Manipulation, not error, behind market plunge

[Large Sarge]

http://australianconservative.com/2010/05/manipulation-not-error-behind-market-plunge/


Manipulation, not error, behind market plunge
Cliff Kincaid
WASHINGTON: The major media say the chaos on Wall Street was the result of a “trader error, possibly a typo,” as the Washington Post put it. Some reports claim the culprit was a “fat finger” on a computer somewhere that pressed the wrong key. But Zubi Diamond, author of the Wizards of Wall Street, says these claims are all lies. “What happened in the market on Thursday is a typical example of pure market manipulation” by unregulated hedge fund short sellers.

His book, whose subtitle refers to the scam that elected Barack Obama, warns that the same hedge fund short sellers were behind the financial crash of 2008 that paved the way for Obama’s election to the presidency.

Diamond says the historic market plunge on Thursday was “due to computerised hedge fund short selling because there is no protection for the invested capital in the equity markets. There is no uptick rule, no circuit breakers and no trading curbs. Our market is primed for manipulation.”

Diamond is referring to financial regulations, which have been repealed, designed to prevent market manipulation.

Diamond has been adamant in his view that the financial reform bill being pushed by Obama and liberal Democrats on Capitol Hill will do nothing to solve this problem and regulate the hedge fund short sellers.

“No one will come on TV to tell the truth,” he complained. Instead, he says representatives and apologists for the hedge fund short sellers, who operate as the Managed Funds Association (MFA), “go on TV and provide false explanations of what happened.”

Diamond says these false explanations include claims of trader error and computerised glitches.

An example of Horatio Alger’s legendary rise from rags to riches, Diamond came from Africa to the U.S. and became a successful businessman, stock market investor and trader. He has about 15 years of financial market experience and more than 23 years experience as an entrepreneur.

Diamond says that the repeal of the safeguard regulations, such as the uptick rule, circuit breakers and trading curbs, and the introduction of the short ETFs (Exchange traded funds), which began under Christopher Cox at the Securities and Exchange Commission, has given the members of the MFA tremendous power and influence. He says these individuals include George Soros, John Paulson, Jim Chanos, James Simon, and other hedge fund short sellers, including those who operate Quant Funds and engage in computerised trading.

“They have the ability to manipulate U.S. and some international markets,” he says. Indeed, Diamond maintains that the MFA has basically taken control of the U.S. stock market.

My March 4, column, “Who’s Behind the Financial Crisis?,” quoted Diamond as then warning that any asset class that is traded in the NYSE, CME, or EUREX exchanges “is susceptible to manipulation by the members of Managed Funds Association and their strategic partners.”

In a previous column for AIM, commenting on the so-called financial reform bill now before Congress, he explained, “The only financial reform needed today is to regulate and monitor the hedge funds and the hedge fund short sellers, some of them which are registered off-shore to avoid scrutiny. These global operators, with investors who remain mostly anonymous, must be compelled to register with the Securities and Exchange Commission (SEC), publicly disclose their positions in the markets, and maintain accounting and trading records for a period of 10 years so their activities can be monitored and scrutinised. Just like mutual funds, they must be prohibited from engaging in day trading activities.”

“What happened on Thursday happens to a select group of individual stocks on a daily basis as the hedge fund short sellers prey on common investors,” he asserted. “They are now expanding the manipulation to include the whole market. They can now crash the market, panic shareholders out of their stocks, buy to cover their short positions for hefty shorting profits, and then buy back in at the bottom to open long positions and then recover the whole market (indexes) to normal levels.”

These market manipulators, he notes, have the ability to drive prices down and then drive them back up, all within a 15 minute period. “How’s that for no-risk investing?” he says. “They make money through stock price volatility and market volatility. They manipulate stock prices through unrestricted short selling.”

Diamond said that one stock, Accenture, with the ticker symbol ACN, dropped from $44 dollars to .01 cent per share within 15 minutes, and recovered back to $41.00 dollars. Apple computer ticker symbol AAPL dropped 60 points in 15 minutes. It went from $258 down to $199 and then recovered to $248. All of this happened within a 15-minute period.

All of this is possible, he says, because there is no uptick rule, no circuit breaker and no trading curbs. All of these regulations were repealed, meaning that the risk and fear of investing have been transferred solely to the common investors “as the hedge fund short sellers operate with impunity looting the invested capital of American families,” he explains.

“What happened on Thursday will happen again,” he adds. “They are getting bolder every day. The hedge fund short sellers, who are members of Managed Funds Association, and their strategic partners at the different stock exchanges, are responsible for the scam that was perpetrated on Thursday.”

“The market plunged and recovered,” he says. “The carnage and destruction of investor’s capital was therefore concealed.”

