your sole danger that I have, in over two years of talk over this radio, possibly never referred to it before. Usury has gnawed into England since the days of Elizabeth. First it was mortgages, mortgages on earls' estates; usury against the feudal nobility. Then there were attacks on the common land, filchings of village common pasture. Then there developed a usury system, an international usury system, from Cromwell's time, ever increasing." (29)
In the end, Pound suggested, it would be the big money interests who would really win the war—not any particular nation-state—and the foundation for future wars would be set in place: "The nomadic parasites will shift out of London and into Manhattan. And this will be presented under a camouflage of national slogans. It will be represented as an American victory. It will not be an American victory. The moment is serious. The moment is also confusing. It is confusing because there are two sets of concurrent phenomena, namely, those connected with fighting this war, and those which sow seeds for the next one." (30)
Pound believed one of the major problems of the day—which itself had contributed to war fever—was the manipulation of the press, particularly in the United States: "I naturally mistrust newspaper news from America," he declared. "I grope in the mass of lies, knowing most of the sources are wholly untrustworthy." (31)
According to Pound: "The United States has been misinformed. The United States has been led down the garden path, and may be down under the daisies. All through shutting out news. There is no end to the amount of shutting out news that the sons of blood who started this war, and wanted this war, and monkeyed around to get a war started and monkeyed around to keep the war going, and spreading. There is no end to the shutting out and perversions of news that these blighters ain't up to, and that they haven't, and aren't still trying to compass." (32) Pound believed press manipulation was a historic phenomenon:
I ask my compatriots of my own age to note that the very high percentage of articles printed in American magazines contains a joker, that is a silent point, a basically false assumption. I don't mean they all contain the same false assumption. I point out that there is no public medium in the United States for serious discussion. Every [one] of these publications has subjects which its policy forbids it to mention or to mention without falsification. And I ask the men in my generation to consider the effects, the cumulative effect of this state of things which does not date from September 1941, but has been going on ever since we can remember. (33)
Pound believed it was vital for the American people to circumvent the controlled press and to investigate current events—and history—for themselves.
Long before anyone ever conceived of C-SPAN's daily broadcasts of congressional activity Pound suggested one way for the American people to have a better view of what was happening in official Washington: "You could put Congress on the air. Then you would know more of what your representatives are putting on you." (34)
The poet noted that the press was so controlled it was virtually impossible to express opinions contrary to those of the controllers of the media of the day: "You can't talk it over with me; because none of you can get to a radio. You can't print stuff like this in your papers, because the newspapers are not there to inform the people." (35) Pound harkened back to the old Committees of Correspondence that existed in the American colonies prior to the American Revolution when he suggested: "You have got talk to each other, you have got to write letters one to another" (36) in order to be able to discuss the real issues of the day.
Pound also noted another press phenomenon: the fact that the American press had failed to tell its readers that in Europe the Masonic order was a widely discussed issue. Pound told his listeners it ought to be news in America, but it wasn't: "Nothing will come as a greater shock to America in general," he said, "but in particular to honest men who compose the greater part, numerically, of American Masonry, than the view held concerning that order in Europe." (37) Regarding the Masonic order, Pound had his own questions: "What are the Masons? Where do they get their money? And who controls them?" (38)
As far as the all-important question of money creation was concerned, Pound also saw the controlled press—and the academic establishment—covering up the truth. He was intrigued by the fact that there was precedent, in history, for the governments of nation-states to create money rather than relying upon private, special interests to do so:
For years economics professors have been lying, even going so far as to deprecate loans by the state, when the fleet that won the battle of Salamis was built with money lent by the Athenian state to the ship builders, instead of mortgaging the whole nation to . . . swine and enemies of the people as has been done in damn near every nation ever since the Stank [Bank] of England was founded. Well, states have lent money, and the Pennsylvania Colony lent it. And the French . . . are lending it. So the British fire on their late allies. And every damn possible thing is done to prevent the American in Utah or Montana from learning economics or history. And our Constitution does give Congress the right to determine prices, though it is worded, "right to determine the value of money," which is the same thing. (39)
In Pound's judgment, the American people had fallen down on the job and relied upon the greatest protection they had against the moneyed interests—the U.S. Constitution. "You have not kept the Constitution in force," he said. "You have not developed it according to its own internal laws . . . The main protection of the whole people is in the clause about Congress issuing money . . . but you have not wanted to maintain the Constitution. You have not wanted, that is, you have not had a will, to maintain the Constitution or to maintain honest, just government." (40)
The U.S. Constitution, Pound said, was "for more than a century, in fact for 130 years, far and away the best on earth. I had always thought we could get all the social justice we need, by a few sane reforms of money, such as Adams and Lincoln would have thought honest and Constitutional. The grafters would rather throw you into a ten years war and kill off five or ten million young men than even let the discussion of monetary reform flower on the front pages of the American papers. (41)
All of these warnings by Pound about the money system have been suppressed or ignored or forgotten.
