In the last hour---really the last half hour--yesterday, the stock market (Dow) went UP several hundred points, aftrer being actually DOWN in the afternoon (ending up 435 points). This was actually proof of a ScIK stock market, where the people on Wlll Street have learned absolutely NOTHING. This is the point I made constantely in 2008 and it is time to make it agian A marmket can be sjust as SICK toing UP as going down, if the way it moes shows that there is no real ratioinality at work at all (external reationality, as distinguished from the interal rationality of high frequency compter trading). Who is STUPID enough to BUY when the Dow is gong up 300 points in 30 minutes, or to SELL when the market is going down 330 pointss in 30 minutes? Machines are that stupid, and the Wall Street peoiple who program them. That is why I call tahe people on Wall Streeet--among otehr reasons--The Stupidest People on Earth.
This Wednesday afternoon the stock market moved DOWN hundreds of pints in the last hour--mainly in the last half hour--ending down 520 points. This was proof, again, of a structuarally SICK sttock market, and of Wass Street people who are truly bonde deep stupid. Noep. This has little to do with"fear". it has everything to do with MACHINES, and momentum trading by computers. Some 70% of market volume is now this machine trading, and individual investores--for good reason--ahave virtually disappeared from the stock market. As stated yesterday by this blog, the stock market is now a computer gaming casions. It was never realy rational, but this computer trading has turned it into a very sick thing.
No, the stock market should NEVER go down 300 pints in an hour, or UP 300 points in an hour. Oh, "never" does not quite mean never. If Lehman Brothers, Bear Searns and AIG fail, you could see a logical reason for a big drop. But even in 2008m, the Dow was gyratig up and down for NO ECONOIMIC REASON--down 700points and up 700 points supposedly about HYPE on POLITICAL events, jsut like some idiots talk about the "politial" reasons for the recent nasty drop in the stock market. Howgwash. It is a SICK market that goes up and down so much, when there has NOT been that much change in real economic events. Even Lehman Brothers and Bear Stearns--their faiures--has a lot to do with diorderly short selling and computer trading, when an orderly market wuould nto have created such panic.
Yes, I do have a partial remedy. BAN SHORT SELLING. What is funny (lest yo cry) is that Wall Streeet--mainly ECONOMIC FASCISTS who no longer believe in free market capitalism--suddenly gets "relligion" when someone talks about restrictions on TEHM. They want freedom to manipulate markets at will. "Puts" and "calls" (options) give ways of "hedging". "Short selling" has become a very anti-social, dangerous thing to allow. In fact, over the hundreds of years that stock markets have beeen in existence, even berfore computeres, MOST "scandals" of market manipulation have involved SHORT SELLING. It is simply too dangerous, and the supposed "liquidity" gained is not worth the downside.
However, theere is something else we could have done (beyond something like a "transaction tax" to imose a cost on high frequency trading--not a real 'tax", although it might raise some revenue, but a way to recognize the hidden COST to stock market participants, and society, of high frequency trading). You may remember that BROKERAGE FEES used to provide a "transaction cost" to stock trades, but now are so cheap that high frequecny trading is just too easy. However, there is something that we could have done to bring home the danger of risky conduct to Wall Street. WE COULD HAVE LET THEM ALL FAIL.
I am serious, and most conservatives agree. It might have meant a steeper economic "crisis" in the SHORT TERM, but we would be ttter off now. NO BAILOUT. Yep. I would not have bailed out AIG, Goldman Sachs, Bank of America, Citigroup, or an y of the rteat. GM? Don't be silly.
What is the result of bailing out Wall Street? They have almost ALL become economic fascists--COUNTING on governmment to bail out their stupidty forever after. Yes, that applies to Big Business as well. This is the WORST part of the bailouts. NO ONE LEARNED. It would have been well worth a momentarily stteper meltdown to avoid sending this messsage. Sending this message has already cost us dearly, and will cost us even more dearly in the future. All of Wall Street and our financial "system" could have crashed--as reallly it was int he prcoess of doing--and the country would have survived. I have extreme doubts that we will ultimately survive the BAILOUTS. The "lesson" we sent is just tooo perverse. We REWARDED bad behavior, and anyone who thinks Wall Street "learned" is just not payig attention, and has not been paying attention. In the crash of the price of oil in the 1980s, EVERY substantial Texas bak FAILED. Texas survived. I can't even express how bad a mistake it was to bail out the people on Wall Street, while still letting the "little guy" (small businesses') faile. "Too big to fail" is one of the most EVIL and destructive concepts of our time.
Have WE (non-Wall Street people) learned? I don't think so. More importantly, I don't think Wall Street thinks so That is why one of the IRRATIONAL reasons for very big stock market moves is WORDS by central bankers and politicians. Wall Street now COUNTS on being "bailed out", and thinks that politicians should let WLL STREET runt he world (arrogant as Wall Street people are, even though the "little people' had to SAVE TEHM for the destruction they so justly deserved). Ben Bernanke--the Worst Failure in the History of World Fianance--says mere WORDS, whcih Wall Street things it is pushing him to say, and Wall Street may have the machines move the stokc markt a thousand points. INSANE. IRRATIONAL. Exactly what6 is it about Bernanke's performance, or any of thsese other central planning economists or politicians, that indicates their WORDS have any economic reality? In fact, what is it that shows that these people hafve any idea what they are doing? 2008? 2011? 2000 (end of tech bubble)? 200--2005 or 2007 (housing bubble)? The FAILURE of Bernanke and Paulson from when they were apporinted in teary 2006 and the final bursting of the housing bubble in 2008? ANY of the "simulus" plans, begining in early 2008 (and really even before that)?
Nope. For markets to move on what bankers, governments, politicians and financial people SAY simply shows that these people are The Stupidest People on Earth (except, perhaps, in making money so long as YOU are willing--stupidly--to bail them out).
None of the recent economic problems were unforeseeable (as this blog identified the looming housing bubble while Bernanke and Paulson were still filling while America burned--as early as 2005-2006 while this blog was still on AOL and I was ommenting on the AOL "Pulse" blog). The Standard and Poors downgrade did not CHANGE any economic items that were not well known. The Eurpose risks have been repeated OVER AND OVER. Yes, the stock market went straight up 9unil recently) on WORDS and the idea of Wall Street that they had fiugred out how to be "partners" in economic fascism. The fact is that we have been in a stock market BUBBLE, where the HYPE, and machine trading, has been based on a rosy template of CENTRAL PLANNERS asserting that they had figured things out. Recvery? Wall Street has basically assumed that" we don't need no stining recovery for you pesants, so long as Ben Bernanke and the politicians of the wrold are taking care of US.'" Bernanke even SAID that one of the major goals of "quantitative easing" (making a real "recovery" impossible) was to SUPPORT THE STOCK MARKET.
I am sorry to hold back on how I really feel, but this is a family blog (sort of).
One thing on which I agree with Jim Cramer (although he, as usual, is not consistent on this when he gets carried away by upward momenum, as a priest of the "Church of What's Happening Now"): Do NOT buy stocks during one of these computer driven rallies when stocks are spiking up, and do not sell stocks during one of these massive daily sell offs. There is no reason for you to join The Stupidest People, and The Stupidest Machines, on Earth. It is BETTER (lathough not necessarily good, or safe) to SELL into irrational rallies, and BUY into irrational droops. The problem, of course is that it is not rally possible to know when the irrational buying or selling is done--a subject on which I cannot really help yo (without endangering your assets).
No proofreading or spell checking (bad eyesight).
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