Charles Biderman, chief executive of TrimTabs Investment Research, is the latest and most credible person to charge that the Federal Reserve and the Treasury (in league with top Wall Street firms) is rigging the stock market on a daily basis.
In a special report released Tuesday, Biderman said the $6 trillion increase in U.S. stock-market capitalization since March can't be explained by the usual sources of funds flowing into the market -- such as mutual funds, direct retail investment, pension funds, hedge funds or foreign purchases. Read more about Biderman's theory.
The only logical explanation for the extent of the rally, he suggested, is secret buying by a government committee known colloquially as the Plunge Protection Team. It's like the dark matter that astrophysicists conjecture must be there, even if we can't detect it.
The PPT was established by President Ronald Reagan in 1988 after the 1987 stock crash to coordinate the government's response to market meltdowns. It consists of the Fed chairman, the Treasury secretary, the head of the Securities and Exchange Commission and the head of the Commodity Futures Trading Commission.
But here's the absolute best part of the story:
Biderman acknowledged that he had no direct evidence that the Fed and other agencies have intervened in the stock market. But he worried about what will happen to the market if the PPT has been buying and suddenly stops
He has no proof -- none, nada. He admits he has no proof. And yet he goes out and spouts this crap. And then -- Marketwatch gives him an audience. When did Marketwatch become Daily Kos?
Here's a news flash for you. It's right from the book, Winning on Wall Street. When interest rates go down, buy stock. Why? Because financing for companies is now cheaper, so it costs less to expand. That's econ 101. No -- that's before econ 101.
7 comments:
This will be on Kos by the end of the day. They love CT's over there.
There is some (SOME) truth to the adage, and absence of evidence is not evidence of absence. The caveat, of course, is that allegation without evidence is conjecture. It's OK to suspect, but the missing Phase 2 is to gather evidence before moving on to announcing your suspicions.
In any case, OK, let's take this at face value. How the heck does the PPT hide a trillion when the entire federal budget is south of $3 trillion? No, wait, sorry, I'm laughing.
The PPT operates on a sane budget because its mission is to buy up stock on the cheap and sell it when the market stabilizes. It's a shock absorber against crashes. At least, that's my understanding.
Even if they are manipulating the market. . . so what? If they kicked in when the markets were down 40%, they made a 70% return on our tax dollars. I something wrong with that?
I think the headline is the best part, "Time for the Fed to disprove PPT conspiracy". Sounds more like Biderman has to actually find some proof for this theory first.
I don't know about the alleged PPT, but here's my CT:
Goldman (and others) have been tasked to prevent significant market declines by intercepting and neutralizing large short sales using that flash trading mechanism that was so roundly criticized a few months ago.
Consequently, markets have had nowhere to go but up since March, despite the large number of investors who have been anticipating a major correction.
In return for restoring the value to a huge number of previously devastated pension plans, they get paid huge bonuses.
Think about it: retirees win, politicians win, banksters win, and only short sellers lose.
Hmmmmmmmmmmmmmmmmmmm
Of course Biderman has no proof. The Fed relishes its powers of secrecy. Like the CIA, it is an unaccountable entity, and it has dirty hands. Bonddad's reverence for the Fed seems to reflect a deep respect for institutions that have been thoroughly discredited.
The Fed completely missed the real-estate bubble, then responded by transferring vast amounts of taxpayer wealth into the pockets of private investors. Now the Fed wants even more authority to loot the treasury to safeguard the wealth of its masters, the Wall Street banks. Bonddad says it's all good, because Bernanke & Co. are fine, upstanding people. Uh-huh.
Love it...take down Shadow Stats,
TrimTabs...it is incredible how some people will ignore data...
And Spartacus/Bob Swern continues to prove how little they know about the economy.
Again -- notice how he completely avoids taking any responsibility for three grossly wrong (as in 100% wrong) calls of the economy? The stock market has not crashed, the mortgage market has not crashed and China has not sold off their entire portfolio of Treasury bonds. And these are just the tip of the iceberg. A complete playbook on the numerous wrong calls and poor interpretations would take far too long to document.
Notice also that it was Mr. Swern who cited "declining government tax receipts" as a reason for the recessions continuation. As demonstrated above, Mr. Swern is again wrong. As usual, he has demonstrated he knows nothing about economics, no idea where to find the information and no idea how to interpret it.
But -- he does have one useful purpose. Because he is always wrong betting against his is a guaranteed profitable trade.
Let the left wing Larry Kudlow/Donald Luskin continue to pontificate!
BTW: May I suggest you actually take an economics course before you continue writing about economics? At least read a text on economics. Then you'd know why employment is a lagging indicator (as are federal and state level tax receipts)....
Post a Comment