[Interesting. Here is 'Planet Wall Street' in the form of Bloomberg's Caroline Baum (was this an opinion, news piece, or what??) denying significant intervention by the Working Group on Financial Markets (PPT). This implicitly denies the offshoot 'Gold Cabal'.]
MIDAS [Bill Murphy] note: Bloomberg's Caroline Baum is the most disingenuous member of the press I have come across in my 9 years of The Cafe/GATA work. None are so blind as those who refuse to see.
Rubin Should Teach Paulson Secret PPT Handshake: Caroline Baum
By Caroline Baum
July 31 (Bloomberg) -- Where is the PPT?
If that acronym, short for Plunge Protection Team, doesn't immediately conjure up images of government officials and representatives of large Wall Street banks (think Goldman Sachs) conspiring to support the stock market, you don't spend enough time with the black-helicopter crowd.
The idea that there is a cabal of government and private- sector individuals who secretly support the stock market in times of distress does have a small basis in fact. Following the 1987 stock market crash, President Ronald Reagan formed a high- level Working Group on Financial Markets to discuss options in the event of a financial crisis and disorderly markets. The group consists of the secretary of the Treasury and the chairmen of the Federal Reserve, the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Reporter Brett Fromson described the inner workings of the group and coined the term Plunge Protection Team in a 1997 Washington Post article.
Anyone who can't prove that the PPT doesn't exist is immediately dismissed as a pawn of the government or a part of the cabal. Yours truly has been accused of both by the conspiracy theorists (CTs).
What is their proof that the PPT exists? To a person, these folks haul out two presumably incontrovertible pieces of evidence: one, a mention of the PPT by ABC's George Stephanopoulos on TV shortly after the Sept. 11 terrorist attacks; and two, a 1989 Wall Street Journal op-ed by former Federal Reserve Governor Robert Heller.
Inside Information
Let's start with Stephanopoulos, who was an adviser to President Bill Clinton. PPT CTs maintain that Stephanopoulos ``verified' the existence of the PPT in 2001 when he explained what was going on ``behind the scenes by the Fed and other government officials to guard against a free-fall in the markets.'
He went on to reveal the formation of the PPT by the Fed (wrong, it was President Reagan) in 1989 (wrong, it was 1987) and expose its workings in the 1998 ``global currency crisis' (wrong, it was a stock- and credit-market meltdown) originating at Long-Term Capital Management ``with a currency trader' (wrong, it was relative value trades that went awry). He said all the big banks, under the Fed's guidance, got together to prop up the currency market (wrong, to rescue LTCM). ``And, they have plans in place to consider that if the markets start to fall,' Stephanopoulos said.
Heller Connection
Rather than reveal any dark secrets about the existence of the PPT, Stephanopoulos showed his complete lack of fluency with previous PPT Close Encounters of the Third Kind.
The other ``conclusive' piece of evidence is the Heller op-ed in the Wall Street Journal that appeared in October 1989, following a mini-crash in the U.S. stock market. Heller wrote that the Fed ``should be charged with the job of preventing chaos in the market' at times when the spread between bids and offers widens to the point that no trading takes place.
He went on to say that the Fed already intervenes in the currency market (not often, actually, and at the behest of the Treasury) and the government securities market (true, although only to stabilize one price, the federal funds rate).
Instead of pumping reserves into the banking system in a crisis, ``wouldn't it be more efficient and effective to supply such support to the stock market directly?' Heller said.
Clarification
The idea sounded kind of loopy, especially since stocks aren't on the list of securities the Fed is empowered to buy, according to the Federal Reserve Act of 1913 and subsequent amendments. So I called Heller yesterday to drill him on his views.
Back in those days, ``I was not comfortable with how things were proceeding,' in terms of the pressure on banks to lend to investment banks in a crisis, Heller said. (This was before the Glass-Steagall wall separating the two came down.) Under the circumstances, he advocated ``intervention in the futures market,' buying S&P 500 contracts or another index.
``If markets cease to function -- if bid-ask spreads widen a lot -- under those circumstances it makes sense for government to step in,' Heller said in a phone interview.
