Will the .001% pull an "October Surprise"
Things are looking brighter in November for the Obama camp since the Republicans have taken to "trial by combat" to select their candidate. The anemic economy is showing sputtering improvement and this always help the incumbent.
BUT
The economy is Obama's biggest weakness, and should it sour badly, it will be "Hello, President Romney"
Economic crashes always have triggers. An institution starts dumping a toxic position, and then panic ensues as everyone else rushes to cash out and avoid being the "last fool". The dominoes start to fall, and the contagion spreads to other stocks/bonds viewed (rightly or wrongly) as risky.
There are a number of tripwires strewn on the financial landscape at the moment.
1) The Eurozone has Greece, Ireland, Spain, Italy, etc. Actually, the entire Eurozone is sitting on debt equal to 82% of GDP. The U.S. is at 102%, Japan 197%, and the UK almost 80% (these are 2010 estimates meaning these number have probably gotten worse).
http://en.wikipedia.org/...
2) China's real estate bubble is bulging ominously.
3) Neocons are pushing for war with Iran, which if it happens, will shut down the Straights of Hormuz and push oil prices toward $200 a bbl in short order.
4) The "too big to fail" U.S. banks are sitting on a mountain of credit default swaps exposing them massive losses if the Eurozone crashes.
5) The housing market is still in dire straights, and no one has really talked about the commercial real estate market which is equally dire.
So, with all of these land mines laying about, just waiting for a misstep to set them off, what is to stop a single hedge fund manager from betting on a crash, then actually triggering a crash by dumping some stock or bond they control? By doing so, the HFM profits massively by:
A) Taking short and long positions in stocks, bonds and commodities that will be impacted by an economic implosion.
B) Destroying the incumbent political party and eliminating all opposition to his view of how the markets should be (de)regulated.
C) Controlling via "patronage" the party that is elected.
In essence, a single person, could stage a complete "financial coup" of a government already at the beck and call of the financial sector.
At this point in time, the circumstances are perfectly aligned for such an action (a rabid anti-government, pro-oligarch movement, Citizen's United allowing unlimited money to buy elections, and individuals controlling hundreds of billions of dollars in the market place, an amount with sufficient momentum when moved to swing markets.
So, is this scenario plausible? Am I right to be concerned about stories like this:
To be sure, heavy insider selling doesn’t always lead to this much market weakness, or this immediately. And there were a lot of other things going on last summer that aren’t present today.
Still, on the theory that corporate insiders — officers, directors and largest shareholders — know more about their firms’ prospects than do the rest of us, it can’t be good news that they are selling at such a heavy pace.
Consider a ratio calculated by Argus Research of the number of shares insiders have sold in the open market to the number that they have bought. Last week, according to the latest issue of Argus’ service, the Vickers Weekly Insider Report, this sell-to-buy ratio stood at 5.77-to-1. And among insiders at companies listed on the New York Stock Exchange, this ratio was even more lopsided at 8.2-to-1.
Are the financial jackals positioning themselves for this scenario? Can a single person trigger an economic meltdown? What about a small group of people?
Your opinions please!