Re; " ... It's virtually entirely Goldman Sachs and a few other big broker/dealers who are trading on their own account. ... Pity the markets, if Goldman's computer algorithm decides it's time to sell. ... "
IMO & if you are into conspiracy theories [disclosure - I absolutely love them - LOL] this didn't appear to bother traders taking short positions back in 2007!
As cited by other posters, back then company earnings were doing just fine. Then new investment instruments such as cfds were created [started on the ASX on November 1, 2007 to enable people to leverage their bets]! IMO all appeared well with the global economy until Greenspan, Faber, Prechter, Soros etc gained the media limelight - famously so in February 2007! They have been media celebs ever since and joined in Australia by our own now well known golden bears. What were their messsages: FEAR, PANIC, crisis, bust, gloom, confusion, chaos, .....
Suddenly capital vaporised & every time Bush pumped money into banks such as BOA, GS & MS we seemed to experience even more market selling. The $Aud plummeted from US$0.985 to US$0.60, adding to the impact of the loss in value on the XAO [~55%]. Australia's losses were compounded by the 38% slump in the value of our currency]!
The URL below enables you to research bank positions taken: http://www.cftc.gov/dea/bank/deamay09f.htm [just alter the "may09" section to see reports for different periods].
But it appears we can only suffer so much panic, fear etc. before we become de-sensitised. IMO the forces which inspired them can only profit so far by shortselling & smashing businesses and global economies before they recognise the need for a change in strategy to avoid catastrophic social consequences.
In that context IMO its worthy of note that MS advised people to return to equities in October 2008 [good one]. Recently Faber, Soros etc. have changed their outspooks & of course GS now says the worst is over [of course it is, they now have little competition & are rolling in taxpayers' dough].
So what do I think: . The Market is manipulated to the nth degree & that must be how governments want it since they set the rules & appoint the regulatory authorities [just ask the dark pools]. egs. The ASX has again strategically permitted short-selling of financial stocks, so called market-makers are in privileged positions. . By virtue of their very roles, investment banks are inside traders [sophisticated investors, call them what you like]. . Much of the world's wealth rarely surfaces for public examination - stored as it is under beds, in tax havens, anonymous Swiss bank accounts, underground & of course ...
Then again, I keep reminding myself that no-one forces us to participate in The Market.
Dare I suggest that bears had a pretty good turn & their greed is becoming increasingly transparent. Maybe its time to share [sic] the spoils a littly more equitably [sic again].
(20min delay)