 |
Add to My Group
6
4
2
View Ratings |
Rate It
The not-so-invisible hand: How the plunge protection team killed the free market
By Ellen Brown (about the author) Page 1 of 4 page(s)
For OpEdNews: Ellen Brown - Writer "We're now no different from any of those Western European semi-socialist welfare states that we love to deride. Italy? Sure, it's had four governments since last Thursday, but none of them would have allowed this to go on; the Italians know how to rig an economy." – Bill Saporito, "How We Became the United States of France," Time (September 21, 2008) 
October 24 marks the 79th anniversary of the October 1929 stock market crash. Heavy selling started on Thursday, October 24, 1929, and accelerated the following week on Black Monday and Black Tuesday, October 28 and 29. Many feared a repeat of this disaster on Friday, October 24, 2008, after Japan's Nikkei stock average fell nearly 10% during the night, Hong Kong's Hang Seng fell 8%, and Germany's and Britain's fell 5%.
"In a stunning turn of events," reported Yahoo! Finance, "the futures for the major indices were 'lock limit' down before the start of trading Friday, meaning they had hit a 5% threshold that prevented them from trading any lower until the stock market opened Friday."
Traders prepared for the worst, but remarkably, disaster was averted. The U.S. market fell only 3.5%, just another "ordinary" bearish day. Why the more modest drop in the U.S., where the financial debacle originated and should have hit hardest? Suspicious observers saw the covert hand of the Plunge Protection Team (PPT), the group set up under President Reagan to maintain market "stability" by manipulating markets behind the scenes. Bill Murphy commented in LeMetropoleCafe.com:
"Today the Muppets on CNBC were remarking how well our market acted, not falling apart as expected. All day long they spoke of how our market was acting differently today than every other stock market in the world. Well hello, the other countries don't have a PPT, which is WHY our market is so different.
"There are those who might think what the PPT is doing is right. What they don't realize is their making 'Everything is fine' for so long, and not allowing the market to trade freely . . . like allowing the stock market to fall the way it should, has kept the individual in the market . . . when they might have been SCARED out some time ago."
In response to Bill Saporito's comment in Time, it might be countered that Henry Paulson's Plunge Protection Team is quite adept at rigging an economy. The difference between an acknowledged socialist state and the stealth socialism we have in the U.S. today is that in a socialist state, everyone expects the market to be rigged and operates accordingly. In a rigged pseudo-capitalist economy, investors are easily separated from their money because they expect the market to follow "free market principles" based on "supply and demand." They are seduced into "pump and dump" schemes – artificial manipulations that allow insiders to unload stock at a high price or buy it at a low price – because they trust in Adam Smith's "invisible hand," which is supposed to automatically set things right in a market left to its own devices. The market today is indeed controlled by an invisible hand, but it is not necessarily serving the interests of small investors.
Plunge Protection for Some, Plunge Creation for Others
The most egregious examples of market manipulation have been in gold, silver and oil. The official "spot" (or cash) prices of gold and silver were taken down sharply in the last ten days, despite the fact that physical demand has been inexorable. Gold is available in the "real" market only at huge markups, and popular types of silver are not available at all. We were taught in school that communism does not work because when industry is in the hands of a single owner (the government), competition is eliminated and chronic shortages and black markets develop, since the government does not let prices respond to "supply and demand" but dictates them from the top. Today this is happening with gold and silver, with the true physical price varying radically from the reported paper price.
Gold is known as the "contra-investment," the "go to" investment which historically has gone up when other stocks were failing. Investors see it as something tangible that will hold its value when everything else is falling apart. For that reason, rigging the market to "maintain stability" means suppressing the price of gold.
The current round of gold manipulations started on Thursday, October 16, at 10 am, when the price of gold suddenly suffered a freefall plunge of $45 within minutes. It continued to drop until it was down by nearly $60 in a little over an hour.
Nothing happened on Thursday between 10 and 11 am to warrant this vertical drop. If anything, gold should have been shooting up in the same exponential fashion that it was falling. On Wednesday, the stock market had dropped over 700 points, and Dow futures (bets on which way the market would go) were down by 150 points Wednesday night. During the night, the Japanese stock market fell more than 10%, and all European markets were down. Thursday morning, among other very bad economic news, U.S. industrial output was reported to have posted its biggest fall in 34 years, and mid-Atlantic factory activity had crashed unexpectedly from September to October. Yet Dow futures were suddenly 130 points higher; and gold was slammed down right at 10 am, although physical gold was available only by paying huge premiums, and gold prices around the world were shooting up. The day continued in the same counterintuitive way, just one more egregious example of an ongoing pattern of manipulation that has become so blatant that either the manipulators have become supremely confident of their invulnerability or they are so terrified of impending doom that all pretense of plausible denial has been abandoned.
The views expressed in this article are the sole responsibility of the author
and do not necessarily reflect those of this website or its editors.
