Re Weiss - great response
Another "Expert" Chimes in With a Lot Of Hat, But No Cattle
Location: BlogsBob O'Brien's Sanity Check Blog
Posted by: bobo 1/22/2006 9:10 PM
(NOTE: Still no posting of the two messages below, and a third one just submitted - apparently Gary does share Jeff's penchant for ignoring dissenting views - not surprisingly, he doesn't want to tackle any heavyweights. See the final entry.)
Author Gary Weiss is trying to rise above the clutter and get his latest tome some interest and visibility. One of the tactics has been to pronounce, with absolutely nothing but the gravitas of his own hot air, that anyone in the anti-naked short selling camp is a de facto member of the "Baloney Brigade."
Mr. Weiss, aside from the ad hominem, is apparently blissfully unaware of many of the data points which would render his perspective moot, and is long on vitriol, while running a deficit on facts. One hopes that his important work is better researched and presented than his blog entry.
Now, aside from the obvious - that anyone can declare those with whom they disagree to be "nuts" or "kooks" or "full of it" - one wonders whether Mr. Weiss truly believes his pap, or whether this is a stunt to get some attention. It is difficult to take seriously statements like "short selling, "naked" or not, is good for investors. That's a proven fact that has been demonstrated time and time again." I am unaware that it has been demonstrated time and time again that a manipulative trading practice is good for investors - unless the investors he is referring to are those in hedge funds that naked short as SOP.
One test to establish if this is a cheap publicity stunt will be to see whether he is interested in genuine dialog, or is merely on a Jeff Mathews-style agenda to demonize, without being able to support his position in any sort of debate. Jeff is a censor-Meister, removing any posts that dare to take an opposing or questioning position, so it will be interesting to see if Gary shares that dislike for having his declarations questioned. To that end, and because I haven't seen my two comments on his blog "approved" by the author yet, I thought I would provide him with an uncensored podium from which to share his wisdoms. Here is his little vignette, along with my two as yet un-approved posts, from his blog:
"THE BALONEY BLITZKRIEG MARCHES ON: Since there seems to be such a high level of interest, as evidenced by the comments I received before I even broached the issue, I guess I'll toss in my two cents on all this "naked shorting" baloney. I devote a chapter to the subject in Wall Street Versus America, but here's the executive summary:
First let's be clear about something: short selling, "naked" or not, is good for investors. That's a proven fact that has been demonstrated time and time again. However, since short-selling wagers on stocks declining, it is viewed as almost un-American and has been used as a scapegoat since the Crash of 1929 and before. However, you need short-selling if you want to have smoothly running, efficient markets. You need that negative input in the process of pricing stocks.
Unfortunately, the mechanics of short-selling have always made it hard to short the stocks that require shorting the most -- illiquid, frequently manipulated, microcap stocks. The Securities and Exchange Commission, via Regulation SHO, actually made it harder for professional traders to short microcaps. That's because to do so you have to do it by "naked" shorting, and SHO pretty well stomps that out.
The SEC should have made it easier to short crap stocks. Instead they made it harder. Now is that dumb, or what? I personally have never shorted a stock and I think it is foolish for amateur investors to try -- almost as dumb as it is to speculate in microcaps. But hey, if you're going to bet on the damn things, you should have the ability to short them as well as buy them, just as you can with large-cap stocks.
And if that drives down the price of the stocks -- so much the better. If the companies are any good, the shorting gives investors an opportunity to buy them at discount prices. I love a bargain, don't you?
So it's really very simple, but the short-bashers have swathed the whole thing in baloney so much, gummed up the debate with so many red herrings and distortions and incorrect assumptions, that it's really a shame. The shame is that a lot of the people who are most upset about shorting of their fave companies would actually benefit the most if it were allowed to flourish. After all, these are great companies, right? And if their companies aren't so great, their beef should be with the companies, not the shorts.
In my book I go into detail on this, but that's the summary.
One thing I find disturbing about this naked shorting business lately is how the anti-naked-shorts have engaged in some really underhanded, cynical tactics to advance their stupid cause. Lately they've been -- oh my, how unique this is! -- bashing the media left and right.
For example, I've seen circulated on the Internet supposed exchanges of correspondence and communications from reporters (note this post and others on the SABEW blog). The transparent aim is to drum up a phony hate-media hysteria. Note the reference to an unrelated payola scandal in this anti-shorting website, replete with this swill:
How many journalists do you think Wall Street pays off every year to write agenda articles? 1% of the total? 2%? 5%? 10%? If there are 500 financial journalists in NY and the surrounding areas, 2% would be 10. Anyone naive enough to think this is an isolated issue is living in a fool's paradise.
