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Bobo gone walkabout for a few weeks...

Location: Blogs Bob O'Brien's Sanity Check Blog    
Posted by:   bobo 7/2/2007 2:19 PM

I'm on the road again, traveling, tripping the light fantastic, doing my annual summer jaunt to parts unknown.

During my sojourn, don't mistake my lack of blogs as a lack of interest. Rather, after years of fighting a beast that seems to be our own financial and banking system, I need to take a break, and enjoy life a bit.

So I'm off to see the wizard.

It's disheartening to see the wheels of justice fail to grind when one is connected or has juice. The latest commuting and pardoning simply underscores how badly bent the system is, whether it is a Marc Rich getting a Clinton hail mary in the last hours of office, or Bush giving his cronies hall passes for knifing opponents in the back. Doesn't seem to matter which party, they all suck. And they are busy stealing everything that isn't bolted down.

So given that the bad guys continue to have their way with things, I'm confident that my absence for several weeks won't cause undue pause to their larcenous predation.

Take care, everyone. Be good, don't run with scissors or play with matches, and for God's sake, stay out of the market.
Copyright ©2007 Bob O'Brien
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Comments (40)
Re: Bobo gone walkabout for a few weeks... By Honkytonker on 7/2/2007 7:25 PM
This may seem like a strange comment for this site, but I was recently "tagged" at the airport security line and underwent a extensive search. No not THAT extensive, but odd nonetheless. My wife was also pulled out for a thorought search. Then, on the way back, same thing. My life is about as boring as one can get, and nothing I do could be a remote threat to national security. The only thing I could think of was maybe viewing that Al Jazeera video on FTDs and other affronts. Is this possible? Am I totally paranoid?
Re: Bobo gone walkabout for a few weeks... By bobo on 7/2/2007 7:26 PM
You are totally paranoid. Then again, at this point, I'd almost say that nothing is too strange to be true....

But I really think that maybe it was the "Jihad!" T-shirt you were wearing, or something, that might have triggered it. Either that, or they just liked you....
Re: Bobo gone walkabout for a few weeks... By Patchie on 7/9/2007 4:25 PM
anthony kalantzis,

I was very clear what issues I have with Altomare. You do not grow a company by taking a paycheck that represents a substantial portion of total revenues (when that salary is also greater than many CEO's of thriving companies). You also do not take necessary capital used for growth and provide yourself and your wife a substantial loan. How much did those loans cost investors in shares? I know I would be pissed owning a stock where the CEO is HIGHLY compensated and still needs to pull out $1.5 Million (at shareholder expense) from a financially struggling company.

From documents I have seen, the share structure is now approx. 42 Billion. You claim that the selling is due to a massive naked short but the short can not keep up with the dilution taking place. Altomare should be putting up for vote the authorization to change shares outstanding and should explain what the need for such is. What was the 21 Billion change that has happened since April used for?


BTW...you really think the short is 4, 5, 10X the share structure? Show me some trade reports that even illustrate near 500 Billion shares traded in the market. Yes Altomare has been screaming loudly for years (as did CMKX management) but I have yet to see the evidence. Don't tell me the $700 Million judgement was proof as there was no discovery and thus no evidence obtained and proven.

As I said, Altomare could build up his own credibility by serving his investors better financially.
Re: Bobo gone walkabout for a few weeks... By eyes wide opened on 7/9/2007 4:26 PM
>...they argue that it is impossible to be fair and do their job, out of one side of their mouth, while they argue that it isn't their fault that their owners fail to settle as mandated - as though the conduct of their owners was beyond their capacity for policing<

free markets??? free press??? when our owners are beyond anyone's capacity for policing, that's oligargchy, that's dominations of its people...same as it ever was the world over. usa is devolving into same unrepresentative system as rest of sorry world... only we are spending our dwindling resources to "police" the rest of world.
btw, rest of world, this is not brought to you by the populace of the usa. it's by the ruling class who enter into these quid pro quo treaties & control the financing
so take up your beef with them.

happy respite bobo. glad you can control some of your own time.
Re: Bobo gone walkabout for a few weeks... By bbhindyou on 7/9/2007 4:27 PM
Bobo
This smells much worse than a load of hooey.
Like something long dead.
Re: Bobo gone walkabout for a few weeks... By Chernobyl? on 7/11/2007 9:01 PM
June 30 / July 1, 2007

A Subprime Chernobyl?
The Fed's Role in the Bear Stearns Meltdown
By MIKE WHITNEY

The Bank for International Settlements issued a warning last week that the Federal Reserve's monetary policies have created an enormous equity bubble which could lead to another "Great Depression". The UK Telegraph says that, "The BIS--the ultimate bank of central bankers--pointed to a confluence a worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system."

The IMF and the UN have issued similar warnings, but they've all been ignored by the Bush administration. Neither Bush nor the Federal Reserve is interested in "course correction". They plan to stick with the same harebrained policies until the end.

The "easy credit" which created the subprime crisis in mortgage lending has now spread to the hedge fund industry. The troubles at Bear Stearns prove that Secretary of the Treasury Henry Paulson's assurance that the problem is "contained" is pure baloney. The contagion is swiftly moving through the entire system taking down home owners, mortgage lenders, banks, rating agencies, and hedge funds. We are just at the beginning of a system-wide breakdown.

The problem originated at the Federal Reserve when Fed-chief Alan Greenspan lowered the Feds Fund Rate to 1% in June 2003 and kept rates perilously low for more than 2 years. Trillions of dollars flowed into the economy through low interest loans creating a massive equity bubble in real estate which drove up housing prices and triggered a speculative frenzy.

The Feds' "easy money" policy has disrupted the "debt-to-GDP" balance which maintains the integrity of the currency. By expanding circulation debt via low interest rates; Greenspan put the country on the path to hyperinflation and, very likely, the collapse of the monetary system.

The problems at Bear Stearns are the logical upshot of Greenspan's policies. The over-leveraged hedge funds are a good example of what happens during a "credit boom". Liquidity flows into the markets and raises the nominal value of all asset classes but, at the same time, GDP continues to shrink. That's because the wages of working class people have stagnated and not kept pace with productivity. When workers have less discretionary income, consumer spending"which accounts for 70% of GDP"begins to decline. That's why this quarters earnings reports have fallen short of expectations. The American consumer is "tapped out".

The current rise in stock prices does not indicate a healthy economy. It simply proves that the market is awash in cheap credit resulting from the Fed's increases in the money supply. Consumer spending is a better indicator of the real state of the economy than stocks. When consumer spending drops off; it is a sign of overcapacity, which is deflationary. That means that growth will continue to shrivel because maxed-out workers can no longer purchase the things they are making.

