The Frozen Economy & You
I hear this type of conversation amongst my struggling friends as well.
Heat or food? Gas or electricity? Medicine or mortgage payments? What to give up? What to cut back? The conversations were everywhere. In the supermarket, I heard one man tell another: “When I was a kid, you woke up, went into the bathroom, and broke up the ice in the toilet. Now my kids will have to do the same. America is moving backward.” [via Business Week]
It’s a sad state of affairs but we’re too blame, we elected socialist leeches and idiots to power. Only true capitalism can save us now.
July 16th, 2008 at 6:13 am
Sorry - socialist leeches did not create this economy - this economy was created by completely unregulated mortgage brokers/agencies and war mongers.
July 16th, 2008 at 6:37 am
Damian: The socialist leeches created an vast entitlement system and then kept robbing its revenues for the war mongers. They’re all the same.
July 16th, 2008 at 8:28 am
The only socialist leeches we need to worry about are those financial institutions which took on risk and we are now bailing out. That is true socialism. As for the entitlement system, the current issues we are not dealing with were not created by that function of government. So no, they are not the same people. 8 years of Republican rule in both the Presidency and the Congress have left this country in a sad state - not entitlements.
July 16th, 2008 at 1:56 pm
now why are you guys fighting?
you’re both on the same side.
the true owners of this world that play/buy both sides.they are the only ones in charge.
you guys are just pawns in a big game of chess”.WE HAVE THE BEST GOVERNMENT MONEY CAN BUY’, as long as reellection costs are rising into the tens of millions the pollotitions allready sold out to the special interest groups funding them.
As far as entitlements/pension funds etc. they are allready in the back pockets of hedge fund owners(the preditors of this unregulated market) that personally earn roughly 1 billion annually from naked shorting/manipulating the stock market.
HERE IS THE LATEST ON NAKED SHORTING IN THE MARKET>
Cramer on NSS, CNBC video:
http://www.cnbc.com/id/15840232?video=794250312
P.S. why are you guys fighting over spilled milk when they are buying up all the cows?, and when they buy them up, we’ll be lucky if we become the fortunate few to clean the barn. ‘THE ROAD TO SERFDOM’ ring a bell
July 16th, 2008 at 3:01 pm
Who said we were fighting?
Trusting/quoting Cramer does nothing but undermine any point you might have, but I agree we’re pawns. It’s just that we’re smaller pawns now than we were!
July 16th, 2008 at 4:24 pm
DC: We’re not fighting but quibbling over nuances. Yep, we are on a Road to Serfdom.
July 24th, 2008 at 1:50 pm
What the SEC Really Did on Short Selling
by
Chairman Christopher Cox
U.S. Securities and Exchange Commission
“Op-Ed” for the Wall Street Journal
July 24, 2008
The Federal Reserve’s decisions to offer credit to its 18 primary dealers — and to extend these credit facilities to Fannie Mae and Freddie Mac, complementing the recent Treasury proposal for authority to back their debt and buy their equity — are highly unusual. Because they break with the norm that markets should decide which firms fail and which succeed, both the Fed and Treasury proposals are intentionally limited in duration. But if policy makers want to return these firms to the discipline of the market, the lessons of the recent turmoil will have to be quickly taken to heart.
Already, heeding one important lesson, both the Securities and Exchange Commission and the Fed have strengthened liquidity and capital tests for the firms we regulate. Another central lesson is that financial institutions, which depend on confidence, are uniquely vulnerable to panic fueled by suspect information and market manipulation.
A run on a bank can take hold quickly, and can be fatal. In the wake of IndyMac’s demise and Bear Stearns’s desperate sale to JPMorgan Chase, even far-better capitalized financial firms may be threatened. What’s needed now, therefore, is reliable information for investors, and confidence that trading can be conducted without the illegal influence of manipulation that can fuel stampedes.
