Audit Notes: The Swells at CNBC, Quote Stuffing, Austerity for Thee

Barry Ritholtz lays into CNBC this morning for one of those decidedly numbskulled views of the world so many of its journalists seem to have. In this case, they were going on about how awesome layoffs are. Three years into a recession or near-depression, the well-to-do folks on CNBC have got some real nerve.

Here’s Ritholtz paraphrasing Squawk Box on why the approach taken by Germany, which has a dramatically lower jobless rate than we do, is a non-starter:

Not only is the German approach of less layoffs, better sentiment, higher economic activity not worthy of much actual debate, it is actually unAmerican (well yes, because its German). The layoffs in the USA are defended as raising productivity to record levels, and (at least over the short term) enhancing profits. One of the hosts suggest this high level of productivity “Is what makes America great.”

Gee, I always thought it was creativity, entrepreneurship, innovation, risk taking, economic opportunity, and freedom.

Turns out it was productivity enhancing layoffs.

Go figure.


The Wall Street Journal fronts a story reporting that the SEC is investigating whether so-called quote stuffing played a role in the so-called Flash Crash in May.

Quote stuffing is where “unusually large numbers of orders to buy or sell stocks are placed in a fraction of a second, only to be canceled almost immediately.”

This is very interesting:

One thing is clear, say traders and regulators: An eye-popping number of the stock quotes entered in the U.S. market’s exchange system are canceled.

For example, on Feb. 18, trading volume on the Nasdaq exchange totaled about 1.247 billion shares, according to data compiled by T3 Capital Management, a New York hedge fund. However, over the course of the same day traders submitted offers to buy or sell stock for roughly 89.704 billion shares. In other words, only 1% of the orders posted on Nasdaq actually traded.

While a portion of cancellations are part of the natural course of trading, Sean Hendelman, chief executive officer at T3, says he believes most of these canceled stock quotes are from traders loading up a stock’s computerized order book with essentially fake bids and offers.


— Talk about a case study in the perils of Too Big to Fail.

Bloomberg reports on how Ireland’s nationalized Anglo Irish Bank says it needs another $32 billion bailout, “equivalent to about two-thirds of this year’s tax revenue.” One bank!

And of course, the Irish have slashed spending across the country, pushing it further into depression.

The government so far has injected almost 33 billion euros into banks and building societies, with two-thirds of that going to Anglo Irish. It has paid a further 13 billion euros for real- estate loans that were once worth 27.2 billion euros, the agency responsible for the debt said on Aug. 23.

Finance Minister Brian Lenihan started slashing spending in 2008, calming investor concern that Ireland would default on its debts amid the worst recession in the country’s history.

Now, Anglo Irish’s woes are casting doubt over the country’s creditworthiness and reignited calls to turn the nationalized lender over to creditors.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.