The underlying problem is not simply the Fed's reckless increases to the money supply, but the growing "wealth gap" which is undermining solid economic growth. If wages don't keep pace with productivity; the middle class loses its ability to buy consumer items and the economy slows.

The reason that hasn't happened yet in the US is because of the extraordinary opportunities to expand personal debt. The Fed's low interest rates have created a culture of borrowing which has convinced many people that debt equals wealth. It's not; and the collapse in the housing market will prove how lethal that theory really is.

To large extent, the housing bubble has concealed the systematic destruction of America's industrial and manufacturing base. Low interest rates have lulled the public to sleep while millions of high-paying jobs have been outsourced. The rise in housing prices has created the illusion of prosperity but, in truth, we are only selling houses to each other and are not making anything that the rest of the world wants. The $11 trillion dollars that was pumped into the real estate market is probably the greatest waste of capital investment in the nations' history. It hasn't produced a single asset that will add to our collective wealth or industrial competitiveness. It's been a total bust.

The Federal Reserve produces all the facts and figures related to the housing industry. They knew that trillions of dollars were being diverted into a speculative bubble, but they did nothing to stop it. Instead, they kept interest rates low and endorsed the lax lending standards which paved the way for millions of defaults. Now the effects of their "cheap money" policies have spread to the hedge fund industry where hundreds of billions of dollars in pensions and savings are in jeopardy.

Alan Greenspan played a major role in the housing boondoggle. On February 26, 2004, he said, "American consumers might benefit if lenders provide greater mortgage product alternatives to the traditional fixed rate mortgage. To the degree that households are driven by fears of payment shocks but willing to manage their own interest-rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home."

Greenspan tacitly approved the whacky financing which produced all manner of untested loans"including ARMs, piggyback loans, "no doc" loans, "interest only" loans etc. These loans are a break from traditional financing and have contributed to the increase in bankruptcies.

Millions of people who were hoodwinked into buying homes with "interest-only", "no down" loans will now either lose their homes or be shackled to an asset of decreasing value for the next 30 years. They've been tricked into a life of indentured servitude.

A recent article in the Wall Street Journal revealed the extent of Greenspan's involvement in the housing fiasco. Here's an excerpt from the article:

"Edward Gramlich, who was Fed governor from 1997 to 2005, said he proposed to Mr. Greenspan in or around 2000, when predatory lending was a growing concern, that the Fed use its discretionary authority to send examiners into the offices of consumer-finance lenders that were units of Fed-regulated bank holding companies.

"I would have liked the Fed to be a leader" in cracking down on predatory lending, Mr. Gramlich, now a scholar at the Urban Institute, said in an interview this past week. Knowing it would be controversial with Mr. Greenspan, whose deregulatory philosophy is well known, Mr. Gramlich broached it to him personally rather than take it to the full board.

"He was opposed to it, so I didn't really pursue it," says Mr. Gramlich.

"Still, Mr. Greenspan's views did color the regulatory environment, facilitating growing concentration in banking and a hands-off approach to derivatives and hedge funds. That approach, broadly shared by both the Clinton and Bush administrations, is coming under increased scrutiny". (Wall Street Journal)

So, Greenspan had the chance to "crack down on predatory lending" and he refused. Now millions of low income people are saddled with payments they have no reasonable prospect of paying off. How much of the present carnage could have been avoided if he had Greenspan done the right thing?

The "Not So Great" Depression

An article appeared this week in the UK Telegraph by Ambrose Evans-Pritchard which supports the theory that Greenspan's "loose monetary policy" fueled a huge credit bubble, which is pushing the global economy towards a "1930s-style slump."

The article quotes from a statement made by The Bank for International Settlements:

"Virtually nobody foresaw the Great Depression of the 1930s, or the crises which affected Japan and Southeast Asia in the early and late 1990s. In fact, each downturn was preceded by a period of non-inflationary growth exuberant enough to lead many commentators to suggest that a 'new era' had arrived".

But today we face "worrying signs" of another economic meltdown.

The BIS said that they were "starting to doubt the wisdom of letting asset bubbles build up on the assumption that they could safely be cleaned up' afterwards". (Greenspan's method) and that, "while cutting interest rates in such a crisis may help, it has the effect of transferring wealth from creditors to debtors and sowing the seeds for more serious problems further ahead.'"

"The bank said it was far from clear whether the US would be able to ignore the consequences of its latest imbalances, ($800 billion per year) citing a current account deficit running at 6.5% of GDP, a rise in US external liabilities by over $4 trillion from 2001 to 2005, and an unprecedented drop in the savings rate. The dollar clearly remains vulnerable to a sudden loss of private sector confidence."'

The BIS referred to the toxic effect of the "$470 billion in collateralized debt obligations (CDO), and a further $524 billion in "synthetic" CDOs which have spread through hedge funds industry. These CDOs are the loans (many sub primes) which were bundled off to Wall Street and turned into securities which are highly leveraged in hedge funds for maximum profitability. As Bear Stearns is discovering, these CDOs are like roadside bombs; exploding without notice whenever the stock market suddenly dips.

The BIS also cautioned about the excess of "leveraged buy-outs (mergers) which touched $753bn, with an average debt/cash flow ratio hitting a record 5.4--. Sooner or later the credit cycle will turn and default rates will begin to rise.'"

The central banks around the world are increasingly worried that the Bush administration's profligate spending and irrational monetary policies will trigger a global depression. The recent volatility in the stock market suggests that the credit boom is just about over. Once the liquidity dries up---stocks will fall sharply.



The Housing Slump

Yesterday's housing data, shows that sales are still weak while inventory continues to grow. Existing home sales dropped 3% while prices dropped another 2.1%. Falling prices mean that cash-strapped home owners will not be able to tap into their home's equity for other expenses. Last year, mortgage equity withdrawals (MEWs) accounted for $600 billion of consumer spending. This year, the amount will be negligible at best.

The media and the Fed continue to mislead the public about the magnitude of the housing bubble. Fed chief Bernanke assures us that the sub prime calamity hasn't "spread to other parts of the economy" (tell that to Bear Stearns) and the media keeps cheerily reiterating that a "turnaround" or "soft landing" is just ahead.

These claims are ridiculous. Apart from the 80 or more sub-prime lenders that have gone "belly-up" in the last few months, the rickety collateralized debt obligations (CDOs) and mortgage backed securities (MBSs) are steamrolling their way through the stock market bowling down everything their path. Bear Stearns is just the first on the casualties list. There'll be many more before the storm is over.

