Again, the motive behind all these changes is all too obvious: with the fate of the administration, consumer confidence, and the US economy itself tied in to every tick of the market, the regulators and lawmakers of the US will do anything to destroy any semblance of an efficient market if it makes price drops more difficult. Of course, any deviations from fair value are always be temporary, and the ultimate collapse, when it does occur, will be that much more violent. However, as we have gotten to a point when every single up day in the market counts so that Obama can boast to a naive TV audience what a great job he has done in any given day courtesy of the Dow being up another few points, it appears nobody really cares about an efficient market any longer.
I’m no believer in the efficient market hypothesis, but a stock market openly manipulated by the government to produce big rallies with little chance of declines is a Potemkin and not a real market at all.
Of course, such manipulation inevitably fails, leading to much worse declines in the future. Who benefits the most by all this? Why, the banks, of course. It temporarily boosts the value of their Potemkin assets and allows them to game the system by doing massive short-term trading since the result has been preordained.
Until the wheels come off – again…