naked capitalism

Anonymous says:

OK…clearly the regulators have no idea how the markets work. Or they are simply trying to create better exit points for themselves and insiders.

Here’s my advice.

Note to government officials of all stripes: shut the fuck up. The core problem is a lack of confidence. Virtually every public statement by these incompetents stokes more fear, primarily the fear that the people in charge have no idea what to do and are just randomly pulling levers.

A three-day ban on announcing new “solutions” would be a far more effective measure at this point.

doc holiday says:

The way I look at this short selling stupidity is fairly simple, you have nasty companies, like Profunds and Rydex, that sell inverse funds which bet on the downside by going short, but the reason behind inversion is based on the reality of having fraction-like denominators and numerators and equal parts and divisions. There is up and there is down!

As an example, Treasury bonds are bought by some people for the simple dividend yield potential and future cash flow streams — while some people hunt down the inverse and look for cheap bond unit pricing which allows them to gain future cash flow as the unit price goes up while the yield goes down. Then, those people have an opportunity to sell into panics, like now, when the price is going up and the yield is headed south.

This happens in exchange and trade, i.e, people take opposite sides on deals, as in arms-length transactions. Granted in this type of a crash related to accounting fraud, there is not honesty and this is what drives valuation to a point of irrationality. In this mess, there is uncertainty as to how long The Titanic can remain afloat.

See: On the night of 14 April 1912, during her maiden voyage, Titanic hit an iceberg, and sank two hours and forty minutes later, early on 15 April 1912. At the time of her launching in 1912, she was the largest passenger steamship in the world.

>> The shorts didn't grant options for people like Fuld or The Friends Of Angelo, or Ken Lay and the fine folks @ Enron — or any of the long list of CEOs that have probably taken a few Trillion $$ in compensation.

The shorts take a side of a bet that often says these bastards are crooks — yet now, these bastards have The SEC and Congress and Senate supporting option grants and future rewards for the crooks for just the upside, as they all deny any wrong doing. This synthetic structure to re-engineer simple fractions and arms-length transactions is criminal!

On October 6, 2008, CEO Richard Fuld testified before Congress. Rep. Waxman pointed out that Fuld had made nearly $.5B since 2000, a salary incomprehensible to the average taxpayer, while Fuld was guiding Lehman to bankruptcy. Waxman said to Fuld, "My question is a simple one. Is this fair?" Fuld did not give a straight answer to the question, but only a meandering reply.

doc holiday says:

CME Group, the world's largest and most diverse derivatives exchange, and Citadel Investment Group, L.L.C., a leading alternative investment and technology firm, today announced they have executed a non-binding term sheet to launch a joint venture company within 30 days, which will be the first electronic trading platform that is fully integrated with a central counterparty clearing facility for Credit Default Swaps (CDS). CME Clearing, the world's largest derivatives clearing house, will be the central counterparty for this solution.

>> Anyone know who owns CME Group.. trick question!

Anonymous says:

Shorts will piously proclaim the services they perform for the market as they perpetrate bear runs on stocks.

Uptick was there for a reason, kids, and 3 years from now, when they do a postmortem on this period of turmoil, it will be widely accepted that anyone who took the shorts word as to how the market worked was a fool.

Anonymous says:

What is ailing the markets is that there is no confidence in Treasury Secretary Paulson and his other Goldman Sachs’ buddies to fairly implement the $700 billion dollar financial rescue package. Paulson held a press conference Thursday to cover his butt by declaring that he couldn’t guarantee that his efforts would do any good. That is because he knows his only goal is to protect his pals, the crooks on Wall Street, and if collateral benefits to the economy occur it will be a miracle. Lets not waste good money on bad people, choose someone new to manage the bailout, someone Americans can trust. Paulson must go.

Caleb Mardini says:

“It’s hard to play a game when the rules change week to week. This is just another reason for people to stay on the sidelines.”

Exactly.

They’ve got to stop manipulating the markets! Prudent investors get screwed with all of this propping up. This is moral hazard on an entirely different level.