I know all about the "fat finger". It's why I've never been able to feel comfortable texting. But I never dreamed it would be the culprit for the biggest intraday trade off ever in stocks. This reminded me a lot of the recent Goldman Congressional testimony that morphed into a circus type atmosphere.
There's going to come a point where, to use the popular vernacular, we need to get "real." There are economic laws; and, if we violate these laws, there is a price to pay. In physics, if we throw a brick in the air and stand under it, there will be a consequence. In economics, we've borrowed too much and played too many games with leverage. When the problems manifested themselves in the U.S., we were able to contain them at least for the short-term. Fed Chairman Bernanke, astute student of the 1930s, understood the dike can be plugged temporarily by the federal government guaranteeing everything in sight and printing money like crazy. He is applauded today along with his cohort at Treasury Tim Geithner.
But now the chain of events has extended. The laws are immutable. Now the ability to solve the problem is out of our hands - unless the U.S. is willing to guarantee Greece's debt or take an equity position in its government and other governments in Europe. At this juncture I have to admit nothing would surprise me - but I've said that a lot over the past few years.
The point is that the root of the problem is governments being too free with tax payers' money and making outrageous promises.
At one time I would have argued that the consequences (as John Maynard Keynes labeled it) of the peace settlement after WWI taught a lesson the world would never forget. But time goes by and lessons are forgot. Now, once again, we face a Europe that is imploding. Once again we have been whooping it up in the U.S. as the economic numbers surprise us on the upside. Once again contagion arises.
It is time to get "real".
Thoughts and observations for those investing on their own or contemplating doing it themselves.
If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at http://www.rwinvestmentstrategies.com. If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.
Thursday, May 6, 2010
Subscribe to: Post Comments (Atom)
Post a Comment