When an irrational panic is fueled by false rumors that investors believe must be acted on immediately — lest everyone else get out first — market integrity is threatened. In such circumstances, it is the job of market cops to provide a measure of confidence that information about public companies is accurate — and when it is not, to punish those responsible.
Who profits from intentionally false information in the marketplace? Those who are in on the scam and positioned to benefit from the predictable response of people who believe the fraudulent information to be true.
The classic “pump and dump” scheme, in which a stock is inflated through false information and then dumped on unsuspecting investors when the perpetrators flee, is one example of how this works. “Distort and short” is the same thing in reverse.
“Naked” short selling can turbocharge these “distort and short” schemes. In an ordinary short sale, one borrows a stock and sells it, with the understanding that the loan must be repaid by buying the stock in the market (hopefully at a lower price). But in an abusive naked short transaction, the seller doesn’t actually borrow the stock, and fails to deliver it to the buyer. For this reason, naked shorting can allow manipulators to force prices down far lower than would be possible in legitimate short-selling conditions.
Last week, in close consultation with the Treasury and the Fed, the SEC issued an order to further the objective of existing commission rules that restrict naked short selling. It applies to precisely those financial firms that the Fed has designated as eligible for access to its liquidity facilities — and for which the taxpayer could be on the hook.
The order carefully protects legitimate short selling in these securities. Our agency’s rules have long been supportive of short selling, which can help quickly transmit price signals in response to negative information or prospects for a company. Short selling helps prevent “irrational exuberance” and bubbles. Continued legitimate short selling in the securities of these financial firms will act, as it is supposed to, as a way for market participants to invest in the downside and to hedge other positions.
Illegitimate naked short selling is different. In the context of a potential “distort and short” campaign aimed at an otherwise sound financial institution, this kind of manipulative activity can have drastic consequences.
Eliminating the prospect of naked short selling will help assure investors that it is safe for them to participate, and that when the market declines it is not because of unseen manipulators and “distort and short” artists.
The emergency order is not a response to unbridled naked short selling — which so far has not occurred. Rather it is intended as a preventative step to help restore market confidence at a time when that is sorely needed.
When the SEC announced this order, I also made clear my intention to ask the full commission to apply operational protections against abusive naked shorting to the broader market. The scope of last week’s action is based on the Fed’s designation of those financial institutions to which our government and the taxpayers will now temporarily provide liquidity, but its rationale extends to all public companies.
Although the Commission’s order was issued under emergency authority in unusual market conditions, it is based on several years of experience and analysis. In 2004, the SEC adopted Regulation SHO to attack the problem of naked shorting. It requires broker-dealers, before they accept short sale orders or effectuate short sales in their own accounts, to first borrow the security to be shorted, or enter into a contract to borrow it.
But Regulation SHO also offers an alternative to these requirements if the broker has “reasonable grounds” to believe that the security can be borrowed. This could create opportunities for evasion of the rule’s purpose.
That has led the commission to consider simply eliminating the “reasonable grounds” alternative altogether. This is essentially what the SEC did for the financial firms for which the American taxpayer is now on the line. It is also what the commission is even now considering for the broader market.
We are also exploring other remedies to “distort and short” and naked short-selling abuses, such as the reporting of substantial short positions (akin to the long-standing requirement to disclose significant long positions). All of this comes on the heels of the agency’s recent elimination of other exceptions to Regulation SHO, and our March proposal of a new antifraud rule targeting naked short selling.
The SEC is committed to maintaining orderly securities markets. It neither can nor should direct the market’s fluctuations, up or down. Instead, the commission’s most basic role is to ensure a continued flow of liquidity to the markets from participants who are confident the game isn’t rigged against them.