Fed-chairman Bernanke knows what's going on. He was given a full rundown by "John Burns Real Estate Consulting that the national sales information for both new and existing homes, is "misleading and covering up a deep plunge of the housing sector." The housing market is freefalling. Existing-home sales are down 22% in May and mortgage applications have fallen a whopping 18%....In Florida home sales are down 34%, not 28% as NAR reported; Arizona sales are down 38%, not 28%; and California's down 37%, not 24% as NAR reports."

Down 37% in California!?! It's a landslide.

As the defaults continue to pile up; the hedge funds will take a bigger and bigger pounding. It can't be avoided. That's what happens when bankers abandon traditional lending standards and lend trillions of thousands of dollars to people who have bad credit and lie on their loan applications.

Thousands of these same shaky sub primes loans have been wrapped up like the Crown Jewels and sold off to Wall Street as CDOs. Now they are ripping through the hedge fund industry like a tornado in a trailer park. The media has tried to downplay the damage, but its not hard to see what is really going on. According to Reuters:

"Banks doubled the amount of CDOs outstanding in the past two years to $2.6 trillion, including a record $769 billion sold last year, according to J.P. Morgan. These figures include funded and unfunded issuance. Pimco's Bill Gross said there are hundreds of billions of dollars of subprime residential mortgage-backed securities (RMBS), derivatives on subprime RMBS and collateralized debt obligations (CDOs) that buy subprime RMBS and/or the derivatives on the RMBS -- all of which he considers "toxic waste."'

"$2.6 trillion"! That's enough to bring down the whole economy. And, as Bear Stearns proves, the whole mess is beginning to unwind pretty quickly.

"Foreign investors have been the dominant buyers of these exotic debt instruments in recent years, owing to their insatiable demand for yield. If investors start dumping them, oh boy, watch out for some massive credit widening," said Dan Fuss, Vice Chairman at Loomis Sayles. (Reuters)

If the hedge fund industry follows the downward slide of the housing bubble, foreign investors will run for the exits. In fact, this may already being happening.

China sold $5.8 billion in US Treasuries in May; the first time they have dumped USTs on the market. This may be the first sign of "capital flight"---foreign investment fleeing the US for more promising markets in Asia and Europe. The greenback's survival now depends on the generosity of foreign bankers. If they refuse to recycle our $800 billion current account deficit by purchasing US bonds and securities, then the dollar will sink like a stone and lose its place as the world's reserve currency.


More Housing Blowdown

Last Friday, the stock market took a 185-point nosedive on the news that Bear Stearns was trying to raise $3.2 billion to rescue its battered hedge fund. According to the New York Times, however, Bear was only able to came up with "$1.6 billion in secured loans to bail out one of the 2 hedge funds".

The funds are the latest victim of the sub-prime meltdown which Bernanke and Paulson assured us was "largely contained". In fact, Paulson even said, "We have had a major housing correction in this country," and "I do believe we are at or near the bottom."

Anyone who believes Paulson should take a look this chart It illustrates that how loan "resets" will continue to pound the housing market for at least another year and a half getting steadily worse as inventory grows.

The disaster is so bad that even the realtors are beginning to tell the truth. As one agent noted, "It's a bloodbath."

But the debacle in housing is only the first part of a much larger problem"a global liquidity crisis. Banks and mortgage lenders have already begun to tighten up their lending practices and many have abandoned sub prime loans altogether. (20% of the housing market in 2006 was sub prime) Now the focus has shifted to the stock market, where banks are beginning to see that "risk" has not been properly calculated. That means that if more hedge funds collapse, the banks may not be able to cover the losses.

The Bear Stearns fiasco has had a chilling affect on lending. In fact, the New York Times reported on 6-26-07 that "After years of supersize private equity deals--the buyout boom may be about to hit a bump--Rising interest rates and tougher terms from investors may signal that private equity players will soon be struggling to continue reaping the outsize returns that have made the buyout business so lucrative." (Private Equity Investors Hint at Cool Down" NY Times)

Liquidity is drying up in the private equity business. The troubles at Bear Stearns has changed the credit-landscape overnight. Bankers are nervous, money is getting tighter, and liquidity is vanishing.

"We know that these holdings are not unique to Bear Stearns," said Professor Joseph R. Mason, co-author of a recent study warning of dangers in securities backed by home loans to high-risk borrowers. "It would be hard to find a Wall Street firm that hasn't created similar funds."

That's right; the industry is waist-deep in these sub-prime time-bombs. Shaky loans and rising foreclosures threaten to knock the foundation blocks out from under the stock market and set off a wave of panic selling.

Could it have been avoided?

Perhaps, if there were better regulations on rating bonds and restricting leverage.

Consider this: one of Bear Stearns hedge funds took a $600 million investment and leveraged it 10 times its value to $7 billion. Their portfolio was chock-full of dicey CDOs and "illiquid assets" such as timber holdings in foreign countries and toll roads. These assets are difficult to price and nearly impossible to quickly auction off if the market suddenly takes a downturn.

It looked like Merrill Lynch & Co., was going to auction off $850 million of Bear Stearns CDOs this week, but backed off at the last minute. (They were reportedly only offered 30 cents on the dollar!) Once the hedge funds start selling these CDOs, then everyone will know how little they're worth. That could trigger a wave of selling that could bring down the stock market. Even if that scenario doesn't play out, the Bear Stearns incident ensures that CDOs in other hedge funds will be face a substantial downgrading that could take a big chunk out of their bottom line.

And, there's a bigger fear on Wall Street than the fact that 2 hedge funds are headed into bankruptcy, that is, that a sudden tightening of credit will send the over-leveraged stock market into a downward spiral.

The market is particularly sensitive to any rise in interest rates or tougher lending standards. It's become addicted to cheap credit and any break in the chain will cause equities to plummet.

Economist Henry C K Liu sums it up like this:

"The liquidity boom has been delivering strong growth through asset inflation without adding commensurate substantive expansion of the real economy. --. Unlike real physical assets, virtual financial mirages that arise out of thin air can evaporate again into thin air without warning. As inflation picks up, the liquidity boom and asset inflation will draw to a close, leaving a hollowed economy devoid of substance. --A global financial crisis is inevitable". (Henry C K Liu "Liquidity boom and looming crisis" Asia Times)

In other words, the "virtual" wealth of Wall Street is a chimera which was created by the Fed's inexorable expansion of debt. It can vanish in a flash if the sources of liquidity are cut off.

Puru Saxena draws the same conclusion in his article "A Gradual Transition":

"Thanks to the Federal Reserve's expansionary monetary policies over the past 5 years, US asset-prices have risen considerably; also known as the "wealth effect". At the end of last year, the market capitalization of the US stock market rose to a record-high of US$20.6 trillion, matching the value of household real-estate, which also rose to a record-high at the same time. On the surface, this may seem like brilliant news, however you must realize that this "wealth illusion" achieved by an ocean of money and record-high indebtedness is only a consequence of inflation."

