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The printing machines must be working at high speed.

According to Galbraith's The Great Crash 1929 at the height of the crash the ticker tape was printing so much that it printed 2 hours late. By the time tape-watchers found out their holdings were being wiped out, they were way too late to react.

On the general situation, the collapse of Lehman signals the end of "organised support" (a stock phrase referring to small investors' hopes that J P Morgan would ride in to save them).

Another recycled comment:

Jerome a Paris:
His view is shared by Larry Summers, the former US Treasury secretary, who wrote in the FT last week: "It is not unreasonable to hope that, in the US at least, the financial crisis will remain in remission."

Some analysts also agree. "Increase risk exposures," JPMorgan advised clients in their latest research. The US stock market is up 8.6 per cent from its March low.

This turn in sentiment is based on the idea that radical action by US authorities has put a floor under the financial system

Holy shit, this sounds like the "organised support" during the crash of 1929.
[On 24 October 1929]

In New York at least the panic was over by noon. At noon the organized support appeared.

At twelve o'clock reporters learned that a meeting was convening at 23 Wall Street at the offices of J. P. Morgan and Company. The word was quickly passed as to who was there -- Charles E. Mitchell, the Chairman of the Board of National City Bank, Albert H. Wiggin, the Chairman of the Chase National Bank, William C. Potter, the President of the Guaranty Trust Company, Seward Prosser, the Chairman of the Bankers Trust Company, and the host, Thomas W. Lamont, the senior partner of Morgan's. According to legend, during the panic of 1907 the elder Morgan had brought to a halt the discussion of whether to save the tottering Trust Company of  America by saying that the place to stop the panic was there. It was stopped. Now, twenty-two years later, that drama was being re-enacted. The elder Morgan was dead. His son was in Europe. But equally determined men were moving in. They were tha nation's most powerful financiers. They had not yet been pilloried and maligned by New Dealers. The very news that they would act would release people from the fear to which they had surrendered.

It did. A decision was quickly reached to pool resources to support the market. The meeting broke up, and Thomas Lamont met the reporters. His manner was described as serious, but his words were reassuring. In what Frederick Lewis Allen later called one of the most remarkable understatements of all time, he told the newspapermen, 'There has been a little distress selling on the Stock Eschange.' He added that this was 'due to a technical condition of the market' rather than any fundamental cause, and told the newsmen that things were 'susceptible to betterment'. The bankers, he let it be known, had decided to better things.

Word had already reached the floor of the Exchange that the bankers were meeting, and the news ticker had spread the magic word afield. Prices firmed at once and started to rise. Then at one-thirty Richard Whitney appeared on the floor and went to the post were steel was traded. Whitney was perhaps the best-known figure on the floor. He was one of the group of men of good background and appropriate education who, in that time, were expected to manage the affairs of the Exchange. Currently he was vice-president of the Exchange, but in the absence of E. H. H. Simmons in Hawaii he was serving as acting president. What was much more important at the moment, he was known as floor trader for Morgan's and, indeed, his older brother was a Morgan partner.

As he made his way through the teeming crowd, Whitney appeared debonair and self-confident -- some later described his manner as jaunty. (His own firm dealt largely in bonds, so it is improbable that he had been much involved in the turmoil of the morning.) At the Steel post he bid 205 for 10,000 shares. This was the price of the last sale, and the current bids were several points lower. In an operation that was totally devoid of normal commercial reticence, he got 200 shares and then left the rest of the order with the specialist. He continued on his way, placing similar orders for fifteen or twenty other stocks.

This was it. The bankers, obviously, had moved in. The moment was electric. Fear vanished, and gave way to concern lest the new advance be missed. Prices boomed upward.

That was a Thursday. The following Monday
At four-thirty in the afternoon the bankers assembled once more at Morgan's, and they remained in session until six-thirty. They were described as taking a philosophical attitude, and they told the press that the situation 'retained hopeful features', although these were not specified. But the statement they released after the meeting made it clear what had been discussed for the two hours. It was no part of the bankers' purpose, the statement said, to maintain any particular level of prices or to protect anyone's profit. Rather the aim was to have an orderly market, one in which offers would be met by bids at some price. The bankers were only concerned that 'air holes' as Mr Lamont dubbed them, did not appear.


... But no one assailed the bankers for letting the people down. There was even some talk that on the next day the market might receive organized support. -- John K. Galbraith in The Great Crash 1929

The "floor under the market" that was put in place in March/April of this year has been removed.

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
by Migeru (migeru at eurotrib dot com) on Mon Sep 15th, 2008 at 06:28:13 AM EST
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