Is The Plunge Protection Team Manipulating Markets?

The President's Working Group on Financial Markets (PWG), also known as The Plunge Protection Team, released a statement in Oct 2008. It states:

The diversity of institutions and markets under stress, and the magnitude and complexity of the adjustment underway, requires that the tools available to policy makers, regulators and supervisors be used in forceful and coordinated ways across regulatory and supervisory agencies in the United States and throughout the world. This will involve moving with substantial force on a number of fronts.

Wikipedia states:

Financial writers for British newspapers The Observer and The Daily Telegraph, along with U.S. Congressman Ron Paul and writers Kevin Phillips (who claims “no personal firsthand knowledge” and is “not interested in becoming a conspiracy investigator”) [7] and John Crudele,[8] have charged the Working Group with going beyond their legal mandate. Claims about the Working Group, which are labeled conspiracy theories by some writers, generally include that it is an orchestrated mechanism that attempts to manipulate U.S. stock markets in the event of a market crash by using government funds to buy stocks, or other instruments such as stock index futures—acts which are forbidden by law. In August 2005, Sprott Asset Management released a report that argued that there is little doubt that the PPT intervened to protect the stock market.[9] However, these articles usually refer to the Working Group using moral suasion to attempt to convince banks to buy stock index futures. [10]

Get Rick Slick posted an article titled "Plunge Protection Team Alive and Well." The site included this video clip from Bloomberg allowing readers to infer that the Plunge Protection Team was the invisible hand behind our recently buoyed financial markets.



Here's another guy making the assertion that the Plunge Protection Team intervened on Oct 10 and Oct 28, 2008.



You can find more videos related to the Plunge Protection Team at YouTube. To date, most of the assertions about the Plunge Protection Team manipulating the stock markets has been categorized as conspiracy theories. I find interesting one assertion that the Plunge Protection Team may be manipulating Goldman Sachs to make trades on behalf of the Plunge Protection Team (source).

I remain interested and cautiously skeptical of assertions about the Plunge Protection Team. I believe that Government has a need to manipulate financial markets, but I haven't yet been able to find a high level member of the Plunge Protection Team inadvertently disclosing enough info to confirm the alleged "conspiracy ideas."

Just Got a Utility Discount and Free Rent From my Apartment Complex

We've been living in an apartment since arriving in Washington state in August 2008. We decided to rent since real estate is expensive up here and because we'll only be here for about two years.

We like our apartment and have paid on time for 11 months. Three weeks ago I got a surprise when I noticed a letter attached to our door. It notified us that if we renewed our 12 month lease early we'd be able to get one month free rent and 10% off our water & trash bill. We sat on the offer for two weeks because my wife was a bit interested in moving closer to her job. Eventually, she decided that it was a good deal and we renewed the lease.

This is the third time i've lived in an apartment as an adult. The first time we broke the lease after living there for just 3 months (we found a house we liked). The second time I was in grad school.

My advice to those living in or considering an apartment:

(1.) If you are already residing in an apartment complex, check the apartment's website for current rates. I found that the rate for our floor plan actually decreased by $15 per month. Had I not looked at the website, I would not have been able to renegotiate a lower rate.

(2.) Some apartment complexes are actually willing to negotiate your lease payment. They would rather minimize the # of months an apartment is vacant and will sometimes entertain rates that are below what's advertised on their website.

(3.) If you're moving into an apartment, check the cable jack before calling to get your cable turned on. In one of three apartments I've lived in, the cable jack was already hot. The cable company was a bit lazy and never turned off the cable from the prior tenant. Had I known this, I would have got free cable until they figured out their error. This was in 2001. I'm not sure if cable companies have gotten any better with service terminations.

Net Worth Up $8k in June

Our household net worth is up $8k for the month of June on $9k in take home pay. We didn't lose any significant money in the stock market. We had no maintenance expenses for our vehicles and $300 in maintenance for one of our three investment properties. The $8k gain in our net worth can be attributed to saved income and equity gains in our rental properties.

Recommended Personal Finance Articles From: Free Money Finance, My Two Dollars, Financial Armageddon, Money Smart Life, and Others

Here's some recommended articles from those sites that share links with Plugged in Finance. I hope they are of use to you.

Free Money Finance - "Wealth Without Wall Street" <- Great article!

My Two Dollars - "What Your Moving Company Won’t Tell You Until You Sign The Paperwork"

Financial Armageddon - "Scenes From a Downturn"

Money Smart Life - "Start A Side Business in The Lazy Days of Summer"

Military Finance Network - "Roth TSP May Be Further Off Than Anticipated"

Fund My Mutual Fund - "Bloomberg: Correlation Among Asset Classes Highest Ever"

Financial Fitness - "Brought LR2 Home Yesterday" Highlights use of "truecar.com"

What Your Home Will be Worth in 2012

Yahoo Real Estate had a good article earlier this week on 10 real estate markets. Yahoo worked with FISERV to analyze real estate data across the U.S. and predicts that real estate prices will start to stabilize around the fourth quarter of 2011 when prices will inch up slightly.

