Do you know about - All Is Well In Stepfordville - The Pre-Election Chicanery Of The Plunge safety Team
Campaign Finance Reports! Again, for I know. Ready to share new things that are useful. You and your friends."The Dow is a dead banana republic dictator in full soldiery uniform propped up in the castle window with a mechanical lever spellbinding the cadaver's arm, waving to the Wall road crowd. - Michael Bolser, Le Metropole Cafe1
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It was other surreal week on Wall Street. The week before the November 4 elections, the Dow Jones commercial midpoint rose a thousand points while the economy prolonged to sink into its worst financial accident since the Great Depression. Most of this stellar climb occurred on Tuesday, October 28, when the Dow rose some 900 points, development it the largest one-day stock shop rise since the Great Depression. The climb was especially suited in that it occurred in just the last two hours of trading, on no particularly good news. Commentators attributed it to an hope of a half point interest rate cut by the Fed the following day, but the likelihood of a rate cut was not new news two hours before closing, and old rate cuts have not evoked that sort of dramatic response. When the cut was assuredly announced, the shop yawned and proceeded to drop.
Meanwhile, gold -- the "go to" investment that at one time could be counted on to go up when the economy was tanking -- had its worst month in 25 years. Gold rounded out the month by dropping in a microscopic over a day. Gas prices also ended 31% lower than a mere six weeks ago, all just in time to assure voters on November 4 that their fears of rampant inflation and stock shop collapse were unfounded.
Nothing To See Here: Concealing A 0 Billion Boondoggle
The Stepfordville-like stability of the shop may have been engineered for other reason: to divert Congress from reconsidering its 0 billion bailout bill, which is proving to be as disastrous for the taxpayers as it is lucrative for the banks. The bankers are manning the lifeboats as the taxpayers go down with the Titanic. In an October 29 description in The Nation titled "Bailout = Bush's Final Pillage," Naomi Klein wrote:
"When the Bush management announced it would be injecting 0 billion into America's banks in change for equity, the plan was widely referred to as 'partial nationalization'- a radical quantum required to get the banks lending again. In fact, there has been no nationalization, partial or otherwise. Taxpayers have gained no meaningful control, which is why the banks can spend their windfall as they wish (on bonuses, mergers, savings . . .) and the government is reduced to pleading that they use a quantum of it for loans. . . .
"By purchasing stakes in these institutions, Treasury is sending a signal to the shop that they are a safe bet . . . [b]ecause the government won't be able to afford to let them fail. . . . That tethering of the collective interest to hidden companies is the real purpose of the bailout plan: Treasury Secretary Henry Paulson is handing all the companies that are admitted to the agenda - a amount potentially in the thousands - an implicit Treasury agency guarantee. . . . [F]or the banks, the best part is that the government is paying them - in some cases billions of dollars - to accept its seal of approval. . . .
"[T]he shop is being told loud and clear that Washington will not allow the country's financial institutions to bear the consequences of their behavior. This may well be Bush's most creative innovation: no-risk capitalism. . . . Meanwhile, every day it becomes clearer that the bailout was sold on false pretenses. It was never about getting loans flowing. It was always about turning the state into a giant guarnatee agency for Wall road - a safety net for the citizen who need it least, subsidized by the citizen who need it most."
William Greider, writing in The Nation on the same day, discussed a stinging letter sent to Henry Paulson by Leo Gerard, president of the United Steelworkers, comparing the sale of very similar bank stock to the American collective and to billionaire Warren Buffett, who got a much better deal. Greider wrote:
"The swindle of American taxpayers is proceeding more or less in broad daylight, as the unwitting voters are preoccupied with the national election. Treasury Secretary Hank Paulson agreed to spend 5 billion in the nine largest banks, together with billion for Goldman Sachs, his old firm. But, if you look more intimately at Paulson's transaction, the taxpayers were taken for a ride - a very expensive ride. They paid 5 billion for bank stock that a hidden investor could purchase for .5 billion. That means half of the public's money was a straight-out gift to Wall Street, for which taxpayers got nothing in return. . . .
"If the same rule of thumb is applied to Paulson's grand 0 billion bailout fund, Gerard said this will constitute a gift of 0 billion from the American taxpayers 'to recompense the institutions that have driven our nation and it now appears the whole world into its most serious economic accident in 75 years.'