Code Red: Subprime Chernobyl

We expect that the mounting losses in CDOs and the continuing defaults in the housing industry will precipitate a "severe credit crunch" which will end in a stock market crash. A report which appeared yesterday in the UK Telegraph appears to agree with this analysis. Lombard Street Research predicted that:

"Excess liquidity in the global system will be slashed. Banks Capital is about to be decimated, which will require calling in a swathe of loans. This is going to aggravate the US hard landing"' ("Banks set to call in swathe of loans" UK Telegraph 6-26-07)

Three of the main hoses which provide liquidity for the market, have either been cut off or severely damaged. These are "securatized" subprime CDOs, corporate mega-mergers and hedge fund leveraging. Without these instruments for expanding debt; liquidity will dry up and stocks will fall. The period of "easy credit" will end in disaster.

We should now be able to see the straight line that connects the Fed's low interest rates to the impending stock market meltdown. The problems began at the central bank.

Presidential candidate Rep. Ron Paul (R-Texas) summed it up best when he said:

"From the Great Depression, to the stagflation of the seventies, to the burst of the dot.com bubble; every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and artificial "boom" followed by recession or depression when the Fed-created bubble bursts".

Mike Whitney lives in Washington state. He can be reached at: fergiewhitney@msn.com
Re: Bobo gone walkabout for a few weeks... By max keiser on 7/11/2007 9:24 PM
hopefully this won't freak anybody out.. but my next film for Al Jazeera English is coming out in a week or so, it's called 'carried away' and it explores the yen-carry trade and explains how it's at the root of the global liquidity bubble...
maxkeiser.com
Re: Bobo gone walkabout for a few weeks... By bbhindyou on 7/14/2007 8:46 PM
Bobo,max,Capt.dale,and any one else who is willing to stop whinning and start DOING something.
I intend to take it to the next level.
A event called the raft off happens in Muskamoot Bay in lake Saint Clair 8,11,2007.
I have several protest dittys worked out and a very small bathing suit I intend to wear with the slogan the dtcc is nakeder than me
Please join me if you can.
I have posted one of the protest songs on the falking truth and tried to get feedback but so far nada.
I would love to get a video clip posted to you tube of this event as I think it might get attention.[I am 5ft2 110 pounds and still look twenty something at my age AND I have the best shake on the lake]
This will be a PEACEFUL protest.
Bobo if you dont want me giving out the sanitycheck website at this event speak now.
Thirty years ago I walked away from a contract that would have givin me everything I dreamed of at that time all I had to do was keep my mouth shut and let the little guy 's fall .
I walked.
I was a small sick frightened child and all I could do was walk away.
I'm done walking away and hiding .
Joe is worth helping to see the truth.
I'm back and the truth will be told.
I would love to see you there.
I will be front and center.
For all of you.
To Dave Patch By davidn on 7/14/2007 8:47 PM
In Dave's last article, he mused about why the SEC discloses fails in percentage dollar value instead of percentage of trades.

I think the answer is that they include debt securities (which usually don't fail to deliver). If you divide the much smaller dollar value of the fails in equity securities by the huge dollar volume of debt securities you get a tiny percentage.

If they were to disclose the PERCENTAGE OF EQUITY TRADES that fail, it would probably be a large percentage, even with all the netting.

Why would they ever throw debt securities into the mix when they have nothing to do with what we are talking about?
Re: Bobo gone walkabout for a few weeks... By ginger on 7/12/2007 3:28 PM
SEC Pondering 'Mutual Recognition' Plan...

http://www.forbes.com/feeds/ap/2007/07/12/ap3909729.html
Re: Bobo gone walkabout for a few weeks... By mhelburn on 7/14/2007 8:48 PM
"Our job is to protect the safety and soundness of the system, by ensuring this trade data is processed, ownership records are changed and financial obligations between trading parties are settled."

They handle the cash and that is done... but where are the shares? They don't know if they are real shares or just Annette's obligation to provide shares at some future date. Those funny things... share entitlements that trade as if they were real shares. They should know if there are more shares long in the market than issued by the company. That isn't rocket science. They can then say that they don't handle those items ex-clearing... not my job, man. We can't be responsible for what goes on outside our realm of trade data. This is a joke.

Re: Bobo gone walkabout for a few weeks... By ginger on 7/13/2007 9:13 AM
Conrad Black Found Guilty in Fraud Trial...


http://www.nytimes.com/2007/07/14/business/13cnd-black.html?ref=business
Re: Bobo gone walkabout for a few weeks... By Marc on 7/14/2007 8:49 PM
Thanks Ginger for your feed from Forbes.com on the SEC's mutual recognition plan. The SEC must think we as investors are real idiots. They are putting finishing touches on grandfather rule and also they want to clear up some technical matters.What they should have said is that once the rule is included in the federal register the banks, hedge funds, market makers ,etc. will have an additional 95 days in which to fleece us poor investors who work very hard at what we do. The SEC with their lawyers are in such a shell protecting their inner sanctum that they don't give a ?@&# about the American investors and true loyal patriots. I feel like petioning all investing americans who have been scammed by NSS to march on Washington. I feel like the guy from the movie Network and I quote"Stand up wherever you are, go to the nearest window and yell as loud as you can:I'm mad as hell, and I'm not going to take it any more." If enough of us yell loud enough something has got to give.
Re: Bobo gone walkabout for a few weeks... By oldfeller on 7/14/2007 8:50 PM
Mr Bernanke said this week that the money supply controlled by the fed had nothing to do with inflation. He said he had even written articles explaining why the money supply controlled by the fed had no effect on inflation. I`m just an ordinary american subject (No longer think of myself as a citizen, citizens have rights). I like most american subjects am too lazy to read Mr Bernanke`s explanations but am still curious. Perhaps he could make a short film about how it works. I like to watch tv. The fed prints billions and billions of dollars each year yet the value of the dollar is not changed? Amazing. I wish I had gone to an Ivy league school to learn how things like that were possible. I will wait for the movie to come out. Maybe the grandfather clause will be explained in the same show. I hope they include someone who can explain how the phrase "taxation without representation" applies to this phenomonen.
Re: Bobo gone walkabout for a few weeks... By captdale on 7/15/2007 9:05 PM
and on a lighter note:this off the sec web page for comments on sho.
----------
A SURE cure for naked short-selling
The naked shorting SHOULD be able to be countered by "naked buying"...
Thats where you buy shares at the ask but never actually exchanage any money. I.E.-naked buying. I mean WTF naked sell is being done where no shares are actually ever delivered so why not naked buying where no money is delivered.


