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Friday, September 19, 2008 10:27 AM

Weep For The Free Market

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Here are some thoughts from a few friends on Minyanville this morning.

Todd Harrison

Bye, Bye Ms. American Pie

This is a historic day for financial markets as the free market system has effectively been put on hold. The implications are profound, not only for the option markets and hedge fund industry, but for the integrity of the system itself. While something needed to be done to avert a market crash, this was a last gasp act of desperation. In many ways, it validates the view that the market would have crashed.

The SKF (proshares ultrashort financials) has been halted down 22%. It'll be real interesting to see how they're gonna mop that one up. They can't simply pretend it's not there and make it disappear. Oh wait, they can. I forgot--they can do whatever they want.

Do I sound bitter? It's not a function of losing money. I respected the magic hat into expiration and discipline saved me. I am profoundly saddened with what we are seeing, however, to a degree that it's probably a good idea for me to hold my tongue until I have an opportunity to digest and synthesize these historic events.

The most curious thing on my screen (which is saying a lot) is the dollar, which I would have expected to be lower on this news.
Professor Jeff Macke
Weep For The Free Market

You can rail against it all you want but, in my experience, fighting a fixed game is something to be done at carnivals; not stock markets.
Professor Bennet Sedacca
The Pain Trade

The Federal Government just declared war on short sellers.
Will it help the real economy? No sir.
Will it help the value of my house? Nope.
Will it blow up hedge funds? Yep.
Is it a selling opportunity? You betcha.
Will the rally last ? No.
Will earnings increase? Actually I think they will fall.

My conclusion? The pain trade, after this burst, is a crash in October. Yes, a crash. I am not talking my book as my firm is delta neutral.

What makes me ill is that folks in the media are the mouth pieces of irresponsible Government officials.

I am sick to my stomach watching Socialism take over. And with that, I head to the Ryder Cup.
Armageddon Postponed

My brief thought of the moment can be found in Armageddon Postponed - Fed Intervenes In Money Markets.

Government manipulation can never prevent financial Armageddon. In fact, government intervention and manipulation in the free markets eventually guarantees financial Armageddon.

Armageddon was not prevented, only delayed, and at taxpayer expense.

Mike "Mish" Shedlock
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