Posted on 08/24/2008 1:47:59 AM PDT by TigerLikesRooster
WALL ST. SHIFTS BLAME FOR CRISIS TO STUPID INVESTORS
By JOHN CRUDELE
August 21, 2008 -- YOUR investments could look like a pack of cigarettes if the government takes the advice of a blue-ribbon panel of experts.
In a report sent recently to Treasury Secretary Hank Paulson, a panel headed by Goldman Sachs Co-Chairman Gerry Corrigan suggested that complicated investments "must have a financial health warning displayed prominently in bold print."
Ironically, the recommendation is the product of top executives from Lehman Brothers, JPMorgan Chase, BNP Paribas, Bank of America, Merrill Lynch and several others - all of which either created or did business in the very same complex investments on which they now want to attach warnings.
The warning label comment is just a small part of the 138-page report entitled "Containing Systemic Risk: the Road to Reform."
And the parts of the report that you and I would understand say things like "the financial crisis of 2007 and 2008 [is] the most severe we have experienced in the post-war period." That's World War II, in case you are getting your conflicts mixed up.
(Excerpt) Read more at nypost.com ...
LOL. Too late.
Ping!
Not too late for all them thieves on the street who racked up their 300K bonuses!
Too late for Grandma Iowa who had all of her 40K in Fannie Mae, though.
Sometimes a mattress is better. It’s a free Country, and it’s citizens may react accordingly.
Same old problem.
Different generation.
Something too good to be true is not true.
Re: “Sometimes a mattress is better. “
Unfortunately inflation will spend it, if you don’t invest it. The US needs entrepreneurship education.
A little sarcasm there. Forgot the tag. I am investing heavily right now and would suggest others to do also.
Tell that to the folks who invested in Enron.
Or Worldcom.
The guy that sits across from me lost 125K on ENRON. He ain’t happy at all.
Thieves? Of course you have proof that all those who receive bonuses on Wall Street broke the law? No? How about at least a sizable % of them? No?. Well then let us in on the specifics of this seemingly outrageous charge.
"Too late for Grandma Iowa who had all of her 40K in Fannie Mae, though."
Fannie Mae is a STOCK and as such it is subject to the forces of the market. If investors aren't even aware of the possibility that a stock can go DOWN as well as UP then I personally haven't any sympathy. People like yourself appear to want to remove risk from the market. The problem with that grandiose idea is along with the risk being removed so will the potential for reward. People like Grandma Iowa who live on fixed incomes and are retired should be 80% in bonds and cash anyway. Anytime you call your broker to by a stock you will be asked if you have read the prospectus and if you say no the purchase is not made on your behalf and one is sent for you. The prospectus lays out the pitfalls of investing in the stock including the claim it can be adversely affected by general market conditions. If someone hasn't the stomach for a loss then they ought to put their money in FDIC insured CD's.
What do you like?
I’m heavy in the belly.
Grandma can still lose it there too if she doesn't follow the $100K rule.
Grandson lives by the same rule.
You’re a brave guy. The only exposure I have to commodities is through a mutual fund. One of my strongest assets is that I definitely know what I don’t know.
Good luck.
The next shaker is the NWS saying this winter will be warm. Buy a new winter coat, Opey would. :^)
The bottom line is, you the individual is ultimately responsible for your investments.There’s no excuse not to educate yourself.I have a friend of mine who is a good liberal who hates big corporations and believes they are the root cause of all evil from here to Mars and back. He always tells me “I don’t buy individual stocks because of my loathing of corporations, that’s why I buy mutual funds.”
Every now and then I try to convince him that investment wise they are one and the same, but he just looks at me with malice and disbelief, like I’m pulling his leg.
I have mutuals as well and don’t mess with it. That’s my retirement. This other crap is just getting to know it.
This is about as close as I get to commodities or currencies in a fund that more or less specializes in them.
http://personal.fidelity.com/products/funds/mfl_frame.shtml?714199106
Symbol-PRPFX
I am one of those who never stopped educating myself, not that I am a financial professional. Even for me, it has been burdensome for me even when I know those experts are blowing lots of smoke. Because everybody else around me and most at FR have had the completely different opinion.
If you are not quite sure of what you know, you can waver easily. Especially you are so busy making your living everyday while finding barely enough time to look into financial information.
If there is balance information out there, people can make prudent decision. However, if information is lopsidedly misleading, you can't blame it all to individual customers.
