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Back in March 2009 the market wanted to go lower:
click to enlarge
Well at least technically there was one more leg down. But it did not come to pass. Of course based on ‘fundamentals’ at the time markets wanted to jump off the cliff but were held back. With good reason. If governments did not intervened then yes we may have seen another ‘Great Depression’
We have seen once again government propping up – and I talk here of the ‘PIG’ economies of Europe. Well maybe that should be PIIGS – Portugal, Italy, Ireland, Greece and Spain. The markets want to go lower but for the moment probably won’t. Even the really bad news is now acceptable.
When I think of these two examples of rescue plans I contemplate was this ‘artificial intelligence’ or maybe even ‘fuzzy logic’ – with emphasis on the fuzzy bit.
And I contemplate how does the market factor in such extreme tilting of the tiller? Will the markets eventually get there way. When I think of the dire state of many economies world wide and to a lesser extent the housing bubble we see building again in Australia, the excesses of the finance industry I think that the more things change the more they stay the same.
Will there be a day of reckoning?
Enjoy the ride
Tom Scollon
Chief Analyst
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