Abusive naked short selling is far different from ordinary short selling, which is a healthy and necessary part of a free market. Manipulative naked short selling is one worry investors shouldn’t have.
http://www.sec.gov/news/speech/2008/spch072408cc.htm
P.S finally what cox says in the last paragraph is what everyone fighting against naked short selling has felt all this time.”COX GIVE US AN EVEN PLAYING FEILD” that’s all
July 24th, 2008 at 3:57 pm
dc: i dont have a problem with naked short selling per se, but it can be abused and rumors can undo a company’s growth in minutes. Yet, I cant bring myself to believe that this is the “fault” of the short sellers, or speculators, or whoever is in disfavor this week.
Bear Stearns should’ve collapsed, they dealt in too much leverage. IndyMac too, they dealt in subprime. If you want the reward, take the risk, but just remember that Wall Street sharks can smell blood a mile away.
July 27th, 2008 at 4:17 pm
hi tom ( here’s where it effects everyone that’s in an investing mode)
IT’S A CASE OF SHARES,SHARES WHO’S GOT THE REAL SHARES
Let’s look at voting rights to prove my point.
If a compony has shareholders vote on something, usually 65% vote.Now when the vote comes in at 20% over the existing share count in circulation, remembering that only 65% usually return a vote,that would equal 85% over the float or 85% naked short shares in the stock.
Now if you know that 100% of the pinks ,OTC,/peny stocks have been manipulated down through naked shorting, you’re begining to see the big picture.
So now we are getting an impression that this form of manipulation(naked short selling) has crept into the main market as a normal way to bear raid and beat down stock prices.
I am of the opinion that as much as 80% of the major stocks have at one time or another been harassed by naked short selling.
“SO HOW MUCH OF A PERCENTAGE,OFA NAKED SHORT RESIDUE IS STILL CLINGING ON TO THESE STOCKS, MAYBE WE SHOULD TAKE A VOTE TO FIND OUT”
An American Hero and an honest man tells it like it is:
http://cosmos.bcst.yahoo.com/up/player/popup/?rn=289004&cl=8984150&src=finance&ch=1316259
P.S.>naked short selling has turned our stock market into a preditorial cesspool where no ones money is safe,and accumilating a stock for the future, with retirement in mind becomes way to risky.YOU DON’T KNOW IF YOU SPENT YOUR HARD EARNED MONEY ON REAL SHARES OR JUST SOME AIR SHARES FLOATING IN CYBER SPACE.
July 29th, 2008 at 5:03 am
dc: I stay far away from pink sheets or penny stocks.
July 29th, 2008 at 2:00 pm
an artical on rico to fight naked short selling
Illegal Short Sellers May Face RICO Indictments
by: R.J. Chopin posted on: July 29, 2008
RICO, Racketeering Influenced Corruption Organizations Act, the law Rudy Guiliani used to bring down Michael Milken, and other Wall Street crooks, could be revisited in the SEC’s struggle to clean up Wall Street’s growing threat to the financial markets.
The SEC’s crackdown against illegal naked short selling and rumor-mongering resulted in more than 50 hedge funds being slapped with subpoenas last week, according to the Wall Street Journal. Conspiracy theorist and CEO of Overstock.com (OSTK), Patrick Byrne, has embarked on a crusade to expose the nefarious hedge funds that practice illegal short selling. Byrne’s web site, Deep Capture.com, has compiled a plethora of facts documenting, names, dates, times and videos of the players and their schemes.
Mark Mitchell, of DeepCapture.com, believes there exist a “hedge fund-orchestrated campaign to cover-up the crime of naked short selling.” Depending on how deep the SEC probes, and what insidious facts they discover, we could see hedge fund managers, traders, and other employees facing scandalous, unprecedented charges under the infamous racketeering law, RICO. There is growing pressure for whistle-blowers to sound off or risk becoming the next scapegoat.
Clusterstock.com, reported, “the SEC is demanding both trading records and email correspondences” from subpoenaed firms. The inclusion of cell phone and text messaging records will undoubtedly be scrutinized. Concurrently, the NYSE Regulation Inc. is also investigating how some of its largest firms comply with false and misleading rumors that could undermine a stock’s price. This is going to intensify.