This kind of bonehead rhetoric is typical of the Baloney Brigade. And as for the ranting by Overstock's Patrick Byrne about Sith Lords and such -- the only journalistic issue that I see is that some people in the media have actually taken it seriously. I saw one broadcast journalist, a gent I respect, actually give a platform to some of this silliness.
Journalists have a duty to their readers and viewers to call that kind of rhetoric what it is -- baloney. Funny how I keep coming back to that word.
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"Interesting. Baloney Brigade. Very catchy - I trust that you will indulge me, as, I suppose, one of the baloney brigade, and take a few moments of your time, bringing your considerable prowess to bear on disabusing me of some of my fanciful notions. Fanciful, because in order to deserve the moniker baloney brigade, I must be misguided, and you, presumably, are not - thus warranting your creating a pejorative label for those taking the position that naked short selling is bad.
Perhaps you can help me understand a few things, ending my confusion on the topic:
1) Naked short selling, in all but a few limited instances, is illegal. Correct?
2) Naked short selling has been illegal since the Crash of 1929 precipitated the creation of the SEC in 1934 - correct? There have been requirements for the prompt delivery and settlement of shares since that time, as it was evident from the bear raids of '29 and '32 that unregulated share counterfeiting (that is how they did it in those days, besides just bald-faced failing to deliver) created unlimited supply to counter fixed demand - a recipe for manipulative pps depression obvious to anyone that understands fixed demand meeting unlimited supply. Do you follow so far? If you create, out of thin air, "shares" (which only the issuer is allowed to do, BTW) in vast excess of what is issued and authorized, you can drive the price of any thinly-traded company down significantly.
3) Depressing the price of a company in order to benefit financially using an illegal trading strategy such as naked short selling is stock manipulation, pure and simple - that is why it is illegal. Seems simple so far.
4) Long-winded, sophomoric, circular arguments about what should be allowed aside, the fact remains that it is illegal to naked short sell, specifically because of these well understood concerns:
A. It artificially creates sales transactions, treated by the system as legitimate (and with a legitimate sale transaction's effect on the stock price) - and yet no product is delivered to the buyer. Simple fraud. That is what they call it when you advertise something for sale, take the money and create a sale transaction, and then don't deliver the product. Fraud. Agreed? If not, why not?
B. Most consider fraud to be bad, and counterfeiting to be equally bad. Both bad, for obvious reasons. Do you feel that fraud, or counterfeiting, are not bad? If only bad some of the time, why the selective ethical barometer?
C. A share is a parcel of rights, including the right to vote, and the right to legal redress from the company, as a shareholder. When a naked short sale is placed, no parcel of rights are exchanged - that is why folks understand that it violates Rule 17A, in which Congress mandated the prompt clearing and settlement of trades, including the transfer of registered ownership. Naked short selling violates 17A's mandate, unless you consider NOT settling or transferring registered ownership to be somehow equivalent with doing so. Most don't.
There are more reasons that naked short selling is considered to be bad, generally, other than the fraud, counterfeiting, stock manipulation, and violation of the SEC's and Congress' rules requiring sellers of stock to deliver what they sold concerns - we could go into those once you have helped me through my confusion on these.
Now, if you don't believe that naked short selling happens, or that it happens much, I would direct you to the FOIA requests at TheSanityCheck.com which show hundreds of millions, and on some days billions, of FTDs - sales transactions for which buyers paid hard cash for a product (shares), and for which they were defrauded, i.e. never received that for which they paid.
Those FOIAs are not subject to discussion or interpretation - they are fact, and any theory or sentiment you have on the topic should include them. I would also direct you to recent actions against Goldman Sachs for naked short selling, or against RYCO for the same, or against Elgindy for his little scheme, or against Rhino Advisors and the Badian brothers, or to the transcript of the recent NASAA meeting (where the top experts on the markets in the country agreed that it was a real problem, and that the lack of transparency in the system created a breeding ground for larceny) - I would encourage you to review the comments of Robert Shapiro (former Clinton senior economist), and Professor John Finnerty (of Fordham), and Professor Boni (whose work on behalf of the SEC established settlement failure by market makers as an endemic manipulative tool) in framing your opinion.
I would further direct you to the recent (Friday) suit brought against a hedge fund for having a material role in the BK of American Business Financial Services, because of naked short selling and stock manipulation - brought not by the management, but by the bankruptcy trustee.
There is a mountain of evidence proving that the practice does take place, and that it causes non-trivial damage to small or thinly traded companies, and that it is an essential element in stock manipulations exactly like those that were ubiquitous in the 1920's. That mountain needs to be addressed, and facile aphorisms are not an adequate substitute for explaining that mountain in any hypothesis you put forward.
So help me out here. Do you maintain that this doesn't happen, or do you maintain that defrauding buyers out of their cash and not delivering their shares isn't bad, or do you feel that because there are crooks running pump and dumps, that allowing another set of crooks to violate the law and defraud investors is justified (the two wrongs make a right canard)?
