Cracks in our Single Foundation

Not so long ago, back in early June, I wrote about the government's Quantitative Easing and how I was afraid that it was failing miserably.

At the time, I quoted from a post in Dan Norcini’s blog:

The one thing that has helped to keep some of the population from becoming completely depressed has been the fact that they could look at their 401K programs and still see that those were in the plus column for the year. In other words, while the rest of the world was seemingly going to economic hell, at least they were making a bit of money on their retirement accounts.

It was clear then that the federal government's actions were serving to prop up the stock market, which resulted in increased demand and higher prices, pushing 401(k) values higher. The fear was that it would end.

Today, the world watched as the New York Stock Exchange and NYSE Amex Cash Markets on Monday invoked a rule to smooth trading at the market open, as futures pointed to a drop of more than 2 percent.

The rule is designed to allow the exchange to suspend price indications in an attempt to speed the beginning of trading. It can be invoked when there is a lot of activity in the futures market before the markets open. Reporters from Reuters said:

S&P 500 futures SPc1 fell 28.2 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures DJc1 lost 248 points and Nasdaq 100 futures NDc1 dropped 48.75 points.