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Source link: http://archive.mises.org/9456/unhinged/

Unhinged

February 17, 2009 by

All this uncertainty and ignorance have left investors and entrepreneurs — the only people who can get us out of this mess — unhinged from the normal parameters with which they operate. The result is inaction and fear, conditions that make the stock market ripe for another crash. FULL ARTICLE

{ 8 comments }

Erik February 17, 2009 at 9:49 am

“Bernanke essentially is asking us to believe that he is MacGyver and that he will get us out of this mess with a clever application of his science using his Swiss army knife.”

LOL classic! Good article Mr. Thornton.

C [the forgotten man] February 17, 2009 at 1:43 pm

“Big government reforms, bailouts, stimulus, and “change” in general create negative expectations of the future along with a great deal of uncertainty. This leads to inaction and fear — the preconditions for a crash in the stock market. All it needs now is the appropriate trigger.”

Terrorists blow up a bridge, hijack a nuclear waste truck, destroy a power grid station, or dump anthrax in the NYC water supply.

The chinese start selling their holdings of T-bills and the dollar crashes worldwide.

The Taliban supporters gain control of Pakistan, because of our meddling their, turning over the nukes to Al-Queda and Iran, who drops their first nuke on Tel Aviv.

Their are infinite scenarios for the trigger.

Ireland February 17, 2009 at 3:43 pm

Coincidentally, DJIA seems to agree with the fine article, at least for today: 7,552.60 (-297.81 / -3.79%).

Bruce Koerber February 17, 2009 at 9:00 pm

Paraphrasing: All we need is a trigger event for the whole thing to collapse.

That is why the U.S. foreign policy is so paranoid. Any rogue nation who dares to say no to the economic terrorists (the unConstitutional coup in the U.S.) can trigger a landslide. It doesn’t even need to be specifically a financial matter either.

Whatever exposes the true weakness of the American empire potentially sends its monetary hegemony into a dollar quicksand. Unable to extricate itself the world will change and rearrange while America is stuck and sinking.

This paranoia makes the U.S. dangerous and militarily on edge. It now has a nervous twitch noticeable to all the world. How sane, how stable is this desperate bully? We are about to find out!

ed February 17, 2009 at 9:44 pm

Has anyone else noticed that ammo and firearm prices are up 30-50% from this time last year. People talk about gold but ammunition may be just as good during times of turmoil. Uncertainty in the market increases the need to feel secure.

ehmoran February 17, 2009 at 10:27 pm

I thinking the crash was a Fed “control burn” meant to siphon money from the markets. Amazing that the biggest losses occurred after the TARP approval and the US budget was balance after the DOT.com crash. Total US revenues were nearly 6 trillion dollars from 1999 to 2001.

Now investors don’t know whether to Short or Buy. If you Short, there’s a good chance that the 30% of Shorts made by Institutionals (like Soros, Buffet, etc., you know, Obama’s advisers) will come out and those just shorting will loose more than they lost with Buys on a falling market.

Seems like with all the bad news, it would be a good time to Short. But remember, inexperienced traders generally Buy at a PEAK. And most exuberance occurs just before a pull back or correction, meaning most anxiety would occur near the Bear Bottom.

What do you guys think? I think were being set up to loose more money on the Short.

Mark Thornton February 18, 2009 at 7:09 am

Yes, today could be key. In technical analysis terms we are at the bottom of a potential double bottom in the stock market which could mean a sharp bear market rally in stocks, or not. That would just mean that the crash would start from a higher level. But that is technical analysis.

The economic analysis is that the Bush-Bernanke-oBama bunch have seriously undermined and destabilized the workings of markets with all their attempts to help the market. Pretty soon we could argue that all the bailout efforts are going to be worse than the original Greenspan-Bernanke Fed housing bubble.

ehmoran February 18, 2009 at 10:37 am

Agreed!

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