World on the verge of a nervous breakdown
Capitalism’s ceaseless quest to cut costs made us more jittery in 2011, and there’s no relief in sight.
http://www.salon.com/2011/12/30/world_on_the_verge_of_a_nervous_breakdown/singleton/
I like this part a lot:
…after the great global crash of 2008, traders everywhere are in a state of permanent PTSD.
I hadn’t looked at the markets this way before and I feel this view provides a lot of insight. It seems that better information actually leads to worse decision making. I have read a bit about that before that people make better decisions when they have fewer choices, something that is counter-intuitive in our society today. I guess that with the swamp of data that is flooding the marketplaces (another good quote: “…a story reporting how U.S. stock traders were increasingly setting their alarm clocks for the middle of the night, in order to absorb the latest news from Europe as soon as it started to break…”) people are settling into analysis paralysis, then leaping into action when they perceive the market has made a decision, then, whether that was a good decision or not, dropping back into analysis paralysis until the next panic move by the market. When I was in graduate school I tried to make the argument that Wall Street traders were moving as a herd (a concept greeted with derision by my professor and the other finance majors in the class; I still think I am right), perhaps that was the early stages of what this author was talking about (that was almost 20 years ago, boy do I feel old when I say crap like that!). Of course, if you can predict the movement of the herd then you can make a pile of money and it was my intent, at that time, to try to work on that sort of problem, but I never got around to it (back then I had no idea I wouldn’t be making a living in my chosen profession (biotechnology management)).
I guess volatility is the new norm and we should get used to wild swings in the market. The vast majority of the time it is just moving money from the pocket of one wealthy idiot into the pocket of another, but occasionally there are really large systemic movements that trigger the herd to head toward a cliff (the failure to bail out Lehman Brothers, for instance). Of course, since our government is in the pocket of the morons heading off the cliff you can expect more taxpayer bailouts in order to keep our society from following the idiot traders off the cliff.
