Busts can be very disruptive, especially if the liquidation of collateral causes a sudden compression of credit. The consequences are so unpleasant that strenuous efforts are made to avoid them. The institution of central banking has evolved in a continuing attempt to prevent sudden, catastrophic contractions in credit. Since a panic is hard to arrest once it has started, prevention is best practiced in the expansionary phase. That is why the role of central banks has gradually expanded to include the regulation of the money supply. That is also why organized financial markets regulate the ratio of collateral to credit. Until now, the authorities have been able to prevent a bust. We find ourselves in a twilight zone where the "normal" process of credit expansion culminated long ago but the "normal" process of credit contraction has been prevented by the authorities. We are in uncharted territory because the actions of the authorities have no precedent. The fact that banks and organized financial markets are regulated complicates the Course of events tremendously. Financial history is best interpreted as a reflexive process in which there are two sets of participants instead of one: competitors and regulators. Such a system is much more complex than the case we studied in the stock market. There, the regulatory environment was more or less fixed: it was the backdrop against which the drama was acted out. Here, the regulatory environment is an integral part of the process. Just sayin'
Who needs markets when you have Central Bank Intervention?
- Thread starter The Humble Bunch
- Start date
This isn't the first time this has happened. If you remember the greece debt crisis, Goldman Sachs gave a derivative security bond to greece, only to find out they don't qualify for the Eurozone. The boom bust cycle in the 80s, another government intervened period, well you know how that ended. It's a cycle. We can't help ourselves, they just have to intervene. They diversify their portfolios with foreign securities, issuing more securitized debt and issuance. IT NEVER STOPS!!! so i decided to move in sync with the market.
Is there any respect left for free markets? For allowing prices be based based on... wait for it... SUPPLY and DEMAND?
In a rational and ideal world, yes, but you must know that we don't live in rational times, as markets are heavily manipulated to a point supply and demand does not matter. Human nature does not change, so supply and demand is stood still. What we need to do as traders, is to not trade patterns, rather trade the imbalance between supply and demand that makes these patterns. Accumulation and Distribution levels should be seen closely, as you can find out what MM's are doing to their own books. Shortly, there is some respect left for markets and supply and demand, if you think like a globalist elite. Put yourself into their benign twisted minds, and you'll know what to do. After all, they themselves are humans like you, it just takes a matter of perspective.
rough week huh?
idiot - it's an UP week.
pics or id didn't happen
can you please eleborate. How can it be an up week? You are fully long since beginning of the year.