Perspectives on the global economic meltdown (Jan 26 2010)

RoyG · Post by **RoyG** » 19 May 2010 19:44

Neshant wrote:Peter Schiff's illustrated book is out entitled "How an economy grows an why it crashes".

Based on the Austrian school of economics, it exposes the fraud of keynesian economics that the federal reserve is trying hard to keep under wraps with secrecy. The storyline is simple enough for a caveman to follow. It starts off with 3 guys on an island where their only currency is fish.

Check out the fish on the dollar bill below.

I ordered the book a couple days ago. I'm a huge fan.

SwamyG · Post by **SwamyG** » 19 May 2010 19:52

Talking about books. This book amazon link is very good & must read. I liked this better than the Dummies and Idiot series on economics, that are easy too.

Carl_T · Post by **Carl_T** » 19 May 2010 22:44

My favorite one is - Naked Economics: Undressing the Dismal Science by Charles Wheelan.

SwamyG · Post by **SwamyG** » 19 May 2010 23:34

Looking towards the East again, especially the emerging ones.

1) Asia Gains, U.S. Drops in Competitiveness

Western nations dominated the annual ranking of the world's most competitive countries by the IMD business school in Lausanne, Switzerland. Now 5 of the top 10 are from the Asia-Pacific region. Emerging-power China, ranked No. 18, has gained ground, even as No. 3-ranked U.S. and No. 22-ranked Britain slipped in the global pecking order.

"For the first time, we're seeing the creation of a self-sufficient economic block of developing countries," says Stéphane Garelli, director at IMD's World Competitiveness Center and co-author of the World Competitiveness Yearbook 2010. "They have money, markets, technology, and global brands that didn't exist 10 years ago. {Some folks always point out the D&G existed in the 60s, 70s, 80s and forever. The West will not slide; but one has to understand the East is rising so the equations are different now.}"

Such manufacturing giants as China and India are tapping into growing domestic markets,fueled by emerging middle classes eager to spend their renminbi and rupees. {1991 to 2001 was crucial for India, it was the infant years of the liberalized India, we are in the toddler stage, just wait for the preteens and teenager stage.}

2) Korea’s moment in the spotlight

The global economic architecture is undergoing reform of historic dimensions, with profound consequences for many formerly underrepresented nations in the world’s power structure.

These systemic changes reflect two dramatic power shifts in the global economy. The first is a shift toward emerging economies; these nations comprise half the G-20 and are the recipients of almost all the increased positions in the IMF.

The second is a shift toward Asia. There was only one Asian country in the G-7 (Japan) but there are at least five in the G-20 (Japan, China, India, Indonesia and Korea), and seven if Australia and Russia are counted as “Asian”

{Such are the days when Greece might drop out of EU, and Australia routinely gets categorized as Asia, no more Oceania, eh?}

3) Japan emerge as biggest loser in World Bank power shift. This is last months power shift in the World Bank. Japan lost its voting rights by a tenth while China gained big time. Poorer nations get larger role. LoL. Look at the takleef in the headlines. Countries like Brazil, India, Indonesia and Vietnam will also have greater representation. There has been a 3.13% shift towards the developing countries.

paramu · Post by **paramu** » 20 May 2010 00:06

Just be wary of "Asia Rising" kind of reports. When wall street guys flatter you, be careful to check what is being put under your chair. I think Korea is also a ticking bomb, like China, as their debt levels are so high.

SwamyG · Post by **SwamyG** » 20 May 2010 01:11

^^^
It is just not one or two guys or even the Wall Street guys. Do you see the progress being made in our very own Desh? Ha yan Na? Then you connect the dots; and then validate with BRF gurus views.

Muppalla · Post by **Muppalla** » 20 May 2010 01:53

I wish Hari comes out of the caves and mountains to give his commentary

From Ilargi

Not that she's done yet; mind you, this was probably just a first step. She will push hard for her measures to be adopted throughout the EU. Which puts her on a one of a kind collision course with the UK, for one thing. Merkel knows this. She still hasn't lost her marbles, no matter what some pundits say. She wanted the drive the Euro down (check!), and wants to drive it down further still; my guess is in about the $1.10-$1.15 range.

