Sublimierte Marktmanipulation - Programtrading

SEC backs down on short-selling disclosure rule

U.S. regulator extends short-sale ban pending bailout bill becoming law
By Alistair Barr, MarketWatch
Last update: 1:52 p.m. EDT Oct. 2, 2008
Comments: 69
SAN FRANCISCO (MarketWatch) -- The Securities and Exchange Commission backed down on a major part of its effort to limit short selling.
Late Wednesday, the regulator said that institutional investors' short positions won't be made public, a major change from an earlier ruling that had upset several prominent hedge-fund managers and short sellers including James Chanos.
Until Wednesday, the SEC's emergency short-selling rules required fund managers to disclose major short positions on shares of roughly 800 financial-services stocks.
The regulator then planned to make those filings public, with a two-week delay. That was due to start in mid-October.
Chanos, head of leading short-selling hedge-fund firm Kynikos Associates LP, said at the time that forcing such public disclosure would be like asking Coca-Cola to reveal the super-secret formula for its popular fizzy beverage. See full story.
Also Wednesday, the SEC said the disclosure requirement would be extended indefinitely as an interim final rule. But it also noted that "disclosure under the emergency order will be made only to the SEC."
That may well come as a relief to short sellers and other hedge-fund managers worried that public disclosure of their bearish bets might expose them to pressure from the companies they target.

http://www.marketwatch.com/news/story/...-B9D95F78C416}&dist=hplatest

Emergency Economic Stabilization Act of 2008


http://www.govtrack.us/congress/vote.xpd?vote=h2008-681
http://clerk.house.gov/evs/2008/roll681.xml

Washington, D.C., Oct. 3, 2008 — The SEC’s Division of Trading and Markets:
"On Friday, October 3, 2008, the President signed the historic Emergency Economic Stabilization Act of 2008 (H.R. 1424), aimed at stemming the credit crisis.  Accordingly, the Commission’s Emergency Order that prohibits persons from selling short the securities of financial institutions will expire at 11:59 p.m. ET on Wednesday, October 8, 2008"

The historic autograph will be auctioned as soon as possible along with some Cox memorabilia to top up the bailout package.

Solange die SEC ihre Arbeit in dieser Weise erledigt,  wird der Normalanleger kaum Vertrauen in das System fassen. Dem sog.Rettungspaket müssen unbedingt gesetzliche Regulierungs- und Ausführungsbestimmungen folgen, so daß kriminelle ungedeckte Leerverkäufe ab sofort verhindert  werden können. Das wird auf die Wiedereinführung der "uptick-rule" hinauslaufen, die von den Bush-Banausen abgeschafft wurde. Republikaner, die jetzt über die Verschwendung von Steuergeldern an notleidende Wall-Street broker weinen, sollten das bedenken.
Es ist davon auszugehen, daß erst eine neue Administration sich um grundlegende Änderungen bemühen wird, woran eine Bush-Regierung offensichtlich kein Interesse hat. Da scheinen im Gegenteil einige zu glauben, mit dem schönen "frischen" Kapital könne man so weitermachen, wie gehabt.

ABC News' angle on SEC reaming

Report: SEC Gave "Preferential Treatment" to Wall Street CEO

Attempts to Question Morgan Stanley's John Mack "Connected" to Firing of SEC Lawyer

By BRIAN ROSS and RHONDA SCHWARTZ

October 6, 2008—

The SEC gave "preferential treatment" to Wall Street executive John Mack during an insider trading investigation three years ago because Mack was about to become CEO of the Morgan Stanley investment banking firm, the SEC's inspector general concluded in a report obtained by ABC News.

Watch Brian Ross' full report on Good Morning America Tuesday morning.

The report recommended disciplinary action against the SEC's chief of enforcement, Linda Thomson, and said the firing of an SEC lawyer was "connected" to his persistent attempts to take Mack's testimony. Read the report's conclusion and recommendations here.

"There's a culture at the SEC that they're not willing to take on the big boys, whether big economically or big politically," said Sen. Charles Grassley (R-IA) who requested the inspector general's investigation.

It is a damning indictment of the SEC at a time when it is being asked to step up its enforcement action against Wall Street.