Re: Bobo gone walkabout for a few weeks... By Greenhodes on 7/15/2007 9:06 PM
1 - Herbie's going after H.Hill & Babson cuz Hill made Herbie look stoopid in emails
2 - Yo Max Keiser, if that's really you, Gary Weiss aka Mantanmoreland had your wikipedia article deleted for "non-notability". You should return the favor and nominate Gary's autobiography for deletion
Re: Bobo gone walkabout for a few weeks... By bbhindyou on 7/16/2007 9:35 PM
The protest is off.
Not only didn't I get any support joe has spoken and he said
"'I don't care if I am being taken I don't want to know give me beer and broads in little bathing suits ,but no protests I don't want to know what I don't want to know and what do you know anyway peon"
Sorry I tried to be something I clearly am not,I have to go find some blue mud and shut up now
Goodbye and goodluck all.
Re: Bobo gone walkabout for a few weeks... By Sean on 7/3/2007 7:12 AM
Bobo, I sent this very scary video to everyone I know!!Thank you this confirms alot!!
Re: Bobo gone walkabout for a few weeks... By InTheKnow on 7/3/2007 7:05 AM
Stay out of the market? I'm still alive and well and myJAGH is doing great. Only good things are happening for me.
Re: Bobo gone walkabout for a few weeks... By bobo on 7/3/2007 7:07 AM
InTheKnow:

Yeah. I'm sure anyone tht just bought at a buck and a half or over is thanking the market for the 40% decline in just a few weeks. The market is great. JAGH pumping is working great. You da man. Everyone wins, except those who just lost a ton on it.

Thanks for the valuable and insightful info.
Re: Bobo gone walkabout for a few weeks... By SamIam on 7/3/2007 8:10 AM
What happened to the video link? I thought it was thought provoking and awesome.

http://video.google.com/videoplay?docid=497251819335380093

Every American should view it and make up their own mind. The part about the role of a central bank and the inevitable end result is dead on.
Re: Bobo gone walkabout for a few weeks... By Marc on 7/3/2007 8:11 AM
Bob, I started to watch that tough video last night but then I had to feed my baby girl. I went on this morning to continue viewing it but I can't seem to find it. Can you give us the feed again. Thanks
Re: Bobo gone walkabout for a few weeks... By Willie Loman on 7/3/2007 11:02 AM
Have a good break, Bobo. On a related note, did anyone else notice thomson's data feed meltdown that occurred so curiously coincidentally to the end-of-month and end-of-quarter reporting for (all those naked short sale contingent liabilities of) hedge funds and market makers? It looked to me to be straight out of the MM's/Specialists' Bottomless Bag of Dirty Tricks.

http://stockcharts.com/help/doku.php?id=support:june07datafeedproble
Re: Bobo gone walkabout for a few weeks... By Real life Matrix on 7/3/2007 11:03 AM
Have a great holiday! It is hard to tell fact from fiction these days one thing for sure you 'think' therefore you are!!! One of the great thinkers of our time you are.

Can you comment on this anyone?

SEC moves to put Altomare in jail.....

Read the whole thing.

http://starspennyscamarchive.110mb.com/altomare/SEC%20v%20USXP%20Doc%20191%20filed%2029%20Jun%2007.pdf
Re: Bobo gone walkabout for a few weeks... By patchie on 7/4/2007 6:01 PM
Real Life,

Nobody knows for sure what is happening but the evidence does not look good. If a naked short existed years ago in USXP the dilution recently authorized by the company has all but diluted it into non-existence.

I will say what i have now said for years, If you are in this fighting for right and wrong the best thing to do is not pick a particular horse as your front runner. You never know when it is a nag.

Fight the cause for the cause and hope you placed your bet on a winner. With recent events where companies claim a naked short to pump investors into a dump, it is best not to put any one on a pedestal that coul lead you into being made a fool.

Altomare would do best by being fiscally responsible to shareholders by paying off the debt he and his wife owe the financially struggling company and keeping his mouth shut until he has something of substance to speak about. These PR's are getting embarassing based on the SEC allegations against him and the very clear stock dilutuion that nobody can deny. The $700 Million judgement sounds much better in print than reality will show and it is being used as a carrot to investors.
Re: Bobo gone walkabout for a few weeks... By oldfeller on 7/4/2007 6:02 PM
Re: Altomare, I`ve never found any reason to doubt the SEC`s allegations that Altomare is a crook. I`ve also never found any reason to doubt Altomare`s allegations that the SEC and the SRO`s involved have knowingly failed to enforce existing rules and even taken steps that seem to promote and protect blatant criminal activity in the marketplace. The only thing I`m pretty sure of is that none of them could care less about the financial welfare of the people who buy microcap stocks.
Re: Bobo gone walkabout for a few weeks... By pjstevenson2001 on 7/4/2007 6:02 PM
Samiam: After watching P:art 3 of 3 of Zeitgeistmovie.com, it became much clearer to me that what I have suspected for many many years is true. It's all in this movie. Much of what we have been talking about and suspected was the case all along.

We are being fed a bunch of lies such that the elite few in this world can make billions if not trillions of dollars off of the average hard working Joe worker. Sad thing is that there is little anyone can really do to affect a fundamental change to the "system" unless those who are in "control" of the media and the current money-making "game" get tired and give us back control. We all know this will never hapen. So, I hate to say it, but we are left with a future that is coming at us fast and is not too bright.

I am sure many are just starting to pay attention to the subprime-lending related bankcruptcies and scandals and an eventual bail out and, also, the NSS settlements are expected in the next 60-90 days...and the sum total impact of these 2 events coming at the same time, will only serve to make those elite rich who are in charge of the Fed make even more money. They will just print up more money and "lend" it out "for a profit" and once again make billions upon billions off of average folks like you and me. Based on what I learned from this videio, there is absolutely no way the elite rich can lose.
Re: Bobo gone walkabout for a few weeks... By InTheKnow on 7/4/2007 6:03 PM
No pump! Your friend Patrick Byrne was on MN1.Com talking about the Brookstreet fiasco. That was the broker that went belly up and is said to be naked short PAYD and JAGH. Check with your friend Patrick Byrne.

How do you know if those sales at 1.50 were not short covering? Or does that not interest you anymore? By the way the stock has been moving back up -39% since Friday - and it looks like short covering. It is not untypical for shorts to push the market down and panic people out (remember Cramer's admission?)