“This is the evil of hedge fund short selling in an unregulated market,” he says.

Cliff Kincaid is the Editor of the AIM Report and can be reached at cliff.kincaid@aim.org

[MNeagle]

Good find.

[k-os]

Excellent article, Large Sarge.

[1970 Silver Art]

This article is just another reason to not own any individual stocks IMO. This article seems more believable than the "fat-finger" excuse that is being given for why the DOW dropping 1000 points and for why P&G stock price was almost cut in half. Thanks for posting this article.

[Neuro]

Here is another theory:

What we saw was a show of muscle from Goldman Sachs, who deliberately set off the computer program trading of hedgefunds to sell... The purpose of the article above was to shift the blame for the manipulation, my bet is that the hedgefunds were net losers on Thursday, hitting those that had invested in them... Goldman Sachs probably raked in upwards of a 100 Billion, in the 1 Trillion of total market losses at the bottom...

[Saul Mine]

Duh, looks like a crash to me, but what do I know? We've only seen two like it, one in '87 and one in '29. Crashes are best announced by something like:

WALL STREET LAYS AN EGG!

[cigarlover]

Yea the original story didnt make any sense. How do you sell 16 billion shares instead of 16 million shares by pressing the wrong button. I say this because total P&G shares outstanding is only 2.88 billion.

http://finance.yahoo.com/q/ks?s=PG+Key+Statistics

[Gknowmx]

I am interested in what Taleb's theory is.

Fooled by Randomness.

In some ways, I think conspiracy theorists would rather believe that evil men at work is a more satisfying explaination than humbly admitting that Man doesn't and can't know everything or control everything. In this regard, conspiracy theorists are no better than the conspirist that they attack; both groups are full of themselves.

[Book]

In some ways, I think conspiracy theorists would rather believe that evil men at work is a more satisfying explanation than humbly admitting that Man doesn't and can't know everything or control everything.


http://www.ezpoker.tv/images/wsop.jpg

Playing with goyim pension funds is a conspiracy on Wall Street.

:oo-->

[Neuro]

I am interested in what Taleb's theory is.

Fooled by Randomness.

In some ways, I think conspiracy theorists would rather believe that evil men at work is a more satisfying explaination than humbly admitting that Man doesn't and can't know everything or control everything. In this regard, conspiracy theorists are no better than the conspirist that they attack; both groups are full of themselves.


Yep randomly the market just turned around just before the circuit breakers were about to close the market down for the day... I think it is way more likely that the entity that created the freefall, by massive shortselling to trigger hedgefund program selling, had enough muscle to stop the freefall... The oddest thing about this day was not how quickly the market fell, it was how quickly it recovered, and how close the bottom was to the circuit breakers closing the market down nullifying any short sellers profit perspective...

[Ponce]

Don't get in the game if you cannot afford to loose......which you will.

First post of the day.........good morning to one and all.

[JDRock]

Make no mistake here....this was a shot across the bow to obama and congress not to mess with the apple of rothschilds eye - Golman sachs.

[Horn]

Well manipulation has been considered a natural event of the precious metals market for decades.

This expanding into the general market should be no surprise.

[Uncle Salty]

This is good new for the metals.

Taking physical possession will break their manipulation. Their paper games only work if it stays a paper game. As more and more people demand physical, the game comes closer to ending.

[MAGNES]

I strongly don't believe this was some sort of error.

All the market makers made the same errors ?

It looks to me like they hit major stops and
triggered them, market fell like a waterfall,
usually when this happens if major buy orders
are not triggered it keeps going, people wait
on sidelines, what were the market makers
doing ? ? ? Seems they stepped aside too.

This looks like price action on silver when they
decide to hit the market, drop it hard and sometimes
it comes back very strong, they do it on a Friday
many times cause trading is thinner, they find the
spot to maximize their strategy.

Notice, it happened in the afternoon, a lazy time for market.
Then it came back real strong same afternoon , they brought
the INDU up past key number, 10,000. It would not take a lot
of money to do that during that time of day.

INDU is only 30 stocks and all other markets follow.
The 30, most of them follow the few leaders. lol

MM's have duties, on New York they have major rules.
Nasdaq does not, Madoff ran it too, lol .

They have a duty to enable, "an orderly market", liquid, etc

In 1987 the MM's stepped aside and exacerbated the drop.
The small old names did their duty and could not meet their
book obligations, and firms like MLynch bought them for
nothing, that was New York market, MLynch stepped aside
not doing it's job, just one example.

[Ponce]

Problem is that most people only wants what others have and not what they really need.