And no, she doesn't have total control over that, but that's not really the point either. To understand why, you need to look at what various parties' thoughts are on global economic prospects. Some of which are quite rosy, while others are not at all. And the bleaker those thoughts, the more important export revenues are in one's vision.

Angela Merkel's vision, though she would hesitate to say so, being a politician and all, is that a strong Euro is what you want in a strong or at least recovering global economy, while a weak economic future makes a weaker Euro the preferred target. All nations today are in deficit (even China, according to some reports), so all need to borrow. The only ways to not get ever deeper into debt are 1) overall economic growth -impossible to control for any one nation, and not very bloody likely- and 2) stimulate your own exports -which decrease the need to borrow (and pay interest)-. The fall of the Euro is a major defeat to President Obama and his goal of doubling US exports in 5 years.

svinayak · Post by **svinayak** » 20 May 2010 03:17

SwamyG wrote:^^^
It is just not one or two guys or even the Wall Street guys. Do you see the progress being made in our very own Desh? Ha yan Na? Then you connect the dots; and then validate with BRF gurus views.

There is progress inside India and some external trade. India's external links are weak and there are many booby traps. War, trade sanctions and global economic collapse/ trade collapse are the many risks. Nothing is guaranteed.

amol.p · Post by **amol.p** » 20 May 2010 09:00

Lets start the morning with some D&G news...

Mortgage Delinquencies, Foreclosures Break Records

More than 10 percent of homeowners had missed at least one mortgage payment in the January-March period, the Mortgage Bankers Association said Wednesday. That's a record high and up from 9.5 percent in the fourth quarter of last year and 9.1 percent a year earlier.
Around 4.3 million homeowners, or about 8 percent of all Americans with a mortgage, are at risk of losing their homes, the trade group's top economist estimates. They have either missed at least three months of payments or are in foreclosure.

http://www.informationclearinghouse.inf ... 5486.htm[b]

Romanians in mass protest over cuts [/b]

Romanian authorities have closed off parts of central Bucharest, the capital, as around 40,000 protesters gathered to demonstrate against drastic spending cuts.
Wednesday's protest marks the first serious test of the six-month-old centrist government's determination to force through austerity measures required to secure more international aid for its recession-hit economy.
Demonstrators included public workers, teachers, doctors, miners and pensioners.

Romania has promised cuts to state wages of 25 per cent and to pensions of 15 per cent as part of an effort to meet International Monetary Fund (IMF) requirements for the release of the next tranche of loans in a $25bn bailout package.

http://english.aljazeera.net/news/europ ... 85825.html

amol.p · Post by **amol.p** » 20 May 2010 10:35

Hedge funds bet $1-tr bailout won’t solve crisis

Managers who made short bets on US subprime securities as the housing market was imploding in 2007 and 2008 see similar opportunities in Europe...........{seems to be a well calculated move...these hedge fund people are going to break down EURO & EU union}

Matrix PVE Global Credit Fund, a € 110 million ($133.9 million) fund run by Gennaro Pucci based in London , gained 19% in April because of bets that Europe’s credit crisis would worsen.

ET Paper

svinayak · Post by **svinayak** » 20 May 2010 12:38

'America has good reason to worry about Greece'
By Clive Crook. Image by Bromley http://tinyurl.com/23ekxy8

'Single currency bloc plays ‘beggar-my-neighbour’' By Martin Wolf
Image by Ingram Pinn http://tinyurl.com/22w9l5y

Neshant · Post by **Neshant** » 20 May 2010 14:26

They have money, markets, technology, and global brands that didn't exist 10 years ago

Maybe China does.

India does not even have a single domestic company that designs & produces cell phones that I'm aware of. Its all based on importing Chinese cell phones into India and renaming/repackaging it.

derkonig · Post by **derkonig** » 20 May 2010 15:41

^^^^
Pray, what are those "global brands" that PRC has? All PRC produces is low quality commoditized junk purely because of its low input costs. Take away that advantage & PRC will be deindustrialized faster than one can say Mao. Heck, already cos are leaving Guangdong for Vietnam. PRC's time in the sun is destined to be shortlived.

abhischekcc · Post by **abhischekcc** » 20 May 2010 16:19

It does not always have to be cell phones.

