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Bush convenes Plunge Protection Team

On Friday, Mr Bush convened the so-called Plunge Protection Team for its first known meeting in the Oval Office. The black arts unit – officially the President’s Working Group on Financial Markets – was created after the 1987 crash.

It appears to have powers to support the markets in a crisis with a host of instruments, mostly by through buying futures contracts on the stock indexes (DOW, S&P 500, NASDAQ and Russell) and key credit levers. And it has the means to fry “short” traders in the hottest of oils.

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1 Comment

  1. Shorts are a small part of the problem. The longs have gone on strike throughout the economy. I wonder whether the longs can be tricked into coming off the bench by Treasury purchases of S&P500 futures. More likely, a few clever hedge funds will make money for themselves by scalping futures to the government and possibly front-running their short position in scalped futures with long positions in S&P500 cash products. Most central banks know from experience that they can control short rates through repo, but there’s no guarantee in pushing down short rates that there will be any actual increase in business investment.

    Scary is suddenly realizing that the guys with the fancy jobs are scared.

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