"Is anyone angry? Will anyone look into these very serious accusations? Congress is off campaigning. The financiers at Treasury probably assume any collective outrage will be lost in the election returns."2
And just to make sure that collective outrage is buried, the Plunge safety Team (Ppt) has been busily painting the arid scenery of the U.S. economy with roses and dewdrops.
The Ppt Rides Again
For anyone who still doubts the Ppt's existence and ability to operate markets, this description will strengthen on one I posted a week ago on the group and its behind-the-scenes activities. As noted in my earlier article, the Ppt is formally called the Working Group on Financial Markets (Wgfm) and was created by President Reagan's menagerial Order 12631 in 1988 in response to the October 1987 stock shop crash. The Wgfm includes the President, the Secretary of the Treasury, the Chairman of the Federal Reserve, the Chairman of the Securities and change Commission, and the Chairman of the Commodity Futures Trading Commission. Its stated purpose is to enhance "the integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets and [maintain] investor confidence." according to the Order:
"To the extent permitted by law and subject to the availability of funds therefore, the agency of the Treasury shall contribute the Working Group with such menagerial and sustain services as may be considerable for the performance of its functions."3
In short, taxpayer money is being made ready to manipulate markets. The shady history of the Ppt was tracked by journalist John Crudele in a June 2006 New York Post series, in which he wrote:
"Back while a stock shop accident in 1989, a guy named Robert Heller - who had just left the Federal sustain Board - recommend that the government rig the stock shop in times of dire emergency. . . . He didn't use the word 'rig' but that's what he meant. Proposed as an op-ed in the Wall road Journal, it's a seminal seminar that says when a accident occurs on Wall road 'instead of flooding the whole economy with liquidity, and thereby expanding the danger of inflation, the Fed could sustain the stock shop directly by buying shop averages in the futures market, thus stabilizing the shop as a whole.'"4
The Ppt was to be the Roman circus of the twenty-first century, distracting the masses with pretensions of prosperity. Instead of fixing the qoute in the economy, the Ppt could just "fix" the investment casino. Crudele continued:
"Over the next few years . . . Whenever the stock shop was in trouble someone seemed to ride to the rescue. . . . Often it appeared to be Goldman Sachs, which just happens to be where Paulson and old Clinton Treasury Secretary Robert Rubin worked."
For inescapable reasons, the mechanism by which the Ppt has ridden to the rescue is not detailed on the Fed's website; but some analysts think they know. An antitrust group called Gata (the Gold Anti-Trust performance Committee) has been tracking the Ppt's moves for many years. Michael Bolser of Gata terminated in 2004 that Ppt money is being funneled straight through the Fed's "primary dealers," a group of favored Wall road brokerage firms and investment banks. The expedient used is a form of loan called a "repurchase agreement" or "repo," which is a compact for the sale and hereafter repurchase of Treasury securities. Bolser explained:
"It may sound odd, but the Fed occasionally gives money ['permanent' repos] to its original dealers (a list of about thirty financial houses, Merrill Lynch, Morgan Stanley, etc). They never have to pay this free money back; thus the original dealers will pretty much do anyone the Fed asks if they want to stay in the original dealers 'club.'
"The exact mechanism of repo use to sustain the Dow is simple. The original dealers get repos in the morning issuance . . . And then buy Dow index futures (a shop that is far smaller than the open Dow trading volume). These futures prices then drive the Dow itself because the larger citizen of investors think the 'insider' futures buyers have way to extra information and are 'ahead' of the market. Of course they don't have extra information . . . Only extra money in the form of repos."5
With Paulson's new 0 billion credit card, the Ppt obviously has way to much more money than in 2004 - sufficient money, no doubt, to buy large blocks of some key stocks. Those purchases, in turn, would trigger the agenda traders' computers, which effect like robots according to pre-set formulae. Although thousands of stocks are publicly traded, only 30 stocks fabricate the Dow, development this trend-setting index fairly easy to manipulate.
While the Dow is being propped up by the Ppt straight through heavy buying, the gold shop is held down by heavy short selling, since gold is considered a key indicator of inflation. If the gold price were to soar, the Fed would have to increase interest rates to tighten the money supply, collapsing the housing bubble and forcing the government to raise inflation-adjusted payments for collective Security.
