QE ECB: Germany wary of ECB quantitative easing, World Bank warns reforms needed as well

European stock markets were boosted by the European Central Bank’s bond-buying scheme with several share indexes hitting seven-year highs on Thursday.

Banks and car makers were among the best-performer companies as they are likely to benefit from cheap lending rates and a weaker euro.

But the head of the World Bank, Jim Yong Kim, told euronews that on top of the bond purchases, eurozone governments also need to do more to reform their economies.

Referring to the bond buying he said: “This is a tool and it should be used, because the potential to have a self-fulfilling and continuous deflationary cycle was very real. The other half of this is that there’s still not enough to really solve the problems. You know, the countries that are in the most trouble, have to move forward with their reform agenda.

What an opportunity! We have historically low oil prices and now we have a quantitative easing. This is now the time to really jump in.”

Germany was the least enthusiastic with economists, politicians and business leaders there warning this is taking the euro system deeper into unchartered territory.

Hans-Werner Sinn, the head of the influential Ifo economic think-tank, called it “illegal, unsolid state financing by printing money”.

Note EU-Digest: Mario Draghi the ECB Chairman who used to be a Goldman Sachs employee is going on a slippery slope with QE financing - Given Draghi's US related banking experience and link with the Goldman Sachs Financial corporatio - whose financial history is not one of sound and honest practices puts up a lot of red flags.

Read more: Germany wary of ECB quantitative easing, World Bank warns reforms needed as well | euronews, economy

Global Economy: Yes, the stock market is rigged - by Timothy Noah

An entertaining CNBC clip currently rocketing through social media networks shows William O’Brien, president of BATS Global Markets, having conniptions over Michael Lewis’s claim (in his new book, Flash Boys) that the markets are rigged. Now that O’Brien has finished reading Lewis’s book, I recommend that he pick up David W. Maurer’s 1940 classic, The Big Con.

The Big Con (not to be confused with a 2007 book with the same title by journalist Jonathan Chait) is an affectionate catalog of the elaborate confidence games played during the golden age of the grift – a period that began in the late 19th century and ended with the Great Depression. In the book, Maurer describes a big con called “the wire” that will be familiar to anyone who’s ever watched the 1973 movie The Sting (which drew heavily on Maurer’s research):

It was a racing swindle in which the con men convinced the victim that with the connivance of a corrupt Western Union official they could delay the race results long enough for him to place a bet after the race had been run, but before the bookmakers received the results.

In essence, the mark was invited to profit by receiving, illegally, information a few minutes before it was available to anyone else. (What the victim didn’t know was that the Western union office and the gambling den were both fakes.) This is, more or less, what Wall Street’s high-frequency traders and the proliferating exchanges that serve them do: they manipulate the speed at which market information travels so that a lucky few can benefit financially from privileged early access at the expense of everybody else.

They do this not by slowing down the rate at which the information travels, but by speeding it up. In this instance, the acquisition of privileged information is perfectly legal. Also, the privileged access is real, making the dupe not the trader who seeks it but anybody who lacks it.

The rap against Lewis’s book is that he exaggerates the degree to which any of this affects the ordinary investor. And it’s true that any lone day trader who logs onto his E*Trade account expecting to outperform the big institutional investors should have his head examined. But Lewis makes clear in Flash Boys that it took many very intelligent bankers (and consequently many investors) several years to figure out why their computer terminals went blooey when they attempted futures trades. Prices were changing in mid-transaction, seemingly in response to orders they were still keying in. If that isn’t a rigged market, what is?

Lewis’s book describes an insane competition to provide the shortest fiber-optic link to market information (and therefore shave off a few crucial millionths of a second). The process leads to, among other travesties, the drilling of dedicated tunnels through mountains and under rivers in rural Pennsylvania. In Lewis’s view, this arms race can’t be regulated away. His book’s hero, Brad Katsuyama, fights it by creating a new exchange, IEX Group, that slows down all trades sufficiently to put all buyers and sellers on a level playing field.

Perhaps Lewis is right that the market is better-positioned than the government to solve this particular problem, in which case good luck to Katsuyama and anyone who might set up a similarly un-rigged shop. The advent of a market-based “slow investment” movement comparable to the “slow food” movement advocated by Berkeley restaurateur Alice Waters and writer Michael Pollan would certainly be welcome. (Something like it seems to have worked out pretty well for Warren Buffett.)

But Flash Boys, along with Lewis’s previous The Big Short, conveys a larger message that the financial markets, with their “dark pools” and ever-more-abstruse financial instruments, are rapidly losing the transparency necessary for them to work properly – a problem the 2010 Dodd-Frank financial reform legislation only partially addresses. As enthralling as Lewis’s new narrative is, his message that the markets are rigged won’t surprise anyone (except, apparently, the enraged William O’Brien). Financial regulators’ foremost task right now is to drag American finance into the sunlight in every way that it can.

That Wall Street will fight them every step of the way merely confirms how rigged the game really is.

Read more: Yes, the stock market is rigged | MSNBC

Stock Markets Warning: Stocks Will Plunge by 50% this year

t is only a matter of time before the stock market plunges by 50% or more, according to several reputable experts.

“We have no right to be surprised by a severe and imminent stock market crash,” explains Mark Spitznagel, a hedge fund manager who is notorious for his hugely profitable billion-dollar bet on the 2008 crisis. “In fact, we must absolutely expect it."

Unfortunately Spitznagel isn’t alone.

“We are in a gigantic financial asset bubble,” warns Swiss adviser and fund manager Marc Faber. “It could burst any day.”

Faber doesn’t hesitate to put the blame squarely on President Obama’s big government policies and the Federal Reserve’s risky low-rate policies, which, he says, “penalize the income earners, the savers who save, your parents — why should your parents be forced to speculate in stocks and in real estate and everything under the sun?”

Billion-dollar investor Warren Buffett is rumored to be preparing for a crash as well. The “Warren Buffett Indicator,” also known as the “Total-Market-Cap to GDP Ratio,” is breaching sell-alert status and a collapse may happen at any moment.

So with an inevitable crash looming, what are Main Street investors to do?

One option is to sell all your stocks and stuff your money under the mattress, and another option is to risk everything and ride out the storm.

But according to Sean Hyman, founder of Absolute Profits, there is a third option.

“There are specific sectors of the market that are all but guaranteed to perform well during the next few months,” Hyman explains. “Getting out of stocks now could be costly.”

Read more: Warning: Stocks Will Collapse by 50