Pump is when you distort and sell. I haven't sold a single share and have only accumulated thru the years.
End of an era... By Gold digger... on 7/4/2007 6:04 PM
A great video link, a must watch. Related to stockgate, lies and the greatest fraud against us and the globe.

http://www.consciousmedianetwork.com/members/ggreen.htm
options market making: profitable in Q1 By tmg on 7/4/2007 6:05 PM
http://www.sifma.org/research/pdf/RRVol2-6.pdf

Page 13:
commissions on listed options fairly consistent, maybe a little higher in '07 Q1, but look at the gain on listed options market making, off the charts, hmmmmm, you don't suppose??? Naahhh.

bobo - here is a link to where SIFMA now has the data on its new website that you have linked on your front page:
http://www.sifma.org/research/statistics/other/NYSEFirmsTotals.xls
Re: Bobo gone walkabout for a few weeks... By bobo on 7/4/2007 6:09 PM
Intheknow: What precisely does your bet on Jag's price have to do with naked short selling? Or more specifically, what does it have to do with the issues we are discussing? I understand you really want the price to go up, and thus short covering and associated speculations, which has nothing to do with naked short covering as the former is legal shorting, are of keen interest to you. But the problem is that you don't know who was buying at a buck and a half. You have speculations, which again, are off topic and immaterial to our discussion in this blog. Perhaps you should confine your discussions and comments to the subject at hand, and take the Jag speculations to boards where that topic is the topic at hand? I don't want to have to bar you, but it is getting really tedious reading all the "JAG going to the moon!" types of posts, which have exactly zero relevance to any of the blogs they are on.

Thanks in advance for your understanding.
Re: Bobo gone walkabout for a few weeks... By Sean on 7/5/2007 7:45 PM
Universal Express Applauds Wall Street Journal Article on Naked Short Selling
Market Wire - July 05, 2007 11:56 AM ET


Related Quotes
Symbol Last Chg
USXP Trade 0.0003 0.00
Quotes delayed at least 15 minutes

Universal Express Inc. (OTCBB: USXP) applauds today's balanced and factual Wall Street Journal article by John R. Emshwiller and Kara Scannell, Blame the 'Stock Vault'? It may begin main stream media's understanding of Universal Express' 10-year attempts to protect the dignity of our trading system without having corporate and personal dignity attacked in the process. http://online.wsj.com/article/SB118359867562957720-search.html?KEYWORDS=naked+short+selling&COLLECTION=wsjie/6month

"Demonizing and railroading the victims should not be the SEC's tactic to solve this obviously real trading problem which exceeds over $2.5 Billion per day! That's conservatively allowing counterfeiting and stealing of more than $750,000,000 Billion a year," said Richard A. Altomare, President and CEO.

"As the SEC continues to focus on attempting to demonize our company and its officers while they obviously remain fearful of a Jury trial, let's consider what our citizens, our soldiers and our government could do with the Billions upon Billions being stolen annually from our economic base," continued Mr. Altomare.

"On this Independence weekend, let us consider that the SEC is wrong on this issue and the companies they have attacked are correct. Isn't that what this weekend is about? Is it fireworks and hotdogs, or is it free speech and not having to fear our government's wrath when we exercise that free speech?" concluded Mr. Altomare.

About Universal Express

Re: Bobo gone walkabout for a few weeks... By kevin on 7/6/2007 1:50 PM
So, the SEC voted on reg SHO. When do the new rules go into effect?
Today's WSJ dips little toe into toxic DTCC pondscum -- albeit off by 3.5B on daily count of undelivered shares By rmr on 7/6/2007 1:51 PM
Clearinghouse Faulted
On Short-Selling Abuse;
Finding the Naked Truth
By JOHN R. EMSHWILLER and KARA SCANNELL
July 5, 2007; Page C1

DEPOSITORY TRUST & Clearing Corp. is a little-known institution in the nation's stock markets with a seemingly straightforward job: It is the middleman that helps ensure delivery of shares to buyers and money to sellers.

About 99% of the time, trades are completed without incident. But about 1% of the shares -- valued at about $2.5 billion on a given a day -- aren't delivered to the buyer within the requisite three days, for one reason or another.

These "failures to deliver" have put DTCC in the middle of a long-running fight over whether unscrupulous investors are driving down hundreds of small companies' share prices.

At issue is a nefarious twist on short-selling, a legitimate practice that involves trying to profit on a stock's falling price by selling borrowed shares in hopes of later replacing them with cheaper ones. The twist is known as "naked shorting" -- selling shares without borrowing them.


Illegal except in limited circumstances, naked shorting can drive down a stock's price by effectively increasing the supply of shares for the period, some people argue.

There is no dispute that illegal naked shorting happens. The fight is over how prevalent the problem is -- and the extent to which DTCC is responsible. Some companies with falling stock prices say it is rampant and blame DTCC as the keepers of the system where it happens. DTCC and others say it isn't widespread enough to be a major concern.

The Securities and Exchange Commission has viewed naked shorting as a serious enough matter to have made two separate efforts to restrict the practice. The latest move came last month, when the SEC further tightened the rules regarding when stock has to be delivered after a sale. But some critics argue the SEC still hasn't done enough.

The controversy has put an unaccustomed spotlight on DTCC. Several companies have filed suit against DTCC regarding delivery failure. DTCC officials say the attacks are unfounded and being orchestrated by a small group of plaintiffs' lawyers and corporate executives looking to make money from lawsuits and draw attention away from problems at their companies.

Historic Roots

The naked-shorting debate is a product of the revolution that has occurred in stock trading over the past 40 years. Up to the 1960s, trading involved hundreds of messengers crisscrossing lower Manhattan with bags of stock certificates and checks. As trading volume hit 15 million shares daily, the New York Stock Exchange had to close for part of each week to clear the paperwork backlog.

That led to the creation of DTCC, which is regulated by the SEC. Almost all stock is now kept at the company's central DEPOSITORY and never leaves there. Instead, a stock buyer's brokerage account is electronically credited with a "securities entitlement." This electronic credit can, in turn, be sold to someone else.

Replacing paper with electrons has allowed stock-trading volume to rise to billions of shares daily. The cost of buying or selling stock has fallen to less than 3.5 cents a share, a tenth of paper-era costs.

But to keep trading moving at this pace, the system can provide cover for naked shorting, critics argue. If the stock in a given transaction isn't delivered in the three-day period, the buyer, who paid his money, is routinely given electronic credit for the stock. While the SEC calls for delivery in three days, the agency has no mechanism to enforce that guideline.

'Phantom Stock'

Some delivery failures linger for weeks or months. Until that failure is resolved, there are effectively additional shares of a company's stock rattling around the trading system in the form of the shares credited to the buyer's account, critics say. This "phantom stock" can put downward pressure on a company's share price by increasing the supply.

