How Short-Sellers Almost Destroyed U.S. Banking [System]

CNBC ^ | Tom Brennan

[SouthDixie]

Yeah, it’s all fun until someone gets hurt...

[Kackikat]

Only for the short seller, but not for everyone else unless they are part of his fund.

[Kackikat]

yup...and it’s all about the money.

[cmdjing]

Wrong, Lehman destroyed Lehman. The short sellers were only the vultures who had come to gorge themselves on the bloated corpse. The cow itself was long past saving.

[Steamburg]

When the government wants something of yours, they seem to find a law. When their friends want to do something bad, they can never find a law...

[Frantzie]

It is worse then that. Cloward-Piven, Alinsky Ayers, soros.

Get a CRA lawyer to sue Citigroup to make bad loans. Get your moles in Fannie & Freddie. Spread the loans to the global financial system. Then with a mega hedge fund operator and his short cronies - pick them off one by one. Insure the a crescendo in October a month before the election. Offer jobs in the admin to people who brought down Fannie, Freddie, Citigroup etc.

Oh and Obama’s pal Buffett picked up Wachovia for a song. Buffett owns a majority stake in Wells Fargo. Buffett owned Freddie stock about 7 years ago and sold it. Wells Fargo oddly had few bad loans. Their lib pals who owned World Savings dumped the disaster on foolish Wachovia at the peaked. World was packed with bad loans.

[Tax Government]

Abolish the federal reserve.

[SeeSharp]

This article and most of its replies are nonsense. There is nothing wrong with short selling. It is simply part of the process of finding the correct market value of a stock. Managers can prevent short selling anytime they want to by simply delivering the profit they have led their investors to expect.

[raybbr]

Was it you who said Cox was Bush’s worst appointee?

[scfischer7]

Correct. This is what Andrew Jackson fought against. The Central Bank.

[pgkdan]

So who initiated all the short selling? Was this a coordinated efort to wreak havoc with our financial system just before the election?

[SAJ]

Fischer Black did not receive a Nobel economics prize for the simple reason that he had died two years before the award was made to Bob Merton and Myron Scholes. The Nobel committee doesn't make posthumous awards.

Your text makes it sound as if Black were the victim of some sort of conspiracy or ripoff (''got zilch''). ''Zilch'' is what everyone who is dead gets from the Nobel committee.

[OCC]

I cant stand Cramer, but Chris Cox was probably not the best choice to head the SEC. He would have been a fine Fed Judge, thank you Barbara Boxer for stopping that..

In the spring of 2001, then-Representative Cox was considered by President George W. Bush for a federal appellate judgeship on the United States Court of Appeals for the Ninth Circuit. Cox withdrew his name from consideration before a nomination could be made because one of his homestate Democratic senators, Barbara Boxer, objected to him due to his perceived conservatism

[jnsun]

It should be clear to even the common Joe Investor now, that money can be made whether the market is going up or the market is going down, especially to those already with the capital to play. At the Institute we call it "pumping" the market, that is, a suction cycle, and an expansion cycle.

The pump can be primed with newspaper articles, coordinated lawsuits, rumors, dumping algorithms, etc. and thus manipulated by the Money-is God boys.

But personally we wouldn't campaign for making options illegal, any more than outlawing poker games; but rather advocate personal investment, beyond the sinister greed that has consumed the US incest, aimed at well positioned institutions that can benefit the wider developing world with a little profit thrown in.

We also agree with the post above that it seems the Bush folks were completely in over their head (and still are). OR, they are the devil themselves. It's called The Left.

[NVDave]

Look on the bright side for Black: he doesn’t have to bear the outcome of LTCM on his CV or his gravestone. ;-)

[Post Toasties]

You have to remember that banking is a business built entirely on trust.

Another idiot trying to give a pass to Fannie Mae and Freddie Mac. This is where the trust was violated, not by short sellers, or the use credit default swaps. Fannie and Freddie are supposed to be guaranteed by the government which makes their securities more desirable and guarantee that they lead the mortgage market regarding lending standards. Therefore, for financial stability, it is necessary that they give loans conservatively and judiciously.

When you have irresponsible partisan idiots like Frank and Dodd using them for pay to play and to buy favor from the Democrat Constituency, that is the exact recipe for the financial crisis we are now in.

Until responsible economists and legislators start going on record as calling for Frank and Dodd's resignations, I don't think misdirecting bloviators like Cramer and and the MSM should be taken seriously.

[dennisw]

P.S. As much as I liked Chris Cox when he was a Congressman, he seemed out of his depth in executive position at SEC, just like several other people on President Bush economic team.
________________________________

Cox was a stooge of some higger power. What it was I don’t know

[snarks_when_bored]

How Short-Sellers Almost Destroyed U.S. Banking

Hmmm. "Larry Livingston" aka Jesse Livermore has something relevant to say about this issue:

I have done my share of trading and have kept fairly well posted on the stock market for many years and I can say that I do not recall an instance when a bear raid caused a stock to decline extensively. What was called bear raiding was nothing but selling based on accurate knowledge of real conditions. But it would not do to say that the stock declined on inside selling or on inside non-buying. Everybody would hasten to sell and when everybody sells and nobody buys there is the dickens to pay.

The public ought to grasp firmly this one point: That the real reason for a protracted decline is never bear raiding. When a stock keeps on going down you can bet there is something wrong with it, either with the market for it or with the company. If the decline were unjustified the stock would soon sell below its real value and that would bring in buying that would check the decline. As a matter of fact, the only time a bear can make big money selling a stock is when that stock is too high. And you can gamble your last cent on the certainty that insiders will not proclaim that fact to the world.

This is from pages 249-250 of Edwin Lefèvre's 1923 classic, Reminiscences of a Stock Operator.

Yes, that's right, 1923.

[ari-freedom]

Get rid of short selling and the market will be a soft and spoiled fat pig that will drop dead at the slightest hint of any exertion or pressure.

The govt should stop trying to be a nanny state. Investors are smart adults and have lots of $$$ to play with. Stop spoiling them like little babies.

[CutePuppy]

Look on the bright side for Black: he doesn’t have to bear the outcome of LTCM on his CV or his gravestone. ;-)

That is a great consolation prize :->)
BTW, it seems John Meriweather will soon have another fund run into the ground on his CV.   JWM Partners is using the same model as LTCM, but this time with leverage of only 10:1.