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The Plunge Protection Team (PPT) and the Exchange Stabilization Fund

Updated September 14, 2009

Derivatives are a mighty paper sword. The United States of America continues their self-serving, fraudulent and surreptitious interventions in the global energy and precious metals markets today. It’s economic warfare. Maintenance of global U.S. Dollar hegemony requires this.

Was the price of oil purposely raised, buying “paper barrels” on NYMEX, along with an accompanying Fed Reserve orchestrated credit contraction to impair China’s global customers and hence their export growth? Empirically and factually, once this occurred, the price of crude oil then dropped precipitously [or was cut ruthlessly, perhaps?] – robbing posturing American un-friendly states [Russia, Venezuela and Iran] of required income when push came to shove?

This is how it is done and how Goldman Sachs in reality runs Washington D.C.: just follow the money..... [The EU has similar institutions but they are working behind the scene. They have a lot more secrecy]


Posted July 28, 2009

Intervention of the PPT and ESF. The USA has to sell a QUARTER of a TRILLION debt this and next week. One has to be blind not to see the interventions.

Posted October 2008

In how far are your deposits with Banks guaranteed by the Authorities? ..click here

Posted September 19, 2008

The drift is eerily reminiscent of early 1931, in the months before the global system snapped with the failure of Austria's Credit Anstalt.

Bad bank and Good bank.

The RTC ( Resolution Trust Corporation) was created in 1989 to absorb the bad debts from the Savings and Loans crisis.

The assets of the bankrupt lenders were taken over by the state, preventing fire-sales that can drive prices even lower in a self-feeding spiral. It worked well enough. The RTC sat on the devalued assets until the bloodbath was over.

Such a Super-Sewer can put a floor under the collapsing value of CDOs, CLOs, HELOCs and all the myriad instruments of leveraged excess that lie at the root of this crisis. By doing so it would at last allow banks to lick their wounds and compute losses. Above all, it would mitigate the US housing crash, changing the whole profile of projected defaults now haunting the banking system.

How much would it cost? Prof Kenneth Rogoff, former chief economist at the IMF, says the bill would run to at least $1 trillion.  People don't seem to realize what the outcome is of this: $1 trillion here, $ 80 billion there, $ 300 billion yesterday,...This is nothing more but the monetization of the DEBT and therefore the prelude to Hyperinflation and the Crash of the Dollar.

Saving the furniture!?

Barney Frank, chair of the House Banking Committee, said he is ready to embrace the idea. "There have been a series of ad hoc interventions that have not worked. Has the private market made so many mistakes there needs to be some public intervention?

Posted September 18, 2008

"What we are witnessing is the nationalization of the financial industry by the United States government."

The PPT has been buying the tar out of the stock market all week. When the government buys, it creates hyperinflation.

Updated September 8, 2008

"As the Fed is not in a position to increase the interest rates to protect the Dollar, it is forced to use its last available arrows".

Posted August 29, 2008

Gold, Dollars, Bonds and central bank interventions ...or how the puzzle starts to fall into place.

Here is more evidence: click to read the PDF file...

Posted August 25, 2008

Manipulation?...The least one can say, is that this is a weird happening.

Last week, widely regarded silver analyst Ted Butler, reported on recent developments during the July 1 – August 5, 2008 time period in the precious metals complex [specifically, open-interest data in COMEX futures].

Butler’s work shows, as of July 1, 2008, two U.S. banks were short 6,199 contracts of COMEX silver (30,995,000 ounces). As of August 5, 2008, two U.S. banks were short 33,805 contracts of COMEX silver (169,025,000 ounces), an increase of more than five-fold. This is the largest such position by U.S. banks I can find in the data, ever. Between July 14 and August 15th, the price of COMEX silver declined from a peak high of $19.55 (basis September) to a low of $12.22 for a decline of 38%.

For gold, 3 U.S. banks held a short position of 7,787 contracts (778,700 ounces) in July, and 3 U.S. banks held a short position of 86,398 contracts (8,639,800 ounces) in August, an eleven-fold increase and coinciding with a gold price decline of more than $150 per ounce. As was the case with silver, this is the largest short position ever by US banks in the data listed on the CFTC’s site.

