U.S.MARKET MANIPULATION EXPOSED BY MAJOR FUND GROUP?

[elehhhhna]

Sep 07, 2005 - FreeMarketNews.com
http://www.freemarketnews.com/nview.php?nseq=787

by David Bond
Until recently a figment of the imaginations of rumormillnews.com and freerepublic.com junkies, the U.S. government’s clandestine Plunge Protection Team is now center-stage and waging war games, exposed by one of Canada’s most prestigious funds, Sprott Asset Management. Culling media archives and performing its own research, Sprott delivers chilling proof that the U.S. government intervenes not just in the gold and bond markets but in the supposedly unfettered stock market, when it sees fit to prop up a dismal U.S. economy and equities market.

The Plunge Protection Team was contrived in the aftermath of the NYSE’s famed program-traders’ crash of 1987. Its mission: Pump liquidity into a down market to avert another 1929-style panic by directing the Federal Reserve to compel its large subservient banks into buying common fiat currencies – such as U.S. fednotes – in order to prop them up. As a one-time intervention to pour oil on 1987’s troubled waters, the Plunge Protection Team’s endeavours may have made sense, Sprott concludes. But rather than disband, the PPT went on to prop up troubled governments, including the Bush XLI, Clinton, and Bush XLIII administrations.

“Most people probably assume that the U.S. stock market is free of government interference. It is acknowledged that the bond and currency markets are influenced by policy-makers, but equities are considered different territory altogether. Current mythology holds that share prices rise and fall on the basis of market forces alone. Such sentiments appear to be seriously mistaken,” conclude Sprott analysts John Embry and Andrew Hepburn. “We believe the stability of domestic stock markets is considered by the U.S. government to be a matter of national security. Interventions are likely justified on the grounds that the health of the U.S. financial markets is integral to American preeminence and world stability. This conclusion flows from an extraordinary financial war game exercise conducted by the Council on Foreign Relations in 2000 and attended by key policy-makers. In this vein, an article in Euromoney magazine disclosed that simulation participants displayed a willingness to consider government intervention in the stock market in the event of a financial crisis.”

[Tace]

1. This Is Excellent Stuff -- Read It And Weep

[BurgherHoldtheLies]

2. Hope Ozy, UIA et al from the LBN forum (stock watch) read this

and provide us with their wise thoughts. Don't know if they visit DU after market close on Friday but maybe you could 'kick' this or repost on Monday AM if they don't see it.

Would love to hear their thoughts.

Thanks for posting it.

[dweller]

6. sent pms

and kicked the Stock Mkt thread.

perhaps they'll chime in.
pd

[ozymandius]

8. I just responded to your pm. I'll repost some of it here.

At the SMW thread, you may see with regularity how incredulous some movements inside the markets are. I think of recent data specifically pointing out the disparity in the price/earning ratio. Particularly inside the S&P - when viewed as a "fund" the price per share among companies in the S&P greatly outweigh the earnings. In other words: if you buy it here, you've paid too much. It seems that the S&P is the principle arena for manipulation. It looks easy to hide among a list of 500 stocks..

The PPT has been no secret for a long time. In fact, high profile stock analysts and economists have started sounding the horn about government intervention in the markets. Tim Wood wrote about this recently in the WrapUp at financialsense.com:

Recently, I have been receiving a few e-mails from listeners questioning me on market manipulation. We all know that the Fed has cut interest rates, pumped M3 and talked the stock market up. Sure, these are all efforts to “control” the market. We have all heard the stories of the “PPT” and how “they” are buying the market in an effort to hold it up as well. As a Dow theorist, my views on this are exactly the same as Robert Rhea’s. There have always been efforts to “control” the market and there has always been talk about how “they” do it as well.

http://www.financialsense.com/Market/wood/2005/0826.html

He goes on to say that manipulation is guaranteed to occur occasionally. The Fed with all its tools today, Wood says, is intervening regularly. Wood goes on to say that such practices are futile as the Fed cannot guarantee market stability and liquidity forever.

Martin Goldberg, also at financialsense.com, has stated the same thing in a column from a few months ago. Sorry, but I've been unable to find it. There's also been lively discussions among traders on onther message boards talking about the mysterious client 990N that clears through Gelber Trading in NYC.