India has several large, globally recognized companies as well as brands.

Yoga is a brand although no company owns it. So is ayurved, Bollywood, etc.

India has companies across the entire value chain in many industries. (ok, so does China).

But Indian management is superior to Chinese.

Also, Indians do a better job of navigating the global village withput losing their culture.

derkonig · Post by **derkonig** » 20 May 2010 20:41

AoA,
Dow tanks 2% admist massive selloff in Western markets.
http://www.bloomberg.com/apps/news?pid= ... cCts&pos=1

Meanwhile in Soviet Socialist Hispania y Andalucia, commie Zapatero is at his wits end....
http://www.marketwatch.com/story/spains ... genumber=2
Hopefully this crisis will kill socialism worldwide and only let the free markets survive..MaoA

SwamyG · Post by **SwamyG** » 20 May 2010 20:52

Neshant wrote:Maybe China does.
India does not even have a single domestic company that designs & produces cell phones that I'm aware of. Its all based on importing Chinese cell phones into India and renaming/repackaging it.

Access to these are as important, if not more, than making them. In the Indian context thousands who never had access to technology and other innovations now can progress with the access. Does the farmer in Thanjavur care if he gets the latest price on his Chennai manufactured Nokia or a Chinese made cell phone? Unlike the Amirkhan way, where they have outsourced all manufacturing to China, they destroyed something that existed in their country, in the Indian context, they are enabling more people by getting the access to newer tools, techniques, methodologies ityadi. Good and dharmic onlee.

ramana · Post by **ramana** » 21 May 2010 00:54

Someone at work remarked that the Euro going down is taking PRC as a secondary effect for PRC has parked a lot of funds in Euros. Any confirmation?

svinayak · Post by **svinayak** » 21 May 2010 04:03

http://www.theatlantic.com/business/arc ... ege/56821/

Should More People Skip College?
MAY 17 2010, 11:48 AM ET | Comment

How important is college? As most high schoolers graduate this spring, they won't even bother asking this question: getting a degree after college is a no-brainer. So any young adult who gets in generally goes. But a college education isn't all that necessary for many jobs.

Why It's A Problem

Is over-education really a problem? What's so bad about a population with more knowledge than it needs? The problem is the expense and opportunity costs. By plowing more money into an education, many students incur incredible amounts of debt before they ever get their first paycheck, or maybe their parents spend savings that would have helped their retirement. That adds to the nation's debt problems. These young adults would have saved more, and maybe even invested a little in the economy. Instead, any extra money young adults earn often goes towards paying off loans.

Then, there's the opportunity cost of the time spent studying instead of working. At this time, the labor market clearly doesn't need more workers. But in a good economy, these individuals might have been able to add to the gross domestic product sooner and spun their career track forward a few years.

Saying college is valuable for many young adults is an indisputable claim. But saying it's valuable for all -- or even most -- young adults isn't as clear.

Neshant · Post by **Neshant** » 21 May 2010 06:41

Acharya wrote: Saying college is valuable for many young adults is an indisputable claim. But saying it's valuable for all -- or even most -- young adults isn't as clear.

[/quote]

The economy in the west is going to change over the next 15 to 20 years.

Jobs that require little education will continue to move overseas and pay less. Jobs that require hands on but little education will see huge competition and less pay.

The only thing that may buck the trend are public sector jobs which will continue to demand over-sized salaries and pensions disproportionate to their (privatized) market value. Politicians will eagerly increase taxes on the private sector to pay for this until the economy (which is the private sector) crashes and tax revenues evaporate. Then printing will begin to destroy what's left of the savers & producers.

Neshant · Post by **Neshant** » 21 May 2010 07:02

Interesting that little/no effort has been made to investigate the over 1000 point drop in the stock market. Most of the explaination thus far appear to downplay the seriousness of it. I can only conclude the US govt is more interested in covering it up. In any other place, investigating a 1 trillion dollar wipeout would take priority over everything else.

