Jamesian Philosophy Refreshed

Continuing our discussion from yesterday about the two government sponsored entities that support the housing mortgage markets known as Fannie and Freddie. Let us be a little more formal about names than we yet have been.  "Fannie [Mae]" is a common nickname derived from the name "Federal National Mortgage Association" founded in 1938. "Freddie [Mac]" is the corresponding brotherly name coming from the "Federal Home Loan Mortgage Association" founded in 1970.  The word "Federal" in each case indicates some connection to the US government, as does the word "sponsored" from "Government Sponsored Entities" when they are called the GSE siblings. The connection to the US Treasury has always been at least implicit -- they were considered too big to fail, so as a matter of psychology anyway their securitizations of mortgages were and are in greater demand than non-sponsored competitors' securitizations.  At any rate, th...

Temasek, an investment company managing Singapore's surplus revenues, has bought a significant stake in a high-tech trading company: that is, 10% of Virtu. Here's what Reuters said about the deal on Sunday . Virtu's CEO is happy about this. "Temasek is an ideal partner for Virtu," etc. Why? Because Virtu is expanding "into new asset classes and geographies." But what comes to my mind is that Virtu is the kind of operation that serves as the missing 'bad guy' in Michael Lewis' book, Flash Boys. Lewis' book plays up the market distortions, the "rigging" of markets in his term, that can be accomplished through contemporary electronic/algorithmic wizardry. When the emphasis is on the speed for the wizardly machinations, this is called "high-frequency trading," though speed itself may not be quite as 'of the essence' as that term suggests. One feature of Lewis' book that many readers found odd was tha...