

Could a "Bear Raid" have caused the '08 market crash? - Killah911
http://boingboing.net/2011/12/21/complex-systems-institute-clai.html

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mkramlich
The possibility that something like this happened is pretty obvious to anyone
who understands how the sausage is made on Wall Street. Yes, people can and do
conspire behind the scenes whether it's illegal or not. Yes, insider trading
occurs. Yes, certain actors have many orders of magnitude more money under
their control than others. And yes there is now a much higher volume of
computerized trading than in decades past, with more complexity, more
abstraction, and more layers of indirection. It's like running a shell game
against a mark, except you're now able to maintain thousands of shells under
which to hide the nut as you move it around. And move them at extremely high
speeds. If you plan a con or scam or "raid" but construct it well enough to
cover your trail, have plausible deniability, and/or not do anything which is
strictly illegal (and if you have millions or especially billions of dollars
at your disposal, you almost certainly can afford to have many great lawyers
helping you to ensure that this is the case), then it seems reasonable to
assume that one can get away with the white-collar equivalent of a bank
robbery.

------
nhaehnle
The headline is overly sensational. The volume of the transactions mentioned
there sounds enough to manipulate one stock, but not enough to cause a
complete crash. This is particularly clear when you compare it to the sheer
volume of subprime loans created by control fraud and predatory lending that
were starting to collapse in 2008. There are orders of magnitudes in
difference.

That said, the real story behind the hype does sound plausible, and stuff like
that just highlights how absurd the notion of "efficient free markets" really
is. You need transparency, you need regulation, and most importantly you need
prosecution.

~~~
intended
This article comes across as link bait and sensationalist, and is extremely
weak when compared to the voluminous analysis done on the market crash and the
recession itself.

This is a simplistic reading of the reasons for the market crash; it is a
complex system, which had multiple fail safes, as well multiple attacks
(legislative weaknesses, absurd leverage levels, bad risk distribution) which
led to the quagmire we are in today.

If the title limited itself to "possible bear raid on Citi Stock in November
2007" it would still have some legs. Going on to postulate that this
precipitated the crisis (and the unsaid subtext being - perhaps without this
the market wouldn't have crashed like it did)

Further, bears will short a stock which looks likely to be weak, and there is
also a buyer on the other side of the fence. A link to the originally article
may have been more worthwhile.

