Blog
|
|
Sep
17
Written by:
bobo
9/17/2008 4:03 AM
UPDATE: See the report at this link offering substantial evidence that FNM and FRE were illegally naked shorted into the ground. This is data that the SEC has got to have knowledge of, and is yet further proof that they are as compromised as a Hanoi streetwalker.
--------------------------------------
What I have always loved about science, is that it is falsifiable - you can posit a theory, and then test it with all available data, and if it fails to stand up, it is falsified. Nothing is sacred, and even long revered theories are subject to the test - witness special and general relativity, or Newton's laws modified when they break down at the sub-atomic level.
Metaphysics, on the other hand, is non-falsifiable. No test can disprove a metaphysical theory. For instance, a metaphysical theory might be that an evil all powerful alien overlord is controlling all events in the universe simply to make my life miserable. There's no way to disprove that. It is metaphysics.
So, it is equipped with the sharp razor of logic and the scientific method, that we can test my long-advanced theory that the SEC is bent as a silly straw.
The latest bit of data comes after a near decade of the SEC "studying" naked short selling, and even as my predicted meltdown of the markets happens in slow motion. The new data is the supposedly tough enforcement rules propagated today by the SEC, which can be viewed here.
Now, those of my readers who have followed along with my blog over the last half a decade or so, have seen my philosophy change from one of, "The SEC doesn't know what it is doing" to "The SEC is as crooked as a wino's walk." This theory has proved to be 100% useful in predicting how the SEC deals with the swindlers and fraudsters who are even now plunging the nation into a financial meltdown from which it will never recover. The theory basically calls for the SEC to pretend to act in a meaningful manner, while actually changing little to nothing for the cheats and predators.
The latest rule changes, in response to massive destruction in the markets of virtually any and all companies that can be destroyed, is completely consistent with my theory.
Basically, it establishes a rule that sternly deals with failure to deliver shares at T+3 with.......a further admonishment to not naked short. As in, the penalty for robbing a liquor store is........now you REALLY can't rob any more liquor stores!
It also failed to reinstate the uptick rule, which was somewhat effective in curbing unbridled bear raids. Even Cramer correctly understands that dismantling safeguards established after the last era of bear raids can't end well. Human nature hasn't changed, and predators certainly haven't, in the last 75 years. We deregulated the banking business so that investment banks could intermingle with traditional banking, and that caused much of the current ugliness we are seeing on the banking side. We eliminated uptick rules, and simply don't enforce the federal securities laws requiring timely delivery, so there is no obstacle for manipulators to run buck wild with the US market system. We allowed our press to be co-opted so they paint whatever picture the highest bidder wants painted, thus the rank and file are being blind-sided as their legacy and savings are systematically stolen and rendered worthless. We changed the regulations on derivatives, enabling the creation of the current global meltdown scenario. None of this was accidental. It was all done for the love of money.
What they could have done is enforced 15C6-1 by requiring a mandatory pre-borrow prior to short selling, with a penalty of immediate buy-in at T+3 for undelivered shares. That would have placed a financial penalty squarely upon the manipulative stock cheat. But my theory says that would never happen, as the SEC essentially works on behalf of the stock cheats. And the test of the usefulness of my theory once again shows it to be correct. There is no hard pre-borrow required, so the cheats can still claim to have located shares using the same shares multiple time, and there is no meaningful immediate penalty - worst case, months or years after the fact, an audit would reveal that the cheat indeed bitch slapped the market like an angry pimp, and made a fortune doing so at the direct expense of the nation....and the money is long gone. So there is no dis-incentive for the cheat. That's next year's problem. This year, daddy needs a new gulfstream. And he's gonna git it.
They finally eliminated the market maker exception, which is positive, however the lack of meaningful penalties for failing to deliver simply means that the cheats need to change tactics, not outcomes.
So a rule with the appearance of change, that does literally nothing to stop the carnage. Completely consistent with my theory.
I have some predictions now for the next 4 months based upon my theory, and the ensuing catastrophe it foresees. I see more massive bailouts required as the NSS crew systematically destroys anything that can be taken down. I see significant bank failures. I see the FDIC running out of money shortly. I see the dollar continuing to be artificially supported until after the election, at which point painting a picture of a strong currency will be unnecessary to get re-elected, and then it will go into free-fall against most commodities and other first world currencies. You can't increase the national debt by trillions and trillions, with the same GNP, and not have the currency used as bottom-wipe by the rest of the world.
