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5/7/10

Fat Finger or Fat Head?


Yesterday's stock market meltdown has been attributed by many to a trader with a "fat finger." We used to use that term on the trading floor when we hit the wrong tele-dialer or direct line key to clients. Sometimes, to a clever sales/trader, it was "accidentally on purpose", a way to start a conversation with someone when nothing was happening on the floor and you needed an excuse to get an order.

And occasionally, it happened for real when entering an order over the electronic order entry system as the then "high tech" equipment was called. But even then, the programs prevented someone from accidentally selling a twenty dollar stock at twenty cents instead.

So yesterday's price action rightfully needs to be examined to find out the cause of the one thousand point decline, the majority of which took only moments to occur.

But there is a larger question here. A media which wants to divert attention away from fundamental problems in the world economy, problems which are so frightening they make the "Nightmare on Elm Street" look like "Beach Blanket Bingo", seems to be trying to make the possible glitch in trading the story instead of the fact that the Dow Jones Industrial Average was already down three hundred and seventy five points or so when the panic began in earnest. And it wasn't the first big decline of the week.

Policies worldwide which are designed to keep the party going instead of correcting mistakes and pressing on, are potentially terrifying going forward. Murderous riots by people in Greece who are aware that they may begin to get less money from those it has been taken from by government (under threat of violence) may spread to the rest of Europe and even here soon.

If so, you ain't seen nothin' yet folks. And that is the reason the markets are "nervous." If your retirement account is ravaged by dropping equity prices, plunging bond prices due to soaring interest rates, and rampant inflation caused by manufactured fiat money, well later, you might be considered to have been a tad Pollyannish if you were under the impression that things were getting better because GM paid back it's government loans with more money borrowed from the government, or employment was up because the federal government hired a lot of census workers.

So it might have been a fat finger, or maybe a lot of fat heads that caused the sell off. As for me, well, I'm just plain old fat.

1 comment:

Wolfgang Sheehy said...

But you still go the best hair on LaSalle Street!!!