No, They’re Not Genius Market Manipulators. They’re Drunk Drivers.
Over at Digby’s place, David Atkins points out that these financial Masters of the Universe don’t really know what they’re doing, and are instead lurching from one strategy to another: So in the midst of this giant selloff, where did the masters of the universe decide to put their money? Why, treasuries, of course : Treasury bond yields are plunging to levels seen in the 1950s on concern the two-year recovery in the world’s largest economy is stalling. Yields on benchmark 10-year U.S. notes are about 4.3 percentage points below the average over the past 49 years and almost where they were when President Dwight D. Eisenhower began his administration in 1953. The yield, which dropped to 2.40 percent today in New York, reached a record low of 2.04 percent in December 2008 during the global financial crisis… “It’s signaling a flight to safety,” said Ethan Harris, head of developed-markets economic research at Bank of America Merrill Lynch in New York, on Bloomberg Television’s “Surveillance Midday” with Tom Keene. “Even with the Treasury market as a weakened safe-haven market, it still gets the safe haven money.” The S&P 500 fell 4.8 percent, dropping more than 10 percent drop from its April 29 peak. The MSCI All-Country World Index slid 4.3 percent. Oil plunged 6.2 percent to $86.27 a barrel as all 24 commodities tracked by the S&P GSCI Index declined. Gold futures retreated from a record. Yes, the same treasuries that were supposed to be in horrible trouble because the ratings agencies said America was too far in debt to keep the yield on our treasuries at healthy levels. The same treasuries concern that led to the austerity bill that led to the market drop that led everyone to run to the only safe place left: treasuries. Brilliant. And tomorrow [today] there’s a jobs report coming out, which will no doubt be worse than expected and lead to even more nonsensical selloffs, considering the strong bottom lines of the American companies that have made such a killing precisely by keeping that unemployment rate at high levels. If this is all the work of genius master manipulators, someone will have to explain the evil scheme. What it really looks like is a bunch of greedy fools who can’t see past next quarter’s profit statement and next April’s tax return, and end up swerving all over the political and economic road like the world’s most shortsighted driver. Meanwhile, all the passengers get sick in the back wondering what the next swerve is going to be. The only real question is: when do we take their hands off the wheel?
No, They’re Not Genius Market Manipulators. They’re Drunk Drivers.
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on August 5, 2011. Filed under