Proof the Stock Market is Manipulated by Investor Class

Sometimes things are right under your nose. They are obvious, but diabolical. Even manipulation of the stock market may be involved. You have to ask yourself why the banks were bailed out. After all, it doesn't appear that they were bailed out to lend to mainstreet. I do think that there was a twofold reason why the banks were bailed out.

1. The most obvious reason that the banks were bailed out was to restore trust between the big banks, so that they could operate in normal fashion. The banks needed to borrow between each other at reasonable interest rates, and the libor was the gauge of those rates.

2. But the most crucial aspect to the bailout had to do with the functioning of the plunge protection team. If banks could not be available to help the government manipulate the stock market, then they could not have this tool to force the market up. The banks were bailed out. Then on March 9, 2009, the plunge protection team was back in business and Obama told people to get back into the stock market on March 3rd, 2009.

But this manipulation worked in tandem with the easy money given to the banksters. And while many on mainstreet were scared to death of the market, the insiders knew it was a rigged game. The relief to mark to market gave even more juice to the market, and it was on its way from 6500 to 10000.

So, the rich got richer, and in fact, they are wealthier today than before the meltdown in 2008. Mainstreet is decimated and gets a few crumbs, in the form of extended unemployment, etc. This and a few manipulations of store closings, etc, make it look like things are getting better. If you believe that the world can come out of the recession without the US consumer, then perhaps you will think that the market will go up and up.

Knowing that the plunge protection team is involved in stock manipulation is no indication which way the market will go, as Bernanke also has to sell bonds. He has the best of both worlds, a true goldilocks, yuk. Treasury bonds are going up in value (rates are declining) as the bond market predicts a depression. The stock market goes up as stocks are predicting a recovery. And both are going up as the Fed has a boatload of toxic assets on the books it wants to increase in value.

Something has to give. Some people are going to get screwed. And it won't be the ones in the know.

Update: A former Fed President was on CNBC saying that QE2 was for the purporse of pumping stocks. Guess he thinks that higher commodity prices won't have a bigger effect than your rising 401k? We shall see won't we. If you buy stocks you should hedge. This is a risky business, because we still have deleveraging by mainstreet. As a retail investor, you still need to be very careful. I noticed that QE2 is going to be under a trillion dollars. Goldman Sachs was predicting 2 trillion, meaning they may need 2 trillion to blow bubbles. If our economy cannot improve without bubbles, it won't work. Savers and bond holders continue to be punished. The Fed has abandoned the save and invest sound money policy and is trying to pump a bubble in stocks, until the bubble bursts? We will monitor it.

Update: The Wall Street financial industry is feeling pinched. They are concerned that the meta programming brainwashing term, "money on the sidelines", isn't going to fool boomers into coming back into the market. The boomers are boycotting stocks. I am happy to see it. The money on the sidelines would have been money in the pockets of Wall Street had the boomers been suckers one more time. But they couldn't be fooled the third time. Dot com and housing crash were enough! So now the meta programming term is "bond bubble". I don't buy it. So, Wall Street volume is incredibly low.

The Basel 3 revision of the Bear Stearns rule will allow bailed out banks to invest in mortgaged backed securities of the GSE's, Fannie and Freddie. These will be considered Tier 2 capital. This will cause the taxpayer to be on the hook forever for any crashes of these mortgages, and will cause congress to forever guarantee mortgage loans with the introduction of a massive moral hazard. The Basel 3 committee is in the process of a massive manipulation here, and will destroy the sovereignty of congress to do anything about TBTF banks. Bernanke is a liar saying we could do anything about these banks when the revised Bear Stearns rule takes effect.

Update: I wrote this in response to an article from Seeking Alpha by Felix Salmon:

"Hammer, you aren't grasping the whole story. Here is the deal, the securities sold all over the world were fake. None of them were real, because title wasn't transferred to the trustees at the investment banks. They did this to hide the crap loans.

The lenders and the investment banks set up a system of fraud, and the borrowers were not the primary people at fault. The investment banks were primarily at fault. People and governments who bought these securities, MBS's, should be able to sue all these banksters. This is a bankster manufactured scandal and there should be Rico laws rolled out to prosecute every person who failed to get these mortgages transfered to the security trustees.

So, Mers, and all these companies who claim to represent the lenders, acting for the investment banks, didn't lend anything. Their claims should be null and void.

Also, I don't think Fannie and Freddie should guarantee these loans because the paperwork is wrong."

Here is the problem for stocks. If banks are hit again, and maybe not bailed out again, will this effect their ability to buy stocks and bonds? Will the plunge protection team weaken? Will real estate plunge into the abyss? Lots if things to think about. We know that the securities of the MBS crap bonds are now fraudulent, having never had real title conveyed to the investment trustee banksters in order to cover up the bad loans. Denniger has coined the term for this newest notary meltdown: Foreclosuregate.

