I am not sure what you mean by "conspiracy theory". If you mean you have a hard time believing that people often make plans and take actions in their own self-interests I can only say that as a former corporate strategist, that stuff happens every day, all day.
My problem is that I read history and note that it is chock full of people planning, scheming, and generally working to their own benefit. This leads me to the conclusion that people operating in their own self-interest is the default position, not the exception to the rule. I am not quite sure how it came to be that so many people hold the opposite view.
At any rate, my second problem is that I don't happen to believe that there is anything special about "the markets" that protect them from political or self-interested interference. Here are the "free and fair" markets that you already accept as being fully manipulated:
1) Subsidized farm products. The prices for many US farm products are not the result of supply and demand, but rather influenced by committee decisions taken in DC on a yearly basis. Without such interference many products would have entirely different prices.
2) The price of money. We call this the "interest rate" which is set by a committee on a 6 week reviewable basis.
3) Foreign exchange rates. Central banks routinely intervene to re-set prices for currencies that they feel need some tweaking. They write papers about the best way to go about this and share tips on the best way to use proxy banks to hide tracks for better impact. It is all there, right in the open, on the BIS server. We even have our own exchange stabilization fund. (ESF) It has a mission and a purpose and a website and it reports what it does.It intervenes in financial markets, specifically currency markets to achieve specific aims on a short term basis.
4) The Trash for Treasuries program. The Federal Reserve has openly exchanged cash and treasuries for impaired debt that could not otherwise be sold into the open market at anything approaching the 85% of face value offered. Without this unprecedented intervention using the TAF, TSLF (etc) programs our debt markets would have a very different price structure and a number of firms (that should have) would have gone bankrupt. Hence, the fed has intervened to set market prices of debt.
5) The CPI, GDP and other fuzzy numbers. These are demonstrably out of line with reality and if they do not represent a conspiracy of sorts, we need a word to describe them rather badly. I am open to suggestions. A 'coordinated program of self-deception' perhaps? I don't know.
And so on.
All of these, and many more, represent official intervention to set prices that would otherwise be set by 'the market'. We accept all of these as 'not conspiracy' because we are told about them.
Now here's the place where you and I separate a bit, and it's worth exploring. We are in the midst of the largest financial crisis in the lifetime of anybody who could possibly be reading this. In my mind it absolutely goes without saying that there are actions going on behind the scenes that we are not told about. I expect this and I remain on the lookout for signs of their appearance because a little bit of warning can go a long way in times like these.
Hank had to have known some time back that FRE and FNM were going under. In fact I'd wager Hank knew right around the time that congress was authorizing the blank check and he was proclaiming it 'unlikely' that taxpayer money would ever be needed that FNM and FRE were already bankrupt. And I go further to suggest that he was in close coordination with all the major players (central banks mainly) who held GSE debt. And I would consider it entirely unthinkable to propose that during these meetings the relative value of the dollar was not discussed. And then I find it entirely too coincidental that it was at this exact period of time that the dollar began its improbable climb (largest ever on a percentage basis). It just doesn't fit the fundamental data or even the technical data well at all. It defies everything except a view of official intervention.
So I know that official FOREX intervention happens, I know that they badly needed the dollar to stage a rally here, and I know the sequence of events fits the observed actions. To me, all of this is simply the best fit of the data to an hypothesis.
Now, how does one accomplish a coordinated raid on a market with official help? Easy. The vast majority of the various markets are not made up of "investors", they are made up of black boxes that trade algorithms and use sophisticated data feeds to sniff the markets with sub-millisecond precision. Consider that more than 10% of the daily market volume on the NYSE is traded by a single hedge fund whose servers are located on the NYSE floor to minimize electronic transmission lag and you can begin to appreciate how these things can be done.
A few phone calls go out to select and trusted 'partners' and then a little shove here, a pull there and the black box stampede is off and running. All the black boxes need to know is which way is the preferred direction.
It is really quite simple.
And, for the record, I believe that such official interventions only serve to exacerbate the underlying problems, not make them better, Hank's sole mission is to last out the year and ride off into the sunset a hero. His sense of self-interest assures that there will be few limits on the bold, daring, unprecedented actions he is willing to take.
To help the country, of course.
Chris Martenson
