Why the deafening silence from the left on the stock market chaos?
The sudden drop in market prices looks to me like someone manipulating prices.
Who are the culprits?
The list is practically endless. There are the usual market players in the US: Goldman Sachs, etc., who have proven that they like markets they can manipulate. There are any number of similar groups throughout the capitalist world. Then, there are the Chinese, who may be testing their ability to control markets other than their own.
If there’s one thing that the science of economics has proven, it’s that free markets remain free only through eternal vigilance of those who value freedom. Those who rely on the markets for wealth don’t like freedom at all!
Meanwhile, in the NYT on May 8, M. Durbin reveals that he doesn’t believe free markets should be free! And, he helps develop high speed trading systems! Take a look at this guy! http://www.nytimes.com/2010/05…
Often, when an exchange operator receives an investor order and finds that another exchange has a better price, it will “flash” the order to a few select traders in its exchange a split second before sending it to market, giving those traders an opportunity to improve their price, too.
Two paragraphs later:
We don’t allow trading based on private knowledge of pending business deals or court rulings, and we shouldn’t allow it in high-frequency trading, either.
But, he also says:
But that doesn’t mean we should ban flashing all together.
And:
When used properly, flashing ensures that investors trade at the best available prices.
And:
Because a great number of trades go through middlemen, regulators have no easy way of even knowing who the high-frequency traders are. With millions of trades made every day, this administrative hurdle means traders are essentially anonymous to regulators.
M Durbin, who develops trading systems, thinks insider knowledge is a good thing! But, he starts the article:
We don’t know all the details about the drop, but it was almost certainly the result of computer or human error in a high-speed trading program.
M. DURBIN, HOW THE HELL CAN YOU BE ALMOST CERTAIN THE MARKET DROP IS NOT THE RESULT OF MANIPULATION WHEN YOU KNOW INSIDERS MANIPULATE THE MARKET EVERY DAY?
And, what the hell’s the difference between a few cronies exchanging info for their (and/or their clients’) profit, and the Chinese government putting 1000 people on the job of exchanging info for the profit of the Chinese government? How will you detect their manipulation when you’ve developed a system with manipulation built in from the ground up?
M Durbin would probably spout the right wing line, “Gummints shouldn’t screw people. People should screw people. And, corporations are people, too!”
but I believe what brought it down yesterday specifically wasn’t any sentient activity, like price manipulation. Rather, it has been attributed to a perfect storm in the automatic system for sales execution. Based on what I have heard, it was an accident waiting to happen. The speed and volume of trading is now such that it is impossible to override an error quickly enough to stop a cascade effect on the entire market.
This should serve as a further illustration of how far the stock market has strayed from the original “investment” concept to a model of reactive gambling. It is almost as irrational and potentially dangerous to the overall stability of the country as any intentional cyber-terrorist could ever hope to be.