I have proven that the ponzi housing bubble and subsequent result, Foreclosuregate, were caused by a premeditated banking scam.

Disclaimer: This website is for general informational purposes only. I am not a financial advisor.

Respected Economist John Mauldin Comes to the Same Conclusions About Fed Manipulation of Stocks

Save Your Business: Private Lender Loans

Foreclosuregate Resources Against Fake Foreclosures

I guess Bloomberg television is like CNBC, by just allowing every rotten pundit on to pump the "V" shaped recovery. While I view the V shaped recovery as being highly unlikely, it is what this obnoxious Linda Duessel of Federated Investors said on 4/26/2010 that just has me shaking my head with disgust and shock. This woman said, "There will always be people unemployed" when asked if high unemployment would temper her rosy picture of the economy. This rings like the French princess saying "Let them eat cake", when told that the peasants had no bread. This sort of insensitivity to the plight of the struggling in America sounds a little like Leona Helmsley when she said that paying taxes was for the little people. For crying out loud, what is wrong with the rich in America? They are like aliens from a foreign planet.

Linda Duessel also was quick to point out that when the money on the sidelines, ie, retail investor money starts coming back into the stock market, she would become more conservative. In other words, once this sucker rally takes money from average Joe, the smart money is going to get out of the stock market!

Again, as we can thank Goldman Sachs for passing weak financial reform as their arrogance stinks to high heaven, we can thank Linda Duessel for telling the disgusting truth in her own blind way. She has no clue what she is doing wrong! What a putz!

Accenture is a great company. My son used to work there. They have a solid stock. But on May 6, 2010, the price went from 41 dollars to ONE CENT in a nanosecond. Then Accenture bounced back. Someone could have made a killing. P&G went from 60 dollars to 40 dollars and bounced back.

If you want to play this market, then just realize that manipulation is alive and well. Computer high speed trading and associated scams trading off the Dow caused this fraud. Just watch out.

As a trader on the Yahoo board for Accenture said, if you didn't think that the casino was rigged, then now you should. Nasdaq now says they will void trades that lost 60 percent but what about the guy who lost 45 percent? This is a joke.

Some have said that this was no conspiracy. Maybe it wasn't, but how about investigating the HFT companies that pulled out of the market, tanking liquidity big time. I would want an investigation as to whether they had positions in which they or in which their associates profited from this pulling out of the trades.

From Wikiinvest:

In the U.S., high-frequency trading firms represent 2.0% of the approximately 20,000 firms operating today, but account for 73.0% of all equity trading volume.

This credit crisis, just like the ponzi housing scheme before it, and the dot com bubble before it, is a scam.

The credit crisis scam accomplishes three things that help greedy big business and banks:

The crisis allows for cheap confiscation of real estate.

The crisis allows for the massive increase of usury and interest gouging the world over.

The crisis allows for a squeeze in wages.

The crisis allows for a cheap confiscation of stocks as crashes come and go at prescribed times.

The crisis allows for the appreciation of bonds, with accompanied low interest for big companies, with the central banks being the chief bond buyers and sellers.

I wrote this comment on this article at Mish's blog:

Yes, what a great opportunity it was to raise interest rates around the world. The crisis is a scam, because it allows the confiscation of massive amounts of real estate. It allows a harvesting of stock profits from poor buy and hold people through "volatility", and it allows the financial world to get richer. The financial industry made a fortune selling crap investments, then made a fortune being bailed out by the taxpayers. Now they will make a fortune by massive interest rate increases.

I like what Mish says: "deep slop over poor loans to PIIGS", however, the insiders will get liquidity, even if our Fed has to provide it to the Eurozone. Tin foil is valid. The elite create bubbles. Then they profit from their collapse.

A recent article by me on the Seeking Alpha website indicated that reverse repos could bring the stock market down and increase volatility. The issue is that reverse repos, a method championed by Ben Bernanke for getting treasury bonds off the books of the Fed, will compete with treasuries created to fund the big deficits of the Obama administration.

The issue is whether the reverse repo market can be used by the Fed to manipulate the stock market and whether the Fed will take the stock market down in order to fund all the excess treasury bonds for sale.

Whether you believe there is a plunge protection team helping to drive up stocks, certainly the Fed can control the money available to buy stocks. If they tighten the money supply, the hedge funds and banks cannot buy as many stocks. So, my argument at Seeking Alpha is that the Fed may want to crash the stock market to scare investors into fleeing stocks and buying bonds, which will also keep interest rates low, which is another Fed goal.

