Peter Brimelow writing for CBSMarketWatch has pinpointed a very strong report out of Canada alleging that the U.S. Government is rigging the equity markets.
Whatever else you do today, you better stop and read this report. It is a blockbuster bombshell which must be acknowledged and responded to by the Fed, the Treasury, and others who are implicated. It must and it will provoke a tremendous uproar. The report entitled “Move Over, Adam Smith: The Visible Hand of Uncle Sam” was prepared by analysts at a firm called Sprott Asset Management in Toronto.
www.sprott.com
The report alleges that it has been common knowledge on the Street for quite some time that a shadowy, informal “coordinating group” known as the Plunge Protection Team (PPT) has been working secretly inside the U.S. Government. This group apparently arranges more or less continuous interventions by the Treasury and the Fed to stabilize U.S. equity markets. Allegedly, these interventions have been going on periodically since the 1987 crash and the report concludes that what began as expedient stop-gap emergency measures to deal with dire financial crises through secret direct TreasuryFed intervention has become ongoing, pervasive and endemic to the market. The report details how private investment bankers and large brokerage firms are employed as de facto agents of the U.S. Government to manipulate the markets.
If these allegations are true this has huge negative implications for the markets which the report outlines. in some detail.
Apparently quite a few players are in on this market fixing scheme by the U.S. Government in co-ordination with the Fed which at its core involves the dissemination of insider information by strategically placed individuals at the NY Fed to prime the market to accomplish government policy objectives. This may or may not entail the necessity of direct Treasury or Fed intervention on a daily basis. But at the very least certain select , privileged members of the “investment community” are provided with early information on U.S. Government market intentions and forthcoming Treasury/Fed interventions into the equity markets. This is the very thing for which poor Martha Stewart was required to spend six months in the Federal penitentiary. The details of this market fixing scheme are stunning in breadth and scope.
Market fixing or “stabilization activities” as the Treasury might call them enriches the privileged insiders acquiescing with the Government’s policy while socializing the risk to the U.S. taxpayers through secret transactions of the Exchange Stabilization Fund (ESF) a Treasury account managed by the NY Fed. This report explodes the myth of free capital markets in the U.S. The inescapable conclusion is that the financial markets are managed to a large extent by means of central control of government planners in Washington. The report infers that national security concerns has prompted this surreptitious nationalization of the capital markets. I am not making this up.
Why is this coming out now? My guess is that this cozy deal between the Government and a select coterie of Street allies is beginning to really rankle the players left out of the loop who are not included in the early morning conference calls originating from the Fed’s NY offices giving direction on the day’s trading objectives. These players are left to interpret and infer what’s going on after the juiciest profits are raked up by the “serious” street players in on the fix. Green eyed jealousy, pure and simple is leading to disgruntled whistle blowing on this giant bucket shop operation being coordinated by the Treasury, the Fed and other policy making agencies with the aid of its private Wall Street “partners”. It gives the term “public/private partnership” a whole new meaning.
This report helps to shed light on a lot that is going on in the markets today.
Have you not wondered how in the world the markets can be experiencing a pleasantly euphoric ride up in the last couple of weeks in the face of losing an entire region of the U.S. to Hurricane Katrina, rising oil prices, a political firestorm of nearly unprecedented proportions threatening to derail Bush’s second term? How can a team of 10 welll placed “serious” market players get their smiley pictures in last week’s Barron’s blithely assuring the public that the market is going to be 10% higher by year end? How? Because they know that Uncle is in there now intervening, either directly or through indirection through the use of insider information to elicit the proper market response of its private partners, and they know that the Government is going to continue to be in there supporting the markets no matter what, that’s how. What is the source of all those knowing Mona Lisa smiles? Apparently, if you believe these Canadians, it's those early morning 5 AM conference calls with the Fed and the Treasury.
I have been bedeviling the ER Board with my ruminations on the unexplainable and potentially ruinous condition of pitifully low risk premiums in the equity markets for some time now. Unsustainable! I have roared at a somewhat fevered, ranting pitch.
Silly me, I really didn’t know until today that these unfathomable low risk premiums are quite fathomable after all—if these allegations are proven out.
You may have heard the term “The Greenspan Put”. This is a kind of tongue in cheek, inside joke. What it means is: don’t worry, you carry no market risk, you can put your position to Greenspan if the market looks a bit unstable, if things get a little out of control – your profits are locked in – the U.S. Government and its unknowing and unwilling taxpayers will bail out your position with Greenspan and the Fed acting as go-between facilitator secretly intervening in the market for the Treasury. There’s a nasty word for that if a lady does it for pay.
If this Canadian report is accurate, then there is no market risk. If there is no market risk then why should anyone be paid a premium to assume a risk that isn’t there?. What is the difference between a risk free Treasury bond and a share of common stock? None, if both instruments are guaranteed by the U. S. Government. And both instruments should yield exactly the same return. Low risk premiums and sustainable, in my view nutty, high market valuations courtesy of secret market price fixing by the U.S. Government.
