A drilling platform at the corner of Wall Street and Broadway exploded and sank today with sticky red ink spreading across the land. It is impossible to estimate the damage this will do as it begins to wash up on Main Street. Senator John Kyle of Arizona denied that any Republican in the Senate ever favored more financial drilling, “Some candidate may have had said something two or three years ago like ‘the fundamentals of the economy are sound’ but that was never our policy”.
The real story is nearly as bizarre; it’s been reported that human traders on the floor just stood and watched as the market fell over a thousand points in less than five minutes. There is a circuit breaker that is currently set at the 1050 point decline to suspend computer trading for an hour but there is no admission so far of that happening. Incredibly they are circulating the rumor that this panic was triggered by a futures trader on the Chicago Board of Trade incorrectly selling 16 billion dollars of an exotic instrument instead of 16 million. This seems a bit far fetched, are they really describing a “blow out“? (didn‘t Halliburton cement the trade properly?).
It’s more likely that the USD reaching new highs thanks to Standard & Poors hyping the Greek bond crisis that has triggered margin calls. You see the USD now need to be repaid at a higher rate than when they were invested in a different currency. We do know that Proctor & Gambles and 3M stock fell by half in just five minutes before coming back. With trillions in Fed money on loan to the Wall Street banks at zero interest pumping up world markets through the carry trade, it was only a question of time before panic occurred. Asian markets have experienced steep declines on a daily basis and Europe has been as well with fears over the collapse of the Euro.
The fact that the market “rebounded up” to only 350 points down means little. Wall Street banks could easily drive the market back up before the close as trading would be light unless a full-fledged panic took hold and traders were willing to sell at any price. It is even possible for the Fed and Treasury to pump cash into the market directly in order to intervene and preventing a crash using authority developed after the Reagan market crash. It’s been rumored that there was a lot of this done under Bush to try and hold off another crash until after he left office. You see there really is no free market under capitalism, the capitalists would never stand for it, crashes are okay for the rest of us though. www.prairie2.com