Tag Archives: Manipulation

Might As Well Nudge, by the Zman

It’s not that easy to manipulate people. From the Zman at theburningplatform.com:

Everyone is familiar with psychological warfare, in which information is used to breakdown the moral of an enemy in wartime. It can also be used on individuals within a community in order to get them to act in a specific way. There’s also propaganda, which is an information campaign used by government to change public opinion or reinforce codes of conduct. This is no different from a marketing campaign, except the people doing it can also use force to get the attention of the audience.

Less known is the use of behavior techniques to subtly encourage or discourage behavior within a population. The idea is to change the environment so that the desired behavior feels like a natural choice. Humans are not fully rational and will make choices that are not entirely in their interests, because of things like peer pressure or assumptions about what everyone else is doing. The Chinese social credit system works on these principles to encourage compliance.

One way this is being done in English speaking countries is through the anathematizing of ideas and concepts the managerial elite wants to discourage. The coordinated and often theatrical banning of people from social media, for example. The people targeted often seem random and nonsensical, but it is not about the people, but about reinforcing an environmental variable. That is, you can be cut off from your in-line community for saying the wrong thing, so you best be careful.

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Plunge Protection Teams of the World, Unite! by Charles Hugh Smith

With the Dow having fallen almost 900 points the last two days, look for a “surprise” announcement, or at least a strong hint, next week that the Fed won’t raise the federal funds target 25 basis points next month after all. From Charles Hugh Smith at oftwominds.com:

The herd must be turned away from selling by any means available, and at this point, that means coordinated buying by all the world’s Plunge Protection Teams.

Central bankers are watching Marx’s dictum all that is solid melts into air play out in global stock markets with a terror informed by the scalding memories of 2008’s global financial meltdown.

Once the trap-door opens, there is no bottom without prompt action by the world’s Plunge Protection Teams–the plausible-deniability action heroes of the hyper-speculative status quo who leap into action when global stock markets threaten to melt down.

After half a decade of ceaseless saves, we all know the mechanics of Plunge Protection.

Since the majority of trading is now done by software programs (trading bots, algorithms, etc.), the first step is to create positive momentum so the bots will detect an “up day” and buy, buy, buy.

The easiest way to generate positive momo is to buy a truck load of S&P 500 futures in a time of low volume, where the impact will be the greatest. usually this is pre-market open.

If this fails, the next step is to send a central bank Talking Head out to discuss more quantitative easing. Announcing the central banks’ readiness to do more of what has goosed markets higher for six years will generally spark a buying frenzy, as those who have bet against central banks over the past six years have had their heads handed to them on a platter.

If this fails, grandiose but purposely vague claims of “doing whatever it takes” are issued. There is no need to actually have a plan, or to lay out a plan in public; the open-ended announcement is generally enough to reverse a trap-door decline.

If this fails, it’s now serious. The Plunge Protection Team must start buying equities. This is usually done by private proxies via dark pools or offshore accounts or by state agencies–investment funds, retirement funds, etc.

When things get very serious, the central bank can buy assets directly, and in such massive quantities that the markets are forced to respond appropriately.

If this fails, the last resort is a coordinated buying campaign by all the central banks, acting in concert. This last stand has a rallying cry: Plunge Protection Teams of the World, Unite!

Of course the PPTs of the world monitor key technical support levels, but what the PPTs are really monitoring is the dangerous sentiments of fear and panic. When the trap-door opens and the herd turns to selling, the entire six-year prop-job will crumble.

The herd must be turned away from selling by any means available, and at this point, that means coordinated buying by all the world’s Plunge Protection Teams.