So this is nothing new. But at the same time it is horrifying because everyone knows that manipulation can only serve as a prop, not a foundation.

[The Backlash Cometh]

3. I'd be impressed, but it's written by the freemarketnews.com

These people would prefer to see the dead bodies of drowned NOLA victims at the bottom of the ravine, rather than to see price controls.

[still_one]

4. how can I confirm the accuracy of

"plunge protection team"?


Thanks

[ozymandius]

9. look here

http://www.washingtonpost.com/wp-srv/business/longterm/blackm/plunge.htm

and here:

http://www.archives.gov/federal-register/codification/executive-order/12631.html

[still_one]

10. Thanks

[UpInArms]

11. here are some things

http://www.archives.gov/federal-register/codification/executive-order/12631.html

Executive Order 12631--Working Group on Financial Markets

Source: The provisions of Executive Order 12631 of Mar. 18, 1988, appear at 53 FR 9421, 3 CFR, 1988 Comp., p. 559, unless otherwise noted.

By virtue of the authority vested in me as President by the Constitution and laws of the United States of America, and in order to establish a Working Group on Financial Markets, it is hereby ordered as follows:
Section 1. Establishment. (a) There is hereby established a Working Group on Financial Markets (Working Group). The Working Group shall be composed of:
(1) the Secretary of the Treasury, or his designee;
(2) the Chairman of the Board of Governors of the Federal Reserve System, or his designee;
(3) the Chairman of the Securities and Exchange Commission, or his designee; and
(4) the Chairman of the Commodity Futures Trading Commission, or her designee.
(b) The Secretary of the Treasury, or his designee, shall be the Chairman of the Working Group.
Sec. 2. Purposes and Functions. (a) Recognizing the goals of enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets and maintaining investor confidence, the Working Group shall identify and consider:
(1) the major issues raised by the numerous studies on the events in the financial markets surrounding October 19, 1987, and any of those recommendations that have the potential to achieve the goals noted above; and
(2) the actions, including governmental actions under existing laws and regulations (such as policy coordination and contingency planning), that are appropriate to carry out these recommendations.
(b) The Working Group shall consult, as appropriate, with representatives of the various exchanges, clearinghouses, self-regulatory bodies, and with major market participants to determine private sector solutions wherever possible.
(c) The Working Group shall report to the President initially within 60 days (and periodically thereafter) on its progress and, if appropriate, its views on any recommended legislative changes.

Sec. 3. Administration. (a) The heads of Executive departments, agencies, and independent instrumentalities shall, to the extent permitted by law, provide the Working Group such information as it may require for the purpose of carrying out this Order.
(b) Members of the Working Group shall serve without additional compensation for their work on the Working Group.
(c) To the extent permitted by law and subject to the availability of funds therefore, the Department of the Treasury shall provide the Working Group with such administrative and support services as may be necessary for the performance of its functions.

http://www.guardian.co.uk/wtccrash/story/0,1300,552568,00.html

Fed to prop up Wall St

Shadowy committee ready to pour billions into stock markets to avert shares meltdown

Special report: Terrorism in the US

Richard Wachman and Jamie Doward
Sunday September 16, 2001
The Observer

The US Federal Reserve and Wall Street's powerful investment banks are preparing to spend billions of dollars to support the US stock market, which opens this week for the first time since last Tuesday's terrorist attacks on New York and Washington.

A secretive committee - the Working Group on Financial Markets, dubbed 'the plunge protection team' - includes bankers as well as representatives of the New York Stock Exchange, Nasdaq and the US Treasury. It is ready to co-ordinate intervention by the Federal Reserve on an unprecedented scale.

The Fed, supported by the banks, will buy equities from mutual funds and other institutional sellers if there is evidence of panic selling in the wake of last week's carnage.

The authorities are determined to avert a worldwide slump in share prices like the crashes of 1987 or 1929. Investment banks and their broking subsidiaries are to block short-selling by speculators and hedge funds by making it hard for them to obtain prices on favourable terms.

'Everyone is eager to avoid "contagion", where prices fall rapidly as investors react lemming-like to a falling index,' said one banker.