Motley Fool, published an article on March 24, 2008, titled “The Naked Truth on Illegal Shorting,” in which 100% of a company’s shares were purchased by one individual, and were not available for shorting. Nevertheless, 60 million phantom shares were traded, according to owner. Subsequently, he filed a SEC 13-D compliant form.
Dick Fuld, CEO of Lehman Brothers (LEH), told market regulators that he has information that short-selling hedge funds colluded to bring down Bear Sterns (BSC). If Fulds’s “information” is of evidentiary value, these hedge fund managers, and their cast of cohorts, could find themselves behind bars.
If the SEC diligently investigates the facts, we could see RICO indictments against illegal short sellers as early as Labor Day. Anyone charged under the RICO statue, even if they are found “not guilty,” will become permanently damaged.
After observing the demise of Fannie Mae (FNM), and Freddie Mac (FRE) last week, it is expedient that the SEC move quickly to abolish the practice of naked short selling for all stocks. Short selling should only be allowed after the short seller has successfully borrowed the shares. The practice of selling shares that cannot be borrowed is a crime!
P.S.>”LET’S RICO THE CROOKS”
this would be a good idea especially if that hedgefund’s M.O. was to try to kill off small companies(the future of the american economy) and then not cancel their naked possition so that they would’nt have to pay taxes.( though the statute of limitations may apply in some cases, it seems fair to me) But will the SEC look back into passed activity, and how far back is the question?
BUT, AT LEAST, THE WORD SHOULD GET OUT ON THE STRRET THAT IF YOU KILL, WE GET RICO AFTER YOU, AND HE’S BRINGING THREE TIMES THE WOOP AZZ.
.
August 7th, 2008 at 7:15 am
hi tom (and anyone interested)
Sometime in 2006 Utah at the state level,(not at the federal leve) decided that it would start to enforce the anti-naked short selling regulations that were on the books since the 1930’s,and since the SEC was missing in action, some of us that are against this type of practice (naked short selling) thought we had ourselves a savior, if only at the state level.We thought that this could be the begining to a some type of protection for the little fledgling companies that were being killed of by naked shorting.
Then oklahoma decided to push forward a bill through it’s legislature to the same affect.
We envisioned companies reregistering themselves over to Utah or Oklahoma in droves.Forming lines around the block HMMM.NOT QUITE
Utah decided to aviod the issue all together and not even bring up the matter at it’s state meetings.(All we can assume from that is that the wall street lobbyists got to it.)
Oklahoma did manage to pass anti-naked short selling legislation on 3/13/2007.
So some small companies thought that maybe Oklahoma might be the place where they may finally have their greivances heard in court ,but the wheels of justice move very,very slowly,especially when you go up against the wall street mob,lawyered up to their teeth. It didn’t amount to anything just some drawn out cases with hardly anything to show for it.
BUT THE FIGHT STILL CONTINUES SO HERE IS THE LATEST ON STATES TAKING SOME ACTION AGAINST NAKED SHORTING
American Entrepreneurs for Securities Reform
An organization who intend to file initiatives in 19 states to immediately prevent NSS market wide if the SEC does not act accordingly. View the You Tube video, read the letter by Senator Johnson, and read the article out on marketwatch.
http://investigatethesec.com/drupal-5.5/node/357
some more info
To Everyone!!
http://www.voteyes9.com/letter.pdf
http://www.youtube.com/user/securitiesreform
P.S.> oh, the things the anti-naked shorting crowd has to do in order for the small companies and small investors to get an even break.I just hope the SEC follows thru and expands it’s pre-borrow rule to the whole market.
Except for some T-3 stragglers it should elliminate the current naked shorting problem for the most part.
