People have lost faith in markets

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In February it looked as if financial markets were going to crash. They didn't. This is the FTSE 100 index for the first quarter of this year:

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It now looks as if it could be said that the panic is over. I beg to differ. Indices do not tell the whole story.

First that is because they can be manipulated. Share buy backs are, for example, a deliberate exercise in share price inflation.

Second that is because volumes matter. And we now know that these have crashed for investment bankers.

Third, we also now know that there is a flight to cash amongst private investors.

The FT index represents the rump of a market from which people are fleeing, making it all the easier for prices to be played. The underlying economic crisis remains. And I am as worried as I was.