Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea - UPDATE 10/23 - NEW MUST SEE VIDEO

T.V.'s video seems to have many people opposed to its publication. Although it was selected to be viewed on cable, it received an inordinate amount of negative votes. 55% for and 45% against. Early on, the ratings were in the 94 to 6 area.

Another muckraking story just posted with almost 500 views got a 80-20 rating and it implicated the CIA who has the power and need to keep keep things under wraps. It will be interesting to see if once this story gets some attention if the ratings proportion decline as rapidly as "Destroying Companies for Profit."

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea - UPDATE 10/23 - NEW MUST SEE VIDEO

A positive note for the weekend, at least I see this as positive. The recent flood of government money into the world markets along with the recent reduction in short term interest rates has, in fact, been having a very positive impact. The proof is in the following chart of 1 month libor rates. 1 Month libor has fallen from 4.5 in mid October to 1.62 today. 1 month libor is important because most ARM loans are pegged to 1 month Libor PLUS some pre defined amount. i.e. 1 month libor + 2 percent. So, ARMs which reset will now will at rates in the 4% range. That ultimately means far fewer foreclosures. In addition, low short term libor rates provide more options for financial institutions who are engaged in workouts with borrowers who are now in financial difficulty. I am not suggesting that the end to this mess is at hand, but I do think the situation looks brighter this week than it diid just two weeks ago.

During the past month, various world governments have committed nearly two trillion dollars to support the financial institutions of the world. In addition, short term government lending rates have been lowered around the world. In the short term, this enormous injection of cheap money is the medicine that the world needs to survive. And, as we all know, before we get to the long run, we must first survive the short run.

http://stockcharts.com/h-sc/ui?s=$LIBOR&p=D&yr=2&mn=0&dy=0&id=p52669926424

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea - UPDATE 10/23 - NEW MUST SEE VIDEO

Bud, Bobo, Patchie, Patrick

Maybe your efforts are now being amplified.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aatlky_cH.tY&refer=worldwide

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea - UPDATE 10/23 - NEW MUST SEE VIDEO

http://stockcharts.com/h-sc/ui?s=$LIBOR&p=D&yr=5&mn=0&dy=0&id=p79725561396

This is where is needs to start. Plenty of cheap short term money at very low rates is the fuel that drives the world's economic engine! It is not all gloom and doom!

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea - UPDATE 10/23 - NEW MUST SEE VIDEO

The SEC was "RIGHT" to CLAMP DOWN" on NAKED SHORT SELLING



The Wall Street Journal stated in a lead editorial that the SEC was "reasonable" to "clamp down" on naked short selling. Well, that was progress of sorts, though one wonders how it could have taken all these years for the nation's most important newspaper to suggest that it might be "reasonable" to put an end to criminal activity that has eviscerated hundreds of companies and destroyed countless lives.

And now that this criminal activity has been implicated in the Humpty Dumptying of our financial system, one grows wistful for the golden age of journalism when editorialists (people working for famous newspapers, not just cyber weirdos) would express a little outrage, demand that heads roll – muster something better than "reasonable" to describe the limpid "clamp down" of an SEC that bows in oily servitude to the very short-sellers who manhandled our markets.

Alas, The Wall Street Journal is not angry about the scandal of naked short selling. To the contrary, it devotes most of its editorial to tut-tutting the SEC for taking the mild step of requiring hedge funds to disclose their short positions. This, the Journal laments, means the government wants to "slap a scarlet letter on short sellers." And (shed a tear) hedge funds will now have to "worry that their crooked schemes & strategies will be put on display for the world to see."

Might the world like to see which hedge funds are employing the strategy of illegal naked short selling – offloading huge chunks of phantom/fake stocks that they do not possess – phantom stock – in order to drive down prices? No, nothing to see there, says the Journal. Having thoroughly investigated the matter, the editorialist reports that there is "no evidence of widespread naked shorting of financial stocks in this panic." Indeed, the Journal assures us that there is no evidence that short sellers have engaged in any market manipulation whatsoever.

That is a mighty bold claim. As the Wall Street Journal itself reported, the SEC has ordered two dozen hedge funds to turn over trading records as part of its investigation into possible short-seller manipulation of six big financial institutions — American International Group, Goldman Sachs, Lehman Brothers, Morgan Stanley, Washington Mutual, and Merrill Lynch.

The SEC has never in history prosecuted a major case against a short seller, and there is no reason to believe that it is actually going to nail someone now. But it is not difficult to see why the SEC feels that is has no choice but to investigate.

