The Olympic Rally
If there was ever any doubt that our financial markets are manipulated, one need look no further than the 300 point move in the DOW on 8/8/08-- the opening day of the Olympics in Beijing.
Traders and investors were partying like it was 1999 ( and we all know what happened to the markets between 2000-2002). Behind this screen of this move were the greatest puppetmasters on the planet--The Plunge Protection Team, aka the President's Working Group on the Financial Markets.
Moves occured on 8/8/08 that defy all logic and can only have come from deliberate intervention in the markets. The move up in the dollar and down in gold, silver and oil were nothing less than orchestrated scare tactics to get the herd all excited and convinced that it was "safe to get back into the water again." Of course, what the herd was not told is that the waters were filled with hungry sharks.
Once again, the little guy and gal-- the small discretionary trader who is in there every day slugging it out trying to make enough money to support his or her family--steps a toe or a foot into the water and ends up floating in a pool of his or her own blood.
Bear markets are like that. They do everything they can to convince people that it's safe. I assure you, that unless you are a nimble trader and an intense student of the markets, it is not safe. Be aware, also that there have been 10 days in the current down cycle in which the Dow closed down 300 points or more and, in the bear market of 2000-2002, there were nearly twice as many 300-point up sessions as 300-point down sessions.
Beware the "always bullish all the time" mantra from the lame street media. It is simply not true. The credit crisis is not going away any time soon. Ditto with the mountain of debt--both public and private. Double ditto with the unemployment and layoffs that are happening all around you, and maybe to you ( If so, I am so sorry and know how much you are hurting from this). Losses from the financial institutions in the trillions of dollars are still being hidden and no one knows the extent of the world-wide exposure to derivatives.
We are in a recession and on the verge of going into The Big Rollover--the greatest political, social, economic, political and personal crisis of our lifetime. Only those who take this opportunity to make themselves strong will survive through the coming Winter. It is not going to be pretty, but it will be a much-needed cleansing and detoxification of the excesses and corruption that are blanketing our country in a great cesspool of lies.
It is not too late to protect yourself and those you love. Please get your head out of the sand and do not allow yourself to be tricked into being part of The Ostrich Nation.
Until next time,
Janice Dorn, M.D., Ph.D.
www.thetradingdoctor.com
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directly buy trying to corner the market and buy up large quantities of a company, commodity, etc.
or indirectly through spreading of rumors, publicity, television appearances - mass media mind control etc.
Of course, as the market is measured in dollars and the dollar is easily manipulated through inflationary measures it follows that the entire economy may be manipulated with relative ease.........
blloyd the following comment, "I don't think that the Fed is working with the government and the investment banks."
Has me wondering if you are paying attention to the Fed's bailout of Fannie Mae and Freddie Mac -- this is a glaring instance of the Fed working with investment banks and the government.
You must be aware that the treasury secretary is the former head of Goldman Sachs. That is another glaring instance of the gov't working with investment banks. You need look no farther than the front page of most newspapers to find more glaring examples.
you speak of is just natural market behavior given the system we have Adam.
The belief can be applied to almost every day living.. We are all, in a sense manipulated or influenced by everyone around us.
With respect to the financial markets we first need thousands of participants who do this for a living. Then you need a creating factor to get all of them to do the same thing that you call manipulation.
In other words:
It is the factors, that cause the people, to create the trends.
You might even call this a job.. :)
Like it or not, it is the system we have.. You can call it manipulation ... I disagree...
I haven't done a good job of explaining my views. I believe that manipulation can occur on a small scale in the short term. When I refer to manipulation, I refer to artificially driving market prices by insidious means (like spreading rumors) outside of the regular market forces. I do not think that entire markets or economies can be manipulated this way either or by any one organization or government. Paulson has worked with the investment banks and others during this crisis, but I do not think it is related to some conspiracy or some other dastardly plot like some conspiracy theorists say. They are doing what they think is best to fix the problem at hand. I do not like the Federal Reserve, the concept of a quasi-government institution like Fannie and Freddie, or any other attempt by the government to interfere in the markets. While I do not like them, I don't believe that they are evildoers out to cheat the world according to some plan of world domination that some conspiracy theorists allege.
and it is ongoing The fed has opened up an emergency line of credit and provided banks with 10's of billions of dollars in loans on a daily basis for some weeks now. You can see Peter Schiff discussing this along with other investor/economists. Since the Bear Sterns fiasco they have monetized more debt than the obligations owed to social security. Fannie and Freddie have most definitely been propped up by the Fed and they continue to do so.
