The Next Market Crash Will Not Be Televised

Tyler Durden's picture

Authored by John Galt via JohnGaltFla.com,

Way, way, way, way back before televisions were generally available in color, cable was a luxury reserved for hotels and the wealthy, and financial television was reserved to Louis Rukeyser and a weekly program on PBS and the “Nightly Business Report”, the idea of information beyond the 6:30 p.m. national newscast was considered absurd.

In fact when the 1987 Market Crash hit live on cable television, it was the quixotic moment which brought financial news out of the shadows and into the forefront.

From that moment forward, long after the great Financial News Network (FNN) was absorbed in a merger with CNBC, financial news broadcasting became a mix of some financial analysis, some real news, and one hell of a lot self-promotion by various financial houses to promote the idea that everyone, even cab drivers, hairdressers, and homeless people just had to be in the stock market.

Then came LTCM in 1998.

Then came the 2000 tech crash.

Then came the 9/11/2001.

Then came the 2008 crash.

And what happened? The parties guilty of bilking individual shareholders got a slap on the wrist. The financial news channels which accepted hundreds of millions of dollars from the financial promoters were never investigated nor prosecuted for potential fraud. And the truly guilty, the banksters and brokers, basically got away with armed robbery with a laugh, a smile, and a tacky commercial promotion in the 6 a.m. hour to urge you to buy a company’s stock or invest in something worse.

This brings my readers to the bit question and a terrifying answer which follows:

WHY will the next market crash not be televised?

Re-watch the FNN video from 1987 above one more time. Pay attention to the interview with legendary investor Paul Tudor Jones and FNN’s Bill Griffith (yes, the one and same CNBC Bill Griffith).

Remember this quote:

“Wall Street uniformly, was, uh, unprepared for this magnitude of a drop”

As America has become complacent and dependent on the technology of mathematicians and hucksters versus experienced financial traders who have warned us about the dot-com bust, the real estate bubble, and other insanity in the past, the risks are up proportionately but the crash is envisioned to occur on television like those in the past. Thirty, twenty, and even ten years ago, that was a realistic prospect where all of us watched the circus unfold live with various annoying television personalities explaining that this was just a “gully” or a “burp” or accident which will self-correct because the Central Bankers said so.

Unfortunately for the average investor and Joe Six-Pack on Main Street, Wall Street has devised a plan to trade in the dark. A methodology using their high speed algorithms which will make the whining of “program selling” in 1987 look foolish so they can engage in trading between the wealthiest of traders which works logically, until all of the clients suddenly scream out into the darkness “No Mas.”

Why is this suddenly a concern?

In the past year the United States has experienced numerous “flash crashes” in its equity, foreign exchange, and commodity markets. The same could be said of individual overseas markets where mini-crashes, much like those in the U.S. system, were dismissed as random “fat finger” trades or computer errors. Yet the system continued to function like it did in 1987 and 2008 but no one ever asked “what happens when all the liquidity is gone” due to the lack of specialists and on the spot providers of liquidity of last resort.

America, Asia, and Europe may well be approaching that moment and the American people will not even be out of bed nor realize that the crash has already happened. Thanks to dark pools, off-market trading operations, and foreign governments providing shields for undocumented exchanges of currency, commodities, and in some case equities (so as to hide stock market purchases by foreign central banks) the crash could be 90% complete before trading even begins at 9:30 a.m. Eastern Time, when most individuals would hope to have a fighting chance to save what is left of their 401K’s or personal portfolios, could even begin to sell their holdings.

This 2014 article from Bloomberg highlights the potential disaster in only a positive, not so much a dangerous light:

Dark pools have a scary name, and to critics they’re scary places: private stock markets housed inside some of Wall Street’s biggest banks. Created to let big investors swap large blocks of shares in secret, they’ve expanded to become a significant part of daily stock trading. More shares now change hands in dark pools than on the New York Stock Exchange.

The graph which accompanied the article above is just as scary:

But don’t worry, the situation was changed as regulators jumped into the fray so as to prevent another 2008, right? Uh, no:

The full report from Cowen which contains the chart above can be read at this link.

From the data above from 2016, it is easy to see that the total volume of the NYSE and NASDAQ combined was far less than the private dark pools and thus provides and advantage to the large financial houses when preparing for or initiating a crash; be it by accident or on purpose. Assuming it was caused by a foreign or domestic political event, or some other irregularity causing an algo driven sell program to start liquidating equities in the pre-market and overnight hours, the American public would be CLUELESS that a crash was already underway unless they were one of the 100,000 or so of us that watch overnight markets via the internet, our personal trading systems, or what remains of financial news online and via cable.