So did Heller have any evidence that anyone at the Fed or elsewhere had run with his idea? He said no. How about some inside info on the PPT since he seemed to be a member in good standing?
``I didn't know a cabal existed until a reporter called me up and asked me about the PPT, saying `you invented it,' he said.
Trader Bob
Yes, I know. I'm either hopelessly naive because I believe him (the CTs believe Stephanopoulos, don't they?) or a pathetic tool of the government.
All last week, with the Dow Jones Industrial Average down 586 points, or 4.2 percent, in its worst week in more than four years, I kept waiting for the PPT to make an appearance.
Instead, Treasury Secretary Hank Paulson, who reportedly has reactivated the President's Working Group, was dispatched to calm financial markets on Friday, saying the subprime mortgage mess did not ``pose a threat to the overall economy.'
Clinton Treasury Secretary Robert Rubin must have forgotten to teach his former Goldman colleague the secret PPT handshake. Otherwise, how to explain Paulson's verbal damage control when the situation called for action?
Trader Bob was always a ``go with' kind of guy, waiting until the dollar had bounced in 1995 before instructing the Fed to intervene in the foreign-exchange market. Maybe Hank's sticking to the Rubin playbook.
To contact the writer of this column: Caroline Baum in New York at cabaum@bloomberg.net .
Last Updated: July 31, 2007 00:12 EDT
Here is the full text directly from Bloomberg:
Rubin Should Teach Paulson Secret PPT Handshake: Caroline Baum
2007-07-31 00:12 (New York)
Commentary by Caroline Baum
July 31 (Bloomberg) -- Where is the PPT?
If that acronym, short for Plunge Protection Team, doesn't
immediately conjure up images of government officials and
representatives of large Wall Street banks (think Goldman Sachs)
conspiring to support the stock market, you don't spend enough
time with the black-helicopter crowd.
The idea that there is a cabal of government and private-
sector individuals who secretly support the stock market in
times of distress does have a small basis in fact. Following the
1987 stock market crash, President Ronald Reagan formed a high-
level Working Group on Financial Markets to discuss options in
the event of a financial crisis and disorderly markets. The
group consists of the secretary of the Treasury and the chairmen
of the Federal Reserve, the Securities and Exchange Commission
and the Commodity Futures Trading Commission.
Reporter Brett Fromson described the inner workings of the
group and coined the term Plunge Protection Team in a 1997
Washington Post article.
Anyone who can't prove that the PPT doesn't exist is
immediately dismissed as a pawn of the government or a part of
the cabal. Yours truly has been accused of both by the
conspiracy theorists (CTs).
What is their proof that the PPT exists? To a person, these
folks haul out two presumably incontrovertible pieces of
evidence: one, a mention of the PPT by ABC's George
Stephanopoulos on TV shortly after the Sept. 11 terrorist
attacks; and two, a 1989 Wall Street Journal op-ed by former
Federal Reserve Governor Robert Heller.
Inside Information
Let's start with Stephanopoulos, who was an adviser to
President Bill Clinton. PPT CTs maintain that Stephanopoulos
``verified'' the existence of the PPT in 2001 when he explained
what was going on ``behind the scenes by the Fed and other
government officials to guard against a free-fall in the
markets.''
He went on to reveal the formation of the PPT by the Fed
(wrong, it was President Reagan) in 1989 (wrong, it was 1987)
and expose its workings in the 1998 ``global currency crisis''
(wrong, it was a stock- and credit-market meltdown) originating
at Long-Term Capital Management ``with a currency trader''
(wrong, it was relative value trades that went awry). He said
all the big banks, under the Fed's guidance, got together to
prop up the currency market (wrong, to rescue LTCM). ``And, they
have plans in place to consider that if the markets start to
fall,'' Stephanopoulos said.
Heller Connection
Rather than reveal any dark secrets about the existence of
the PPT, Stephanopoulos showed his complete lack of fluency with
previous PPT Close Encounters of the Third Kind.
