Tuesday, December 6, 2016

The Congressional trading pit from the veiwpoint of a US Senator

OK, I am working in the new pit boss for swamp trading.:

import TradingPit as Pit
Pit.boss = CongressionalTrader

Now, consider I execute the above two steps within the cloud of my favorite provider. The items sold are the significant stocks and bonds bought or sold by congressional insiders. The pit boss charges a fee.  How big a fee? OK, start witch a penny (transaction costs zero).

Now we model this as a strictly Huffman coded on price for stocks and bonds market.  One exception, of course, US Congress critters get an income whenever they trade here. The pit boss will order the tree as long as it has cycles on  the graph.

But it is legal, the transactions costs zero, so any congress critter can sell and buy penny stocks, unrelated to legislative business.  But activity on the graph attracts hedgers, congressional income goes up.  The more inside information the swamper reveals, the more he gets paid.  Still, ity is legal.

What happens?

All those boneheads walking around the halls today, in the swamp?  They make the budget work and insider trading is a big part of paying for the Kanosian expenses.

Swampers will do exactly the same job, all the bank execs, Senators, secretaries of  munchkin, the conservatives.  They all do the same job, walk around, make deals, get the interest expense paid.  But they walk the trading pit graph  and are instantly extremely efficient, Coaseian, and fair, actually.  We simply make legitimate the legal; so Schumer doesn't have to sulk around in urine infested alleyways behind the NY Fed.

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