IMO the market is being artificially propped up and the fact that it can erase 1000 points in the span of 10 mins is itself evidence that valuations are bogus.

I'd be extremely wary of Goldman sachs or other companies trying to plant a backdoor system in India's electronic stock exchanges. They have proved themselves apt at gaming the system in the US and milking it, now they have set their sights on India.

India better keep tabs on information flow in stock prices, purchases and sales. Also don't accept any so called 'technology' from some foreign country to improve the stock market. All software should be developed in India itself by the govt. including the encryption.

All transactions should be trackable and any party trying to game the system for an unfair advantage should be given the noose.

-----

India is important to Goldman Sachs: Blankfein
http://timesofindia.indiatimes.com/biz/ ... 955775.cms

Singha · Post by **Singha** » 21 May 2010 08:21

isnt the NSE and BSE partly owned by foreign entities?

Singha · Post by **Singha** » 21 May 2010 09:17

NYT - the stability and cushy pensions hike up demand.

Teachers Facing Weakest Market in Years
By WINNIE HU
Published: May 19, 2010

PELHAM, N.Y. — In the month since Pelham Memorial High School in Westchester County advertised seven teaching jobs, it has been flooded with 3,010 applications from candidates as far away as California. The Port Washington District on Long Island is sorting through 3,620 applications for eight positions — the largest pool the superintendent has seen in his 41-year career.

Even hard-to-fill specialties are no longer so hard to fill. Jericho, N.Y., has 963 people to choose from for five spots in special education, more than twice as many as in past years. In Connecticut, chemistry and physics jobs in Hartford that normally attract no more than 5 candidates have 110 and 51, respectively.

The recession seems to have penetrated a profession long seen as recession-proof. Superintendents, education professors and people seeking work say teachers are facing the worst job market since the Great Depression. Amid state and local budget cuts, cash-poor urban districts like New York City and Los Angeles, which once hired thousands of young people every spring, have taken down the help-wanted signs.

Even upscale suburban districts are preparing for huge levels of layoffs. School officials and union leaders estimate that more than 150,000 teachers nationwide could lose their jobs next year, far more than any other time, including the last major financial crisis of the 1970s.

Juliana Pankow, who just graduated from Teachers College at Columbia University, has sent out 40 résumés since January. A few Saturdays ago, she went to a school in Harlem because she heard the principal would be there (she was invited back to teach a demonstration lesson, but it may be for naught since the city has a hiring freeze). Now, Ms. Pankow said she might have to move back in with her parents in Scarsdale, N.Y., and perhaps take up SAT tutoring.

“I can’t think of anything else I’d rather do,” said Ms. Pankow, 23, as she waited outside the principal’s office at Pelham Memorial last week, among 619 people applying for one English position. “Which is a problem, because I might have to do something else.”

At Teachers College, so many students like Ms. Pankow are looking for work that two recent job fairs attracted a record 650 students and alumni, up from 450 last year. Last month, the college added a job fair focusing on schools in Harlem.

But job postings are down by half this year, to one dozen to two dozen a week, mostly in charter schools, said Marianne Tramelli, the college’s director of career services.

Charter schools, which are publicly financed but independently run, are practically the only ones hiring in New York and elsewhere because of growing enrollments amid expanding political and economic support for school choice. Even so, they do not have nearly enough jobs to go around.

In New York, where the Success Charter Network is hiring 135 teachers for its seven schools in Harlem and the Bronx, some of the 8,453 applicants have called the office three times a day to check on their status. Veteran teachers have also offered to work as assistant teachers.

“It’s heartbreaking — there’s much more desperation out there,” said Eva S. Moskowitz, a former councilwoman who is the network’s founder and chief executive.

KIPP, another charter school network with 82 schools nationwide, has received 745 applications since January at its seven schools in the San Francisco Bay Area, compared with 385 last year.