Much of this could have been prevented by ending NSS with tough real rules. If you can't destroy the market cap of a financial firm, it has time to structure workouts, and can raise money and continue to function, and much of the financial nuclear winter can be avoided. But that isn't what happened. Instead, the tactic that has created a global financial panic over the speed with which the mighty can fail remains virtually unchecked by the Commission. Bluntly, the SEC behaved as any crooked cop would, which is to put on a show of trying to effect change, while studiously avoiding the only and obvious way to do so.
RIP, American experiment. The country got sold out so 200 rich twats could become billionaires. And it will never recover, IMO.
And that's the tame version.
Copyright ©2008 Bob O'Brien
Tags:
32 comment(s) so far...
Re: On Scientific Reasoning, and the Testing of Hypotheses
It appears to me that the last change made is intended to do force a pre borrow. If this is enforce, a very big IF, but if this is inforced, doesn't rule 10b-21 force the buyer to prove that he did have access to the stock at the time he initiated the short sale. The rule specifically states that lying about his ability to deliver those shares is a criminal act.
"Rule 10b-21 Short Selling Anti-Fraud Rule
The Commission adopted Rule 10b-21, which expressly targets fraudulent short selling transactions. The new rule covers short sellers who deceive broker-dealers or any other market participants. Specifically, the new rule makes clear that those who lie about their intention or ability to deliver securities in time for settlement are violating the law when they fail to deliver. This rule also becomes effective at 12:01 a.m. ET on Thursday."
If this new SEC policy is inforced, I think it is exactly what is needed.
I do agree with many... Cramer included... that some form of an uptick rule should be reinstated. I'll bet the markets will be up dramatically starting this afternoon. I also bet that this is the bottom...
By Regards to requiring a "pre borrow".... on
9/17/2008 9:11 AM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
The problem is that it is reactive. Yes, if enforced, years after the violation, the manipulator would be subject to criminal penalties....but only if the DOJ decides to prosecute. Remember that the SEC can only turn cases over to justice. So as a deterrent, you have two choices - make billions now, and deal with whatever down the road, or behave because you think someone may start doing something some day.
No, this is basically the difference between instant financial punishment, versus someday punshment.
Put simply, would you rather have cancer today, or next year? Most would opt for next year. This rule does nothing but create an appearance. It will stop nothing. The swindler can claim he "located" the stock, as his 50 hedge fund buddies also can, using the same stock, and sidestep the fraud charge, so it is complete bullshit. It doesn't require a particularly bright legal mind to see the loophole here.
By bobo on
9/17/2008 9:19 AM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
you mentioned this before. I guess every thing comes full circle because soon the indians will be able to buy america back for a few beads.
By Doc Holliday on
9/17/2008 11:02 AM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
I believe that a large number of those using the option market exception are not crooks and will be reluctant to use illegal means to naked short. If I'm right, the step taken today by the SEC will help significantly. Still a long way to go.
Mr. O
By Mister_Optimistic on
9/17/2008 11:22 AM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
I say Amen, adieu, addios & no mas. Amerika the Kleptocracy. Pity the nation. Pity us. The masses have been circle-jerked by those 200 masters and the masses will ask for more. Not in my country.
By mfm1021 on
9/17/2008 11:32 AM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
The latest victim of this is John Mack. Fox TV just read a letter from Mack in which he is complaining to the SEC that they need to halt the naked short selling that is responsible for the nose dive his stock is taking. Now that's poetic justice. Mack and MS who have benefitted from all of this is screaming that this in unfair, even though his balance sheet is truly shakey with a debt to equity ratio of over 32. But, he never blinked an eye when SOBs like Chanos and Cahodes participated in efing into oblivion hundreds of very credit worthy companies. I hope someone investigates Cox and his cohorts. I have no doubt that they have knowingly participated in this scam from day one.
By beegdawg on
9/17/2008 12:09 PM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
Patrick Byrne's critique of the SECs actions today. Brief but clear... worth reading..
http://www.marketwatch.com/news/story/overstock-ceo-comments-secs-new/story.aspx?guid=%7BEDEA343A-11BD-4264-B468-B07C3A97A50A%7D&dist=hppr
By beegdawg on
9/17/2008 12:21 PM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
Rush Limbaugh and naked short selling.
http://tinyurl.com/3vkow3
By kevin on
9/17/2008 2:15 PM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
Beegdawg:
First they come for your neighbor, and when you say nothing, or worse yet, help them drag him off, they eventually come for you. They are now coming for the prime movers in the game, thus the whining.
The irony is not lost on me.
