Guest Post: Biggest Market Rigger Is Government Itself

Tyler Durden's picture

From Chris Powell of GATA, published in Journal Inquirer

Biggest Market Rigger Is Government Itself

As gasoline prices passed $4 per gallon in Connecticut, Sen. Richard Blumenthal and Rep. Joseph D. Courtney joined President Obama in denouncing "speculators" and urging investigation of manipulation in the oil market. There are a few problems with this.

First is that such investigations have been undertaken before, including investigations by Blumenthal himself during his 20 years as Connecticut's attorney general, and they never found anything more than the OPEC oil producer cartel's public but uneven efforts to support the oil price. Anti-competitive as its activity is, OPEC's formation a half century ago was only a defensive response to the rigging of the currency markets by Western central banks and particularly by the U.S. Treasury Department and Federal Reserve, which were manipulating the value of the world reserve currency, the dollar, the international means of payment for oil, long before OPEC began to try to manipulate the oil price.

The second problem is that there are always speculators in all major markets. There were speculators in the oil market when gasoline last went to $4, in the summer of 2008, again when it crashed to $1.65 at the end of that year, and ever since then as it has risen back to $4. Big players in commodity markets can get away with a lot of manipulation because regulation by the U.S. Commodity Futures Trading Commission is so weak, but as the biggest players are investment banks allied with the government, which wants lower commodity prices, much of that manipulation is actually downward.

Third, and most important, the value of the U.S. dollar as measured in other currencies has fallen about 13 percent over the last year, hitting its lowest point since the dollar's last link to gold was broken in 1971. The dollar's fall reflects the U.S. government's long mismanagement of its finances and the nation's economy.

Any review of market manipulation should start with the biggest manipulator -- the U.S. government itself. With nearly complete secrecy, the Federal Reserve lately has been funneling hundreds of billions of dollars to private financial institutions, purportedly to stabilize markets. Congress and the public have little idea of what actually has been done with this money, nor any idea at all of the private understandings the Fed and Treasury Department have with investment houses like J.P. Morgan Chase that often act as government agents in the markets.

Further, federal law long has established an office in the Treasury Department whose very purpose is market manipulation: the Exchange Stabilization Fund. While it originally was intended to stabilize the dollar against foreign currencies, the fund is authorized to intervene in any market at the discretion of the treasury secretary and president. The law says the fund's decisions "are final and may not be reviewed by another officer or employee of the government."

The Fed and the Treasury Department routinely refuse to answer questions about their secret market interventions. Now that the government bond market is admittedly and almost entirely a Fed operation, even reputable market observers suspect that the government's market intervention has become comprehensive as the government's financial mismanagement has worsened -- that not just the bond market but the dollar and equity markets as well are being held up only because of secret government intervention.

So congressional investigation of market manipulation should start with the government itself -- if members of Congress aren't too scared of what they might find.

h/t JP

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oogs66's picture

They are horrified about what they'd find if they investigated themselves

Hephasteus's picture

May 21st is supposedly judgement day. That's gaining alot of steam.

ZeroPower's picture

First time i hear of this..

Whatta's picture

I think it's Paula Abdul?

Hephasteus's picture

I think it's simon not paula abdul.

Look. I didn't invent this drivel shit. I'm saying it's gaining steam. The guy predicted this shit before and it was wrong. He is taking another dart throw.

RockyRacoon's picture

What the HELL are you talking about?  Who... predicted what?

I think yer basketti done fell off the wall.

BoNeSxxx's picture

What is the point of a two sentence amiguous post like this?  Are you conveying real intel about the markets here or spewing some Jehovah Witness drivel?

PrDtR's picture

YOU.. better get saved.. atheists are coming back from death reporting they saw.. H  E   L    L!

Who you gonna beleve.. the guy here calling it drivel OR the die hard ATHEIST who is seen on video "crying" about what they saw.. OPEN YOUR EYES.. its ALL related..  .. see playlist: "Religion -Former Atheists"



ThisIsBob's picture


Savings are down, I believe.

cranky-old-geezer's picture

Seems I know WAY better what the bible says than you do, and it says NOTHING about an "ever-burning hell", NOR does it say ANYTHING about "getting saved", it clearly says there are NO guarantees.

So take your "christian" BULLSHIT somewhere else, we're not buying.

Dr. Acula's picture

>YOU.. better get saved.. atheists are coming back from death reporting they saw.. H  E   L    L!

Or instead of listening to anecdotes about people's acid trips, consider this:



  Department of Philosophy, Oxford University


Missing_Link's picture

May 21 is a *SATURDAY*.  Markets are closed that day.

So unless you're literally referring to the Four Horsemen of the Apocalpyse, I'm pretty sure the markets won't be doing much that day.

TruthInSunshine's picture

The Ben Bernank & The William Dudley want more debt slaves. 'Don't be afraid, debt slave sheeple - borrowing from banks to pay for what you can't afford to buy absent credit is good for you, us, the economy, and Keynesianism.'


05-09 10:01: Fed says US household debt increases 0.3% in first quarter, sees greater willingness of banks to lend
longhardbull's picture

They always win, not this time

TruthInSunshine's picture

They rarely win, Cochise.

Think of all the central bank and sovereign sponsored moments of spectacular failures, many and incredibly, throughout history.

They are full of fail.

The Bernank will be but the latest footnote under Merriam-Webster's definition for fail. He already garned a significant note for the efforts of the 'Bernanke Put' in 2007 (which not only failed to save the 'markets,' but saw them implode).

Bernanke will swing and miss, again and again.

