So there were the bankers cruising along in the sunshine admiring themselves when there was a sudden roaring sound and the ship started to list very badly to one side. Turns out some Greek deck hand had left the car-deck doors open and the sea was pouring in.
800 points down at one point!
I guess that answers the question I asked in the previous post.
The fear that Greece might not be contained, either because Germany doesn’t agree to it, or the Greek people won’t put up with it, or because there is just no longer enough confidence that other European debtors won’t get sucked into the same sink hole – the fear of any of these possibilities was enough to knock the Dow down 800 points.
It is rallying now. But you can bet that is pure intervention. They have been jokingly dubbed the PPT or Plunge Protection Team – the financial world’s Men in Black – the last line of defence. Of course the PPT is no more than some of the Primary dealers using their own or the FED’s cash to intervene and stop market sentiment from doing too much damage. Back to ‘only’ a 350 point, 3.5% drop.
The point, however, is not how much it fell or how much it claws back. the point is that it shows financial stocks particularly, are so fragile and the system of which they are a part, so unstable, that a worry, just a worry, that one country might default is enough to send them ALL over a cliff.
If they were all healthy, well capitalised and their ‘assets’ really worth what they claim they are worth, then their stocks would not have plunged. But they did. Because all the banks are still lying about their ‘assets’, still holding on to and hiding debts. All still using leverage that used to be illegal for the simple reason that it is inherently unstable. So when it looked like someone was going to expose some of those debts, the entire ship started to roll.
This plunge gives the lie to the party line that everything has been dealt with and contained.
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