Author Archives: Lila

Wiki Fudges Importance of Naked Short-Selling

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(Continued from previous post)

Many people (including this blogger) see naked short-selling as one of the central rackets used by Wall Street’s racketeers to pull off their heists. It’s a view with quite a few supporters in the industry, government, and major media. But you wouldn’t know it from the wiki entry on naked short selling.

In a piece earlier this piece, urging sharper treatment of Geithner during his hearing, an off-shore journalist Lucy Komisar pointed out that naked short-selling of US Treasury bonds artificially depresses the price of the bonds by increasing the number of shares. It’s in effect a theft from the portfolios of ordinary people who hold them, unaware that their brokers are lending them out and leaving them only with electronic IOUs.
In other words, they’re lending to their broker, rather than to the US government….

In fact, the most prominent critic of naked short-selling, Patrick Byrne, has this to say on his blog, Deep Capture:

“Notwithstanding thousands of articles such as the ones cited above, the current Wikipedia article on naked short selling insists that experts believe that it is not a problem. No mention is made of hearings, statements by economists and SEC Chairmen, emergency federal actions and emergency meetings of regulators from the G-20 to stop the world financial system from imploding, etc. ……… notwithstanding the thousands of articles such as the ones I cited above, the current Wikipedia page maintains that the mass media agrees that naked short selling is not a problem…”

— “The Hijacking of Social Media”

Byrne’s site has a useful video by Judd Bagley on naked short-selling:

Byrne is the CEO of Overstock, an online retailer of surplus and returned goods, which, he claims has been the victim of naked short-selling for many years. At one point, around 30% of Overstock’s float (shares held by the public and not institutional investors or insiders) consisted of fails (shares that did not deliver at settlement of the trade) and although fails can have many causes, naked short-selling is certainly the most important of them.

Note: Byrne claims that this isn’t the principal motivation for his campaign against the practice and points to his other philanthropic initiatives as proof. Major media business reporters, including Joe Nocera and Gary Weiss, have argued otherwise.

Note: Bagley has been accused of cyberstalking Weiss over Weiss’s alleged complicity in the social engineering of wikipedia.

Update: Note also that several experts have contradicted Byrne’s assessment of the effects of naked short selling on the price of the stocks he’s analyzed.

Still, whether Byrne is a hero or an out-of-control conspiracist is beside the point.

With the scale of criminality on Wall Street now, you’d have to be a hero and out-of-control to go after any of it successfully.

And conspiracy-mongering seems to be largely in the eye of the beholder.

Byrne deserves credit.

Update: To be fair to Byrne’s critics here is a criticism by one Sam Antar (a reformed felon who now consults on white collar crime) of Overstock’s accounting practices.

To be fair to Byrne, Antar’s original fraud was extensive and involved his whole family. Antal also admits to profiting from short positions in the companies he criticizes for fraud.

Wiki Fake Quote Shows Up Journalists

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In the news:

“When Dublin university student Shane Fitzgerald posted a poetic but phony quote on Wikipedia, he said he was testing how our globalized, increasingly Internet-dependent media was upholding accuracy and accountability in an age of instant news.

His report card: Wikipedia passed. Journalism flunked.

The sociology major’s made-up quote — which he added to the Wikipedia page of Maurice Jarre hours after the French composer’s death March 28 — flew straight on to dozens of U.S. blogs and newspaper Web sites in Britain, Australia and India.

They used the fabricated material, Fitzgerald said, even though administrators at the free online encyclopedia quickly caught the quote’s lack of attribution and removed it, but not quickly enough to keep some journalists from cutting and pasting it first.

A full month went by and nobody noticed the editorial fraud….”

More here

My Comment

Only a 22 year old would be shocked by this, of course. Any one else knows that very few journalists double check sources or go to the original print report and look for an additional sources. But I’m not convinced that Wikipedia is such a paragon of journalistic rectitude either.

And I wonder whether this story coming out now doesn’t conveniently bolster wiki’s own reputation? I like wiki as much as the next person, but, among other instances, when I was writing about Virginia Tech, I noticed some manipulation of the time-line (which I’ve written about on this blog).

The fact is Wiki has its own slant and it often editorializes very strongly. Of course, bloggers do it too.

But bloggers are supposed to editorialize, push the envelope and move faster than the print media. Wiki, on the other hand, is supposed to be the definitive online, interactive, “wisdom of crowds.”

Again – don’t get me wrong. I love wiki and find it mostly a reliable source, at least of references and pointers. But it’s been known to engineer a few things too….

(Continued in the next post)

Pakistani Strike Creates Nearly 1/2 Million Refugees

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Hundreds of thousands of people have become refugees and scores of civilians (including children) killed during Pakistan’s latest offensive against what it terms extremist militants in the Taliban-held districts of Pakistan that border Afghanistan.