You have stated your belief that the Fed is not evil. Then of course you use the old term "conspiracy theorist" to define someone who disagrees with you. How typical.
The gov't, the fed, and wall st. are obviously closely linked together. You are welcome to speculate on their intentions and I'm sure your speculations will be guided by your beliefs.
Either the central planners are incredibly stupid and shortsighted or they have planned this. That is my belief. I give them the benefit of the doubt and say its planned.
There are certain elements that dominate the world according to plan. But its not my job nor my inclination to convince you of that.
Adam... all you are describing is what the Fed does... they were created for this reason..
Have you ever taken out a loan or needed money for an emergency situation yourself?
Damn to hell those people for doing that for you... nothing but evil manipulators... right?
:)
at the interest rate that the Fed loans it to banks, if you factor in a multiple of about 10 then yes I have
speaking of loans, when and if I were to apply for a loan, the money lender would consider my CREDIT SCORE along with other factors like Debt to Income ratio, payment history, etc. There's no way, that any of the corporations now being bankrolled to the tunes of billions upon billions would even register on a normal credit score --- they would be below the radar -- somewhere in the low hundreds, also, they are totally bankrupt -- meaning that they owe way more than they have, and are unable to even make their minimum payments ----- No bank in a "Free Market" would touch them, They'd have to go with some shady mail order lender like..... the fed......
I never used the word evil, anyhow, I thought getting rid of the Fed was one of Ron Paul's platforms
Bloyd says the idea that the market could be manipulated is "absurd" (why doesn't he have a "Dr" in front of his name?) and you said that there's no way the Fed could've intervened to raise the value of the dollar
That's what got me talking, So do you surrender? or shall I continue typing?
Adam,
You continue to misrepresent what I am saying. I said that markets for securities and commodities can be manipulated over the short term, but not entire economies.
As for your words:
"There's no way, that any of the corporations now being bankrolled to the tunes of billions upon billions would even register on a normal credit score --- they would be below the radar -- somewhere in the low hundreds, also, they are totally bankrupt -- meaning that they owe way more than they have, and are unable to even make their minimum payments ----- No bank in a "Free Market" would touch them, They'd have to go with some shady mail order lender like..... the fed......"
I don't know where you get this stuff, but this is gross exaggeration. What corporations you are talking about? The Fed lends to banks, not to corporations. How do you know that they have as bad credit as you say? How do you know they owe more than they have, or that they can't make minimum payments? Granted, there are always a small percentage of companies that are in trouble, and we may see more bank failures and more bankruptcies as this crisis goes on, but the facts do not back up your exaggerations. A basic premise of a good argument is the use of facts to back up your assumptions and conclusions. I suspect you are just repeating what you hear from the rants of other conspiracy theorists, sensationalist bloggers, and other bedwetting handwringers.
me that the dollar rising in value wasn't the result of Fed action
But they bailed him out too!
The "emergency line of credit" that you refer to has always been open to the commercial banks. It is only recently that they extended it to the investment banks and only recently that this line of credit has been used at all. The Fed is providing liquidity in this case, which is part of what it does every day, although this is an extreme case. I don't view that as a bailout at all. They are definitely coming to the aid of the banks (which I do not agree with), but I don't consider it a bailout. Now if the government ends up injecting equity in Fannie and Freddie or any other bank to keep them solvent, that would be a bailout. So I guess it comes down to semantics. If you believe coming to the aid of the markets by providing liquidity is a bailout, then the Fed has been bailing banks out for decades.
