I do believe it's the Fed's fault we had a stock market/internet
bubble that popped in 2000, and I also believe it's their
fault we just had a RE bubble that popped in 2005. I think
bubble management is not a way to sound economy, so... I
don't like what the Fed has been doing. As far as liquidity
goes, they are just enablers of easy money, which, yes, gives
profits to the trade. I disagree with you on how computer models
work - most profits, I believe, are made for the market makers
(read "trade") in the options market, at least according to BIS.
These computers definitely work in agreement with the
Black-Scholes options pricing/delta-hedging, with some version
of volativity "smile", and not anything else. As long as there is
abundant liquidity (provided by the Fed), volativity will be
suppressed, and the markets will move higher -g- |
