Ok, please explain this to this poor girl who does not understand the ins and outs of the stock market.
Thank you.
“Ok, please explain this to this poor girl who does not understand the ins and outs of the stock market.”
Basically it’s like this.
The ecomony is headed for a disaster of biblical proportions, real wrath of God type stuff. Fire and brimstone coming down from the skies! Rivers and seas boiling! Forty years of darkness! Earthquakes, volcanoes...
The dead rising from the grave! Human sacrifice, dogs and cats living together... mass hysteria!
The financial markets — US, other countries, stocks, bonds, bank debt, currencies, commodities, and derivatives of all these, including things traded on exchanges and things traded directly between buyers and sellers, are:
1) All very tightly intertwined with each other, and
2) Highly leveraged (i.e. most participants “own” a lot more than they’ve paid for, similar to somebody buying a house with 5% or 20% down).
When a huge player goes under and can’t meet its margin calls (requirement to putting up more money for what they “own” when the market prices goes down), this immediately starts causing problems for everybody else at all points in all markets. This is what the Fed HAD to stop, and they had to stop it before 8PM EST, because that’s when the Asian markets open.
If the Asian markets started tumbling hard, in anticipation of the problems about to hit from Bear failing, that would cause unmet margin calls to start piling up all over the place, and a huge flow of asset sales at fire sale prices to cover margin calls, which would cause further tumbling of asset prices — all before the US markets even opened. All hell woulld have broken loose. Things could still be pretty rough in tomorrow. And there are likely to be more emergencies of this nature in the coming months.