Ruy Lopez

This link talks about a Reagan creation in 1988 called Plunge Protection Team to maintain and enhance the integrity, efficiency, orderliness and competitiveness of US financial markets.

http://www.eldoradogold.net/cornered_rats_030326.html

The title "Cornered Rats" speaks of the author's disdain for what the team ended up doing. But do not let that discourage you. The article is still informational, logical and most probably valid. This is one of those things to keep in mind for self-protection.

I'll summarize in concise itemized fashion to drive home the point.

1)Unit was formed after 1987 stock market crash to deal with similar future incidents.

2)Objects of its activity are to protect and enhance the US$ and US stock and other financial markets--suppressing the price of gold is part of the function.

3)Article asserts that gov't increases the volatility and instability of markets by its interference.

4)Current bearish stock markets and a declining dollar has forced the US gov't to prop up both the dollar and the Dow as well as suppress gold. Author asserts, and I agree, that such action is extremely dangerous.

5)Deflation that has plagued Japan since 1982 is the sworn enemy of the team--will lead to crash of dollar and stocks.

6)Team therefore had been engaging in secret operations to flood system with dollars to prop up dollar/markets.

7)Operation would not work except to delay the inevitable and save corporate elite allies from the ticking time bomb at public expense.

8)Operation would tend to make dollar dirt cheap due to oversupply.

I think I may have stumbled into evidence that such massive intervention indeed is taking place. They are churning the markets trying to keep them up.

The evidence can be seen in these two links;

http://www.tradersedge.biz/images/S&P500-Mthly.gif

This is the S&P from 1991 to 2003. Look at the volume turnover at the bottom of the chart just above the "year" horizontal axis. The volume is still rising?? three years after the bear market has turned. It should have tapered off by 2002 and 2003.

In a bubble, volume is greatest right before, during and right after peak prices because the greatest number of suckers and volume are lured at this time, i.e. 1999, 2000 and 2001. By 2001, many market participants were experiencing sizable losses. That should have made them cautious and probably did. New money has been entering the market.

There are two likely sources of new funds: the PPT's "unlimited printing press" and some of the corporate elite insiders who sold earlier at the top but now have been prevailed upon to return to the market hoping the bear will soon be over.

This second link is the Dow over a longer period of time. It is more graphic and more frightening. (Make sure the chart is the MONTHLY one by selecting monthly in case the link reverts to default position)

http://www.sharelynx.net/Markets/Cha...IndMonthly.htm

If the PPT's efforts fail, which is likely, a thundering crash of the Dow would ensue because of the artificially high perch being maintained. Some chartists say Dow 1000. I am brave enough now to suggest 1700 by 2006.

You see, "artificial intervention" creates new problems and intensifies the force of gravity on the interventionists and the market. To prop up stocks, one has to be a net buyer and a buyer can do only two things after buying; a)hold on but eventually b)SELL.

The PPT is banking that the recession would be over soon, profits would increase and the public and the world would be enticed to buy heavily again. Then they can unload gracefully as if nothing happened.

That scenario is unlikely. This is the WINTER PHASE of the Kondratieff long wave. It demands and will demand that DEBT BE PURGED. They should look at Japan. Japan has been unable to get out of its predicament in 13 years because it refuses to liquidate the mountain of bad debt in its banking system.

Kondratieff winter phases usually last 12 to 16 years. The US is only 4 years into it. How much money can Summers and Greenspan print to sustain the charade?

Clinton was lucky in his re-election. Rubin is being credited with successful intervention on the US dollar that made the economy look great. Success was likely in Rubin's time because the US K-wave was still rising or in ascendance. This time, the headaches are multiplied tenfold. The long wave is in decline.

Edit;
Suggest the article "cornered Rats " be read in full.

Zar

I have heard of this. I will read with interest.

Soyin Milka

Hi,

I read the articles. I won't pretend I understood everything
Few people seem to be interested by the possible collapses of the US dollar and stock markets. Few seem to take the possibility of a collapse seriously. It's like people believe the american economy is immune from it, because it has been the dominant economy of the world for so long.

I think I'm ready to take that risk seriously now. At least until someone provides me with convincing evidence America has a magical and limitless ability to get in debt and print new money without consequences.

Thanks for often posting new stuff about this issue. It's interesting even if it doesn't make for long threads

Soyin

slept2long

:notworthy :notworthy

Nice work! I just skimmed them because I ain't in a heavy reading mood but I was still surprised at what I read. What site do you recommend for a good understanding of the "Kondratieff long wave"? I remember you, I think it was you , posting a prediction a few months back regarding the "cycle" of the markets, right?

Ruy Lopez

Thanks Soyin. It's good to know somebody out there appreciates my "bereft of excitement" topic. If one or two learn something from the posts, I'll be happy.

Slept2long

You need to discriminate when reading K-long wave material because of many me-tooists trying to ride on the idea for financial gain including astrologers, goldbugs and mystifying demagogues.

The K-wave originally pertained only to a long 50-60 yr economic cycle as detected in interest rates, wages, commodity prices and wholesale prices. My interest in it started with stock market applications which led to wider economic cycle phenomena. Just note that the wave concept manifests itself differently in various economic aspects. Examples;

http://www.ttheory.com/public/pubstu.../longwave.html

This site describes stock market manifestation of the long wave. Here a 60-year wave breaks into two 30 yr half cycles. Both have their vigorous bullish phase but the second half is what turns into a wild stratospheric bubble. It's what we saw between 1982-2000.

The next link is the most up-to-date graphic depiction I found combining interest rates, prices, stock market, gold. Note that the post-war (WWII) highly inflationary period distorts the previous 170 years. Also the indicators during and just after the Great Depression are also distorted by monetary inflation., Keynes i.e.

http://www.financialsense.com/transc...raWithCRB4.pdf

I haven't read this one but it looks professional and serious

http://www.earthsharing.org.au/Geophil.PDF

You can also google "Kondratieff long wave" and select what to read. Just remember my discrimination warning.

Good luck.

Edit;
One more site. Should probably read this first because it covers the topic from a much wider pv.

http://www.gold-eagle.com/editorials...and062902.html