# Plunge Protection Team (PPT) Enemies



## hangseng (1 September 2007)

This is not the news the PPT and markets would have wanted on the 1st day following the pep talks last night. Perhaps people may like to add to this thread as more PPT enemies come to the surface (and there will be more).

in part only here:
full story: 
http://www.theage.com.au/news/business/basis-capital-hedge-fund-fails/2007/08/30/1188067276878.html

Basis Capital hedge fund fails
Leon Gettler and Vanessa Burrow
August 31, 2007

BASIS Capital's Basis Yield Alpha Fund has been put into provisional liquidation, and investors in the Sydney hedge fund appear unlikely to get their money back.

The Basis Yield Alpha Fund had invested mainly in collateralised debt obligations (CDOs), bundles of bonds, loans and asset-backed debt securities that are divided into sections, or tranches, including the high-risk subprime mortgages.

While the aim of the CDOs is to spread the risk, commentators have described the process as being like putting horse dung and rubbish into a grinder to make sausage.

Apart from Basis, Macquarie's Fortress funds may have lost up to 25 per cent. Another hedge fund manager, Absolute Capital, has suspended redemptions in its funds to protect investors while it assesses the impact of its exposure to risky credit markets.

And RAMS, a listed non-bank lender, has also said its profits could be affected by the fallout.


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## explod (1 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*

Good on you hangsen for having the termirity to start this thread.   Dont expect much input as I have found most people are very negative on hearing or facing how bad things may really be heading.   Better they say, to look at the jump up on the Dow chart and say  "...the down trend has broken and rising through resistance."

Uncle George B says "I'll save you" and a way she went.   Wonder who else used to say that, read it somewhere on this forum this morning.

Like selling a time bomb to your best mate


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## hangseng (1 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*

I agree

I did this thread because I believe more analysis is required here. If this turns sour it will be a huge plunge and people will get burnt thinking all is well.

Well, it isn't! That's why you have both the Fed and Govt trying to balance this as they know that the dung is about to hit the fan.


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## explod (1 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*

"Prechter: Why the Fed Will Not Stop Deflation
Posted August 30th, 2007 by manystrom in Federal Reserve 
Editor's note: Robert Prechter's Latest Elliott Wave Theorist was released three weeks early, and is one of his best Theorist's ever. He does not mince words and cuts straight to the bone on what the Fed is and is not willing to do. It is fascinating reading. I have arranged to make this brief excerpt available.

Excerpted from The Latest Elliott Wave Theorist
August 26, 2007 | Robert Prechter
Reprinted with permission

We hear it every day: "What about the Fed?" The vast majority of investors and commentators seem confident that the Fed's machinations make a stock market collapse impossible. Every hour or so one can read or hear another comment along these lines: "the Fed will provide liquidity," "the Fed is injecting money into the system," "the Fed will be forced to bail out homeowners, homebuilders, mortgage companies and banks," "the Fed has no choice but to inflate," "the government cannot allow deflation," "the Fed will print money to stave off deflation" and any number of like statements. 

None of them is true. 

The Fed is not forced to do anything; the Fed has not been injecting money; the Fed does have choices; the government does not control deflationary forces; and the Fed will not print money unless and until it changes its long-standing policies and decides to destroy itself.

A perfect example of one of these fallacies recently exposed is the widespread report in August that the Fed had "injected" billions of dollars worth of "money" into the "system" by "buying" "sub-prime mortgages." 

In fact, all it did was offer to stave off the immediate illegality of many banks' operations by lending money against the collateral of guaranteed mortgages, but only temporarily under contracts that oblige the banks to buy them back within 1 to 30 days. The typical duration is 3 days. Observe three important things:

The Fed did not give out money; it offered a temporary, collateralized loan. 
The Fed did not inject liquidity; it offered it. 
The Fed did not lend against worthless sub-prime mortgages; it lent against valuable mortgages issued by Fannie Mae (the Federal National Mortgage Association), Ginnie Mae (the Government National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation). The New York Fed is also accepting "investment quality" commercial paper, which means highly liquid, valuable IOUs, not junk 
As a result:

The Fed took almost no risk in the transactions. 
The net liquidity it provided -- after the repo agreements close -- is zero. 
The financial system is still choking on bad loans. 
Banks and other lending institutions must sell other assets to raise cash to buy back their mortgages from the Fed. 
These points are crucial to a proper understanding of the situation. The Fed is doing nothing akin to what most of the media claims; like McDonald's, it is selling not so much sustenance as time, in this case time for banks to divest themselves of some assets. But in the Fed's case, that's all it's selling; you don't get any food in the bargain.

As I have said before, the Fed is a bank. It has private owners. The owners do not want to see their enterprise destroyed. Although Bernanke probably received distress calls from mortgage lenders, he probably also got calls from the Fed's owners saying, "Don't you dare buy any of that crap and put it in our long-term portfolio." The Fed's owners are smart. They exploit the banking system without taking on any of the risks. They let member banks make mortgages and lend to consumers, but they don't do so themselves.

