Posted on 07/14/2008 2:34:38 PM PDT by StatenIsland
Three years ago, Deep Capture reporter and Overstock CEO Patrick Byrne gave a famous conference call that he titled, “The Miscreant’s Ball.” His thesis was simple: Some short-selling hedge funds collude to destroy public companies by spreading misinformation, orchestrating government witch hunts, filing bogus class-action lawsuits, and, most egregiously, selling billions of dollars worth of phantom stock.
In the months that followed “The Miscreants Ball” presentation, a clique of journalists with close ties to short-selling hedge funds and CNBC’s Jim Cramer (himself a former hedge fund manager), set out to sully the reputations of Patrick and everyone else who sought to expose short-seller crimes.
Cramer pal Joe Nocera, who is the New York Times’ top business columnist, wrote that Patrick’s crusade against hedge funds that sell phantom stock was “loony beyond belief.” CNBC contributor and Marketwatch columnist Herb Greenberg, formerly an editor with Cramer’s web publication, TheStreet.com, labeled Patrick the “worst CEO in America” for taking on the shorts (ie., the same shorts who are now paying Herb for “independent” financial research). Fortune magazine’s Bethany McLean, who has yet to write a story that was not sourced from a small group of short-sellers connected to Jim Cramer, suggested in an article titled “Phantom Menace” that Patrick should be fired from Overstock for speaking out against the problem of phantom stock.
At the time, I was the editor of the Columbia Journalism Review’s online critique of business journalism. The attack on Patrick was like nothing I’d seen before, so I decided to write a story about the media’s coverage of short-sellers and phantom stock. When Herb Greenberg and Joe Nocera got word of this, they both called my editor demanding that he kill the story. Cramer sent a public relations goon to delay the story. Then a short-selling hedge fund, Kingsford Capital, appeared in my offices and offered to pay my salary.
My successor at the Columbia Journalism Review is now called “The Kingsford Capital Fellow.” One of Kingsford Capital’s managers was a founding editor of Cramer’s website, TheStreet.com. I do not believe that Kingsford’s interest in the Columbia Journalism Review is philanthropic. And I do not believe that the Columbia Journalism Review, “the nation’s premier media monitor” is capable of objectively monitoring the financial media so long as it’s chief writer on the subject is paid directly by this very controversial, Cramer-connected, short-selling hedge fund.
Perhaps facing similar pressures, or perhaps because they are unwilling to contradict Cramer’s influential Media Mob, or maybe because they’re just plain lazy, other journalists have shied away from covering the problem of illegal short-selling. Instead, reporters have incessantly repeated the party line that “short selling is good for the market. Only bad CEOs complain about short-sellers.”
In March, short-sellers destroyed Bear Stearns by spreading false information and selling millions of phantom shares. And now the shorts are going after another major investment bank. In a week of high drama, hedge funds have been circulating blatantly false and hugely damaging rumors that big institutions are pulling their money out of Lehman Brothers. If March SEC data is any indication, the shorts are also selling millions of dollars worth of phantom Lehman stock.
One of the nation’s most important investment banks is down, and another is on the brink. The American financial system wobbles.
And, suddenly, Cramer’s Media Mob is silent. Gone is all of the talk about Patrick Byrne being crazy. Nocera says nothing about the attacks on Lehman and Bear. Bethany McLean recently wrote a favorable review of a book written by David Einhorn, the most prominent short-seller of Bear Stearns and Lehman, but she dares not mention the current market predations.
Herb Greenberg, who used to sing the praises of short-sellers almost weekly, was last heard defending his hedge fund friends in April. CNBC seems to have taken him off that beat. (The network recently dispatched Herb to the San Diego County Fair, where he interviewed a vendor of deep-fried Twinkies).
