The President’s Working Group on Financial Markets, better known as the “Plunge Protection Team,” has long been a bugbear of financial conspiracy theorists, gold bugs and other anti-establishment types for the last ten years or better. Some have claimed that it’s another head of the shadow government hydra, manipulating markets at will and doing anything necessary to keep Wall Street from imploding during those periodic sell-offs that occur. Others have claimed that there is no such thing, that it’s the invention of tinfoil hat-wearing kooks, or that it’s simply an ad-hoc working group that rarely does anything.
Well, I think it’s now safe to say that it exists as this article in the London Telegraph is hard to refute. Mr. Bush has apparently decided that things are getting ugly enough that the group needed to meet once again.
Some choice selections from the article:
“It appears to have powers to support the markets in a crisis with a host of instruments, mostly by through buying futures contracts on the stock indexes (DOW, S&P 500, NASDAQ and Russell) and key credit levers. And it has the means to fry “short” traders in the hottest of oils. “
Mr Paulson reactivated it last year, asking the staff to examine “systemic risk posed by hedge funds and derivatives, and the government’s ability to respond to a financial crisis”, he said.
It seems he failed to spot the immediate threat from mortgage securities and the implosion of the commercial paper market. But never mind.”
In other words, ‘Lasseiz-Faire’ Capitalism my ass. Small investors are sacrificed as needed to keep the gears of commerce well-greased, but when the big banks start foundering due to their own greed & incompetence, then it’s the PPT to the rescue.
If market conditions continue to deteriorate, and it looks to me as if they will, it’ll be interesting to see what kinds of stimulus packages the White House will come up with. Here’s a hint: more tax cuts. No mention of budget cuts, which is expected in an election year. When you’re 9 trillion in debt, what’s a few hundred more billion?