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Quote of the day from Swamp Owl at forexfactory:

No, I don’t buy that “this was an error, market is acctually ok, just a mistake – nothing to see here, move along, folks” propaganda. That “error” occured after DOW had already fallen 300 points and – people, how do you feel living in a world where large scale financial meltdown depends only on … just “N” on keyboard separating b and m. That’s pure absurd.

Swamp Owl is right, of course. Furthermore, it makes no difference whether this was a genuine mismatch where bids fell off the table or a ‘mistake caused by a fat finger’. It tells us that markets are not rational and there’s not point rationalizing the kind of moves we saw. It doesn’t matter what or who caused the Dow to move 1000 points down from its open at one point. What matters most is what you will do if and when such a thing does happen. You can’t go wrong buying off a 9% decline when the market is in a primary bull market and the internals are in a relatively good shape for the intermediate term. Did you manage to catch a few bargains?

“When the tiger gets out and starts creating damage, it’s insane to blame the tiger, it’s the idiot tiger keeper” that deserves the blame.

There are the words of Warren Buffett, uttered in the defense of the Abacus deal for which Goldman Sachs has been charged by the SEC (source: WSJ). A few years ago, Buffett was an outspoken critic of derivatives, calling them ‘financial weapons of mass destruction’. Historically, he’s also been a critic of Wall Street and the way they conduct business. It now seems that Buffett has sold his soul to the devil – during the credit crisis Buffett got a large stake in Goldman Sachs and now he is doing everything he possibly can to talk up his investment. It doesn’t matter that Goldman is part of Wall Street and that it is involved in a business Buffett doesn’t understand to the core (one of his main investment mantras is to buy a simple businesses, ie Coca-Cola). In fact, Buffett has gone as far as to help block derivatives regulation in the financial regulation bill currently in the works. Additionally, Buffett’s Berkshire has over $63 billion in derivatives exposure. So much for derivatives being WMDs.*

What Buffett failed to mention, however, was the fact that Goldman Sachs and other financial institutions were in part responsible for the ‘idiot tiger keeper’. Wall Street has spent tens of millions of dollars each year to lobby lawmakers and regulatory institutions, thus making sure that the tiger keeper is as dumb as possible and as defenseless as possible so as to make sure that in the event a tiger did get loose, it would be unable to return the tiger to its cage . In fact, repealing Glass-Steagall, deciding to not regulate the derivatives markets the way futures and equity markets are regulated, increasing leverage (Commodity Futures Modernization Act, anyone?), allowing mega-mergers on Wall Street and a plethora of other stupid decisions is exactly what made the ‘tiger keeper’ and ‘idiot’.

*
“Only when the tide goes out do you discover who’s been swimming naked.” – Warren Buffett

“Only when the crisis hits do you discover who’s been a self-serving hypocrite.” – Reworded to describe Warren Buffett

From NY1:

Police are on the scene in Times Square this morning where authorities say they discovered and are in the process of dismantling a bomb inside an SUV. The device, made of three propane tanks, fireworks, and two five-gallon full gasoline containers, had two clocks with batteries attached to it. There is no word how much time, if any, was left on the timer.

CLICK ON IMAGE TO SEE FULL SIZE. Images from Times Square webcam.

Luckily the bomb was discovered before it went off. Reportedly a t-shirt vendor noticed smoke coming from the car and noted a mounted police officer nearby. It is not clear whether the bomb failed to go off or the bomb squad managed to dismantle it before the detonator went off. In any case, this is the second failed terror plot on New York City and the third on the United States in a very short period of time. What kind of sick people do this? As I understand this, the propane and the gasoline would not have produced a lot of structural damage to the surrounding buildings, but it certainly would have been enough to set people on fire and cause a lot of cuts (a lot of glass buildings around). Indeed, the stampede resulting from the panic would have caused numerous injuries (Saturday evening = a lot of people around Times Square).

New York is fortunate to have avoided a disaster this time. Let’s hope they’re as lucky next time around. New York is one of the greatest cities I’ve been to and I wouldn’t want to see the city being taken over by fear and terror.

Carl Swenlin of DecisionPoint was interviewed this week by Jim Puplava on his weekly Financial Sense Newshour. During the interview, Mr. Swenlin gave his perspective of where he thinks the market is heading as well as provide a free trial username and password for the listeners of the show. I’ve had a look into DecisionPoint once before and it’s full of useful information. There are so many custom charts to give you ideas for a whole range of new trading systems. Market breadth indicators (new highs vs new lows, up volume, down volume etc) are what interest me the most, but there is a lot more to it that just that. In any case, if you are interested in the free trial, listen to the interview with Mr. Swenlin or send me an e-mail at kristjan[at]kristjanvelbri[dot]com (you have to make the e-mail address usable, the parentheses with sharp corners are to keep away spambots, who browse the web for e-mail addresses).