What markets are manipulated and what will cause it to stop?

Discussion in 'Economics' started by DrPepper, Mar 30, 2010.

  1. I have read a lot about markets being manipulated by our government. However, as far as I can tell, it mostly falls within the realm of conspiracy theory.

    US government bonds appear to be the most obviously manipulated market. I have read that private investors purchased a record number of treasuries last year in the midst of a bad economy, which simply defies logic. However, it would make total sense for the US government to hide how many bonds they were purchasing with freshly printed money by attributing the purchases to anonymous individuals. The US would have to default on their debt if they could not sell treasuries, so they have to buy those that don't sell. However, if the world knew how many treasuries were being monetized, it might also scare away investors.

    There also seems to be evidence that gold is being manipulated. The fact that the price of gold often goes up during the European and Asian sessions only to go down when Comex opens suggests that the US is involved in driving the price down. I imagine that suppressing the price of gold serves a similar purpose to confiscating it. If the price of gold sky-rocketed, the US dollar would correspondingly decline in value. As a result, gold would essentially challenge the US dollar for reserve currency status. However, I have read that someone (GS?) has so money gold puts that they cannot be covered. How can that situation end?

    Finally, I read that the US stock market has been manipulated for years. I guess the only purpose for that would be for people to think that the economy is okay. Afterall, a stock market crash suggests a recession or a depression to the general public. As long as the market is going up, everyone seems to think that our economy must be improving. However, if our government is truly propping up stocks, they may need to withdraw that support and let the stock market decline to encourage investment in bonds if the treasury auction fails to attract enough buyers.

    So my questions are:

    1. Is there any proof of market manipulation by our government?
    2. Which markets are manipulated and how (by GS working with the treasury?)
    3. What market forces will make the government to stop their manipulation, allowing bonds or stocks to crash and gold to soar?
  2. By providing the banks with near-free money, with no end in sight, what do you think the banks will do with that? Invest it in asset classes. They're certainly not going to lend it out to non-credit worthy Americans. The money has to go somewhere. Therefore, this isn't a natural market wherein the tide is determined by fundamentals, economic strength or anything of the sort.

    It is driven by cheap, no interest loans and free money. It is fixed. Manipulated to go only up. When the money dries up (and it always does eventually) the house of cards comes crashing down. But the big boys in the "know" will "know" when that is to happen, and they won't get burned. Everyone else will. Again, fixed. Manipulated.
  3. This much is certainly true. The other conspiracies (PPT, etc.) may or may not be. There is definitely a PPT but it's hard to prove when and if they're actually buying (they claim they don't prop up stocks by buying them).

    As for gold/silver market manipulation, that seems like the most likely place. Strong precious metals prices are a slap in the face to central bankers and their useless economic theories. I haven't read this carefully and can't speak to its validity, but here's the latest on this subject, i.e., "Silvergate":

  4. I have stated my opinion many times, so no need for me to reiterate ('cause I am sure we're gonna end up talking about Britney Spears again)...

    Conspiracy and mkt manipulation theories, in my view, are generally invented, advocated and disseminated by two kinds of people:
    1) People who lost money in the mkt or forecast mkt movements wrongly. These people try to attribute their losses to mysterious all-powerful agents (of the govt, mafia, the Vatican, etc), rather than their own bad luck or intellectual shortcomings.
    2) Storytellers (e.g. journalists, bloggers) whose very livelihoods depend on creation of bold headlines that conspiracy theories can provide.
  5. the government is becoming the MBS market. Is that not manipulation?
  6. spinn


    so please explain why the market goes up every day with more and more bad news....help me understand that.
  7. TGregg


    Bill Whittle wrote an article about people who buy into conspiracy theories over at ejectejecteject.com (now part of PajamasMedia, apparently). He makes the argument that some folks have a psychological need to be one of a few people who know the truth.


    If you like his stuff, check out his page. His older stuff is better, IMO.
  8. Simple, more people/machines pressing their magical green buttons... Moreover, there's bad news and good news and there's even some news that may appear good to one group of people and bad to another, if you can imagine such a thing...
    No, not in the sense of the OP's question... Specifically, the Fed's actions in the agency MBS mkt were well-advertised in advance and were extremely transparent to the mkt participants. If you want to widen the context and define mkt manipulation more broadly, why have this discussion at all? It's obvious that, under the expanded definition, the mkt is heavily manipulated. A regulator, such as the SEC, the FSA or CFTC, is the biggest manipulator, by definition.
  9. I agree that many losers in trading use the manipulation card so they don't have to take responsability for their loss. However, many people know for a fact that certain markets are manipulated. Some of them actually are making money with that knowledge.

    That is where facts make the difference between fantasy and reality.

    I suggest you do some research on GATA - gata.org - and their long time work against the gold market manipulation. Especially the recent CFTC public hearing, the Andrew Maguire story and the King World News interview.

    That's just one example of a manipulated market.
  10. Ask "Why?" Why would the stock market in general be manipulated? Short term, because everyone looks at the stock market. If it's going up, then people think the economy is good. If it's going down, people think the economy is bad. The economy has been bad (in real life) so we need to make it look like it's good (in perception) then people will loosen their purse strings and start spending again, then the economy really will be better (in real life).

    The more important question to ask is "How can I profit from it to protect the future of myself and my family?" Basically, don't fight the gov't. A long-term, broad market, short position right now is retarded. Be long until we see evidence that they are letting it come down for a soft landing.
    #10     Mar 30, 2010