From a report on the weekend (May 9) by AP:

“The offensive has prompted the flight of hundreds of thousands of terrified residents, adding a humanitarian emergency to the nuclear-armed nation’s security, economic and political problems. Desperate refugees looted U.N. supplies in one camp, taking blankets and cooking oil….”

PM Gilani calls the full-scale offensive that was launched on Thursday at Washington’s behest

“a fight for the country’s survival.”

My Comment

Here’s a problem that’s festered decades. Why would a military solution work now when it hasn’t worked in all this time? That’s the blundering logic of the state. Defending against militants doesn’t justify creating what could amount to half-a-million refugees, by UN estimates and has the potential to destabilize what’s often considered the top “hot-spot” of the world –  the Indo-Pak border and Kashmir.

At Cato, Malu Innocent has similar thoughts:

“Also, if America is worried about Pakistan’s imminent demise, U.S. policymakers and defense planners must understand that the coalition’s presence in Afghanistan threatens to further destabilize Pakistan. The vast majority of Pakistanis are not radical. But the spread of tribal militias in the northwest, tens of thousands of refugees (and certainly some militants) fleeing into major cities from aerial drone strikes, and widespread distrust of America’s intentions in the region, all place undue stress on a nation already divided, weak and fragile.”

The New York Times Complains About Chinese Torture

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And no – I don’t mean that someone dripped water into the eyes of the editorial staff until they squealed. I mean they  referred to torture  – committed by the Chinese – and they did it without using quotes, their standard practice when referring to American torture.  The reference was in an obituary for Colonel Harold E. Fisher, an American pilot who died at the age of 83. Here’s what Fisher underwent:

“kept in a dark, damp cell with no bed and no opening except a slot in the door through which a bowl of food could be pushed. Much of the time he was handcuffed. Hour after hour, a high-frequency whistle pierced the air.”

Contributing to the general tone of hypocrisy, Barack Obama has recently ruled out holding the CIA responsible for torture, even though many experts have argued that at least the lawyers who wrote the authorizing memos, Jay Bybee and Steven Bradbury, should be prosecuted.

Just for comparison, here’s what Human Rights had to say about the lack of accountability so far at every level:

“Since August 2002, nearly 100 detainees have died while in the hands of U.S. officials in the global “war on terror.”

Despite these numbers, four years since the first known death in U.S. custody, only 12 detainee deaths have resulted in punishment of any kind for any U.S. official. Of the 34 homicide cases so far identified by the military, investigators recommended criminal charges in fewer than two thirds, and charges were actually brought (based on decisions made by command) in less than half. While the CIA has been implicated in several deaths, not one CIA agent has faced a criminal charge. Crucially, among the worst cases in this list – those of detainees tortured to death – only half have resulted in punishment; the steepest sentence for anyone involved in a torture-related death: five months in jail.”

The HR report also specified just how brutal the torture could get:

“Abed Hamed Mowhoush, a former Iraqi general beaten over days by U.S. Army, CIA and other non-military forces, stuffed into a sleeping bag, wrapped with electrical cord, and suffocated to death. “

Here’s the whole HR report.

Scott Horton has proved that the documentary evidence of wrong-doing goes straight up the chain of command to the President (I made that argument as early as 2005 based only the record available at the time). So the NYT’s selective treatment of the subject has simply no justification.

Fortunately Glenn Greenwald was at hand to give the paper a thrashing:

“The NYT’s incoherence and double standards, equally, are self-evident. But I would like to know if Bill Keller will remove the t-word from this obit and replace it with “harsh interrogations” as he does when referring to the US government’s use of identical techniques. If not, why not? Remember: these people won’t even use the word torture to describe a technique displayed in the Cambodian museum of torture to commemorate the atrocities of the Khmer Rouge – as long as Americans do the torturing.

I mean: the NYT isn’t just a vehicle for US propaganda, is it? It’s a newspaper, right? It has standards that it maintains across its copy. Right?”

My Comment:

We’re still waiting for the answer on that one. But, meanwhile, Glenn Greenwald and Salon prove that they’re the real press.

And talking about double standards, Al Jazeera poses this question: Torture still continues in Iraq (this time, at the hands of Iraqis), but why is there no global outcry over it?

Legislation to Oversee Fed Watered Down

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Ryan Grim at Huffington Post has a piece about the watering-down of legislation intended to give Congress greater oversight over the Federal Reserve.

He writes –

“On page five of Grassley’s amendment, he intends to give the Comptroller General of the Government Accountability Office power to audit “any action taken by the Board under…the third undesignated paragraph of section 13 of the Federal Reserve Act” — which would be almost everything that it has done on an emergency basis to address the financial crisis, encompassing its massive expansion of opaque buying and lending.

