John Crudele: CNBC has no clue on market manipulation

Section:

By John Crudele
New York Post
Thursday, November 20, 2008

http://www.nypost.com/seven/11202008/business/credit_cards_will_be_the_n...

If you really want to laugh, watch this 10-minute video of Tuesday's "Squawk Box" on the Bubble Network:

http://www.cnbc.com/id/15840232?video=931599105&play=1

CNBC -- which loves bubbles more than Lawrence Welk ever did -- invited a Chicago trader named Scott Nations to the show.

Nations then shook things up by saying, straight out, that the US government, through the Plunge Protection Team, manipulated the Standard & Poor's 500 index on Oct. 10 and Oct. 28.

That was right before the election, in case you've forgotten, which brings into question whether there was something undemocratic going on.

The hosts of the show went apoplectic with one -- sadly, one who should know better -- calling the accusations "Internet rumors."

One viewer even noticed that his screen went blank for five seconds in the middle of the exchange, although CNBC said -- if in fact it happened -- that the dead air was due to technical difficulties and not censoring.

It's surprising that CNBC is so clueless, especially now when Washington is openly considering government rescues of auto, insurance, financial companies, and anyone else that tells a convincing enough sob story.

You know where I stand on this. Once someone takes a really close look at what's been going on this'll be the biggest financial story ever.

Here are the facts: Ronald Reagan signed an executive order during his last year in office that created the President's Working Group on Financial Markets, which the Washington Post later nicknamed the "Plunge Protection Team."

In 1989, Robert Heller, who had just left the Federal Reserve Board, proposed that the government should rig the stock market in times of imminent disaster.

George Stephanopoulos, a top aide to former President Bill Clinton, said the government used this power in 1998 during the meltdown caused by the failure of hedge fund Long-Term Capital Management. And I spoke with a high-ranking official at the Fed about intervention when the markets cratered right after 9/11.

As soon as CNBC gets a clue, I'll let you know.

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