Despite his international travel, his choice to live abroad, his fluency in foreign tongues, his cosmopolitan associations, Pound was very much an American nationalist and a patriot in the truest sense. American culture and history were the foundation of his thinking, and he was the first to proclaim it. At the same time, Pound felt the American people were badly misinformed about the realities of European history:
"The Americans are unqualified for intervention," he said. "They are disqualified by reason for their intense, abysmal, unfathomable ignorance of the state and past facts of Europe. Even my colleagues in the Academy of Social and Political Science have no competent perception of the difference, the basic difference between the American problem and that of Europe. And most of them have not made any adequate use of even such fragmentary fragments of knowledge as they possess." (42)
As far as the Jewish question was concerned, Pound was never an advocate of mass extermination or of any program of discrimination against the Jews—contrary to what modern day "historians" might contend. Pound did perceive communism as an outgrowth of ancient Judaic teachings. He called communism "the left hand of Judah" (43) (the right hand, presumably, being international finance capitalism) and declared that "The Bolshevik anti-morale comes out of the Talmud, which is the dirtiest teaching any race ever codified. The Talmud is the one and only begetter of the Bolshevik system." (44)
Pound sometimes resorted to the use of ethnic slurs, but earthy expressions and salty language were integral to the poet's style. Pound's real target was the international banking establishment—many of whose leaders were, in fact, Jews. But he was not an enemy of the Jewish people: "Don't start a pogrom," he said. "That is, not an old-style killing of small Jews. That system is no good whatsoever. Of course if some man had a stroke of genius and could start a pogrom up at the top, there might be something to say for it. But on the whole legal measures are preferable." (45)
Pound traced many historical problems to the direct involvement of Jewish financiers. For example, he pointed out: "Nobody with any historical knowledge says that the French revolution occurred without Jewish assistance. Nor that since that somewhat bloody upset and series of subsequent upsets the Jew weren't cock-a-hoop in the French capital. A knowledge of the French commune would have helped us to understand the Russian November revolution If we had had it. But handy and useful knowledge has an easy way of getting mislaid. Now what causes that?" (46)
Of the much-discussed Protocols of the Learned Elders of Zion, Pound had the following intriguing comment:
If or when one mentions the protocols alleged to be of the Elders of Zion, one is frequently met with the reply: Oh, but they are a forgery. Certainly they are a forgery, and that is the one proof we have of their authenticity. The Jews have worked with forged documents for the past 24 hundred years, namely ever since they have had any documents whatsoever.
And no one can qualify as a historian of this half century without having examined the Protocols. Alleged, if you like, to have been translated from the Russian, from a manuscript to be consulted in the British Museum, where some such document may or may not exist . . .
