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From the Financial Times: Waking up the bears
10a EST Wednesday, April 5, 2000
Dear Friend of GATA and Gold:
John Crudele of the New York Post wrote today
about what looks like the Plunge Protection
Team at work. His column is below. Please post
it as seem useful.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
HOW STOCKS TURNED BACK
FROM THE ABYSS ON TUESDAY
By JOHN CRUDELE
New York Post
Wednesday, April 5, 2000
Something happened at around 1 p.m. our time
yesterday that pulled the stock market back from the
edge of the cliff. Traders say it was almost like divine
intervention. One minute the Nasdaq was down 11
percent -- say it out loud, quot;Eleven percent in one
dayquot; -- and then it suddenly rallied several hundred
points in the matter of an hour.
The Dow followed suit. Down 500 points around mid-day,
the blue chip index's decline -- along with the
horrible showing of over-the-counter stocks -- was
destined to make yesterday's market an unqualified
disaster for investors and the country.
Then, traders said, someone started buying large
amounts of stock index futures contracts through
two major brokerage firms -- Goldman Sachs and
Merrill Lynch. These transactions are usually done
on the QT so we don't really know how many of these
contracts were purchased.
And unless the brokers tell, there is no way of
knowing which of their clients were making the
purchases. Goldman wouldn't comment on this and
Merrill did not return a call for comment.
But traders said enough were bought to catch
everyone's attention. In fact, the buyers seemed
to want people to know they had an appetite for stocks.
Then the market rebounded.
It didn't go all the way back. At the end of the
day the Dow Jones index had still lost lost 56 points
or half a percent on the day. And the Nasdaq lost
another 74 points, or the equivalent of a 1.77
percent drop. Yesterday's loss by over-the-counter
stocks nearly put the Nasdaq index back to ground
zero for the year -- in two days all but 2 percent
of its gain for the year was gone.
It was real nice of Goldman and Merrill to stick
their necks out like that. In fact, it was downright
uncharacteristic for Wall Street outfits to put the
thought of possible losses aside for the greater good.
Because of the purely unselfish nature of what went
on, traders are naturally suspicious. Hell, so am I.
quot;I think some one or more persons saved the market
today. There was a suspicious urge to buy stocks at
an opportune time,quot; says one trader. quot;Why drive the
Dow up 350 points in a half hour? That's never
serious buying. That's someone trying to establish
prices,quot; he adds.
I'm especially suspicious when the market suddenly
rebounds at nearly the very same moment that a member
of the Clinton administration -- economic advisor
Gene Sperling -- is on TV telling investors not to worry.
And there's the obvious connection between Goldman
Sachs and the administration, the Wall Street firm
having given Robert Rubin to the Clinton administration
as its Treasury Secretary.
Plus, what better way to make investors not worry
than by having the stock market recover a lot of the
ground it had just lost. That gesture almost makes
a guy want to buy some stock -- bottom fish, if you
are into sporting analogies.
I'm not saying that government intervention in a
collapsing market is wrong. In fact -- except for
the obvious contradictions with the free-market
system -- it is politically and socially a very
right thing to do.
I've written about this before. And I've mentioned
that Washington has had a secretive group call the
Working Group on Financial Markets, made up of
investment industry and government people, that
would be in just the right position to rescue the market.
Informally the folks on Wall Street call this the
quot;Plunge Protection Team.quot; In February 1997, the
Washington Post did a piece on this team, just i
n case you don't believe it exists.
And while I can't swear that Goldman and Merrill
are captains of that team, they sure acted
like it yesterday.