This of course is a counter argument to those who believe that the Fed cannot hold interest rates down as the treasury printing presses work full time. Anyway check out the article and know that the bond and stock markets are manipulated big time.

The government does not report store closings properly in determining retail sales figures. This accounts for the discrepancy between the retail sales numbers and the states retail receipts. I suggest you read this hub regarding the manipulation.

Of course the companies themselves could be fudging their numbers as well, making the distortion even worse.

Add to this the fact that housing is now being flipped at the low end, thereby artificially inflating the sales numbers, and you can see that this "recovery" is much weaker than reported. Add to that housing fact the knowledge that banks are holding inventory off the market to make people pay more for homes, and one can see that this is a process of education.And don't forget about the option arms that will whack the middle and high end of the housing market.

The pumped stock market may go on for awhile, but it is a crap shoot for the little investor who does not have access to the information that the biggies have.

Here is a warning. The stock market is a bubble scam. It is a dangerous scam for any retail investor:

"The CPDF provides a glimpse into the Fed's, up to now speculative, and hereby confirmed, willingness to (in)directly manipulate equity markets via its Primary Dealer network. If there is no risk associated with borrowing practically free taxpayer money, it is obvious that banks will manipulate stock prices to the point where nobody but other Primary Dealers who enjoy the same Fed backstop benefits will remain in the market. As more and more American retail and institutional investors realize the magnitude of the scam, the risk that equity markets will remain an isolated bubble in perpetuity where Primary Dealers simply play around with the Fed's excess capital, becomes tangible. And as long as there is no regulatory reform to commence the split of TBTF institutions, as long as financial system crutches persist and as long as the opportunity cost of being wrong is zero (and borne only by US taxpayers), US equity markets will continue to be a scam. Therefore, Zero Hedge advises all readers to immediately remove all their capital from the stock market, until such time as proactive steps are taken to remedy these numerous concerns, or alternatively suffer the consequences of not only another Fed inflated market bubble, but the even sadder consequences of its unwind."

Read more about the scam here.

Also read about the plunge protection team here.

From Bloomberg:

"[The Fed] will complete the purchase of $1.25 trillion in agency mortgage-backed securities and about $175 billion of agency debt by April.

Buying agency debt is good for Treasuries because it displaces investors in that market, forcing them out of Treasuries. [Because of low returns, treasuries hurt savers who are forced into riskier assets like stocks to get a return.] Barclays strategists estimated in a Nov. 12 report that this Fed purchasing accounted for another $750 billion of Treasury purchases.

“Federal Reserve purchases of securities has artificially reduced supply of fixed-income securities coming into the market,” the minutes from the Nov. 3 TBAC meeting with the Treasury said. “Next year, financial markets should expect even greater issuance with no support. Such an outcome could pressure rates,” according to the minutes, which don’t list individual speakers."

Nice to see the free market working so well, lol. But this is the warning: if the US does nothing to curb spending, the unintended consequence is that more bonds will be sold by the Chinese and others, further putting pressure on interest rates, a certain death pressure for the economy. If there is pressure coming just by the Fed no longer intervening, think of the adverse pressure against the bond values if the foreign countries start selling the bonds! I still say it would be better had the Fed not bailed out the banks, bought bonds, bought stocks, controlled the housing market. Since the Fed has done all that, the financial system is vulnerable to higher interest rates even without inflation.

This is such a terrible scam. I came to the decision that the Fed primarily is a bonds sales organization that pushed bonds and increased demand for bonds by taking liquidity from the stock market. I came to that conclusion completely on my own, And sure enough, an analyst for Cantor Fitzgerald (who should know since Cantor is a primary dealer for US treasury bonds) made this amazing statement:

"The Fed also happens to be exiting the Treasury market at a good time,” Goncalves added. “Other markets, such as equities, which performed well due to the expansion of the Fed’s balance sheet are retreating and that will provide a backstop for the Treasury market.”"

As this evidence of blatant manipulation may have gone unnoticed by the author of the article, it hit me between the eyes and should hit all of you as well!

Keep in mind that the opposite to this scam is another scam, the carry trade. Until the Fed needs to sell these bonds because of reduced demand, that private bank may just allow the carry trade to continue. This will likely end badly, however, after the big boys have made their money and the little guy is left holding the bag.

One additional danger of the carry trade is that the US is attempting to compete with the entire world on price. This will hurt Japan and other exporting nations. The effect of hurting Japan will be a possible economic default there, resulting in a danger to the world banking system. Japan has huge debt, and the US will likely play this export growth to the detriment of the entire world stability or until it all crashes like Roubini says willl happen.

