The Financialization of America: A Wee Example

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Once a month, at 10 am, the University of Michigan releases its consumer confidence index. But not everyone gets it at the same time. Thomson Reuters pays Michigan a million dollars a year for early access:

Five minutes before that, at 9:55 a.m., the data is distributed on a conference call for Thomson Reuters’ paying clients, who are given certain headline numbers.

But the contract carves out an even more elite group of clients, who subscribe to the “ultra-low latency distribution platform,” or high-speed data feed, offered by Thomson Reuters. Those most elite clients receive the information in a specialized format tailor-made for computer-driven algorithmic trading at 9:54:58.000, according to the terms of the contract. On occasion, they could get the data even earlier—the contract allows for a plus or minus 500 milliseconds margin of error.

Read the whole story for more, but in the meantime just sit back and be amazed at how high-speed trading has changed things. Getting early access to economic information has been important for centuries, and people have always been willing to pay for that early access. In the past, though, getting early access has always required either putting in extra work—for example, paying lookouts for early reports of ships coming into port—or else outright fraud—think Trading Places. But not anymore! This isn’t exactly something that either Michigan or Reuters advertises, but now you just have to pay a fee in order to guarantee that you can take all the ordinary schlubs to the cleaners.

This is a small example of the financialization of America that I posted about yesterday. It has no possible social value, and it doesn’t make credit markets more efficient in any way. It’s just a purely artificial way for the rich to hoover up economic rents, and it’s fully institutionalized and above board. Lovely, isn’t it?

HERE ARE THE FACTS:

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ONE MORE QUICK THING:

Our fall fundraising drive is off to a rough start, and we very much need to raise $250,000 in the next couple of weeks. If you value the journalism you get from Mother Jones, please help us do it with a donation today.

As we wrote over the summer, traffic has been down at Mother Jones and a lot of sites with many people thinking news is less important now that Donald Trump is no longer president. But if you're reading this, you're not one of those people, and we're hoping we can rally support from folks like you who really get why our reporting matters right now. And that's how it's always worked: For 45 years now, a relatively small group of readers (compared to everyone we reach) who pitch in from time to time has allowed Mother Jones to do the type of journalism the moment demands and keep it free for everyone else.

Please pitch in with a donation during our fall fundraising drive if you can. We can't afford to come up short, and there's still a long way to go by November 5.

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