It must investigate, or at least appear to investigate, because the data scream, "Investigate!"

Take the case of Washington Mutual, which met its demise on the same day that the Journal published its editorial. While the SEC has not yet released data covering the last couple weeks of turmoil, the data through June show that at one point that month "failures to deliver" of Washington Mutual's stock reached an astounding 9 million shares. From June 5 to June 19 there were, on any given day, at least 1 million WaMu shares that had "failed to deliver."

In other words, HEDGE FUNDS and BROKERS sold as many as 9 million shares that they did not possess (which is why they "failed to deliver" them[what were the suckers getting when they put up cash to buy this trash), and they kept the market saturated with at least 1 million phantom shares for more than two weeks. WaMu's stock price dropped by more than 30% during this period. Similar attacks, with similar effects, occurred one after another in the months leading up to June.

That is very good evidence of illegal market manipulation and fraud!!!!!

Aside from Washington Mutual, Bank of America, Fannie Mae, MBIA, Ambac, and close to 50 smaller financial firms – not to mention a couple hundred non-financial companies – have appeared on the SEC-mandated "threshold" list of companies whose stock has "failed to deliver" in excessive quantities.

That, too, is very good evidence of illegal market manipulation.

What media manipulation can that explain the Journal's claim that there is "no evidence" that naked short selling contributed to our financial crisis. Or it the Journal does not understand the methods that naked short sellers use to manipulate the markets. The Journal also does not understand how powerful financial elites manipulate the government (and the media).

Peter Chepucavage, the former SEC official who authored Regulation SHO (the rules that governed short sales from 2005 until the SEC temporarily banned short-selling of financial stock last week) has told us that the rules were watered down under fierce pressure from the hedge fund lobby.

One result is that Regulation SHO did not force short sellers to borrow real shares before they sold them. They were given three days to produce stock before it was declared a "failure to deliver." If they missed the three-day deadline, they were given another ten days, after which they were supposed to buy (not borrow) real shares and deliver them, or face penalties.

In practice, HEDGE FUNDS and BROKERS ignored the deadlines without repercussions.

A FREE RIDE FOR 13 DAYS ON NO SHARES. But even traders who met the deadlines were able to churn the markets. Since they were not required to possess real shares before they hit the sell button, they could offload a large block of phantom FAKE stocks and let them push the down price and dilute supply with counterfeit stock for three to 13 days. When the deadline arrived, they might borrow real shares and deliver them, and then sell another block of phantom stock, which would hammer prices down again for another three to thirteen days.

Or, rather than borrow real shares, the hedge fund might buy stock (the price having been knocked down during 13 days of diluted supply) from a FRIENDLY BROKER. WHEN THEIR FRENDLY BROKERS [CO CONSPIRITORS] did not have any stock to sell the hedge fund, but they pushed the sale button anyway. The hedge funds then used the broker's phantom stock to settle its initial sale of phantom stock, and when the broker's deadline came, he bought an equal quantity of phantom stock from another broker, and so on.

A lot of bought friendly journalists have portrayed this naked short selling as "legal." In fact, it is grossly illegal assuming the goal is to manipulate markets. But the SEC until recently shied away from making that assumption. So long as the hedge funds met the delivery deadlines, they could distort and destroy at will.

Another result of the short-seller lobby's intervention is that a company does not appear on the SEC's "threshold" list unless there are failures to deliver of more than 10,000 of the company's shares (and at least 0.5% of its total shares outstanding) for five consecutive days. So long as there are no failures on day six, there are no flashing red lights at the SEC. That is, threshold (excessive) levels of phantom shares can float around the system for a total of eight days (three days before they are registered as "failures to deliver," plus five more) without a company and their inocent honest shareholders being designated a VICTIM OF NAKED SHORT SELLING

An eight-day NAKED SHORT ATTACK (or even just a one day blast) of, say, a couple-hundred thousand phantom shares can knock down a stock's price very nicely. NAKED SHORT ATTACKS s of a MILLION-PLUS shares, which ARE COMMON, can do MUCH more damage.

If a company has weaknesses that can be blown out of proportion with help from CERTAIN FRIENDLY MEDIA, and if hedge funds blast the company with phantom stock, then pause, then blast again, then pause, then blast again — over and over — for a couple of months, each time driving the share price down [stealing cash from the honest innocent investor shareholder] then the company's share price can soon be in the single digits. – without ever having appeared on the SEC's threshold list.