“IF YOU DON’T PRE- BORROW YOU DON’T GET TO PLAY” SOUNDS OK !
also feels good too
August 11th, 2008 at 9:03 am
to anyone interested
from another board
The word is certainly getting out:
Hedge funds alone in fight against short-selling curb
SEC expected to shore up protective measure
By Sara Hansard
August 11, 2008 Post a Comment Recommend
The hedge fund industry faces growing opposition to its efforts to hold back restrictions on naked short selling.
Among the 300 investor comments filed over the past month with the Securities and Exchange Commission about naked short selling, most voiced opposition to the abusive version of it.
Adding to the cry against naked short selling is a new proposal that the SEC is slated to release this week protecting publicly traded companies from abusive naked short selling.
What’s more, South Dakota voters will decide in November whether to approve an initiative that the state’s securities director says would ban all short selling. The group sponsoring that action promises to get similar initiatives on ballots in 18 other states if the SEC doesn’t put more restrictions on short sales.
The hedge fund industry is fighting restrictions on naked short selling, in which securities are sold short without borrowing the stock first. Abusive naked short selling is being blamed for depressing stock prices in financial services stocks as well as stock prices for other companies.
The practice could have played a role in the demise of The Bear Stearns Cos. Inc. of New York, which was taken over by JPMorgan Chase & Co. of New York in May.
The pressure to take protective action in the wake of these incidents is mounting. SEC emergency orders enacted July 15 require short sellers of stock in 19 major financial services firms to arrange to borrow the securities before the transaction so that buyers will receive the stock they purchase on time. Those orders expire tomorrow and will not be renewed. However, the new SEC rule will address the issue.
Treasury Secretary Henry Paulson, Federal Reserve Board Chairman Ben Bernanke and Robert Greifeld, chief executive of The Nasdaq Stock Market Inc. of New York, as well as the Financial Services Roundtable and the U.S. Chamber of Commerce, both of Washington, have all indicated support for the SEC’s efforts to impose more restrictions on the practice.
Many financial firms have joined in calling on the SEC to take more-aggressive action to rein in abuses. The emergency order ought to be made permanent, and it should be extended to all publicly traded companies, said registered representative Keith Stucker, who was one of the commenters.
“Naked short selling has been abusing the markets for a decade,” said Mr. Stucker, senior vice president and financial consultant in the Indianapolis office of RBC Wealth Management of Minneapolis. He manages about $100 million.
The proliferation of hedge funds during that time has contributed to the problem, Mr. Stucker said.
“When you couple naked short selling with the repeal of the uptick rule a year ago, it was like giving the keys to the henhouse to all of these hedge funds or sovereign wealth funds that wanted to take advantage of manipulation,” he said.
The uptick rule, repealed by the SEC in 2007, required traders to wait for a stock’s price to go up before it could be sold short.
In a July 21 letter filed with the SEC by the Managed Funds Association and the Coalition of Private Investment Companies, both in Washington, the two hedge fund groups urged the SEC not to extend the emergency order, which they said “will have the effect of discouraging legitimate short sales.”
Current rules say short sellers only have to locate stock before they short, according to Peter Chepucavage, general counsel of Plexus Consulting Group LLC in Washington, which operates The International Association of Small Broker Dealers and Advisors. He is a commenter.
“That means you only have to look at a list” to locate a stock, Mr. Chepucavage said. “If the locate fails, you’re better off. That leads to opportunistic short selling. If I can make a ton of money without the borrowing costs, that’s the American way.”
So far, the Securities Industry and Finan cial Markets Association has been silent on the SEC’s emergency order, which ends this week. SIFMA, which has offices in New York and Washington, is “first and foremost focused on … implementation issues,” said spokesman Travis Larson.
“We’re now in the process of gathering data about how that [July 15 emergency] order went forward … When we have those facts in hand, we will … work on … a consensus position,” Mr Larson said.
In 2006, SIFMA sued Utah over a law passed by the state’s legislature that would have imposed severe penalties on brokerage firms that failed to deliver stock in a short sale. The Utah Legislature repealed the law after SIFMA won a preliminary injunction against it in a federal court in that state.
