Papa Papa Tango. Do You Read Me? Come In, PPT: Caroline Baum
May 23 (Bloomberg) -- Global stock markets have gone into a coordinated swan dive in the past two weeks, with the biggest gainers (emerging markets) suffering the biggest losses (a 15 percent decline, according to the Morgan Stanley Emerging Markets Index).
While each region or country can boast a unique reason for falling share prices -- a drop in metals prices and noise from China's central bank about slowing growth was poison for Asian bourses -- the fact that prices are slumping simultaneously suggests something else is afoot.
On May 10, the Dow Jones Industrial Average came within 80 points of its all-time high of January 2000, only to see a 4.6 percent pullback.
``Where is the PPT?'' wonders Jim Bianco, president of Bianco Research in Chicago. ``Now that the Fed isn't publishing data on M3, it's a perfect opportunity to intervene.''
For uninitiated readers, PPT stands for Plunge Protection Team, which is either a committee of government officials and individuals from private financial institutions created by President Ronald Reagan after the 1987 stock market crash; or a nefarious cabal of the same characters that intervenes surreptitiously to reverse a slide in the stock market. According to conspiracy theorists (CTs), the PPT has been sighted in currency and gold markets as well.
And as for M3, the broadest monetary aggregate, the Fed announced in November it was discontinuing publication as of March 23. Like all government statistics, M3 came up for its once-every-three-year review and flunked the cost/benefit analysis. M3 went the way of 100 other Fed-produced data series, including debt and liquidity.
Married to M3
For the CTs, the demise of M3 was a signal the central bank was gearing up to run the printing presses 'round the clock without leaving any footprints. While most of the M3 components are captured in other statistical releases, one component, ``repurchase agreement liabilities of depository institutions,'' or repos, is not. And that, according to the CTs, is the key to PPT intervention.
The PPT's ``main resource is the money the Fed prints,'' writes PPT theorist Robert McHugh on Safehaven.com. ``The money is injected into markets via the New York Fed's repo desk, which easily showed up in the M-3 numbers, warning intervention was nigh.''
No, the money injected via Fed repos shows up on the Fed's balance sheet, reported every Thursday. That's what tells us what the Fed is doing. The repos in M3 tell us what the banks are doing with the raw material the Fed provides.
PPT MIA
If McHugh is right, this is the PPT's big chance to intervene, to prop up stock prices anywhere and everywhere they may be falling, and to use the Treasury's untraceable slush fund at a time when no one will ever know.
I was just about to check some conspiracy Web sites to find out why the PPT was MIA, allowing stock markets around the world to tumble, when a reader sent me a link to some deep, dark background stuff that made the PPT seem mundane.
Written sometime in April, a posting on OSS.net by Sterling Seagrave, co-author of ``Gold Warriors,'' says that, according to ``sources in the U.S. Treasury, the White House has secretly ordered the Federal Reserve to print two trillion dollars immediately, and put into circulation!''
Because M3 data are no longer being reported, there is ``no way for the public, investors and bondholders to know how much currency exists -- and no way to gauge how much a `dollar' is truly worth,'' according to the posting.
No Black Helicopters?
Funny, the folks in Weimar Germany didn't need weekly publication of money numbers to break the news on hyperinflation. Somehow they knew. One week it took a wheelbarrow full of German marks to buy a loaf of bread. The next week, consumers had to enlist both a wheelbarrow and a baby carriage to haul enough worthless paper money to buy the same loaf. No data release required.
For all his bluster, Mr. Seagrave seems to be living in a time warp. He says the dollar-flooding operation was the reason a Treasury secretary quit several months ago (Would that be Paul O'Neill, who was shown the door in December 2002?) and Alan ``Greenspan resigned several weeks ago.'' (Most CTs consider Greenspan the villain, not the hero.)
There's more: an imminent attack on Iran; compromising photos of President George W. Bush when he was a ``drunken teenager in Beijing with his father the Ambassador'' (the U.S. didn't have a full ambassador to China then, and W. was in his late 20s at the time); and something about certificates for Yamashita's gold being stashed away at Citibank.
And, oh yes, the ``super-rich'' were probably ``tipped in advance, just as many were before 9/11.''
It's enough to make me want to run out and stock the larder, put my finances in order and convert all my holdings into gold.
Then again, if the PPT is going to push the gold price down, maybe I'll wait before jumping in.
(Caroline Baum, author of ``Just What I Said,'' is a columnist for Bloomberg News. The opinions expressed are her own.)
To contact the writer of this column:
Caroline Baum in New York at cabaum@bloomberg.net.
Last Updated: May 23, 2006 00:08 EDT
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