Friday, May 14, 2010

Today's Stock Market (Musical Tribute)

Interest rates plummet as investors seek safety

NEW YORK (AP) -- Treasury prices soared Friday, pushing interest rates lower, as investors sought shelter from the latest market turmoil caused by worries over Europe's economy.

Traders are dumping stocks and other risky assets because of concerns that the deep spending cuts being called for in countries like Greece, Spain and Portugal will slow down a recovery in Europe. The Dow Jones industrial average lost about 170 points and crude oil was down 4 percent.

It's getting a bit out of control. Perhaps fat fingered day traders were using their claws to make lycanthropic disorders on their terminals today.

The S&P 500 closed today at 1,135.68. It might be a while before we can cross the Rubicon and retest the Maginot Line again.


EconomicDisconnect said...

Mark you as always have been proven right once again!

Even in the midst of a gold bull run, what does a man truly need in desperate times? Toilet paper of course!:

Man tweets to get much needed TP. Unreal.

G.H. said...

There was no "fat-fingered" trade.

Last Thursday was an orchestrated event intended to put into place a fear among investors that we need safety stops in the market.

And 'Viola, today we hear that the SEC is imposing a stop-trading command on any stock that trades down more than 10% in five minutes (to go into effect some 30 or 60 days from now.)

In other words, as of now it is virtually impossible to see a true stock market crash on the order of Oct. 29, 1929.

This is an outrage. Where is the stop if the market goes up too fast?

What's telling here is not that .gov feels that these measures are a proper response to last Thursday. Rather just the fact that they feel they must protect the market to the downside proves that a crash (of some form) is imminent.

Stagflationary Mark said...



Stagflationary Mark said...


I don't think it was an orchestrated event. I think it was just competing computer algorithms running wild.

The Stock Market's Feedback Loop

I also don't think the changes will accomplish much. If people and/or computer algorithms wish to panic, then people and/or computer algorithms will panic.

It reminds me a bit of your mother telling you that you need to take a deep breath and count to 10 before you say any more. That advice is often very sound. However, it does not work if you are currently in a smoking building, the fire alarms are going off, and you feel the need to get out, lol.

This is an outrage. Where is the stop if the market goes up too fast?

I would point out that if the market desperately needs more circuit breakers to protect investors from the downside risks right now, then one might infer that there are plenty of downside risks right now!

If I was shorting the market, I'd actually be encouraged to see this behavior. First, it shows that there are risks to the downside. Second, I know that it is a form of price control and price control never works long-term.

Four Thousand Years of Price Control

The case against price controls is not merely an academic exercise, restricted to economics textbooks. There is a four-thousand-year historical record of economic catastrophe after catastrophe caused by price controls.

Just opinions of course!!

G.H. said...

Price controls are the key.

The popular joke today is to refer to GM as "Government Motors."

That does not scratch the surface.


Stagflationary Mark said...



Free market

In social philosophy, a free-market economy is a system for allocating goods within a society: purchasing power mediated by supply and demand within the market determines who gets what and what is produced, rather than the state.

In my opinion, the free markets are trying to give us fewer banks, fewer cars, fewer restaurants, fewer malls, fewer mansions, and so on.

The free markets aren't dumb. They realize that we've sent production overseas and we must at some point live within our own means. If we ultimately do not produce anything, then we ultimately must not consume anything either.

The government thinks it can "control" this process by controlling the symptoms. Good luck on that one!

If a ship is sinking, fixing holes is every bit as important as "bailing" out the water. I see very little hole fixing.

Mark-to-market accounting

On April 9, 2009, FASB issued the official update to FAS 157 that eases the mark-to-market rules when the market is unsteady or inactive. Early adopters were allowed to apply the ruling as of March 15, 2009, and the rest as of June 15, 2009. It was anticipated that these changes could significantly boost banks' statements of earnings and allow them to defer reporting losses.

The ship is sinking. All that water still exists. Rather than admit that even more water is pouring in, let's just redefine water to be powdered water temporarily. Problem solved!

Expect more bailouts though. I think there's another storm brewing.

I bought some powdered water, but I didn't know what to add. - Steven Wright

Nobody does.

EconomicDisconnect said...

In a totally controlled world they would even have the air supply as a commodity!

"Give them the air Cohagen!"

Stagflationary Mark said...


In a totally controlled world they would even have the air supply as a commodity!

Check this out.

Nitrogen tire air station opens in St. Peters

The new nitrogen tire-filling machine is part of a federal stimulus grant the city is using for various environmental projects.


Anzalone's Jeep Grand Cherokee sank as hoses simultaneously let the air out of all four tires. It rose again as a machine attached to a tall green cylinder filled the tires with nitrogen. The machine then deflated and reinflated his tires again under the watchful eyes of Frank McPartland, 20, an intern with the city. The deflation-inflation is done twice to ensure a proper fill.


The process took about 20 minutes, ending with McPartland placing symbolic green valve stem caps on Anzalone's vehicle.

20 minutes?

For now, the free tire-filling service is available by appointment to St. Peters residents only. Darling said city officials are trying to figure out whether they can offer the service to motorists outside the city.

By appointment? Seriously?

Forehead. Desk. Whack.

I have a cheap portable air compressor that works through my car's cigarette lighter. I think I'll just stick with that.