Financial Innovation = Creative Counterfeiting Schemes by Wall Street

The new Sanity Check blog by Bob O'Brien is out. He gives us his take on the subprime meltdown. For those who get befuddled by the convolutions used to explain how they first naked short the stock and then naked short the bonds, using cdos, tranches etc, he included a picture which I pasted in below. The blog has a pretty accurate depiction of what went on imo. I invite you all to follow the link down the rabbit hole.

[q url="http://www.thesanitycheck.com/BobsSanityCheckBlog/tabid/56/EntryID/732/Default.aspx"]
"By all appearances, what is actually going on is nothing more than the equivalent of naked short selling, but in the bond market. This fundamentally fraudulent behavior is completely consistent with what we have seen in the stock market. It involves the fraudulent misrepresentation of a derivative (read, counterfeit) as the genuine article. In the stock market, it is the representation of a securities entitlement for which no stock has been delivered as being equivalent to genuine registered stock. It isn't. It has none of the rights of stock. It is a sham transaction."

[/q]

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Mark Mitchell of Deep Capture also put out an exposé on how all over the world the press is covering the story of the naked short selling that toppled the US financial markets, yet the press in the United States refuses to cover the story. So if you live in the US, you probably have missed this.

Wall Street Journal Reports that Short Selling Fueled Panic

November 25th, 2008 by Mark Mitchell

Journalists who write about short selling hedge funds fall into three categories.

The first category is comprised of a very small number of journalists who have deliberately whitewashed the dubious activities of their short selling sources. These journalists–such as Herb Greenberg (whose stories for MarketWatch.com invariably served the interests of the same short sellers who are now paying Herb’s salary), and former BusinessWeek reporter Gary Weiss (who works with a cast of convicted criminals and flimflammers to smear the reputations of people who are critical of short selling crimes)–are, at some level, corrupt.

The second, larger category is comprised of journalists who gorge on the junk food fed to them by the hedge fund lobby, subsequently farting out the predictable fog – “short sellers are vital to the markets;” “short sellers are vital media sources;” “short sellers were right about company X because company X is now bankrupt.” To which you say, yeah, but some of those short sellers commit crimes that destroy companies – and the journalists say, yeah, that might be, but it’s hard to prove a crime, deadlines loom, and sloth has its appeal, so “fart, fart, fart.”

The third category is comprised of the small but growing number of journalists who have actually spent some time chewing on the data and the evidence – and are now digesting this nourishing roughage into something a bit more solid – something like stories that show that short selling shenanigans just might have contributed to the near total collapse of the American financial system.

As evidence that the latter sort of journalists do, indeed, exist, consider that no less than five Wall Street Journal reporters spent several weeks working together on an investigative story about how short selling might have helped fuel the panic that nearly took down Morgan Stanley in September.

The result, published yesterday, revealed that:

Click the link to read the rest of the blog.

http://www.deepcapture.com/wall-street-journal-reports-that-short-selling-fueled-panic/

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Here is a short video of Dylan Rattigan telling how the looting of the world was legally pulled off, using a compensation scheme.

http://link.brightcove.com/services/player/bcpid1079049304?bctid=4123830001


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Regulators Spring Into Action Against Naked Short Sellers. Or not. December 7th, 2008 by Patrick Byrne

As is explained in numerous pieces in DeepCapture, there are many cracks in the settlement system, one of them being the DTCC’s Continuous Net Settlement system, or CNS. I am highly confident that the federales (at least, the SEC) are not permitted to explore the other cracks, that the failures to deliver that they see within the CNS are thus but a small fraction of all that exist, and that, therefore, trying to gauge the depth of the naked short selling problem from the level of FTD’s in the CNS is like trying to guess the condition of an automobile from the level of water in its radiator.

But it’s a start. Given that the CNS system is the one place the SEC can look, and might be able to do something about, it is instructive to see how well they are cleaning up unsettled trades there.  Towards that end, DeepCapture has analyzed the data that the SEC released last week. These graphs show their fine progress in that regard.

see chart

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Dr. Patrick Byrne, Overstock.com CEO stepped to the forefront of this mess. He deserves the Pulitzer Prize for causing the government to begin shutting down the scam. Here he did an interview with Cade Metz discussing his 4 year crusade to  expose the naked short selling counterfeiting scheme.

"Patrick Byrne doesn't call it an economic meltdown. He calls it "the de-leveraging of a civilization.

When the ever-quotable Overstock.com CEO last sat down with Radio Reg, the world still pegged him as a tin hat–wearing crackpot. But now that Wall Street has buckled under its own excess, he's been recast as an financial soothsayer.

. . .

Somewhere along the way, Byrne compares the country's financial brain trust to a pair of post-coitus behavioral psychologists. And that's the boring bit."

The article and video can be found here.

http://www.theregister.co.uk/2008/12/03/patrick_byrne_cast/