Financial "Freefall"

There's a big stock selloff going on all over Asia and Europe today, and it will start up in the US in a few minutes. Steve Goldstein at Marketwatch traces it to paragraph nine of an article published in the International Herald-Tribune, which he correctly describes as mostly an NYT reprint paper for Americans abroad who can't read the local language.

That paragraph reads: "I'm reasonably confident that French banks will weather this turmoil without major trouble even though they are clearly, like all banks, in the world still in the process of marking down assets," said Christian Noyer, governor of the Bank of France and a member of the European Central Bank's governing council."

Apparently the fuss came from the statement that French banks were still "marking down assets."

Was there a single finance professional on earth who thought otherwise? Presumably not, so they are just "selling the news" - selling on the theory that stocks will go down because now the herd knows that French banks are still marking down assets.

But of course the herd also knew this, since it does know how to turn on a TV. So it's a case of "I (now) know that you know that I know that French banks are still marking down assets."

It's a great way to run a world economy.