Wednesday, January 06, 2010

"Secret Buying"

A respected mainstream analyst takes the debate up a notch. You don't need a custom-fitted Reynolds Wrap chapeau to suspect that this is one reason Bernanke and the Fed are so desperate to avoid a full audit.

The next step is to demand answers, in writing and in person, to the questions at the end of my previous post.


Anonymous goldhorder said...

must be time to sell any stock I have. LOL

1/06/2010 12:08 PM  
Anonymous Kilfarsnar said...

Intersting article. The part that jumped out at me was, "With so much money at stake, anyone with direct knowledge of the conspiracy (such as a $30,000-a-year administrative aide) would be highly tempted to blow the whistle."

Now why would anyone think that? Is a $30,000 a year peon going to stick his neck out to go against the most powerful people in the most powerful sector of society? I think not. Not if he knows what's good for him or his career (or those close to him). And tempted by what? The massive retaliation if ever the whistle-blower's identity is exposed?

I have heard this sentiment voiced in realation to a certain other conspiracy (which shall not be discussed in polite company) and it always makes me chuckle. Why would some powerless person go up against these powerful people and intitutions? Some sense of duty? Morality? A death wish? I don't know if people who think these secrets can't be kept are shockingly naive or just clueless as to how things work in the big leagues.

1/06/2010 1:17 PM  
Anonymous Thomas Daulton said...

I think we can draw a dividing line...

In "The-Conspiracy-Which-Shall-Not-Be-Named", I'd like to think I still have an open mind because there are a lot of unanswered questions about that Day-Which-Shall-Not-Be-Named. But regarding proof of the the conspiracy, there is a large burden of physical proof which, in my opinion, has not been met -- and also, a huge need for shovel-ready grunt work. I read a reasonable argument that a bare minimum of 400 people would be necessary to pull of The-Conspiracy-Which-Shall-Not-Be-Named. With so many people involved, I am skeptical that it could be pulled off without leaks or at least a paper trail. Dozens of tons of high-tech material would need to be placed, and even if this was done secretly under cover of "maintenance", there would have to be suspicious shipping manifests for the high-tech material, etc., just to keep everything co-ordinated and organized without leaving obvious loose ends. I'm skeptical this could be done without some kind of leak, either a remorseful whistleblower or a paper trail.

However, a financial conspiracy such as the Plunge Protection Team would function a lot more like Enron's phony "California Energy Crisis". It wouldn't leave any physical evidence, and only a handful of people would have any decision-making responsibility; everyone else just follows what appear to be reasonable, legal orders.

In the case of California in 2001, the conspirators never needed to meet in the same room nor leave a paper trail. A few highly placed secretaries or governmental officials acquiesced to building industry-friendly loopholes into the artificial market. The private-market players simply responded to market signals, with confidence that others would follow, and the result was a co-ordinated yet NONconspiratorial, nevertheless deliberate and detailed, plan to screw over the public. You ask any individual energy trader or plant operator about their actions, and most of them can honestly say their actions were legal. My power plant needed maintenance, they say, so I shut it down. But if you look at the big picture, something like 37% of the generation capacity just 'happened' to need maintenance on the exact same day, driving up the price to the stratosphere, and somebody gave that order.

The Plunge Protection Team would function the same way. A Treasury Secretary here, a Fed Chairman there, they lunch with a highly-placed assistant exec to GS or AIG, make some idle conversation, nudge nudge wink wink, GS and AIG suddenly buy a ton of stock through their front companies and intermediaries, and the quid quo quo comes later in the TARP bailout. Only a handful of people actually know what the larger plan is. No paper trail. Each individual step is legit, but taken together, the big picture is too slanted to be co-incidence.

1/06/2010 10:17 PM  
Anonymous Kilfarsnar said...

Mr. Daulton:

I don't think your analysis of the first conspiracy negates my reasoning. Setting aside the overall burden of proof, I don't think the size of the conspiracy has anything to do with whether anyone with real, concrete knowledge would come forward. In fact, I might argue that the heinous and brazen nature of the crime would make it even less likely that someone would come forward. People willing to do what I think they did wouldn't think twice about taking care of someone who was deemed a risk. Keep in mind that everyone has their pressure point; something they will do anything to keep from happening.

Even if 400 people would be necessary (I'd like to see a link that provides the reasoning behind that number) only a handful would know the whole story. Compartmentalization is a powerful tool, and poeple in the military/intelligence business are accustomed to following orders without being told why. I think it is also safe to assume that any paper trail (if they were foolish enough to create one) is long gone at this point.

Anyway, I didn't mean to get into a discussion of that day. But I brought it up, so I guess it's my fault. Really, I just wanted to make the point that people often think that if shenanigans are afoot, someone is going to blow the whistle. I don't get why they think that. Perhaps an overestimation of people's willingness to put themselves at personal risk in service of the truth. In my estimation there is a big upside to keeping one's mouth shut, and a big downside to whistle-blowing. That is especially true if it is difficult to prove your claims. And I think that is the case in both of the conspiracies we are talking about here.

1/07/2010 1:37 PM  
Anonymous Goldhorder said...

