43 online
 
Most Popular Choices
Share on Facebook 16 Printer Friendly Page More Sharing
OpEdNews Op Eds    H3'ed 7/30/09

FREE Market? Not Anymore!

By       (Page 1 of 1 pages)   1 comment
Message George Washington
Become a Fan
  (5 fans)
This article won't talk about how Uncle Sam has taken majority ownership in a number of financial giants and car companies. Everyone knows about that.

There are a lot of other reasons the market is not free.

For example, Two new quotes show that Uncle Sam has replaced individual investors. As bond king Bill Gross says:

Investment conclusions? A 3% nominal GDP "new normal"means lower profit growth, permanently higher unemployment, capped consumer spending growth rates and an increasing involvement of the government sector, which substantially changes the character of the American capitalistic model.
And David Rosenberg says:
The government has its hands in 40% of the economy and when public sector officials can influence how banks can value their assets, how mortgage servicers should be doing their business, who shall fail in the financial industry and who shall not; and when we have a central bank that is not just the lender but the market of last resort, even for RVs, and a government willing to run up its deficit to levels that would have made FDR blush, then perhaps we can end up seeing a recovery occur sooner than we had thought.
(As I wrote last September, the government's involvement in the economy has become a lot like the movie "Weekend at Bernie's").

Then, of course, you have high-frequency program tradings which not only distort the markets, making up more than 70% of stock trades, but which also let Goldman and the other program trading giants take a sneak peak at what the real (aka "human") traders are buying and selling, and then trade on the insider information. See this, this, this and this. (This is frontrunning, which is illegal; but it is a lot bigger than garden variety frontrunning, because the program traders are not only trading based on inside knowledge of what their own clients are doing, they are also trading based on knowledge of what all other traders are doing).

Remember, one of the assumptions of economics is that everyone has the same instant and total knowledge of prices, supply and demand as everyone else. Program trading destroys that assumption, because it gives the handful of financial giants with high-frequency trading programs insight into prices, supply and demand that no one else has.

Indeed, to the extent that banks carry out tasks for the Federal Reserve, they get insider knowledge of what the fed is doing, and which way trends will go. I'm not even talking about the Plunge Protection Team (see this and this). I'm talking about the Fed's "normal" open market operations.

And then there's Goldman admitting that its proprietary trading program can "manipulate the markets in unfair ways".

And don't forget that at least one of Matt Taibbi's claims that Goldman has manipulated every major bubble since the Great Depression has been confirmed. Specifically, the Commodity Futures Trading Commission confirms that speculators caused the oil boom last year.

And there is also the recently-unearthed Federal Reserve document from 1961 - hosted on the St. Louis Federal Reserve's website (pdf version; html version) - showing, in the words of Rob Kirby:

The Fed's . . . plans to intervene surreptitiously in the currency and gold markets to support the dollar and to conceal, obscure, and falsify U.S. government records so that the intervention would not be discovered.
In the same article, Kirby also argues that bond interest rates have also been manipulated.

And then there are bear raids, naked short selling, and credit default swap holders driving companies into bankruptcy (see this and this).

Given the above manipulations, I don't know if there is anything "free" about the market whatsoever.

The above list is just what comes to mind off the bat. There are a lot of other forms of manipulation. Indeed, I am not even an insider in the financial industry. Just imagine what those guys know.

Rate It | View Ratings

George Washington Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

George Washington


As a political activist for decades, I have rejoiced in victories for the people and mourned in defeats. I chose the pen name "George Washington" because - as Washington's biographies show - he wasn't a (more...)
 
Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines

 
Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

STAY IN THE KNOW
If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
Name
Email
   (Opens new browser window)
 

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Top Financial Experts Say World War 3 Is Coming -- Unless We Stop It

Indonesian Health Minister Says Swine Flu Might Have Been Man-Made | Epidemiologists and Virologists Need to Weigh In

Obama Is Considering Doing Something Even Bush Didn't Try: "Preventive Detention" of People Who Will Never Get a Trial

How To Solve the Economic Crisis

The Four Reasons the Mainstream Media Is Worthless

5 Reasons that Corporate Media Coverage is Pro-War

To View Comments or Join the Conversation:

Tell A Friend