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Who
knows what might happen if there was no support mechanisms....I dont think the
answer is really that hard to work out. It would be a vicious world...many
firms would go belly up..many people would become unemployed, but life
would go on....there would be enormous short term hardship for those
unprepared. But out of destruction would come new growth...just like after
a fire rages through a forest....capitalism works...support or no
support...
<FONT face=Arial color=#0000ff
size=2>
<FONT face=Arial color=#0000ff
size=2>Adrian
<BLOCKQUOTE
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<FONT
face=Tahoma size=2>-----Original Message-----From: p8
[mailto:pwh112358@xxxxxxxxxxx] Sent: Thursday, 20 November 2003
3:14 PMTo: realtraders@xxxxxxxxxxxxxxxSubject: [RT] Re:
Fed supporting marketThe idea does give a warm and
fuzzy feeling. In reality the so-called free market can't seem
to stay 100% free for a long time without being intervened sooner or later
by the government. The "free" market tends to behave in a
pendulum-like fashion, swinging perpetually from left to right (too much
intervension vs no intervension) and passing that center point only in
a fleeting moment.Could you provide a lasting, real-life example of a
100% free, unadulterated market? -p8 --- In
realtraders@xxxxxxxxxxxxxxx, Code 2 <Code2@xxxx>
wrote:>...<snip>...> > A free and unencumbered
market can do a better job of deciding who should thrive and who
shouldn't....<snip>...> >
> ----- Original Message ----- > From:
Dan Goncharoff > To: realtraders@xxxxxxxxxxxxxxx
> Sent: Wednesday, November 19, 2003 10:44
AM> Subject: Re: [RT] Re: Fed supporting market>
> > Because the purpose of the government is to
ensure that the market exists the next day. That is why liquidity is
provided.> > As you yourself point out, some players
went bankrupt, even a big bank, and survived. As you also point out, the
market stopped functioning, and there was no way to hedge.>
> The specialists with negative balances were deciding to
commit yet more capital, in a situation where they taken significant
losses already, to 'provide a bottom'. How did they know it was the right
decision to buy when they did? They were taking yet more risk, and
could have been wrong.> >
Regards> DanG> > >
> Ira wrote:> > During the Crash of 87
there were futures, the S&P was traded and options> on futures
as well as the OEX. As for being bankrupt, many broker
dealers> on the NYSE as well a market makers on the NASDAQ and on
the options floors> and Specialists were carrying negative
balances. In fact a bank in Chicago> did finally go belly
up. There were many that didn't get the benefit of> that very
favorable government loan treatment and lost millions on that day.>
I personally know of one person that lost $80 million and another who
lost> $20 million in a couple of hours. To lose a million on that
day was no big> trick. There was no way to hedge because
every time you went to hedge they> would stop trading that
item. With unlimited borrowing power many> specialist firms were
allowed to stay in business with negative balances and> provide a
bottom to that market. Options on the OEX that were almost
100> points out of the money were quoted as high as $65 and there
were no> sellers for several hours. What happened to
the American way then? Why> not let those that took the
unlimited risk go the way they should, bankrupt,> and those that
did have limited risk or those that were short reap the full>
benefit of their positions? Once again the government stepped in to
protect> the privileged and the political favoritism goes on.
Will the Fed and Bush> let the Dow go to 5000 in an election
year? How much pressure is placed> upon the Fed by the party
in power? No one really knows except those in> power.
All I can relay is what I have seen happen. The rest is just
guess> work by those trying to find a reason.> To
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