I was not saying that everyone who disagrees with me is a conspiracy theorist. Not at all. Those who think that there is a massive nefarious scheme between government, Wall Street, and the Federal Reserve to defraud the people are conspiracy theorists in my view. If they actually wanted to do that, it would have happened a long time ago.
and definitions, this of course makes it a bit difficult to reach a solid point,
anyhow, an "emergency line of credit" that has never been used before, that was never available before to investment banks, that is now being used to keep these investment banks afloat is precisely - a bailout
The taxpayers pay for it directly with their tax money and indirectly through inflation.
Isn't this a scheme between gov't, wall st. and the fed to defraud people? Call it what you want, but that is the result. The question remains as to whether or not its an accident or was planned. As previously stated, I don't think they're all shortsighted morons - so I give them the benefit of the doubt and say planned.
I suggest you read up on the role the Fed has played in monetary policy since 1913. It appears they have done "that" and did accomplish it quite a while ago.
... banks have been bailed out by the Fed for decades. I just don't think it is that simple. Any form of assistance that the Fed provides to the banking system does not constitute a bailout. There are shades of grey here, and I don't think it is as black and white as you seem to think. If the Fed injects money into an organization that will certainly fail without it, then a bailout has occurred. What happens today is more subtle. The Fed is trying to stabilize the markets, but we don't know yet whether they are preventing outright failures from occurring. As for monetary policy history, thanks, but I am aware of how it works.
I don't think it is a planned scheme. Just because something bad has happended doesn't mean there is some vast conspiracy at play. Sometimes (and a lot of times), the government simply screws up. It doesn't mean the government is deliberately trying to defraud us. The government often tries to do what it thinks is right, but unintended and negative consequences are the result. If you think that there is a coordinated scheme going on, the burden of proof is on you. I would rather stick to the facts and resist making unfounded and irrational assumptions and jumping to conclusions.
debater, and now you're talking about "irrational assumptions" and "Jumping to conclusions"
The proof is there, There's no point in me trying to bring it to your attention if you won't look
Just a quick recap: you started out by saying that the fed, gov't, and wall st. don't work together
then you said they did, but not for a bailout
then you said giving money to the banks to keep them afloat is not actually a bailout
There's no point in debating intent because that is emotional speculation
Best Regards............
My point all along is that these organizations do not work together in some plot to defraud the American people. Do they interact in various ways? Of course, that is a fact. The leap in your argument is that you think that they are colluding to screw the American people. You don't seem to distinguish between the interactions of these organizations and conspiracy theories. Everyone knows of the interaction between Paulson, the Fed, and the investment banks as it relates to the Bear Stearns situation, the liqduidity facilities that the Fed has put into place, and the new legislation with Fannie and Freddie. But saying that this is all part of some hidden plot is a big assumption and is not justified by the facts. Like you said, speculating on intent is emotional speculation! This is what you are doing!
Where is your proof of collusion? Don't just cop out and say that proof is there and I have to look for it.
As for bailouts, there is a big difference between the Fed lending banks money and injecting equity in order to prevent certain failure. Your definition of a bailout is too broad in my opinion. What ISN'T a bailout in your opinion?
and I think it's frustrating that I have to state the following point, because I think it is one of the fundamental observations that leads to libertarian beliefs
To put it simply, I believe (don't we all) that people act in their own selfish interests, I don't have any problem with this, and there are some like Any Rand who believe that this (selfishness) is a virtue
I disagree with your hopeful assumption that gov't is acting in the best interest of the majority of its citizens in any of its affairs including the financial sector,
Gov't is a small group of people acting in the interests of a small group of people that they are beholden to
There's no conspiracy theory here whatsoever, nothing paranoid, just plain reason and logic
When Paulson bails out his friends on Wall St. it is a decision made to help his friends (literally) -- these are the people he has worked with and socialized with his entire life,
When the Fed and the owners of that private entity take their income tax from the people, they do so with the same interests that a corporation has - wanting to maximize profit
When these powerful interests support the campaigns of certain politicians, while using bribery, extortion, murder and blackmail to maintain political influence they do so with the goal of increasing their power through which they can maximize their profit
I've never said any of this was evil, I'm not interested in that, but the fact that it transpires is evidenced by common sense, history, current events, and piles of documents
Naturally if you are on the side that profits from these activities you'd do everything in your power to remain on that side including spending billions on public relations, advertising, and media campaigns
So is their stated goal to "defraud the American people" Of course not. Is it to help the American people as you have suggested. Could anyone but the most gullible optimist really believe that? I mean after Katrina?
