"We Want Fairness. There Is No Fairness If You Do Not Let Us Cheat"
To find what is perhaps the best analogy of the mentality behind today's global capital markets and the perhaps the entire US economy as well, one has to travel to Zhongxiang in Hubei province, where a university entrance exam for 800 students did not go quite as expected. Telegraph reports: "When students at the No. 3 high school in Zhongxiang arrived to sit their exams earlier this month, they were dismayed to find they would be supervised not by their own teachers, but by 54 external invigilators randomly drafted in from different schools across the county. The invigilators wasted no time in using metal detectors to relieve students of their mobile phones and secret transmitters, some of them designed to look like pencil erasers. A special team of female invigilators was on hand to intimately search female examinees, according to the Southern Weekend newspaper."
In short: everyone was hoping to continue a historical tradition and simply cheat, but the proctors finally and shockingly pulled the plug. End result: hundreds of test takers who had no idea what to do when the system is not rigged. And summarizing best not only what happened in China, but what is going on in the market now that Bernanke has warned he may pull the liquidity Koolaid shortcut to wealth effects and riches: "Outside, an angry mob of more than 2,000 people had gathered to vent its rage, smashing cars and chanting: "We want fairness. There is no fairness if you do not let us cheat."
Also known as a 20% crash in the market.
The Telegraph has more:
Last year, the city received a slap on the wrist from the province's Education department after it discovered 99 identical papers in one subject. Forty five examiners were "harshly criticised" for allowing cheats to prosper.
So this year, a new pilot scheme was introduced to strictly enforce the rules.
When students at the No. 3 high school in Zhongxiang arrived to sit their exams earlier this month, they were dismayed to find they would be supervised not by their own teachers, but by 54 external invigilators randomly drafted in from different schools across the county.
Outside the school, meanwhile, a squad of officials patrolled the area to catch people transmitting answers to the examinees. At least two groups were caught trying to communicate with students from a hotel opposite the school gates.
For the students, and for their assembled parents waiting outside the school gates to pick them up afterwards, the new rules were an infringement too far.
And so the parents, furious that their kids "brilliance" had been exposed as nothing but a shortcut gimmick, stormed the school demanding that the cheating continue!
As soon as the exams finished, a mob swarmed into the school in protest.
"I picked up my son at midday [from his exam]. He started crying. I asked him what was up and he said a teacher had frisked his body and taken his mobile phone from his underwear. I was furious and I asked him if he could identify the teacher. I said we should go back and find him," one of the protesting fathers, named as Mr Yin, said to the police later.
Bottom line: when cheating is not only permitted but encouraged, those who rely on fairness and honesty are at a disadvantage:
According to the protesters, cheating is endemic in China, so being forced to sit the exams without help put their children at a disadvantage.
Teachers trapped in the school took to the internet to call for help. "We are trapped in the exam hall," wrote Kang Yanhong, one of the invigilators, on a Chinese messaging service. "Students are smashing things and trying to break in," she said.
Another of the external invigilators, named Li Yong, was punched in the nose by an angry father. Mr Li had confiscated a mobile phone from his son and then refused a bribe to return the handset.
"I hoped my son would do well in the exams. This supervisor affected his performance, so I was angry," the man, named Zhao, explained to the police later.
Hundreds of police eventually cordoned off the school and the local government conceded that "exam supervision had been too strict and some students did not take it well".
A picture from the ridiculous situation in China:
And that is perhaps the best explanation of what is going on in the US markets, if not entire economy, right about now.
We can only hope the crowd of furious E-trade babies, all margined out, that has been used to cheating in the market courtesy of the Fed, swarms the Marriner Eccles building demanding that the cheating continue or else.
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