Dark Liquidity

December 30, 2007 § Leave a comment

World map showing inflation, updated for 2009....

Image via Wikipedia

What if “dark liquidity” (off-exchange) crossing platforms were introduced in European economies?

Any investors risk evaluation is a function of counterparty risk. Suppose that counterparties are at risk because of dark book transactions with other dark parties. Those risks would not be included. In this scenario, you can now invest in dark pool transactions that are set up by Banks, trusted parties! A much better deal! Hurray for “free market”! And for economic globalisation! And no information leaks from these pools, which is why they are called “dark pools”. You can be in a very effective “stealth mode”!!!

Dark pool algorithms are designed to trade large orders in liquid globalized “free” markets. Some of the biggest traders on the exchange will also be the bank’s biggest customers in other areas. (Forget about conflict of interests, those are for “softies”, right?)

What flexible “keys” can we discern to protect ourselves?

  • Invest in tangible assets and strategic commodities.
  • Evaluate counter party strength to greater extent. Are they clearinghouse guaranteed, for example? What is the reputation and strength of the clearinghouse?
  • Go Local with trusted parties that you know well. This also aligns with impact of globalisation countermeasures. Globalisation seems to damage to the planet, in terms of perceived unsustainable harm done to the biosphere, as well as perceived human costs. Increased poverty, inequality, injustice and the erosion of traditional culture could very well be the result of the economic transformations related to globalisation.
  • Track likely bank cartel initiated takedowns. When you see one coming, don’t wait. Act.
  • Ask, nay push, for transparency.
  • Stay informed of such dark pools if any. This will be hard for they are “dark”. Find spies if possible! Spread the news, but only if it doesn’t reveal your spies’ identities!

I expanded this somewhat in a follow-up article Is there any way for us to protect ourselves against dark liquidity?

Is there more to this game?

Why is credit inflation separated from currency inflation in the diagram?
Because currency inflation is infinite, while credit inflations have a finite end point, a “break point”.

Looking at the diagram, this is a spiral up, or down, depending on how you look at it. A spiral with a breakpoint.

Is Dark Liquidity real?


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