HOW THE FED MANIPULATES THE MARKET

November 4, 2008

ALL IS WELL IN STEPFORDVILLE:
MORE ON THE PRE-ELECTION CHICANERY
OF THE PLUNGE PROTECTION TEAM

“The Dow is a dead banana republic dictator in full military uniform propped up in the castle window with a mechanical lever moving the cadaver’s arm, waving to the Wall Street crowd.”

– Michael Bolser, Le Metropole Cafe1

It was another surreal week on Wall Street, with the Dow Jones Industrial Average rising a thousand points while the economy continued to sink into its worst financial crisis since the Great Depression. Most of this stellar climb occurred on Tuesday, October 28, when the Dow rose some 900 points, making it the largest one-day stock market rise since the Great Depression. The climb was especially remarkable in that it occurred in just the last two hours of trading, on no particularly good news. Commentators attributed it to an expectation of a half point interest rate cut by the Fed the following day, but the likelihood of a rate cut was not new news two hours before closing, and previous rate cuts have not evoked that sort of dramatic response. When the cut was actually announced, the market yawned and proceeded to drop.

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