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Wall Street's Naked Swindle
Rolling Stone ^ | Oct. 14, 2009 | Matt Taibbi

Posted on 10/17/2009 6:09:52 AM PDT by Wolfie

Edited on 10/17/2009 8:54:23 AM PDT by Admin Moderator. [history]

On Tuesday, March 11th, 2008, somebody — nobody knows who — made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half their value in nine days or less. It was madness — "like buying 1.7 million lottery tickets," according to one financial analyst.


TOPICS: Business/Economy; Culture/Society
KEYWORDS: bailout; bearstearns; economy; federalreserve; paulson; sec; wallstreet
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To: TopQuark

Fine analogy, WTG!


41 posted on 10/17/2009 8:06:33 AM PDT by SAJ
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To: headsonpikes

I’m just a dumb country boy who dutifully puts his retirement into a 401(k), but something dawned on me reading this article.

Americans have invested tens, if not hundreds, of Trillions of dollars into the stock market in the past 25 years.

After reading this article, it occurs to me that the big Wall Street companies are simply lying, cheating and stealing that money from each other. In the process, our retirement is not growing and many millions are simply having their money stolen from them.


42 posted on 10/17/2009 8:07:11 AM PDT by Bryan24 (When in doubt, move to the right..........)
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To: grey_whiskers
"I hope I'm misreading that!"

Yes. Taibbi has such audience.

43 posted on 10/17/2009 8:07:24 AM PDT by TopQuark
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To: b359

Short selling is when you sell stock you don’t own, because you think it is going to go down (and/or you are trying to push it down).

I borrow some stock from Alice and sell it to Bob, then I go out and buy on the open market to return what I borrowed from Alice. In practice it’s more complex than that (you may be asking what’s in it for Alice, in reality she probably never knows I “borrowed” her stock).

What’s described in the beginning of the article are options, in this case put options. When you buy a put option, you get the ability to sell a certain number of shares for a certain amount of money at a certain time. When that time comes, if the value of the shares have fallen below the agreed price, you can buy them at market price and sell them for the agreed on price, pocketing the difference (minus the cost you paid for the option, but you’ve already lost that money whether you exercise the option or not).

See also call options and naked shorting.

http://www.investopedia.com/terms/s/shortselling.asp


44 posted on 10/17/2009 8:13:07 AM PDT by Darth Reardon (https://www.doughoffmanforcongress.com/donate3.html)
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To: b359

for an ordinary retail trader like me, we can “sell” shares which we don’t own.....hoping the price will soon go down, at which time we buy to “cover” at the lower price. (if it goes up enough to reach max pain, we cover at a higher price).

What I THINK you want to know about is organized manipulation that is beyond the reach of we retail traders....this will explain in detail in lay terms....well worth watching, as it is the object of all that you’ve heard about “naked” short sales that has taken down the market cap of many companies:
http://www.deepcapturethemovie.com/


45 posted on 10/17/2009 8:14:08 AM PDT by Vn_survivor_67-68 (CALL CONGRESSCRITTERS TOLL-FREE @ 1-800-965-4701)
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To: TopQuark
It appears Taibbi, a charlatan without brains and an honest bone in his body, has acquired quite a following on FR. It’s nice to see the unity of the leftist scum and the supposedly conservative forum...

Another know-nothing post ... seeing as you are so wise, why not favor us with actual discussion instead of personal attacks not backed up with facts.

46 posted on 10/17/2009 8:17:00 AM PDT by ikka (Brother, you asked for it!)
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To: b359

PS.....here is the current RegSHO list....the page is also full of hotlinks for you to learn more about it. I suggest watching deepcapture before more than a quick look here:
http://www.nasdaqtrader.com/Trader.aspx?id=RegSHOThreshold


47 posted on 10/17/2009 8:20:06 AM PDT by Vn_survivor_67-68 (CALL CONGRESSCRITTERS TOLL-FREE @ 1-800-965-4701)
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To: TopQuark
‘leftist scum and the supposedly conservative forum..’

Fascism is to be fought[Bailouts, TARP].

I have little regard if the guy is ‘left’, it matters not, and even less respect for supporters of Gov’t bailouts and socialism.

48 posted on 10/17/2009 8:28:04 AM PDT by BGHater ("real price of every thing ... is the toil and trouble of acquiring it")
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To: Wolfie

Well, a very long article. There were crooked shennanigans but who was responsible? The headline and the lead suggest that it was wicked capitalists. “Wall Street.”

