Cluster of errors

Interest rate increase by the Fed means of Shake off the previously abundant credit. And obviously wrong decisions are taken not only of individual players - but of entire sectors in the economy. Managers of companies and institutional investors who trusted their money - all to an otherwise highly trained professionals - do such a stupid thing together.

Greed? Or the wrong signals, hence the decisions and actions?

In the name of it to create a "wealth effect" - euphoria in financial markets, investment and consumer optimism - with quantitative easing / zero interest rates was achieved total chaos at the micro level. With dramatically confusion of the relative prices of assets and the total collapse of the price system in the face of interest rate.

The interest rate is the winner of information for investors about the availability of real savings, the economy and the expected future corporate results, respectively the present value of the companies. Manipulation today has its price: shale industry bubble dramatically, and capital-intensive sectors are threatening to drag with them.

What made the meantime players with free money handed out generously by the monetary authorities?

Redemptions: the presence of too much cash in the companies is double-edged sword. Some frankly do not know what to do with it and invest in instruments with negative nominal yield - from deposits to money market funds and short-term government bonds minute.

Others take the redemptions of its shares, which is a form of dividend payments and return the cache owners. This company managers aim to improve factors such as price / earnings per share, as in the meantime the process more expensive and the price of the shares.

Moreover, these same managers have call options, which increase in the price of shares activate a profit for their owners, and the cache is pulled from the companies in their favor. In addition: easy money and provide many new issues of shares with which to finance acquisitions (mergers practically never) - and these new net emissions are more than redemptions, which cover about blurs and owned by the shareholders / owners.