The Bankwatch

Tracking the consumer evolution of financial services

What happened in the markets this week is quite rational

Increasingly it appears the financial world toppled on the edge of global crisis last Wednesday on a scale that has not been seen since September 2008 when Lehman Brothers went down.

European banks in bonds plea to ECB | ft.com

Worried bankers from 47 European groups urged the ECB to become a “buyer of last resort” of eurozone government bonds to steady markets.

There was speculation that the central bank could be preparing a €600bn ($762bn) loan facility for one-year loans at 1 per cent to help more than 1,000 banks in their funding.

What was most interesting this week was the ‘stories’ of brokers making mistakes selling billions instead of millions.  These stories are imaginary.  The real story is that the crisis that began in 2007 is still playing out and there is more to come.  The financial press are looking for external threats [edit and here] to explain perfectly rational behaviour.  The automated trading systems that exist in the big broker houses combined with black swan type events are a more likely cause.

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Written by Colin Henderson

May 7, 2010 at 23:21

Posted in Uncategorized

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