I am truly interested in your sentiment, as you are getting a bit of play on the message boards, and your work is being characterized in a way that sounds either patently silly, or wildly misguided, or just completely uninformed. I have a hard time believing that a responsible author would so badly butcher the facts, so I was hoping, that absent seeing a release copy of your work, you could clear all this up for me.
Thanks for taking the time to respond.
AKA Bob O'Brien
www.TheSanityCheck.com
One other comment as I read your summary - I note that you are long on declarative statements, but short on addressing facts which show your position to be questionable - specifically, last week, there were two examples where journalists were compromised - paid by outside interests to write stories which advanced those interests' agendas. One was Abramoff and a Fellow at the CATO Institute, who is syndicated in hundreds of papers across the US, and the other was the Healthsouth CEO paying a local paper to influence sentiment in the local populace during his trial.
Now, are you saying that my statement you cited (without attribution, BTW, but who's counting) is incorrect, or impossible? If incorrect, how do you know what you clearly claim to know, and what definitive proof do you have to support your claim? If impossible, why? Are you saying that unlike every other profession on the planet, from the clergy to law enforcement to charity workers to bankers, that journalists are uniquely immune from a larcenous fraction existing? If not, what are you saying?
It seems to me reading your statement that you are long on rhetoric and acrimony, but rather short on substance. If I got that wrong, I apologize - maybe I missed the substance in your missive - to me it seemed like a lot of ranting and unsubstantiated opinion being tarted up as substance.
There is a lot of that in the camp that declares that there is no naked short selling problem, or that it is all in our heads, or that it isn't bad to defraud buyers.
I assume you are different from the other empty suits purveying that dross.
Thanks again for the opportunity to respond."
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"I think I can help here:
Gary's agenda is to be as outrageous as possible - sort of like saying vigilantism is good, and citing the few times the vigilantes stopped a crime from occurring, and ignoring the weekly lynchings they are responsible for.
Gary isn't dumb, so Gary must have an agenda. Gary understands the practice is illegal, and threatens any idea of a fair market system, but Gary also needs to drum up publicity for his new book with as outrageous a set of idiocy as he can conjure.
Gary's entire argument appears to be "two wrongs make a right." There are stock scammers in the micro-caps (note he ignores the REG SHO list stocks, which are NASDAQ and NYSE, as his argument falls apart) thus having a set of opposed stock scammers is good.
There are gang bangers shooting people, thus it is a good idea to have vigilantes shooting gang bangers, or anyone that is the same racial profile as a gang banger.
Gary is hereby disposable. Pity, as you would think that an associate of Tim's from Businessweek would have a bit more reasoning muscle than this - alas, as he articulates his "position" more, his atrophied powers become increasingly evident.
Another all hat, no cattle NY hack. "
Copyright ©2006 Bob O'Brien
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Re: Another "Expert" Chimes in With a Lot Of Hat, But No Cattle By browntrout on 1/22/2006 9:55 PM
Gary has now removed my repost from his blog as well as any evidence of his asking me to repost. Why is that? >>>>>>>>> Gary posted this on his blog: ATTENTION ANONYMOUS COMMENTER: Afraid I deleted your comment comparing naked shorting to rape, but I now realize it is a good example of the overheated, asinine rhetoric of the Baloney Brigade. Can you re-post?......>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>And I reposted this on his blog: Gary said: "First let's be clear about something: short selling, "naked" or not, is good for investors. That's a proven fact that has been demonstrated time and time again." I said: I have taken the same approach to raping people male or female, young or old-it does not matter. I claim it is good for them whether they like it or not! I see it as providing a necessary service that has benefits mostly for the raper but the rapee might claim the benefit of reduced tension or population control, enjoyment, etc. Oh yeah they were asking for it anyway by being there. They probably won't admit to benefits that rapists assign to the rapee but WE know better,right Gary? My only problem is the government has made this behavior illegal. I was hoping that they might grandfather all of the rapists and look the other way in the future such as the SEC is doing for the naked shorts. Can you put out the word now that rapists are good also? It would be most appreciated by all! >>>>>>>>>>Now it is deleted again. Do you think he was trying to help some "good fellahs" find out who I am?
Maybe the BOSS called? I noticed Raging Bull(hometown of all bashers) has been shut down all weekend and rumored to be under investigation and closing soon to cover up all of the evidence! Coinkydink?
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Re: Another "Expert" Chimes in With a Lot Of Hat, But No Cattle By bobo on 1/22/2006 10:02 PM
I wonder why he censored your post after asking you to post there?
That IS odd...
