A Crazy Thought

[sdelmonte]

Given that a lot of the stock market chaos now is pure collective panic, would closing the stock markets for two weeks to let everyone calm down and to let the governments of the world get on the same page help things? Or would it just create more panic?

Comments

[mabfan.livejournal.com]

Closing the stock market is not something to do lightly. The entire point of a stock market is that capitalism works. If you close it down, you're admitting to failure.

Your question is akin to suggesting that if there's a run on the banks, we close the banks for two weeks. Most people would not be calmed down by that, but just put into more panic.

[sdelmonte]

I'm not really sure that capitalism is working at the moment, though. I really don't know one way or other. That's why I labeled my post as a crazy thought. The whole thing is beyond me.

Makes me almost wish I'd studied economics in school for more than three months.

[mabfan.livejournal.com]

Capitalism may not be working at the moment, but I would say that has less to do with the system as a whole and more to do with the lack of regulation that led to the current crisis. The fact that a Republican administration stepped in to essentially purchase AIG...well, as one commentator put it, we have a word for when the government steps in and takes over private industry: communism.

I didn't study much economics either, but I do own some mutual funds and stocks, and I've been seeing their values drop in the last week. Since I'm not close to retirement I'm not too worried (I've always been in it for the long term.) But many others want to keep up the option of selling, even if in the long run it would be a bad idea. If the market were shut down for two weeks, it would just create a major sell panic at the end of those two weeks.

That said, I think that the market has controls on it. I've heard that if the market loses some specific percentage of its value in any given trading day, the brakes are applied and trading is suspended for the rest of the day. I'm looking for a reference on this, and if I find one I'll let you know.

[yakalskovich]

Yes, it would.

That's not just my opinion -- a blogger who has been uncannily right in his predictions about the crisis, as far as 1 1/3 years back, says that this is something that will have to happen, and will happen, before the crisis is over.

Unfortunately, it's pointless to link to his excellent blog, because he writes in German.-

[mamadeb.livejournal.com]

I am increasingly of the opinion that nothing should be done at all. The government has thrown everything at it and nothing has helped, right? Because, as they themselves admit, they have no idea what to do at all.

If you don't know what to do, and you've tried everything you can think of, then the thing to do is not do anything at all.

It won't be pretty, but it's not pretty now.

[sdelmonte]

The problem is, it's too soon for anyone to say that it won't work. And too soon to lose your head to the what-ifs.