Unsurprisingly, the data through June shows this NAKED SHORTING BLAST-pause-blast pattern in the stocks of nearly every major financial institution that has been wiped off the map, and quite a few that were in death spirals before the SEC temporarily banned short-selling. Very often, huge failures to deliver have occurred in stretches of precisely five days – just long enough to keep a stock off the threshold list.

The attack on Bear Stearns, for example, began on January 9, when hedge funds naked shorted more than 1.1 million shares. The shares "failed to deliver" at the end of Friday, January 11 (the three-day deadline). For the next four days, beginning Monday, January 14, there were massive failures to deliver, peaking at 1 million shares on January 17. That is, the attack lasted a total of eight days, with failures to deliver lasting precisely five days. On day six, there were few failures to deliver, so Bear did not appear on the threshold list.

Over the next few weeks, there were several more NAKED SHORT ATTACKS blasts – with failures to deliver ranging from 200,000 to 500,000 shares. Those were threshold levels, but the failures lasted less than five consecutive days, so no flashing red light at the SEC.

On February 28, 800,000 shares of Bear Stearns failed to deliver. For the next five business days, anywhere from 100,000 to 350,000 shares failed to deliver. On day six, there was a pause — few failures to deliver. So no threshold list – no flashing red light at the SEC.

A week later, just before CNBC's David Faber reported the false information (given to him by a hedge fund "friend" whom he had "known for twenty years") that Goldman Sachs had cut off Bear's credit, somebody NAKED SHORTED more than a MILLION shares of Bear's stock.. Over the course of the next couple of weeks, there was a sustained effort to drive the stock to zero, with massive failures to deliver every day — peaking at 13 MILLION SHARES. [REMEMBER NAKED SHORTERS RECIEVED REAL CASH FOR THEIR COUNTERFIET SHARES FROM SOME POOR INNOCENT NEW INVESTOR AND AT THE SAME TIME THEY THEY WERE KILLING THE PRESENT SHARE HOLDERS

This attack lasted long enough to put Bear Stearns on the threshold list, but by then, it was too late. The bank's mangled remains had been swallowed by JP Morgan. Ultimately, at least 11 MILLION SHARES of Bear Stearns were sold and EVER DELIVERED never delivered.

THE NEXT QUESTION IS WHERE DID ALL THE SHARES GO?? IS ALL OUR COMPUTER TRADING SYSTEM DISHONEST & ALL SCREWED UP GARBAGE GARBAGE OUT????

Meanwhile, the naked short sellers began their attack on Lehman Brothers. On March 18, Lehman's stock had begun to increase sharply, so somebody unleashed more than 1.5 MILLION PHANTOM shares. Those failed to deliver on March 20. For the next three days, there were failures to deliver of between 400.000 and 800.000 shares — far exceeding the daily "threshold." That helped the share price to fall sharply, but on day five, there were no failures, so Lehman didn't appear on the threshold list of companies victimized by naked short selling.

On April 1, another round of naked short selling commenced, coinciding with a wave of false rumors about Lehman's liquidity. That continued until April 3, when SEC Chairman Christopher Cox, for the first time, told a Senate committee hearing that naked short selling was a big problem. Using the words "phantom stock," he said many companies had been affected and vowed to crack down.

For a few weeks after that, there was not much new naked short selling.

Then, on May 21, short-seller David Einhorn gave his famous speech accusing Lehman's executives of cooking their books. Though Lehman, like most banks, was guilty of participating in the dodgy business of securitized debt, it was not cooking its books. It had, however, failed to mark some of its assets down to levels prescribed by Einhorn, who waved the CMBX index as the proper barometer of commercial mortgages.

The CMBX comes from a company called Markit Group, which is owned by four HEDGE FUNDS funds, the names of which the Markit Group will not disclose. I don't know if the managers of those hedge funds are friends of David Einhorn, but the Wall Street Journal's Lingling Wei published a story in February noting that the CMBX "doesn't make sense." It grossly undervalues commercial property, implying default rates, for example, that are four-times higher than they are in reality.

Nonetheless, the "FRIENDLY MEDIA YAHOOS" including the Wall Street Journal, trumpeted Einhorn's analysis, which was distorted in many other ways – .

For now, it is enough to know that coinciding with Einhorn's speech, somebody naked shorted more than 200,000 shares (the settlement date for that sale was May 27, three business days after the speech, owing to a holiday weekend). Thus began a five day stretch of failures to deliver (ranging from 120,000 to 450,000 shares). On day six, as usual, there were few failures to deliver, so Lehman did not appear on the threshold list.