Handwritten into the margins, however, is the amendment that watered it down: “with respect to a single and specific partnership or corporation.” With that qualification, the Senate severely limited the scope of the oversight.

On the Senate floor, Grassley named the top Republican on the banking committee, Richard Shelby of Alabama, as the man pouring the water.”

In case you haven’t been keeping up, the Fed’s been lent much more than the $700 billion odd money of the original bail-out.  By January 2009, the figure had exceeded $2 trillion, as this video on the oversight problem indicates. Note that the number is now at least $3 trillion plus, according to the Special Inspector-General’s Report on TARP (SIGTARP).

.

My Comment

The HuffPo piece is just more confirmation of systemic rot, as delineated in this belated but useful Wall Street Journal report on the selling-out of America by Wall Street and Washington.

I only skimmed the report, but I notice that it seems to be blaming the whole mess on deregulation, pinpointing the late 1990s (and onward) as the culmination of  bad practices arising from what it calls without irony the “prevailing laissez-faire ideology of the Bush administration” – this, about the most interventionist administration in modern American history.  I like to take a nuanced position on regulation but this sticks in my craw.

Sounds like someone’s hustling the plebes away from the scene of the crime, clapping both hands over their eyes, just in case one of ’em catches a glimpse of the plates on the back of the get-away car –  FED1917*

For the WSJ it’s all about the late 1980s. It has nothing – repeat, nothing –  whatsoever to do with pre-New Deal policies…… nothing, I tell you.

No one’s defending junk-bond kings here, but that sounds a bit loaded to me.

Why am I getting the feeling that for a cynic the fun only begins now…

——————–

* i.e. the creation of the Federal Reserve itself

US Ranks 6th in Private Report on Electronic Surveillance

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I don’t know how accurate this report from Cryptohippie.com (hat-tip to Sunni Maravillosa) is, but I thought it was interesting.

It ranks countries as police states, based on 17 factors:

1) Daily documents 2) Border issues 3) Financial tracking 4) Gag orders 5) Anti-crypto laws 6) Constitutional protection 7) Data storage ability 8)Data retention ability 9) ISP data retention 10) Telephone data retention 11) Cell phone records 12) Medical records 13) Enforcement ability 14) Habeas Corpus 15) Police-Intel barrier 16) Covert hacking 17) Loose warrants

At the top were the communist countries: China and North Korea.

Then came the former communist countries: Belarus and Russia

Next:  the UK, US, and Singapore

Please note:: I couldn’t find much about the privacy firm that created the report, Cryptohippie, and have no idea how authoritative the report is. Any further insights are welcome.

Massive Push to Criminalize Criticism of Israel (Links/Video added)

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Paul Craigs Roberts writes about H. R. 1913 (“Local Law Enforcement Hate Crimes Prevention Act of 2009”), at Counterpunch:

“It has been true for years that the most potent criticism of Israel’s mistreatment of the Palestinians comes from the Israeli press and Israeli peace groups.  For example, the Israeli newspaper Haaretz and Jeff Halper of ICAHD have shown a moral conscience that apparently does not exist in the Western democracies where Israel’s crimes are covered up and even praised.

Will the American hate crime bill be applied to Haaretz and Jeff Halper?  Will American commentators who say nothing themselves but simply report what Haaretz and Halper have said be arrested for “spreading hatred of Israel, an anti-semitic act”? ……….

A massive push is underway to criminalize criticism of Israel.  American university professors have fallen victim to the well organized attempt to eliminate all criticism of Israel.  Norman Finkelstein was denied tenure at a Catholic university because of the power of the Israel Lobby. Now the Israel Lobby is after University of California  (at Santa Barbara,) professor Wiliam Robinson. Robinson’s crime:  his course on global affairs included some reading assignments critical of Israel’s invasion of Gaza.

The Israel Lobby apparently succeeded in convincing the Obama Justice (sic) Department that it is anti-semitic to accuse two Jewish AIPAC officials, Steven Rosen and Keith Weissman, of spying.  The Israel Lobby succeeded in getting their trial delayed for four years, and now Attorney General Eric Holder has dropped charges.  Yet, Larry Franklin, the DOD official accused of giving secret material to Rosen and Weissman, is serving 12 years and 7 months in prison….”

My Comment (May 8, 2009):

H.R. 1913 was sponsored by Rep. John Conyers [D, MI-14] and voted on by the House on April 29, 2009 (passing 248-175 with largely Democrat support).

Complaints about the legislation have focused on several things.