We have been getting lopsided information for nearly a decade. Not many can withstand such sustained and heavy bombardment of PR onslaught(or shall we say propaganda?)
Remember that when the economy is rocky, the price of a mutual is cheap. I am racking up shares at a low rate. It will pay off big-time.
Good Luck
If a thief is a smart thief that makes him no less a thief.
BTW I’m curious about what you did with your bonus.
No need to reply. You know very well where I’m comin from.
I’ve lost 20.65% yet gained about 300 shares. We shall see
| You know very well where I’m comin from.
|
If I look over a 20 year span, the $$ I invested in CDs has done better than stocks. You can do great in stocks if you have the iron discipline to sell after a big gain. Unfortunately, I did not fall into that category.
I will never forget what my Dean Witter financial advisor once told me with a big grin on this face: “You screwed up....you listened to me.” Of course—what did he care? He was just collecting fees on Other People’s Money.
The U.S. needs education, period.
Warning!!! 
Goldman are the biggest crooks working on the street. They were one of the largest firms, pushing these Collateralized Debt obligations on the banks, and at the time they were selling these packagged “junk” mortgages to the banks, they were shorting the banks whom they were selling these pieces of garbage. Why they haven’t been charged with ccrimes, is beyond me.
Check out Ben Stein’s piece on this:
http://www.nytimes.com/2007/12/02/business/02every.html?pagewanted=all
Goldman is the most “connected” of all Wall St firms. Mafia style connected. The Fed Reserve outsources a lot of it’s buying selling to Goldman Sachs
Careful you are up against the belief, that if you were dumb enough to give them your money you deserve to lose it.
The Anatomy of a Short Attack — Abusive shorting are not random acts of a renegade hedge funds, but rather a coordinated business plan that is carried out by a collusive consortium of hedge funds and prime brokers, with help from their friends at the DTC and major clearinghouses. Potential target companies are identified, analyzed and prioritized. The attack is planned to its most minute detail.
The plan consists of taking a large short position, then crushing the stock price, and, if possible, putting the company into bankruptcy. Bankrupting the company is a short homerun because they never have to buy real shares to cover and they don’t pay taxes on the ill-gotten gain.
When it is time to drive the stock price down, a blitzkrieg is unleashed against the company by a cabal of short hedge funds and prime brokers. The playbook is very similar from attack to attack, and the participating prime brokers and lead shorts are fairly consistent as well.
Typical tactics include the following:
Flooding the offer side of the board — Ultimately the price of a stock is found at the balance point where supply (offer) and demand (bid) for the shares find equilibrium. This equation happens every day for every stock traded. On days when more people want to buy than want to sell, the price goes up, and, conversely, when shares offered for sale exceed the demand, the price goes down.
The shorts manipulate the laws of supply and demand by flooding the offer side with counterfeit shares. They will do what has been called a short down ladder. It works as follows: Short A will sell a counterfeit share at $10. Short B will purchase that counterfeit share covering a previously open position. Short B will then offer a short (counterfeit) share at $9. Short A will hit that offer, or short B will come down and hit Short A’s $9 bid. Short A buys the share for $9, covering his open $10 short and booking a $1 profit.
By repeating this process the shorts can put the stock price in a downward spiral. If there happens to be significant long buying, then the shorts draw from their reserve of “strategic fails-to-deliver” and flood the market with an avalanche of counterfeit shares that overwhelm the buy side demand. Attack days routinely see eighty percent or more of the shares offered for sale as counterfeit. Company news days are frequently attack days since the news will “mask” the extraordinary high volume. It doesn’t matter whether it is good news or bad news.
Flooding the market with shares requires foot soldiers to swamp the market with counterfeit shares. An off-shore hedge fund devised a remarkably effective incentive program to motivate the traders at certain broker dealers. Each trader was given a debit card to a bank account that only he could access. The trader’s performance was tallied, and, based upon the number of shares moved and the other “success” parameters, the hedge fund would wire money into the bank account daily. At the end of each day, the traders went to an ATM and drew out their bribe. Instant gratification.