By bobo on
9/17/2008 4:20 PM
|
NOW
There are many remaining areas to be investigated. First, there has been no mention yet of WHO the people are who are shorting our financial stocks into ruin. We need names and faces - NOW. Next, there should be a complete investigation into ex-clearing. There are many market makers that are showing up out of the blue to overwhelm demand with supply in companies whose stocks they have NEVER bought a single share. Are these fails? Are there deliveries? Let's find out -NOW. What about the pre-existing fails - buy them in - NOW. Restore the uptick rule - NOW. All short positions disclosed - NOW.
Do all this and we will see money put into the hands of investors who can support our economy. Where is the money going from all of these short sales.
Let's find out
NOW
By clearthinker on
9/17/2008 9:20 PM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
http://www.bloomberg.com/apps/news?pid=20601087&sid=a8f8YwvIHkoM&refer=home
By SEC breaking news late Thursday night!! This is ne on
9/17/2008 9:24 PM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
clear. Startr with stevie cohen, davy einhorn, and murk cohones
By Huckstercrusher on
9/18/2008 3:32 AM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
so what about the existing FTDs and naked shorts ? will they be forced to cover or are they grandfathered in and allowed to continue to exist ?
By me on
9/18/2008 9:32 AM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
http://thehill.com/campaign-2008/mccain-would-fire-sec-chair-cox-2008-09-18.html
By McCain would fire COX... he's earned my vote! on
9/18/2008 9:32 AM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
Me. That is an interesting question. My hunch is that they will just allow the billions and billions of counterfeit shares to exist, as that would be consistent with my theory that the SEC works for the bad guys. If they didn't work for them, they could execute buyins immediately on all FTDs, which would cause the market to go up thousands and thousands of points, would alleviate most of the valuation crisis the financials are experiencing, and end a great deal of the current catastrophe. But the wrong guys would lose money, so of course they won't do that. Instead, they will allow a global meltdown to occur and the country's finances to be laid to waste. Again, can't have 200 billionaires lose most of their ill-gotten gains. Far better to destroy the nation's future.
Where are your priorities?
By bobo on
9/18/2008 9:37 AM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
To further amplify that thought, consider this. Naked short selling and failing to deliver is nothing more than the sellers REFUSING to buy and deliver what they sold. That's it. They refuse to do so, and nobody is making them. These flimsy rules we keep seeing advanced are not designed to stop anything. They are a smokescreen.
If you want to end the crisis today, force buy-ins of all those who are refusing to comply with 15c3 and it's requirement to deliver shares within T+3.
But that won't happen. The SEC will continue to allow billions of shares to remain undelivered, resulting in a false market where ability to counterfeit defines supply.
For all the talking heads, note that nobody has suggested that those who have for months, or years, REFUSED to buy what they took money for, actually be forced to buy those shares and deliver them. That would cause all the bad guys to lose all their stolen money, and that is antipodal to the objective of the SEC.
Which is why there will be no mention of the massive overhang of counterfeit shares from the past. They both claim the number is tiny, and yet refuse to force those REFUSING to deliver to do so.
This isn't hard to figure out. It's a cheap con game.
By bobo on
9/18/2008 10:02 AM
|
Question for Bobo and others... McCain wants COX fired!
What could we do to get some momentum behind this. Is there anyway we can help this idea get momentum. For example, Bobo, could you talk to Patrick to see if he could get the Utah Senator to start raising this issue in WA. I am just a mid western Joe. I have no contacts or clout with anyone. But I sure as heck would like to see Cox booted. I have zero doubt that this guy is either a crook or an idiot. As we all know, he needs to go. We may have an opportunity here... maybe an internet targeted at getting thousands to write key senators...
By beegdawg on
9/18/2008 11:19 AM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
Heres the link to that news...
http://biz.yahoo.com/ap/080918/eu_britain_short_selling.html
By UK bans all short selling on Financial STocks thro on
9/18/2008 11:22 AM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
Something is missing in all this. If you follow Catherine Austin Fitts, you have been told that there is a lot of drug money beinig laundered by the banks and put back into the economy. Will this type of corruption be exposed? Will those who have been on the inside dealing and money laundering ever be brought to task?
