There are still several issues with his 10/25/08 morning column. These issues will be addressed here, as Mr. Harding's email excludes anyone who is not a paying subscriber of his newsletter. That alone is interesting, as many famous people such as Phil Zimmermann, Helen Thomas, Alexander Cockburn, Dr. Michael Hudson and others will respond directly to email inquiries. Joe Kernan, CNBC Squawkbox, will respond while he is actually working a show.
Mr. Harding's point is elusive as, the headlines he uses as examples of a worsening situation over the weekend were merely the headlines that were too late for yesterday's price drop. That may suggest that he has not advised his newsletter reader to buy into the market yet. I don't know about the particular deadlines of the publications he refers to, but I know it was too late yesterday morning to have headline on a story that wasn't even material until 8:00 AM yesterday.
Therefore the headlines of today's paper are characterizing yesterday's situation, not some extension of the problems. Global markets aren't open until open until tomorrow night, US time.
Yesterday:Followed later in the column by...
Markets around the world continued to spiral down a dark hole. It's an ugly day that can end with the Dow down 312 points, 3.6%, and still be greeted with relief that it wasn't much worse.
It will be interesting to see how Asian markets perform tomorrow night. Perhaps that the U.S. market did not totally collapse yesterday will provide some encouragement.
It's difficult to say if Mr. Hardng considers the overseas markets as leading or lagging the US market. He reports that previous overseas results affected yesterday's US market, but then turns around later in his column and speculates whether yesterday's US market will affect tomorrow night's overseas market. It would certainly by representative of a dog chasing its tail if a failed overseas market affected a US market, which affected the next overseas market.
Another oddity of Mr. Harding's article is the mention of some conspiracy to manipulate the US stock market. Mr. Paulson and Mr. Bernanke have never been shy about when they are forcing the market upwards. In that case, some government report comes in surprisingly favorable to the stock market or some major plan to counter the credit crisis is made near an expiration period or at a sensitive time.
They just banned shorts for several days. The US government isn't likely shy about taking action now. They may attempt to affect the markets next week, as any additional routs, such as Mr. Harding seems to expect, may spiral the entire world economy into the land of the lost. It could simply be, that a 45% dive is oversold for the moment. There is also a natural tendency to end all pain quickly, but that likely will not be the case. There was a story on CNBC yesterday about Pimco calling on all hedge funds who were selling to just sell and get it over with, but that's not the reality of markets.
Some investors don't appear to understand the risks this time around. Nothing says the US stock market has to recover after speculators beat it down to what they consider a level which will yield a harsh rally and fast profits. There is such a thing as a run on stock market brokers. It took years to get into a financial mess of world class proportions and it will take years for it to unwind. Actually, if the government and banks were colluding to prevent a disastrous collapse of the stock market, one possibly past hope of recovery, I don't know if I would be pounding the table against their intrusion on a free market. That "free market" has almost strangled the life out of the world.