Definitely check out the cafe post on the Debate on the Existence of Plunge Protection Team

Its well worth your time (the video is pretty amusing, too).

Category: Bailouts, Federal Reserve, Legal, Markets, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

16 Responses to “The Plunge Protection Team ?!?”

  1. jmborchers says:

    Does anyone remember what stat the gov’t wanted to stop posting? but then people wrote to them and they kept it going. Was it the CPI? I’m figuring whatever it was they wanted to hide it because they knew what was coming.

  2. Rightline says:

    My recollection was not an elimination of a data point but the consolidation of them on one page called Economic Indicators which was designed for convenient reference.

    http://www.economicindicators.gov/

  3. abvt says:

    It strikes me as odd that so many people find it inconceivable that the Fed would intevene in the market by buying stock futures.

    We have a system in which the Fed sets the price of money. There isn’t a more powerful and steering force than setting the price of borrowing. When borrowing and the money supply was escalating out of control over the last 5+ years, the rate did not increase and thus the supply was in no way constrained.

    A mere expenditure in the purchase of a few 100 s&p points in stock market futures is extremely minor compared to the intrusive powers exerted by the Fed over the last 10 years.

  4. mark mchugh says:

    Jim,

    Are you referring to the discontinuance of M3?
    Because that was stopped period.

    http://www.federalreserve.gov/releases/h6/discm3.htm

  5. DMR says:

    abvt Says “It strikes me as odd that so many people find it inconceivable that the Fed would intevene in the market by buying stock futures. ”

    Not inconveivable that they would, but skeptical about their ability to make much of an impact.

    The Fed doesn’t deploy anywhere close to as much capital as would be required to make a dent in the broader market. They dabble in overnight rates. They don’t even have enough clout to make serious dents in treasuries, much less in the Dow or S&P.

    The only successful intervention I can think of was the Japanese Quantitative easing, which only included the purchase of JGBs. Look what even that did to their government debt.

  6. DL says:

    I agree with DMR (@10:08). It would just cost too much to move the market substantially.

    In the months leading up to the election, Bernanke and Paulson were able to induce a number of rallies, but they did it by supplying information (usually about bailouts) to the public. But that is very different from a clandestine purchase of stock or futures contracts.

    And even if there is such a thing as a PPT, there would be no reason for them to go into action until September of 2010 at the earliest.

  7. Mannwich says:

    Just getting back from a short trip to visit the in-laws and my wife’s family in CO. Gorgeous weather there every day (sunny in the 60′s/70′s). THIS is what I’ve come back to? I should have stayed an extra 2, maybe 3 months (or longer).

    Tomorrow and Friday should be lots of fun.

  8. bri says:

    Barry, the “evidence” is the tape.

    Oct 2-10, 7 trading days in a row the market drops a total of 2400 points. the points are no biggie, but how we went down was suspect.

    how does a market fall uniform 400 points every day for a week? it would seem to me, we could have knocked out that slow motion train wreck out in a day in a half.

    unless there was some size buyer coming in putting in a floor, every day. maybe it was program trading?

    also, why have we not seen a real capitulation day? i guess we have capitulation weeks now. or capitulation months.

    2008 the year of capitulation! all this technology has slowed us down. sometimes it’s good to panic

    for example, if you panicked sold at any point in the last 5 years, you’re better off than anyone holding today.

    i do enjoy foil hats, but i’m also willing to admit it just might be us bears having absolutely no comprehension as to why anyone is buying.

    that said, sold my DIA DEC 70 Puts at the buzzer. looking to rebuy further out, ASAP.

    happy trades

  9. KJ Foehr says:

    Aren’t the actions of the PWG subject to the FOIA?

    If so, why don’t we know what they have been doing all these years.

    If not, why not?

    My guess is they are not nearly as active as people think.

    And if they have been active this year, then they deserve a failing grade.

    And if they have been active all they did was postpone the inevitable and prolong the agony. An earlier and faster crash would have resulted in a bigger rally by now.

  10. hotfudge01 says:

    DMR (@10:08) you say “The Fed doesn’t deploy anywhere close to as much capital as would be required to make a dent in the broader market”

    Don’t forget the Fed is just a bunch of private banks with the president picking the governors and chairman….

    At this point in the market the Fed really has the cash to move markets, the markets is illiquid now, and a couple of million dollars can move the market in a certain direction.

    I am not here to say that the group exists and is active but one can build a pretty good conspiracy theory on the following

    - highly illiquid market, a few billion dollars a day would move the market listen to Joe Kernan’s statement
    - there’s a good enough reason for such manipulation to occur against breaching the current technical level the market is flirting with (38% fib retracement from the 1900s, 2002 lows, October lows), if breached, that will be unbearable chart damage
    - Take a look at dollar action in the past year, if you don’t believe there was any form of manipulation to the dollar, then…..also manipulations in the Gold and silver markets, look at the Aug COT report, 2 US banks were responsible for shorting an equivalent of 20% of the world gold supply few days before the major collapse of the gold and silver market
    - Finally recent price action in the markets in the final hr of trading: trading volume all day is very light, and all of a sudden there’s a spike in volume, and the market reverses all the way from negative territory to positive territory see this video http://www.youtube.com/watch?v=cYAcM7KtGUI
    - There are many other reasons one can come up with

    I just think it’s possible, I would like to believe i’m wrong

  11. J35 says:

    jmborchers: You’re thinking of the M3 money supply number that was squashed. The Fed stop publishing M3 shortly after Bernanke took over.

  12. MikeDonnelly says:

    This video is completely unavailable to me thru CNBC, it worked fine earlier today. I could access the same video here on YouTube

    http://mediamonarchy.blogspot.com/2008/11/video-cnbc-plunge-protection-team.html

  13. shane says:

    I do sort of find it funny how people adamantly deny the PPT, or say the government could never do it, it would have been found out by now.

    Ever heard of MKUltra . . . CIA drug program for almost 30 years tested on US citizens and that’s a fact, no denying it.

    The PWG exists, we know they exist for “financial stability” what exactly they do to promote that is well anyones guess. I would image that it’s not direct manipulation, but indirect. I highly doubt is BB and Hank sitting around a table just dreaming up TARPs.

  14. schoolsout says:

    Any doubters who want proof of actual transactions care to tell us all about “dark pools of liquidity?”

  15. aram11 says:

    so if PPT really exists….what is their goal, send the market down 70% in a orderly fashion??

    to those who have doubts about buyers intention….i have an easy explanation, speculation is what brings those rally….

    thousands of traders participating to make a quick buck in a oversold/illiquid market can bring those 10% up days…

    if PPT was buying….dont they have to sell?? and when do they sell without damaging the market…if we had a depressed market for a long time??

    or do they just buy and hold??

  16. schoolsout says:

    Speculation about what? The only thing that would spark those rallies, other than the thin volume, would have to be speculation that the economy and whatnot are getting better. Clearly, that isn’t the case.

    All the PPT has to do is “chart paint” as the black boxes (mindless trading) move on “technical” signals….

    Fundamentals out the window…… Chicken bones and tea leaves are all the rage….