At the University of Pennsylvania, most of the 90 aspiring teachers who graduated last weekend are jobless. Many had counted on offers from the Philadelphia public schools but had their interviews canceled this month after the district announced a hiring freeze.

“We’re trying to encourage everyone to hold on,” said Kathy Schultz, an education professor at Penn. “But that’s very difficult because students have taken out loans and want to be assured of a job.”

Michigan State University has pushed its 500 teaching graduates to look out of state. As local jobs have dried up, it started an internship program in Chicago, a four-hour drive from campus. Professors now go with students to the annual campus job fair to make sure they do not hover around the Michigan tables, but walk over to, say, North Carolina, Texas or Virginia.

“We have a culture of people wanting to stay here and teach where they went to school, but we also want them to get jobs,” said Suzanne Wilson, the chairwoman of the department of teacher education.

Along with five other former teachers, Jade Stier, 27, finally gave up and enrolled in a nursing program last fall, after three years of looking for an elementary school job. She sent out hundreds of résumés, only to land one interview a year. She settled for working as a substitute teacher, earning $85 a day with no benefits.

“Spending $50,000 for an education you can’t use is really frustrating,” Ms. Stier said. “I definitely miss teaching, but I felt like I had no other choice.”

If there is an upside to the shortage of teaching jobs, it is that schools now have their pick of candidates.

Teach for America, which places graduates from some of the nation’s top colleges in poor schools, has seen applications increase by nearly a third this year to 46,000 — for 4,500 slots. From Ivy League colleges alone, there are 1,688 would-be teachers.

Here in Pelham, a well-regarded district where teaching salaries range from $50,000 to $134,000, high school administrators and teachers have spent recent weeks winnowing applicants’ résumés. Candidates with grade point averages below 3.0 were eliminated (3.3 in some departments), as were those who missed the April 30 application deadline. Almost 200 were invited for interviews.

“It’s very difficult,” said Jeannine Clark, the high school principal in Pelham. “More so than in years past because there are so many very qualified candidates.”

While Ms. Clark and the English supervisor were meeting with prospective teachers last week, candidates for the social studies job were down the hallway typing a 40-minute timed essay on the French Revolution. Upstairs, interviews for physics and biology teachers were being conducted.

“People will come in here begging for anything,” said Dennis R. Lauro Jr., the superintendent, who started closing his office door this year because out-of-work teachers would drop in unannounced to hand him résumés. “We’ve never seen these kinds of numbers before.”

Top candidates will be asked to return several more times to meet with Dr. Lauro, parents and students and to teach a demonstration class.

Ms. Pankow is hoping she will be among them.

“It would be unbelievable,” she said. “I would love it here, but I’m not necessarily putting all my eggs in this basket.”

Murugan · Post by **Murugan** » 21 May 2010 10:29

Around 24 financial institutions and banks own NSE

Foreign institutions' share :
1) Urbana - Canada holds 5% in NSE
2) NYSE Euro Next
3) Goldman Sachs

Singha · Post by **Singha** » 21 May 2010 11:28

BSE owners from a 2008 article.
http://www.businessworld.in/images/stor ... se_big.jpg

benett coleman seem to be a "desi carlyle group" of sorts, with deep political connections and some tentacle in every deal going on.
I wonder if their 1% share was bought on the market or via Treaty?

looks like between nyse, gen atlantic and GS they hold 15% and softbank another 5%. all four will act in western interests/

http://www.nseindia.com/content/press/p ... _nsesh.htm
National Stock Exchange inducts pedigreed foreign institutions as its shareholders

Pursuant to the FDI Policy announced by the Government of India in respect of Foreign Direct Investment in the Indian stock exchanges, five Indian Institutions: IFCI, IL&FS, ICICI, PNB and GIC have entered into an agreement with a global stock exchange and three financial institutions to sell part of their holdings in the National Stock Exchange (NSE). The NYSE Group, General Atlantic, Goldman Sachs and Softbank Asian Infrastructure Fund will each acquire 5% stake in the NSE from the above domestic Institutions.

