Submitted by PM Fund Manager Dave Kranzler, Investment Research Dynamics:
There’s no such thing as markets anymore – only interventions. – Chris Powell, co-founder and Treasurer of GATA
If today’s market action does not convince the last skeptics that the U.S. financial markets are completely rigged, nothing will.
The action in the U.S. markets today after the Greece/EU situation hit a wall today demonstrates the degree of control the Fed and the U.S. Central Planners have over the markets now. The S&P 500 futures opened down 30 points when global electronic trading opened Sunday evening. Gold and silver spiked up. Both markets began to reflect some degree of the risk to the global financial system posed by Greece’s potential financial collapse.
Of course, as has been the case since the 1987 stock market crash, the Fed/Treasury – collectively the plunge protection team (PPT) – went to work containing the damage to the paper markets. This entailed methodically working the S&P 500 higher during the course of the night and methodically pushing gold/silver back down – click to enlarge:
The manipulation of the markets reflected by these overnight trading charts of the SPX and Gold futures epitomizes the extreme degree of market intervention by the PPT. Ever since 1987, and since Reagan signed the Executive Order which authorized the PPT to prop up the stock markets, there’s been market intervention “creep” in this country. Robert Rubin’s role as Secretary of Treasury was to transition the Working Group on Financial Markets (PPT) from its stock market propping function into a full-fledged, all-encompassing market intervention mechanism.
A colleague of mine this morning remarked that after today the market intervention going on should become blatant to everyone. I scoffed at this notion. Most people in this country are either not aware of what’s going on in DC and Wall Street or don’t care. I was watching CNN this morning and the Greek Tragedy was not even reported. If you only get your news from CNN you have no idea that the EU could fall apart. Therefore, you have no reason to believe that the stock market should be falling off a cliff and gold should be going parabolic toward the sky.
The markets have become unimaginably imbalanced in the degree to which the paper derivative securities misrepresent the underlying financial, economic and political reality. Yes, stocks and bonds are nothing more than simple derivatives in that they are pieces of paper which are supposed to “derive” their value from underlying entities that issue them. But the underlying entities are nothing more than cesspools of accounting fraud, criminality and Ponzi schemes designed to suck wealth out the system.
The financial markets – and specifically the U.S. financial markets – have become collectively the biggest Ponzi scheme in the history of the universe. This condition has been made even worse by the fact that the people running these markets and our Government have become completely immune from prosecution or even indictment. They are criminals who are above the law.
Examples of this are becoming limitless, but consider that an open felon who, as Secretary of State, sold U.S. foreign policy to the highest bidders for her own personal gain is now the front-runner candidate to be the next President. The only way that our system can become more distorted, debauched and depraved than that will be when the Government begins to herd malcontents and critics into “internment” camps. Don’t think for moment that is not in the playbook…
…when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed. – Ayn Rand, “Atlas Shrugged”