The goal is to maximize profit. If that involves defrauding the American people I don't think that would stop them - but I don't think that there's some evil plan to do so. It just may be the side effect.
As for defining a bailout -- I would say - money given in a state of emergency to keep an entity afloat that would fail without that emergency assistance. I think that most of the banks borrowing tens of billions of dollars a day would be failing without Fed assistance.
The government is more accurately viewed as a private corporation. It's run to benefit its shareholders. Being a citizen doesn't make you a shareholder in our current gov't. Being a large donor, a rich and powerful corporation, a middle man capable of selling the American people on ideas that are popular to the aforementioned groups does.
There's nothing evil about pursuing one's self interest! But there is something incredibly naive and foolish about thinking that some benevolent ruler will be kindly looking out for the best interests of a faceless and nameless horde! (Maybe a Kennedy raised to feel the white man's burden from birth)
So we all admit that the Fed, Wall St. and gov work together -- they are basically three branches of gov in my opinion
An emergency situation involving giving tens of billion dollars to Wall St. is underway
This in effect makes losses public property while keeping profit private and is neither capitalism nor communism but something resembling feudalism (class structure enforced by arms)
This conversation started by an assertion that a group being able to manipulate the market is "absurd". Of course the market is nothing but dollars acting, if enough dollars acted together in unison that would influence the market, if a very large amount of dollars acted together you could manipulate or control the market.
Of course if you could control the value of the dollar you could manipulate just about everything
Our Fed controls the value of the dollar and by manipulating the dollar manipulates the market,
I also believe, that groups may directly manipulate the market with focused actions --- It seems to me a mathematical certainty --- there's a finite number of shares outstanding, since most of these shares are traded, anyone with a large enough purse could just buy every share at an extremely high price thus raising the market
if you wanted to lower the market you could set up many different companies to buy the shares (from yourself) at lower prices thus causing a price drop
If a majority of people in this country ever broke through "the matrix" and by "the matrix" -I'm referring to the veil of psychological control that convinces people to act against their own self interest- and having broken through, decided to act according to their own self interest there would be a massive shift in how business is conducted here
Borrowing from the Fed is not automatically a bailout. If you had a choice between borrowing in the open market at 4% and borrowing from the Fed at 2.25%, you would choose the Fed, regardless of whether you are on the verge of failing or not.
I am under no illusion that government is looking out for our best interest.
Saying that Wall Street is a part of government is downright silly. If that were true, they wouldn't be facing the onslaught of new regulations, greater disclosure, and greater oversight that is heading their way.
Your market manipulation example makes no logical sense. No one acting in their own self interest would pay a price above where something is worth and then sell it to themselves at a lower price, thereby taking a huge loss! That makes no sense!
-isn't that its role?. The Fed isn't run by "thousands" of people. I disagree with your statement on those grounds. Also, the Wall St. bailout wasn't brought on by "thousands".
There are varying degrees of manipulation to be sure -- however, controlling the value of the dollar is a bright example of manipulation by a small, unelected group.
the last 2-3 weeks... So tell me Adam, just how did the Fed manipulate or manufacture this move?
If you can answer this than I will agree with you. If you can't, which I know will be the case.. I will rest my case.
None of this is a secret. If you read international news, all of this is reported. Jim Rogers has actually said of Paulson, "you have to feel sorry for the guy - I know I do."
Tom Mullen
www.tommullen.net
www.myspace.com/skepticsongs
"Question with boldness even the existence of a god; because if there be one he must approve of the homage of reason more than that of blindfolded fear."
-Thomas Jefferson
THey are working with the other central banks to prop up the dollar and put off worldwide economic collapse - but it won't work. Paulson has been going around the world literally begging central bankers to help. Your technical trading skills should tell you that a violent move up in a bear market is NOT a bullish sign. It is not for the dollar either.
