Quote of the Day: The unknown forces in the market these days—the Plunge Protection Team

From John Crudele of the New York Post:

But let me explain about the unknown forces in the market these days. Call it by a nickname — the Plunge Protection Team. Or call it the President’s Working Group on Financial Markets, the official name given to the group when it was formed by President Ronald Reagan after the market turbulence of 1989.

These forces may be working from a script in the “Doomsday Book,” which the US government recently fought to keep secret when it was brought up last week during the AIG trial in Washington.

Here’s the bottom line: Someone tried to rescue the market last Wednesday. And it’s becoming a regular occurrence.

The details of last Wednesday morning are these: At the same time the Dow was off 350 points, the S&P index was down 43.80 points, That was an enormous decline in just 11 minutes of trading and it was an indication that Wall Street was not having a good day.

Then, someone (or something) started buying S&P futures contracts en masse. Twenty-one minutes later, the S&P index had regained 30 of those lost points and was back at 1,861.

Maybe you’ll believe that there was some manipulation going on if you knew that a guy named Robert Heller, who was a member of the Federal Reserve’s Board of Governors until 1989, proposed just such a rigging as soon as he left the Fed.

Look it up. Oct. 27, 1989, Wall Street Journal. Headline: “Have Fed Support Stock Market, Too.” By Robert Heller, who had just left the Fed to head up the credit card company Visa.

“It would be inappropriate for the government or the central bank to buy or sell IBM or General Motors shares,” Heller wrote. “Instead, the Fed could buy the broad market composites in the futures market.”

In case you don’t know the lingo, Heller is proposing that the Fed or government purchase stock futures contracts that track — and can influence — the major indices.

These contracts are cheap and a government could turn the whole stock market around quickly — but probably not permanently.

Wow! Doesn’t that seem a lot like what happened Wednesday at 9:41 a.m., when S&P futures contracts were suddenly and mysteriously scooped up?

Let me allow Heller to finish his thought because it’s important to anyone who believes in free and fair markets.

“The Fed’s stock-market role ought not to be very ambitious. It should seek only to maintain the functioning of the markets — not to prop the Dow Jones or the New York Stock Exchange averages at a particular level,” he continued.

But times change and so does thinking. In recent weeks, we’ve discovered that the CME Group, the exchange in Chicago, has an incentive program under which foreign central banks could buy stock market derivatives like the S&P contracts at a discount.

It’s not that these foreign banks need a break on the price of their trading. But it does show that there is a back-door way — through foreign emissaries — for the Fed and the US government to prop up stocks like Heller suggested, and — maybe — not get caught.

It's no secret that governments have been bolstering stock markets subtly or openly. 

The Bank of Japan (BOJ) openly reports of her stock market buying interventions. 

As I have recently reported, a study by a central bank watchdog revealed that global central banks has had $29 trillion worth of equity exposures since 2009 which has contributed to "overheated asset prices", according to the Official Monetary and Financial Institutions Forum (Omfif) last June. 

At the height of the taper tantrum last year, the Philippine government via her government public pension fund talked of implicit support at the 5,500 level. Ever since, "marking the close" has become a frequent, if not a regular occurrence. During the global selloff a week ago, a bizarre event took hold, a one day panic buying on three issues catapulted the Philippine Phisix to outperform as the world stock markets shuddered. The incentives for such actions suggests of non-profit activities, which implies activities by a non-profit symbol conscious participant/s.

While there have been little direct evidence that the US government's plunge protection team has been indeed been part of the manipulation of stock markets, the facts--the sudden symphony by governments towards more interventions--Fed's Williams and Bullard, ECB's Couere utterance of 'S-T-I-M-U-L-U-S', the ECB's abrupt engagement of covered bonds and ABS, the supposed increased allocation of Japan's public pension funds in the stock markets--indicates of the desire by various governments to influence stock market prices.

As you will observe, stock markets have become propaganda tools for the governments