I don't see the US equity markets being a true "free market"

Discussion in 'Economics' started by walter4, Jan 22, 2008.

  1. "Today, Treasury Secretary Hank Paulsen, and other members of the Plunge Protection Team (the President's Working Group on Financial Markets) are working overtime to stabilize the financial markets.
    Paulsen's morning speech was interrupted with news that the Federal Reserve cut the key leading rate by three quarters of a point after its first emergency since 2001.
    Short sellers would say that manipulating the markets to prevent a market crash is a bad thing. Obviously these people have something to gain from the misery of others, so we need to discount what they say.
    The negatives are obvious. You and I grew up to believe that the "free markets" are based on the laws of supply and demand. In some ways they are, but today we have proof that the markets are not truly "free".
    Today, many US investors are glad we don't have free markets.
    Capitalism in the modern financial ERA is now run by organized groups that change regulations and laws for their own political and monetary gain.
    For example, I don't believe the energy markets operate in a "free market". Over the past 6 years how many times have we been told that speculators have been in control of the oil markets?
    Don't you find it odd that energy prices decline just before an important election, and rise just after?
    Don't you find it odd that Glass Stegal (Banking Act of 1933) that called for the separation of commercial banking and investment banking was repealed in 1999 by the Gramm-Leach-Bliley Act?
    Glass- Stegal was a depression era protection put into place by the US government to solve the problems that created the 1929 stock market crash. The repeal of this act has lead to the integration of commercial banks, and investment banks.
    In short, I don't see the US equity markets being a true "free market".
    Not that the financial channels have you scared to death, where do we go from here?
    I think the intervention from the Plunge Protection Team will be strong enough to force short sellers to cover, and the market will rally.
    My best guess the rally will stall just before the January Fed meeting. The Fed will cut rates by another .50 basis points, and the market will rally into the first week in February.
    After the oversold rally, I would expect the stock market to re-test the lows we saw today sometime in February and March. By year-end, I am expecting the financials and retail to lead the market higher.
    Have a great day!"

    found it on johnmugarian.com