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Government Intervention in the Stock Market

danarhea

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So when is Capitalism not Capitalism? When the government intervenes in order to unlevel the playing field in favor of cronies.

Nope, not Capitalist, and definitely not Conservative. When the government moves to centralize and manage the economy, its a lot like Communism. Only the beneficiaries are different.

The Sprott Report
 

surftide

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shouldn't this go under conspericy theory? oh well, I'm with you on the fact that i believe that the government controls the stock market, among other things that they should not mess with.
 

oldreliable67

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When the government intervenes in order to unlevel the playing field in favor of cronies.
"unlevel the playing field"? "Cronies"? Absurd. Read the paper that you cited. Read a few of the articles cited by the footnotes. Then come back and see if you still want to make that assertion.
 
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Oh come on oldreliable67, so you don't think that the amount corporations pump into political parties here in the U.S and in Australia, doesn't buy political influence?

You don't think that massive campaign contributions by companies, doesn't give them any influence over politicians?

What amazes me, that in Australia and it seems in Australia, it is popular to oppose and rant about government social schemes, i.e social security, yet at the the same time, people are not up im arms in the government welfare that is given to corporation and companies throughout Australia and the U.S.A.

Lets be frank money talks, and politicians are more than happy to say thank you to the business community be providing corporate handouts, providing tax loop holes for corporation, and doing loads of other things that are actually completely against the notion of a FREE MARKET.

Because every time a government, subsidises an industry, provides tax loop holes, bails out a failing corporation, interferes in the stock market or provides corporate welfare, they are wasting TAX PAYERS money, and INTERFERING with the FREE MARKET.

Government intervention into the corporations and the market economy is not a conspiracy, it is plain to see. Nothing more than governments, saying a big thank you to those that donated so generously, to their campaign finances.

The US Federal Reserve is just another handy tool that the American government has at its disposal, to interfere with the market economy.
 
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Iriemon

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Australianlibertarian said:
Lets be frank money talks, and politicians are more than happy to say thank you to the business community be providing corporate handouts, providing tax loop holes for corporation, and doing loads of other things that are actually completely against the notion of a FREE MARKET.

Because every time a government, subsidises an industry, provides tax loop holes, bails out a failing corporation, interferes in the stock market or provides corporate welfare, they are wasting TAX PAYERS money, and INTERFERING with the FREE MARKET.
It is one thing to assert that the government interfers in otherwise free markets, and sometimes for good reason (sometimes not). It is another to make the logical leap to assert that equate to interfering in the stock markets.
 

oldreliable67

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AussieLib,

Sorry to be so long in replying, simply had not checked in here for a couple of days...

so you don't think that the amount corporations pump into political parties here in the U.S and in Australia, doesn't buy political influence?/QUOTE]

Of course it does. It is unfortunate, but true. But that was not the topic that this thread was addressing (or so I thought, anyway).

The topic that this thread and the referenced Sprott report addresses is the near-mythical 'Plunge Protection Team', or PPT. I refer to it as 'near mythical' in that the PPT has now been assigned blame and/or credit -depending on one's point of view - for most every major market turnaround since October '87.

As a long time Wall St govt bond market participant, going back to the late '70s, I know from personal experience several occassions in which the Fed has communicated to the bond market that they stood ready to provide whatever liquidity was required to maintain the depth, breadth and liquidity of the markets. This is not/was not a big mystery, nor are the actions of the supposed 'PPT'. It comes under the heading of the Fed's function as the nation's 'lender of last resort'. (In fact, I lost quite a lot of money - several mill - in October '87, because I was away over that Thurs, Fri and the weekend and not reachable by phone when the message was disseminated.
:( Ruined what had been shaping up as a good year.) They have done this going way, way back.

"Largest Financial Powers in the City Meet After Day of Hysterical Liquidation Sinking Prices Below Thursday's
By Laurence Stern

After the stock market had come crashing down again in a veritable deluge of forced and hysterical liquidation, word sped through the financial district last evening that the largest banks in the city were prepared to exert their organized power this morning to prevent further disaster.

Arrangements described as "fully adequate" were completed at a conference at the offices of J. P. Morgan & Co. at Broad and Wall Streets...

Although no formal statement was issued, it was the consensus of those at the meeting that the worst of the liquidation is over and that a natural demand for investment stocks now available on the bargain counter should go far toward an immediate restoration of trading stability.

-- The World, October 29, 1929"


Source.

It hardly amounts to cronyism or anything remotely resembling 'unleveling the playing field'. It amounts to protecting the 'holy trinity' of depth, breadth and liquidity of the markets. Nothing more, nothing less. And, as my personal anecdote testifies, it can work against you as well as for you. There are no favorites.

If you go back and review economic history and examine the episodes of panics and crashes, particularly those prior to the 1930s, you will find many of them that amounted to what were in essence 'runs on the bank'. Fed declarattions of provision of market liquidity is the activity consititutes a last resort 'stopper' for 'runs on the bank'.

Now, the PPT may or may not exist. I'm assuming that it does exist but informally, without any meetings or minutes or such. Given the threats to the world's financial system in recent years, from both external forces (e.g., terrorists organizations) and 'internal' forces (LTCM collapse), it would seem prudent to have some informal arrangement with those who have the largest vested interest and capabilities to do so with the purpose of maintaining orderly markets. It may have been the success in '87, in fact, that prompted Heller to write his prescription for same and perhaps led to an informal operating methodology.

To conclude, if such a 'PPT' exists, it is at the very least accepted by the regulatory authorities as an extension of the Federal Reserve Boards historically mandated responsibility to maintain the depth, breadth and liquidity of the market for US government securities. This function implicity if not explicity extends to the market for equities and the currency if and when such is necessary. I would imagine that the Aussie central bank has a like function; all European central banks do.
 

Comrade Brian

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danarhea said:
So when is Capitalism not Capitalism? When the government intervenes in order to unlevel the playing field in favor of cronies.

Nope, not Capitalist, and definitely not Conservative. When the government moves to centralize and manage the economy, its a lot like Communism. Only the beneficiaries are different.
Nah, its still capitalism, capitalism is defined when most property is owned privately. Not by govt. intervention.

Also, its a rather poor comparison, between capitalism and communism, no doubt you are confused about it.
 
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