Let’s not kid ourselves anymore; the world’s financial markets are heavily manipulated on a regular, if not daily, basis by central banks and their main clients the Big Banks. While it's always possible that the recent abnormal market behaviors can be ascribed to what happens when the mother of all bubbles forms a massive top, the recent market rescues have what appear to be clear signs of central bank intervention all over them.
Somewhat frustratingly to this observer, one vocal group denies that this could be the case while another actively cheers on the manipulations. The first group thinks that because in the past markets have been too big for central banks to influence trends for more than a short while that this must still be equally true today.
The second group thinks “who wants falling markets?” and is comforted by the idea that ‘they’ are working to assure that the markets do not do anything ‘wrong’ like go down in price.
From my perspective neither group is seeing deeply enough. The former fails to see into how the market structure has shifted to make it easier than ever for central planners to manipulate markets and the latter group fails to grasp the downstream implications of a small cadre of central planners deciding the ‘right’ prices for asset prices.
On numerous occasions we’ve covered the extent to which central banks are now both overtly and covertly propping and manipulating markets.
The main deception is caused by lowering the price of money to zero and beyond while flooding the financial markets with liquidity. This creates, as always, conditions ripe for rampant speculation and that’s happened to a greater extent than ever before in history.
Another level comes via direct participation in bond and stock markets. The Bank of Japan is the only participant left in the market for Japanese government bonds and is an increasingly large participant in buying up key ETFs for Japanese equities.
The Swiss National Bank has a gigantic equity portfolio mainly consisting of US companies such as Apple.
An as-yet-unnamed group of central banks are such heavy participants in the highly levered products offered on the CME that they have a preferred incentive buyers program. To date not one has admitted buying or selling futures or options (that I have uncovered) but enough of them are to warrant having a discounted fee structure with the CME.
by waterdog14 
