I have a feeling I already know the answer to this one, but I’ll let the commenters decide. It has to be relatively easy picken’s for placing blame after a trading day like yesterday, but the truth is there is plenty to go around. For my money you can start with Hank Paulson, mastermind of the TARP bailouts, but you can certainly point fingers at whomever you like these days, they’re all guilty after all.
The Problem with Assigning Blame
There are several problems with assigning blame. First and foremost, it does not solve the problem. Second, it isn’t profitable trading-wise. Third, assigning blame in a failure of this magnitude is an exercise in futility – for as I said in my opening: they’re all guilty.
Finding Positive Actions to Take After a Market Meltdown
There are a lot of positive potential outcomes after a market meltdown like we had yesterday. Favorite stocks are now cheaper (if not yet cheap). Yields on dividend paying stocks will have gone up (but will they have gone up enough to offset risk of further capital loss?). Assumptions made about the ill-advised use of quantitative easing (via Fed POMO actions) to prop up (certain) asset prices have been strongly confirmed.
Now is a good time to try to assess where the bottom is in asset prices. Hopefully the Fed will be smarter this time around and not try to manipulate asset prices. Capitalist markets have a need to find the proper balance between supply and demand, and intervening in the market to put a floor under only certain asset prices upsets the whole system, as we have found out by soaring gold prices. Markets can smell a rat, and unfortunately since the beginning of the Quantitative easing efforts globally, there have been more rats in the markets than real investors.