Their interest lies in the type of mind, or the state of mind of their author. That was their interest for the psychologist the day they first appeared. And for the historian two decades later, when the program contained in them has so crushingly gone into effect up to a point, or down to a squalor. (47)
Pound saw the ongoing war as an enemy of culture and he acknowledged his goal was stopping the war, if he could: "Oh yes, I want it to stop. I didn't start it. I should like to conserve a few art works, a few mosaics, a few printed volumes, I should like to shore, or bring to beach what is left of the world's cultural heritage, including libraries and architectural monuments. To serve as models for new construction." (48)
Contrary to his modern reputation for "racism," Pound resented racist attacks on the Japanese by the Allies. Shortly after Pearl Harbor he remarked that: "A BBC commentator somewhere about January 8 was telling his presumably music hall audience the Japs were jackals, and that they had just recently, I think he said within living men's lifetime, emerged from barbarism. I don't know what patriotic end you think, or he thinks, or the British authorities think is served by such fetid ignorance." (49) Pound told his audience the United States had, "with unspeakable vulgarity . . . insulted the most finely tempered people on earth, threatening them with starvation, threatening them with encirclement and telling them they were too low down to fight." (50) The result, he said, was Pearl Harbor and American intervention in the war.
Pound also recognized Japan's Chinese enemies were as much victims of the international money lenders and intriguers as were the Japanese. In colorful language evoking lively imagery that only Pound could conjure up, he declared:
"There are millions of Chinamen, many of them living on very short rations in the interior and about as much interested in Chiang Kai-shek as they are in the White Socks and the Phillies, if there still are any Phillies. You could get more enthusiasm out of those Chinks for a Hot Dog Championship on the Northside than you could for Chiang's foreign party in China. A lot of China is not pro-Kai-shek. A lot of China is not for that gang of foreign investors." (51)
Pound was very much attuned to the nationalist instincts of other peoples. He was himself an American nationalist who knew there were nationalistic strivings all across the globe—that nationalists everywhere wanted their peoples to be free of the big money interests:
Parts of the world prefer local control, of their own money power and credit. It may be deplorable (in the eyes of Wall Street and Washington) that such aspirations toward personal and national liberty still persist, but so is it. Some people, some nations, prefer their own administration, to that of Baruch and . . . the Sassoons, and the problem is: how many more millions of British, Russians, and Americans of both the northern and southern American continents, plus Zulus, Basutos, Hottentots, etc. and the lower, so-called lower races, phantom governments, Maccabees and their sequelae, are expected to die in the attempt to crush out European and Japanese independence? (52)
Pound also had a profound respect for the European contribution to civilization. He told his listeners: "Europe is an organic body, its life continues, its life has components and nearly every damn thing that has made your lives worth living up to this moment, has had its origins right here in Europe." (53) In Pound's view, the rise of fascism in Italy and Germany was an exclusively European phenomenon and one that should be of no concern to America:
Europe with systems of government less modern than ours, Germany and Italy with the leftovers of earlier centuries, especially Germany, saw revolutions. Worked out a new system suited to Europe. It is not our American affair. We could with honor advocate freedom of the seas. For Europeas well as for a few Jew controlled shipping firms. We could, with honor advocate natural commerce; that is, a commerce wherein each nation would exchange what it has, what it has in superfluity or abundance, with what other nations can or will spare. We could stand for that sort of commerce instead of trying to throttle it. Why do we not? Why should all men under 40 be expected to die or be maimed in support of flagrant injustice, monopoly and a dirty attempt to strangle and starve out 30 nations? (54)
Pound felt there was much to be said for the social and economic achievements of Italy and Germany and that they could prove a model for the rest of the Western World: "Every social reform that has gone into effect in Germany and Italy should be defended," he said. "And the best men in England know that as well as I do. The time of calumny is past, and its passing should be seen very clearly." (55)
Conscious of the reforms effected in Italy and Germany, Pound saw similar possibilities for the American system. Pound believed the U.S. Constitution itself provided Americans the mechanism for change. However, he said, "You have not made use of the machinery provided in the Constitution itself, to keep the American government modern." (56) Pound suggested:
You could keep the Constitution, and under that Constitution every state in the Unioncould reorganize its system of representation. Any or every state could elect its Congressmen on trade basis . . . Any or every state could organize its congressional representation on a corporate basis. Carpenters, artisans, mechanics, could have one representative; writers, doctors, and lawyers could have one representative.
