Power of Story Send a Tweet        

Share on Google Plus Share on Twitter Share on Facebook Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend 21 (21 Shares)  

Printer Friendly Page Save As Favorite View Favorites (# of views)   8 comments
OpEdNews Op Eds

The not-so-invisible hand: How the plunge protection team killed the free market

By   Follow Me on Twitter     Message Ellen Brown       (Page 1 of 4 pages)     Permalink

Related Topic(s): ; ; ; ; ; ; ; ; ; ; (more...) ; ; ; ; ; ; , Add Tags  (less...)  Add to My Group(s)

Must Read 6   Valuable 4   Supported 2  
View Ratings | Rate It

opednews.com Headlined to H2 10/26/08

Author 7471
Become a Fan
  (204 fans)
- Advertisement -

"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%.   

- Advertisement -

"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.   

- Advertisement -

"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. 

- Advertisement -

 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 Most Massive Intervention Since Roosevelt" 

Next Page  1  |  2  |  3  |  4

 

- Advertisement -

Must Read 6   Valuable 4   Supported 2  
View Ratings | Rate It

opednews.com

Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling WEB OF DEBT. In THE PUBLIC BANK SOLUTION, her latest book, she explores successful public banking models historically and (more...)
 

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon Share Author on Social Media   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.

Follow Me on Twitter

Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
- Advertisement -

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

It's the Derivatives, Stupid! Why Fannie, Freddie and AIG Had to Be Bailed Out

Mysterious Prison Buses in the Desert

LANDMARK DECISION PROMISES MASSIVE RELIEF FOR HOMEOWNERS AND TROUBLE FOR BANKS

Libya: All About Oil, or All About Central Banking?

Borrowing from Peter to Pay Paul: The Wall Street Ponzi Scheme Called Fractional Reserve Banking

"Oops, We Meant $7 TRILLION!" What Hank and Ben Are Up to and How They Plan to Pay for It All