Stock market rigging is no longer a ‘conspiracy theory’

[humble3d]

Stock market rigging is no longer a ‘conspiracy theory’

The stock market is rigged...

When I started making that claim years ago — and provided solid evidence — people scoffed. Some called it a conspiracy theory, tinfoil hats and that sort of stuff. Most people just ignored me.

But that’s not happening anymore. The dirty secret is out.

With stock prices rushing far ahead of economic reality over the last six or so years, more experts in the financial markets are coming to the same conclusion — even if they don’t fully understand how it’s being rigged or the consequences.

Ed Yardeni, a longtime Wall Street guru who isn’t one of the clowns of the bunch, said flat out last week that the market was being propped up. “These markets are all rigged, and I don’t say that critically. I just say that factually,” he asserted on CNBC.

Yardeni’s claim is the most basic one: that the Federal Reserve won’t do anything that will upset Wall Street and, in fact, is doing all it can to help the stock market.

But there are other recent claims that come closer to the bull’s-eye, even if the archers don’t quite see what they are hitting.

The Wall Street Journal carried an intriguing story on March 11 about how the Bank of Japan was “aggressively purchasing stock funds.” (The Journal is owned by News Corp., the parent of The Post.)

“By directly underpinning the market, [bank of Japan] officials have tried to encourage private investors to follow suit and put more money in stocks in the hope of stimulating the economy and increasing inflation,” read the report with a Tokyo dateline.

That’s called rigging the market for a higher purpose, or hoping people who can afford to invest in stocks will make lots of money and spend it. The benefits, Japan’s central bank believes, will then trickle down to the rest of the economy.

The Journal provided lots of details that I won’t get into here. But the paper also presumed that all these central bank stock purchases were being done on the Tokyo market and that only the shares of Japanese companies were being rigged.

That’s not necessarily the case. The Bank of Japan — and other central bankers around the world — could easily be purchasing shares of American companies to help out the US stock market.

And Japan could even be doing it with the blessing of Washington, which is afraid any direct intervention in equities on its part would be discovered by nosy people like me.

Last fall, we learned that one American exchange has made intervention in — rigging — foreign governments easier and cheaper to accomplish. In October, it emerged that CME Group, the Chicago exchange that trades options and commodities, had an incentive program under which foreign central banks could buy stock market derivatives like the Standard & Poor’s futures contracts at a discount.

As I’ve reported many times, S&P futures contracts are the vehicle of choice for rigging the market. They are a cheap and very powerful way to cause an artificial buying frenzy.

After the market’s sizeable drop on Wednesday — the Dow alone lost 292.60 points — be on the lookout today for aggressive S&P futures buying today. It could start in Asia or Europe, but it almost always occurs.

Foreign central banks, of course, really don’t need a discount to buy S&P futures contracts. That’s like billionaires clipping cents-off coupons. But what the CME’s discount tells us is that the Bank of Japan and other central banks are probably already customers.

So the rigging of US stock markets by foreign entities has likely been going on for some time.

Has the US ever directly rigged the stock market? I’m sure it has. The sloppiest attempt seems to have occurred in 2008 during the financial crisis, when Washington was sure our whole financial system was toppling.

Phone logs that I received showed numerous calls between Treasury secretary Hank Paulson and Wall Street banks — Goldman Sachs, in particular — that seemed to coincide nicely with stock market rallies.

Unlike the Bank of Japan, Washington would have been coy about rigging the stock market and probably would have used proxies. The New York Federal Reserve Bank, for instance, would wink and nod at its favorite banks, and trades that turn the stock market upward would suddenly be made.

There’s another kind of market rigging that is also going on. This is being done by companies themselves.

Since corporate profits and revenues aren’t growing enough to justify current high stock prices, companies have been aggressively buying back massive quantities of their own shares.

By doing this, companies reduce the number of their shares owned by the public. This accounting trick boosts the calculation of profit-per-shares because the numerator of the equation (earnings) remains the same while the denominator (outstanding shares) is reduced.

Okay, so the markets are rigged. Basically everyone now agrees on that. But should we care?

America was built on capitalism and free and fair markets. Today’s markets aren’t fair. In fact, they are unfair because they are putting lots of money into the pockets of a small number of Americans.

The bigger problem is this: If stock prices are artificially inflated, nobody can tell what a company is really worth. And banks are going to be hesitant to lend money to companies with fuzzy valuations.

http://nypost.com/2015/03/25/us-stock-market-is-just-way-too-riggin-easy/

[dcs18]

Where I come from - it never was a conspiracy theory (example = Harshad Mehta.) ;)

[CODYQX4]

Who could possibly believe that 17700-18000 in this crap economy was anything less than pure fraud?

I dare not invest at all right now, invest now and lose your shirt when it bottoms out. Buy the bottom. If the housing market tanks again I'm scooping some cheap homes up.

Besides, big money already has computers that use lasers to trade nanoseconds faster, and I'm sure their brokers don't give them "the worst price of the day" when they buy like they do to average joes.

It is a rigged game through and through, the house always wins.

The best investment you can make is in yourself. Start your own business in something the megacorps don't have monopolized.

[flitox]

so who went to prison???? lol

[CODYQX4]

so who went to prison???? lol

The guy who stole some pens from the Bank Teller, of course.

[humble3d]

Oh ! But remember that many of us are only conspiracy nuts... :lol: :lol:

[dcs18]

Not many, only 3 conspiracy nuts - correction . . . . . . . only 2 (since ambrocious is registered under a proxy account.)

[flitox]

so who went to prison???? lol

The guy who stole some pens from the Bank Teller, of course.

good to hear there is still some justice down here :P stealing pens tsssss......hope he will be jailed for life!!

[dMog]

Not many, only 3 conspiracy nuts - correction . . . . . . . only 2 (since ambrocious is registered under a proxy account.)

and i bet good old ambro thought he was flying under the radar all this time

[CODYQX4]

Rob the bank teller for $100 - get 15 to Life and become unemployable and lose what little rights you had after the time, you can't even vote in some states.

Rob the citizenry for trillions - get promoted to CEO or elected High Office, be praised in the news about how stealing the money and cheating taxes is good business while they bitch about welfare mamas in the same sentence. Both leeched the system, one is a great thing and will apparently create new jobs out of that G6.

[flitox]

... be praised in the news about how stealing the money and cheating taxes is good business while they bitch about welfare mamas in the same sentence. Both leeched the system, one is a great thing and will apparently create new jobs out of that G6...

to be accurate, you should say: be praised in their newspaper

[CODYQX4]

... be praised in the news about how stealing the money and cheating taxes is good business while they bitch about welfare mamas in the same sentence. Both leeched the system, one is a great thing and will apparently create new jobs out of that G6...

to be accurate, you should say: be praised in their newspaper

People still read those?

[flitox]

pdf + tablet, the perfect tool to kill time while on commuting ;)

[212eta]

Where I come from - it never was a conspiracy theory (example = Harshad Mehta.) ;)

India?

[dcs18]

:yes:

[212eta]

:yes:

;)