By mhelburn on
9/18/2008 2:01 PM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
I just cannot believe that this is all collapsing in front of our eyes. I have been reading about this for years, watching your blog. It was the private sector companies first, Ostock, etc - now the wall street firms - it is just so UFnBlvable - but NSS is coming front and center - it is all over the news. Do you think the public will finally catch on? Can these criminals keep hiding it? At what expense to the universe is it worth supporting such negligent behavior? I can't imagine it is coincidence that Bear, Leh, Mae,Mac, AIG, MS, Ford, Wachov, is just a coincidence due to writing bad mortgages (which by the way seems the theme of Main Street) - but I think your thread was way ahead of its time - and I can only hope we are also witness to major reform. Thanks BOBO.
By MS on
9/18/2008 2:01 PM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
MS: the problem is that they are going for broke, as they correctly understand that the country can't support the bailouts that are going to be required to soften the worst of these slams. In a nutshell, the money is so big in destroying firms now, that nothing is too large to be taken down. As predicted.
The saddest part about all this is that guys like me have been correctly predicting this for half a decade or more. It's not like it was a big secret. Thousands of letters have gone to the SEC to address this, and all were ignored. This isn't incompetence, it is criminal behavior. But the system keeps on spinning it as though all is being fixed by their government.
It isn't. By far. There are still billions of shares out there that the sellers simply refuse to deliver, because they are allowed to get away with it. The SEC has done nothing about those, and won't. Those represent trillions of dollars removed from the market, but with no goods delivered. You cannot have fair markets when they function that way.
And the one thing you will never see is any mainstream publication covering how I, or Dave Patch, have spent the better part of the last 5 or more years warning of the coming calamity, and being derided by the media and the Wall Street huckster squad. You will never see any acknowledgement that the "baloney brigade" was 100% right all along and predicted exactly this type of market calamity.
And that is a shame, as it means that most will have learned nothing.
By bobo on
9/18/2008 2:16 PM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
McCain wants to fire Cox for not dealing with naked shorting. Wasn't Cox a Bush appointee?
http://tinyurl.com/3v8wof
We seem to be getting attention, finally.
By kevin on
9/18/2008 2:46 PM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
Mary, this post from this morning from a cop who followed the drug trade and its role on wall street said it best.
http://www.fromthewilderness.com/nowisthetime2008.shtml
One would think that illegal drugs would be cheap now to lubricate the wheels of a nation in panic. But this is beyond that. Enron was in drugs. It operated several hundred subsidiaries in the Cayman Islands. Its bankruptcy was $63 billion. Lehman all by itself was $632 billion. The last time I estimated the total amount of cash generated by the drug trade it was only $600 billion a year. Lehman was just one bankruptcy. Add in Fannie and Freddie and Bear Stearns; soon Washington Mutual (which I suspect may be allowed to fail) plus all the rest -- and anything the drug trade could do is vastly overwhelmed.
Now, we who have labored so long and paid such prices to warn have a real shot at breaking public consciousness.
Now, we who understood all this and who have been marginalized, have authority to stand up and command the floor.
Now, we who cried as voices in the wilderness, have a chance to actually reach the minds of those we love but who have refused to listen.
We can do all this because the elephant in the living room has started to trample people.
By narco on
9/18/2008 3:32 PM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
Last year I couldn't pay someone to listen to me about NSS. This week everyone I know is asking me about it. Makes my "it doesn't exist", 30 yr on WallSt, A.H., brother-in-law look like the ass he truly is. Now he sees it front page every day. he haw jackasss.
By justanotherbrick on
9/18/2008 3:33 PM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
If anyone wants to know why Cuomo's announced investigation into NSS is likely just a posturing load of BS, simply read this:
http://www.villagevoice.com/content/printVersion/541234?ref=patrick.net
The scumbags run the place, is the problem. They got us here, and now, are the cops. Back to my operating thesis, which is that the cops are bent...
By bobo on
9/18/2008 4:02 PM
|
Re: Bob O' an idea which may help get Chris Cox fired... we can do this!!
Several years ago you and other raised money to run an add to force Bush's administration to do something about naked short selling. Send a copy of that to Rush Limbaugh or some other public mouth piece. This is hot news. A guy like Rush would druel over this bit. What a hot hunk of news... I want to keep the heat on Cox and get that lame brain prick fired. There are a few Senators who also should get a good ass whoopin out of this. Maybe even better than Rush would be Niel Cavuto. He had a very good interview with Patrick Byrne. Oh hell, send it to both of them.
Regards,
Beegdawg....
By Beegdawg... on
9/18/2008 6:12 PM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
Send a copy of this to Rush Limbaugh or Niel Cavuto.. This is the inside story... Bob O made this visible to Washington in 2005. This did not need to happen...
http://boulder-wadg.org/pdfs/Naked_Shorting_Scandal_Item2.pdf
By beegdawg on
9/18/2008 6:11 PM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
AIG was a big peice of cheese anybody get a picture of the rats that went for it?