Sibel edmonds... She accused Dennis Hastert of taking bribes from the Turks...among other things...she was slapped with a gag order. What does Dennis Hastert do today? Why...rather than sitting in a prison cell he is a highly paid lobbyist for the Turks! He took this job after it was public knowledge Sibel Edmonds had accused him of taking bribes for pushing legislation the Turks wanted. Why did this not concern him? Why no investigation? Why no followup story by 60 minutes after the gag ordered was lifted and Sibel went public....and an fbi agent verified her concerns and case files did indeed exist and have merit but the investigation was ordered shut down... Story can be read in the American Conservative. So... What is my point... Here you have a High level crime. You have a whistleblower...and no story. Hastert probably has so much dirt on so many other powerful people and has been tied into the upper levels of American political power for so long... That he is untouchable. Conspiracies don't need to be covered up. As long as the media, the financial, military, and political elites are protecting their will only believe...what they tell you to believe in the New York Times and on the nightly news. Lol

1/07/2010 3:12 PM  
Anonymous Mojo said...

After Bernanke failed to directly address one aspect of a question, you decided that must mean a non-governmental proxy was doing the buying. But this claim is that the PPT is doing the buying so it doesn't support your point. If this article is true it would mean that he simply lied when he said he had "no knowledge of any other U.S. government entity providing such support", in which case constructing more and more elaborately phrased questions to try to pin him down is a useless exercise.

1/07/2010 7:41 PM  
Blogger Cam Hui, CFA said...

I don't understand why a PPT has to operate in secret. See my full discussion here:

f they were propping up the stock market (or the currency), wouldn’t they get a bigger bang for the buck if they let it be known that they were intervening?

The story of PPT intervention doesn’t make sense. Stock market leadership has been narrowing in the large caps. If the Fed or some other government agency was directly or indirectly buying S&P 500 futures, why is the Dow Jones Industrials outperforming the S&P 500?

1/07/2010 8:33 PM  
Anonymous Goldhorder said...

Lol @ humble. OMG... R u kidding me? Well if that is the case why not just have the President give a state of the union address and announce the government will be dropping 1 trillion dollars into the mafket tomorrow in order to get the evonomy moving. Why not just give all Americans a million dollars and watch the economy hum along. Never mind those trillions of dollars in foreign hands. I'm sure they will just sit on them quietly while we spend our way to riches! Lol

1/07/2010 11:40 PM  
Anonymous Thomas Daulton said...

@ Kilfarsnar -- thanks for the respectful reply.

Like you, I don't really want to get sidetracked with that whole can-of-worms-which-must-not-be-named. And I agree with you that both the conspiracies we're talking about (three, actually, if you count Enron/California along with the PPT) can be compartmentalized and witnesses can be intimidated.

However, in the case-which-must-not-be-named, I tend to think the blackmail/partisan-advantage potential is just too great for every single conspirator to stay quiet forever. If the conspiracy-w.-m.-n.-b.-n. was basically a product of the Bush Administration, then some of those conspirators would have Democrat or Independent leanings, or just greed, enough to spill the beans for partisan or personal advantage. I mean, the idea that an Administration which wrapped itself in the American Flag was actually responsible for one of the largest mass killings of Americans in history, is just too too stupendous. Somebody would be dropping hints just for the personal feeling of power, or the thought of fame, power and riches to be gained from this greatest news scoop of all time. Even if all the hundreds of conspirators were "trusted operatives", the type of people who would to this work are simply too mercenary for all of them to stay loyal. That kind of blackmail knowledge is the POWER to shape nations. Somebody would be tempted to use that power for personal or partisan advantage. I'm not suggesting altruism as a whistleblower motive -- quite the opposite!!

I don't want to get into this debate, but just out of respect to show you I'm not ignoring you, here is the link to a quick calculation of the number of conspirators. I hadn't reviewed that article in some time, so I misremembered the number: the article claims 300, not 400. But I really think this is a conservative estimate.

The article is clearly hostile to the conspiracy-theory-w.-m.-n.-b.-n., but that doesn't necessarily reflect my own stance. I'm still willing to entertain the idea, but I've been entertaining the theorists' very impassioned arguments for almost nine years now and never found them satisfactory. Occham's Razor seems to me to favor the idea that many hundreds of people who were supposed to protect us, were utterly incompetent on that day (and before, e.g. slipshod building construction), and subsequently engaged in a crude, un-co-ordinated conspiracy to cover their tracks, write expunging reports and destroy evidence of their incompetence.

But we should be talking about the Plunge Protection Team. Basically, it seems to me like almost every large business entity attempts to cheat the stock market in its favor -- with varying degrees of success -- so I don't see why the government should be any different. I've seen no evidence that any politician is so moral and idealistic that they'd refuse to use the government's vast wealth and connections in order to interfere with the Free Market for their own purposes (e.g., what they believe would save their own necks from a million-man-march of unemployed voters with pitchforks; whether or not their meddling actually succeeded like they hoped.) And if those other conspiracies were "light" on paper trails and physical evidence -- the PPT Conspiracy would leave NO evidence at all. And since no murder was involved, only gobs and gobs of money tossed out by the bucketful to anyone involved, I find it easier to believe in the lack of leaks and whistleblowers.

1/08/2010 4:20 AM  
Anonymous goldhorder said...

conspiracy stories that wound up being true. LOL

1/08/2010 11:17 PM  
Anonymous KAIMU said...


Who needs "conspiracy theories" when you have the US Treasury?

Total "marketable" US DEBT created by the end of the first quarter FY 2010 is $2.1TRIL USD.

Creating debt at the rate of one TARP per month.

Its on the US Treasury's own website!

1/09/2010 4:47 PM  
Anonymous Goldhorder said...

Dammit Kaimu... Always spoiling my fun. I have to quit this posting nonsense and buy more gold.

1/09/2010 11:32 PM  
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