The Elephant in the Stock Pit
(posted by Daniel Koffler)
No doubt about it, the Down Jones picking up points is a lot better than the alternative, but a stock market over a having four separate three-digit swings — three of them over 400 points and one over 500 points — over five consecutive trading days is radically unhealthy.
By the way, a lot of hedge fund traders are making out like bandits right now, but don’t blame them: nobody forced Lehman and Merrill to sell them tens of billions of dollars in protection on loans and bonds whose likely default was glaringly obvious long in advance to everybody who could bother to look up from some fancy Excel pamphleteering to recognize that the result of a crap bond or loan stamped AAA-rated in virtue of being cut up and collateralized along with actually solvent credit instruments is probably not going to be the crap security acquiring solvency by osmosis. (On the other hand, some hedge-fund traders took and are taking the same bath as the i-banking virtuosos, and deservedly so.)