The technical term for it is "negative feedback loop." The rest of us just call it a panic. How else to explain yet another plunge in the stock market Tuesday that sent the Standard & Poor's 500-stock index to its lowest level in five years -- particularly in the absence of another nasty surprise? If anything, the markets should have been buoyed by the Federal Reserve saying it would shore up another troubled corner of finance by lending money directly to companies. Stocks did open higher, but then quickly tumbled as rumors swirled about the viability of big financial firms like Morgan Stanley and the Royal Bank of Scotland. Anybody searching for cause-and-effect logic in the daily gyrations of the market will be disappointed -- even if the overarching problem of a crisis of confidence in the global economy is now becoming clear.
The technical term for it is "negative feedback loop." The rest of us just call it a panic.
How else to explain yet another plunge in the stock market Tuesday that sent the Standard & Poor's 500-stock index to its lowest level in five years -- particularly in the absence of another nasty surprise?
If anything, the markets should have been buoyed by the Federal Reserve saying it would shore up another troubled corner of finance by lending money directly to companies. Stocks did open higher, but then quickly tumbled as rumors swirled about the viability of big financial firms like Morgan Stanley and the Royal Bank of Scotland.
Anybody searching for cause-and-effect logic in the daily gyrations of the market will be disappointed -- even if the overarching problem of a crisis of confidence in the global economy is now becoming clear.
<sigh>
This is why "the rest of us" should stop writing crap about what's going on and pretending they understand it at all.
(Sorry, I can't type those words without cringing). "The womb that spawned that thing is fertile yet"
As for metaphors, vicious circle is better. A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