I for one have my little Toy truck that after 20 years is still running and better than new......so why would I want a luxury Mercedes if I cannot afford it?...to me wanting a Mercedes is greed and not need.

[MAGNES]

The oddest thing about this day was not how quickly the market fell, it was how quickly it recovered, and how close the bottom was to the circuit breakers closing the market down nullifying any short sellers profit perspective...


This is key. I totally agree with you.

Look at the time of day. Afternoon.

This is all Goldman Sachs and key market makers
not doing their jobs, the MM's have been consolidating
their power/control, the gold and silver manipulation
cannot work without market maker involvement,
you see the media even the gold bug media, they
do not cover this enough, the MM's are the real
criminals that can see right into the market, all orders,
etc, all of "wall street" has huge conflict of interest issues.
MM's with some money and backing could easily have done
this, swing it at any point. And they did, at a key level,
above 10K Indu. The charts are still hold/buy +ve.

[MAGNES]

Make no mistake here....this was a shot across the bow to obama and congress not to mess with the apple of rothschilds eye - Golman sachs.


Totally agree.

I would of loved watching level2 windows, revealing ? ? ?

There is going to be people reading this thread, wtf ? etc

GS dominates and they get a free pass too cause
they are partners of FED.

On Goldman Sachs, GS, they are key to the manipulations
and there is a lot of information out there on their program
trading and "black boxes", front running clients, rigging and
other manipulations, including gold, creation of ICE to avoid
regulators, etc, as much as 75% of trades are reported to be
"black box" program trading, not people anymore.

Who are the Market Makers, these are the most powerful
people/group, again it is GS and other giants, New York
had many small MM's but they got murdered in 1987.
NASDAQ has no rules, NY still does, brokers are MM's
and trade for their own accounts too, one conflict of interest
on top of another, neither allowed on NY market.

[Gknowmx]

Odd, that no one is calling this an act of 'financial terrorism'. :sarc:


Same effect.

[MNeagle]

Odd, that no one is calling this an act of 'financial terrorism'. :sarc:


Same effect.


Worse, in many ways.

[skid]

People actually believe the guy (Diamond) in the first post???

The stock market is doomed to fall, and only intervention from the PPT saved a drop of even larger proportions.

That market has only room to fall, and people who think it will remain up are in for a shock...

Diamond's just running interference for the powers that be.

[Gneisenau]

Did some reading on the web today and came up with an alternative theory: unwinding of yen carry trade

Some big players sold their US stock and swapped the dollars for yen to get out of the yen carry trade. No Greece at all. Take a look at the chart below. I couldn't find a similar move for another US$-? currency pair.

[FreeEnergy]

Gneisenau, so they sold all of their US stock in one batch, knowing it will bring market down 1000 points (and hence the price of their stock)...and then they bought it back too? or somebody else bought it back? you buddy make no sense.


The possibility that drop went down 998 points (2 points less than 1000 which is a circuit breaker) - the possibility of a random event happening like that withing such a short period of time is close to 0. This is mathematics, not some fun, games and cover up stories. Somebody knocked the air out of a casino fraud you all call "stock market", and knocked hard. And then brought it all back.

The idea that someone fat-fingered billion instead of million is laughable, there would be big red lights going off all around, and popup screens warning that trader that he's doing something wrong - software would prevent that from ever happening. MSM story is a lie.


The stock market is doomed to fall, and only intervention from the PPT saved a drop of even larger proportions.

Aha, it fell 1000 points in 2 hours. Apparently the other days someone was holding all DOW stocks from falling, and has been doing it for years. Then one day he went to take a leak, and oops, market dropped. Right.

Whatever MAGNES said is closest to being right.

[FunnyMoney]

It is called "running the stops". It is a money making ploy by the big players. If you do not understand how no-limit poker works then you should study the rules. The market works the same way. Once a player has a majority of the chip and the ability to see where the stops are for all the little players it becomes easy for them to extract money from the market. They can start the tumble and then watch it gather momentum, then buy from the suckers who were late to panic and capture profit on the way back up.

[Gneisenau]

Gneisenau, so they sold all of their US stock in one batch, knowing it will bring market down 1000 points (and hence the price of their stock)...and then they bought it back too? or somebody else bought it back? you buddy make no sense.

The possibility that drop went down 998 points (2 points less than 1000 which is a circuit breaker) - the possibility of a random event happening like that withing such a short period of time is close to 0. This is mathematics, not some fun, games and cover up stories. Somebody knocked the air out of a casino fraud you all call "stock market", and knocked hard. And then brought it all back.

The idea that someone fat-fingered billion instead of million is laughable, there would be big red lights going off all around, and popup screens warning that trader that he's doing something wrong - software would prevent that from ever happening. MSM story is a lie.



