Was Last Week's Market Crash a Direct Attack By Financial Terrorists?

[marmar]

via AlterNet:



Amped Status / By David DeGraw

Was Last Week's Market Crash a Direct Attack By Financial Terrorists?
In a market where 70 percent of all trades are executed by computer algorithms via High Frequency Trading, Goldman Sachs has the power to make the market crash or rise at will.

May 10, 2010 |


Last week, the U.S. stock market suffered the greatest sudden drop in its history, for reasons that nobody on Wall Street can seem to decipher. But of all the explanations being examined—a tech glitch, Greek debt worries and fraud have all been discussed--the most troubling is not being given sufficient attention.

Coming on the very day that Congress considered two key financial reforms, the timing of the "flash crash" raises concerns that Wall Street is resorting to extreme tactics in its efforts to intimidate politicians who want to rein in the capital markets casino. Thursday's market plunge could have been an act of financial terrorism. Wall Street has both the motive and the means: Goldman Sachs, which is currently under investigation for a very different kind of fraud, has the trading power to make just such a market crash occur, and has much to lose from financial reforms moving through Congress.

On Thursday afternoon, the Dow Jones Industrial Average plummeted 700 points in about 10 minutes. A few hours later, top Democratic negotiators reached a compromise with Sen. Bernie Sanders, I-Vermont, over a plan to audit the Federal Reserve's secret bailout operations. The Fed has pumped nearly $4.3 trillion in bailout funds into the banking system since the onset of the crisis, and we know almost nothing about that money. The "Audit The Fed" amendment would finally tell the public the full extent of Wall Street's bailout operations.

Later Thursday night, Congress voted on—and rejected—an amendment that would have forced the break-up of the six largest U.S. financial behemoths into banks that can fail without wrecking the economy. Goldman Sachs would have been one of those six banks. Meanwhile, riots in Greece and inaction from the European Central Bank raised the possibility of major trouble for our financial titans across the pond. ...........(more)

The complete piece is at: http://www.alternet.org/economy/146793/was_last_week%27s_market_crash_a_direct_attack_by_financial_terrorists/

[PDJane]

1. I would be very surprised if it weren't, frankly........

Since the wall street bunch are not capable of long-term thinking. They would do it for the power and the money, and both are strictly amoral.

[liberal N proud]

2. I think it was a money making scheme

Fear drove jittery investors to sell while someone bought it all up and then over the next couple of days turned around and most likely made a profit on it.

[FormerDittoHead]

6. I agree. It set off a bunch of limit orders.

If you annualized the return, buying and selling something for a 4% return in 2 days is a 720% return.

If you ONLY KNEW it was going to happen you would buy something you'd know would certainly go back up (Proctor and Gamble) and be living on a beach somewhere by June, or financing someone's primary...

[elfin]

3. I think so

And have from the first. "Fat Finger", my foot.

At the least, it was a test run to see even further weaknesses in the markets' mechanisms.

[dkf]

4. Banks buy the bonds and use their investment arms to punish governments into making them whole.

I have a strong feeling this is what is going on.

[ixion]

5. Goldman Sachs, thy name is thief and fraud

That they're still in business is a testament to the corruption in government.

[nebenaube]

7. None of the too-big-to-exist are immune to the patriot act.

And clearly, there are enemy combatants in their ranks.

[zipplewrath]

8. Actually, I suspect the opposite

I suspect it was someone that went "too far". It very well could be that market manipulation on a grand scale is happening everyday. However, it is intended to be so subtle that it is undetectable. Very likely what happened here was that someone "over did it" and made the markets over react (with respect to their intentions). Better to make millions every day and not be stopped than to make a billion in one day, and have to shut down.

[Demeter]

9. When 20-Somethings Are Shuffling the World's Finances Around

anything is possible.

I don't think it was an accident, but on the other hand, I think the result exceeded the instigator's expectations.

[zipplewrath]

10. Yes, there's always Occum's corrollary

"Never attribute to intent, that which can be explained by stupidity"

A guy tried to steel an apple, and the whole pile came a tumbling down.

[NorthCarolina]

11. Possibly a warning shot fired to discourage any meaningful Wall St. reform. n/t

[KoKo]

12. Yes...the article lays that out nicely towards the end.

Can it be proven? A more thorough investigation should be done. There are just too many coincidences that have caused revisions in legislation to toughen up regulations.

It's a very interesting article that's getting some Buzz around the financial blogs.

[troubledamerican]

13. Dry test run for the October Surprise