Economic Warfare

[bourbon]

No, according to the real world.
....
There's never everyone in the market a panicking chicken, nor is ever everyone misinformed. Bonds such as long-term business relationship with mutual trust as well as openness in regard to bookkeeping protect against stupidities.

September 2008 was a market panic. Rumors can drive-off buyers of an investment bank, like “two major clients have stopped trading” or “XYZ is going to buy the bank at 25% below market price”.

We may differ in our ideas about the threshold to healthiness in this case, though.

Yes, for this purpose we do.

[Dayuhan]

I didn’t know the Peace Corps had an investment banking division, but that’s good to know…

I left the Peace Corps in 1981. Bit of water under the bridge in the intervening decades.

So you are saying that CDS manipulation has a minimal effect on a company’s ability to access credit; and that disinformation and share price manipulation has a minimal effect on investor confidence?

September 2008 was a market panic. Rumors can drive-off buyers of an investment bank, like “two major clients have stopped trading” or “XYZ is going to buy the bank at 25% below market price”.

What you're missing here is duration. Disinformation, rumor, and panic have an impact, but it passes, quickly. The impact is also strongest among individual investors: institutional holders are quite capable of recognizing what's going on and are not so easily swayed... unless of course the underlying conditions justify panic, which in 2000 or 2008 they did.

Runor and disinformation will create little more than a transient ripple if the company and the markets are in reasonably good condition. If both are bloated, overvalued, hollow, and ready to collapse, any little pinprick will provoke a crash. In that case what needs to be examined is not which pin did the pricking, but how the hollowness and bloat emerged in the first place.

PS (edit): Remember the old saying... markets are short term idiots and long term geniuses. You make money in between. Markets are inefficient while that short-term idiocy prevails, but over time they do tend to catch up, especially when the inefficiency is a consequence of rumor, panic, or short term manipulation.