China admits that stock market "time outs" don't work

When was the last time you saw governments admitting to people that its efforts to control things not only don't work but also make matters worse??  And when was the last time you saw face saving China do this?  Today's article is a must-read shocker for those who think government knows any better what to do with our lives than we do.  Essentially, the Chinese government admitted that forced market "time outs" or "safety breakers", whose supposed purpose is to make people slow down, stop and think before they sell.  In other words, its the asinine goal of leading the cattle to the slaughter house and then trying to convince the herd to remain calm once it figures out that cattle go in but don't come out.

Where are these nannys when the market is headed up?  They don't exist.  When only upward movement is enabled, expect the markets to regularly overshoot to the high side!  But when you do this, the herd is at some point going to sense danger and it is going to panic.  Trees will not grow to reach the sky.

The important aspect of all this is that the new conservatism is rapidly breaking down the notion that central control is even possible, much less good.  You are going to start seeing more and more of this kind of thing.  Not only much less new laws and government control but in fact rollbacks (freedom clawbacks if you will) of past policies that tried to control the people.

Governments do not do this just for any old reason.   Governments see that things are spinning out of control and now they want to try to relieve some of the pressure on the ever more "animated" herd.  In other words, they hope to avoid a stampede.  I mocked their president when he announced that the stock market crash was over.  I continue to model that the downside risk is high and that it should unfold rather quickly.  This is a prime setup for the use of 2017 or even 2018 maturity put options folks...