After a pause of a few days, somebody circulated the falsehood that Lehman had gone to the Fed for a handout. Coinciding with that rumor, hedge funds naked shorted close to 1.5 million shares. Those shares failed to deliver three days later, on June 9. The next day, there were 650,000 failures. The day after that, 263,000 failures. On day four, there were 510,000 failures. On day five, there were 623,000 failures. Time for Lehman to appear on the threshold list. But, on day six, of course, the failures to deliver stopped. No list – no flashing red light at the SEC.

Throughout this time, Einhorn continued to appear on CNBC and in the major newspapers, doing his best to make Lehman's problems (which were real, but probably, at this stage, manageable) appear to be both catastrophic and criminal. From May 21, the day of Einhorn's speech, to June 15, the stock lost almost half its value.

For reasons that I cannot fathom, Lehman then opted for a strategy of appeasement. Rather than challenge Einhorn's assumptions, Lehman aimed to silence him and his media yahoos by doing what they asked. It "reduced its exposure" to mortgages, primarily by marking them down to levels dictated by Einhorn's bogus index – the CMBX. This is the main reason why it booked a 2.8 billion loss in the second quarter.

When Lehman announced its quarterly results, on June 16, there was another blast of naked short selling, with failures to deliver at threshold levels from June 19 to June 24. Exactly five days. Then the failures stopped. No threshold list. No flashing red light.

I look forward to the day (in a few months) when the SEC will release data covering July to September. But I can tell you right now what happened next.

On June 30, somebody floated the false rumor that Barclays was going to buy Lehman at 15 dollars a share (it was then trading at 20). Simultaneously, hedge funds no doubt naked shorted large blocks of shares. It's a safe bet that the data will show failures to deliver lasting precisely five days.

On July 10, somebody (SAC Capital?) circulated the false rumor that SAC Capital was pulling its money out of Lehman. Hours later, there was another false rumor — that PIMCO was pulling out its money. Quite certainly, these rumors were accompanied by naked short selling, with failures to deliver beginning three days later, and probably continuing at threshold levels for precisely five days. Lehman's stock lost almost 50% of its value in the four weeks leading to July 15..

At this point, the SEC FINALLY WAS FORCED to realize what was happening to Lehman. It realized that similar madness had destroyed Bear Stearns. It realized that AIG, Citigroup, Fannie Mae, Freddie Mac, Bank of America and fifty other financial companies were getting clobbered in exactly the same fashion.

Clearly, CRIMINAL NAKED SHORT SELLING WAS A CURRENT & PRESENT real DANGER to the stability of the financial system. So the SEC issued an emergency order forcing hedge funds to borrow real stock before they sold it. No more saying "Yeah, my cousin Louie has the stock in a drawer somewhere." No more naked short selling.

This order protected only 19 big financial institutions – which is as far as the SEC thought it could go and still retain friendly relations with its short-selling paramours – but it was something. During the three weeks that the emergency order was enforced, Lehman's stock price increased by around 50 percent. The other companies that had been under attack enjoyed similar rebounds.

The short-sellers, of course, fumed. Some of those fumes wafted to The SHORT SELLER FRIENDLY Wall Street Journal and other prestigious publications, which lambasted the SEC for issuing the emergency order. They published all manner of mumbo-jumbo about the emergency order wrecking "market efficiency" – though the only evidence of this was an utterly dubious report circulated by the short seller lobby (see here for the details), and it was hard to comprehend what could possibly have been "efficient" about a market getting smothered with false information and fake supply.

Of course, the SEC, captured by the short-sellers, and ever mindful of the media, decided to let its emergency order expire, and announced no new initiatives to stop naked short selling..

The day after the emergency order expired, Lehman's stock nosedived. So did a lot of other stocks that had enjoyed a temporary reprieve.

Mark my words, the data for August and September will show that soon after the order was lifted, rampant naked short selling began anew.

It will show a sustained attack on Fannie Mae and Freddie Mac, with failures to deliver exceeding one million shares, until the day the two companies were nationalized. It will show Lehman getting hammered (blast-pause-blast) until its stock was so low that there was no way it could raise capital. And it will show that in Lehman's final days, hedge funds sold unprecedented amounts of phantom stock, knowing that the stock would never, ever have to be delivered.

Two days after Lehman was vaporized, AIG watched its stock fall to as low as one dollar. The data through June shows that AIG was repeatedly blasted with phantom stock, often in stretches of eight days (three + five), with peak failures to deliver reaching 2 million shares. It's a safe bet that the data will show that these attacks continued, and grew in magnitude, until a price of one buck per share resulted in paralysis, and AIG had to be nationalized. But the company never appeared on the SEC's threshold list.