The other ``conclusive'' piece of evidence is the Heller
op-ed in the Wall Street Journal that appeared in October 1989,
following a mini-crash in the U.S. stock market. Heller wrote
that the Fed ``should be charged with the job of preventing
chaos in the market'' at times when the spread between bids and
offers widens to the point that no trading takes place.
He went on to say that the Fed already intervenes in the
currency market (not often, actually, and at the behest of the
Treasury) and the government securities market (true, although
only to stabilize one price, the federal funds rate).
Instead of pumping reserves into the banking system in a
crisis, ``wouldn't it be more efficient and effective to supply
such support to the stock market directly?'' Heller said.
Clarification
The idea sounded kind of loopy, especially since stocks
aren't on the list of securities the Fed is empowered to buy,
according to the Federal Reserve Act of 1913 and subsequent
amendments. So I called Heller yesterday to drill him on his
views.
Back in those days, ``I was not comfortable with how things
were proceeding,'' in terms of the pressure on banks to lend to
investment banks in a crisis, Heller said. (This was before the
Glass-Steagall wall separating the two came down.) Under the
circumstances, he advocated ``intervention in the futures
market,'' buying S&P 500 contracts or another index.
``If markets cease to function -- if bid-ask spreads widen
a lot -- under those circumstances it makes sense for government
to step in,'' Heller said in a phone interview.
So did Heller have any evidence that anyone at the Fed or
elsewhere had run with his idea? He said no. How about some
inside info on the PPT since he seemed to be a member in good
standing?
``I didn't know a cabal existed until a reporter called me
up and asked me about the PPT, saying `you invented it,''' he
said.
Trader Bob
Yes, I know. I'm either hopelessly naive because I believe
him (the CTs believe Stephanopoulos, don't they?) or a pathetic
tool of the government.
All last week, with the Dow Jones Industrial Average down
586 points, or 4.2 percent, in its worst week in more than four
years, I kept waiting for the PPT to make an appearance.
Instead, Treasury Secretary Hank Paulson, who reportedly
has reactivated the President's Working Group, was dispatched to
calm financial markets on Friday, saying the subprime mortgage
mess did not ``pose a threat to the overall economy.''
Clinton Treasury Secretary Robert Rubin must have forgotten
to teach his former Goldman colleague the secret PPT handshake.
Otherwise, how to explain Paulson's verbal damage control when
the situation called for action?
Trader Bob was always a ``go with'' kind of guy, waiting
until the dollar had bounced in 1995 before instructing the Fed
to intervene in the foreign-exchange market. Maybe Hank's
sticking to the Rubin playbook.
(Caroline Baum, author of ``Just What I Said,'' is a
Bloomberg News columnist. The opinions expressed are her own. To
comment on this column, click on {LETT <GO>} and write a letter
to the editor.)
--Editor: Dickson (jmg/ecw).
To contact the writer of this column: Caroline Baum in New York
at +1-212-617-3369 or cabaum@bloomberg.net.
To contact the editor responsible for this column:
James Greiff at +1-212-617-5801 or jgreiff@bloomberg.net.
[TAGINFO]
NI Codes: NI BAUM NI COLUMNISTS NI COLUMNS NI FEA NI BON NI USB
NI GBN NI NOB NI FRX NI FX NI FED NI CEN NI US NI ECO NI TRE NI
MMK NI USS
#<698734.4653949.1.0.38.15369.25>#
-0- Jul/31/2007 04:12 GMT
Evening of July 31, 2007:
MIDAS
Appendix
Caroline Baum received an earful from Cafe members:
Caroline,
I suggest you do a
little more research before making a complete fool of yourself. You
might want to call up a real journalist like John Crudele.
You may also wish to call Rep. Ron Paul. In an exchange with Bernanke before the Financial Services Committee Bernanke admitted the PPT existed and met several times a year but was not sure if they could make the minutes available to the House Financial Services Committee!!
QUOTE
From the Hearings on Monetary Policy and the State
of the Economy Committee on Financial Services, the U.S. House of
Representatives
July 20, 2006, Washington, D.C.
MR. PAUL: Good afternoon, Chairman Bernanke.
