The wrinkled whores of Wall Street
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Posted: April 21, 2003
1:00 a.m. Eastern
© 2003 WorldNetDaily.com
At times, one is forced to wonder if the financial media operates on some sort of Orwellian contrarian basis, wherein every word's meaning is wholly inverted. After all, the "inevitable" post-war rally left the Dow 183 points lower than it was when the pre-war rally ended, and the "lackluster trading" that was sure to characterize the lead-in to the three-day Easter Weekend somehow managed to pump the NASDAQ up 5 percent on "light" volume that was 18 percent higher than the monthly average.
There's a reason for all of this, of course. The truth is that America's capital markets are in no way free – they are massaged more carefully than a Dow component's books the week before earnings season. There's been quite a debate on the existence of the Plunge Protection Team – it's interesting to read arguments for and against the existence of this notorious beast, but the fact that the financial media avoids discussing the issue like the plague is surely decisive proof that someone, somewhere, is trying to prop up the markets.
I tend to be skeptical of human nature, so I don't find the notion of a PPT incredible simply because there are so many people who profit from the notion of the eternal bull market. Also, being a serious night owl, I've watched the NASDAQ futures jump noticeably on small volume in the Asian markets while said Asian markets are dropping like stones. Coincidence? Sure, once or twice, perhaps, but not when the same thing keeps happening repeatedly.
It's hilarious to watch the European markets get faked out of their cleats like a hapless cornerback trying to tackle Barry Sanders in the open field – this repetitive chicanery is why the German DAX is now up 29 percent compared to the NASDAQ's 12 percent since March 12. It's profitable, too, as a short picked up on the opening highs can clear 100 percent by the afternoon. And speaking of shorts, did I mention that the DAX was up 17 percent over the NASDAQ?
So, why complain if I'm riding the system? First, the corruption offends my sense of justice. A free market should be free, not secretly managed for the benefit of inside players or even for the economy as a whole.
Second, this charade gives me the same nausea as walking into one of those palatial Vegas casinos and seeing the blue-hairs losing their meager pensions in the slots. The people who suffer most are those who can least afford to lose.
Third, and by far the worst, this market managing leads to inefficient capital flows, exacerbating the lingering malinvestment problem that is already pounding the tottering U.S. economy. Inflating the money supply and temporarily propping up equity prices will only extend the bust and ensures that the inevitable payback will be that much more painful for all concerned.
I'm no technician, but a wily old trader once told me to ignore the news and trust the charts. What's interesting is that every technical chart and buy-sell indicator – and every whisper of a hint of desperate Plunge Protection Team activity – is now screaming that the markets are heading for a brutal fall. It may not begin too hard or too fast, but before November, equity prices will blow past last year's sub-800 lows like the Marines going through the Republican Guard. The PPT has failed in its valiant, but hopeless 4-month effort to extend the October rally, and the time to abandon ship is now.
But what about last week's impressive performance? Wasn't it a powerful demonstration of market resilience in the face of downbeat economic data? Weren't earnings surprisingly super-duper? In a word, no. I won't bore you with my exotic analytics, but here's an anomaly to ponder: The NASDAQ-100 is down 77.5 percent since the bear first roared in March 2000, but has closed up 61 percent of the time during short weeks – 45.2 percent more often than the statistical average would indicate. How lackluster indeed! You see, the streetwalkers of Wall Street like to make their hay when the sun is shining and anyone who might be paying attention is on vacation.
Wall Street has many sins for which to answer. But what the market makers truly don't seem to understand is that neither people nor markets can be controlled for long, and with every well-intentioned stabilization exercise, they risk killing the goose that lays the golden eggs. |
