Washington's Secret Weapon or What’s up with Paulson and the Plunge Protectors?

It sounds like a loser band or at best a one-hit wonder . But someone - and we don't know who - wants us all to know that since July Henry Paulson, the new secretary of the U.S. Treasury, has spent a lot of time on a little known Washington operation called the President's Working Group on Financial Markets.

That was the major message in a prominent piece this past Monday in The Wall Street Journal. The big mystery is why do these people want us to know this? And why now? We wrote about the Working Group on Financial Markets back in June when Paulson left Wall Street powerhouse Goldman Sachs to accept the top job at Treasury.

The group was supposed to - you know - solve financial problems, although the scope of its authority and its powers were never clearly defined. The group soon became known as the Plunge Protection Team, and for those who were following its stealthy pursuits, the Working Group seemed to be using a blueprint set down by a former Federal Reserve official named Robert Heller.

The Plunge Protection Team - a. k. a. Working Group - probably remained mostly dormant during the good years. But there were sneaking suspicions that it came out of its shell a couple of times, especially after 9/11. So it's interesting that now - seemingly out of the blue and far removed from any obvious crisis - Paulson is activating the Plunge Protection Team and someone wants us to know about it.

The Journal's Monday piece started: "With just two years to make his mark, new Treasury Secretary Henry Paulson is focusing much of his attention on making American financial markets more competitive . . .

Among other things, Paulson and the Plunge Protection gang discuss the problems that might occur with hedge funds and derivatives, plus the "government's ability to respond to a financial crisis," according to a source quoted by the Wall St Journal .

Stocks have been moving steadily upward since July, when Paulson took over the Plunge Protection Team (and the Treasury). And one of the reasons could be that - as I mentioned back then - there is less risk in stocks if the government is providing a safety net. Less risk until something bad comes out of left field.and clobbers us.

Maybe this has to do with providing a safety net for the Republicans in the mid-term elections? Insuring that we sail to November without a financial mishap. You got a better idea - Email us at Geoffp7@juno.com.

http://www.nypost.com/seven/10262006/business/treasurys_paulson_plays_with_the_plunge_protectors_business_john_crudele.htm