This rout has been in the making since the previous bailouts began in late 2008 and which continued into 2009. With hindsight, artificial support came from various QE programs along the way. But did all these bailouts (TARP) and monetary policies leave us in better shape now? What if we had just let everything fail? Could markets have healed on their own? We'll never know. The bottom line is this poor situation is still with us and evidently only temporarily covered up. After all, the Fed allowed banks to carry underperforming mortgages at cost versus market value.
Over these last two weeks investors have demonstrated they have no trust in authorities or how our stock markets are being operated. Investors have pulled $13 billion from equity mutual funds last week per ICI.
Wednesday wiped-out Monday's HFT (or someone's) late-day market ramp as problems with financials and banks rose to the surface once again. Bank of America (NYSE:BAC) CEO Brian Moynihan held a conference call trying to reassure investors everything was just fine. Investors weren't listening and sold more after the call. France's SocGen (Societe Generale) was beset with rumors they were on the brink of collapse (down 17%) due to tier one capital exposure to Greece and Italy's UniCredit bank. All this spilled over to other French banks including BNP Paribas and Credit Agricole with the former down nearly 10% and the latter 12%.
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