Two black swans crash Wall Street
Posted on 16 April 2010 with 4 comments from readers
News that the SEC is to sue Goldman Sachs sent Wall Street into a tailspin on Friday, while those on the other side of the pond saw half of flights grounded in Europe.
Two black swans in one day reversed stocks out of their recent rally. Is this the beginning of the end? Financials are certainly well rattled by the Goldman Sachs’ news.
But the dust clouds from Iceland that threaten to keep 27,000 flights a day grounded in Europe are arguably a bigger real threat. Who knows how long this will last or whatever unexpected eruptions the volcanoes of Iceland have in store.
We only know that a big problem has emerged and nature does not necessarily know when to stop. This is a natural catastrophe, a real black swan event in Europe.
Not surprisingly the New York business TV networks hardly noticed as the
Goldman Sachs’ story broke. Yet actually this was a day of two black swans and most likely the end of the bear market rally.
4 Comments posted by readers:
I was surprised that the market finished down just over 125 points for such news that had come out. GS is quite well connected and has people deep in congress so I get the feeling this will be brushed aside pretty rapidly.
From what I was told is that we see a mild correction for about 2 weeks and then in the beginning of May we slowly resume our upward Bull run.
yes, GS will probably be fined a few hundred million dollars – but that’s peanuts to them – considering they made more than 10 billion dollars profit last year. even if it is a couple of billion dollars fine (unlikely), GS will still survive and thrive.
then again, GS may not be found guilty at all. GS may be unethical but they are too smart to do anything that is blatantly illegal. the case against GS is quite grayish.
only a war in the middle east (e.g. Israel bombs Iran) can crash this artificial market. artificial because it is manipulated by TPTB.
A little (well, OK a lot) of volcanic ash messed up the entire international air transport system. I just read an article on some ‘green’ web site that claimed that the Pentagon has issued a report that concludes that oil production will no longer be able to meet the global demand, possibly as soon as 2014. I think that may be a bit early, but we shall see how much oil Iraq can produce. The report warns of increasing global instability as chaos begins to set in as the oil price explodes. That won’t be a black swan. It will be a black Quetzalcoatlus.
It will be interesting to see how many planes are parked in 2016, after ticket prices get back to where they were back in the piston engine age. Only this time it won’t be the need to rebuild the engines every 500 hours, but the cost of the fuel, that will cause a lot fewer people to be able to afford to fly. Remember the classic old movies like Hitchcock’s ‘North by Northwest’ (1959) with people travelling on trains? Train travel might be back a lot sooner than many people think. At least trains can now go twice as fast as back then.
In regard to GS, the sharks smell blood. China Daily has reported that the Germans may take action. It might be death by 1000 cuts even GS has connections in Washington