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Post Info TOPIC: future of (free) markets in U.S.


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future of (free) markets in U.S.



       tt


With the current involvement of govt in the market currently I can only image  the National Restoration Act on steroids will be the new control on markets in the U.S.

As public money is increasingly injected into the market without justification I would imagine the senario of too many dollars chasing too few product giving rise to hyperinflation and forcing the govt to impose massive price controls.

Essentially any product caring the symbol will be guaranteed by government to be frozen in price.

Isn't that like totalitarianism ??

Wow... that's freaky !!

What's so complicated with keeping public money under public control and keeping private money under market control. Shouldn't the two monies stay out of each others business?

confused

-- Edited by NUKE ROCKY44 at 01:36, 2008-10-16

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Bruce Behrhorst


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I think right now the thing that is doing the most damage to the market is, literally: us. The stock market is 'pourposing'--it is undergoing rapid and wide oscillations--it is up 800+ points one day, down 786+ points the next...

These oscillations are driven by panic buying and selling, as people are trying to make back what they lost on their investments...as long as they buy low and try to sell high, the market will continue to dramatically fluctuate. But since so many people are doing exactly the same thing, it has the effect of pumping up these oscillations--so that it has immediate and international consequences throughout the world.

To dampen out these oscillations, they need to remove the pumping mechanism: and that means either a temporary freeze on stock trades, or they need to impose a 'trading filter:' to reduce the coupling of driving forces, they should institute a temporary trade freeze, i.e., once a stock is purchased, then one week must pass before a subsequent sale of that stock can be made. It sounds Draconian in the least, but it is the only way without shutting down the stock market to get some control over what is happening. People need to cool off, calm down, and get clear heads. That is the only way to get these huge oscillations back under control.

Of course I am no stock broker or analyst, but to me, I think in terms of mechanical engineering and systems analysis, and this whole thing looks like what is called in the aerospace industry as "pilot induced oscillation," wherein the aircraft wildly and violently oscillates--usually up and down (pourposing)-- as the pilot puts in sharp and large control commands into the control stick. The aircraft (because of inertia and command delays) lags slightly in its response, so when it does respond it overshoots the pilots intended or desired input, so the pilot jerks the controls the other way. The plane response lags again, and so another control overshoot occurs, this time the other way.

This pilot induced oscillation is hard to diagnose and it can become quickly fatal to plane, pilot, and passengers. The industry identified and fixxed this problem by introducing a special kind of software patch called a "Kahlman Filter" which kind of averages the input commands over a short period of time--it tends to dampen out sharp, high amplitude input commands, so that plane has a more stable response...

I suppose that if the Stock Exchange implemented something like that, where a computer entity would have oversite--and final say--to approve or dissaprove immediate stock transactions based in part on a Kahlman Filter--this could help restore order seamlessly on the market...

Hmmm...I think I'm going to have to do some more research--this sounds like the start of a good idea!

-- Edited by GoogleNaut at 13:40, 2008-10-16

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Good analogy Googlenaut.

I think what you're suggesting is already in place or used before the "circuit breaker"?

"The SEC modified the margin requirements in an attempt to lower the volatility of common stocks, stock options and the futures market. The New York Stock Exchange and the Chicago Mercantile Exchange introduced the concept of a circuit breaker. The circuit breaker halts trading if the Dow declines a prescribed number of points for a prescribed amount of time."

[link]

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Bruce Behrhorst
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