Likewise, the violent move down for gold in a bull market is NOT a long term bearish sign, either. Once the elections are over and the new president starts (maybe before if China makes moves once the Olympics are over), the dollar will resume its decline and gold will keep heading up. Save this comment. :)
Tom Mullen
www.tommullen.net
www.myspace.com/skepticsongs
"Question with boldness even the existence of a god; because if there be one he must approve of the homage of reason more than that of blindfolded fear."
-Thomas Jefferson
of your comments, I think..
As I have been trying to explain for some time now. What you are both referring to is simply the market at work... It is the system we have. It is just the Fed doing business.. not manipulation.
If you see an add on TV and buy the product are you being manipulated?
What about when the local bank jacks up CD rates higher than others to get business?
What about the sales at grocery stores or any store for the matter, is this manipulation?
Or is it simply business doing business?
Again, the Federal Reserve is a business and they just do what banks do to create more business.
Although I am not fond of them and I hope some day for a more stable type of system, I am not that blind to see them for what they are.
A lot of what you now claim the Fed has manipulated up (dollar) and down (gold) also flies in the face of what you both and so many others have been preaching... that is the dollar to continue to fall and $2000 Gold, THIS YEAR!..
With all due respect Tom, I will pull the posts if you like...You seem to be wanting it both ways.
If you want to know what the Fed's next rate move is you need to look no further than the treasury market and Fed funds futures.
If you wanted to know if there were going to be financial and banking problems you need to look no further than the debt markets or financial indexes which have been falling for over a year.
Is that manipulation? NO... Its tens of thousands of people working in the markets doing business.
As I have also stated before that the Fed has been unable to free up the credit markets (deflation) the spreads on the fed funds to other rates are HUGE never seen before... they are NOT doing anything to spur credit business.
The banks themselves are remaining tight so to think this has been somehow an orchestrated or manipulated move is ridiculous cause everything the Fed is doing says the opposite. Yet a lot of what the market outside of the Fed is doing was one of the predictive indicators or trends that created the people in the market to "make the market" move as it did. NOT the Fed manipulating.
I have been posting about this since the end of May.. Deny it all you want.
I as many others were able to see the writing on the wall... those who didn't, blame intervention or manipulation.
read my forum post -- about market manipulation -- an article I reposted
The Fed can easily control the value of the dollar by controlling supply. Either they print more of it, increasing supply and the value slumps
or they take dollars out of the market by buying up dollar based debts, and the value increases
It is a very simple case of supply and demand and being able to control supply
The article I posted, explains this with greater detail..
The Fed's role is not controlling or manipulating the value of the dollar. Rather, the effect of their policies aimed at maximizing employment and stable price levels can lead to devaluation of the dollar. Also, there was no Wall Street bailout. Bear Stearns was purchased for next-to-nothing by JP Morgan and the shareholders lost almost everything. Fannie and Freddie may get bailed out in the end, but it hasn't happened yet; the recently passed legislation has laid the foundation for it to happen if needed.
Securities and commodities markets can be manipulated in the short term. Entire economies cannot be manipulated since there are so many factors and forces acting at once, each of which behave differently under various conditions, with different degrees of lag, etc. The Fed has the most power of all to affect the economy, and they struggle to use their levers to achieve certain outcomes. No question they have great influence, but they cannot manipulate or control the economy.
Suggestions that the markets are manipulated and a 300 point move is part of some "orchestrated scare tactics" is absurd. Granted, there may be some degree of manipulation taking place in individual securities/commodities over the short term, but to suggest that there is some evil force pulling on levers behind the scenes to change public opinion does not make any sense. It may not make sense to be bullish all the time, but market timing and short term trading is a fast way to lose a lot of money for most people. Long term investing with attention to asset allocation is a proven winning strategy.
I am with you, blloyd, that the "puppet masters" cannot orchestrate a "master plan" to control the entire economy. That is the mistake that I believe most conspiracy theorists make - they imagine a conspiracy that is much more far reaching than it is. No government or banking system in the world can change the forces of supply and demand - they are like economic forces of nature. They can try to control them, but they are always overwhelmed in the end. If that were not true, then 100 million people would not have died in communist china and russia in the last century.
