Manipulation In the Financial Markets
In July and August, the USD has actually become stronger against most other currencies, on apparently no news. Gold had also dropped as low as $790/oz from a high of $1030/oz this year, even though there is a shortage of physical gold in the US and the US mint had stopped selling gold coins like the American Gold Eagles. I was wondering if there was some manipulation going on in these markets.
Hedge fund manager John Lee thinks that gold prices are being manipulated in an effort to keep up the dollar afloat.
According to an article on Forbes, the central banks of the US, Europe and Japan planned in mid-March to prop up the US Dollar if it continued to slide.
Officials from the U.S. Treasury Department, Japan’s Finance Ministry and the European Central Bank reportedly drew up a currency contingency plan over the weekend of March 15-16.
The officials did not specify an exchange rate for initiating the dollar rescue plan, but in the event of a free-fall they agreed to aggressively buy the greenback and sell yen and euros.
Japan was to supply yen necessary for the underlying currency swaps. The plan also called for using a previously established swap mechanism between the United States and Europe.
Analysts said even though a rescue never took place, the fact that global monetary officials had agreed on action would be important in the future if the dollar were to tumble again or other exchange rates move very sharply.
Hmmm…who are these analysts and why should we trust what they say?
The Government and Wall Street has been less than forthright in the past. The CEO’s of Fannie Mae and Freddie Mac said a few months ago that they’re in no danger, but Buffett just declared game over for those two.
I’m getting tired of the bankers and government interfering in the natural course of things. They’re bailing out some market participants to the detriment of the taxpayer. People aren’t facing any adverse effects for taking on insane amounts of risks. If it pans out, they give themselves a bonus. If not the US taxpayer bails them out! Effectively, they’re socializing losses while privatizing profits.
Fannie Mae’s CEO claims that they make housing affordable for millions of Americans. However, if they went bankrupt, there would not be money available for huge home loans and home prices would fall. THAT would make home prices more affordable. Yes, it would be difficult for people to get a mortgage to buy a home, but it would encourage regular saving and it would take longer for people to buy their first home. But in the long run, housing would be a lot cheaper with lower payments towards mortgage interest and thus lower effective home costs.
The fact that the two CEOs of Fannie Mae and Freddie Mac took home $32 million last year while saddling the US Taxpayers with $500 Billion in losses means they can’t be trusted. If this isn’t outright theft, then at least it’s either gross misrepresentation, negligence or stupidity and they ought to refund their salaries, if not do serious jail time.
And talking about government manipulation, the Pakistani Government just introduced price controls on the most popular Karachi Stock Exchange Index. They got tired of watching the stock market drift lower every day, so until the officials decide otherwise, the KSE-100 cannot go below yesterday’s two-year low of 9,144!
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August 28th, 2008 at 8:06 pm
This confirms what I reported on in my own last post, as well, about the “greenback buy-back plan” that was orchestrated in March 2008 just after the Bear Stearns fallout.
August 28th, 2008 at 11:14 pm
With gold at these levels are you considering taking a position? I’ve held GLD in the past and am looking at it again now. Any mining stocks you would consider now?
August 29th, 2008 at 6:19 am
“they’re socializing losses while privatizing profits”
so true … so disgustingly true.
August 29th, 2008 at 6:27 am
“Effectively, they’re socializing losses while privatizing profits.”
Amen. I wonder how many more Bear Sterns’, Fannie/Freddie’s, and IndyMac’s will be bailed out with taxpayer money.
I think now we are presented with an excellent opportunity to get in on gold/silver at cheaper prices. The US financial situation is a complete mess. The future of the dollar does not look good…
Anybody see I.O.U.S.A? I really want to see it.
August 29th, 2008 at 7:12 am
You write good! I’m begging you to WRITE YOUR CONGRESSMEN.
I wrote mine. Let them know that you are becoming disillusioned.
————-
There’s a theory that I have: Similar to the way accountants use “accruals”, i.e. expenses and cashflows for expenses don’t always line up; when we write a check to the gov’t to pay our taxes we are not really paying taxes. We pay taxes when the gov’t spends money. Right now, the government is spending money on stuff that is crazy but nobody seems to mind because the actual cash taxes we pay are at historical lows.
August 29th, 2008 at 8:11 am
I saw I.O.U.S.A – it was incredibly well put together. I think it’ll be out on DVD in a few months.
I’ve been buying gold (and recommending people buy it too) since December 2005. I own and recommend
these gold & silver coins
GDX – the gold mining etf
CDE – a silver mining company that I bought at twice its current price and I’m still happy to own
if you don’t own any physical gold, I’d at least start there.
August 29th, 2008 at 10:20 am
this is a great post that I wish more understood about the economy. you are doing a lot more than playing the market…
August 30th, 2008 at 3:01 am
[...] Manipulation in the financial markets [...]
August 30th, 2008 at 11:30 am
Hi, i was actually looking for how to contact you on the blog, but didn’t see a contact page, i don’t know if you do personal emails, but if you could please email me, i have a few things i’d like to talk to you about.
Thanks
September 1st, 2008 at 2:45 pm
I thought the dollar was supposed to keep dropping. I was kind of looking forward to a weaker dollar because that means more American exports.
September 3rd, 2008 at 9:01 am
The US national debt is really bad. It stands almost at 9 trillion dollars. The US dollar is also being debased and I am not surprised if the dollar continues to weaken as the years go by.
The dollar might strengthen in the near term but I will stay out of US dollar investments in the time being.
September 6th, 2008 at 3:02 am
[...] Manipulation of the financial markets [...]
September 7th, 2008 at 6:06 am
“I was wondering if there was some manipulation going on in these markets.”
Manipulation of gold prices, manipulation of oil prices. It’s all the same unfortunately. It’s all sickening. We’re all paying for it.
Great post!
September 8th, 2008 at 2:03 am
Right on. Why would it be so wrong for mortgage prices to fall so housing could be affordable for the rest of us who don’t overextend ourselves??