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The Dow Zero Insurgency


In April, Zero Hedge began drawing reader attention to weekly trading data issued by the New York Stock Exchange. The reports showed that Goldman Sachs was conducting a highly disproportionate percentage of all the trades on the exchange. This giant footprint, Ivandjiiski suggested, gave Goldman Sachs “unprecedented opportunities to take advantage” of a situation that has a “ ‘very fishy feel’ about it.”

His report reverberated widely. Zero Hedge’s traffic spiked. Goldman Sachs spokesman Ed Canaday felt compelled to respond, calling some of Zero Hedge’s charges “untrue and offensive.” Which of course only inspired Zero Hedge to dig deeper.

Bit by bit, Ivandjiiski pieced together a theory as to how the firm’s dominance of high-frequency computer trading, specifically so-called flash trades, enabled it to see other people’s trades moments before they were executed. Goldman used this information, alleged Ivandjiiski, to jump in and pinch off pennies in the price differences, a practice that he estimated could add up to millions of dollars a day. This, he decided, was how the firm was producing such huge profits so quickly after its near-death experiences in 2008.

Zero Hedge made such a compelling case that mainstream-media reporters started paying attention. Ivandjiiski happily walked journalists through his theories in off-the-record conversations, becoming a trusted resource, especially for reporters at Bloomberg News, which published several stories riffing on Zero Hedge’s pursuits, starting with a July 7 report speculating on the misuses of high-frequency trading following the arrest of Sergey Aleynikov, a former Goldman Sachs computer programmer accused of stealing the firm’s codes. “Goldman Sachs Loses Grip on Its Doomsday Machine,” went a story by Bloomberg columnist Jonathan Weil. Later, Ivandjiiski, using his alias Tyler Durden, was interviewed on Bloomberg Radio.

Ivandjiiski, meanwhile, started peddling a much larger conspiracy—that ever since Robert Rubin ran Goldman Sachs’s arbitrage trading desk in the seventies, the firm and its network of powerful alumni had essentially rigged the market in its favor. If that sounds like something you read in Rolling Stone last July, that’s because Zero Hedge served as a key source for the infamous article on Goldman Sachs written by gonzo journalist Matt Taibbi. “I didn’t understand a word he was saying,” says Taibbi, recalling his first conversations with Ivandjiiski last spring. “I went through the tape-recorded interview trying to decipher it minute by minute.”

Analysts on CNBC mocked Taibbi’s story, but Zero Hedge, of course, loved it, calling it “one of the best comprehensive profiles of Government Sachs done to date. Speaking of GS, they sure must be busy today, now that Bernanke is about to be impeached and take the fall for all their machinations.”

Taibbi, who says he still exchanges e-mails regularly with Ivandjiiski, believes the blog was responsible for the New York Stock Exchange’s decision to alter the way it releases weekly trading data: “Pretty clearly this guy has so pissed off Goldman Sachs they managed to get that rule change about how the data got released, and that’s almost certainly because of Zero Hedge.”

On September 17, the SEC drew up a proposal to ban flash trading, scoring a bona fide victory for Zero Hedge. “He was on the cutting edge of bringing attention to the problems posed by flash trades,” says Brian Fallon, a spokesman for Senator Schumer, “and his writings certainly bring an insider’s perspective to anyone wading through this highly technical issue.”

Conspiracy theories are hot sellers these days, and Goldman Sachs is the new Warren Commission. Following the lead of Zero Hedge, both Michael Moore and Glenn Beck have hit pay dirt by attacking the firm. It’s an attractive target for almost anyone. Blogger Cullen Roche of the Pragmatic Capitalist says that whenever he writes about Goldman Sachs, he sees immediate results. “My traffic automatically shoots through the roof,” he says. “It resonates with people, that sentiment, that frustration with other things that are going on.”

And so it goes with Zero Hedge.

“Something like Zero Hedge, which takes an extremely conspiratorial view of the markets and possible manipulation, is going to happen in part because the world has become more conspiratorial,” says John Carney, who blogs at Clusterstock. “You don’t even need a conspiracy theory to say the most powerful people and the wealthiest people are working together to accomplish their mutual goals.”

Four days after the Times story on high-frequency trading, Zero Hedge re-launched with a sleeker design and more advertising space, adding staff and posting phone numbers to “offices” in London and Zurich. Zero Hedge has seen its page views triple since July. It began selling $37 Zero Hedge T-shirts, modeled by a rumpled hipster in a green camouflage cap. The new logo looks vaguely like a Masonic symbol, and Tyler Durden’s posts now feature the image of Brad Pitt’s pummeled face from Fight Club, a glowering radical.

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