Did the Fed Buy the Market to Stop the Collapse?

[Donnachaidh]

http://www.zerohedge.com/contributed/did-fed-buy-market-stop-collapse

Now that the market has rolled over and erased most of the gains from last week, I can’t help but wonder just why the market rallied at all. True, it was oversold… but the FOMC announcement wasn’t exactly bullish (Seriously… ZIRP for another year was reason for an 8% rally in four days?).



I found it interesting that the New York Post published a story containing the following quote just 3 hours before the post-FOMC market ramp job started.



Back in October 1989, a guy named Robert Heller, who had just quit his post as a Fed governor, suggested that the government should purchase stock index futures contracts to calm the markets in times of distress.



"The Fed could support the stock market directly by buying market averages in the futures market, thus stabilizing the market as a whole," Heller wrote in an op-ed piece in The Wall Street Journal after saying the same thing in a little-noticed speech. "The stock market is certainly not too big for the Fed to handle."…

More at the link --

[Horse with no Name]

1. I am just thankful that they gave taxpayers another chance to fill their pockets!

Was hoping that with the economy as bad as it was, that we would still be able to funnel the money upward. Since our opportunities for this are dwindling, I sure hope this was enough to tide them over.

[Fuddnik]

2. They do that regularly.

Known as the PPT. Plunge Protection Team. Officially known as the Working Group on Financial Markets.

http://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets

It was formed by Reagan after the 1987 crash.

You can watch the markets and pretty much tell when they've entered. And they've done it a lot over the last five years.

It consists of the Treasury Sec, Fed Chair, Chair of the SEC, and Chair of the CFTC, or usually their designees.

A friend of mine who used to work the floor at the NYSE said they had a direct line to the floor, and he was told, when that phone rings, don't let it ring twice. They probably use computers now.

[formercia]

3. Another Sucker Rally.

Now, the Taxpayers are on the hook.

Just let it die.