Unfortunately for the American people, the belief is “it is different this time” is being promoted by the hucksters once again. In 1987, it was over three years since a 10% correction had happened; right now we are at 10 years plus and counting for the longest period without a “normal” or substantive equity correction in modern American financial history. Yet when the crash started in October 1987, well, hear it from the lips of the legendary Louis Rukeyser himself:

Watch it again; he did in fact say a weekly loss of 17.5% before the crash on Black Monday. In those days, there were at least hints of a storm gathering yet the lack of internet trading platforms left one re-dialing their brokers in futility and numerous individuals locked out of their stock broker’s offices as the panic accelerated on October 19, 1987. Does anyone think it will be any different this time should such a crash occur and the markets stop trading due to a NYSE trading halt?

This time the crash for the masses will not be on television until it is too late. This time it is truly different as the average person will be so swamped by the liquidation of equities long before the market opens, if it opens, thus leaving the average American family holding the bag. In the end, the government will be forced to swoop in and buy what is left of most portfolios with guarantees from the Federal Reserve and emergency action by Congress to nationalize pension program, IRAs, and 401K’s to prevent retirees from being put out on the street. The average non-retirement based individual shareholder will be lucky to get 30 cents on the dollar if not wiped out completely. At the same time, the banks will be “guaranteed” liquidity to shield against a bank run which would portend much darker economic and political consequences, especially if the stock market and banks fail to open after such an event begins.

In the end, just like 1987, 1998, and 2008, the taxpayer will end up holding the bag. They will never see the crash coming if it takes a few days or a few minutes to occur.

And modern television will cover it much like they did in 2007 and 2008:

After the financial nuclear bomb has already gone off leaving the citizenry as the bag-holders while the banksters retain their ill gotten gains.

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johngaltfla's picture

Thanks for posting this Tyler. Appreciate it.

Beam Me Up Scotty's picture

It won't be televised because it won't happen.  Unless TPTB want it to happen, in which case it WILL be televised.  They can buy evey stock, evey bond, every paper anything to keep the price of that item propped up.  They OWN the printing press, and can create unlimited dollars both printed and digital.  The STAWK market is nothing more than a number.  And thats IT.  If they choose to crash the market, it will be for a reason, and they will sure as hell want the masses to know that reason.

Row Well Number 41's picture

"It won't be televised because it won't happen."

 

So you're saying it is different this time?

The Real Tony's picture

new Beam Me Up Scotty is crazy. Eventually all that will be left in the stock market is the central bankers and NO ONE ELSE. How are the central bankers going to make money trading stocks back and forth amoungst themselves with no one except themselves owning everything? The reason people end up losing their shirt is recency bias and never being able to think ahead because they don't have the background and knowledge to start with so they usually end up coming to the wrong conclusion or conclusions.

Muddy1's picture

It won't be televised, but that's ok.  I get my information from ZH. and Kitco.  That'll keep me close to real time.  Nothing in the markets to cause me direct trouble.  I just want to know when to put on more coffee, or more popcorn.  Should a cyber attack take everything down, well, that's all folks!

HushHushSweet's picture

The sole purpose of the present "to infinity!" market and its multiple simultaneous bubbles is to get EVERYONE involved in the game, from boomers to millenials and even to 12-year-olds trading through proxies. Everyone with any liquidity whatsoever or any access to credit, however modest, is being lured and goaded into investing. Sites like this one play their part as well. And when the very last dime -- whether on credit or not -- has been squeezed from the very last "investor" to join the game, the plug will be pulled, and down they'll all go. All investments will plunge, and the value of all currencies will likewise plummet to near worthlessness.

That's what this "to infinity!" market is all about. It's not based on essentials or any real value; it's based on greed, peer pressure, and suckerdom.

When the right moment comes, it will all go.

The trick, I suppose, is to get out before that moment comes, but I suspect it will come without warning to anyone except the proverbial hands behind the curtain. The article is bang on in stating that it will happen when people have no access to their investments; perhaps this will be due to a world-wide power outage or telecommunications restrictions brought on by global war or global pandemic or some other near-ELE.

If I had any investments, I would get out now. And I would buy land far far away from any city or any military base and as high above sea level as I could get. I would look for a high piece of land that features a cave on the property. And I would set myself up there without telling anyone beyond my most trusted friends and relatives.

Because when the plug is pulled, that's where you're going to want to be.

