China Ends Circuit Breaker, So What

I do believe the circuit breaker played a role in the crash in China, but only to the extent that it ratcheted up the torschlusspanik. Otherwise, the circuit breakers are meaningless. They only are useful for fat fingers, rumors, hacking attacks, short-term events that have no bearing on the long-term trend. The analog's predictive ability says deeper psychology is at work in the market. Everyone, including the regulators, is vulnerable to social mood.

USA Today: Don't blame 'circuit breakers' for China's woes

China "set the controls too tight," said Bill Witherell, chief global economist with Cumberland Advisor, a $2 billion money management firm. This created "an incentive for anyone thinking of selling to jump in and sell right away so they won't get shut out."

China's regulators should have modifed their circuit breakers to account for wider swings, Witherell said.

Except China still limits daily moves to 10%, so what is the point of a circuit breaker? The most the market can drop in one day is 10%, and they shut it at 7%. The U.S. market does not shut for the day unless stocks fall 20%.