The Indonesia headlines this morning have the quality of weather reports from somewhere that has no weather. Bloomberg says the selloff is deepening across stocks and bonds. Reuters calls it a record two-day rout. CNBC has stocks at a six-year low, and the Journal said Friday that this was the worst day since 1998. The cause, as far as I can tell from the headlines, is a warning from MSCI that it might downgrade or expel the country from its indexes. No factory closed and no harvest failed. A committee sent a letter.

Notice who the buyers are. If a market gets reclassified, funds that track the index must sell it whether they like the companies or not. So the sellers on a day like this have no view at all about Indonesian earnings, and that is why the damage can be so much larger than any news about the economy would justify. A rulebook written by a private firm, with no army and no central bank, sets the price of a country’s savings.

I keep noticing this kind of thing this month, where the price follows the plumbing. The bond market gets its own decade-high records, chip stocks swing on one memory-maker’s guidance, and today Nasdaq futures are up 1% on “buy the dip” while Seeking Alpha says a “stealth bear market” is a generational buy. Everyone seems very sure what the dip is.

The Indonesian exchange is reportedly trying to calm things. What would calm look like when the seller is a rule?

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