"They ought to be able to challenge anybody regardless of their economic might or regardless of their political might," said Sen. Grassley.

Grassley asked for the investigation after a SEC lawyer who sought to take Mack's testimony, Gary Aguirre, was fired.

"I was told that it would be very difficult to get approval to take his testimony because of his powerful political connections," Aguirre told ABC News in an interview for Good Morning America.

When he says he persisted, he was told to go on vacation and then notified he had been fired.

"We were trying to immediately sit the people down and nail them down to a story, this was the sole exception," Aguirre said.

Aguirre said the inspector general's findings are vindication for his three-year long effort to clear his name after being fired.

The report concluded, "there was a connection between the decision to terminate Aguirre and his seeking to take Mack's testimony."

"Wall Street has long tentacles," said Aguirre, "and those tentacles reached into the SEC and cost me my job."

The Inspector General found Aguirre's superiors at the SEC provided Mack and his lawyers with information that "could prove very useful in preparing a defense."

The report also said, "the information was provided specifically because John Mack was being considered for a high-level position in a large investment bank, and would not be available to another potential target of lesser means or reputation."

Watch Brian Ross' full report on Good Morning America Tuesday morning.

After Aguirre was fired, the SEC ultimately took Mack's testimony and cleared him of wrongdoing.

A statement issued on his behalf by Morgan Stanley said, "John Mack had nothing to do with the SEC's decision if or when it would seek his testimony in 2005. As soon as he was asked, John Mack immediately agreed to provide his testimony and has cooperated fully with the SEC throughout this matter."

Aguirre says Mack hired a former Manhattan US attorney, the former head of the SEC enforcement division and other former SEC officials to pressure his bosses to curtail the investigation.

The SEC says changes have been made since its current chairman, Christopher Cox, took over.

The Inspector General did not find that "cases are generally affected by political decisions or the prominence of the defendants."

Read a statement from the SEC here.

The SEC would not say what, if any, disciplinary action would be taken against Aguirre's superiors, as recommended by the Inspector General.
http://abcnews.go.com/Blotter/Story?id=5970263&page=1

http://biz.yahoo.com/rb/081007/business_us_financial_greenberg.html

Schlage vor, "Cox" in "Kotz" umzubenennen.

Cox's SEC Censors Report on Bear Stearns Collapse

By Mark Pittman, Elliot Blair Smith and Jesse Westbrook
http://www.bloomberg.com/apps/...=20601109&sid=a6iXuZJG1L44&s=polyhoo

Oct. 7 (Bloomberg) -- U.S. Securities and Exchange Commission Chairman Christopher Cox's regulators stood by as shrinking capital ratios and growing subprime holdings led to the collapse of Bear Stearns Cos., according to an unedited version of a study by the agency's inspector general.

The report, by Inspector General H. David Kotz, was requested by Senator Charles Grassley to examine the role of regulators prior to the firm's collapse in March. Before it was released to the public on Sept. 26, Kotz deleted 136 references, many detailing SEC memos, meetings or comments, at the request of the agency's Division of Trading and Markets that oversees investment banks.

``People can judge for themselves, but it sure looks like the SEC didn't want the public to know about the red flags it apparently ignored in allowing Bear Stearns and other investment banks to engage in excessively risky behavior,'' the Iowa Republican said in an e-mailed statement.

An unedited version of the 137-page study posted to Grassley's Web site Sept. 26 showed that Bear Stearns traders used pricing models for mortgage securities that ``rarely mentioned'' default risk.

The firm lost one top modeler ``precisely when the subprime crisis was beginning to hit'' and writedowns were being taken, the full report said. ``As a result, mortgage modeling by risk managers floundered for many months,'' according to the unedited document, quoting internal SEC memos from April and December 2007. The comments were removed from the edited version publicly released by the SEC.

Aguirre Inquiry

Kotz followed the Bear Stearns report with another requested by Grassley, this one covering the 2005 firing of Gary Aguirre, an SEC lawyer who claimed superiors impeded his inquiry into insider trading at hedge fund Pequot Capital Management. The report was released by the Senate Finance Committee member today. It said the agency should consider punishing the director of enforcement and two supervisors over the firing.

SEC spokesman John Nester didn't immediately respond to a voice-mail message. The New York Times reported the Aguirre report earlier today.

