Re: Sensex gets a 542 pt weekend drenching - INDIA COLLAPSING!



On Sun, 29 Jul 2007, BMJ wrote:

Straydog wrote:

<snip>

Herd mentality, understandbly, leads to panics. There have been panic selling streaks all over the world now, and even in China, Indian, Russi, South America, the just halt trading for a period, and wait for people to bail back in.

But more than halting all trading, they can halt sellectively.

That's done to restrict excessive speculation, particularly when critical information is about to be announced. I see that often in the news releases I survey during the trading day.

When
Nelson Bunker Hunt cornered the silver commodity market (and indirectly manipulated all the metals), the commodity trading commission decided to put a stop to this and halted all _buying_, and instantly everyone moved to _selling_ (understandably), and the crash was "allowed" to continue until the prices went into the toilet. Hunt was ruined, and a few banks that backed him up were in deep doo-doo. Quite a few other people were affected, too.

The silver market never really returned to the levels before that all started.

The "background" demand, in industry, for silver (and other metals) actualy does relate to the continuous technical development in the world rather than the sporadic speculation that comes in waves as those who can muster up enough capital to attempt to manipulate the markets, either directly or indirectly. However, I have the feeling that quite a bit of "private equity" is directed at any mission to make money, no matter how its done, and several books I have go into some detail about how these guys use all manner of tricks to "rope in" people on the sidelines to create a "herd mentality" so they can get out with a bundle just as everyone else is coming in with everything in their piggy banks.


(ie. A
type of bank holiday).

"Bank holidays" are meant to stem "runs" on banks and back in the S&L days which are also due to herd mentalities focused on a bank where the rumors are carrying bad news. and, they didn't start doing this as a tool to control disorderly trading until only a few decades ago.

As much as the Fed can be criticised for various things, at least the wisdom of controling bank failures has progressed since the founding of the Fed. During the Great Depression, banks were allowed to go out of business whihc practically everyone agrees was one of the factors that hurt not only our economy but the world economy. Now, if a bank is in trouble, the Fed tries to arrange a shotgun marriage of the bad bank with a healthy bank.






.

Relevant Pages