Tags: Greece | Europe | Markets | Government

Greece Confirms Government Can't Control Markets

By    |   Wednesday, 05 August 2015 07:18 AM

Every time the Dow Jones Industrial Average falls by a few percentage points, conspiracy theorists spring into action. They claim the market will rally because the government’s “Plunge Protection Team” will prevent a decline. The PPT, according to some, has kept stocks at elevated prices for years.

There is no official confirmation from government officials that a PPT exists. The lack of confirmation is, of course, proof of the group’s existence to conspiracy theorists. Denials of the group’s existence are also accepted as proof of the PPT. Conspiracy buffs ignore the 2008 bear market when all members of the PPT must have been on vacation.

The PPT seems to be based on a government working group established in the aftermath of the 1987 market crash. That group met to discuss how to avoid more crashes. Judging from the fact we’ve never seen another one-day, 20 percent plunge, it looks like the working group succeeded by introducing circuit breakers and other regulatory reforms to the market.

At that time, officials realized a PPT could never succeed. Markets are driven by fundamentals and no amount of government intervention can keep markets afloat in the face of lousy fundamentals.

This was proven by George Soros when he broke the Bank of England a few years later.

China recently attempted to stop its stock market from falling by providing billions of dollars to prop up prices. Officials in China have also implemented regulations to stop selling, also without success.

Greek officials closed the stock market and when it reopened this week, prices plunged even though there were restrictions on trading by Greek citizens.

Markets reflect the prices determined by millions of investors willing to buy and sell. Governments have never been able to defy market trends, in stocks or currencies. And government officials will never decide where the Dow should close.

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
MichaelCarr
Every time the Dow Jones Industrial Average falls by a few percentage points, conspiracy theorists spring into action. They claim the market will rally because the government's "Plunge Protection Team" will prevent a decline.
Greece, Europe, Markets, Government
307
2015-18-05
Wednesday, 05 August 2015 07:18 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved