Perdido 03

Perdido 03

Thursday, January 7, 2010

Plunge Protection Team

I'm a huge fan of CNBC's morning show.

Watch it nearly every morning.

What I have learned from watching that show in the last half year is that everything is fine and dandy with the stock market.

And if the market's up, well, then all is well with the state of the nation.

And since last March, the markets have been going up.

So all must be well with the economy and the nation , right?


Or maybe someone's funking with the numbers:

WASHINGTON (MarketWatch) -- The massive stock-market rally in the past nine months is mostly due to secret government buying of stock-index futures, a respected stock-market analyst said Tuesday.

Charles Biderman, chief executive of TrimTabs Investment Research, is the latest and most credible person to charge that the Federal Reserve and the Treasury (in league with top Wall Street firms) is rigging the stock market on a daily basis.

In a special report released Tuesday, Biderman said the $6 trillion increase in U.S. stock-market capitalization since March can't be explained by the usual sources of funds flowing into the market -- such as mutual funds, direct retail investment, pension funds, hedge funds or foreign purchases.

The only logical explanation for the extent of the rally, he suggested, is secret buying by a government committee known colloquially as the Plunge Protection Team. It's like the dark matter that astrophysicists conjecture must be there, even if we can't detect it.

The PPT was established by President Ronald Reagan in 1988 after the 1987 stock crash to coordinate the government's response to market meltdowns. It consists of the Fed chairman, the Treasury secretary, the head of the Securities and Exchange Commission and the head of the Commodity Futures Trading Commission.

Biderman acknowledged that he had no direct evidence that the Fed and other agencies have intervened in the stock market. But he worried about what will happen to the market if the PPT has been buying and suddenly stops.

Now maybe the government is doing nothing wrong and maybe they're disclosing all the Treasurys, agency bonds and mortgage-backed securities they've been buying in the fixed income markets.

Or maybe they're printing money at night and buying stock futures in the morning and hiding it from view.

Hard to know since there is no transparency at the Federal Reserve (which is the way Fed chief Ben Bernanke and Bernanke's boss, President Obushma, want it.)

But until the Fed proves differently, I'd lean toward the government buying up a bunch of Treasurys, bonds and securities with freshly minted greenbacks.

Remember, the people who caused last year's near financial collapse are still the ones running the show at the Fed and the Treasury Department.

Lots of good reasons why they'd be operating the Plunge Protection Team overtime these days.

Of course they can put all this tin foil hat stuff to rest by submitting to an audit of the Federal reserve the way Ron Paul and lots of others in Congress want.

No comments:

Post a Comment