After AIG, the rumor was that Citigroup would go down next. The data through June shows that Citigroup was bombarded – blast, pause, blast – with massive amounts of phantom stock. Failures to deliver peaked at 8 million shares. No doubt, the blasts continued and grew in magnitude in the days leading up to September 16, when Citigroup's stock went into a death spiral.

On September 17, the SEC rushed out new rules governing naked short selling. The new rules seemed a lot like the old rules. Hedge funds would not have to actually possess stock before selling it. Instead, they would merely have to "locate" the stock. The SEC would have no way of knowing whether hedge funds had "located" stock, but if they lied and told their broker, "Yeah, I located the stock, I got it somewhere, push the sell button," then that would be "fraud." Presumably, the BROKERS, who depend on the hedge funds for most of their income, and are COMPLICIT in their NAKED SHORT SELLING, would line up to inform the SEC that their clients were telling them lies.

Meanwhile, the hedge funds would still have three days to deliver stock, with no strong penalties for failing to do so, and no mechanism for determining whether a hedge fund had delivered real stock, as opposed to new phantom stock that it had received from a friendly broker. As for the "threshold" of five consecutive days before a company could get on the list that sets off the flashing red lights that the SEC ignores – that would remain the same.

When these rules were announced, the short-seller lobby cheered loudly. The media transcribed the lobby's cheerful press releases, and then the naked short sellers eliminated Merrill Lynch. After that, they turned on Goldman Sachs and Morgan Stanley, at which point both stocks went into death spirals and the companies' CEOs treated us to the spectacle of calling the SEC to complain that Morgan and Goldman (ie., the companies that housed the brokerages that invented and profited the most from naked short selling) were now getting mauled by their own monstrous creations.

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea - UPDATE 10/23 - NEW MUST SEE VIDEO

Bobo

I can't seem to make a comment to Bud's commentary - where did he get the support for 14 trillion moved offshore????

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea - UPDATE 10/23 - NEW MUST SEE VIDEO

Hey Bobo

Read this please

http://biz.yahoo.com/portfolio/081027/tag_www_portfolio_com_2008_6_15199.html

Is Wall Street "derisking" or "decriminalizing" like this article aludes to???

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea - UPDATE 10/23 - NEW MUST SEE VIDEO

I'm guessing the retirement moneys that I thought were safe in treasuries is now toast, too. Nowhere is safe!
Awesome.
At what point will it be called a Depression rather than a recession?

Bobo, I've followed you since the NFI board (before NCANS). Thanks for all you do. Too bad that the 'powers that be' didn't listen.

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea - UPDATE 10/23 - NEW MUST SEE VIDEO

http://uk.sys-con.com/node/722376

Re: Mainstreet Media Comes down on SEC Hard...

No surprise that Cox is the primary target to deflect the blame...he is the poster child in the making...the perfect fall guy for the mess we are all in.
This was on MSNBC and most mainstream media. No surprise here.

http://www.msnbc.msn.com/id/21134540/vp=27304832�

Of course we all knew this was going to happen.

IMO, Democrats were most to blame by stopping legislation to regulate Fannie and Freddie when more Republicans were saying there was a huge bubble about to pop. However, since the Dems are in control, they will simply point the finger in other directions (you will surely notice the big front page news they will get with lots of coverage as they make their moves with slight of hand to rrid these nasty markets of all the corruption and greed.). They will certainly need to cut off a few heads and take some big kahunas down and then they will say "There! We've solved that problem, you should all feel good now, so everyone can go back to your business...and by the way, here's your hand out, go away, we've got things under control...just leave this to us and you will feel good."

In other words, "Pay no attention to that man behind the curtain."


Next action, I fully expect the SEC to be moved under the DOJ in short order.

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

Bobo - in an effort to share, see this article by Mike Baker (Peoples Weekly) where you are affectionantly mentioned -
---------------------------
Deb from New Mexico said "Taxpayers win the award for electing the Yutzes that appointed the Yutzes that failed to oversee the Yutzes that…” you get the point. She added that “P.S…. I think you should televise the event, we’re in urgent need of comic relief.”

A loyal reader who shall remain anonymous wrote that “… the American people win the Yutz award for allowing the institution that creates laws, interprets laws and enforces laws to now own my mortgage, control my investments, determine how much wealth is fair to possess and soon oversee my health care. What could possibly go wrong with that?” I’m not positive, but I think he’s being facetious with his question.

