Mad Money Machine

See? They Say the PPT *WAS* at Work Last Week

Here’s a post from Naked Capitalism just now proving that yes, in fact, the Plunge Protection Team did act last week:

 Are the Feds Manipulating the Stock Market?

from naked capitalism by Yves Smith

This message came from an investor who has provided me with some very useful research from time to time:

"Mike Belkin, who writes a weekly technically-based look at lots of markets—the only technical service to which I subscribe—notes today that last week equity fund flows netted to a $22.9 billion inflow, broken down as $3.3 billion of mutual fund outflow, and $26.2 billion of ETF inflow. His inference is that the Fed/Treasury is buying ETFs. Just so you know, Mike is an ultimate insider, although he views things with a very jaundiced eye, and views them from Seattle. He ran a Salomon prop desk for years, and is the opposite of a conspiracy theorist or a perma-anything—he’s very good at noting crosscurrents and catching shorter term countertrend moves within broad longer term trends."

The reason I consider this credible is that I was told back in 2000 by my derivative trading buddies that the Fed, known as the Turk, would place orders in S&P futures. Note that the Fed has no responsibility for the health of the stock market despite what its actions would lead you to believe.

I find this all rather hard to believe. Surely neither the Fed nor the government would intervene in the workings of the free market. What would they do if their bet lost? Who would pay?