Not only that, low risk premiums on equity investments are sustainable for a very long time as long as the U.S. taxpayer is going to provide the liquidity to keep them low if Volker’s “event or combination of events” were to suddenly transpire. According to the Canadians you and I are going to be the buyers of last resort after all courtesy of your speculator friendly U.S. Treasury and its willing accomplice at the the Fed. A lot easier to be aggressively, bullishly speculative when Uncle Sam puts a floor under the market. Might be a big bill for you and me, though. A question in my mind has to be: How much of the market has been nationalized to date? What is the market position of the U.S.taxpayer anyway? Is this the secret solution to the Social Security problem? Public/Private accounts that nobody knows about?
And, son of a gun, all those smiling Mona Lisa insider collaborators, the “serious players”on the Street, have apparently been in on the fix for quite some time. Not hard to be a market genius when the fix is in and you know when the fix is on. Whaddaya think of that Maria Bartimoreo? What’s that number to dial in on the Fed/Treasury 5AM conference call? Eliot Spitzer, please call your office!
I know you think I have gone completely bonkers and I am blowing the staggering implications of this report completely out of proportion. Read it for yourself and you tell me what it means if it is all true. Of course, if you can convince me it’s all a bunch of hokum then I will shut my mouth. But these allegations sure have an authentic ring to them.
Stay tuned. You haven’t heard the last of this. The Fed and the Treasury are going to have to denounce and disavow this Canadian report in no uncertain terms, and I mean pronto. Or it’s going to be big trouble for the Administration and big trouble for the markets. If we see a bunch of “no comment” or other attempts to pooh- pooh, or brush off or make light of or dismiss this report off-handedly as lunatic stuff then know that we are in big trouble. They have to squash this and squash this hard.
These are serious, serious allegations these Canadians are making. If this stuff is all true then it represents a dagger at the throat of the American free enterprise free market capitalist system, make no mistake about that. All in the name of national security? We have to subvert the system in order to save it and protect its participants from themselves? Give me a break! This is mind boggling stuff.
Either this story is too big to cover or some financial reporter is going to get a Pulitzer Prize for this. I am a little curious about where the press has been on this if, as the Canadians allege is the case, ongoing endemic U.S. Government intervention into the equity markets, that is to say Government price fixing, has been common knowledge in parts of the Street for some time. There ought to be a real feeding frenzy by the press on this but there isn’t. Strange. It is a huge, unthinkable story, if true. How come the silence? This one could make Teapot Dome seem like a Sunday School picnic. Plunge Protection Team? – who’d have thought it was really possible?
Donner
Whatever else you do today, you better stop and read this report. It is a blockbuster bombshell which must be acknowledged and responded to by the Fed, the Treasury, and others who are implicated. It must and it will provoke a tremendous uproar. The report entitled “Move Over, Adam Smith: The Visible Hand of Uncle Sam” was prepared by analysts at a firm called Sprott Asset Management in Toronto.
www.sprott.com
The report alleges that it has been common knowledge on the Street for quite some time that a shadowy, informal “coordinating group” known as the Plunge Protection Team (PPT) has been working secretly inside the U.S. Government. This group apparently arranges more or less continuous interventions by the Treasury and the Fed to stabilize U.S. equity markets. Allegedly, these interventions have been going on periodically since the 1987 crash and the report concludes that what began as expedient stop-gap emergency measures to deal with dire financial crises through secret direct TreasuryFed intervention has become ongoing, pervasive and endemic to the market. The report details how private investment bankers and large brokerage firms are employed as de facto agents of the U.S. Government to manipulate the markets.
If these allegations are true this has huge negative implications for the markets which the report outlines. in some detail.
Apparently quite a few players are in on this market fixing scheme by the U.S. Government in co-ordination with the Fed which at its core involves the dissemination of insider information by strategically placed individuals at the NY Fed to prime the market to accomplish government policy objectives. This may or may not entail the necessity of direct Treasury or Fed intervention on a daily basis. But at the very least certain select , privileged members of the “investment community” are provided with early information on U.S. Government market intentions and forthcoming Treasury/Fed interventions into the equity markets. This is the very thing for which poor Martha Stewart was required to spend six months in the Federal penitentiary. The details of this market fixing scheme are stunning in breadth and scope.
Market fixing or “stabilization activities” as the Treasury might call them enriches the privileged insiders acquiescing with the Government’s policy while socializing the risk to the U.S. taxpayers through secret transactions of the Exchange Stabilization Fund (ESF) a Treasury account managed by the NY Fed. This report explodes the myth of free capital markets in the U.S. The inescapable conclusion is that the financial markets are managed to a large extent by means of central control of government planners in Washington. The report infers that national security concerns has prompted this surreptitious nationalization of the capital markets. I am not making this up.
