An Article Worth Reading

Here is an article that articulates exactly what scares and frustrates me most about the current markets.

http://www.webofdebt.com/articles/manipulation.php

“…(J)ust one more egregious example of an ongoing pattern of manipulation that has become so blatant that either the manipulators have become supremely confident of their invulnerability or they are so terrified of impending doom that all pretense of plausible denial has been abandoned.”

I’ve tried to hold off on complaining about the obvious attempts by the Executive Branch of the US Government to prop up stock prices and minimize the magnitude of each leg of the decline, because I didn’t want to come off as a conspiracy wonk. But I am really nervous about where we now stand.

Two days before Bear Stearns went out of business, you had the top regulator in the country SEC Chairman Chris Cox go on TV and tell the world about how “well capitalized” Bear Stearns was. He isn’t supposed to be their cheerleader. He is supposed to be defending the public from their lies. The stock popped up into the $62 range and was ultimately bought out for $10 a share. People lost a lot of money because Cox went on TV and lied.

In July, the US Government changed the rules and made it illegal to short about 1,000 companies. That’s like the dealer telling me that my pair of aces lose to a pair of twos, because he says so. Goldman Sachs rallied $60 (70.6%) in 24 hours. Did you know that Treasury Secretary Paulson was the former CEO of Goldman? Do you think his cheating helped out a few of his buddies? And maybe his own holdings?

The author of the post says what I have been thinking – that the technocrats in Washington are either so cocky that they think they can break the law with impunity, or they are so scared by what they see, that they are breaking all the rules to keep the system from imploding.

So I am very nervous. This will not end well. Either the market will teach the cocky technocrats who is boss, or the markets will prove to be bigger than those trying to save it by manipulating it and will collapse under their own weight.

Price manipulation always ends in crashes as investors lose confidence in they system. I fear that we have unfinished business to do to the downside.