conspiracy theory: government price manipulation

[scriabinop23]

now this isn't my normal style, in fact perhaps I'm naive not to even believe this, but I think it makes an interesting discussion.

What do you think the likelyhood of price manipulation of commodity and security markets occurs by government related entities ??

Think about it for a second -- if the powers that be don't want oil expensive right now, they could be massively shorting right now, and in case the trade turns against them, they can fund that loss with off the books printed currency. Essentially transfer wealth to the opposite side traders to achieve a political goal (whether it be election timing related, a bargaining chip in a geo political crisis, etc)

I've never really considered this before, but who's to say this isn't done periodically.

So lets hear it - who thinks the US government potentially has a not for profit, all for power trading wing?

we fight wars with weapons and force both secretly and privately (classified missions with elite forces), so why would we not fight wars with money privately as well?

 

[Alexandre]

this poll seems manipulated

 

[scriabinop23]

Quote from Alexandre:

this poll seems manipulated

I'll be the first to admit I voted no on my own poll just because I'm not convinced it could be gotten away with ... too many people involved, I think.

 

[PretzelPiece]

Do you talk about things we all know yet (plunge protection team, M3 not published any longer, difference between real inflation and official inflation except food, energy, housing) or something else?

 

[scriabinop23]

Quote from PretzelPiece:

Do you talk about things we all know yet (plunge protection team, M3 not published any longer, difference between real inflation and official inflation except food, energy, housing) or something else?

interesting article on plungle protection team:

http://www.safehaven.com/article-721.htm


BTW, whats up with COT reports -- I don't use them for my trading, so I haven't followed -- has transparency already disappeared, or is this all pending?

 

[scriabinop23]

Look at the timing - did they short oil to change the price ceiling in case Iran does something?


U.S. Says Sanctions Needed to Stop Iran Nuclear Work (Update1)

By Jonathan Tirone

Sept. 13 (Bloomberg) -- The U.S. said it's time for the UN Security Council to impose sanctions on Iran after the Islamic Republic failed to suspend its nuclear program.

``We must take further steps to persuade Iran to abandon its nuclear weapons ambitions,'' read a U.S. statement, delivered by Ambassador Gregory Schulte, to the International Atomic Energy Agency in Vienna. ``The time has come for the Security Council to back international diplomacy with international sanctions.''

The U.S. accuses Iran, which has the world's second biggest oil and natural gas reserves, of trying to make a nuclear weapon. Iran says its program is intended only to fuel power stations. The United Nations Security Council, in a July 31 resolution, ordered the country to halt uranium enrichment, a process that can be used for nuclear power or to make bombs.

French, German and U.K. diplomats, the so-called EU-3, took a more conciliatory approach in their message to the IAEA. The agency's 35-member board of governors was meeting for a third day in Vienna.

``We continue to extend an open hand to Iran,'' read the statement. The group's talks with Iran aimed at ``paving the way for a diplomatic solution and a long-term comprehensive arrangement.''

The EU-3 said it was ready to ``suspend action'' against Iran once the country suspends its uranium enrichment program. Iran stipulated in an Aug. 22 letter to EU foreign policy chief Javier Solana that it wasn't ready to negotiate as long as its case is before the UN's highest authority.

Solana-Larijani Talks

Solana will meet with Iran's top nuclear negotiator, Ali Larijani, for the second time this week to talk about the Islamic Republic's atomic program. The one-day meeting will take place tomorrow, Solana's office said. The encounter will be in Paris, the French Foreign Ministry press office said.

Solana and Larijani engaged in two days of talks about Iran's program Sept. 10-11 in Vienna. The diplomats tried to strike a compromise on the rules that would open seven-party talks about the atomic work. The EU is offering a U.S.-backed deal of trade and technology benefits in exchange for Iran suspending uranium enrichment.

The IAEA reported on Aug. 31 that Iran continues to enrich uranium in defiance of a Security Council deadline.

To contact the reporter on this story: Jonathan Tirone in Vienna at jtirone@bloomberg.net .

 

[Hydroblunt]

Quote from scriabinop23:

interesting article on plungle protection team:

http://www.safehaven.com/article-721.htm

That author needs to his research, the PPT is no secret and never was. There was a press release by the Fed and there is an executive order of some sort back from early 1990 (1993 I think) where they gave out some info about it. It was mentioned on this board several times.

Nothing "conspiracy theory" about. A PPT type function is and should be performed by any first world government. It is in the nation's interest to provide a price level during times of a market meltdown. It also makes sense, because as the government, you are investing in your own country by doing this. Some may say "free market" but if in the government's view the equity market may be oversold, why should they not be able to step in and buy.

The problem is that PPT may be actually controlled by the Fed in conjunction with the Treasury. The Fed IS NOT a government entity. I personally believe there have been a lot of shady operations between the PPT and the Fed's open market operations (most of which you can track down).

Also, if you do a search, there have been a couple ex-pit traders that have mentioned that they believe that PPT is very active just based on the S&P action on the floor at times.

 

[Avid_Consumer]

thats a danger .. that an emergency function becomes a daily mechanism under the pretext of being in some constant state of emergency

 

[scriabinop23]

Quote from Avid_Consumer:

thats a danger .. that an emergency function becomes a daily mechanism under the pretext of being in some constant state of emergency

Exactly, I have no problem with defense under a collapse (ie currency drop and market sellof, so defense is mass buying). That is good.

But lets just say this oil selloff was intentionally done by this party, merely to lower the price ceiling for some big political move.

I'm sure some gov't economist has studied this and defined an Iran embargo would add a $25 price premium to oil right now. $25 on top of $60 is $85, not as bad as $25 on top of $78 ($103). Is this plausible?

Nonetheless, I need -something- to blame all of these reversals and screwed up trades on.


By the way, doing some armchair math, at avg volume around 100k/day over the last 3 weeks on front month QM, if half that was PPT selling, lets figure this out.

50k x 20 days = net total 1m contracts each with $10 total movement. $500 per dollar movement, and lets say avg cost basis on sales is around $69 (midpoint), so $2500 gain per 1m. Thats a profit of 2.5 billion dollars to move QM down $10.

Now 2 points:

1) If no political nightmare with Iran happens, how well could they cover 1 million contracts to minimize losses or maximize gains.

2) If oil went to $100 on Iran nightmare, that would be a net loss of $30/contract ($15k) - so $15 billion loss
Still not that much in the big picture. One hurricane dwarfs this. And at best, they could hold these contracts for covering until the dispute resolved.


Maybe its more plausible than I first suggested. And additionally, maybe you don't need to sell short 1m contracts over 20 days to have a big impact. Maybe the number is only 100k. In that case, the cost of doing this is cheap - at least in the face of $100m warplanes, lives, etc. etc.

I remember reading how Hong Kong defended their markets several years back in the southeast asian crisis buying stock, then held a few years, and sold for quite a few billion dollars profit.

 

[jaronimo]

Quote from scriabinop23:

I'll be the first to admit I voted no on my own poll just because I'm not convinced it could be gotten away with ... too many people involved, I think.

Yeah, it would be hard for the govt to keep it a secret for long.

Although I would like to know who killed JFK.

Why would you waste truckloads of money to short oil? That might make it cheaper, but why not take the same money and put it out as rewards for terrorists? get the numbers high enough and the other terrorists will start collecting. That would bring a whole lot more satisfied voters.