The Easter Bunny Says SEC Discovers That Unbridled Naked Short Selling Might Actually Be, Er, Not So Good....

http://www.thesanitycheck.com/BobsSanityCheckBlog/tabid/56/EntryID/699/Default.aspx

Bobo O'Brien is the Paul Revere of the Market Meltdown except unlike Paul, the Government Ignored the Alarm and now we will all pay severely.

7/15/2008 3:59 AM

Location: Blogs Bob O'Brien's Sanity Check Blog
Posted by:   bobo

Excerpts

Here's what you won't be hearing any time soon, or reading about in the NY Financial press: "Easter Bunny's prediction of massive, pervasive naked shorting crisis comes to fruition, destroys US market." "Patrick Byrne's call that system is in danger of vapor locking due to illegal market manipulation cause by NSS now 100% dead on." "Bob O'Brien spelled out exactly how NSS will cause systemic meltdown and erosion of public confidence in US markets, and is completely correct on all counts."

Nope.

What we are seeing is the US markets relentlessly melting down, as even the bulge bracket firms, and the "too big to fail" entities, are victimized by unbridled, unconstrained naked short selling. Exactly as used to be the case in the 1920's. Exactly in the manner that resulted in the SEC being formed, and the uptick rule (discarded just a few short months back as an anachronism), and requirements for timely clearing and delivery. All of which the SEC has basically ignored, very deliberately.

While the national net worth is stolen, and the markets are rendered a cesspool of crookery that makes an Afghan flea market seem rigidly honest.

Cox is going to introduce an emergency rule requiring that short sellers actually borrow the stock they then sell - in the two largest holders of mortgages in the nation. Why? Because apparently it is OK to put thousands of companies out of business using the same technique, but when it becomes so obvious that the taxpayers are going to get stuck with a massive obligation due to the bear raid and resulting crisis of confidence that nobody can pretend it isn't happening anymore, the SEC has to act. Sort of is forced to.

. . .

I predicted that we would see a financial calamity, which would put the entire burden of years of unbridled crookery by wall street, squarely on the backs of the taxpayers. And here we are. I also predicted that the SEC would use this entire contrived disaster to let the criminals off the hook for robbing the nation of its retirement savings. That is still to come, but mark my words, it's a coming. I expect what I described two years ago, where the government basically allows all the naked shorts to close out at current mark to market, essentially rewarding the largest financial theft in history, and rendering the constitutional protection of property rights a farce. That's the only way this can be cleaned up - we, the investors lose everything, and the guys who drove all our companies into the toilet get to keep 100% of the money they generated doing so.

Patrick just issued a statement on this that sort of says it all, albeit much more politely than I do. So much for equality under the law. Depends upon how much juice one has, I suppose. And the ugliest part about all of this is that the Wall Street firms also singled out for special protection by Cox, are the very same firms that largely made this illegal and predatory scam possible, and which benefited hugely from the practice.

Billions and billions and billions made, raping the future of America via its public companies and their capitalizations. The destruction of GDP for profit, unchecked by any of the entities chartered with ensuring it would never happen.

As to who is sucking out all the money being gained by gaming the system, how do you think so many hedge fund managers are making close to a billion a year, or more, without generating anything? No new drugs, no shoelaces, no intellectual property....nothing. Just pulling the money out of the market. They win. You lose. You pay, they collect.