"We are pleased to welcome the NYSE Group and other new stakeholders in NSE,” said Ravi Narain, MD & CEO of NSE. “In a rapidly integrating world of financial markets, this timely partnership brings together the strengths of institutions from North America, Europe and Asia. This alliance marks a significant milestone for NSE in developing a place for itself in the emerging global scenario. The global financial investors are amongst the most pedigreed institutions in the world, and will contribute to building value in the NSE”.

NYSE Group has a market capitalization of more than USD $15 billion. The operating companies listed on its New York Stock Exchange and NYSE Arca subsidiaries represent a total global market capitalization of $23 trillion. NYSE Group is in the process of merging with Euronext N.V., to create the first truly global financial exchange group. Its proposed investment in the NSE is therefore of significant strategic importance for the Indian stock exchanges and capital markets.

General Atlantic is a leading global private equity firm with $12 billion of capital under management. General Atlantic has extensive experience in the financial services industry and is one of the first global private equity firms to invest in India. Current investments among 50 portfolio companies globally include NYSE Group, NYMEX, Genpact and Patni.

Goldman Sachs is a leading investment bank globally and is a committed partner, leading advisor and practitioner to many of the world's major exchanges. As a stakeholder in the NSE and through its leading experience with exchanges, Goldman Sachs will be an important strategic partner and will contribute to NSE's continued success.

Softbank Asian Infrastructure Fund is a leading Asian private equity firm with over 60 portfolio companies in the region. SAIF Partners will bring its extensive network of Indian as well as international relationships in the financial services sector to the advantage of NSE.

Singha · Post by **Singha** » 21 May 2010 11:37

people might also be surprised to know that HDFC and ICICI banks are not anymore indian banks under the letter of the law.
the majority of shareholding in these banks is now foreign.

http://economictimes.indiatimes.com/new ... 938851.cms

Both ICICI Bank and HDFC Bank have more than 50% foreign investment, which make them foreign banks under the new investment norms. Overseas investors can hold up to 74% in private banks.
............
Seven leading banks, ICICI Bank, HDFC Bank, ING Vysya, Development Credit Bank, Federal Bank, IndusInd Bank and YES Bank, became foreign banks overnight under the new norms.

Murugan · Post by **Murugan** » 21 May 2010 11:54

Are these Indian foreign banks owned by NRIs?

svinayak · Post by **svinayak** » 21 May 2010 12:20

Singha wrote:people might also be surprised to know that HDFC and ICICI banks are not anymore indian banks under the letter of the law.
the majority of shareholding in these banks is now foreign.

Seven leading banks, ICICI Bank, HDFC Bank, ING Vysya, Development Credit Bank, Federal Bank, IndusInd Bank and YES Bank, became foreign banks overnight under the new norms.

They will create a super Bank monopoly which will be instrumental in build global financial link to the rest of the world and control the money supply and interest rate inside India

shyamd · Post by **shyamd** » 21 May 2010 13:12

Neshant, apparently the government investigated it and the fall was normal apparently. No fat fingered freddy or any of that sort.

SwamyG · Post by **SwamyG** » 21 May 2010 18:18

As India looks elsewhere for mineral and energy resources plus investments to energize and sustain its growth, it can throw caution out the window. Since the World is not yet border-less humanity without countries, in my opinion, India should have adequate control over its entities. Learn from the mistakes made by the Western & developed countries, for crying out loud. Naah, they are aping the West.

Neshant · Post by **Neshant** » 21 May 2010 22:03

shyamd wrote:Neshant, apparently the government investigated it and the fall was normal apparently. No fat fingered freddy or any of that sort.

No they didn't. They just put out some press release that they will look into it and post the results on the SEC's website.

There's no such thing as a 'normal' fall of 1000+ points in under 10 minutes with no news making event where stocks valued at $40 can go to $0.01 and then back to $40.

You need to question so called news instead of just consuming it.

paramu · Post by **paramu** » 22 May 2010 00:35

Neshant wrote:You need to question so called news instead of just consuming it.

This is the major mistake many smart people make. They take official statements as absolute truth, while knowing that many official statements are plain lies because they can't tell the truth as it can not contain the damage.