I have a question dealing with the Working Group on Financial Markets. I want to learn more about that group and actually what authority they have and what they do. Could you tell me, as a member of that group, how often they meet and how often they take action; and have they done something recently? And are there reports sent out by this particular group?
MR. BERNANKE: Yes, Congressman. The President's Working Group was convened by the President, I believe, after the 1987 stock market crash. It meets irregularly, I would guess about four or five times a year, but I am not exactly sure. And its primary function is advisory, to prepare reports. I mentioned earlier that we have been asked to prepare a report on the terrorism risk insurance. So that is what we generally do.
MR. PAUL: In the media you will find articles that will claim that it is a lot more than an advisory group you know, if there is a stock market crash, that you literally have a lot of authority, you know, to impose restrictions on the market. And we are talking about many trillions of dollars slushing around in all the financial markets, and this involves Treasury and, of course, the Fed, as well as the SEC and the CFTC. So there is a lot of potential there.
And the reason this came to my attention was just recently there was an article that actually made a charge that out of this group came actions to interfere with the prices of General Motors stock. Have you read that, or do you know anything about that?
MR. BERNANKE: No, sir, I don't.
MR. PAUL: Because they were charging that there was a problem with General Motors, and then there was a spike in GM's stock prices.
But back to the issue of the meeting. You tell me it meets irregularly, but there are minutes kept, or are there reports made on this group?
MR. BERNANKE: I believe there are records kept by the staff. These are staff mostly from Treasury, but also from the other agencies.
MR. PAUL: And they would be available to us in the committee?
MR. BERNANKE: I don't know. I am sorry, I don't know.
END
M/s Baum if you don’t
know what you are talking about and you can’t be bothered to do
research beyond making one phone call to an ex FED Governor you are
not qualified to be classified as a journalist. You are a disgrace to
journalism.
Adrian Douglas
Okay Smart-Ass,
I'm curious why you refused to
include in your examples, your neighbor John
Crudele-New York Post, who has patiently waited OVER ! YEAR to
legally receive documents under the FOIA on the minutes of those
"open" plunge team meetings?
By the way, the only one you discredit in your Stephanopoulos example is yourself. Yes, there was an Asian currency crisis in 1998, preceeding the LTCM debacle. In fact, the LTCM crisis involved an unexpected Russian currency model abnormality that those nobel-prized individuals didn't anticipate. Due to it's secrecy, who knows how the problem was dealt with/fixed? One thing we do know though, the New York Fed and William O'Donough orchestrated it.....just like the conspirators have been claiming all along! Of course, you were entrenched in J-School at that time, so we all understand.
As always, you will never get it!
Wistar W. Holt
Holt & Shapard Capital
Management
St. Louis, Mo.
Ms. Baum responds to Wistar;
crudele is a CT [Conspiracy Theorist ??] in good standing, that's why
Then Wistar:
How "objective" of you!
Hi Caroline, What we know of as the 'PPT' and it's mandate is now carried out by the Counterparty Risk Management Policy Group, or the CRMPG. This group has close ties and Greenspan acknowledges them and their value to supporting the markets in a speech he gave in 2002. Below is the link to that speech. It is a very enlightening as to what we are seeing today with the hedge funds controlled by the large NYSE member banks.
Greenspan in 2002: " In today's markets, for example, there is an increased reliance on private counterparty surveillance as the primary means of financial control. Governments supplement private surveillance when they judge that market imperfections could lead to sub-optimal economic performance.”
http://www.federalreserve.gov/boarddocs/speeches/2002/200209252/default.htm
I wrote an essay last year that made it's rounds to several trading groups. In that essay I tie Greenspans comments to what the CRMPG said in their last report in 2005. Link to my essay titled 'Moral Hazard' -
http://siliconinvestor.advfn.com/readmsg.aspx?msgid=23644209&srchtxt=moral%20hazard
The CRMPG filed their report in July of 2005. Here are some selected excerpts with my comments.