 Contact Author |
Contact Editor |
 View Authors' Articles |
by Elizabeth Warren
$29.95
Lowest New Price $31.80
Number of pages: 550
Publisher: Aspen Law
by Alex Philippidis
$5.95
Number of pages: 3
Publisher: Thomson Gale
by Timothy G. Borden
$10.90
Number of pages: 8
Publisher: Gale
by Joan Stableford
$5.95
Number of pages: 11
Publisher: Westfair Communications, Inc.
| 8 comments |
|
Great Article
I was wondering how and why these bizarre undulations of the market were taking place. I was also wondering why I could not buy any gold at the quoted rates when gold went down. Like elections, its "The Big Fix". by jeff rock (13 articles, 1 quicklinks, 10 diaries, 319 comments [128 recommended, 1 rejected]) on Sunday, Oct 26, 2008 at 8:47:20 AM  (0+)
|
|
Treason, indeed
This posting seems to explain the unexplainable up days for the market. Also my feeling that there was 'somebody' getting rich on them. I have long felt that I was the sucker at that particular poker game....nice to know my perceptions had basis in fact. Sad that the media does not see fit to report on stories with importance to us, the absence of Brittany's underwear being judged as being of more interest. When a Republican says 'Let us Prey' we all mistake their meaning. by Roger (0 articles, 0 quicklinks, 0 diaries, 517 comments [38 recommended, 2 rejected]) on Sunday, Oct 26, 2008 at 9:47:37 AM (0+)
|
|
Great, great article.
I've been learning from and following web sites like George Ure's 'Urban Survival', Chris Martenson's excellent and educational site (for those who need to begin to get up speed on money/financial info, DO his Crash Course - you won't be sorry), and Karl Denninger's 'The Market Ticker' (albeit more right wing/free market generally but no less cognizant of much of what really going on - although they still think, I believe, generally more in terms of 'forces' and greed as opposed to 'conspiracies'). But it is a conspiracy, n'est pas? But I've not seen as nicely a comprehensive and tidy study as is your article. thanks again Thanks very much. I will be passing it around. Far and Wide. I only wish all the other posters of 'dire and important' news here on OpEdnews could get a clue and focus in on the financial/economic news because more than anything else, it's the bullshit spewing from the government, the Fed, the PPT etc., and the market whores which is going to (quite literally for millions, I expect) kill us. by richard (0 articles, 5 quicklinks, 2 diaries, 1482 comments [514 recommended, 13 rejected]) on Sunday, Oct 26, 2008 at 10:03:58 AM (0+)
|
|
This is great
I was wondering what had happened. My husband died last year but he worked at Goldman Sachs and nothing he ever said would lead me to understand what happened to gold or silver or oil or even why the dollar was doing so well. Do you know which 3 banks were involved in the manipulation? siriusss by siriusss (6 articles, 3 quicklinks, 2 diaries, 114 comments [7 recommended, 0 rejected]) on Sunday, Oct 26, 2008 at 10:25:34 AM (0+)
|
|
Which 3 U.S. banks?
Hi, Butler says in his article that there is an archaic rule preventing the CFTC from revealing the name of the banks -- it may have been only ONE bank: "The facts are so clear that the CFTC should have provided an immediate explanation as to why this doesn’t constitute manipulation. They should move against the manipulators just as promptly. Silence is not an option. The U.S. banks (or bank) in question are at the top of the financial food chain when it comes to size, power and importance. They are publicly owned by millions of investors. These banks are generally open about their financial dealings, which are closely scrutinized. There is an archaic rule that prevents the CFTC from revealing the identity of these banks. But there is no rule preventing these banks acknowledging they were responsible for these silver and gold short sales and explaining the economic justification behind them. These are material transactions that should be disclosed to their shareholders. Apparently transparency does not apply to manipulative transactions. "One U.S. Bank? "While the report lists two U.S. banks in silver and three in gold, it may be that only one bank, and perhaps the same bank, held the greatest amount of the total short position in silver and gold. The published data is not specific enough, but objective analysis raises the strong probability that just one bank held 30,000 or more short silver contracts (150 million ounces), and 75,000 gold contracts in the current report. What are the odds of two or three banks suddenly deciding to short unprecedented amounts of silver and gold contracts spontaneously? If it were two or three banks it would raise the issue of collusion. If it was just one U.S. bank, it would mean that bank held 34% of the entire COMEX silver market and 30% of the gold market. Such a concentration would be manipulation to any reasonable person." by Ellen Brown (55 articles, 0 quicklinks, 3 diaries, 122 comments [18 recommended, 0 rejected]) on Sunday, Oct 26, 2008 at 10:33:05 AM (0+)
|
|
Ellen, I've saved your article and will study it.
In the meantime, I'm thinking November 15, which I suppose you are too. It's my hunch MSM is also. NYTimes' headlining the US economy this morning helped to make me come to that. by Margaret Bassett (51 articles, 3819 quicklinks, 66 diaries, 2539 comments [200 recommended, 0 rejected]) on Sunday, Oct 26, 2008 at 12:04:44 PM (0+)
|
|
If it had been Martha Stewart
you better believe her name would be all over the news. I also heard that Paulson was blacking out the pay out amounts of the banks involved in consulting for the bailout. click here much for transparency. Why isn't this treason or covered under RICO ? siriusss by siriusss (6 articles, 3 quicklinks, 2 diaries, 114 comments [7 recommended, 0 rejected]) on Sunday, Oct 26, 2008 at 12:13:23 PM (0+)
|
|
If it had been Martha Stewart
you better believe her name would be all over the news. I also heard that Paulson was blacking out the pay out amounts of the banks involved in consulting for the bailout. click here much for transparency. Why isn't this treason or covered under RICO ? siriusss by siriusss (6 articles, 3 quicklinks, 2 diaries, 114 comments [7 recommended, 0 rejected]) on Monday, Oct 27, 2008 at 12:16:21 AM (0+)
|
Want to post your own comment on this Article? 
|
||||
|
||||||||||||||
Well Said (1) 
News (1) 
Touching (0) 
Funny (0) 
Interesting (2) 
Inspiring (0) Tell a Friend:
|
Copyright © 2002-2009, OpEdNews |
