The Visible Hand of Uncle Sam

People can’t stand two things – randomness and responsibility.  On the first point I cite Voltaire: “If God did not exist, it would be necessary to invent him.”  The premise is a truism – life must have order.  Now factor in the inability to accept responsibility – “If my horse doesn’t win – the race was fixed – the horse was doped.” Dashed hopes demand a villain.

-Art Cashin on the existence of a Plunge Protection Team and conspiracy theories

Given yesterday’s strong reversal on the anniversary of the Oct 19th, 1987 stock market crash, it’s worth wondering whether the Plunge Protection Team had a hand in turning the markets around.  With much due respect to Art Cashin, it’s pretty clear that a "Plunge Protection Team" does exist in one form or another and two authors from Canada have put together a compelling study to try to prove it.  "Move Over Adam Smith: The Visible Hand of Uncle Sam" makes the case that "the U.S. government has surreptitiously intervened in the American stock market" – 

Most people probably assume that the U.S. stock market is free of government
interference. It is acknowledged that the bond and currency markets are influenced by
policy-makers, but equities are considered different territory altogether. Current
mythology holds that share prices rise and fall on the basis of market forces alone.

Such sentiments appear to be seriously mistaken. A thorough examination of published
information strongly suggests that since the October 1987 crash, the U.S. government has
periodically intervened to prevent another destabilizing stock market fall. And as official
rhetoric continues to toe the free market line, manipulation has become increasingly
apparent.

The study is worth keeping in mind the next time the markets seem on the precipice, as they are now.  It’s another reason that "gloom and doom trading" (always buying puts and shorting at any sign of trouble) is difficult to do. 

The Mess That Greenspan Made has some excellent discussion and links regarding the Plunge Protection Team.   

5 thoughts on “The Visible Hand of Uncle Sam”

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  2. GSM sucks. In the Watertown mall if you go into Gamestop AT T or T-Mobile will not work. GNC that is next door AT T or T-Mobile will only work until you get half way into the store. GNC has the big side window that I think helps GSM.I was with a frnied at PAX EAST Boston and he could not make a call with his T-Mobile phone but my cheapass Virgin Mobile phone got five bars at PAX EAST BOSTOn and it’s one of those flip phones.

  3. I am confused about stonikcg silver. Suppose there are riots where looters will kill someone for a can of food; and you go to where you know food is and say, I will trade some of this silver for food. Don’t you think that the people with the food will pull out their 12-guage shotguns, take your gold, and send you away empy handed? The time is coming when food will be of far more value than silver and gold You can’t eat either of those; but if you have rice, etc stored, you can stay alive.

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