If the market’s participants are finally, FINALLY getting around to figuring out that markets far and wide are manipulated…does it really matter? Most people come home from work exhausted, watch the news, eat, go to bed and get up to do it all over again so what difference does it make if LIBOR is manipulated? “They prop the market up”? Yipee, if not for that, my 401K would really be wiped out, can you guys “prop” the market some more please?! The Fed buys all unbought Treasury securities to lower interest rates? Great, that will make it easier to service a mortgage or for someone else to buy my house, can y’all make rates even lower…please?!
For the most part, people couldn’t care less that markets are manipulated. They are more interested in more pressing problems like keeping their job, paying the mortgage and putting food on the table…period…until they do care. This is how “paradigm shifts” happen. You have heard the one about putting a frog in a pan of water and turning the burner on, right? Have you ever tried it? The story goes, the frog will just sit there enjoying the “warmth” until it’s too late and gets cooked. This is a myth, I knew a Cajun guy in South Texas who tried this and guess what? The frog jumped out! This, I believe is what will eventually happen, the “heat” (reality) will get turned up to a point where it cannot be ignored any longer. The “injustice” of fraud and manipulation will be too public and too painful to ignore.
My point? It has to get “bad enough” for enough people to get the whole herd restless enough to pay attention. The $700 TARP bailout back in 2008 saw many people screaming bloody murder (including myself), but, there was still enough of a majority thinking “I sure hope this thing works”. It didn’t, nothing they’ve done has, and the economy is now rolling over again into another down leg. Markets the same, momentum has been lost and downwards is the path of least resistance. Further economic and financial pain that was not taken over the course of the last 40 years is coming and will silence Keynsianism for ever. “Manipulation” works until it doesn’t. When it “works”, all it does is hide or mask the reality just like an aspirin relieves the pain (temporarily) from a brain tumor.
To answer the question that my title asks, no, it doesn’t matter until it does. Once it does matter, the mal investment that occurred from bad decisions based on the false information that manipulated markets sent, will be wiped out. 40 to 50 years of bad decisions will ultimately be wiped out and wiped clean in less than a quarter’s time. Please don’t get me wrong, manipulation absolutely does matter in a real world where people are held accountable. Today (for at least the last 5 years+++), almost no one has been convicted of, much less arrested for fraud. John Corzine being a prime example. Manipulation of markets does matter because the markets send signals that investors make decisions with. It matters greatly,…but…no one really cares and no one will really care until they get collectively wiped out by a system that was rigged.
ONLY AFTER the masses get wiped out will the majority care. As it stands now, fraud after fraud occurs, brokers close and swallow their clients money, markets are blatantly turned on their heads against all logic and…no one cares. Well, not no one but very few. What is happening though is that more and more people are putting it together, more and more are starting to vote with their feet (money) and the “few” are becoming a few more. The sad thing is that the majority can’t, don’t and won’t see it coming and those who do for the most part have the “crazy aunt syndrome” and don’t want to talk about it. Facts are facts and the fact that people are finally being exposed, even through the main stream media, to the reality that markets, all markets are manipulated is important. This is a game changer!
How much information needs to come out before we have an outright panic? How many more people will need to connect the dots before we have a panic? I truly don’t know. But just as a frog will always jump from a room temperature pot as it’s heated, eventually enough investors will “bail”, eventually enough people will “care” but unfortunately I’m afraid that we may need a complete wipe out to make them.