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Except for Benjamin Strong's inflation of the money supply in
the 1920s to bail out Great Britain, pre-1933 ... for both stock
markets and currencies..
----- Original Message -----
From: "p8" <pwh112358@xxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Wednesday, November 19, 2003 8:14 PM
Subject: [RT] Re: Fed supporting market
The 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.
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