I never said anything about that drop being random, actually I'm pretty sure it was not. But it's no secret that large entities have borrowed large amounts of yen and invested it in the US stock market. One (or more) of these entities sold a big bunch of their stocks to pay of the debt denominated in yen. I have no idea about those entities intentions (why they sold an amount like that in one batch) nor who bought the stocks back, but the sharp drop in the DOW followed by the drop of US$ vs yen is the best thing I have seen so far on the DOW plunge.

[Horn]

The oddest thing about this day was not how quickly the market fell, it was how quickly it recovered, and how close the bottom was to the circuit breakers closing the market down nullifying any short sellers profit perspective...


This is key. I totally agree with you.

Look at the time of day. Afternoon.

This is all Goldman Sachs and key market makers
not doing their jobs, the MM's have been consolidating
their power/control, the gold and silver manipulation
cannot work without market maker involvement,
you see the media even the gold bug media, they
do not cover this enough, the MM's are the real
criminals that can see right into the market, all orders,
etc, all of "wall street" has huge conflict of interest issues.
MM's with some money and backing could easily have done
this, swing it at any point. And they did, at a key level,
above 10K Indu. The charts are still hold/buy +ve.


Being as gold & (weak dollar) was the only things that held during the event, yes

U R correct.

[Neuro]

Gneisenau, so they sold all of their US stock in one batch, knowing it will bring market down 1000 points (and hence the price of their stock)...and then they bought it back too? or somebody else bought it back? you buddy make no sense.

The possibility that drop went down 998 points (2 points less than 1000 which is a circuit breaker) - the possibility of a random event happening like that withing such a short period of time is close to 0. This is mathematics, not some fun, games and cover up stories. Somebody knocked the air out of a casino fraud you all call "stock market", and knocked hard. And then brought it all back.

The idea that someone fat-fingered billion instead of million is laughable, there would be big red lights going off all around, and popup screens warning that trader that he's doing something wrong - software would prevent that from ever happening. MSM story is a lie.



I never said anything about that drop being random, actually I'm pretty sure it was not. But it's no secret that large entities have borrowed large amounts of yen and invested it in the US stock market. One (or more) of these entities sold a big bunch of their stocks to pay of the debt denominated in yen. I have no idea about those entities intentions (why they sold an amount like that in one batch) nor who bought the stocks back, but the sharp drop in the DOW followed by the drop of US$ vs yen is the best thing I have seen so far on the DOW plunge.

This would signal the end of strongish dollar... Stronger Yen for a few months, then? I doubt that the Yen would remain strong much further than that considering the fiscal problems Japan has... Euro may strengthen considerably also considering it seems they have contained the Greek problem for the moment, unless GS starts hitting Portugal or the other PIIGS in SPAACE... Irregardless Gold should shine now, the only currency left standing...

[Defender]

Another theory I read somewhere is it was arm twisting by the FED to keep Congress from passing a full strength audit-the-fed bill. It worked.

[JDRock]

Another theory I read somewhere is it was arm twisting by the FED to keep Congress from passing a full strength audit-the-fed bill. It worked.


The fed = Rothschild, so it really is the same here.... a shot across the bow to show what they can do any time they want, if they dont get their way.

[Neuro]

Another theory I read somewhere is it was arm twisting by the FED to keep Congress from passing a full strength audit-the-fed bill. It worked.


The fed = Rothschild, so it really is the same here.... a shot across the bow to show what they can do any time they want, if they dont get their way.
Yes the fed= Rothschield = Goldman Sachs...

I see Goldman Sachs more as the moneyearning executive branch, while the Feds job is more to armtwist some politicians into submission, and pick up the Rothschield banks when they are in trouble, by diluting the monetary supply...

[JDRock]

Make no mistake here....this was a shot across the bow to obama and congress not to mess with the apple of rothschilds eye - Golman sachs.


Most of the anti goldman talk is off the table and the mkt has "miraculously" recovered. :oo-->

[Gknowmx]

I am interested in what Taleb's theory is.

Fooled by Randomness.

In some ways, I think conspiracy theorists would rather believe that evil men at work is a more satisfying explaination than humbly admitting that Man doesn't and can't know everything or control everything. In this regard, conspiracy theorists are no better than the conspirist that they attack; both groups are full of themselves.


I will take the opportunity to quote myself. And in today's papers, it looks like a few others are thinking of Taleb as well:

http://www.huffingtonpost.com/janet-tavakoli/nassim-taleb-kills-20-bil_b_571633.html

[silver_surfer]

Make no mistake here....this was a shot across the bow to obama and congress not to mess with the apple of rothschilds eye - Golman sachs.


That is my take on it as well