Why is this coming out now? My guess is that this cozy deal between the Government and a select coterie of Street allies is beginning to really rankle the players left out of the loop who are not included in the early morning conference calls originating from the Fed’s NY offices giving direction on the day’s trading objectives. These players are left to interpret and infer what’s going on after the juiciest profits are raked up by the “serious” street players in on the fix. Green eyed jealousy, pure and simple is leading to disgruntled whistle blowing on this giant bucket shop operation being coordinated by the Treasury, the Fed and other policy making agencies with the aid of its private Wall Street “partners”. It gives the term “public/private partnership” a whole new meaning.
This report helps to shed light on a lot that is going on in the markets today.
Have you not wondered how in the world the markets can be experiencing a pleasantly euphoric ride up in the last couple of weeks in the face of losing an entire region of the U.S. to Hurricane Katrina, rising oil prices, a political firestorm of nearly unprecedented proportions threatening to derail Bush’s second term? How can a team of 10 welll placed “serious” market players get their smiley pictures in last week’s Barron’s blithely assuring the public that the market is going to be 10% higher by year end? How? Because they know that Uncle is in there now intervening, either directly or through indirection through the use of insider information to elicit the proper market response of its private partners, and they know that the Government is going to continue to be in there supporting the markets no matter what, that’s how. What is the source of all those knowing Mona Lisa smiles? Apparently, if you believe these Canadians, it's those early morning 5 AM conference calls with the Fed and the Treasury.
I have been bedeviling the ER Board with my ruminations on the unexplainable and potentially ruinous condition of pitifully low risk premiums in the equity markets for some time now. Unsustainable! I have roared at a somewhat fevered, ranting pitch.
Silly me, I really didn’t know until today that these unfathomable low risk premiums are quite fathomable after all—if these allegations are proven out.
You may have heard the term “The Greenspan Put”. This is a kind of tongue in cheek, inside joke. What it means is: don’t worry, you carry no market risk, you can put your position to Greenspan if the market looks a bit unstable, if things get a little out of control – your profits are locked in – the U.S. Government and its unknowing and unwilling taxpayers will bail out your position with Greenspan and the Fed acting as go-between facilitator secretly intervening in the market for the Treasury. There’s a nasty word for that if a lady does it for pay.
If this Canadian report is accurate, then there is no market risk. If there is no market risk then why should anyone be paid a premium to assume a risk that isn’t there?. What is the difference between a risk free Treasury bond and a share of common stock? None, if both instruments are guaranteed by the U. S. Government. And both instruments should yield exactly the same return. Low risk premiums and sustainable, in my view nutty, high market valuations courtesy of secret market price fixing by the U.S. Government.
Not only that, low risk premiums on equity investments are sustainable for a very long time as long as the U.S. taxpayer is going to provide the liquidity to keep them low if Volker’s “event or combination of events” were to suddenly transpire. According to the Canadians you and I are going to be the buyers of last resort after all courtesy of your speculator friendly U.S. Treasury and its willing accomplice at the the Fed. A lot easier to be aggressively, bullishly speculative when Uncle Sam puts a floor under the market. Might be a big bill for you and me, though. A question in my mind has to be: How much of the market has been nationalized to date? What is the market position of the U.S.taxpayer anyway? Is this the secret solution to the Social Security problem? Public/Private accounts that nobody knows about?
And, son of a gun, all those smiling Mona Lisa insider collaborators, the “serious players”on the Street, have apparently been in on the fix for quite some time. Not hard to be a market genius when the fix is in and you know when the fix is on. Whaddaya think of that Maria Bartimoreo? What’s that number to dial in on the Fed/Treasury 5AM conference call? Eliot Spitzer, please call your office!
I know you think I have gone completely bonkers and I am blowing the staggering implications of this report completely out of proportion. Read it for yourself and you tell me what it means if it is all true. Of course, if you can convince me it’s all a bunch of hokum then I will shut my mouth. But these allegations sure have an authentic ring to them.
Stay tuned. You haven’t heard the last of this. The Fed and the Treasury are going to have to denounce and disavow this Canadian report in no uncertain terms, and I mean pronto. Or it’s going to be big trouble for the Administration and big trouble for the markets. If we see a bunch of “no comment” or other attempts to pooh- pooh, or brush off or make light of or dismiss this report off-handedly as lunatic stuff then know that we are in big trouble. They have to squash this and squash this hard.
These are serious, serious allegations these Canadians are making. If this stuff is all true then it represents a dagger at the throat of the American free enterprise free market capitalist system, make no mistake about that. All in the name of national security? We have to subvert the system in order to save it and protect its participants from themselves? Give me a break! This is mind boggling stuff.
Either this story is too big to cover or some financial reporter is going to get a Pulitzer Prize for this. I am a little curious about where the press has been on this if, as the Canadians allege is the case, ongoing endemic U.S. Government intervention into the equity markets, that is to say Government price fixing, has been common knowledge in parts of the Street for some time. There ought to be a real feeding frenzy by the press on this but there isn’t. Strange. It is a huge, unthinkable story, if true. How come the silence? This one could make Teapot Dome seem like a Sunday School picnic. Plunge Protection Team? – who’d have thought it was really possible?
Donner