VikramS · Post by **VikramS** » 22 May 2010 04:15

Neshant:

It was a real crash, pure and simple.

Crashes happen when bids disappeared. And bids disappeared that day when the stock market was already down 3-4%. If there are no bids and there is a flood of market orders to sell, you will exhaust all the limit order bids and hit the 1c floor bids some participants put out to profit from lack of liquidity. The situation was even worse with ETFs because the number of market-makers and active participants are smaller than the major stocks. This is one disadvantage of computers. They do not have the human sense not to execute an order at 1c because they have been programmed for execution speed, the best available bid/offer which in this case was 1c.

The market reached its 50 week Moving Average before buyers emerged and bought it back up.

The market reached its 50 week Moving Average before buyers emerged and bought it back up.
http://stockcharts.com/h-sc/ui?s=$SPX&p ... 1441641044

This week it went back and tested that level again.

That is why short-sellers are so important to the functioning of a market. Short-sellers are natural buyers; they have to buy to close their position. After a drop, the first set of buyers who emerge are typically short sellers. Very likely it was the shorts who decided to cover at that technical point which led to the bounce attracting more buyers.

Neshant · Post by **Neshant** » 22 May 2010 11:03

It was a real crash, pure and simple.
Crashes happen when bids disappeared.

No it wasn't.

What do you mean by 'disappeared' ?

Not even microcaps with just a few million in capitalization do that kind of stuff. How can bids disappear all at once and how does a stock go to 0.01 from $40 and back to $40 in 10 mins with no news driving it ? Even after 911, it did not fall 1000+ points and that was a real panic.

It would have been more believable if they had said it was a software glitch on the exchange (which I'm sure they'll come round to saying once no better excuse can be found).

The whole think reeks of rigging and manipulation. I suspect that's how the stock market staged its so called recovery from March, 2009. I also suspect that's why the the govt, which is in on the rigging, hopes everyone forgets about it and swallows the main stream media's explaination which is to say swallows the govt's claim that its normal.

shyam · Post by **shyam** » 22 May 2010 11:28

TIFWIW
Max Keiser Reveals 1000 Point Plunge was Digital Financial Terrorism on Alex Jones Tv 1/5

shyam · Post by **shyam** » 22 May 2010 12:32

Peter Schiff: Stock market, U.S. economy, financial regs, exchange controls

Check out what he says after 5:00, about a request from a foreign broker. It seems some new laws are there that prevents US citizens from investing abroad.

SwamyG · Post by **SwamyG** » 22 May 2010 17:40

paramu wrote:
Neshant wrote:You need to question so called news instead of just consuming it.
This is the major mistake many smart people make. They take official statements as absolute truth, while knowing that many official statements are plain lies because they can't tell the truth as it can not contain the damage.

Some times truth can hurt even more than the lies. It boils down to what and whom the lie is protecting and at what costs.

svinayak · Post by **svinayak** » 22 May 2010 21:45

Is USA heading towards - France of 1789 or Pre Nazi Germany of 1930s?

Another thought provoking article from nakedcapitalism.com - Yves Smith ( author of "Econned')

Excerpts:

"Simon Schama tonight warns in the Financial Times that revolutionary rage is close to the boiling point in Europe and the US : Historians will tell you there is often a time-lag between the onset of economic disaster and the accumulation of social fury. In act one, the shock of a crisis initially triggers fearful disorientation; the rush for political saviours; instinctive responses of self-protection, but not the organised mobilisation of outrage.

