Forum Archive Index - July 2002

["Nick Kearney" <nickk@quicksilver.net.nz>]

Team

 

This makes interesting reading.  I wouldn't doubt it but have never heard of it.

 

Anyone know of this?  Interesting stuff.

 

Nk

 

Crisis Team Hit Or Myth

By Robin Bromby For Australian Financial Review Friday June 28 2002

At 2:32pm Wednesday, something extraordinary happened at the corner of Wall and Broad streets. New York Stock Exchange’s Dow Jones Industrial Average, struggling since the opening bell after the WorldCom fraud revelations, threw off its problems and from an intraday low of 8927 shot skywards to 9160 by 3:29pm, leaving a chart movement resembling the north face of the Eiger.

Quite some reversal in the face of such bad news for investors. Could it be the work of the much talked about but never seen Plunge-Protection Team? There is a belief fast gaining ground that this team represents a powerful and secretive hand that is ready to act at any time the Dow looks ready to tank big- time. It is reputed to consist of Fed chairman Alan Greenspan, the US Treasury Secretary, and select insider Wall Street brokerages, including Goldman Sachs and Merrill Lynch along with bankers like Citigroup. When needed, so the theory goes, funds are pumped into stocks and futures to derail any market panic. Such a group’s existence first came to light in Washington Post five years ago. The paper reported that, after the October 1987 crash, President Ronald Reagan signed an executive order authorising a working group on financial markets aimed at coming up with strategies dealing with stock market crises. No one heard much more about it. Until January 1997 when Dr Greenspan made a speech saying the government would directly intervene in the market “in rare circumstances.” That lead to the Post’s investigation and the belief that such interventions have occurred has never died. In January popular online brokerage TheStreet.com wrote: “That may investors believe a so-called ‘plunge-protection’ team exits may be as important as whether it’s fact or myth. Such beliefs may explain why many investors rode the markets down in the past 22 months and why most continue to have faith in the stock market and in Greenspan.” New York Post reported October 2000 that when the Dow dropped 400 points the previous day, Goldman Sachs, Merrills and others saved the market through heavy futures purchases. “You and I will probably never know whether the Fed was behind the futures purchases and Alan Greenspan will never admit he is interfering in a supposedly free market,” the paper added. Meanwhile the London Observer reported it had information the Plunge Team was preparing to spend “billions of dollars” to avert a repeat of 1929 and 1987, adding that Washington’s strategy was to use the investment houses'  brokers and investment advisers to discourage short selling by the public.