A Modest Counter-Proposal
A prominent financial professional who wishes to remain anonymous submits the following:
What happened today? The stock market cratered because Obama, like Louis in Casablanca, just discovered that there’s gambling going on in the back room.
Recently there’s been a lot of speculation that the Federal Reserve or the Treasury was the sole buyer of S&P 500 futures thereby boosting the market since March. Imagine a scenario where someone at the Obama administration just discovered after checking that it wasn’t the Fed doing the buying, rather an “informal” group of the top dogs at the prop trading desks at the top three brokerage firms were going long stock futures and short fed funds.
That would explain Obama’s pissed off news conference.
That would also explain why stocks sold off. Imagine what will happen if indeed the buyer were the prop trading desks particularly since leverage works both ways, the good and bad.
If correct, Obama's rhetoric will indeed be much more than mere posturing, and the duel between D.C. and Wall Street should provide for a memorable spectacle for months; alternatively we hear the bulk of AIG folk who were supposed to refund their taxes from last year's March witch hunts still have not done so. Or, much simpler, Perhaps Obama is just worried that American Idol is slipping in its ratings.