links for 2007-07-31
Why Oh Why Can't We Have a Better Press Corps? (Bill O'Reilly Edition)

Felix Salmon on Noise--Literally: Noise--Traders

He watches Jim Cramer, and is scared:

Finance Blog - Market Movers by Felix Salmon: Great Moments in Punditry: Jim Cramer on Housing - Is it worth responding to this as though it's rational? Is this what passes for informed commentary on TV these days? I can see how it gets ratings, in a train-wreck kind of way – hell, I'm blogging it. But the idea that wealthy people will stop paying their mortgages because their houses are "fungible" (unless we get a 100bp cut in the Fed funds rate, of course) – it's like some kind of incredibly unfunny parody. Nouriel Roubini et al might be shrill, but at least there's coherent logic to their position.

What scares me is that this could be a rare and genuine glimpse into how traders actually think. In which case the Great Moderation and decline in volatility of recent years is doomed to die a sudden and extremely unpleasant death.

Some traders tend to think this way: they add a lot of volatility to the order flow. Do the Cramers have a material effect on price patterns, or do they just create trading opportunities for more sophisticated investors. That is a hard question.