Sorry Folks, There’s No Such Thing as the PPT

After the stock market crashed in 1987, Ronald Reagan did what presidents like to do, he created a commission to look at what went wrong. The commission was formally called the President’s Working Group on Financial Markets.
Ever since it was created, conspiracy theorists have had a field day. They’ve taken this small and not-very-important fact and somehow interpreted it to mean that the government, in the form of the Federal Reserve, buys stock to support the market.
They refer to the Working Group as the Plunge Protection Team, or the PPT (get it?). They continue to hold to this belief even though it makes no sense, there’s absolutely zero evidence for it and if it did exist, it hasn’t worked very well.
This morning, CNBC interviewed Damon Vickers of Nine Points Capital. He said that the markets are looking very dicey “unless the Plunge Protection Team comes in.” (See 2:38.)

I’m afraid investors don’t realize how nuts this statement truly is. At 3:20, Joe Kernan rightly pressed him and even assumed Vickers was joking about the PPT. Vickers said “absolutely not” and goes to embarrass himself and his firm further by confusing the moves made by the government during the crisis with secret market manipulation.

I don’t think it’s totally out of the realm of possibility. I mean they’re out there buying Citicorp (sic) and Fannie Mae and Freddie and shoring up the economy when the economy is weak, why wouldn’t they be active in the S&P futures?

Well…because the moves are completely different and buying S&P 500 futures makes no sense at all. Since Mr. Vickers is a bear, his argument is even more bizarre since he believes the PPT is both real and incompetent.
(Via: Gregory White)

Posted by on July 8th, 2010 at 3:54 pm


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