All of that being said, I believe that the government, in cooperation with the Fed and large trading houses like Sachs, can and do manipulate the market enormously during short periods of time. It is no coincidence that Greenspan used to talk down a sector, draw in shorts, and then Sachs comes in and buys it up, sending the price through the roof and the shorts lying dead all over the place. It happened too many times for it to be a coincidence. Look at all of the "big announcements" on Friday afternoon that send the market completely the other way, often in a short squeeze.
THe government/banking complex can definitely punish TRADERS, but not wise INVESTORS. If you understand economics and make long term buys based upon competent analysis, they can't really touch you - their control is not that complete. However, if you are playing short term moves in the markets, they can and will kill you with manipulation. The government never wants the market to go down on their watch, so they particularly gun for shorts, even before they started vilifying them with the recent crisis. They also either don't understand or don't care that shorts are good for markets - they care about nothing but public perception that things are going well on their watch.
I think the article supports this view - I don't think it purports the vast conspiracy that you are correctly skeptical of.
Tom Mullen
www.tommullen.net
www.myspace.com/skepticsongs
"Question with boldness even the existence of a god; because if there be one he must approve of the homage of reason more than that of blindfolded fear."
-Thomas Jefferson
then, if you practice what you preach Tom...
>>No government or banking system in the world can change the forces of supply and demand - they are like economic forces of nature. They can try to control them, but they are always overwhelmed in the end.
Then how can you hold the view that oil and gold will continue to climb as you have stated to me many times? Forget gold for a second and lets focus on oil.. fits right in with your comment above..
Here's a little article you might be interested in..
http://www.bloomberg.com/apps/news?pid=20601012&sid=aaE3k1AMJyEg&refer=c...
Now lets put excessive speculation and falling demand together...no need to explain the end result.
Remember what the Doc quoted:
The worst lies are the lies we tell ourselves. We live in denial of what we do, even what we think. We do this because we're afraid...
THis is exactly what I'm talking about. The present upsurge in the dollar and dip in gold is SHORT TERM manipulation by the Fed in collusion with the govt. However, this short term manipulation cannot change the forces of supply and demand, and the in the LONG TERM the overwhelming supply of dollars vs. the goods and services that can be bought with them, the shambles that is the American REAL economy, and the increasing, instead of decreasing, government intervention into the marketplace will all push the dollar down, despite the government's wish to manipulate it up. This will, of course, push gold and othe commodities up, despite the government's wish to keep them down.
This was the essence of my comment - how did you find that it disagreed with the earlier comment you quoted?
Tom Mullen
www.tommullen.net
www.myspace.com/skepticsongs
"Question with boldness even the existence of a god; because if there be one he must approve of the homage of reason more than that of blindfolded fear."
-Thomas Jefferson
But I don't think that the Fed is working with the government and the investment banks. I think the Fed has made plenty of mistakes on its own, and doesn't need the government's help to make mistakes(!) The investment banks are out for their own self interest, which I believe is fine, as long as they are not engaging in outright fraud. I also take issue with someone who sells financial advice and calls themselves an expert, yet has no financial education or credentials. She reminds me of the "Rich Dad Poor Dad" guy.
Great Jefferson quote by the way!
you didn't get what I said, judging that I got a negative score on my posting.
I too, was disagreeing with the Doc as far as markets somehow being pre-manipulated to move any given way. If you read my post a little slower you will see what I was saying was that if the case is that the Fed orchestrated this move higher as she appears to be saying, well then, they also orchestrated the moves lower. The point is mute... it has no basis at all.
This is exactly what Ron Paul talks about when he says the Fed creates the bubbles and then bursts them and this is precisely what I was referring to in my comment.
But as a trader I also understand that the market can remain irrational longer than you can remain solvent and this applies to bull and bear markets. Don't think that just because Bear Stearns got bailed out and many banks are failing and that this credit crisis still has a ways to go that equities cannot rally is a flawed thought process when it comes to trading.
But I guess thats OK to give me negative votes as I got many in the forums I linked above...The great thing is that my analysis was spot on and I am still here. While all the other people who took the opposing view are nowhere to be found. (Big grin) :)