What markets are manipulated and what will cause it to stop?

Quote from HelloDollar:

I'm not saying any of this activity is clandestine. But I am saying it's manipulative. And I will look up the thread you're speaking of. Don't misconstrue; I think you're a brilliant guy and one of only a dozen or so participants here worth listening to.
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Thank you for the compliment. I am hardly brilliant, but I am a participant in this mess, for better or worse.

So it seems that we all here agree that mkts ARE manipulated by the govts, as a matter of EXPLICIT policy. Likewise, I assume that we ALL agree that some mkt regulation is necessary (otherwise, we have coordination/negative externality issues). For example, I doubt that many here would argue that you don't need enforcement of certain rules, such as insider trading prohibitions and anti-trust laws.

That brings me to an honest (but, possibly, rhetorical) question that I'd like to ask you peeps here. Where do you draw the line between regulation and manipulation? For instance, SEC going after insiders = regulation = GOOD. On the other hand, SEC short-sale restrictions = manipulation = BAD. I can come up with similar examples for Fed actions. What are the objective criteria (if they exist) that allow you to define certain policies as "manipulative"?
 
Quote from austinp:

every decision and every act that the US Fed makes in the past 1.5 years has been to indirectly or directly impact financial markets. US financial markets = consumer sentiment. Consumer sentiment is the US economy.

Look at all of the magazine and newspaper articles now. They all contain the phrase, <i>"now that the economy is improving / on track / rising" </i>everywhere you look.

Fed's mission accomplished. Press financial markets up at all costs, do not let them back off or correct two inches. Build the perception that all is returned to normal... if in doubt, check your 401 or IRA for verification.

A friend of mine bought ford at $2 and is holding until it hits $20 or better. Ford... a 10 bagger inside of two years? Is this a two-way market free to back & fill, ebb & flow?
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If you have been actively trading and making good money for the last five years, it is undeniable that all these policies have distorted things beyond all recognition.

The russell just gained 18 percent in march. Its the government making the moves, not millions of traders. The only problem is they arent really solving anything. Where is the capacity to keep servicing all the debt the kep pumping in? there isnt any
 
This says it all….

N.Y. Times
Fed Plans to Inject Another $1 Trillion to Aid the Economy
By EDMUND L. ANDREWS
Published: March 18, 2009

“WASHINGTON — The Federal Reserve sharply stepped up its efforts to bolster the economy on Wednesday, announcing that it would pump an extra $1 trillion into the financial system by purchasing Treasury bonds and mortgage securities.

The action makes the Fed a buyer of long-term government bonds rather than the short-term debt that it typically buys and sells to help control the money supply.
The idea was to encourage more economic activity by lowering interest rates, including those on home loans, and to help the financial system as it struggles under the crushing weight of bad loans and poor investments.

But there were also clear indications that the Fed was taking risks that could dilute the value of the dollar and set the stage for future inflation. Gold prices rose $26.60 an ounce, hitting $942, a sign of declining confidence in the dollar. The dollar, which had been losing value in recent weeks to the euro and the yen, dropped sharply again on Wednesday.

But to the surprise of investors and analysts, the committee said it had decided to purchase an additional $750 billion worth of government-guaranteed mortgage-backed securities on top of the $500 billion that the Fed is already in the process of buying.
In addition, the Fed said it would buy up to $300 billion worth of longer-term Treasury securities over the next six months. That would tend to push down longer-term interest rates on all types of loans.

Since last September, the Fed’s lending programs have roughly doubled the size of its balance sheet, to about $1.8 trillion, from $900 billion. The actions announced on Wednesday are likely to expand that to well over $3 trillion over the next year.
Despite a trickle of encouraging data in the last few weeks, Fed officials were clearly still worried and in no mood to cut back on their emergency efforts. ….”


“…The Fed’s action is an expansion of its effort to bypass the private banking system and act as a lender in its own right. …”

And all this money where do you think it will end up?
 
Quote from Ivanovich:

By providing the banks with near-free money, with no end in sight, what do you think the banks will do with that? Invest it in asset classes. They're certainly not going to lend it out to non-credit worthy Americans. The money has to go somewhere. Therefore, this isn't a natural market wherein the tide is determined by fundamentals, economic strength or anything of the sort.

It is driven by cheap, no interest loans and free money. It is fixed. Manipulated to go only up. When the money dries up (and it always does eventually) the house of cards comes crashing down. But the big boys in the "know" will "know" when that is to happen, and they won't get burned. Everyone else will. Again, fixed. Manipulated.
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You make it sound like low-interest loans are something new. Ever since currency has existed there has been varying rates to borrow it. Sometimes it's 0%, sometimes it's a pinky finger after 2 weeks, other times a goat or a cow. It absolutely blows my mind that people think cheap money is the cause of _any_ current problems.

How about this thesis: everything is working as it always has. Due to the rise of the what I'll call the "international economy" there is a re-balancing that is currently underway in multiple markets. Over time I fully expect the global economy to normalize and settle in to an ebb-and-flow. These "problems" as most people are constantly talking about are nothing more than volatility. People need to quit bitching and find the opportunities; everything else: jobs numbers, ponzi schemes, currency manipulation, are distractions.
 
Quote from JamesVU2000:

Oure leadership from the President to congress to the FED are completely out of control.
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Meanwhile, the dead cat starts bouncing...
 
To me the markets and it's manipulation are just an extrapolation of the human condition.

say you have a really hot girlfriend. You know a lot of guys would like to hump her.

What do you do?

You can lock her up.

You can give her freedom.

You can go out dancing together to keep an eye on her.

You can round up some friends and kick her admirers ass.

You have a wide range of tools at your disposal but so has the hunter who wants to get into your girlfriends pants.

Both sides will go out of their way to get what they want but shouldnt condemn the level of perseverence shown by their opponents as they are guilty of that charge just as well.

In the end, laws of nature and physics decide and the entire cycle can start again.

Hey... Is that girl looking at me? :)
 
Quote from JamesVU2000:

Our leadership from the President to congress to the FED to the voters are completely out of control. [/B]
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Fixed it for you.
 
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