Zero Hedge
Encyclopedia
Zero Hedge is an American financial
blog
. It reports on Wall Street
and the financial sector
and is credited with bringing the controversial practice of flash trading
to public attention in 2009 via a series of posts alleging that Goldman Sachs
' access to flash order information allowed the firm to gain unfair profits. The blog is written by a group of people who write under the pseudonym
"Tyler Durden". Though derided by the mainstream press as being fraught with conspiracy theories, the blog grew quickly and has been called a "blog sensation".
book and movie Fight Club
, reflecting the blog's activist posture. Despite speculation that "Tyler Durden" is a pseudonym of Daniel Ivandjiiski, Ivandjiiski denies being a founder of Zero Hedge. Rather, he says he is one of several writers contributing to the site under the pseudonym. In an interview, "Durden" said there were four contributors to Zero Hedge but another contributor says there are up to 40.The other contributor writes elsewhere using the pseudonym "Marla Singer", another character from Fight Club. Contributors have experience in various areas of finance and operations, differing from journalists who become experts about finance as they write about it, but have no practical work experience in the sector. The blog is anonymous to protect the contributors from retaliation for dissident
speech. Durden maintains this protects its integrity, objectivity and independence, as well. Durden cites the First Amendment to the United States Constitution
and a 1995 U.S. Supreme Court case, McIntyre v. Ohio Elections Commission, which upheld anonymity as a right of free speech
.In McIntyre v. Ohio Elections Commission (93-986), 514 U.S. 334, Justice John Paul Stevens
, writing for the majority, stated, "The right to remain anonymous may be abused when it shields fraudulent conduct. But political speech by its nature will sometimes have unpalatable consequences, and, in general, our society accords greater weight to the value of free speech than to the dangers of its misuse."
.
to public attention in 2009 with a series of posts alleging that Goldman Sachs
had access to flash order information, allowing the firm to gain unfair profits. It used New York Stock Exchange
(NYSE) data to detect Goldman's flash trading advantage. The blog contends that Goldman Sachs alumni are at the center of a powerful cabal
and that the solution is "a purifying market crash that leads to the elimination of the big banks altogether and the reinstatement of genuine free-market capitalism" - "Dow Zero." The blog drew the attention of the mainstream financial media and became a source for reporters. Bloomberg News published stories based on Zero Hedge’s blog posts, such as “Goldman Sachs Loses Grip on Its Doomsday Machine,” by columnist Jonathan Weil. The New York Times ran a front-page story on the high-frequency trading
, detailing how it translated into billions of dollars of profit for Goldman Sachs and hedge fund
s. The NYSE has since made a rule change and no longer releases the data used by Zero Hedge.
Matt Taibbi
, author of Griftopia
, cites Zero Hedge in the last chapter as accurately assessing the level of corruption in the banking industry and credits its inside advantage. He questions why the mainstream financial media did not earlier detect the corruption at Goldman Sachs. Taibbi writes:
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
blog
Blog
A blog is a type of website or part of a website supposed to be updated with new content from time to time. Blogs are usually maintained by an individual with regular entries of commentary, descriptions of events, or other material such as graphics or video. Entries are commonly displayed in...
. It reports on Wall Street
Wall Street
Wall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...
and the financial sector
Sector
- Places :* Sector, Devon, a location in the county of Devon in south-western England* Sector, West Virginia, an unincorporated community in Hampshire County, West Virginia, United States of America- In computing :...
and is credited with bringing the controversial practice of flash trading
Flash trading
Flash trading, otherwise known as a flash order is, according to industry trade publication, Traders Magazine, defined as “a marketable order sent to a market center that is not quoting the industry's best price or that cannot fill that order in its entirety...
to public attention in 2009 via a series of posts alleging that Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
' access to flash order information allowed the firm to gain unfair profits. The blog is written by a group of people who write under the pseudonym
Pseudonymity
Pseudonymity is a word derived from pseudonym, meaning 'false name', and anonymity, meaning unknown or undeclared source, describing a state of disguised identity. The pseudonym identifies a holder, that is, one or more human beings who possess but do not disclose their true names...
"Tyler Durden". Though derided by the mainstream press as being fraught with conspiracy theories, the blog grew quickly and has been called a "blog sensation".
Blog profile
Zero Hedge was founded in January 2009. Posts are signed "Tyler Durden," a character in the Chuck PalahniukChuck Palahniuk
Charles Michael "Chuck" Palahniuk is an American transgressional fiction novelist and freelance journalist. He is best known for the award-winning novel Fight Club, which was later made into a film directed by David Fincher and starring Brad Pitt, Edward Norton, and Helena Bonham Carter...
book and movie Fight Club
Fight Club (film)
Fight Club is a 1999 American film based on the 1996 novel of the same name by Chuck Palahniuk. The film was directed by David Fincher and stars Edward Norton, Brad Pitt and Helena Bonham Carter. Norton plays the unnamed protagonist, an "everyman" who is discontented with his white-collar job...
