The events of the past week require comments, but not the comments you're expecting. If you think the whole thing seems absurd, I agree. Some guy sells a billion shares of Procter & Gamble instead of a million, and the whole stock market panics? It doesn't make sense... unless there was already fear and panic in the air, and Mr. Market was dying for an excuse to hit the sell button on thousands of stocks.
First, let me tell you what no one else will tell you about what happened on Thursday.
Nothing bad happened in the stock market last week. The stock market behaved the way it always does. And it did so with brilliant efficiency.
When you enter billions of orders to sell stocks, the market is supposed to tank 8% in 10 minutes. That's how it works. The market instantly balanced an insanely unbalanced set of buy and sell orders. If the market soared last week, nobody would say there was any big problem that required more government interference. But it fell, so everybody says there's something wrong. The efficiency of the markets was on full display last week. The real lesson, the one that won't be reported anywhere, is that markets work. So what?
If anyone tells you I'm wrong about this, take a look at how he makes a living. Most of those who say last week's market action represents some kind of problem will tend to be in the business of offering "solutions." It's easy to look like a magnanimous hero by saying your industry should be more regulated, even though regulation naturally enhances incumbents' already substantial advantage. Voicing support for the government to "do something" is the perfect camouflage for scheming to eliminate or cripple the competition.
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