Well, there is an explanation, if you are inclined to heed political conspiracy notions.
First of all, recall that about this time in 2006, just before the national elections (mostly for House of Representatives, but also some Senators), Goldman-Sachs conducted a major and ill-publicized manipulation of oil prices to effectively eliminate oil and energy as an issue in those elections [leaving other issues such as the "wars" in Iraq and Afghanistan on the forefront]. How?
Simple. Goldman-Sachs produces a commodity prices index widely used by various investment entities as a guideline for investing in different commodity markets. Historically, this index included unleaded gasoline futures prices as about 8% of the total commodity index. This means that to follow the index allocations, all the investment operations needed to invest about 8% of their assets in unleaded gasoline operations or futures contracts. In August/September of 2006, gasoline and oil prices were high and getting higher. To combat this trend temporarily, but long enough to effectively remove this trend as an election issue, Goldman-Sachs unannounced previously [except to privileged insiders, who made vast fortunes on the advanced warning] changed the unleaded gasoline proportion to about 2%. This meant that all the investment houses then had to SELL about 75% of their investments, including gasoline futures, to re-align themselves with the index and knocking the feet out from under the gasoline and oil markets. For a while, that is, because after the elections, oil prices resumed their climbs. And when oil prices declined, the visibility of energy issues greatly decreased as an election issue - which meant that it was not really addressed by any of the candidates.
Okay, another contentious elections looms now in September 2008. This time around, the US dollar has mysteriously increased substantially in strength relative to other currencies and commodities, especially oil and gold. Since the market fundamentals have not changed at all, why is there this big bounce? Well, perhaps this is a repeat of the 2006 market manipulation, but this time for the dollar. To my knowledge G-S has not made any overt manipulations of its various indices. However, the political advantages of eliminating the strength or weakness of the dollar as a campaign issue for the forthcoming elections in November cannot be over-emphasized. Except for the wars, the only real issues apparent in the national media are essentially personalities. And since neither party has advocated a significant change in military operations anywhere, the only issues the public will witness, aside from fixed factors of race and gender, is essentially who will do the best job of bitch-slapping the opposition.
How could G-S manipulate the markets? Very simple indeed. Recall that the US Treasury Secretary is Mr. Paulson, former President and Chairman of Goldman-Sachs; in effect, Goldman-Sachs IS the Treasury Department, just like J.P. Morgan IS the Federal Reserve Bank. Together, these corporate/goverment (no difference any more, is there?) bureaucrats constitute the Working Group on Markets, commonly referred to as the Plunge Protection Team by knowledgeable commentators. It has been estimated that this Team, in cooperation/collaboration with the vast financial resources and acumen of G-S and Morgan, have about $1 Trillion in assets with which they can invest in futures, options, and contracts as they see fit. This is more than enough to guide any markets anywhere in the world in any fashion they see fit. So by buying a chunk of dollar call options or long futures, they can effectively increase the demand for dollars world-wide, and increase its value with respect to all other currencies and to anything that dollars are used to buy, such as oil and gold. Note that this can be effected even while the total US money supply is reported increasing at about 14-15% annually!
WHY would they want to do this? Currently G-S, Morgan, and cronies are making vast fortunes on the credit they extend to essentially everyone in the world, but especially the U.S. government. Just to cite ONE operation, consider that Congress has just passed the latest annual increase in the federal debt ceiling by the usual $800 billion - indicating clearly that despite the publicized deficits, the REAL increase in debt is that $800 billion. This money, or actually the credit line extended, is created out of thin air by the Federal Reserve Bank, but interest is still collected as if it were real money. Who in the world would want to give up this enormous cash cow?
Well, as long as no questions are raised about the system, nothing will change - until, of course, the whole system collapses when the government can no longer even pay interest payments on the current $9+ trillion dollar debt. So the Powers-That-Be conduct periodic market manipulations to ensure that during the election season things seem to be doing pretty well, with a stronger dollar and lower commodity prices (in 2008), or with lower oil prices (in 2006). Out of sight and out of mind for the electorate. And since it is a given that no contender would have been allowed to become a candidate if there was the slightest chance of any REAL change in the system, the whole scheme is preserved in tact.
Keep this in mind during this election. What are the real issues here? What were they a few months ago, when oil was over $140 and the exchange rate for dollars to ANY other currency were pretty much lowest on record? What does it tell you about the level of enlightenment in the American populace when the only real issues are race, gender, age ["experience"?], and "morality [??]"?
Keep your eyes and your mind open.
Mike Childress
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