Moral Outrage
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US stock market rigged

The stock market is rigged. Under former Treasury Secretary Hank Paulson, confidential government information was regularly leaked to select people on Wall Street.

The Post got hold of Paulson’s telephone records back in 2009. And the phone logs show that Paulson, the former head of Goldman Sachs, regularly spoke with influential people on Wall Street with whom he shouldn’t have been communicating.

Among his regular phone buds was Lloyd Blankfein, who, for example, spoke six times with Paulson on Sept. 18, 2008. That was a day of great market turmoil and — while there is no way of knowing what the two men spoke about — the calls did coincide with a major turnaround in stock prices. That was just one example.

There were many recipients of Paulson’s calls. And the conversations went on for years and were especially frequent when Washington needed a friend on Wall Street.

Bloomberg Markets magazine led last week with a story headlined, “How Paulson Gave Hedge Funds Advance Word.” It addresses the morning of July 21, 2008 — a time when both Fannie Mae and Freddie Mac, government-sponsored organizations that buy most of the nation’s residential mortgages, were in serious trouble.

Paulson met that same day with hedge-fund managers at the office of Eton Park Capital Management. “Around the conference table were a dozen or so hedge-fund managers and other Wall Street executives — at least five of them alumni of Goldman Sachs Group Inc.”

Quoting a fund manager at that Eton Park meeting, “After a perfunctory discussion of the market turmoil . . . the secretary [Paulson] went on to describe a possible scenario for placing Fannie and Freddie into ‘conservatorship’.”

Paulson explained further how the publicly traded stock of both companies would be wiped out under the move. By giving confidential information to a roomful of traders, Paulson had to understand he’d influence the price of Fannie and Freddie stock and, by extension, the whole market. He’d also be giving the people receiving that information a chance to cheat — to rob public investors who weren’t lucky enough to be invited to such meetings.

All an investigator — not to mention a prosecutor — would have to do is check the trading records of the firms on the receiving end of Paulson’s chats to determine if there was any suspicious activity. And, guaranteed, they’d find it.

And that brings me to last week. According to other journalists’ reports, the Federal Reserve voted on Monday, Nov. 28, to approve a financial bailout for Europe using our dollars. That’s the same day that the stock market staged a strong rally, which turned out to be only a preliminary event to the 400-plus point surge the Dow would have two days later — after the rest of us found out about the European bailout.

[Excerpts from New York Post]

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