Act two is trickier. Objectively, economic conditions might be improving, but perceptions are everything and a breathing space gives room for a dangerously alienated public to take stock of the brutal interruption of their rising expectations. What happened to the march of income, the acquisition of property, the truism that the next generation will live better than the last? The full impact of the overthrow of these assumptions sinks in and engenders a sense of grievance that “Someone Else” must have engineered the common misfortune….At the very least, the survival of a crisis demands ensuring that the fiscal pain is equitably distributed. In the France of 1789, the erstwhile nobility became regular citizens, ended their exemption from the land tax, made a show of abolishing their own privileges, turned in jewellery for the public treasury; while the clergy’s immense estates were auctioned for La Nation.................
==
Severe financial crises result in a permanent decline in the standard of living. For some citizens, that has come through contracts being reneged, in particular, pension cuts. Other people see their savings in tatters and hYves here. Having weakened faith in government and made considerable progress towards creating a social Darwinist paradise of isolated individuals pitted against each other, the oligarchs may be about to harvest a whirlwind.ave no realistic prospect for being able to fund their retirement. And for many of these individuals, the odds of finding continuing, reasonably paid work are low. Even before unemployment soared, people over 40 face poor job prospects. The idea that the middle aged cohort can earn back losses to their nest eggs is wishful thinking. And the young are not much better off. New graduates also face a hostile job market. Worse, students often went into debt to finance their education, believing the mantra that it was an investment.....
==
Unequal societies, in other words, will remain unhealthy societies – and also unhappy societies – no matter how wealthy they become. Their advocates – those who see no reason whatever to curb ever-widening income differentials – have a lot of explaining to do..............
==

Yves here. Having weakened faith in government and made considerable progress towards creating a social Darwinist paradise of isolated individuals pitted against each other, the oligarchs may be about to harvest a whirlwind."

http://www.nakedcapitalism.com/2010/05/ ... pened.html

VikramS · Post by **VikramS** » 23 May 2010 04:53

Neshant wrote:
It was a real crash, pure and simple.
Crashes happen when bids disappeared.
No it wasn't.

What do you mean by 'disappeared' ?

Suppose you are a trader. You see prices falling. You decide to buy. However whenever markets are volatile you always put a stop; especially for the short term traders who use a lot of leverage.

The price falls another 2% and your trading rules force you to sell. So a buyer 2 minutes ago is a seller now. After every trader around is burnt a few times, they decide not to buy until they see signs of price stability.

Suddenly there are no short term buyers who provide most of the liquidity. All the buyers are longer term buyers who have put limit orders way away from the market. In some more thinly traded instruments even the long term buy orders are a few.

However when the price falls it triggers stops and a flood of sell order comes and with very few buy orders, the price keeps on falling. At this time those trades which are designed to execute fast (market orders) will fill at whatever bid is available and in some cases it is 1c. There are no other buyers who were willing to buy then these dummy 1c bids!

The bids finally appeared at a major technical level. This is where what is called the Other Time Frame players come in. OTF are not day-traders. They are buying for longer term. Once there were buyers and price stabilized, other buyers come in and the price continues to go up. Initially traders thought that there might have been a terrorist attack or something else. Once it was clear that it was a technical crash and not based on any news, the price was bid up back as buyers rushed in to get in the big discounts.

Think in terms of an auction. If there are no bids at the opening price the guy auctioning lowers the price. Then one bid appears. As soon as one bid appears, other bid appears and the price starts moving up; often it will end up higher than the opening price where initially no one wanted to buy initially since they were waiting to see if there was a real market (interest by others) in the product.

Not even microcaps with just a few million in capitalization do that kind of stuff. How can bids disappear all at once and how does a stock go to 0.01 from $40 and back to $40 in 10 mins with no news driving it ? Even after 911, it did not fall 1000+ points and that was a real panic.

Welcome to the world where most of the trading is done by computers.

Carl_T · Post by **Carl_T** » 23 May 2010 06:05

How could that work for stocks that have volumes in the millions? There will always be huge numbers of buyers and sellers at any given moment right?

At the same time looking at the graph, what you say it does seem to make sense, because if it had just been a normal sell-off, it would have lasted a lot longer showing a steady decline in value throughout the day, or at least a steep drop with some tapering at the end. Here it was just a spike and back to normal, like Mr Market dividing by zero or something!

shyam · Post by **shyam** » 23 May 2010 06:41

VikramS: Your theory looks fantastic, but it is not backed by volume of trade during that interval. Worst case example of Accenture ~40->0.01->40 should have had a lot of sellers to push it down followed by a lot of buyers to pull it back. We didn't see that.