You could perfectly legally and constitutionally divide up the representatives of any or every state on the basis of trades and professions and the life of that state, every man in it, would gain representation in Congress; and Congress would take on an honesty and reality no American in our time has dreamed of.
Present Congressmen are mostly so ignorant that some people have thought it might be useful to have a bit of congressional education. Insist on Congressmen being able to pass an exam in at least some of the subject matters they are expected to vote on . . . I think the representation by trades and profession would be a better way out, with, if you like, different exams for the different trades and professions.
That could do no harm whatsoever. Man to represent steel workers, to be able to show he knows the working of steel; miner to know the workings of mines; professional to represent his profession, really to represent his profession, the best qualities, most acute knowledge of his profession. That would certainly lead to efficiency. Health regulations would be decided by someone who knew something about sanitation. Rules for mining coal, rates per day, decided by someone who knows coal don't just crawl out of a mine, while somebody sits round playing pinochle . . .
"I am telling you how to oil up the machine," he said, "and change a few gadgets so that it would work as the founders intended." (57)
Quick and certain to draw distinctions between U.S. and European traditions, however, Pound declared: "Class war is not an American product, not from the roots of the nation. Not in our historic process. And the racial solution, which is Europe's solution, which is IN Europe's process, rooted deep down, un-uprootable." (58) He told his listeners it was vital they study the evolution of the American system, and why the American Revolution took place to begin with—yes, it had to do with money:
Colonies, pretty much racially homogeneous, evolved. They found a solution for the problem of money, not of fields against money, not of colonists, farmers fighting money, but of fields and money working together, and they found it in Pennsylvania , and the world said, "How marvelous." And an unjust, usurious, monopolist government shut down on the money—money handed out to the colonists to facilitate their field production, the repayment not going to a set of leeches and exploiters. And the unjust monopolist government, namely the British, was hoofed out [of] the colonies 30 years later. (59)
Full of contempt for those whom a real historian—his friend, Dr. Harry Elmer Barnes—called the "Court Historians" of the day, Pound recognized people could not make correct decisions about the course of their future if they were being lied to about their past: "You have a half-dozen historians but not all of them, by any means, are able to take out the facts and show how they hitch together." (60) He wondered, however, why people could not look at recent events that took place within their own time frame and see why things were happening as they were. To the people of war-torn England he addressed this poignant inquiry:
Have you no . . . eyes, no knowledge or . . . memory of events that have happened before you? Do you know only watery pools where were the cellars of London, only the material ruins, having no knowledge of . . . deeper causes, of why these things have come on you, or what you have done, or in most cases omitted, and which have caused these things to come on you, and have you no wish to know why this has happened? (61)
Pound suggested some good reading for his American listeners who might have a desire to bring back American tradition: "Two great friendships, at the base of American history. John Adams and Jefferson, Van Buren and Andy Jackson. You can pass the time reading that history. It will make the boys better citizens. Make any young man more American if he sticks to seeing American history first before swallowing exotic perversions." (62)
Knowledge—basic historical knowledge—was vital, according to Pound. That theme—that knowledge was critical—was central to all of his wartime broadcasts. He urged his listeners to know who they were and why the world was in crisis. To his listeners, Pound urged this much: "Don't die like a beast. If you are dead set to be sunk in the mid-Atlantic or Pacific or scorched in the desert, at least know why it is done to you. To die not knowing why is to die like an animal . . . To die like a human being you have at least got to know why it is done to you." (63)
Pound's graphic words could well be a warning to modern-day Americans in this age when American soldiers are being asked to fight and die in endless brush-fire wars around the globe—wars that enrich their real enemies—the very plutocrats Pound so fiercely condemned.