DTCC officials counter that for each undelivered share there is a corresponding obligation created to deliver stock, which keeps the system in balance. They also say that 80% of the delivery failures are resolved within two business weeks.

There are legitimate reasons for delivery failures, including simple clerical errors. But one illegitimate reason is naked shorting by traders looking to drive down a stock's price.

Critics contend DTCC has turned a blind eye to the naked-shorting problem.

Denver Lawsuit

In a lawsuit filed in Nevada state court, Denver-based Nanopierce Technologies Inc. contended that DTCC allowed "sellers to maintain significant open fail to deliver" positions of millions of shares of the semiconductor company's stock for extended periods, which helped push down Nanopierce's shares by more than 50%. The small company, which is now called Vyta Corp., trades on the electronic OTC Bulletin Board market. In recent trading, the stock has traded around 40 cents. A Nevada state court judge dismissed the suit, which prompted an appeal by the company.

DTCC says the roughly dozen other cases against it have almost all been dismissed or not pursued by the plaintiffs.

Nanopierce garnered support from the North American Securities Administrators Association, which represents state stock regulators. The group filed a brief arguing that if the company's claims were correct, its shareholders "have been the victims of fraud and manipulation at the hands of the very entities that should be serving their interest."

DTCC's Defense

DTCC General Counsel Larry Thompson calls the Nanopierce claims "pure invention." DTCC officials say the main responsibility for resolving delivery failures lies with the brokerage firms. DTCC nets the brokerage firms' positions but it is the brokerages that manage their individual client accounts and know which client failed to deliver their stock.

DTCC officials say that Nanopierce had internal business problems -- including heavy losses -- to explain its stock-price drop. DTCC received support in the suit from the SEC, which filed a brief defending the trade-processing system and arguing that federal regulation pre-empted state-court review.

In January 2005, the SEC made an initial swipe at the naked-shorting problem by requiring that if delivery failures in a particular stock reached a high enough level, many of those failures would have to be resolved within 13 business days. But some failures weren't covered by the rule. The SEC action in June aimed to cover those remaining delivery failures. Naked shorting could "undermine the confidence of investors" in the stock market, SEC Chairman Christopher Cox says.

However, it doesn't seem likely that the SEC's latest move will end the debate that has been raging in the market for years. While lauding the SEC action, critics are questioning whether it is sufficient. The SEC still hasn't taken all the steps necessary to ensure "a free and transparent market" as required under federal securities laws, says James W. Christian, a Houston attorney who represents several companies that claim to have been damaged by naked shorting.

Among other things, authorities need to make public much more trading data related to stock-delivery failures, he says.

Critics contend that DTCC and the SEC have been too secretive with delivery-failure data, depriving the public of important information about where naked shorting might be taking place. Currently, DTCC's delivery-failure data can only be obtained through a Freedom of Information Act request to the SEC, which has released some statistics that are generally two months old.

In light of the controversy, DTCC has proposed making more information available and the SEC says it is looking at releasing aggregate delivery-failure data on a quarterly basis.

Write to John R. Emshwiller at john.emshwiller@wsj.com and Kara Scannell at kara.scannell@wsj.com
Re: Bobo gone walkabout for a few weeks... By ginger on 7/6/2007 1:48 PM
Hedge Funds Mystify Markets, Regulators
Deeply Powerful, Largely Unchecked

By David Cho
Washington Post Staff Writer
Wednesday, July 4, 2007; A01



Wall Street chroniclers one day could look back at the early 21st century and easily dub it the Era of the Hedge Fund. The question is whether it will be remembered as an age of reason or irrational exuberance.

Hedge funds hold unparalleled sway over the financial markets, as confirmed by the recent unraveling of $20 billion in Bear Stearns funds. Portrayed as the new masters of the universe by author Tom Wolfe, hedge-fund managers are responsible for more than a third of stock trades and control more than $2 trillion worth of assets, according to industry researchers. Each of the top hedge-fund managers earned more than $1 billion in 2006 alone.

But like the Wizard of Oz, these funds hide behind a cloak of mystery as they pull the levers that make Wall Street go. "To a great degree they're unregulated and hardly understood or not understood at all," said James Grant, publisher of Grant's Interest Rate Observer.

Understanding the impact of this secretive world gained urgency in Washington after the crisis at the two Bear Stearns hedge funds sent the Dow Jones industrial average down 279 points and prompted the Securities and Exchange Commission to begin an informal investigation last week.

The Bear Stearns funds were on the cutting edge of the hedge-fund world that reaps billions of dollars from slicing up corporate loans, mortgages and other kinds of debt into pieces that can be traded like shares on the stock market. This process is considered by many bankers and regulators to be one of the great advances in finance over the past five years. With hedge funds acting like shock absorbers, investment banks and lenders have been able to make massive loans to freewheeling borrowers and feel less impact from the risk.

Money became easy to get and was easily lent. Banks offered huge mortgages to people with questionable credit. The business of borrowing billions of dollars to buy troubled companies boomed. Backed by hedge funds, insurance companies could offer coverage to homeowners in New Orleans after Hurricane Katrina.

Some analysts say hedge funds have become more important financiers than the long-established investment firms of Wall Street. Greenwich, Conn., where more than half of the biggest hedge funds are based, has earned nicknames such as "The New Wall Street" and "Hedgistan." It also has become one of the most important stops along the presidential campaign fundraising trail.

Yet the trouble at Bear Stearns is revealing that the system may not be as crash-proof as once thought. And it has left Washington regulators and Wall Street analysts with questions: How dependent has the new financial system become on hedge funds? Are their trades getting more risky? If one of them unravels, who absorbs those losses?

The answers are unclear, even to top economists. Part of the problem is that most hedge funds do not reveal much about their trading activities. Many operate offshore. Even for the ones that are based in the United States, no federal agency is empowered to regulate or watch their activities.

The SEC in 2004 passed a rule requiring hedge-fund managers to register with the agency and submit to some oversight. But a U.S. Court of Appeals struck down that rule in June 2006. Later that summer, SEC Chairman Christopher Cox testified to the Senate Banking Committee that hedge funds were operating in a "gap" in the SEC's authority, but he fell short of asking Congress to address the issue through legislation.

The President's Working Group on Financial Markets, which was founded after the collapse of hedge fund Long Term Capital Management in 1998, said in February that hedge funds needed no regulation

Yet many market watchers worry that, shielded from regulators and operating in the dark, the biggest and most influential hedge funds might be making bets that put the entire financial system at risk. As the two Bear Stearns funds demonstrated, some hedge funds are investing large amounts of money in complex securities that are difficult to value accurately. And much of it is being done with borrowed money -- or "leverage" -- which can magnify returns but also exacerbate losses.

