In what has to be one of the most cartoonish examples of crony capitalism rubbing the faces of their victims in the effluvia of their self-created crises in the history of all things financial, the CME Group (NYSE:CME) announced on Thursday a 5 to 1 split of their shares. This behavior is consistent with their announcement of lowering the margin requirements on gold (NYSE:GLD) and oil (AMEX:USO) futures contracts as both actions are akin to airing brand new episodes of the new Muppet Show that the U.S. financial markets have become.
Stocks split to encourage retail investors to buy shares, increase liquidity and make it generally easier for Wall St. to quote stuff, rape, pillage and plunder the very people who make the market in their activities in the first place; the aforementioned Muppets.
Lowering margin requirements has the same effect and if the prices of these two uber-important commodities become politically uncomfortable in price well, the CME group will just change the rules, raise the margin requirements and slaughter the very players that were encouraged to play when the margins were lowered in the first place; again, the aforementioned Muppets.
But, all of that is old news, what is really disgusting is that both CME and Intercontinental Exchange have been deemed Too Big to Fail and hence can go about their business with a direct line to the Federal Reserve’s piggy bank, or more accurately, that of the American people. From GATA via the Wall St. Journal:
Last year regulators finalized rules for how they would use this new power. On Tuesday, they began using it. The Financial Stability Oversight Council secretly voted to proceed toward inducting several derivatives clearinghouses into the too-big-to-fail club. After further review, regulators will make final designations, probably later this year, and will announce publicly the names of institutions deemed systemically important.
We’re told that the clearinghouses of Chicago’s CME Group and Atlanta-based Intercontinental Exchange were voted systemic this week, and rumor has it that the council may even designate London-based LCH.Clearnet as critical to the U.S. financial system.
Have a great weekend all. And, as Jeremy Clarkson is want to say on Top Gear, cue the music.
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