augieboo's PPT Archive

[augieboo]

Market Plunges and Fed steps in again http://www.nex.net.au/users/reidgck/NASDAQ.HTM#Market
Over a six day period, the high-tech NASDAQ stock index in the U.S. lost 17% of its value, dropping by November 13 2000 to below 2,900, its lowest value since November 3 1999.

In paper terms, it represented an evaporation of more than $1.7 trillion in share values since the all-time high of 5,123 in March 2000, or a drop of 44.3% in 8 months. In real terms, the fall in the Nasdaq stocks meant a disappearance in personal wealth of some DM 3.7 trillion - almost the total German GDP.

Many American families have been shifting funds from savings, to the stock market, especially the high flying Nasdaq stocks. That now, is on the brink of vanishing.

On November 13, (2000) U.S. election uncertainty threatened a dollar crisis, on top of a meltdown of the stock markets.

Enter the Federal Reserve with an injection of liquid funds, cash, into the banking system in the form of $3.01 billion in 28 day repurchase agreements, or repos.
Minutes later, it again injected $2.71 billion in overnight funds to the banks. It was enough to stop a Nasdaq meltdown, but not enough to push it above the psychologically important 3,000 level. To do that, the Fed activated its "Plunge Protection Team," the small group including Fed Reserve Chairman Greenspan, Treasury Secretary Summers, select insider Wall Street stock brokerages, such as Goldman Sachs, and key trusted banks such as Citigroup, whose Vice Chairman is former Treasury Secretary Robert Rubin.

The Plunge Protection Team went into full gear on Tuesday November 14. First the Fed injected another $2 billion early in the day. Then, minutes later, as if on cue, Goldman Sachs' market prophetess, Abby Joseph Cohen was brought out to tell the world press that the stock market was under valued, and should rise by "at least 15% by year's end."

Since the October 1987 stock market crash, Abby Cohen has been used to "predict" a rebound every time the markets were threatened. Wall Street insiders know her predictions mean Goldman Sachs and other major players have been told to buy, so a rush of speculative buying usually ensues. In addition, the process is leveraged via derivatives, or stock futures contracts on the Nasdaq or Dow Jones Industrial index.

On November 24, within minutes of the combined Fed and Goldman Sachs intervention, the Nasdaq was soaring, ending the day well above 3,100 for a daily rise of 5.7%.

According to informed market insiders, had the Fed and Plunge Protection Team not stepped in, there would have been a full-blown systemic financial crisis which would have soon spilled over into a dollar crisis.


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augie