"There's been a fundamental change in the debt markets that I don't think people appreciate yet," said Richard Bookstaber, who has managed hedge funds and recently wrote a book on the topic, "A Demon of Our Own Design."

"I don't think anybody knows how much leverage a particular [group] of hedge funds is using or how much leverage has grown. . . . We are running the risk of making the markets more levered and more complex so that something can go wrong all of a sudden," Bookstaber said.

So what is a hedge fund?

For starters, hedge funds take money only from those with deep pockets. They pool huge amounts of money mainly from super-wealthy investors, Wall Street banks and other hedge funds. About 25 percent of their money comes from pension funds and endowments, according to data from Greenwich Associates.

In the late 1940s, managers of the first hedge funds invented ways to make money no matter which way the stock market was moving. They used terms like "short the market" -- a technique for profiting when stocks go down -- and "going long" -- which means selling stocks after their prices have gone up. The trick was figuring out how many "short" and "long" positions a manager should have in a portfolio.

But to understand what hedge funds do today, it could take "two PhDs and an MBA," as Greenwich Associates hedge-fund analyst Karan Sampson put it.

Some funds bet on how stocks, gold prices and interest rates will move. Others turn almost any kind of cash flow -- including credit card payments, home mortgages, corporate loans, plane leases, and even movie theater revenue -- into bonds and trade them.

One of the most successful fund managers, Edward S. Lampert of ESL Investments, runs an $18 billion fund that makes money in part from what are called "total return swaps." These provide insurance for traders holding risky investments. If the investment goes down, Lampert absorbs the loss, but if it goes up, he enjoys the gain. In exchange for agreeing to the swap, the trader gets regular cash payments from Lampert.

Lampert's fund reportedly has earned returns of 30 percent every year by trading in swaps and other obscure financial tools. He personally made more than $1 billion last year. Most fund managers get their pay by taking a 20 percent cut of the profits from their trades and collecting from investors a 2 percent annual fee based on the total value of a portfolio.

Former Federal Reserve Chairman Alan Greenspan was an advocate for how hedge funds help spread investment risk across many partners. The concept of "risk dispersion" has been described by Federal Reserve Governor Donald L. Kohn as a pillar of the "Greenspan doctrine." Over the past five years, advocates say, it has created a more stable financial system.

In 1998, just when hedge funds were starting to become big, Long Term Capital Management collapsed, nearly paralyzing the U.S. bond market. The disruption was so severe that the Fed had to organize a temporary rescue. The fund lost about $3.6 billion before closing in 2000.

But when the Amaranth hedge fund imploded in September 2006, losing about $6.4 billion on bad bets in natural-gas commodities, federal regulators stayed on the sidelines. Returns plummeted for a few hedge-fund managers and a pension fund in San Diego, but the markets generally shrugged off the news.

The new financial system seemed to be working.

Still, a growing number of market watchers wonder whether the system is encouraging hedge funds to take on too much risk.

"It's a weird dynamic that the market has now," said Dan Freed, a senior writer at Investment Dealer's Digest. "You used to have a small number of institutions taking a lot of risk. Now you take something that's toxic and you divide it into a thousand pieces and you say, okay, well, it's not toxic anymore. . . . But if it's toxic, isn't it [still] toxic?"

The Bear Stearns hedge-fund managers not only made risky bets but also did so with massive loans. They raised hundreds of millions of dollars from wealthy investors and other hedge funds, and borrowed many times that amount from Wall Street banks. With $20 billion at their disposal, they traded obscure securities backed by mortgage loans made to homeowners with shoddy credit histories.

The securities were so exotic that few knew whether the managers were getting good prices as they traded them.

The problem is similar to what happens in the housing market. Because houses are "traded" infrequently, homeowners often struggle to figure out the right price to attract interest. An appraisal can help, but a house's actual value is established only when a buyer and seller agree on a price.

Stocks, on the other hand, are exchanged every day, so their prices generally are considered accurate.

In the case of the Bear Stearns funds, the managers appeared to struggle to value their assets accurately or find buyers for them. In May, they said the funds had lost 6.75 percent of their value in April. In June, they revised that loss to 18 percent. The revision spooked traders, and ultimately some of their assets had to be dumped in a fire sale. Bear Stearns also lent $3.2 billion to bail out one of the funds after Wall Street banks demanded their money back.

Analysts worried about the ripple effects Other hedge funds holding similar securities had to mark down the value of their assets. Banks suddenly got skittish about making big loans.

Some analysts wondered whether the era of easy money was ending. Daniel A. Strachman, author of "The Fundamentals of Hedge Fund Management," noted that the markets had put a lot of confidence in the new hedge-fund-dominated financial system even though it had not been tested seriously during the economic expansion of the past five years.

"I think there are a significant amount of people who call themselves hedge-fund managers who have been very lucky because they were able to ride the market wave," he said.

But as the Bear Stearns case showed, it may be impossible to know from where the next crisis will emerge and whether there are other troubled hedge funds.

"Wall Street creates all these increasingly sophisticated financial products, and no one really seems to understand them but the people involved in creating them," Freed said. "They assure everybody that everything's going to be okay, and we are forced to believe them."
Re: Bobo gone walkabout for a few weeks... By anthony kalantzis on 7/6/2007 1:48 PM
Patchie ... i read somewhere that you tried to sue the SEC but couldnt find a lawyer who would touch it ...is that true ??
You must admit Altomare must have big cohunas for suing the SEC .

The difference between USXP and JAGH or even OSTK .. or any stock for that matter ,is that USXP has the largest short position in the entire stock market ...if you dont beleive me , ask an expert ..
i think it bothers you when altomare speaks about naked shorting , because the MEDIA will associate naked shorting with companies like USXP who LOOK like a fraud shell ..but arent ,thus discrediting the whole subject matter altogether and that makes your hard work look fruitless.
You think USXP is similar to CMKX .... that where youre dead wrong .
IF you would have done your research instead of screaming DILUTION just like the bozos at the SEC ,you would realize Altomare has been fighting this battle longer than almost anyone ,and at the same time he is trying to grow a company .

What the stock market needs is hundreds of ceo's to put some pants on and start suing and raise a little hell scream just like ALTOMARE




a few weeks... By Thoughtpolice on 7/7/2007 6:50 AM
If you think anyone is uninformed enough to only fight for an individual company at this point, you are mistaken Anthony. This is where the scapegoat or misdirection comes into play. Go ahead Alt