But SIFMA may face an even more difficult situation this year in South Dakota, where a measure is on the ballot in November that would effectively ban all short selling, according to that state’s securities director, Gail Sheppick, whose office is in Pierre.
The initiative would ban selling securities not owned by the seller, or securities that a seller did not have a contract to purchase, said Mr. Sheppick, who opposes it. “It sounds like a simple resolutions, but it’s not when you’re trying to keep the markets liquid,” he said. If the initiative is passed, it may be overturned in court for violating the commerce clause of the Constitution, Mr. Sheppick said. “But meanwhile, it will create a lot of turmoil in the market here.”
Los Angeles-based American Entrepreneurs for Securities Re-form, which sponsored the South Dakota initiative, last week promised to organize similar campaigns in 18 other states if the SEC does not move to restrict naked short selling permanently for all companies.
The organization is backed by Overstock.com Inc., a Salt Lake City online retailer that has waged a campaign against naked short selling for several years, saying the practice has been used by hedge funds to depress its own stock. “Our goal is to stop abusive naked short selling,” said Overstock.com president Jonathan Johnson, a commenter. “Before someone short-sells, they should have to borrow the stock.”
Other companies also believe they have been harmed by naked short selling. One is Monroe Bank and Trust, a unit of MBT Financial Corp. of Monroe, Mich. The community bank’s trust department manages $750 million. “A short sale as an investment strategy is appropriate,” said Herb Lock, senior vice president and chief investment officer, and a commenter. “The concern is the naked short sale and whether there is an effort to manipulate price.”
The SEC needs to act as quickly as possible to make its emergency order permanent for all stocks, said Wayne Jett, managing principal and chief economist with Classical Capital LLC of San Marino, Calif., which manages about $3 million. He is one of the commenters.
Naked short selling has allowed short-sellers “to create stocks that are unregistered and sell them as electronic entries and get the money for it,” Mr. Jett said.
E-mail Sara Hansard at shansard@investmentnews.com.
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20080811/REG/827522981
P.S.> A LITTLE CORRECTION(to my previous post) IN PARAGRAPH 8 FROM THE BOTTOM IN THIS ARTICAL, ABOUT UTAH’S PASSING A REGULATION IN 2006
the Utah law did pass but then was repealed
(ahhh>that’s ok by not hearing about anything passing saved me a few brain cells by not drinking an alcoholic bevarage in ceiebration)
August 14th, 2008 at 4:14 am
to anyone interested
the latest info on naked shorting
Naked shorting will be a thing of the past imho! (if the SEC does it’s job)
http://www.cnbc.com/id/15840232?video=823077283&play=1
P.S.> finally they agree toward the end that naked shorting should be eliminated completely and the pre-borrow should be extended to the rest of the market.
“HIP,HIP, HOORAY, CHALK ONE UP FOR THE GOOD GUYS”
August 21st, 2008 at 5:54 am
dc: i’m pretty sure it will help stabilize the market! Now if we can only get rid of the Federal Reserve then I’d be really happy!
August 22nd, 2008 at 1:43 pm
hi tom
The only thing i can says about the Federal Reserve is that, making 6%(on a loan to the government) by just putting a few digits with endless amount of zero’s behind them into the governments account.
” WOW WHAT A NICE RACKET” , and they don’t even have to print it,and you know who guarantee’s the payment for it, THE TAX PAYING PUBLIC through income taxes.
CHECK OUT> Aaron russo’s AMERICA - FREEDOM TO FASCISM
P.S.>dumbing down the masses is the key, to keep the process going.
Though most people that are aware still pay income taxes so that they won’t be hassled and to safeguaed their net worth, which is slowly being eaten up by infaltion.
“THERE IS NO ESCAPING SERFDOM IF THE INTERNATIONAL BANKERS ARE INVOLVED IN SOCIAL ENGENEERING”