The Daily Beast
By Zachary Karabell
August 10, 2011
Over the past 48 hours, global markets have lived a life cycle, from panic and fear through uncertainty and confusion, and then, finally, euphoria. The individuals and machines placing the trades have been along for the ride, and if you stepped away for lunch or coffee, you risked exiting the movie at a crucial plot point, asking distracted friends and colleagues, “What just happened?”
What happened was a flash crash followed by a flash rally. It’s too soon to tell if the carnage in the markets are over, though it is telling that the reaction to President Obama speaking in homilies on Monday was a rash of selling, while the reaction to Ben Bernanke and the Fed announcing another year and a half of astonishingly low interest rates was a rash of buying. Obama said nothing that would satisfy the desire of market makers for clarity, promising only committees, process, and indomitable spirit. Bernanke and the Fed, though not unanimous in their assessment, offered a clear future of cheap capital and low rates. That at least was something on which to hang hats, and so investors did.