In the early 1930s, as markets fell and the economy collapsed, the Fed offered loans only on the most pristine debt. Its standards have fallen a bit, but not by much. Today it will still lend only on highly reliable IOUs, not junk. And it doesn't even want to own most of those; it takes them on only temporarily as part of a short-term repurchase agreement.

The Fed's power derives from the value of its holdings, which are primarily Treasury bonds, which provide backing for the value of the Fed's notes. What would a Federal Reserve Note be worth if it were backed by sub-prime mortgages? The real value of U.S. Treasury debt is precarious enough as it is, but at least it has the taxing power of the government behind it. But if the Fed bought up the entire supply of sub-prime mortgages, its notes would lose value accordingly. So will the Fed bail out mortgage companies, as the optimists seem to think? No, it won't. Those who think the Fed will buy up junk with cash delivered by helicopter are dreaming.

Ironically, of course, the Federal Reserve System and the federal government-both directly and via creations such as privileged mortgage companies and the FDIC-have fostered all the lending and the junk debt that resulted. But these entities want only to benefit from the process, not suffer from it. As we will see throughout the bear market and into the depression, the Fed is self-interested and will not brook losses in its portfolio. Those who own the bad loans, and perhaps some foolish government entities that try to "save" them, will take losses, but the Fed won't. ...

What must the banks do with their "grace period" of a few days that the Fed's repo agreements provide? They have to raise the cash to buy back the IOUs that the Fed agreed to hold for them. How does a bank raise money? By selling assets. Thus begins the downward spiral: Contracting credit causes asset sales, which cause collateral values to fall, which causes lenders to curtail lending, thus contracting overall credit, which causes assets sales, and so it goes. Thus, the Fed is not staving off deflation; at best, it may have helped -- momentarily -- to make it more orderly. But the selling of assets has begun regardless."    End of quote


Will be interesting to see how long the Plunge Protection Team will hang on before they let Wall Street tumble

- - - -


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## hangseng (1 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*

Not until the big players are ready and have placed themselves where they want to be.

I just can't overlook the fact that 2 weeks ago it was financial disaster and now it's all sweet smelling roses and chocolates.

Being risk management oriented I remain wary until this false propping ceases and the economy and markets run ther respective natural paths (be it positive or negative).

With a politician coming up to an election telling the world it will be OK makes me even more concerned.


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## Bush Trader (3 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*

This may be also tied in with you theories.  Emails were wide spread amoungst the big investment banks on Friday.

Cheers


BT


The Mysterious US Option Trade
FN Arena News - September 03 2007 
By Greg Peel
It has internet chat rooms absolutely abuzz. It has evoked conspiracy theory fears of the most frightening nature. But it has not made news in any of the traditional media outlets. It is, in short, a total mystery.
Last week a transaction was posted in the US SPY options market of an astonishing US$900 million in value. The SPY (or "spyder" as it is called) is an exchange-traded fund which replicates the S&P 500 index. 12 million call options ranging in exercise price from 600 to 950 have been bought/sold (and thus created) by parties unknown. The S&P closed at 1474 on Friday. The options expire on September 21. This represents a three-week bet on the market being 35% to 60% lower in that time.
What has the crazier element of the internet chat room fraternity in a frenzy is a transaction that occurred prior to September, 2001. Somebody came into the market and bought an extensive number of put options on US airline stocks. After September 11, those positions would have booked some US$50 million in profit. Quite sufficient, one would assume, to cover the cost of certain terrorist activities.
But the reality is that there are so many reasons this option trade has been transacted, it's impossible to settle on one conclusive reason. This is why, suggests Keith Fitz-Gerald of Money Morning, the story has not been published at respected media outlets. There are too many unknowns, too many rash conclusions to jump to, and no one to interview.

Among various possibilities, Fitz-Gerald offers four as a cross-section. Two benign, two sinister.
On the benign side, it could just be a dividend play, popular with hedge funds. As option instruments don't receive dividend payments there are plays to be exploited just in the same way traders try to strip dividends out of the banks and other stocks each season in the Australian market. Or it could be a "covered call" play. While such trades usually involve the sale of out-of-the-money calls to enhance returns on long equity positions, some large funds prefer to operate within the safety of in-the-money-calls.
On the sinister side, one theory is that China has been caught up in the subprime mortgage debacle far more extensively than has so far been disclosed. In the meantime, the Chinese stock market has not corrected, but continued to rally blissfully on throughout the turmoil. Could the Chinese government be readying itself to start dumping US dollars? This would cause havoc in the US stock market and a profitable offsetting trade for the Chinese.
Or, of course, it could be Osama Bin Laden.
One thing is for sure - this transaction would not have gone unnoticed by those who should take notice. The US government, amongst many of its clandestine spook outfits, has a unit colloquially known as the Plunge Protection Team.
Whatever the reason, this is an unusually large trade at a surprising level. However, there are just as many simple explanations as there are conspiratorial ones. Should we be worried? No one has any idea.


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## Mofra (3 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*



Bush Trader said:


> This may be also tied in with you theories.  Emails were wide spread amoungst the big investment banks on Friday.




Not as suspicious as first thought, but did get the pulse a little higher initially.

https://www.aussiestockforums.com/forums/showthread.php?t=8058


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## hangseng (8 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*

DJIA down 249pts and looking very weak indeed. Now looking like this could easily go down to re-test recent lows.  

