There Is No Plan

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The Fix is In – The Long and the Short Of Wall Street

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Another bumper day on the Street. The Government bails out another basket case bank. Everything’s right with the world. Hurrah! Yet again, Wall Street proves it’s an utterly amoral, self-interested, club that has nothing whatsoever to do with you and me.

panic on wall street. or not.

panic on wall street. or not.

Massive market volatility, huge gains on the basis of nothing, followed by huge losses and back to gains. Is there a pattern to all this? Not on the surface, at least. The press loves reasons, and tacks on some or other reason for that day’s movements. Recession indicators, new appointment at Treasury, another baby for Angelina and Brad.

But maybe something else is in play too, something mysterious, something very, very fishy.

Traders either go “long” hoping a stock will rise, or they go “short” on borrowed stock hoping the stock will drop and they get to keep the difference on the sale. Long traders and short traders are not in competition, but supposing they were, even in some unspoken way, in collusion. Wall Street traders aren’t known for their mild-mannered approach to business, so could be…

Here’s an example. There are a hundred traders on a floor. Fifty go long, fifty go short. And they work in turns. One day up, another down, Long guys make good on the up day, short guys make good on the long day. The whole floor makes out like gangbusters every day. And the reason? Market volatility.

Economists say volatility is all bad, up or down. They say they don’t understand where the market is going, but in a closed club, where rhythms and patters can be well hidden in the supposed chaos, could any of the volatility be manufactured?

These are the guys who created the ‘toxic junk’, so I for one certainly wouldn’t put it past the boys on the Street to come up with a plan to get their bonuses bouncing again.

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