Plunge protection team goes into action

[Chris Burford <cburford@xxxxxxxxxx>]

The largest emergency expenditure in the last week has been to maintain the
global capitalist economy, and US domination of it. The sums involved are
of the order of over $100 billion.

Much of this is rational, if you accept the logic of the system without
question. But it is interesting isn't it, that while the sacred blind laws
of commodity exchange are sacrosanct when the currency of Thailand is in
free spin, there is a shadowy (why shadowy?) "plunge protection team" to
maintain the dominance of the dollar.

Why could Thailand not have its own plunge protection team? Why could the
IMF not have seen the value of supporting it as much as LTCM? When you
think of the damage to most of the economies of South East Asia, leading
among other things to vicious communal violence between Christians and
Muslims, it would have been cheap at the price.


http://www.guardian.co.uk/wtccrash/story/0,1300,552568,00.html

> Fed to prop up Wall St
>
> Shadowy committee ready to pour billions into stock markets to avert
> shares meltdown
>
> Special report: Terrorism in the US
>
> Richard Wachman and Jamie Doward Sunday September 16, 2001 The Observer
>
> The US Federal Reserve and Wall Street's powerful investment banks are
> preparing to spend billions of dollars to support the US stock market,
> which opens this week for the first time since last Tuesday's terrorist
> attacks on New York and Washington.
>
> A secretive committee - the Working Group on Financial Markets, dubbed
> 'the plunge protection team' - includes bankers as well as representatives
> of the New York Stock Exchange, Nasdaq and the US Treasury. It is ready to
> co-ordinate intervention by the Federal Reserve on an unprecedented scale.
>
> The Fed, supported by the banks, will buy equities from mutual funds and
> other institutional sellers if there is evidence of panic selling in the
> wake of last week's carnage.
>
> The authorities are determined to avert a worldwide slump in share prices
> like the crashes of 1987 or 1929. Investment banks and their broking
> subsidiaries are to block short-selling by speculators and hedge funds by
> making it hard for them to obtain prices on favourable terms.
>
> 'Everyone is eager to avoid "contagion", where prices fall rapidly as
> investors react lemming-like to a falling index,' said one banker.
>
> In addition, US regulators are prepared to ease rules that prevent
> companies from buying their own stock.
>
> The 'plunge protection team' was established by a special executive order
> issued by former President Ronald Reagan in 1989. It is known to include
> senior bankers at leading Wall Street institutions such as Merrill Lynch
> and Goldman Sachs. It has acted before, in the early Nineties and during
> the 1998 LTCM hedge fund crisis.
>
> Whether coordinated action by the US authorities and banking institutions
> will be sufficient to avert a large-scale sell-off on Wall Street this
> week remains to be seen.
>
> Tony Jackson, director of UK equity strategy at investment bank ING
> Barings, believes there may be an emotional tide of support for Wall
> Street this week, but that it will be shortlived. He said: 'Some people
> are talking about a "patriotic rally" that could lift the Dow by 1,000
> points on reopening. I don't think it will be that high, but it will
> certainly go up, perhaps several hundred points.
>
> 'But long term, the trend will still be down, perhaps 10 per cent from
> where it opens. Many companies will cut earnings forecasts now.'
>
> Khuram Chaudhry, equity strategist at Merrill Lynch, believes that Wall
> Street could fall by as much as 10 per cent. 'You have to remember that
> things did not look that good before the attack on the World Trade Centre.
> There were already signs that American consumer confidence was
> deteriorating. I don't think people are now going to rush out to take
> foreign holidays or crowd the shopping malls.'
>
> John Llewellyn, economist at Lehman Brothers, is worried that markets may
> prove disorderly, despite the best efforts of the authorities.
>
> 'There is a degree of synchronisation between the three major economies.
> The US and Europe are weaken ing in tandem, while Japan is in the
> doldrums. In the early Nineties Japan was in better shape. The global
> economy may end up in a worse condition than 10 years ago.'
>
> But there are optimists too. Sonja Gibbs, chief equity strategist at
> Nomura International, believes 'the economic fundamentals will take a turn
> for the better in 2002'.
>
> Robin Aspinall, equity analyst at broker Teather and Greenwood said: 'The
> Americans will want to show that the stars and stripes still fly over Wall
> Street.'





Note in particular the little sentence:

> In addition, US regulators are prepared to ease rules that prevent
> companies from buying their own stock.


The sacred laws of private property in the means of production are entirely
alterable, when it is necessary to keep the system running. This are
man-made artefacts, just like the laws against the development of
capitalism into flagrant monopoly, which would make its demise all too
imminent.

This week has revealed that the fetishistic mystification of commodity
exchange is and must always been in the context of a society, that is not
really atomised for those with ultimate power, only for those who have
nothing to sell but their labour. That society ,ediates  power and
submission in order to maintain a particular pattern of production.

Hopefully the crisis will make more explicit and transparent the fact that
the world is a single unit, and those who attempt to dominate the world
without consent, and without an international system of justice, may reap
the whirlwind.

And lest that sound too harsh for a people understandably in mourning, but
whose mourning is a matter of concern to many interested parties, not least
to the thousands more who may die in the aftermath of that morning, let me
make the following observation from an old, humbled imperialist power.

All this moral talk about the polarities of good and evil, which conceal
the realities of actually existing societies and complex conflicts, is used
to suggest that "terrorism" is a form of "Evil". Yet unpalatable though it
is to hear from someone as repellent (IMHO) as Ian Paisley, the leader of
the Northern Irish "loyalists", the fact is that the biggest financiers of
terrorism in recent years, were none other than Americans, yes of Irish
extraction, and for very understandable reasons. And very many of them came
from New York. And that terrorism, broke the financial ability of British
imperialism to continue to refuse to talk to the terrorists, and now they
do, and are greeted, quite rightly, by the President of the United States
of America.

Because peace based on justice requires discussion. Including about how the
world financial system is run.

Chris Burford

London