In addition, US regulators are prepared to ease rules that prevent companies from buying their own stock.

The 'plunge protection team' was established by a special executive order issued by former President Ronald Reagan in 1989. It is known to include senior bankers at leading Wall Street institutions such as Merrill Lynch and Goldman Sachs. It has acted before, in the early Nineties and during the 1998 LTCM hedge fund crisis.

...more...

http://www.frbsf.org/education/activities/drecon/2002/0209.html

Does the Federal Reserve System hold stocks or other commonly traded equities like the Bank of Japan recently started doing? (09/2002)

The Federal Reserve System does not hold corporate stocks, but it does hold government securities. In 2001 government securities1 accounted for a significant share of Federal Reserve System's $654 billion in assets. The Federal Reserve's securities portfolio is composed of securities issued by the United States government or government agencies. Securities held by Federal Reserve Banks are obtained and traded through open market operations.

While the Bank of Japan (BOJ) also conducts monetary policy through open market operations, it recently announced a plan to purchase stocks from commercial banks that fit a set of specified criteria. A subsequent analysis in the Financial Times2 explained the reason for the BOJ's decision to purchase stocks from commercial banks: "The bank said falls in the Nikkei stock average, which dipped briefly below 9000 last week, near its 20-year low, could threaten the stability of financial markets and the financial system."

Security Holdings are Important to the Federal Reserve System

At year-end 2001, the twelve Federal Reserve Banks held over $560 million in U.S. Treasury and federal agency securities. This accounted for about 86 percent of total System assets (see Chart 1). The majority of these securities were Treasury bills, notes, and bonds. The balance of the securities portfolio was federal agency securities issued by Federal Farm Credit Banks, the Federal Home Loan Bank, Federal Land Banks, or the Federal National Mortgage Association (Fannie Mae).

...more...

[satya]

5. Investor's Business Daily is reporting it, too.

Sprott's research suggests U.S. market manipulation
By Peter Brimelow
Last Updated: 9/9/2005 6:35:47 AM

<snip>

Indeed, several letters muttered about suspicious late-day rallies as detailed in our June 27, 2002, column. Of course, it's too wild an idea for most of the mainstream media.

Now, two respected figures in the Canadian investment industry, John Embry and Andrew Hepburn of Toronto's Sprott Asset Management, have published a report, "Move Over, Adam Smith: The Visible Hand of Uncle Sam."

It pieces together from published sources evidence that points to the existence of the long-rumored "Plunge Protection Team," an informal group of U.S. government agencies, stock exchanges and large Wall Street firms. (The report's downloadable from the firm's Web site www.sprott.com.)

For starters, the Sprott reports quotes former Clinton advisor George Stephanopoulos apparently confirming the group's existence and revealing that the Federal Reserve directed large banks to prop up currency markets in the wake of the Long-Term Capital Management crisis in 1998.

more

[scarletwoman]

7. I wonder to whom this will come as a surprise?

Of course, the ability of the U.S. public at large to believe any fiction and fantasy about the virtue, honesty, integrity and good intentions of the wealthy elite is utterly breathtaking...

sw

[UpInArms]

12. the Guardian article from after 9/11 states that the PPT was

used during the LTCM crisis:

http://www.guardian.co.uk/wtccrash/story/0,1300,552568,00.html

excerpt:

The 'plunge protection team' was established by a special executive order issued by former President Ronald Reagan in 1989. It is known to include senior bankers at leading Wall Street institutions such as Merrill Lynch and Goldman Sachs. It has acted before, in the early Nineties and during the 1998 LTCM hedge fund crisis.

Whether coordinated action by the US authorities and banking institutions will be sufficient to avert a large-scale sell-off on Wall Street this week remains to be seen.

[dweller]

13. thanks for the responses

from all involved.

dp

[spuddonna]

14. Yes, but even this won't stop Great Depression II...

No matter how much manipulation goes on, I honestly believe it only defers the inevitable: complete market meltdown...

Stock markets are based on mass psychology, and soon we will see this house of cards fall. It won't be the first time, and it probably won't be the last...

[UpInArms]

15. sometimes a bit of history

can help you gauge the future:

http://www.huppi.com/kangaroo/Timeline.htm

best of luck to us all