Funny.
The fact is that this little statement proves that whatever response the government comes up with - excepting staying neutral - will simply exacerbate the situation.
They are essentially admitting that they don’t control the financial levers anymore. The world market is so sophisticated and large that we are essentially back to a pre-Fed period where whipsaw responses to the market were much more common.
Had they not shut down the market they actually don’t know what would have happened. They were speculating. It was a real panic (automatic and electronic - maybe), but did shutting it down make it worse or better? What if the market had cleared on Monday?
As bad as the whipsaw could be (it would literally wipe out malinvestment), the market would clear as recognized value and moved in. Sadly, the “stimulus” just continues the hurt. Like getting surgery one cut and one day at a time.
We live in interesting times.
I thought this had been acknowledged since the early '90s. I remember some C-span type presentation I saw around then when some guy was explaining the explosion of the money market, how money had become a commodity in itself rather than representing other commodities. I suppose this has always been true in a way, but his point was the explosion in the amount of money, which seemed in some way to be breaking assumed boundaries.
Sometimes panic over rides logic!
Part of the problem here is that the people in DC are simply not our best and brightest. They are, on the whole, the failures and dregs of society.
In these crisis situations, where high finance is involved, the people in DC are completely without a clue as to what is going on. They have no foundation, no framework of understanding with which to discern who is telling the truth, who is telling a lie and who is merely clueless - and as a result, they’re getting log-rolled by Wall Street.
Now, that’s the normal state of affairs. It has been that way since the founding of our nation.
What is different this time is that neither the Fed, nor regulatory agencies understand the markets they pretend to regulate or supervise. The derivatives markets especially have completely surpassed the understanding and comprehension of the people in DC. We might as well be carrying on a conversation about particle physics theories as discussing finance with these people. If we started talking about Schroedinger’s famous experiment with the cat in the box, they’d fixate on whether we were being cruel to the cat and get on the evening news to excoriate us for being cruel to cats with particle physics experiments.
They would completely miss the point of the “thought experiment.”