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Re: Another "Expert" Chimes in With a Lot Of Hat, But No Cattle By rtway1 on 1/22/2006 10:19 PM
My friend again I give you accolades of admiration for your response. One does not have to be a genius to figure out why he will not meet you one on one. This is not a fair debate because he is so ill informed and to be polite (challenged) that it is black and white for the reader to draw a just conclusion. How do these people put food on the table with their talent.
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Re: Another "Expert" Chimes in With a Lot Of Hat, But No Cattle By browntrout on 1/22/2006 10:54 PM
Bobo-- I dunno why he deleted my post. I can only speculate. He is a guy that advertises his books for sale on his blog. One is: Wall Street Versus America : The Rampant Greed and Dishonesty That Imperil Your Investments and the other is: Born To Steal: When The Mafia Hit Wall Street. I have not read either and after his behavior I will not waste my time or funds. I am curious though, based on those titles you would think he would be right in the middle of this. I mean this is a subject that has everything: fraud, CIA, FBI, SEC, MOB, terrorists and much more. This is every writers dream and yet nobody except you is writing about it. Are they afraid? Maybe his books were just sell-out journalism where he hoped to make a buck without turning anyone. Maybe he just writes after the fact books. Again I dunno but it sure is strange.
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Re: Another "Expert" Chimes in With a Lot Of Hat, But No Cattle By rvac106 on 1/23/2006 1:03 AM
Looks like we may have another crackpot utilizing a few or more of the 25 ways to disseminate disinformation. Boyd seems to like him, and another of the Post's variety columnists saw fit to mention the upcoming Weiss 'book,' so, a Google of the title shows it coming up in a number of places. I've gone to one, to direct the readers back here, and also to CFRN, aiming for at least a little balance. Perhaps tomorrow, I can track down some more.
Am curious as to whether he'll answer any of BO'B's queries, in a fashion that doesn't include....."Oh,just wait for my book!"
RVAC
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Re: Another "Expert" Chimes in With a Lot Of Hat, But No Cattle By PhantomCertificates on 1/23/2006 4:09 AM
The more I keep investigating, the more I think we are only seeing a vary narrow view of the problem. We all know naked shorting is illegal, and no one is doing anything about it. In fact, it appears everyone is doing everything possible to cover it up. The question is why? Is it only to skim money off the top, or is there an even bigger picture we aren't seeing? I'm starting to think it's the later.
Someone posted this little tidbit about how the DTCC holds all of our shares in essentially their own name (http://ming.tv/flemming2.php?did=10&vid=10&xmode=show_article&amode=standard&aoffset.... I read through this persons write up and found one point especially interesting. The DTCC is owned by the Federal Reserve Bank.
I thought, ok that's kind of odd. Let's see who owns the Federal Reserve Bank. When I did a search on that I came up with this article (http://www.worldnewsstand.net/today/articles/fedprivatelyowned.htm).
One of the key things I found in this article is that the Federal Reserve Bank is owned by a group of wealthy financiers and is privately held. Our government, it appears, gave them the power to print money in 1913 (the same year the IRS was created by the way, hmmm), even though the United States has the only right to print money for this countries currency. From what this guy writes, part of their objective is to create a 1 world government, where the UN and these fed bankers will control a single world currency. There is a lot more to this story but I want to draw a possible link here.
If the Fed controls the DTCC, our elected officials, the SEC, and the media, and their goal is to orchestrate a great depression like that in the 1930s so that Americans would be receptive to a world government, then how would they do it? I would think the goal would be as follows:
1) take control of all assets (they already control our currency, and with the DTCC and dematerialization, they'd control our companies as well).
2) make life miserable for the average worker (the push for globalization pretty much does that as now we have to compete with low priced labor from China and India, as well as our new dependence on commodities provided by other countries like oil).
3) destroy our financial base (the accepted practice of naked short selling companies out of business, and the extreme pricing of real estate is reducing our assets and increasing our debts).
I haven't had a chance to verify the references for this information, but it sure would tie all this together with a motivation for what has been happening of late and why it all seems to go by as though everything is just fine. I'm getting the sinking feeling this conspiracy is very real and that every right we have as Americans are under assault.
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Re: Another "Expert" Chimes in With a Lot Of Hat, But No Cattle By AceNeuf on 1/23/2006 4:59 AM
Baloney, Salami... all written by a meathead!
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Re: Another "Expert" Chimes in With a Lot Of Hat, But No Cattle By dave on 1/23/2006 10:32 AM
Debating the merits of naked short selling is a red herring intended to distract us. The merits are not relevant to our property rights.
The property rights of investors are protected by the constitution and naked shorting implies to buyers that they are getting property in return for their hard earned money.
What do you think would happen if brokerages printed "pending" next to purchases that didn't close rather than misrepresent the ownership status?
Maybe the lawyers would do well to start suing the brokerages for statement and confirmation slip fraud. |