The enemies are gathering momentum with the latest US data being another. When the credit skeletons come out of the closet then and only then may the Feds lower rates in my opinion. All too late for the market. IMO the next 4-6 weeks we will finally see this all coming to the surface.

The flight to the safety of gold in the last 2 sessions is a big indicator of what is coming in my opinion. 

Take care.

Disclosure: Once again I have no market exposure.


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## Whiskers (8 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*

Good thread hangseng. 

It's a good vice to play the deils advocate occassionally... helps to keep perspective.



hangseng said:


> Not until the big players are ready and have placed themselves where they want to be.




All our press seems to be focused on the US troubles. But invariably others would try to take advantage of the situation.

How are things perceived in Japan where the carry trade came from and what is the effect on their economy? What is Japan doing? 

Do you see China playing a part, re the US trade imbalance problem and US pressure to revalue the yaun... since they got the US over the trade imbalance barrel... are they now dumping some of those $US in favor of gold?


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## explod (15 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*

A typical Friday. the PP Team come as the traders hit the pub for the end of the week.   With Bernarke to perform his miracles again next week we should have interesting times.

Am I cynical????


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## hangseng (15 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*



Whiskers said:


> Good thread hangseng.
> 
> It's a good vice to play the deils advocate occassionally... helps to keep perspective.
> 
> ...




The POG and plunging value of the USD is a good indicator.

DJIA just flies up in the face of all the negative news coming out. I can't see that lasting although the PPT is doing a great job of maintaining the primary uptrend.

Am I cynical? Um YES!


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## lusk (15 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*



hangseng said:


> The POG and plunging value of the USD is a good indicator.
> 
> DJIA just flies up in the face of all the negative news coming out. I can't see that lasting although the PPT is doing a great job of maintaining the primary uptrend.
> 
> Am I cynical? Um YES!




Not surprising at all that the DJIA keeps going up against what you are hearing in the news, US heading for recession, financial system shot, if everyone thinks its over the market will most probably do the opposite and power on upwards.


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## explod (15 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*



lusk said:


> Not surprising at all that the DJIA keeps going up against what you are hearing in the news, US heading for recession, financial system shot, if everyone thinks its over the market will most probably do the opposite and power on upwards.




It is going up by what is in the news.   The unqualified content of the news is the question.  Making sure the content continues to suck in the mugs is the job of the PPT and they do it well.


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## lusk (15 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*



explod said:


> It is going up by what is in the news.   The unqualified content of the news is the question.  Making sure the content continues to suck in the mugs is the job of the PPT and they do it well.




Are you saying the market is being driven by whats in the news and the "PPT" is apart of this conspiracy? hmmm this is deeper than I thought.


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## explod (15 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*



lusk said:


> Are you saying the market is being driven by whats in the news and the "PPT" is apart of this conspiracy? hmmm this is deeper than l thought.




Absolutely, sociologists are specifically employed to direct the spin for the smart money and to support Government Policy which in turn is there for the smart money.

i.e. Hallyburton cleans US military uniforms.  US Vice President part of Hallyburton.  GWB makes his press releases from prepared script.

Have a good look at releases on Bloomberg and try to find factual justification for statements.


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## krisbarry (15 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*

The Plunge Protection Team are going to be workin' their candy arses off over the coming week,  3 major US events are about to take place.  Will they be positive or negative?  Only time will tell


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## BradK (15 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*



Stop_the_clock said:


> The Plunge Protection Team are going to be workin' their candy arses off over the coming week,  3 major US events are about to take place.  Will they be positive or negative?  Only time will tell




what are the 3 events?

Brad


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## numbercruncher (15 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*

Just do a google search for where vice president Dick Cheney invested his money, might give you an indication on what to expect


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## tcoates (15 September 2007)

Here's what's coming - "Get ready for the mother of all weeks"...

http://articles.moneycentral.msn.com/Investing/Dispatch/070914markets.aspx


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## hangseng (16 September 2007)

tcoaates_au said:


> Here's what's coming - "Get ready for the mother of all weeks"...
> 
> Thanks for that, a good article but the link is getting messed up in posting somehow. I tried to repost here but it comes out as yours does for some reason. I eventually found the article but not without wading through web slosh to get there.
> 
> Moderators, any chance of fixing it? If you do a quote response on tcoaates post you will see his correct link. To tech for me.


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## tcoates (16 September 2007)

All that I do for the post is insert the URL from the address bar. You should see the proper address in the status bar of your web browser when you put the mouse over the link. (When you click on the link it should still work). The alternative is that paste the link in pre code or similar.

Tim

PS. But yes.... it is a quite a good article on what coming up next week.


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## krisbarry (16 September 2007)

*Re: Plunge Potection Team (PPT) Enemies*



BradK said:


> what are the 3 events?
> 
> Brad




*1> The Federal Reserve will meet on interest rates. 

2> Four big investment banks will report profits. 

3> Plus there will be important reports on inflation and housing. 

After a flat, sleepy Friday, next week could be dramatic for markets.*


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