So, yes, most of what he says is true, but he seems to leave some stuff out. Like it was Chris Dodd, Barney Frank, Bill Clinton, the Congressional Black Caucus, and others whoo were most responsible for this lack of regulation. In other words, it was Big Government that made it possible, and that put CRA on steroids.

Paulson seems to have been at the center of the storm, and it turned out that Paulson was working for Obama, which became entirely evident when Paulson sprung the October Surprise on the hapless Bush and McCain, which put Obama over the top on election day.

Who got the largest contributions from Goldman Sachs, the firm that made the biggest bucks on those bank and investment firm crashes? Chris Dodd and a junior Senator from Chicago, Barack Obama.

Who got the money that Obama and Dodd demonized AIG for? Why, none other than Goldman Sachs, where Paulson was the former CEO.

Naked shorts? The government did absolutely nothing about that, although there were many protests from, well, Wall Street. Jim Sinclair among others was yelling abouot it for years, to no avail.

Who removed the uptick requirement for shorts, at the height of the financial crisis? None other than the corrupt fed regulators. That rule was installed in 1987, and removed just in time for the 2008 market crash.

Yes, there were corrupt folks on “Wall Street.” But they were working hand in hand with Big Government. And they still are. And Obama was far more involved in it than Bush, who simply didn’t understand what was going on during his watch.


49 posted on 10/17/2009 8:48:39 AM PDT by Cicero (Marcus Tullius)
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To: MNJohnnie

” the insane ranting of a Neo Marixist know nothing clown? “

One of the distinguishing features of FreeRepublic is that the audience demands facts...and ad hominem rants are a manifestation of intellectual weakness and ineffectiveness(liberals). If you have some proof of your accusations...i’m sure we all would be happy to see it.


50 posted on 10/17/2009 8:52:45 AM PDT by mo
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To: b359

One idea is to start reading Denninger’s Market-Ticker.

You can search it for ternms, like ‘naked’:

http://market-ticker.denninger.net/index.php?serendipity%5Baction%5D=search&serendipity%5BsearchTerm%5D=naked


51 posted on 10/17/2009 8:56:02 AM PDT by combat_boots (The Lion of Judah cometh. Hallelujah. Gloria Patri, Filio et Spirito Sancto.)
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To: Wolfie

Bump.


52 posted on 10/17/2009 9:00:58 AM PDT by khnyny (Too much power in too few hands is always a bad idea.)
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To: investigateworld

Yeah, dealing with the idiocy this generated on FR made me sad, not quite suicidal.


53 posted on 10/17/2009 9:01:11 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Wolfie

“In Tuesday, March 11th, 2008, somebody — nobody knows who — made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half their value in nine days or less”

1.7 mil is loose change. Wonder why the Rolling Stone commie isn’t concerned about the 500 billion dollar run on money market accounts on Sept 18th?

And yes, Taibi is the new Michael Moore commie clown.


54 posted on 10/17/2009 9:03:17 AM PDT by y6162 (uish..)
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To: MNJohnnie

i learned more from that article than i have from 2 years worth of material posted here.


55 posted on 10/17/2009 9:03:21 AM PDT by skipper18
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To: Wolfie

bump


56 posted on 10/17/2009 9:06:26 AM PDT by Tribune7 (I am Joe Wilson!)
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To: Cicero
Who removed the uptick requirement for shorts, at the height of the financial crisis? None other than the corrupt fed regulators. That rule was installed in 1987, and removed just in time for the 2008 market crash.

I think the uptick rule for sales was enacted in the 1930s.

57 posted on 10/17/2009 9:07:16 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: BGHater

Taibbi Bump....he is to the left but makes good points


58 posted on 10/17/2009 9:08:26 AM PDT by dennisw (Ir's not the Wheel, It's the Carousel)
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To: Publius6961

Can always repost excerpts (w/ your analysis).


59 posted on 10/17/2009 9:13:44 AM PDT by Liz
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To: MNJohnnie
Since when does this website devote band-with to the insane ranting of a Neo Marixist know nothing clown?

When he's actually right.

60 posted on 10/17/2009 9:19:40 AM PDT by garbanzo (Government is not the solution to our problems. Government is the problem.)
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