But Jim Cramer is talking. No doubt to distance himself from the growing scandal, he went on CNBC today and said precisely what Patrick Byrne said three years ago. Noting that short-sellers are colluding to take down Lehman, he said the problem is “the need to be able to get a borrow and see if you can find stock….. no one is even calling to see if they can get a borrow. [In other words, hedge funds are selling stock they don’t have -- phantom stock]. It’s kind of like, well listen, let’s just knock it down. It’s very similar to what Joe Kennedy would have done in 1929 [leading to Black Monday and the Great Depression] which is get a couple of cronies together and let’s take it down…”
Too late, Jim. For three years, you, CNBC, and a clique of journalists very close to you have ignored this crime because your short-selling hedge fund cronies claimed that phantom stock is not a problem. Meanwhile, hundreds of companies have been affected. Billions of dollars of value have been wiped out. And lives have been destroyed.
It is one of the most ignominious episodes in the history of American journalism.
INTREP
The gist of the show was that everyone knows enough to invest wisely in the stock market, i.e. do you think Coke tastes good? Then buy Coke stock! Yeah!
I imagine that Cramer is going to pretty much short the market after all of the idiots have poured their money down the rat hole.
I am pretty stupid regarding big picture financial stuff, but I have had this creeping feeling that something very bad is behind what is happening with the markets. I read today about Jim Rogers, who used to be a partner with George Soros screaming about the fannie/freddie plan being a disaster. He openly states that his shorting these institutions in an article on bloomberg. I also think it is interesting that Goldman Sachs who has given my state it’s most liberal governor, Jim Corzine, continues to talk down finacials and talk up commodities. I smell something very rotten afoot.
here is Patrick Byrnes voice/power-point video on nekkid short selling.....
http://www.deepcapturethemovie.com/
I think part of the problem is that they changed a rule for shorting about a year ago that had been in effect since the Great Depression, and that 1% rule needs to be reinstated.
If commodities go down, then the municipalities go into debt.
This is the best PR the hedge funds can have: if governments depend on hedge funds doing well, then even the government regulators will be unwilling to do anything about it until it is way too late.
“At the time I was the editor of the Columbia Journalism Reviews.......The attack on Patrick was like nothing I had seen before”
Lol! He had never vistited a Patrick Buchanan thread on FR obviously.
Thank you for posting the link. Here it is again, it is a must watch:
http://www.deepcapturethemovie.com/
If they’re doing something illegal, then prosecute them. But if they haven’t broken any laws, then leave the shorts alone.
Sheep get sheared.
Their fees and bonuses from these true "killings" are so big they can't turn away from doing it. No fear of reprisal or jail, no morals or remorse, just get yours, retire big in the islands and let someone pick up the pieces.
The SEC banned Naked Short Selling last year: http://findarticles.com/p/articles/mi_qn4188/is_20070614/ai_n19291043
The two are markedly different, both as to purpose and execution.
What I am saying is that some of the money in pension fund investments is going into hedge funds because of the current (emphasis on current) high yields.
When the short selling starts, then everyone in government will all of a sudden realize what a stupid idea it was.
Jim Rogers was live on the John Batchelor Show last night talking from Singapore, just lambasting the Fannie Mae / Freddie Mac deal. Such hatred in his voice. If he was shorting the stock I am sure that he was losing some $$$ this morning.
He has a long history of being against gubmint bail outs.
His article is nevertheless worthless, because he fails to address what has to be the key point.
Specifically, if all of these folks were big supporters and protectors of the short-sellers of yore; and yet they're shocked and upset by short-sellers of today... what explains the difference?
Seems to me that that would be the real story.
Instead, we are presented with a rather bitter, angry screed in which the complicit villians from before, somehow become nothing more than a group of witless mouthpieces who finally get what this guy claims to have been saying all along and, oh, if they'd only listened to him three years ago....
An interesting psychogical case study, perhaps, but not much more than that.
If I had to make a guess, it would be that Mr. Mitchell is testing the waters to be a newsletter guru for some niche market or other.
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