 

 

The Real Tony's picture

Except all that will be left of the market is the central bankers pumping the market to infinity by trading shares back and forth amoungst themselves like you see in penny stock pumps. No one else except the central bankers will be in the market because everyone has been on to the bankers bullshit for at least the past several years. That's when all the central bankers will finally be arrested when no one except them are left in the market.

allgoodmen's picture

They will not be arrested. You know it, I know it, everybody knows it. But otherwise you are right. Once they have title to all the securities - and it will not be long now - they will pull the plug and the values of everything including their securities will drop precipitously.

Congress will overreact to the EOW scenario by bailing *them* out with *your* money even though you are the victim. Because the alternative is unthinkable. MAYBE one or two of the worst are made examples of, everyone else big bonuses.

They will then snap up all your foreclosed properties with this bailout money and as predicted you will be paying rent on the land your fathers died to keep free.

The Real Tony's picture

new Beam Me Up Scotty is crazy. Eventually all that will be left in the stock market is the central bankers and NO ONE ELSE. How are the central bankers going to make money trading stocks back and forth amoungst themselves with no one except themselves owning everything? The reason people end up losing their shirt is recency bias and never being able to think ahead because they don't have the background and knowledge to start with so they usually end up coming to the wrong conclusion or conclusions.

Bob's picture

Thanks for writing it, johngaltfla!

Dead Canary's picture

My two cents:

If a crash is inevitable (it is) the big players will trigger it. This way they can front run the market. I believe this HAS to happen this way. But like a tsunami, where the tide quietly goes way out before the tidal wave hits, the banks will drop gold and silver. (so when people start buying, the talking heads can say: "Gold closed unchanged for the day")

When silver hits a $14 dollar handle, I'm backing up the truck.

TimmyM's picture

I always like to say "the world is gonna end on an uptick."

Ntoxic8ingWave's picture

Who wouda thunk it? Corporate media telling the lie, and nothing but the whole lie. Better get urself some gold, silver, crypto, guns, food, and tp.

WakeUpPeeeeeople's picture

and the ammo. Don't forget lots of ammo.

tropicthunder's picture

Oh boy, all this crash talk is really giving me a boner...

The problem is that each 300 point decline during the last 5 years ended up being just another buying opportunity.

Why should this time be any different, especially when the FED STANDS READY to intervene and protect all the sheeples 401k scam money in play.

The Real Tony's picture

When something is 100 percent rigged eventually everyone will drop out of the market except the rig artists themselves. They will be the untimate bag holders and the 9 to 5er's can sit back and watch them trade shares back and forth amoungst themselves will no one making a single cent.

Nostradumbass's picture

"eventually everyone will drop out of the market except the rig artists themselves"

If only this were the case. Sadly, pension funds are invested out of necessity to earn that elusive 7%+ annually just to keep afloat. It would be wise to not count too much on any pension funds coming to you as promised. Expect 50% or less and plan accordingly.

cheeseheader's picture

I survived '87 somehow.  Lost the most money the week before.  Watched the following week from Maui.  Luckiest vacation booked in advance evah!  Reminds me of '89...that was a bit hinky too.

silver sword's picture

Let the Revolution begin . . . it's the only final answer

allgoodmen's picture

Anyone can have a heads-up, there are lots of financial apps that will give instant, user-definable alerts of market moves

Of course even with that, in the event of a crash, such alerts will already be too late

Stan522's picture

Define "crash".....

RagaMuffin's picture

amazingly like porn    ;-)

Stan522's picture

Yes, but they've called a 500 point DOW loss a "crash" before.... It's all relative.......

madmike117's picture

This site has taken to calling 1-2% drops in CL or GC as flash crashes. Evidently anytime anything drops at all, even by a miniscule amount, it is a flash crash ohmegerddd...

Stan522's picture

They used to be called "corrections".....

The Real Tony's picture

One day all the circuit breakers are tripped and then the major stock exchanges are closed for 2 weeks to a month with a reopen some 50 to 60 percent ower. Then the market erodes another 20 to 25 percent and then we see decades or scores of sideways movements in the major market indexes. The point all these morons don't get is everything isn't a get rich scheme. They just don't understand the part about the maket indexes moving sideways for at least several decades after the initial set of crashes.

Son of Captain Nemo's picture

Before those circuit breakers shut down for "good" this (http://www.zerohedge.com/news/2017-08-10/black-sky-hazards-feds-wargame-...) will happen which more than likely will be blamed on Russia or China of course for not buying US Ts.... Followed more than likely by a very bright flash of light after this one of these (http://www.zerohedge.com/news/2017-08-10/trump-escalates-war-words-nkore...)...

And then nothing but your "PEACEFUL" "ETERNAL" "REST"!

Just remember that when those two event(s) take place in succession YOU MADE "THE" BED!!!

World citizen's picture

Drawing a parallel between 1987 and 2017 is... missing the words...

