After Sept. 11th when the markets were closed for a week I pointed out to a WSJ reporter I know that this makes it clear that we should never have all electronic markets – the risk is too great. People have to be able to meet and make trades.
This market sell-off is bolstering that viewpoint. I can’t say I thought of it myself this time as I heard it from Dennis Gartman on FAST MONEY (CNBC) but he is right – and it made me think of Sept. 11. When there is no human to make a bid, the markets go south.
btw… this isn’t far from the argument I made a few weeks ago about how if the mortgage-related products (CDO’s and CDS’) had been exchange traded – even pit traded – then we would never be in this kind of mess to begin with. (- did you notice that the CME and Citadel are setting out to do just exactly that!)
Markets are made up of humans – and human methods of interacting. Markets are nothing more than beliefs and feelings about the future. Computers don’t have beliefs and feelings. They just do what the humans tell them – and if they do exactly what we tell them, which they do, just like in a pseudo-Matrix like event, they can take over.