To wrap your head around “who” the perpetrator[s] must and categorically do include, just take a peek at [admittedly dated] the Quarterly Derivatives Report [Q1 / 08, pg. 30] compiled by the Office of the Comptroller of the Currency to see J.P. Morgan (remember those guys that took over Bear Stearns!?) sporting 93 billion+ of gold derivatives [futures] on their books.!?

Manipulations in the capital markets are not restricted to precious metals. We regularly see the same “man-handling” of the interest rate complex when institutions such as J.P. Morgan wield amounts of 7 – 8 TRILLION in notional [largely 3 month interest rate futures based products] from one quarter to the next.

The OBSCENE amounts of these financial instruments being thrust through the system – allegedly in the name of 1 bank, amounting to MULTI-TRILLIONS per quarter – CAN ONLY BE THE WORK OF A PRIVATE CENTRAL BANK [read, the FED], because no public entity – bank or otherwise - has the balance sheet maneuverability in an impaired credit environment to conduct such business.

That such obscenities are allowed to continue – UNREPORTED by the mainstream financial press – is, in itself, a condemnation of not only how warped, twisted and connived our capital markets are, but how COMPLETELY BROKEN and complicit our system of free speech and irresponsible our media have become.

Posted August 14, 2008

Because of growing evidence indicating that there was a real risk the Dollar would break through the €1.60 level there was unannounced intervention in support of the dollar.  This could have involved Asian countries, but rumors are the intervention deal would more likely have been arranged with the Saudis during the recent Bush-Cheney visits. All that this would have required is sufficient buying commencing in mid-July to squeeze USD shorts and creating a momentum move on the upside.

Given a sharp drop in euro holdings in the U.S. Treasury's Exchange Stabilization Fund, it seems that it may have intervened in the currency markets, possibly out of fear that a more significant run on the dollar could have resulted. While taking out insurance against such a scenario may be understandable, we would argue that the recent surge in volatility may well be the side effect of such intervention. Without having proof, we would not be surprised if other countries, notably Asian governments, also interfered in the markets, although with very different motivations.

Taking advantage of historically low trading volume during August was certainly a tempting opportunity.

The positive of the surge in volatility is that it teaches hedge funds a lesson - too many of them pile into the same trades. In recent months, we believe these funds may have shorted financials to buy commodities and sell the dollar. The global deleveraging must continue; for that to happen, hedge funds must have their access to credit be tightened as well.

In the meantime, a lot of technical damage has been done to precious metals prices and hard currencies versus the U.S. dollar. Just as everyone was piling into the same trade, now it seems the speculators all either wanted to exit or received margin calls and had to exit their trades.

Off course, pundits were eager to call a major shift in the market, declare the end of inflation and the rebirth of goldilocks. An easy job for masses that don't even know what the definition of Inflation.

The question one may ask is how the markets will react to this damage as time goes by and the markets will over time start to understand what and why these interventions are happening and fresh problems will surface.

Before the existence of the Euro, Europe saw plenty of similar interventions in an effort to delay pending devaluations of Spanish Pesetas, Italian Liras, French and Belgian Francs. Each time again, this kind of action brought only short relief for what was about to happen.  


Updated September 5, 2008

Reality may be delayed sometimes for a day, week or month, but eventually Mother Nature always wins the battles of reality versus rhetoric. Public servants can control their constituents, the mainstream media and their Dumbed down electorates, but Mother Nature and Global market fundamentals cannot be fooled.


 1961 Gold pool:

Was set up as the US was running high deficits to cover for the Vietnam War and the Great Society. Its goal was to prevent the gold price to break through the $ 35/onz. Each time the Gold price was about to overrun this level, the international pool sold gold until the price was rebalanced.

General De Gaulle looked through this game and simply requested the exchange of his dollars for GOLD. As a result in 1970 Nixon had no other choice than to close the gold window.

The 2008 paper Gold pool has triggered a run on the Dollar and the World Gold reserves.

The actions of the PPT can be compared to the Gold Pool which existed before the last great financial crisis and was revitalized in 1960. But instead of selling PHYSICAL Gold and Silver (there is little left), this Summer (but also on many other occasions each time it was needed) they sold PAPER Gold and Silver.

