Safehaven | Nefarious Market Manipulation

March 18, 2008

Nefarious Market Manipulation
by Randy

As I wrote in my Sunday post: Tumultuous Week Ahead, the Plunge Protection Team (PPT) certainly has been busy.

Yesterday, the team bailed out/monetized Bear Stearns debts with $30 Billion of public money (and I'm sure we'll see plenty more where that came from).

Today, not to be outdone by the previous day's activities, the nefarious market manipulators (PPT) pulled out all stops and their orchestrated manipulation operation was synched up perfectly to the FOMC announcement -- and was so extreme/blatant (across all spectrums), that I nearly fell ill from disgust.

Specific Examples of their Manipulation:

FOMC Rate announcement took place today at 2:15PM EST and the cut was 75bp.

To anyone with a working brain, the results of a significant rate cut like this should be dollar negative and gold positive (right?) Well look at the charts below -- especially after the FOMC announcement

US DOLLAR INDEX CHART -- Note the Dollar's increase after 2:15 PM

SPOT GOLD -- Note the fall in gold price after 2:15 PM (down > $20)

How about the DOW sell-off immediately after the 2:15 announcement (investors were disappointed with a 75bp cut -- they expected 1%) and the PPT rescue, and huge rally later in the day?

S&P Chart below is nearly identical to the DOW above

We have a "free market" economy/society?

Come on, cut us a break -- We may act like sheep sometimes, but we're not stupid, and your manipulation operation was obvious to anyone with a heartbeat.

I guess the NY Times was spot on with their article yesterday:

Fed Acts to Rescue Financial Markets. (Snippets below)

The New York Fed, which runs the Fed's daily market operation and has long been the Federal Reserve's primary channel for dealing with Wall Street...

In a potentially even bigger move, the Federal Reserve also announced its biggest commitment yet to lend money to struggling investment banks. The central bank said its new lending program would make money available to the 20 large investment banks that serve as "primary dealers" and trade Treasury securities directly with the Fed.

Much like a $200 billion loan program the Fed announced last Tuesday, this program will essentially allow the government to hold as collateral a wide variety of investments that include hard-to-sell securities backed by mortgages (My 2 cents--Worthless Toxic Waste). But Fed officials told reporters on Sunday night that the new program would have no limit on the amount of money that can be borrowed. Did he just say "NO LIMIT"???)

"The Federal Reserve, in close consultation with the Treasury, is working to promote liquid, well-functioning financial markets, which are essential for economic growth," he said. "These steps will provide financial institutions with greater assurance of access to funds."

I guess the next question is: Will their incessant nefarious manipulation schemes work? Will they be able to re-instill confidence and liquid, well-functioning financial markets?

My thoughts are: They will not fix a thing, but will merely prolong the inevitable agony...

Randy
contrarian2day

Disclaimer: These articles merely reflect the opinions of this author and are by no means a guarantee of future economic conditions. Though the author strives to provide accurate and relevant data, he sometimes relies on external sources and cannot assure the reader of the accuracy contained within. Additionally, these articles are provided for INFORMATIONAL PURPOSES ONLY and are NOT MEANT to provide investment advice to anyone. For investment advice, please consult with your professional financial planner.