, reflecting the blog's activist posture. Despite speculation that "Tyler Durden" is a pseudonym of Daniel Ivandjiiski, Ivandjiiski denies being a founder of Zero Hedge. Rather, he says he is one of several writers contributing to the site under the pseudonym. In an interview, "Durden" said there were four contributors to Zero Hedge but another contributor says there are up to 40.The other contributor writes elsewhere using the pseudonym "Marla Singer", another character from Fight Club. Contributors have experience in various areas of finance and operations, differing from journalists who become experts about finance as they write about it, but have no practical work experience in the sector. The blog is anonymous to protect the contributors from retaliation for dissident
Dissident
A dissident, broadly defined, is a person who actively challenges an established doctrine, policy, or institution. When dissidents unite for a common cause they often effect a dissident movement....
speech. Durden maintains this protects its integrity, objectivity and independence, as well. Durden cites the First Amendment to the United States Constitution
First Amendment to the United States Constitution
The First Amendment to the United States Constitution is part of the Bill of Rights. The amendment prohibits the making of any law respecting an establishment of religion, impeding the free exercise of religion, abridging the freedom of speech, infringing on the freedom of the press, interfering...
and a 1995 U.S. Supreme Court case, McIntyre v. Ohio Elections Commission, which upheld anonymity as a right of free speech
Freedom of speech
Freedom of speech is the freedom to speak freely without censorship. The term freedom of expression is sometimes used synonymously, but includes any act of seeking, receiving and imparting information or ideas, regardless of the medium used...
.In McIntyre v. Ohio Elections Commission (93-986), 514 U.S. 334, Justice John Paul Stevens
John Paul Stevens
John Paul Stevens served as an Associate Justice of the Supreme Court of the United States from December 19, 1975 until his retirement on June 29, 2010. At the time of his retirement, he was the oldest member of the Court and the third-longest serving justice in the Court's history...
, writing for the majority, stated, "The right to remain anonymous may be abused when it shields fraudulent conduct. But political speech by its nature will sometimes have unpalatable consequences, and, in general, our society accords greater weight to the value of free speech than to the dangers of its misuse."
Readership and influence
By September 2009, Zero Hedge had begun drawing more traffic than more established financial websites with 333,000 unique visitors a month, impressing even those who say the blog is full of conspiracy theory and "apocalyptic world view". Durden says two-thirds of its readers are from Wall Street. Under the name Tyler Durden, Ivandjiiski was interviewed on Bloomberg Radio and Zero Hedge has been quoted in the Columbia Journalism ReviewColumbia Journalism Review
The Columbia Journalism Review is an American magazine for professional journalists published bimonthly by the Columbia University Graduate School of Journalism since 1961....
.
Exposed Goldman Sachs
Zero Hedge is credited with bringing flash tradingFlash trading
Flash trading, otherwise known as a flash order is, according to industry trade publication, Traders Magazine, defined as “a marketable order sent to a market center that is not quoting the industry's best price or that cannot fill that order in its entirety...
to public attention in 2009 with a series of posts alleging that Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
had access to flash order information, allowing the firm to gain unfair profits. It used New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
(NYSE) data to detect Goldman's flash trading advantage. The blog contends that Goldman Sachs alumni are at the center of a powerful cabal
Cabal
A cabal is a group of people united in some close design together, usually to promote their private views and/or interests in a church, state, or other community, often by intrigue...
and that the solution is "a purifying market crash that leads to the elimination of the big banks altogether and the reinstatement of genuine free-market capitalism" - "Dow Zero." The blog drew the attention of the mainstream financial media and became a source for reporters. Bloomberg News published stories based on Zero Hedge’s blog posts, such as “Goldman Sachs Loses Grip on Its Doomsday Machine,” by columnist Jonathan Weil. The New York Times ran a front-page story on the high-frequency trading
High-frequency trading
High-frequency trading is the use of sophisticated technological tools to trade securities like stocks or options, and is typically characterized by several distinguishing features:...
, detailing how it translated into billions of dollars of profit for Goldman Sachs and hedge fund
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
s. The NYSE has since made a rule change and no longer releases the data used by Zero Hedge.
Matt Taibbi
Matt Taibbi
Matthew C. "Matt" Taibbi is an American author and journalist reporting on politics, media, finance, and sports for Rolling Stone and Men's Journal, often in a polemical style. He has also edited and written for The eXile, the New York Press, and The Beast.- Early years :Taibbi grew up in the...
, author of Griftopia
Griftopia
Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America is a 2010 book by the political journalist Matt Taibbi about the events that led to the financial crisis of 2008....
, cites Zero Hedge in the last chapter as accurately assessing the level of corruption in the banking industry and credits its inside advantage. He questions why the mainstream financial media did not earlier detect the corruption at Goldman Sachs. Taibbi writes:
Further reading
- Lawrence Delevingne, "Morgan Stanley May Sue Zero Hedge For Publishing Their Research As Its Own" Business InsiderBusiness InsiderBusiness Insider is a U.S. business/entertainment news website launched in February 2009. Founded by DoubleClick Founder and former C.E.O. Kevin P. Ryan it is the overarching brand beneath which fall the Silicon Alley Insider and Clusterstock verticals...
(January 28, 2010) - Charles Duhigg, "Stock Traders Find Speed Pays, in Milliseconds" The New York Times (July 24, 2009). Retrieved May 12, 2011