Global Links Corporation is an example of how wholesale counterfeiting of shares will decimate a company’s stock price. Global Links is a company that provides computer services to the real estate industry. By early 2005, their stock price had dropped to a fraction of a cent. At that point, an investor, Robert Simpson, purchased 100%+ of Global Links’ 1,158,064 issued and outstanding shares. He immediately took delivery of his shares and filed the appropriate forms with the SEC, disclosing he owned all of the company’s stock. His total investment was $5205. The share price was $.00434. The day after he acquired all of the company’s shares, the volume on the over-the-counter market was 37 million shares. The following day saw 22 million shares change hands — all without Simpson trading a single share. It is possible that the SEC has been conducting a secret investigation, but that would be difficult without the company’s involvement. It is more likely the SEC has not done anything about this fraud.
Massive counterfeiting can drive the stock price down in a matter of hours on extremely high volume. This is called “crashing” the stock and a successful “crash” is a one-day drop of twenty-percent or a thirty-five percent drop in a week. In order to make the crash “stick” or make it more effective, it is done concurrently with all or most of the following:
Media assault — The shorts, in order to realize their profit, must ultimately purchase real shares at a price much cheaper than what they shorted at. These real shares come from the investing public who panics and sells into the manipulation. Panic is induced with assistance from the financial media.
The shorts have “friendly” reporters with the Dow Jones News Agency, the Wall Street Journal, Barrons, the New York Times, Gannett Publications (USA Today and the Arizona Republic), CNBC and others. The common thread: A number of the “friendly” reporters worked for The Street.com, an Internet advisory service that hedge-fund managers David Rocker and Jim Cramer owned. This alumni association supported the short attack by producing slanted, libelous, innuendo laden stories that disparaged the company, as it was being crashed.
One of the more outrageous stories was a front-page story in USA Today during a short crash of TASER’s stock price in June 2005. The story was almost a full page and the reporter concluded that TASER’s electrical jolt was the same as an electric chair — proof positive that TASERs did indeed kill innocent people. To reach that conclusion the reporter over estimated the TASER’s amperage by a factor of one million times. This “mistake” was made despite a detailed technical briefing by TASER to seven USA Today editors two weeks prior to the story. The explanation “Due to a mathematical error” appeared three days later — after the damage was done to the stock price.
Jim Cramer, in a video-taped interview with The Street.com, best described the media function:
When (shorting) ... The hedge fund mode is to not do anything remotely truthful, because the truth is so against your view, (so the hedge funds) create a new ‘truth’ that is development of the fiction… you hit the brokerage houses with a series of orders (a short down ladder that pushes the price down), then we go to the press. You have a vicious cycle down — it’s a pretty good game.
This interview, which is more like a confession, was never supposed to get on the air, however, it somehow ended up on YouTube. Cramer and The Street.com have made repeated efforts, with some success, to get it taken off of YouTube.
Analyst Reports — Some alleged independent analysts were actually paid by the shorts to write slanted negative ratings reports. The reports, which were represented as being independent, were ghost written by the shorts and disseminated to coincide with a short attack. There is congressional testimony in the matter of Gradiant Analytic and Rocker Partners that expands upon this. These libelous reports would then become a story in the aforementioned “friendly” media. All were designed to panic small investors into selling their stock into the manipulation.
Planting moles in target companies — The shorts plant “moles” inside target companies. The moles can be as high as directors or as low as janitors. They steal confidential information, which is fed to the shorts who may feed it to the friendly media. The information may not be true, may be out of context, or the stolen documents may be altered. Things that are supposed to be confidential, like SEC preliminary inquiries, end up as front-page news with the short-friendly media.
Frivolous SEC investigations — The shorts “leak” tips to the SEC about “corporate malfeasance” by the target company. The SEC, which can take months processing Freedom of Information Act requests, swoops in as the supposed “confidential inquiry” is leaked to the short media.
The plethora of corporate rules means the SEC may ultimately find minor transgressions or there may be no findings. Occasionally they do uncover an Enron, but the initial leak can be counted on to drive the stock price down by twenty-five percent. The announcement of no or little findings comes months later, but by then the damage that has been done to the stock price is irreversible. The San Francisco office of the SEC appears to be particularly close to the short community.
Class Action lawsuits — Based upon leaked stories of SEC investigations or other media exposes, a handful of law firms immediately file class-action shareholder suits. Milberg Weiss, before they were disbanded as a result of a Justice Department investigation, could be counted on to file a class-action suit against a company that was under short attack. Allegations of accounting improprieties that were made in the complaint would be reported as being the truth by the short friendly media, again causing panic among small investors.
