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A few months back I wrote here
about the repo pool and it's
empirical connection to the stock
market. Repo goes up, stock market
goies up. some people on my gold
discussion board were cleaning up
by watching the repo pool. The fed
announced no more repo reports at
the same time it announced no m3
reports.. It seems that repo's are
funding the purchase of market
index options by the plunge
protection team. The options are
bought in large quantities at critical
times to prevent the market from
plunging. For example, after 911 the
repo pool rose to new highs and
turned around the initial sell off.
What I have not read anywhere else
is tha connection between a stable
stock market and excessive ceo pay
and a general toleration of bad
mangement. If stocks are not
allowed to go down, then ther are no
really angry owners to insist on
proper management behavior. The
stockholders become complacent.
Add the plunge protection team to
the list of government world
improvement projects that reward
the rich and corrupt the system. The
fed will also be buying bad mortgage
paper from the banks as the real
estate bubble fizzles. This has and
will also wxplode m3 and also shield
the real estate ponzi artists,
especially the most overwxtended
institutiions from seeing the natural
results of excessive speculation. In
the modern world of finance, pigs do
not get slaughtered. Of course, the
idiot Socialists will see all the results
of governments mucking up the
markets as proof that Capitalism
does not work, thus feeding the
thiest for more world improvers.
Ugggh..
In the days since the Fed
announcement the price of Gold has
shot up nearly 20 bucks, to new 17
year highs. Perhaps the Fed has
underestimated the power of the
blogesphere to spread
understanding of thier once
mysterious ways, or then again,
maybe they understand all too well.