I said it on the Cavuto show on Friday November 14th – “they will come back to buying the assets because the market needs a bid. It has to find a bid somewhere and nothing will be fixed until it does.” I have said it before in this blog but since getting the &#)@)#? tag cloud to work correctly is one of techno road blocks of my life, I can’t find the exact post. (probably user error I admit).

Anyway – these markets we trade are auctions. If there are no buyers, the price either keeps going down or the seller withdraws the item. Since withdrawing the CDO’s and CMO’s isn’t an option, the auction is always open…and waiting waiting waiting for a bidder/buyer to show up. It isn’t one iota different in process than what happens in a rapidly directional ES or YM move. Not one iota.

Oh yeah, the timeframes are different and the product’s complexity is greater but the underlying idea that a human somewhere needs to be willing to pay something for the asset – i.e. bid on it – is identical.

The reason I bring it up is because essentially thinking through what has happened with these assets and how they have been handled is a slow-motion object lesson in the same high-frequency trading we do everyday. That might sound odd… but think about it and let me know…