March 10, 2009

This is Rational

Let me get this straight. A huge bank, which has made a series of highly leveraged bets that lost so much money that the very existence of the company is imperiled, the result of which the bank must receive massive tax payer subsidy just to remain in existence. This banks makes some money for a couple of months, in no way alters the underlying insolvency issue or the need for government backing and the entire stock market makes huge gains. Tomorrow everyone will remember that Citigroup is insolvent, that we are in the middle of a recession and the market will fall. What's so rational about all of this? Everyone has been lecturing me since grade school on the rationality of markets. So somebody tell me, what is so damn rational about this market?

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