This action however is back firing: the lower they take paper Gold and Silver down, the more physical Gold and Silver is being bought!  Johnson Matthey has weeks of delay in delivery and today they even talk of stop taking orders all together and February of 2009 is the shortest delivery date for silver Eagles.


"First, the speculators get blamed for the problem of high food and raw material costs. Second, government bureaucrats and officials begin meddling thinking that their intervention will cure the problem."

The first step is to start a vast communication offensive. It uses the same logic as for the Iraqi situation before the 2004 presidential election: preventing voters from becoming aware of the extent of the disaster in progress by flooding them with fictitious news, by drowning “bad” objective news in a multitude of “good subjective news” (this is what an American economist called “the transformation of indicators into vindicators” ), by working out each week new explanations proving that the “positive” situation was sustainable,….

In fact, what we see on almost a daily basis, is a remarkable exercise of psychological war probably coordinated by the very secret “Working Group on Financial Markets” created by the Executive Order 12631 established under R. Reagan  in March 1988, also called by the Washington Post, the “Plunge Protection Team”.
This working group was created following the October 1987 stock exchange crisis with the objective “to promote the integrity, the effectiveness, the regularity and the competitiveness of the markets of the country, and to maintain the confidence of investors”.                                                         .

note: the middle puppet was replaced by a new one.

This group does not produce any reports; has no public visibility and details neither the agenda, nor the composition of its meetings; is directed by the Finance Minister (Henry Paulson) and includes the president of the federal Reserve Ben S. Bernanke (former adviser of G.W. Bush, named to this position at the end of 2005) and the two presidents of the authorities monitoring the markets: the Securities and Exchange Commission, Christopher Cox (named to this position by G.W. Bush in 2005) and Reuben Jeffery III (also named by G.W. Bush to this position after having been its adviser), one of the directors of the CPA, American authority of transition in Iraq and also former member of Goldman Sachs, like H. Paulson.

We can see that the double influence of the Bush administration and the Goldman Sachs bank on this entity is total. This entity has the vocation of coordinating the actions of the main public and private American players (who are invited to participate in working groups) towards the objective of “healthy” American financial markets.

Since the stopping of the publication of the M3 indicator at the end of March 2006, as well as many indicators previously allowing everyone to follow the developments of the flows of credits in dollars in the world, as well as the possible actions of the Fed and the American Treasury on the markets, this working group now has increased possibilities of action since they cannot be tracked down.

Each 6 weeks there are quiet meetings of the PPT that are the financial world's equivalent of the war room. The officials discuss options and review crisis scenarios because they know that the government's reaction to a crumbling stock market, extreme Forex fluctuations and a strong Gold price would have a critical impact on investor confidence around the world.

In the event of a financial crisis, each federal agency with a seat at the table of the Plunge Protection Team has a confidential plan. At the SEC, for example, the plan is called the "red book" because of the color of its cover. It is officially known as the Executive Directory for Market Contingencies. The major U.S. stock markets have copies of the commission's plan as well as the CFTC's.

Forex market action of June 16, 2008

Today at 14:50 GMT (08:50) right after Bernanke’s speech, the Euro was smashed from 1.560 to 1,545 so swiftly that some talking heads even saw for a moment the Dollar flying. At the same time Gold was hammered from $ 893 to $ 877.  On the hourly chart, the intervention is obvious. However, on the daily chart the action is nothing more than a small blip.

In less than two hours time, the Euro jumped back to 1.546 and Gold to $ 884. Less than two days later, the Dollar has slipped backed to 1.575 against the Euro and Gold jumped back to $ 900.  That’s how long the medicine worked!

Meantime all is well Madame la Marquise: Bradford & Bingley in the UK, IKB in Germany and Lehman Bros. (seeking another $ 4 bn) in the US are running into more financial problems and GM is closing 4 truck and SUV plants. Yesterday Foreclosures for the American and British real estate markets showed a new record and the ECB (European Central Bank) and the UK treasury informed the markets they were not planning is lowering the key interest rates for Britain and the EU.

I have seen this kind of actions of the PPT over and over again and it remembers me of what happened in Europe years before the introduction of the Euro. This scenario was frequently seen just before major devaluation of currencies was announced (ex. French and Belgian franc, Spanish Peseta and Italian lira)

Gold market action for September, 2008:  Authorities cannot allow for Gold to be strong until after the Presidential Elections.


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