  • The bill’s perceived fuzziness in defining the class of protected persons (“sexual orientation”) and in defining “bodily injury.” Both could make the legislation very elastic in application
  • The possibility that the legislation could be used to chill religious speech
  • The possibility that pastors who preach orthodox Christian views on controversial social issues could be prosecuted if an unstable person in their congregation later commits a “hate crime”
  • The granting of even more federal power to oversee, fund, direct, and intervene in local and state authorities
  • The redundancy of new legislation on “hate crimes” (since there are such laws already on the books)
  • The elusiveness of  the notion of “hate crime” and its inherent intrusiveness, since it claim to assess the state of mind of the perpetrator and the victim and of a whole class to which the victim belongs.

Christian groups have been particularly agitated by it, believing that it principally targets fundamentalist/orthodox Christian preachers.

That may well be so, but in the context of the financial scandal and ongoing Middle Eastern policies, I’d argue that the legislation has as much to do with criticism of the US government, especially of Zionist and Middle Eastern policies. For instance, see this effort at ending protests against US aid to Israel, at Muzzlewatch.

H.R. 1913, like H. R. 1955 before it, is meant for home-grown dissidents, a.k.a., people who object to federal government policies.

Action: Please call your  House or Senate representative at 1-877-851-6437 or toll 1-202-225-3121. and urge them not to vote for yet another thought crimes bill HR 1913.

Think of the two initiatives below as further context:

1. US Army Concept of Operations for Police Intelligence Operations, 4 Mar 2009 (see wikileaks)

2. The Violent Radicalization and Homegrown Terrorism Prevention Act of 2007 (H.R. 1955/S- 1959, a bill sponsored by Rep. Jane Harman (D-CA) in the 110th United States Congress. It was introduced in the House on April 19 2007, passing on Oct 23, 2007, was introduced to the Senate on August 2, 2007 as S-1959, declared dead on arrival there after a powerful grass-roots campaign against it,

but has since been referred to the House Committee on Ways and Means, April 2, 2009, according to wiki.

H.R. 1955

Insiders Selling the Rally

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Insiders are selling this rally like crazy, so says The Pragmatic Capitalist:

“I recently wrote about reports that insider selling was at record highs and buying was practically non-existent.  The selling has become even more alarming in the last week and the buying has slowed to an absolute trickle. Below you’ll find the list of latest insider buys and sells.  The sells are staggering with the amounts ranging from $3MM to $63MM (and I was only able to copy one page).  The buys, on the other hand, are meager and range from $100K to $635K (the $800K purchase is a few months old and shouldn’t be in the data).   You’ll also notice that the screen came up with just 18 total purchases vs 170 total sales (the lowest of sell screen data were sales of over $400K which is not shown here due to the large size of the results…”

My Comment

Wall Street, as well as the administration, both want to boost the market for reasons that partially overlap. The administration wants to be able to justify the bail-outs and retain some of the shine of of the pre-election rhetoric of “change”.  But too much optimism will work against legislation/reforms that need a certain amount of panic to be passed.

Wall Street, on the other hand, doesn’t want panic at any price. It wants stability and optimism. And is eager to jump at any positive news it gets.

Mike Martin at MartinKronicle has a long and interesting interview with Victor Sperandeo (of “Trader Vic”), who calls it – as most informed commentators do – a bear market rally.  Sperandeo’s voice is a bit hard to follow but Martin’s questions are searching and cover a lot of ground.

Two points:

Sperandeo (like nearly everyone else) thinks currency depreciation is inevitable and massive inflation around the corner.

He’s pessimistic about the Middle East situation and anticipates more friction with Iran.

Paulson, Bernanke Caught Red-Handed in Fraud?

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From Casey Research:

“On April 23, 2009, New York Attorney General Andrew Cuomo sent a letter to Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs Chris Dodd; Chairman of the House Financial Services Committee Barney Frank; SEC Chairwoman Mary Schapiro; and Chairwoman of the Congressional Oversight Panel Elizabeth Warren.

The letter outlined how former Treasury Secretary Paulson and Fed Chairman Ben Bernanke forced Bank of America’s acquisition of Merrill Lynch – even though Bank of America CEO Ken Lewis and the board of directors tried to pull the plug on the deal after it turned out that Merrill Lynch was far deeper in debt than it had admitted……….

…the part of the story that could really break Al Paulson and Don Bernanke’s necks is the failure to inform the Securities and Exchange Commission, as well as Bank of America’s shareholders, of the extent of toxic waste Bank of America was forced to accept. That’s fraud, pure and simple.“

My Comment:

The only problem is – who will bell the cat? Goldman Sachs’ reach is vast. And I doubt that Goldman is acting alone or purely out of its own interests,  although its own interests are no doubt paramount.

Think about it.

How was this bank’s reach and corruption not noticed before? Even Lisa Endlich’s very staid history of the firm in 1999 couldn’t conceal the slime.

So what gives?