Many, many voters voiced similar thoughts… basically it seems that there is a general understanding that all of us average folk share some responsibility. Whether it was for trying to game the mortgage system or simply for not demanding more of our elected officials, or even for not trying our best to be informed, we can’t heap all the blame on Congress, any particular administration or Wall Street. As the saying goes, don’t throw stones in glass houses, particularly if you’re sitting on an adjustable rate mortgage.

But take heart… I suspect that we won’t have to live with the blame thing for long. During our regular morning staff meeting the other day we consulted the Magic 8 Ball regarding the upcoming election. I consider the Magic 8 Ball to be as accurate, perhaps more so, than any of the polling wonks that surface during national elections. This fateful morning I asked “Is socialism just around the corner?” Bobo shook the hell out of the ball and we all peered into the abyss. Slowly the answer appeared… “You bet."

So there you have it. The beauty of socialism is that it doesn’t encourage the population to feel responsible for anything. No responsibility, no blame… my stress level is already dropping. And just think, not only does it promote mediocrity, it practically rewards it. How much better will you feel in the coming years as we grow the national entitlement scheme and reduce that pesky, nagging feeling that hard work is rewarded.
------------------------------------
Couldn't have said it better myself

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

Mainstreet Media Comes down on SEC Hard..

http://investorvillage.com/smbd.asp?mb=3532&mn=26481&pt=msg&mid=5938399

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

Is there any way that we can find out what members of congress and senate have their monies in Hedge funds???

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

I wonder who dropped dime on Ms. Thompsen??Could it have been Dick Fuld of Lehman??Nah, but we may have another Gary Aguirre in the making!! read this..and enjoy.

Senate Investigators Target SEC Officials

Senate Investigators Target SEC Officials

Inside Knowledge on Bear Stearns Cited





By Amit R. Paley

Washington Post Foreign Service
Wednesday, October 22, 2008; Page D03

Senate investigators are looking into whether senior officials at the Securities and Exchange Commission provided confidential information to former colleagues working on Wall Street.

The inquiry began after the SEC's Inspector General received an anonymous tip earlier this month. It alleged that Linda Chatman Thomsen, the agency's director of enforcement, gave information about investigations into Bear Stearns around March to the general counsel of J.P. Morgan Chase, which at the time was considering whether to buy the troubled investment bank. The Oct. 7 complaint claimed that the inside knowledge obtained by the attorney, Stephen M. Cutler, a former head of enforcement at the SEC, allowed J.P. Morgan to low-ball its bid to purchase Bear Stearns.

A copy of the complaint was also provided to Sen. Charles E. Grassley (R-Iowa), the ranking member on the Senate Finance Committee.

In a letter sent last night to the SEC, Grassley asked for information about all SEC investigations into Bear Stearns, as well as communications between SEC officials and J.P. Morgan Chase about those cases.

"Such conduct would reinforce the appearance that Enforcement decisions, and disclosures of information about them, are sometimes based not on the merits," he wrote in his letter yesterday, "but rather on access to senior officials by influential representatives of power brokers on Wall Street."

An SEC spokesman declined to comment last night. J.P. Morgan Chase did not respond to a request for comment last night.

The inspector general, H. David Kotz, issued a report last month that criticized what some agency employees called the "common practice" of outside lawyers gaining access to senior SEC officials. He also said the agency should consider disciplining Thomsen for such behavior while she was in charge of an insider-trading case.

Grassley raised concerns last year about improper communications between high-level SEC officials and attorneys at firms under investigation.



Recs: 12 Senate Investigation Targets SEC Officials
http://www.investigatethesec.com/drupal-5.5/node/451

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

In case someone missed this--well, it`s to good to miss.