Most traders who see this manipulation going on don't complain, because they think the Fed is rigging the shop to their advantage; but unwary investors are being induced to place risky bets on a nag on its last legs. The citizen become complacent and accept bad leadership, bad policies and bad laws, because they think things are still "working" for them economically. Worse, there are insiders to this scheme who must find it difficult to resist the temptation to capitalize on their favored positions. As Chuck Augustin observed in a June 2006 description titled "Plunge safety or enormous hidden Tax Revenues":
"Today the markets are, without doubt, manipulated on a daily basis by the Ppt. Government controlled 'front companies' such as Goldman-Sachs, Jp Morgan and many others gain imaginable revenues straight through shop manipulation. Much of this money is probably returned to government coffers, however, enormous sums of money are assuredly skimmed by participating companies and individuals.
"The performance is similar to the Mafia-controlled gambling operations in Las Vegas while the 50's and 60's but much more efficient and beneficial to all involved. Unlike the Mafia, the Ppt has enormous advantages. The performance is immune to investigation or prosecution, there [are] unlimited funds ready straight through the Treasury and Federal Reserve, it has the ultimate insider trading advantages, and it fully incorporates the spin and disinformation of government controlled media to sway markets in the desired direction. . . . Any investor can dream the riches they could gain if they knew what direction stocks, commodities and currencies would move in a particular day, especially if they could gain unlimited funds with which to invest! . . . [T]he Ppt not only cheats investors out of trillions of dollars, it also eliminates competition that refuses to be 'bought' straight through mergers. Very soon now, only global companies and corporations owned and controlled by the [financial] elite will exist."6
A study firm reporting on the unexpectedly high regular profits of Goldman Sachs in March 2004 wrote cynically:
"[W]ho does Goldman have to thank for the most recent outsized regular earnings? Its 'partner' in charge of financing the proprietary trading performance -- Alan Greenspan."7
Henry Paulson headed Goldman Sachs before he succeeded to Treasury Secretary in June 2006, following in the footsteps of Robert Rubin, who headed that major investment bank before he was appointed Treasury Secretary in 1995, just in time for Goldman and other investment banks to capitalize on the drastic devaluation of the Mexican peso. An October 2006 description in the conservative American Spectator complained that the U.S. Treasury was being turned into "Goldman Sachs South."8
In his October 28, 2008 letter, United Steelworkers president Gerard wrote to Henry Paulson:
"The recipients of the first wave of gift-giving comprise Goldman Sachs. It has been widely reported that you have surrounded yourself with old Goldman employees as well as individuals from other Wall road firms. Yet it has never been revealed either in fact you and they have fully divested yourselves of your Wall road holdings. Doesn't it seem just a wee-bit of a conflict of interest for those setting the price of the investment to be either so directly associated to the firms receiving the investments or, even worse, direct beneficiaries of the decision to overpay with taxpayer money? . . .
"Out in the real economy, we need our government to spend in creating sustainable shared prosperity - not play Santa Claus to the scoundrels who have laid waste to the American Dream."
Where is the collective outrage? As the fog of the election lifts from our plundered nation, we wait to see.
1 Michael Bolser, "Cartel Capitulation Watch," Le Metropole Cafe (April 18, 2004).
2 William Greider, "Paulson's Swindle Revealed," The Nation (October 29, 2008), citing "Usw Raises Questions about Treasury's 5 Billion investment in Financial Firms," shop Watch (October 28, 2008).
3 Executive Order 12631 of March 18, 1988, 53 Fr, 3 Cfr, 1988 Comp., page 559.
4 John Crudele, "George Let Plunge Slip," New York Post (June 27, 2006).
5 Michael Bolser, "Enough Is Enough," Midas, Le Metropole Cafe (January 26, 2004). See his chart site at http://www.pbase.com/gmbolser/interventional_analysis.
6 Chuck Augustin, "Plunge safety or enormous hidden Tax Revenues," Le Metropole Cafe (June 30, 2006).
7 The John Brimelow Report, "Goldman Sach's 'Partner'," Midas, Le Metropole Cafe (March 24, 2004), quoting Bianco study report.
8 The Prowler, "Raid on the Treasury," The American Spectator (October 12, 2006).
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