By bbhindyou on
9/18/2008 7:16 PM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
The powers that be always resist change, but truth and right are inevitable and will always win over the long run.
It's frustrating that as you send that letter or you challenge that low IQ radio personality, that it seems like you are getting no where.
It's hard to see that behind the scenes, the skinny, wrinkly old men that run this country and value pieces of paper and ink over people are panicing because they don't want you to pull the curtain and realize the Wizard of Oz has now power.
But every little thing that every little person does adds up, like snowflakes gently landing on a mountain slope until suddenly change comes so suddenly, so drastically, that the letter writers are suddenly in control.
The avalanche is now. Bobo, where do we go from here?
______________________________________________
Some scholars have theorized that the images and characters used by Baum and Denslow closely resembled political images that were well known in the 1890s, specifically the debate of the day regarding monetary policy: the "Yellow Brick Road" represents the gold standard, the silver slippers (in the film ruby) represent the sixteen to one silver ratio (dancing down the road). Many other characters, and story lines represent identifiable people or circumstances of the day. The wicked witches of the east and west represented the local banks and the railroad industry, both of which drove small farmers out of business. The scarecrow represents the farmers of the Populist party, who managed to get out of debt by making more silver coinage. Unfortunately, the farmers did not understand that introducing more coin into circulation reduced its value (Dorothy eventually losing her silver shoes). The Tin Man represents the factory workers of the industrialized North, whom the Populists saw as being so hard-pressed to work grueling hours for little money that the workers had lost their human hearts and become mechanized themselves. (See Second Industrial Revolution) Toto was thought to be short for teetotaler, another word for a prohibitionist; it should be noted that William Jennings Bryan, the fiery popular candidate (possibly the Lion character) from the Populist Party, was a teetotaler himself. Bryan also fits the allegorical reference to the cowardly Lion in that he retreated from his support of free silver after economic conditions improved in the late 1890s. However, it has also been suggested the cowardly Lion represented the Wallstreet investors given the economic climate of the time. The Munchkins being the common people (serfdom), the emerald city, Washington and its green-paper money delusion. The Wizard, a charlatan who tricks people into believing he wields immense power, would represent the President. The kiss from the Good Witch of the North the electoral mandate; Dorothy must destroy the Wicked Witch of the West - the old West Coast "establishment" (money) with water (the US was suffering from drought). Moreover, of course "Oz" is the abbreviation for the measuring of these precious metals, ounces.
By davidn on
9/19/2008 5:24 AM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
Government programs are simply ways to funnel money to special interests.
Bush is responsible for this whole thing. Here it is in black and white. Don't look at the "good intentions".. look at the results.
Today, President Bush announced a new goal to help increase the number of minority homeowners by at least 5.5 million before the end of the decade. The President's aggressive housing agenda will help dismantle the barriers to homeownership by providing down payment assistance, increasing the supply of affordable homes, increasing support for self-help homeownership programs, and simplifying the home buying process & increasing education. The President also issued "America's Homeownership Challenge" to the real estate and mortgage finance industries to join in his effort to increase the number of minority homeowners by taking concrete steps to tear down the barriers to homeownership that face minority families.
By mhelburn on
9/19/2008 5:26 AM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
I've sent the links to BOB and Deep capture to both Rush and Neil recently. Lets see what they do, I must add I sent emails nearly 5 years ago alerting Oreilly,Cavuto and a few others back then. AND unfortunately they did NADA.
We'll see what is done NOW. I concur with Bob that the fix is simple. While I'm here, Thanks BOB/DAVE and all others who have worked very hard to educate,and do the right thing.
By Fintas_1981 on
9/19/2008 5:25 AM
|
Re: On Scientific Reasoning, and the Testing of Hypotheses
Narco,
I've started following Ruppert, Fitts, as their insight is absolutely necessary to get the big picture. It is all about a sustainable future.. Oil and who controls the resources.
The stock market is one brick.. We need accountability. We must make the government tally up what they are doing. The Chinese built a wall to keep out invaders hundreds of years ago. It is not the lack of resources that is stopping border control, it just doesn't fit the agenda for the banksters.
There has been no shortage of oil, the price is dependent on the value of the dollar. People are going to expect the price to come down and it can't because the dollar has declined and these inflationary moves by Paulsen will keep the price of oil up.
By mhelburn on
9/19/2008 5:23 AM
|
|
|
|