Bullshit, maybe?

LMAO!!!!

The Cooler King's picture

Yeah I don't think Miley Cyrus was even born yet... FFS ~ "Achey Breaky Heart" didn't even get relaeased until a few years after...

 

Then, AL GORE invented the internet and instead of having flying cars, we have that mullet sportin' hillbilly's daughter usin it to show her tatooed coochie all over it every chance she gets for no other purpose than to get 'LIKES' from a guys website that needs to be tossed down the well.

MrSteve's picture

The parallel between 1987 and 2017 is 30 years of the same shit; new flies syndrome. You're right though, it could be bullshit. Bullshit talks and money walks. So should we just walk away?

The Real Tony's picture

Only the central bankers know what is going to happen and remember they can make a lot of money on the way down. Shouldn't this make you feel like a pawn on a chessboard? The central bankers will coin the phrase "the stock market is where the most amount of people can lose the most amount of money".

HRH Feant2's picture

This reminds me of 2000. Stupid internet companies. Heck, watching that old FNN newsfeed was great! I watch Utubers that regularly produce high quality videos on various topics (with better graphics).

Snap, Blue Apron, et al, are already jokes.

As far as the cryptos, I am fine with BTC, Ether, LTC. Some of the ICOs for tokens are obvious Ponzi schemes that won't stop until the SEC locks up some of the scammers.

Bam_Man's picture

I remember watching Wall Street Week the Friday evening after "Black Monday" in 1987.

Rukeyser and his panel of guests (IIRC Marty Zweig, Mary Farrell and Michael Holland??) mentioned the Federal Reserve exactly ONCE in the entire broadcast.

Imagine that happening today. I can't.

 

RagaMuffin's picture

Remember what Zeig said the Friday before Black Monday?

RagaMuffin's picture

Remember what Zeig said the Friday before Black Monday?

Bam_Man's picture

Yup.

He said he was "nervous".

RagaMuffin's picture

And  said a crash on Monday....

Bam_Man's picture

No, I think he just said he was "Nervous about what could happen Monday", so he did not really get credit for "calling the crash", even though he was correct.

Elaine Garzarelli of Shearson Lehman actually "called it", but that was the only time she was ever right in making a major market call.

Tarzan's picture

All I remember from that day, being a simple young man, is being bewildered why "smart" men in suits were jumping out of windows?

RagaMuffin's picture

Appear to have the hicups, sorry

 

stocktivity's picture

Here's Wall Street Week - After the crash. This will bring some memories back for old timers here.  3 parts-

https://www.youtube.com/watch?v=XFn1G2goDQw

https://www.youtube.com/watch?v=Lm_4j-_Dnwc

https://www.youtube.com/watch?v=o_fxEoF8Vl8

Nostradumbass's picture

Nice visit back to the past - thanks...

Tarzan's picture

Just today overheard a mortgage banker talking to a man who wanted to remove someone from his mortgage, which he had less then 5 years left on a 15 year term.  Banker says we can, but we'll have to refinance for 10 years.  The man says he'd rather just pay it off with 401k money and be done with it.  And the Banker tells him that would be fine if the stock market wasn't doing SOOO GOOD, and tells him best to leave it in stocks and take out a 10 year mortgage, blah blah blah.

The day after,

But, But, they were AAA rated just yesterday?

stick a fork in America, we're done.............

Two Theives and a Liar's picture

I worked way back then at a major electronics retailer very close to Wall St. I clearly remember that day as the usual "lunch-rush" of local foot traffic didn't materialize. Some people coming in the store mentioned a "crash" and we put on a radio news channel to hear some details.   

Wonder what would happen today with a similar 20+% drop (in one day!)

Mr Pink's picture

No more "lunch-rush" from the 6 people that still work on the trading floor

Ms No's picture

Another reason for it not to be televised is because these bastards want WWIII.  The odds that they will pull major conflict to keep their banker asses from being hung are quite high.  Without war everybody will be looking to hang them over their market games.  The Zionists want Russia and China.  They will not stop until they control the world.  The economic sanctions and secret warfare has already begun.  The longer I look at it the more I think that China and Russia are going to have to make first strike if they want to survive.  The war is coming regardless.

I woke up's picture

Crash the market, blame it on the koreans, start a war since everyone will be looking for a scapegoat, sounds about right

runnymede's picture

They'll blame it on Donald. 50 yrs from now cyborg kids will have their AI brains implanted with how Trump wrecked the world and how we were saved in the nick of time by world co-presidents Schmidt and Zuckerberg implementing the Gore 15 trillion (bitcoin) agenda. 

DEMIZEN's picture

who still watches tv anyway.