JustPrintMoreDuh's picture

With leaders like these, who needs organized crime?

Urban Redneck's picture

Blumenthal and Courtney are the sole property of the Connecticut Hedge Fund Mafia.  Their calls for investigation will go nowhere and very existence of organized crime can be denied. 

RobotTrader's picture

Looks like TPTB is still buying retail stocks.

Ross Stores, Costco, Abercrombie, Limited Brands, Whole Foods, etc. on the verge of breaking out to new highs as we speak.

SheepDog-One's picture

Too bad youre only an onlooker commentator.

Bay of Pigs's picture

Hey Robot,

Chris Powell is a friend of mine and you couldn't carry his jockstrap in a debate on this subject. No wonder you throw out meaningless shit in an attempt to hijack the thread.

Silver up almost $5 since friday. We see $40 and then you're bullish again right? 

gjp's picture

Today it's all about Amazon, with high volume as they attempt to print a new high on this margin-free, tax-dodging retailer of (usually foreign-made) products to the overindebted and up-to-their-eyeballs-in-stuff consumer.  100x earnings for that?  Hey, why not?

Sophist Economicus's picture

tax-dodging retailer of (usually foreign-made)


Wow!   New speaking points being issued at union halls and state tax collection agencies

lynnybee's picture

basically, i'm in heart failure about all the shit i'm learning !    it's all so outrageous !   when & where is the revolution ?   ...... rigging of all markets / false flag events / lying ....... here's what's got me all in a tither today ~~ it's all TREASON !   These people need to be hunted down & put in prison ...... OR WORSE !


SheepDog-One's picture

Thats why theres the daily 3 ring circus clown show, to keep the new middle class food stamp and unemployment crowd placated a bit longer...just bread and circuses for the idiots till SHTF!

HoofHearted's picture

lynnybee, you really may not want to watch "V for Vendetta." It was a dose of cold water like "The Matrix." I'm just waiting for the next Guy Fawkes and upset that I don't have what it takes to be him. We need the revolution and certain terrorists like Thomas Jefferson, Samuel Adams, Paul Revere, and Thomas Paine would likely agree.

Dr. Acula's picture

>We need the revolution and certain terrorists like Thomas Jefferson, Samuel Adams, Paul Revere, and Thomas Paine would likely agree.

These guys helped install our current system of subjugation and yet you revere them as heroes.

Read Rothbard.

samsara's picture

keep your powder dry Lynny

For every season...

Diogenes's picture

Read Matt Taibbi's stuff if you want to know what is going on in the financial arena. Things have gotten to the point where there is no turning back and no cure. All we can do is secure our own future and our families.

gall batter's picture

heard a Taibbi interview that aired at the end of April.  he said that Americans are used to the level of corruption and feel powerless.

PrDtR's picture

You are correct.. it is OUTRAGEOUS, and it gets more outrageous each passing day where NOTHING is done about the rigging, the dark pools, the hidden hand of the FED.. this private bank should be raided AND audited immediately.. how many criminals hide behind this false public institution?


SwingForce's picture

I like the T word, it fits Henry Paulson.

mrdenis's picture

Our Government has a crack team on this ...look at who got Bin Laden ...

The Third Man's picture

If what Panetta said is true...that there is no video feed on the military operation...then what the hell are they watching? Reruns of Dancing with the Stars?

youngman's picture

its really shows you how stupid they are for even thinking this...or how big a liars they are...they don´t think their policies have ANY effect on oil consumption...prices..production...importation...they really think they sit on pedestals and rule the world don´t they

disabledvet's picture

yes they do.  it is their job of course--to THINK they rule the world.  our job is different of course.  nice pic btw--is that "take my wife PLEASE" Youngman?

RobotTrader's picture

Now TPTB are pushing tech stocks again via its MarketWatch conduit.

AAPL to be the next $2 trillion company???  Why not $3 trillion?

LOL....I'm not making this up..

"The basic math: Last quarter, Apple’s earnings growth was about 90%
year-over-year. That means, according to many common theories of how you
value a company, that it’s not unreasonable for Apple to trade for 90
times earnings. In the past 12 months the company earned $20 billion.
Ninety times that is $1.8 trillion. We know they are going to grow
earnings. Heck, they might grow 90% again. That might even imply a $3
trillion market capitalization."

Don Birnam's picture

MW ( a cog in the Dow Jones financial media apparatus, along with "Barron's" ) has unabashedly jumped the shark on this one; a jump of such a magnitude it rates admission to the Pantheon of Absurdities with Arthur Fonzarelli, Cramer and "Winners of the New World," and the reigning Pontifex Maximus of Top-calling Priests, Jim Glassman with his "Dow 36,000."

The top is in, or very nearly so.

DaveyJones's picture

speculators, the new terrorists. Even when there's no connection, it's their fault

mayhem_korner's picture

If all you have is a hammer...everything looks like a nail.

lynnybee's picture

....liars, scammers, deceivers .... an honest person doesn't even have a chance of surviving in America anymore !    my dad was as honest as the day & taught me the same .    i want them all gone , we need a clean sweep to get rid of these lying, awful people !  LIARS & SCAMMERS !

AbandonShip's picture

We hear ya Bee.   Feels good to vent hear, right? Kinda therapuetic.

Congress and the President are in charge of fixing these problems. They can come up with root causes, excuses and scapegoats all day BUT THESE ELECTED OFFICIALS are responsible for fixing it. And based on that criteria, they get an F

Time for change (again).  (And perhaps time to look for a new place to live entirely as I'm beginning to think this mess is un-fixable.  Call me un-American if you will.)