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MORAL HAZARD AND THE US STOCK MARKET: ANALYSING THE `GREENSPAN PUT' - Miller - - The Economic Journal - Wiley Online Library

The new report is titled "Move Over, Adam Smith: The Visible Hand of Uncle Sam," and has been published by Sprott Asset Management of Toronto. It was written by the firm's president, John P. Embry, and his assistant, Andrew Hepburn, and concludes that the U. But some of these reports have been circulated by the Gold Anti-Trust Action Committee over the years.

Moral Hazard and the US Stockmarket: Analyzing the "Greenspan Put"

The Sprott report does not maintain that the government should never intervene in the stock market; it recognizes that certain emergencies may argue strongly for temporary intervention, such as the stock market crash and the terrorist attacks of September But, the Sprott report notes, frequent surreptitious intervention, conducted through intermediaries, the government's favored financial houses in New York, gives those intermediaries enormous advantages over ordinary investors.

Frequent intervention, the Sprott report adds also makes it impossible to distinguish between national emergencies and political expediency. The Sprott report concludes: Too much credible information exists to deny this. Yet virtually no one ever mentions government intervention publicly, preferring instead to moral hazard and the u s stock market as if such activities have never taken place and never would.

These markets have been interfered with on euro exchange rates today at marks and spencer occasions. Our primary concern is that what apparently started as a stopgap measure may have morphed into a serious moral hazard situation, with market manipulation an endemic feature of the U.

In many respects, for instance, the apparent rescue after the crash and the planned intervention in the wake of September 11 were very defensible. Administered in extremely small doses and with the most stringent safeguards and transparency, market stabilization could be justified. Whether they have been indemnified against potential losses or simply made privy to non-public government policy, the major Wall Street firms evidently responsible for preventing plunges no longer must compete on anywhere near a level playing field.

It is most unfair that the immensely powerful have been further ensconced in their perched positions and thus effectively insulated from the competitive market forces ostensibly present in our society. This has tangible ramifications. By not informing the public, successive U. In this regard, the line between national necessity and political expediency has no doubt been perilously blurred.

The time for such a public discussion is long overdue. In accordance with Title 17 U.

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