Are Our Markets Being Manipulated By Rogues Or Firms?
Jul 15, 2009 By Danny Schechter
Theres New Evidence to Suggest that Crime In The Financial Markets is Rife
Everyone has heard of the Wikipedia but not everyone knows about the Investopedia, a Forbes website, that monitors finance for market players. One of the issues it is concerned about is market manipulation, actions by rogue and not so rogue players who, working alone or together, unduly influence the way our supposed free markets function.
It is a fascinating source of information for the uninitiated who hear the daily reports on the ups and downs of the Dow and believe that somehow it is all part of the natural order of the universe.
Thanks to an even more informative web site, Gamingthemarket.com, we learn that in fact markets are subject to, prone to, and characterized by all sorts of manipulative practices. Heres one you may not have heard of.
It looks like we have gone from the age of the trustbuster to the era of the ghost buster as fiction once again turns into faction.
Last week, the price of oil mysteriously shot up. There were reports of yet another rogue trader. The New York Times later reported:
Reacting to recent swings in oil prices, federal regulators said they were considering limits on speculative traders in markets for oil and other energy products. Of course, the big banks and Wall Street firms are expected to zealously oppose more oversight.
Some things dont change. Anyone remember Nicholas Leeson, a one man engine of speculation who lost over a billion dollars and brought down his own bank before going to jail? He later gloated on his website; How could one trader bring down the banking empire that had funded the Napoleonic Wars?
The next sentence is particularly eye-opening: The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways, Facciponti said.
J.S. Kim who runs an independent investment research and wealth consultancy firm commented on the financial site, Seeking Alpha:
I spoke with Christian Angelich, the founder or Gaming the Market.com, a former airline pilot turned trader, who told me that in recent years efforts to manipulate markets have become pervasive and, yet, are mostly illegal.
He too cited Goldman when I asked how it often works.
Without prodding, he came up with one possible scenario involving a firm like Goldman Sachs that had 00 millions of shares of Intel it wanted to offload. So they issue a report predicting it will sell for $50 a share. As a major player at the New York exchange where they do l out of ever ten shares, and have become even more powerful now that competitors like Bear, Lehman and others are out of business, their recommendations are given lots of weight even though in this case they really want to just dump the shares.
None of this is new, he told me, its been going on for years. Even the founding Fathers warned about it, but is more egregious today in part because of all the technology these firms have. He says it is illegal and has been winked at, citing one example: former Senator Phil Gramm attaching a plan to kill the Glass Steagall act as an amendment to a bill that then sailed through the Congress while his wife was on the Commodity Futures Trading Commission.
We will only have a real bottom, he believes when the masses are out in the streets like they are in parts of Europe. For change, pressure from below is needed.
Sometimes unexpected events can take
over markets too, as Michael Jacksons untimely
demises meteoric impact on the music market shows.
His sales went from nowhere to everywhere confirming one
jaded pundits cynical comment that he was
more valuable dead than alive.
He told me:
This was new to methe whole system being described as predatory which smacks of criminal.
He went on:
Answer: I think it was manipulated. There is a lot of debate whether its about speculation or manipulation but there is an old expression among traders which is the trend is your friend. What that means is that in fact a few people can use significant resources, financial resources, freely as a weapon.
Umm, weapons on Wall Street? Already credit default swaps have been compared to financial hydrogen bombs as financial terms merge with military language. Does anyone doubt that these Wall Street manipulations have become form of warfare and that, until now, the wrong side has been ahead.
Surely, all this demands a serious investigation and serious regulation. Will it happen?
Mediachannel.orgs News Dissector Danny Schechter is producing a film on the Crime of Our Time as a follow-up to his book PLUNDER; Investigating Our Economic Calamity (Cosimo Book, Amazon.com)