Hi CB,
<<... anticipating the pattern or causing it? Don't suppose it matters as long as it goes the way they are betting.>>
I understand the question and agree with your answer.
The article opens with a comment about traffic patterns and jams ...
<<STOCKMARKET crashes can be like buses: you wait ages for one to come along, then three arrive at once. That has not stopped people from trying to understand why they happen, of course ...>>
There was a MIT (?) study on what causes traffic jams. They used a bunch of duper computers to simulate a whole city, with many of the main streets, shops, schools, work places, services (banks and such), residential locations and all of the highways. They created as many "agents" as there were residents in that city (I want to say Pitsburg, but I do not remember).
It turns out what caused most traffic jams were, in most instances, where a particular driver had to step on the break to decelerate (passing a construction site, gawking, spilled coffee, toll booth, etc). This is perhaps not surprising.
What was surprising, was that the particular knot of traffic jam 'travelled' or 'migrated' or 'translated' further down the highway as time passed, even though the original cause of the jam is no more.
Half an hour past the clearing of the original jam, a major jam will have form much distance before the location of the original jam. As folks drive by what then seemed to be the location of the new jam, there is absolutely nothing to see.
And thus, the often heard "what the heck is going on?".
If the stock market has a similar translate/migrate mechanism, mathmatically speaking, then I believe any shock to the system will cause problems ... thus big crashes follow smaller crashes, historically speaking, for no particular reason.
The system is fragile, interlinked and complicated. Greenspan's spigot work serves to temporarily widen the highway at the immediate point of congestion, but may have other consequences not to our liking.
For 1929, we know a temporary narroring of the highway does not work.
Given the competitive devaluations that is going on now, and the burden of locomotion squarely on the US consumers, and a worldwide widening of the highway, we may see Dow at 36k soon, enough to buy a constant weight in gold.
I simply do not know, and thus the caution and concern.
Chugs, Jay
Chugs, Jay |