My take, watch unemployment numbers. Our economy is already spiraling lower than what was predicted by the White House. The White House predicted that the peak unemployment rate would be 8% if its Stimulus package was passed. Since unemployment is now at 9.4%, we know that the White House estimates are off by at least 17.5% [(9.4-8)/8 * 100 = 17.5].

Foreclosure activity is also important. The moratorium on foreclosure activity ended in March. In the last three months, there were almost one-million foreclosure filings. For the month of May alone, foreclosure filings were up 18% from May 2008. In May, one if every 398 households got a foreclosure notice. (Source: Moneynews)

Finally, consider the months of unsold pre-existing home inventory on hand. The real estate market will continue to be a sellers market until the months of unsold pre-existing homes on the market drops to six months. Our nation's ability to get to a six month inventory of unsold pre-existing homes depends greatly on trends in new home construction. If builders continue to add new homes to the market, pre-existing unsold home inventory will continue to remain higher than historical averages.

Enough about my opinion, here is what Yahoo Real Estate estimates for 10 real estate markets:

1. New York
Metro: New York-White Plains-Wayne (N.Y.-N.J.)
What a Home Will Be Worth in 2012: $343,937
Q4 2008 price: $440,000
Projected price change by MSA: -21.8%
Projected price change by state: -15.6%

One of the metros with the highest housing prices in the nation, the New York-White Plains-Wayne area is projected to have the third-largest drop in the country, behind Los Angeles and Tampa. Analysts predict that 2009 and 2010 will be the worst years, and then home prices will stabilize. Of particular concern is the impact that the crisis in the financial industry, one of the area's largest employers, has had on the housing market. From banker to back-office staff, thousands lost their jobs or saw their incomes slashed. As Wall Street strengthens, so will real estate prices.

2. California
Metro: Los Angeles-Long Beach-Glendale
What a Home Will Be Worth in 2012: $253,328
Q4 2008 price: $350,000
Projected price change by MSA: -27.6%
Projected price change by state: -13.2%

Los Angeles, best known as the home of Hollywood, is home to excellent universities such as the University of Southern California and large corporations such as aerospace contractor Northrop Grumman. Southern California has been particularly damaged by the downturn in the housing market and home values are expected to remain soft.

3. Illinois
Metro: Chicago-Naperville-Joliet
What a Home Will Be Worth in 2012: $248,136
Q4 2008 price: $247,000
Projected price change by MSA: +0.5%
Projected price change by state: +0.6%

Chicago, hometown of President Barack Obama, is the third-largest city in the U.S. and a financial center. The city is famous for its architecture, museums, nightlife, and deep-dish pizza. The area's top employers include Jewel-Osco supermarkets, United Airlines, and J.P. Morgan.

4. Pennsylvania
Metro: Philadelphia
What a Home Will Be Worth in 2012: $171,347
Q4 2008 price: $195,000
Projected price change by MSA: -12.1%
Projected price change by state: -3.6%

This year, prices in the nation's fifth-largest metropolitan area are projected to fall 11.6%. Housing prices in the suburbs remain expensive but have still dropped in price. Real estate in Center City also has seen significant declines but will begin to turn around in 2011.

5. Texas
Metro: Houston-Sugar Land-Baytown
What a Home Will Be Worth in 2012: $160,471
Q4 2008 price: $160,000
Projected price change by MSA: 0.3%
Projected price change by state: -0.1%

Texas in general and Houston in particular have been spared the worst of the downturn, thanks in large part to the energy industry. The sixth-largest metropolitan area in the country will hold steady over the next four years. Prices are expected to dip a bit in 2009 and 2010, but regain ground by 2012.

6. Georgia
Metro: Atlanta-Sandy Springs-Marietta
What a Home Will Be Worth in 2012: $182,199
Q4 2008 price: $182,000
Projected price change by MSA*: +0.1%
Projected price change by state: +0.3%

Atlanta, the capital of Georgia, has seen its home price declines slow. Prices dropped about 1% in March from to the previous month but were down 16% from a year earlier. The Atlanta metro is home to many of the nation's largest companies including Delta Airlines, CNN, Coca-Cola, and Home Depot.

7. District of Columbia
Metro: Washington-Arlington-Alexandria
What a Home Will Be Worth in 2012: $306,398
Q4 2008 price: $330,000
Projected price change by MSA: -7.2%
Projected price change by state: -11.5%

The DC area is one of the nation's few economic bright spots and has been somewhat buffered from the recession because of its government and defense contractor jobs. Another bright spot is its popular tourist attractions, which bring in millions of visitors every year to fill its museums, hotels, and restaurants. However, home prices will remain down through 2010 and will come back in 2011.

8. Massachusetts
Metro: Boston-Quincy
What a Home Will Be Worth in 2012: $294,741
Q4 2008 price: $320,000
Projected price change by MSA: -7.9%
Projected price change by state: -3.2%

Boston is a historic city with large hospitals and world-class universities such as Harvard and the Massachusetts Institute of Technology. But while education and health services have been strong, the construction, leisure, financial, and transportation industries have all taken a hit. Home prices will begin to normalize in 2011 and be up more than 7% year-over-year in 2012.

