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Market analyst Grandich supports GATA in Canadian TV interview
12:28p ET Monday, October 24, 2005
Dear Friend of GATA and Gold:
Bloomberg News Service's Caroline Baum has
written a column, appended here, ridiculing
suggestions that the U.S. government might
be more involved in the equities, currency,
and gold markets than it lets on. While the
column is disappointing as journalism --
after all, journalism would consist of
requests for access to Federal Reserve and
Treasury Department records and meetings
to which the public now is denied access
-- this is actually progress.
For Baum's inclination not to commit
journalism is now on the record, even as
the complaints of market rigging have just
snuck onto the Bloomberg wire. Other
market participants who increasingly note
anomalous events will come across her
column and be given ideas. Maybe someday
a financial journalist will even commit
journalism by examining both records and
circumstantial evidence and putting some
inconvenient questions to government and
financial house officials.
When that day comes, the joke may be on
those who today are just sneering.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
I Am Not Now, and Have Never Been, a PPT Member
By Caroline Baum
Bloomberg News Service
Monday, October 24, 2005
Nothing elicits more vitriol from readers than columns about
conspiracy theories. Mention "black helicopters" or the "plunge
protection team" and your inbox will be inundated for weeks by folks
venting their utter disdain and disgust at your pathetic naivete.
Over the years I've dismissed the idea of a plunge protection team
(PPT), a cabal of select government institutions (the Treasury and
Federal Reserve) and large investment banks (Goldman Sachs is always
mentioned) that allegedly intervenes to support the stock market from
time to time.
Imagine my surprise, then, when I learned quite by accident that I
was a member in good standing of the PPT!
Readers alerted me to my new, exalted status, documented in a
footnote of a special report by John Embry and Andrew Hepburn of
Sprott Asset Management in Toronto entitled, "Move Over, Adam Smith:
The Visible Hand of Uncle Sam."
The report, a collection of hearsay presented as research and given
the veneer of credibility by copious references and footnotes,
purports to present evidence that the U.S. government surreptitiously
intervenes in the stock market.
The evidence is hardly persuasive. For example, Embry dates the
origin of the PPT to the Oct. 19, 1987, stock market crash. The
following day stocks mysteriously rallied.
According to a Wall Street Journal article he cites, "some
knowledgeable traders" speculated that the Major Market Index futures
contract, a proxy for the Dow Jones Industrial Average,
was "deliberately manipulated by a few major firms as part of a
desperate attempt to boost the Dow and save the markets."
The buying had an outsized effect on the thinly traded MMI contract,
raising the futures price to a premium over the underlying securities
and prompting arbitragers to buy Dow stocks.
Well, whoop-de-do. On any given day major firms buy securities to
support their existing positions. There are folks who make a living
capitalizing on the differences between cash and futures prices. And
what's so unusual about a bounce after a 508-point slide?
But in the eyes of the conspiracy theorists, this is evidence of a
scheme to rig the markets -- not just stocks but gold, currencies,
Treasuries, and oil.
For the uninitiated, the origin of the PPT dates to the creation of
the President's Working Group on Financial Markets following the 1987
stock market crash. The group, which includes the U.S. Treasury
secretary, Federal Reserve chairman, chairman of the Securities and
Exchange Commission, and chairman of the Commodity Futures Trading
Commission, was formed to ensure the smooth operation of financial
The first reference to the group as a plunge protection team appeared
in a Feb. 23, 1997, Washington Post article by Brett Fromson. How the
government's "high-level forum for discussion of financial policy"
morphed into a worldwide market-rigging operation is anybody's guess.
Each of the agencies in the Working Group has a confidential
contingency plan in the event of a financial crisis, Fromson
reported. The SEC's includes maintaining a list of "everyone's home
and weekend numbers" so that relevant officials, here and abroad,
could be reached at any time.
How positively quaint, especially when viewed from the Age of
The government isn't the only entity concerned about the worldwide
implications of a national financial crisis. Following the near-
collapse of Long-Term Capital Management in 1998, the Council on
Foreign Relations conducted a simulation exercise, organized by Roger
Kubarych, senior economic adviser at HVB America Inc., to
determine "financial vulnerabilities and their interconnections with
broader economic, foreign policy, and national security
considerations." The results of the exercise were published by the
CFR in Kubarych's 2001 book, "Stress Testing the System."
I attended the first meeting of the CFR's war-game exercise, which
was a lively theoretical discussion of the issues. My participation
is documented in footnote 72 at the bottom of Page 24 of Embry's
report. Had he called me, I would have been happy to tell him what
went on, best as memory serves.
He didn't call or ask. I'm not a member of his club. (He clearly
presumes I'm a member of the "other" club.) Conspiracy theorists
stick together. They hang out on the same Web sites and chat rooms.
They belong to GATA (the Gold Anti-Trust Action Committee). They swap
the same fish tales back and forth, with the stories acquiring
respectability through frequent repetition among believers.
When I called Embry last week to see if he had any hard data on the
PPT -- he quotes a money manager who claims almost everyone on the
floor of the various U.S. futures exchanges has seen the PPT -- he
said, "The weight of evidence, including continuous moves that make
little sense, suggests that it exists."
Besides, where was my proof, he wanted to know.
The reason Embry can't support his theory with anything concrete is
the government's "utter lack of official disclosure of the market
interventions," he wrote in the report.
Well, I'll be. The government is rigging the markets, and officials
don't have the decency to comply with Regulation FD. Shameless.
Before you e-mail me to say I couldn't possibly be as naive as all
that, take a deep breath. I don't challenge the notion of a PPT that
manipulates the markets because I think the government is virtuous.
To the contrary, most politicians, Republican and Democrat alike,
bend the truth (lie).
The reason the notion of a global cabal is so preposterous is that
the paper trail would be too long. Too many people would have
specific knowledge of the PPT's operations. Some concrete proof would
have surfaced by now.
If the Fed were buying Standard & Poor's 500 futures contracts, the
PPT's vehicle of choice, it would have to have an account. There
would be a record of the transactions. There would be tax
implications (oh, right, the Internal Revenue Service is in on it
There would be balance-sheet implications because the Fed's purchases
would add reserves to the banking system. Some back-office clerk
would monitor the account to ensure it has adequate maintenance
margin. ("Say, who is this A. Greenspan?")
If you were a $30,000-a-year clearing clerk who saw the trades from
the market-support operations, why wouldn't you grab a multimillion-
dollar advance from a publisher to expose the conspiracy? This is
Still, I'd like to keep an open mind. Anyone who has first- hand
knowledge of the PPT, please forward the evidence to me. If, on the
other hand, you just want to vent, contact me at cbaum@PPT.gov.
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