The report can be found here.
http://www.crmpolicygroup.org/docs/CRMPG-II.pdf
CRMPG: “The primary purpose of CRMPG II — building on the 1999 report of CRMPG I — is to examine what additional steps should be taken by the private sector to promote the efficiency, effectiveness and stability of the global financial system. As practitioners, the members of CRMPG II recognize that periodic financial disruptions and shocks are inevitable. However, the Policy Group also believes that it is possible to take steps that would be capable of reducing the frequency of such shocks and, especially, to reduce the risk that such shocks would take on the contagion features that can produce systemic damage to the financial system and the real economy.”
Again it appears the CRMPG mandate is to control the markets. How else are they to reduce the frequency of periodic financial disruptions.
CRMPG: “since we know that financial disturbances and even financial shocks will occur in the future, and we know that no approaches to risk management or official supervision are fail-safe, we also know that we must preserve and strengthen the institutional arrangements whereby, at the point of crisis, industry groups and industry leaders, as well as supervisors, are prepared to work together in order to serve the larger and shared goal of financial stability.”
Caroline, I am a day trader. I watch the markets minute by minute for over 10 years now. I have seen program trading rise from 19% of all shares traded on the NYSE to nearly a average of 75% today. 75% of ALL shares traded are now in program trades. Program Trading took a noticeable climb in 2002 just a few months before Greenspan's speech. I see the buys come in at just the right moments. Of course the 'PPT' doesn't step in every time the market sells off. However, they do step in when needed as not to let the selling get out of hand.
I do hope you read Greenspan's speech. The CRMPG report is as I recall 276 pages and very boring. I hope you also read the essay I wrote as the quotes I provide from the report give the gist of what they are about.
Best Regards, Joe Eifrid
Bill,
what a bore that Caroline gal and her
anti conspiracy theory rants in The Metropole today. It's insulting.
Unfortunately 99.99% of the people are taken in by such. That's my
serious estimate. Cabals. Power. We are also a cabal. Big deal. Nice
of you to allow idiots like that in our hallowed grounds, though I
wonder how many of our correligionairies are also taken in.
Your
friend,
Luis
Dear Caroline,
In relation to your
statement
Yes, I know. I'm either hopelessly naive because I
believe him (the CTs [CTs
??] believe Stephanopoulos, don't they?) or a pathetic
tool of the government.
No, you are neither naive nor a
pathetic tool of the government, but I know where you are coming
from. You work for them, as you ARE the
government. Isn't that nice and give you a feeling of power?
Government IS a conspiracy here and everywhere and at all times.
Let's not play the innocent lamb. It is demeaning of one's
intelligence, at least mine.
Best regards from someone in
your league.
Francis
Bill,
I too find Ms. Baum to be quite dense,
not stupid, just totally uncurious. I find it funny to think that she
expects to see US Treasury and Fed files with titles like: PPT-Market
Manipulation-S&Ps, Q3 2005. Just like Salomon Brothers had files
around entitled: Overbids beyond Treasury Regulations....get
real.
regards
Dave Lewis
"We stand ready to
lease gold into the markets in increasing quantities should the price
rise..."
Alan Greenspan, in testimony to
Congress
****
You forgot another possibility Ms. Baum -
that the Working Group IS ALREADY at work in the markets and last
weeks drop would have been three times as bad without them.
Are
you friends with cheerleader Larry Kudlow?
Maybe you two could
get together and work on your cheers, or maybe shop for bobby socks
and saddle shoes?
Misleading the American people is a shameful
thing.
The Tom deSabla Show
1:00 to 3:00 PM Every Weekday
WMET 1160 AM
Live Web stream at www.wmet1160.com
Show
call-in Phone 1-866-369-1160
Show Website - Tomdesabla.com
Hi Bill:
"MIDAS note:
Bloomberg's Caroline Baum is the most disingenuous member of the press I have come across in my 9 years of The Cafe/GATA work. None are so blind as those who refuse to see."
Just like to add my two cents here:
[34] "If a blind person leads another blind person, both of them will fall into a ditch."
This comes from the Gospel of Thomas, which not being in the "proper Bible," we're not supposed to read. But it still makes a lot of sense to me.
Glad your eyes are open, and thanks for helping me
with mine.
Respectfully,
Edward Ulysses Cate