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Nick Brady got the job he presently occupies by heading up a study of the October, 1987 stock market crash, the results of which Brady announced on a cold Friday afternoon in January, 1988, just after the New York stock market had taken another 150 point dive.
The study of the October, 1988 "market break" was produced by a group of Wall Street and Treasury insiders billed as the "Presidential Task Force on Market Mechanisms." At the center of the report's attention was the relation between the New York Stock Exchange, American Stock Exchange, and NASDAC over-the-counter stock trading, on the one hand, and the future, options, and index trading carried on at the Chicago Board of Trade, Chicago Board Options Exchange, and Chicago Mercantile Exchange. The Brady group examined the impact of program trading, index arbitrage and portfolio insurance strategies on the behavior of the markets that led to the crash. The Brady report recommended the centralization of all market oversight in a single federal agency, the unification of clearing systems, consistent margins, and the installation of circuit breaker mechanisms. That, at least, was the public content of the report.
The real purpose of the Brady report was to create a series of drugged and manipulated markets using funds from the Federal Reserve and other sources. The Brady group realized that if the Chicago futures price of a stock or stock index could be artifically inflated, this would be of great assistance in propping up the value of the underlying stock in New York. The Brady group focussed on the Major Market Index of 20 stock futures traded on the Chicago Board of Trade, which roughly corresponded to the principal stocks of the Dow Jones Industrial Average. As long as the MMI was trading at a higher price than the DJIA, the program traders and index arbitrageurs would tend to sell the MMI and buy the underlying stock in New York in order to lock in their stockjobbing profits. The great advantage of this system was first of all that some tens of millions of dollars in Chicago could generate some hundreds of millions of dollars of demand in New York. In addition, the margin requirements for borrowing money for use to buy futures in Chicago were much less stringent than the requirements for margin buying of stocks in New York. Liquidity for this operation could be drawn from banks and other institutions loyal to the Bush-Baker-Brady power cartel, with full backup and assistance from the district banks of the Federal Reserve.
The Brady "drugged market" mechanisms, with the refinements they have acquired since 1988, are a key factor behind the Dow Jones Industrials' seeming defiance of the law of gravity in attainting a new all time high well above the 3000 mark during 1991.
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http://www.tarpley.net/bush19.htm ">George Bush: The Unauthorized Biography 1992 Chapter 19
Bush convenes Plunge Protection Team
By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 1:18am GMT 11/01/2008
Bears beware. The New Deal of 2008 is in the works. The US Treasury is about to shower households with rebate cheques to head off a full-blown slump, and save the Bush presidency.
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.
The team is led by Treasury chief Hank Paulson, ex-Goldman Sachs, a man with a nose for market psychology, and includes Fed chairman Ben Bernanke and the key exchange regulators.
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http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=A1YourView&xml=/money/2008/01/07/ccview107.xml