Today I write not to gloat. Given the pain that nearly everyone is experiencing, that would be entirely inappropriate. Nor am I writing to make further predictions, as most of my forecasts in previous letters have unfolded or are in the process of unfolding. Instead, I am writing to say goodbye.
Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, "What I have learned about the hedge fund business is that I hate it." I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.
There are far too many people for me to sincerely thank for my success. However, I do not want to sound like a Hollywood actor accepting an award. The money was reward enough. Furthermore, the endless list those deserving thanks know who they are.
I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices. What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.
So this is it. With all due respect, I am dropping out. Please do not expect any type of reply to emails or voicemails within normal time frames or at all. Andy Springer and his company will be handling the dissolution of the fund. And don't worry about my employees, they were always employed by Mr. Springer's company and only one (who has been well-rewarded) will lose his job.
I have no interest in any deals in which anyone would like me to participate. I truly do not have a strong opinion about any market right now, other than to say that things will continue to get worse for some time, probably years. I am content sitting on the sidelines and waiting. After all, sitting and waiting is how we made money from the subprime debacle. I now have time to repair my health, which was destroyed by the stress I layered onto myself over the past two years, as well as my entire life -- where I had to compete for spaces in universities and graduate schools, jobs and assets under management -- with those who had all the advantages (rich parents) that I did not. May meritocracy be part of a new form of government, which needs to be established.
On the issue of the U.S. Government, I would like to make a modest proposal. First, I point out the obvious flaws, whereby legislation was repeatedly brought forth to Congress over the past eight years, which would have reigned in the predatory lending practices of now mostly defunct institutions. These institutions regularly filled the coffers of both parties in return for voting down all of this legislation designed to protect the common citizen. This is an outrage, yet no one seems to know or care about it. Since Thomas Jefferson and Adam Smith passed, I would argue that there has been a dearth of worthy philosophers in this country, at least ones focused on improving government. Capitalism worked for two hundred years, but times change, and systems become corrupt. George Soros, a man of staggering wealth, has stated that he would like to be remembered as a philosopher. My suggestion is that this great man start and sponsor a forum for great minds to come together to create a new system of government that truly represents the common man's interest, while at the same time creating rewards great enough to attract the best and brightest minds to serve in government roles without having to rely on corruption to further their interests or lifestyles. This forum could be similar to the one used to create the operating system, Linux, which competes with Microsoft's near monopoly. I believe there is an answer, but for now the system is clearly broken.
Lastly, while I still have an audience, I would like to bring attention to an alternative food and energy source. You won't see it included in BP's, "Feel good. We are working on sustainable solutions," television commercials, nor is it mentioned in ADM's similar commercials. But hemp has been used for at least 5,000 years for cloth and food, as well as just about everything that is produced from petroleum products. Hemp is not marijuana and vice versa. Hemp is the male plant and it grows like a weed, hence the slang term. The original American flag was made of hemp fiber and our Constitution was printed on paper made of hemp. It was used as recently as World War II by the U.S. Government, and then promptly made illegal after the war was won. At a time when rhetoric is flying about becoming more self-sufficient in terms of energy, why is it illegal to grow this plant in this country? Ah, the female. The evil female plant -- marijuana. It gets you high, it makes you laugh, it does not produce a hangover. Unlike alcohol, it does not result in bar fights or wife beating. So, why is this innocuous plant illegal? Is it a gateway drug? No, that would be alcohol, which is so heavily advertised in this country. My only conclusion as to why it is illegal, is that Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other additive drugs, than allow you to grow a plant in your home without some of the profits going into their coffers. This policy is ludicrous. It has surely contributed to our dependency on foreign energy sources. Our policies have other countries literally laughing at our stupidity, most notably Canada, as well as several European nations (both Eastern and Western). You would not know this by paying attention to U.S. media sources though, as they tend not to elaborate on who is laughing at the United States this week. Please people, let's stop the rhetoric and start thinking about how we can truly become self-sufficient.
With that I say good-bye and good luck.
All the best,
Andrew Lahde

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

>>>Never mind that the bailout plan isn't working. Credit markets are still locked up, because the recipients of the bailout aren't doing what they are supposed to with the money - lending it out. <<<

As you must know, the bailout plan is not yet working because no monies have yet been distributed from the $700B. It feels as though you are really stretching in your attempt to bash this plan.

Well, actually there has already been a very significant positve by product of this plan. The TED spread has dropped from 4.6 to 2.7 during the last three trading sessions. This means short term LIBOR is finally starting to decline. That is important because most adustable rate loans are pegged to short term LIBOR. Time will tell, but I feel confident that the actions taken by Hank and Ben along with the actions taken by other world governments will turn this around. A trillion here and a trillion there, that's a heck of a lot of moolah! And of course the banks will lend the money once they have it, simply because that is what banks do to make a living. I am not your enemy, but I am also not going to make believe I agree with you when I do not!

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

The reason to desk a trade is the assumption that it can be delivered for a lower cost in the future. One fail can daisy chain if the same bond is sold numerous times, not counterfeited. If such a fail is reported multiple times, the actual value of the fail should be reported once.. not the multiple times that it could be reported. There seems to be a problem in the settlement and reporting department... ???? If broker A has both fail to receive and a fail to deliver, this should net out.

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

Bob, Do not believe it is only in the US. Here we see the same: http://www.20min.ch/tools/suchen/story/26343420.