Pound's defense attorney, who found the transcripts of the broadcasts "dreary," later summarized them as follows:
There was no criticism of the allied war effort in the broadcasts; nothing was said to discourage or disturb American soldiers or their families. Pound's main concern was with usury and other economic sins which he conceived were being committed by an international conspiracy of Jewish bankers who were the powers behind the throne of England and had succeeded in duping the government of the United States. The broadcasts were in essence lectures in history and political and economic theory, highly critical of the course of American government beginning with Alexander Hamilton . . . The American people were told they did not understand what was going on in Europe and if they did, the war would not have been necessary."(64)
Was Pound a traitor—or a prophet?
NOTE: The dates cited in the following footnotes refer to the dates of radio broadcasts by Ezra Pound excerpted from the volume, "Ezra Pound Speaking"—Radio Speeches of World War II, the singular source for the information appearing in this article. The page numbers which follow refer to the location of the broadcast in the published compendium.
1"Ezra Pound Speaking"—Radio Speeches of World War II. Edited by Leonard Doob. (Westport, Connecticut: Greenwood Press, 1978). p. ix.
2. .Ibid.
3. .Ibid. 427.
4. .Ibid.
5. .Ibid.
6. .Ibid., p. ix.
7. .1942 (undated script), p. 393.
8. .November 6, 1941, pp. 16-17.
9. .Ibid.
10. .December 7, 1941, p. 21.
11. .March 6, 1942, p. 54.
12. .March 30, 1942, p. 80.
13. .February 26, 1942, p. 44.
14. .February 3, 1942, p. 30.
15. .February 19, 1942, pp. 42-43.
16. .February 18, 1943, p. 221.
17. .July 20, 1943, p. 370.
18. .April 30, 1942, p. 113.
19. .February 19, 1943, p. 226.
20. .Early 1941 (undated script), p. 382.
21. .May 23, 1943, p. 319.
22. .March 25, 1943, p. 259.
23. .March 2, 1942, pp. 48-49.
24. .March 8, 1942
25. .Ibid.
26. .March 8, 1942, p. 55.
27. .Ibid.
28. .October 26, 1941, p. 7.
29. .May 23, 1943, p. 318.
30. .May 23, 1943, p. 319.
31. .April 30, 1942, p.113.
32. .January 29, 1942, p. 24.
33. .February 17, 1942, p. 39.
34. .July 13, 1942, p. 203.
35. .Ibid.
36. .Ibid.
37. .April 30, 1942, pp. 114-115.
38. .Ibid.
39. .1941 (undated script), p. 390.
40. .June 1, 1943, p. 331.
41. .November 6, 1941, p. 19.
42. .June 14, 1942, p. 170.
43. .May 31, 1942, p. 155
44. .May 4, 1942, p. 117.
45. .April 30, 1942, p. 115.
46. .July 17, 1942, p. 207.
47. .April 20, 1943, p. 283.
48. .Ibid.
49. .January 29, 1942, p. 26
50. .February 3, 1942, p. 30.
51. .October 2, 1941, p. 5.
52. .July 17, 1943, p. 369.
53. .October 26, 1941, p. 9.
54. .November 6, 1941, p. 19.
55. .May 23, 1943, p. 319.
56. .June 1, 1943, p. 331.
57. .July 13, 1942, pp. 204-205.
58. .May 28, 1942, p. 153.
59. .May 28, 1942, p. 153.
60. .February 3, 1942, p. 30.
61. .May 28, 1942, p. 151.
62. .May 9, 1942, p. 121.
63. .1943 (undated script), p. 409.
64. .Doob, p. 427.
Labels: Communism, Poets
Subscribe to:
Posts (Atom)