I believe that the stock market is being manipulated. I believe that if you ride that manipulation, you need to be able to turn on a moment's notice and get out of this gamble. The saying is don't fight the market, or don't fight the tape. I believe that really means: Don't fight the Hedge Funds. I believe I have proof that the market is being manipulated big time. I will come back and update this subject regularly based on how things work out between now and 2012, when the toxic mortgages quit resetting. For now let us see what some of the headlines have been since March 2009.

1. The big three banker CEO's of JPM, C and BAC stated that they made money in January and February. At the same time President Obama was stating that the stocks in the US markets were oversold and undervalued. Of course the banks made money because AIG paid them billions of dollars in derivative payments that came from the US taxpayer! What a scam to say this was a successful profit!

2. As the G20 meeting rolls around at the beginning of April, 2009, President Obama and Tim Geithner both say that economic recovery is assured. On the same day, the Mexican stock market soared because the IMF gave Mexico a much bigger line of credit than they were expecting. The same day Bloomberg.com announced that the global economic slide may be ending. While no one wants President Obama to fail, he is working with a plan that is backed by the investor class, which does nothing to stimulate the real golden goose of world prosperity, the American consumer!

Now, we know that in the beginning of this March 2009 rally, hedge funds were participating like crazy. It was reported on CNBC that the first three weeks of the rally were hedge fund driven. CNBC came out and admitted it!

Why would hedge funds participate in unity and why would banks benefit? The answer is an easy one. Hedge Funds had the power to take the market down as they sold good stocks in order to deleverage their positions. And they have the power to drive the market back up. Hedge funds have an interest in helping their counterparty buddies, the big banks. Hedge fund see forward and see a lull in bad news. They have the ability to get out of the market on a moment's notice if bad news is worse than anticipated. Trust me, this process is rigged.

The question then is: Was the market oversold? I believe that the answer is no for the long term but yes for the short term. Why? Well, we were in a lull in defaults.in early 2009. The subprime debacle had passed and the alt a and option arm tsunami had not yet hit with a vengence. Also the commercial real estate tsunami has not yet hit, but will. So, the market was oversold in the short term.

As small investors come in and as mutual funds and pension funds start following the hedge funds into this market, there is a very good chance that these boys will get killed. So far, the market is ignoring the ominous sign that commercial defaults are starting to pick up, also announced by Bloomberg on 4/1/2009.

Since this move in the stock market is a blatant manipulation, it is a risky business to be investing too much of your money for the long term. I am not a stock analyst or a stock advisor, and I would hope that you would check with one before doing anything with your money. However, based upon the knowledge that this is a manipulation, what is the long term investor to do?

Certainly the market has been leveraged by hedge funds who take their lead from the big kahuna of all hedge funds, Goldman Sachs. With Lehman and Bear out of the picture, they are taking on great risk in the market and will likely short industries in trouble as the market reaches unsustainable heights. But who knows what is unsustainable in the Goldman plan?

Some say that investing through dollar cost averaging is the way to go. Others say you need to time the bottom, which could be difficult. But here is the deal, we could drop precipitously from here. If the commercial real estate default rate truly soars, and if the walk aways from Alt A and Option Arm loans are particularly bad, some have said that we could go to 400 on the S and P!!

So, it all boils down to what you are comfortable in doing. I am personally tired of being ripped off by pumpers of stocks who have been shown to be associated with people who short stocks. Believe me, if data comes in that shows bad earnings or bad guidance, then you can be sure these guys will have short positions and they will rip your heart out because you trusted the upbeat President and others.

While no one has a crystal ball, I would suggest that investors tread carefully if they cannot afford to lose a lot of the money that they invest or if they will need the money withing ten years. Japan's market has lost money for over 15 years. That is a sober and serious fact. It is my opinion only that people with time or savings limitations be very careful in this market and don't get greedy.

The following Video is a sobering warning of what could happen. Jim Rogers, who predicted the meltdown, has said that it is likely that the United States government could default on her debt and the currency could be debased! This is a must see video and we need to be on guard for this possibility.

We must also realize that the California housing market could take down the entire US economy. The fear of deflation that comes from this California market is igniting the massive spending that is taking place. But the spending is misplaced, with more needing to go to the beaten down US middle classes, the golden goose of world prosperity. Otherwise, loan demand will continue to be down, and any credit manipulated recovery will not come to pass.

Housing Bubble Bloggers have written from the beginning that California herself could throw the country into a great depression. California is ground central for option arm and alt a loan resets. You need to take a look at the "Dr Housing Bubble" link labeled "Real Homes of Genius" below to see that this California crisis remains the weak link in the chain and could cause continuing deflation and probably major inflation down the road as the federal government strains to spend out of the deflation that is coming out of California.