POMO in Hand the PPT Strikes Again

Brian Hicks

Updated September 28, 2010



To the millions of tourists who have driven down San Francisco’s Lombard Street, it is easily the “crookedest street in the world.”

Steep and full of sharp turns, it’s an oddity as recognizable as the city’s Golden Gate Bridge.

But as familiar as that street is to everyone who has driven it or seen it in a movie, Lombard Street has nothing on the winding road that has been built between Washington and Wall Street.

Between bailouts and back-room deals— it’s as crooked as it gets.

And in a financial crisis that is by all accounts the worst of our generation, the deep connection between the two has become even more tightly twisted.

And while I’ve never been a big fan of conspiracy theories, this twisted alliance of power and greed has made me reconsider at least one… It’s called the Plunge Protection Team.

And according to the lore, it has been propping up the markets for the last 20 years.

And the truth is, if it didn’t already exist, the current crisis is big enough to give birth to it, in my opinion.

So between the PPT and POMO—aka the Fed’s Permanent Open Market Operations—-it has been a pretty good September for the major averages.

On that score, here’s a great video that made rounds yesterday.


It’s from CNBC Europe and features strategist Robin Griffiths’ take on the manipulated markets.

Blame the PPT he says…

It’s pretty simple…

The Fed pushes money into the banks and the banks push the money into the markets. Do it enough and the market rises.

So, whether you believe in the Plunge Protection Team or not, at least recognize that markets are a lot less free than you imagine.

At times, power and greed do work to goose the outcome, and this is likely one of those them

BTW, Griffiths is spot on when it comes to emerging markets—especially in Brazil.

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