9. Arizona
Metro: Phoenix-Mesa-Scottsdale
What a Home Will Be Worth in 2012: $141,859
Q4 2008 price: $169,000
Projected price change by MSA: -16.1%
Projected price change by state: -17.2%

Phoenix-Mesa-Scottsdale is one of the worst-hit housing markets in the country. Retirees, empty-nesters, and others flocked to the area during the boom for its warm weather, relative affordability, and recreational opportunities. And so did builders. Many of the new homes built during the boom have since been repossessed.

10. Washington
Metro: Seattle-Bellevue-Everett
What a Home Will Be Worth in 2012: $413,966
Q4 2008 price: $395,000
Projected price change by MSA: +4.8%
Projected price change by state: +5.4%

Relatively protected by the presence of tech giant Microsoft and airplane maker Boeing, after a nearly 10% drop in 2008, analysts project an 8.7% decrease this year, followed by gains. (Source: Yahoo Real Estate)

Something I Never Thought I Would See on The White House's Website

This isn't personal finance related but you gotta love this hokie video of the President dunking and egging kids to dunk his Senior White House Staff.

Numbers on Welfare See Sharp Increase Year-Over-Year (OR +27.2%, SC +23.1%, WA +18.3%, CO +16%, MD +14.2%...)

Just read a good WSJ article discussing the nationwide increases seen in the number of welfare recipients.

Highlights:

* Twenty-three of the thirty largest states have seen an annual increase in welfare case loads. The biggest increases are generally found in the states with the highest unemployment rates.

* Welfare cases peaked at above 5 million in 1995. In Sep 2008, most recent date on record, the number of welfare cases were 1.6 million.

* The number of food stamp recipients has increased over the last year at a greater rate than welfare recipients. The criteria to qualify for food stamps is easier than qualifying for welfare. In general, people with an income less than $2297 per month can qualify for food stamps. Additional details on food stamp programs can be found at the US Department of Agriculture's Supplemental Nutrition Assistance Program (SNAP) site.

* Average monthly welfare benefit in 2006 was $372 (Source: Sarah Murray)

Annual shift in welfare usage among top 30 most populous states (Source).

Cash For Clunkers: Short AP Video Describing Program and How to Qualify

I despise government bail outs. But, they are news and if you can take advantage of them you must. If you don't gain from them out spite, you're a double loser in that you get nothing out of them now and you pay higher taxes in the future to cover the cost.

Hey government, why doesn't my 27 mpg 1998 Acura qualify too? I'd be happy using the credit for a 37 mpg or more car! I guess Congress didn't want owners of cars like mine to qualify because our subsequent purchase might be less profitable to the auto manufactures.

Here's the video:



Those who qualify for the cash for clunkers incentive may have to move fast. I hear there is only $1 billion reserved for the program.

Treasury Department Issues Emergency Recall of All US Dollars (Hoax - Video)

Don't like our spiraling national debt? Here's another good video for comic relief.


Treasury Department Issues Emergency Recall Of All US Dollars

US to Trade Gold Reserves for Cash via Cash for Gold (Hoax)

Thanks to the Calculated Risk for this funny video.


US To Trade Gold Reserves For Cash Through Cash4Gold.com

I Finally Established a Twitter Account

I'm typically not an individual to join faddish social networking sites. I've held back from joining Facebook, Myspace and others.

But, I decided to join Twitter because it seems like it offers a revolutionary shift in social networking. This week I have seen the viability and importance of Twitter demonstrated on a global scale with the Iranian election demonstrations... So, I got off my butt and joined.

My profile can be found here.

I already set up my account to follow other personal finance writers who share links with Plugged in Finance. I'm looking forward to networking with others who share my interests in the future.

My Largest Dividend Reinvestment Plan (DRIP): Johnson & Johnson (JNJ)

I have carried my Johnson & Johnson (JNJ) dividend reinvestment plan since 2005. While the stock market has seen tumultuous times, I haven't in my JNJ position. Factoring in dividends, I have lost just 6% of my investment compared with an approximate 19% loss I would have experienced if I invested in the S&P 500.

JNJ is my largest DRIP. I bought it originally through Equiserve.com (since taken over by Computershare.com). I was able to establish my JNJ DRIP without ever using a broker. Subsequent cash and dividend investments in JNJ are not charged any fees. Only reoccurring investments are charged a $1 fee.

CBS Marketwatch seems to like JNJ also. Here's a recent Marketwatch video that emphasizes that JNJ may be a "Buy" now.




Morningstar details on JNJ:

Morningstar Rating: 5 stars
Economic Moat: Wide
Last Price (COB Fri, 19 Jun): $56.09
Consider Buying: $64
Fair Value: $80
Consider Selling: $100

JNJ is selling 12.4% below Morningstar's consider buying price.

If you are interested in establishing a DRIP in JNJ check out Computershare for further details.