Monday, October 18, 2010

Alternate theory on flash crash, caused by currency wars

It is widely suspected that the flash crash event is the result of HFT (high frequency trading) gone wild. The SEC scapegoats Waddell and Reed's singular algorithmic S&P500 e-mini trade for causing the entire thing but data gathered by Nanex seems to refute this.

However, Webster Tarpley, investigative journalist and historian, presents an alternate theory.  Back in late 2009/early 2010 when Greek sovereign debt issues were the front page news (albeit really old news which was recycled and hyped up) the Euro started taking a significant dive.  Mr. Tarpley thinks that the collapsing Euro was the result of a concerted Anglo-American speculative attack in order to bolster the dollar, and that this attack on the Euro also resulted in an unintended "boomerang" effect upon the US stock indexes which crashed in May of 2010 (the "flash crash").

Quoting from Mr. Tarpley's work:
"The stage for this current crisis was set last May when the Anglo-American attack on the euro, designed to provoke a panic crash of that currency, broke down — partly due to German self-defense, partly because of Chinese intervention, and partly because a high-frequency attack on the euro boomeranged against the Dow in the infamous “flash crash” of May 6. Since then, the euro has been steadily gaining ground, while the US dollar has lost about 13% of its value since mid-June. The forces of depression, represented by $1.5 quadrillion of kited, toxic, and bankrupt derivatives centered on New York, have been re-asserting themselves against the battered US greenback.

If smashing the euro was one prong of the Anglo-American game plan, then driving the Chinese renminbi up into the stratosphere was the other prong of an ongoing attempt by London and New York to export a world depression by beggaring their leading rivals in Frankfurt and Beijing. The attack on China had been speaheaded by the feckless Tiny Tim Geithner, so it is not surprising that the Chinese have largely ignored US demands, limiting the rise of the renminbi to just a couple of percentage points since the last bilateral confrontation in June."

Full article here

Mr. Tarpley also extrapolates this point in an interview with RT News on the ongoing currency wars of competitive devaluation: