Iceland DEAD

Anyone here from Iceland?

What the fudge! Things are seriously getting out of proportion in the world nowadays and it's SO sad and unsettling! The oddest part of them all is the gut-wrenching feeling that you can't actually do NOTHING but sit and watch!

The saddest thing is that -as I mentioned earlier- the stock market is a completely irrational, emotional entity, that acts and reacts purely emotionally, without much rationale or eye on the future. That's mainly what is perpetuating this whole mayhem. The very best thing to do would be to close the markets for a long time. A week. Preferably a month.
You see, there really is no stock market problem: it's a BANK problem...and it's very well in hand in Europe and starting to get there in the US (however much some Americans may balk at the perceived "socialism" of the government taking over banks...they should be more worried about a possible Cyberpunk future being realized as Japan is now very keenly buying large chunks of the American economy! ).

Incidentally, Iceland -not a member of the Euro zone, and therefore relatively unprotected- isn't bankrupt yet...officially...but the call to take on a loan from the International Monetary Fund has been huge, and really that's the first thing a bankrupt nation should do. Interestingly though the Iceland government seems to be too proud to do this and instead is now opting for talks with Russia for a loan. Won't that create an interesting political map when all this has blown over?

Anyway. at the end of the day there really isn't all that of a global problem...but these irrational fears on the stocks may still cause it (the hits the industry and technology stocks are taking are proof of this: there is NO reason for this other than fear the stocks may drop in value -which causes masive selling -which causes the stocks to do exactly that. A self-fulfilling prophecy propagated by blind and panicked lemmings.

I'm never talked out.

USA filing for almost formal bankruptcy? No. I can't imagine it happening even with the crisis at hand.

Maybe not a bad idea, that would make the economy less dependant on the stock exchange, which is basically social psychology, from what I see.

If any events occur to affect perception of security prices while share markets close (e.g. general lack of confidence), you'll find prices will adjust pretty immediately on re-opening.

To relate an Australian case...

All short selling (naked and covered, financial and non-financial stocks) was embargoed in Australia two weeks ago under political pressure for a month, in the belief that the capacity to sell short was the main reason share prices were falling across the market. I think we can safely say now that that wasn't the problem, though it would have been obvious to any financial economist at the time that there are many ways in which share prices can experience negative pressure, but the ultimate reason is due to perceived overvaluation.

What exactly with greed?

I didn't knew there was so much money in the world. It somehow appears suddenly, to be used by our governments, tons of billions to save a bank, while saving cheaper problems takes ages.

If there was a run on the banks in this country to withdraw all of our money we'd collapse. A long time ago we were on the gold standard. In fact there was a time that a paper bill said silver certificate and one could actually demand and receive silver for it. There is no backing on our money today.
Thomas

And I didn't suggest it either. Nor did I say that greed had anything to do with it Where did I say that? Or are you just assuming. I did say that if everyone tried to withdraw their money, feeling more comfortable with it under their mattress, we'd collapse or the banks would refuse and accept the consequences.

Why don't these crooks who have made billions on the stock market replace the two trillion dollars that have literally made some on fixed incomes/retired homeless. These people don't drive or have much of anything and the little money they saved has been taken away from them. This is what bothers me. I don't worry about CD's anymore I'm worried about making my co-pay for my drugs and a little food.

Thomas

It is tough. Franz/Micheal just doesn't get it.
Thomas

Are you kidding me, Tom? I'm the one who 'doesn't get it'?

Thanks for the defense, Martijn.

I should note that my defence of 'shorting' is purely for covered shorting, not for so-called naked shorting, the latter of which should be sensibly banned, but which is hard to discern on a trade-by-trade basis. Also I could understand why a ban on shorting financial stocks took place - that was clear - however the Australian government went to the point of banning shorting in all securities, for which there was no precedent, and no clear argument beyond the need to be seen to be doing something. For various reasons, I think the ban was misguided, partly due to the implementation (there are still many ways to effectively do it, if your business depends on it), but also due to my belief that if you don't intervene to prevent to ridiculous escalation of a share price beyond all proportion of company value, intervene to prevent a correct re-evaluation is dubious at best. There's an argument for protecting banks from speculative attacks because of the national interest, but the argument for investment banks is much less obvious. They reaped what they sewed into their balance sheets. Even if short selling doesn't return in 2 weeks to the Australian market - unlikely, given the managed funds will be screaming for it and Macquarie Bank is now in safer waters - there'll be ways to do the same thing with synthetic securities or futures contracts in the meantime and then.