Dow Freefalls More Than 1,000 Points During Contrived Market Crash

The Dow plunged Thursday amid buzz in the market that European banks have halted lending. 

 One trader, on the condition of anonymity, said he heard fixed income desks in Europe shut down early because there was no liquidity — basically European banks are halting lending right now. 

 “This is similar to what took place pre-Lehman Brothers,” the trader said. 

 The Dow was down about 400 points, or 4 percent, after being down more than 900 points earlier.  Treasurys surged. 

 Under current, New York Stock Exchange rules, if the market falls ten percent or more between 2:30 and 3:00 pm ET, trading is halted for 30 minutes. 

 The S&P 500 and Nasdaq were also sharply lower. The CBOE volatility index, widely considered the best gauge of fear in the market, was above 40, or up more than 60 percent. The VIX ended last week around 22.

 Financial took a beating, with Bank of America [BAC  16.22    -1.31  (-7.47%)    ] down more than 7 percent and JPMorgan [JPM  40.80    -1.83  (-4.29%)    ] was off more than 5 percent. 

 The sector was already undre pressure after the Senate approved an amendment to the financial-reform bill that would end “too big to fail.” The measure calls for setting up a government protocol for seizing and dismantling large firms that are in distress. 

 Rioting in Greece escalated after the Greek austerity bill won enough votes for passage in parliament, which prompted speculation that Greece would just default. (more…)

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