The headline : "Trotz der versprochenen Staatshilfe zur Bewältigung der Krise will die UBS im nächsten Frühling sieben Milliarden Franken an Boni auszahlen"

Translation :
Despite the promised government help to cope with the crisis, UBS wants to pay seven billion francs in bonuses next spring.

I think these people won't get it until they see citizens with pitchforks at the gates of the bank.

Difference with the US, it makes the news. The press is not (yet) completely suppressed.

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

Bobo, now for the bright side, would it be safe to sa that if they can give all this $$ to these crooked "Banksters" (70 billion) in the guise of bonuses when it comes time to pay Overstock, Taser et al for the Rico charges that will ensue there will be more than enough to settle this case? I mean the way they are tossing money around another 100billion in damages should not hurt the government, all they have to do is bill the taxpayers, right?

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

Land grab??Why not Cash grab also. But to me what is most amazing is the fact that the United Kindom, Great Britain, England's newspaper, The Guardian had to report this for us to know the truth. Not the New York Times, The Washington Post, The daily News, USA today, Barrons, Bloomberg, Reuters, not ONE found this to be an interesting story. Well I guess Anna Nicole is still ranking up there above Corporate Malfeasance. They are doing this to us in broad daylight and there is not a thing we can do about it!!!

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

Susanne Trimbath letter to the SEC concerning failures in the bond market

http://www.sec.gov/comments/s7-08-08/s70808-471.pdf. Read footnote 5.

9% of the treasuries are failing and that represents only the primary dealers and could be higher.

I saw this explanation.. don't know if it is true.

"Settlement fails are reported by security class (that is,
Treasury securities, agency debt securities, and so forth).2
Dealers’ failure to deliver securities they have sold and
dealers’ failure to receive securities they have purchased
are reported separately. If primary dealer A does not
deliver a security to primary dealer B as scheduled, for
example, then dealer A reports a fail to deliver and dealer B
reports a fail to receive. In contrast, if primary dealer A
does not deliver a security to customer C, then dealer A
reports a fail to deliver and the fail to receive is not reported.
A settlement fail goes unreported if neither the buyer nor the
seller is a primary dealer."

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

Think of what a bond settlement failure means.

You give your brokerage money to buy a triple A government bond and instead of buying it, they desk it to you. They go under. You get nothing.

Failing to deliver shares is bad enough, but failing to deliver a bond is ridiculous.

People should be going to jail over this.

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

Trade Settlement Failures in U.S. Bond Markets

Susanne Trimbath
STP Advisory Services, LLC


September 23, 2008

STP Working Paper No. STP2007_1


Abstract:
In this study (an update and revision to our 2007 working paper), we estimate the total value of trade settlement failures in the US bond markets. Analyzing data from multiple sources, we show that the value of settlement failures is rising. Regulatory and market efforts to reduce the problem have been largely unsuccessful. In April 2008 fails to deliver in bond markets reached a peak value of $600 billion, a fail rate of nearly 9%. We calculate the resulting loss of tax revenue on payments in lieu of interest (on tax-exempt municipal and Treasury securities) to be $42 million per year to the federal government and $271 million per year to the states. We calculate the loss of use of funds to investors as a result of securities paid for but not received to be $7 billion per year.

Keywords: failure to deliver

JEL Classifications: G10, G14, G38

Working Paper Series

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

But the Wall St people getting the bonus will pay taxes on it won't they ? Well, maybe, maybe not.

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

Sure, giving all Americans healthcare is socialist... but giving away money from the government to cover the excessive lifestyles of the greedy players in the financial world is not only fine, it is necessary.

Help, help! I'm being repressed!

Re: Why The $700 Billion Landgrab By Wall Street Won't Work, And Other Miscellanea

Bobo, I think the TARP plan will work once the money actually starts flowing into the system. Thus far, very little money if any has actually been pushed into the system. Give it a few weeks. Europe has chosen a similar path to that of the U.S. This is not a freebee for the banks and I don't believe that the US tax payer will lose money on this. I think the recent change that was made which puts $250B directly into the banking system was a smart move because that $250B will result in $2.5T in new loans. This is the quickest way to prime the pump. That's exactly what our economy needs right now. Even though I believe that there are numerous crooks and scum-bags working over the markets, COX being the top numero uno scum bag, I actually trust Paulson. I believe that he and Benny B. are trying to right this economy. And, I believe that six months from now, because of what is being done in the US, Europe and Asia, this will be far less of an economic issue than it is at this moment.