Interfering with target company’s customers, financings, etc. — If the shorts became aware of clients, customers or financings that the target company was working on, they would call and tell lies or otherwise attempt to persuade the customer to abandon the transaction. Allegedly the shorts have gone so far as to bribe public officials to dissuade them from using a company’s product.
Pulling margin from long customers — The clearinghouses and broker dealers who finance margin accounts will suddenly pull all long margin availability, citing very transparent reasons for the abrupt change in lending policy. This causes a flood of margin selling, which further drives the stock price down and gets the shorts the cheap long shares that they need to cover.
Paid bashers — The shorts will hire paid bashers who “invade” the message boards of the company. The bashers disguise themselves as legitimate investors and try to persuade or panic small investors into selling into the manipulation.
This is not every dirty trick that the shorts use when they are crashing the stock. Almost every victim company experiences most or all of these tactics.
How Pervasive Is This? — At any given point in time more than 100 emerging companies are under attack as described above. This is not to be confused with the day-to-day shorting that occurs in virtually every stock, which is purportedly about thirty percent of the daily volume.
Wall Street finally has its “Pogo Moment.”
Personally, my retirement savings are in T-bills. If the government defaults on its T-bills, I've got much bigger problems than my retirement anyway.
300k? Some received millions.
People lost money on the riskiest devices. If you understood what happened, you would know that people voluntarily took a stab at big rewards for a lot of risk. People who wrote this money off, most likely. These are not stocks.
As I suspected you are unable to provide a shred of evidence that there was anything other then the routine amount of law breaking that occurs in any industry at any time. There Are laws that govern such law breaking and those caught are punished as they should be.
"BTW I’m curious about what you did with your bonus. No need to reply. You know very well where I’m coming from."
Although I have been an investor for some 35 years I never worked for a broker or investment house. I just lose patience with totally uninformed bleeding heart hand wringers like you, who think every time an investor gets hammered someone must have screwed them.
I like mutuals because even though I have to pay for someone to manage the fund I am secure in knowing they will do a better job (probably) then i will since I neither have the time nor patience to follow every stock, read reports and seek out industry news on a regular basis.
I’m a buy and hold guy and mostly stick with large cal balanced funds on the equity side even though they are normally split 60-40 Equity/Bonds and cash. It’s enough exposure for me and I’ve always been happy with a real 8-10% return.
GS has become a bigger drag on the economy than trial lawyers. Ken Lay had more candor than your average GS press release.
Check out what Ben Stein has to say about this den of thieves at Goldman Sachs
Unfortunately, that is way things are. People and companies go bankrupt and stiff their creditors and shareholders all the time. If you have legal standing to try and get your money back, it may be wrapped up in the legal system for years. The best defense is not to lose it.
Ben’s pertinent sentence:
“The point to bear in mind, as Mr. Sloan brilliantly makes clear, is that as Goldman was peddling C.M.O.’s, it was also shorting the junk on a titanic scale through index sales — showing, at least to me, how horrible a product it believed it was selling.”
Article is a great read, though you’ll probably need a shower after reading it, as it shows how truly slimy Goldman is.
The article in full:
http://www.nytimes.com/2007/12/02/business/02every.html?_r=2&adxnnl=1&oref=slogin&pagewanted=all&adxnnlx=1219583904-zF2pcDn8V61uhnVO8vesow&oref=slogin
Ben Stein has no idea what he’s talking about in this case. He’s mistaking cause and effect.
August 21, 2008
Cramer calls out what he regards to be the fraudulent destruction of Freddy and Fannie, shameful actions of the FED, SEC, Treasury, and Whitehouse; the damage being done to market capitalism; and directly implies that our economy is being illegally manipulated by insiders.
Cramer says go to your local brokerage put everything into treasuries on whatever. Caution people !
Please feel free to pass this along . . .
Wow ! LOL, LOL, LOL !
It’s always blame the victims, never the economic swindlers & brazen banking industry criminals, on both sides of the Atlantic.
Double caution. October could hold a huge surprise (for the majority).
The buying and selling of what exactly?
What's an index sale related to CMOs?
showing, at least to me, how horrible a product it believed it was selling.”
Whenever you buy something you should ask yourself, "If it is so great, why is this guy selling it to me, instead of keeping it for himself".
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No, please explain. On the surface, it appears that you are "coming from" the place where smart guys in suits who work in government bureaucracies make choices on behalf of We The Stupid People because we're all too dumb to handle our own affairs. If that's not the case, you should explain why you sound exactly like that.