NetNews Usenet Archive 1992 #20/NN_1992_20.iso/spool/misc/activism/progress/6421

Text File | 1992-09-09 | 5.5 KB | 125 lines

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Subject: Funny Money Props Up Wall St.
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Via The NY Transfer News Service ~ All the News that Doesn't Fit

Funny money props up Wall Street

By Andy Stapp

It began with two odd occurrences. On July 28, when prices
started sliding on Wall Street, the brokerage firm Shearson
Lehman bought 1,000 stock futures worth $200 million. By the
closing bell, the Dow had risen 51 points. Then, almost a month
later Shearson and Goldman Sachs executed another enormous
transaction, again at the Chicago Mercantile Exchange. Traders
described the conduct of the two firms as "aggressive" and
"suspicious."

"Something strange has been happening on days when it looks like
the stock market is ready to fall apart," the Wall Street Journal
observed on Aug. 28.

What was going on? Where was the money coming from? Quietly the
word began to leak out. The U.S. Treasury and Federal Reserve
Board are shoring up and rigging stock prices. They are using
taxpayers' money to bail out Wall Street. To disguise this,
orders have been placed through Goldman Sachs and Shearson Lehman
Brothers. A spokesperson for Goldman claims he was "not aware of
any such activity." At Shearson, the official statement read, "As
a matter of policy, we don't comment on trading activities."

The San Francisco Examiner pointed to the Treasury Department's
Exchange Stabilization Fund, which has about $30 billion on
deposit with the Reserve Bank in New York, as the source of the
funds. The Fed's Open Market Committee is another possible
reservoir of ready cash.

There's no question that "some entity has been intervening in the
markets and recklessly buying stock futures when the market's
heading down," the Republican loyalist New York Post reported
Aug. 29. That same morning, the Wall Street Journal asked, "Would
the Bush administration try to prop up the stock market?" NBC was
the first TV network to run the story.

Who benefits from this state intervention? Certainly not ordinary
people, the majority of whom own no stock at all. That's why it's
being done so secretly. The winners here will be the financiers,
brokers, money managers, Chief executive officers and hordes of
financial consultants, along with other major shareholders.

Aren't these the very people who have boasted for years that
capitalism does well on its own and needs no regulators, no
police over it, no bureaucrats telling business what to do? They
call for "smaller government"--buzz words for less spending on
food stamps, Medicaid, public housing, family assistance and
unemployment insurance.

The Federal Reserve is headed by Allen Greenspan, a right-wing
Reaganite who has been most vociferous in promoting the policy of
"let capitalism be capitalism." Now he turns up as head of an
undercover governmental scheme to rescue rich investors.

Public and private economies

Three years into a recession, the economy is in rotten shape. But
not the private economy of the wealthy. Throughout the 1980s the
income gap grew, widening the disparity between rich and poor,
and between rich and average wage earners. According to a study
just released by the Center on Budget and Policy Priorities, the
bottom one-fifth of families lost a yearly average of $350 in
real income over the decade. The top fifth gained $7,200. In New
York, for instance, the split is $9,959 for the lowest 20 percent
compared to $107,005 for the highest 20 percent. Pay for those in
between stagnated.

The Aug. 27 Chicago Sun Times reported that: "Corporate profits
grew to record levels in the second quarter even as the pace of
economic activity abruptly slowed. Tough corporate cost cutting
measures, including stiff payroll cutbacks, sent profits up to a
record $235 billion after taxes. Companies are squeezing more
output from each employee, fattening profits even as growth
slows."

Those with fat wallets, however, are only tough about squeezing
everybody else. They squeal in horror when their own "life style"
seems in jeopardy. That's why well-fixed inheritors and corporate
bosses possessing enormous stock portfolios think nothing of
manipulating the government to inflate the value of their
investments.

The Federal Reserve Act does not permit the purchase of
securities. Nor has Congress ever authorized such a venture. But
when asked about it, Preston Martin, a vice chair of the central
bank during the Reagan administration, said, "The Fed can do
almost anything."

Still, there are anxieties about the ultimate outcome of all
this. The San Francisco Examiner writes: "Government fooling with
the stock could lead to big problems. For one thing, the
integrity of the equities market would be put in doubt. And while
traders would be happy that the market has a guardian angel,
they'd also be terrified that the rigging would someday end.

(Copyright Workers World Service: Permission to reprint granted
if source is cited. For more info contact Workers World,46 W. 21
St., New York, NY 10010; "[e-mail]".)

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