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The Invisible Hand (of the U.S. Government) in Financial Markets (Plunge Protection Team)

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February 22, 2008 – Comments (7) | RELATED TICKERS: GS , JPM , GLD

John McCain has not heard of it either:

The best article of the PPT Here:

http://www.financialsense.com/editorials/reality/2005/0403.html  

Summary: The U.S. government is manipulating all major U.S. financial markets—stocks, treasuries, currencies. This article shows how it is possible and how it is done, why it is done, who specifically is doing it, when they do it, and where they get the money to do it.

The Invisible Hand
(of the U.S. Government)
in Financial Markets
by Robert Bell
April 3, 2005

Most people probably believe that the major capital markets in the U.S. are basically true markets with, occasionally, maybe very occasionally, a little bit of rigging here and there. But evidence shows that the opposite is the case—the rigging is fundamental with a little bit of true markets here and there. I have discussed how this works concerning U.S. and some other stock markets in an earlier article.[1] Here I will primarily discuss the rigging of currency and U.S. Treasury markets.

Perhaps the main reason for the urban legend that major markets are not generally rigged is that they are assumed to be too big; the millions of independent buyers and sellers, worldwide because of globalization, make effective and sustained coordination impossible. The implicit assumption is that any market could be systematically rigged if it were small enough, or at least small enough at some critical choke point.

 

7 Comments – Post Your Own

#1) On February 22, 2008 at 8:12 PM, abitare (43.81) wrote:

Read the article, it gives a very good MACRO picture also:

The Invisible Hand (of the U.S. Government) in Financial Markets
by Robert Bell
April 3, 2005

 

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#2) On February 22, 2008 at 8:17 PM, Jognils (92.09) wrote:

I completely agree.  Most of the American public are under the impression that we have a purely or almost purely capitalistic economy, but we are rapidly sliding into a socialistic mindset as a country. 

Even the idea that the government should provide universal healthcare (even though the laws of supply and demand tell us that it is impossible for all consumers to obtain a good at no cost) shows how radically our expectations for government have changed. 

Anyone who doesn't think the U.S. government has overgrown its role should read the Constitution, which was intended to restrict the federal government from gaining too much power.

 The hand of government in the market is actually quite visible; we've just been gradually lulled into ignoring it.

Jognils 

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#3) On February 22, 2008 at 8:42 PM, abitare (43.81) wrote:

Jognils,

Concur. A good time for a morale improving Ron Paul Speech:

 

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#4) On February 22, 2008 at 8:49 PM, Bupp (28.59) wrote:

Monetary policy is not a conspiracy.

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#5) On February 22, 2008 at 9:32 PM, AnomaLee (28.72) wrote:

You are not alone... Our political system is full of monkeys. Even CNBC's Erin Burnett agrees with this.

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#6) On February 22, 2008 at 9:43 PM, abitare (43.81) wrote:

rwilso01,

Correct it is not a conspiracy. It is real policy.  Saving LCTM did happen, Greenspan does work for three hedge funds that made billions off the mortgage implosion.

AnomaLee, 

Good find. My heart goes piter padder for Erin Burnett.

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#7) On February 24, 2008 at 1:04 AM, abitare (43.81) wrote:

FYI- Comments taken from Mish Global Economic Trend

Mish wrote: "... spurring silly talk on message boards of the PPT." 
 
Pros like Rick Ackerman, "Trader Dan" Dan Norcini recognize that the President's Working Group on Markets is manipulating the S&P. Do you include them as "silly talk"? 
 
From Rick Ackerman:  
 
http://news.goldseek.com/RickAckerman/1201071660.php 
 
"This is not the buying of mere institutional traders second-guessing each other so as to produce a raggedy series of lows. Rather, it is a buyer whose 1255.50 bid was set in concrete, fearlessly oblivious to the selling panics that had overwhelmed the world’s bourses for two consecutive days. The bid held for long enough to exhaust sellers, as it doubtless was intended to do ..." 
 
From "Trader Dan" Dan Norcini at Sinclair's website Friday: 
 
http://www.jsmineset.com/cwsimages/Miscfiles/5800_February2208-USEquityDan.pdf 
 
"A huge buyer all day long lurking at 1328.50-1329.00. At 2:15 this support is broken, sucking in all the bears. 5 minutes later a story hits CNBC about a bailout of AMBAC. You figure the odds of this happening and figure who it was that knew in advance of the AMBAC news and was buying all day long." Like this comment? [yes] [no] (Score: 4 by 4 votes)
calvino Saturday, February 23, 2008 4:25:59 PM [delete] [moderate] Scaramanga - correct. Mish is a macro economist and a good one at that. Grounded in the theory of free markets. If the free market does not exist, Mish and every other economist would be jousting with windmills, straight men playing a marked deck... pick the analogy, but the conclusion obviates the existence of economic theory, except for that of centrally planned economy. It would be painful for an economist to acknowledge that he is being gamed from the point of his starting assumptions. btw Gene Sperling did a nice op ed in Barrons last week explaining how Greenspan's professional mad him turn on the gold standard. 
 
Back to the subject at hand. I spend much time on the trading screens. As others, I know when something unnatural and foul happens on the tape. On Thurs, the indexes jump a half of one percent in less then ten minutes at a couple of minutes after 12, off a flat tape. That can only happen when the tradebots arb the futures, that are being manipulated by a non-economic entity. Meaning with limitless capital and indifferent to market risk.

 

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