Trading and Markets had oversight of holding companies for the five biggest U.S. investment banks, including Bear Stearns, via the Consolidated Supervised Entity Program. The division failed to follow up on ``red flags'' raised by the New York-based firm's increasingly ``significant concentration of market risk'' from mortgage securities, according to the full document.

`Failed' Mission

The SEC, which governed the firm along with the Financial Industry Regulatory Authority, ``failed to carry out its mission in the oversight of Bear Stearns,'' the agency said in both versions of the report. The Federal Reserve will provide $29 billion in financing for JPMorgan Chase & Co.'s March 14 takeover of the investment bank after the government said it stepped in to prevent panic.

The agency censored the report because ``the requests from the Division of Trading and Markets covered information contained in non-public memoranda and documents filed by the CSE firms,'' spokesman Nester said.

JPMorgan spokesman Brian Marchiony declined to comment.

A footnote in the uncensored version of the report quotes Bear Stearns Chief Executive Alan Schwartz as saying he hadn't held ``terribly current discussions'' to raise capital for his firm even after the SEC asked in March, two weeks before it failed, about obtaining funds.

No Help

While Bear had retained Lazard Ltd. as an adviser, the report quoted Schwartz saying, ```The time it would take to get that done, it wouldn't help.''' The CEO said rumors would cause more damage in the meantime, according to the SEC.

Schwartz didn't return a phone call for comment.

The SEC took no action even as Bear Stearns provided more collateral to lenders as they lost trust in the 85-year-old firm, the unedited report said.

The agency removed a section of the publicly distributed report showing that the Division of Trading and Markets knew Bear Stearns's capital ratio had dropped to 11.5 percent in March from as high as 21.4 percent in April 2006. The ratio measures assets, adjusted for risk, relative to a firm's equity. Ten percent is the minimum standard under international banking regulations.

Regulators from the unit ``inquired whether Bear Stearns was contemplating capital infusions,'' even though they didn't formally or informally pressure the firm to do so, according to the unedited version.

Under the voluntary Consolidated Supervised Entity Program, the SEC couldn't force the firm to raise capital.

`Fundamentally Flawed'

The CSE ``was fundamentally flawed from the beginning, because investment banks could opt in or out of supervision voluntarily,'' Cox said on Sept. 26 in announcing the program's shutdown.

``This chain of events raises very significant questions about the supervision of all types of financial institutions, not just investment banks,'' said a written response to the inspector general's report from the Trading and Markets unit, headed by former agency chief economist Erik Sirri.

``With respect to Bear Stearns, the staff applied the relevant international standards for holding-company capital adequacy in a conservative manner,'' the unit said.

The staff ``added a holding-company liquidity requirement; and yet, they couldn't withstand a `run on the bank,''' the response said.

Kotz, the inspector general, declined to comment, as did Cox.

`Generous Marks'

Bear Stearns was able to ``create capital'' by inflating the value of assets including mortgages, according to the unedited study. Two days before it was rescued, the firm paid out $1.1 billion to ``numerous counterparties to squelch rumors'' it couldn't meet its margin calls, the full report said. The finding didn't appear in the censored version.

The firm ``tended to use the traders' more generous marks for profit and loss purposes,'' it said.

Trading and Markets unit members saw that Bear Stearns traders dominated less-experienced risk managers, the inspector general reported in sections that were excised from the public report.

``As trading performance remained strong for years in a row, it clearly wasn't career-enhancing to stand in the way of increasingly powerful trading units demanding more balance sheet and touting their state of the art risk-management models,'' said Brad Hintz, an analyst at Sanford C. Bernstein & Co. in New York, and a former chief financial officer at Lehman Brothers Holdings Inc.

Basel Guidelines

The Basel Committee on Supervision published revised guidelines in 2004 that allowed global financial institutions to ``rely on their own internal estimates of risk components'' to help determine the amount of capital they needed.

By censoring the report, ``the SEC didn't do well by the public and the inspector general didn't do well by the public,'' said Tom Cardamone, managing director of the Washington-based Global Financial Integrity Program. ``The buck has to stop someplace. Joe Main Street has to rely on the professionalism of the people doing the job.''

For Related News:

To contact the reporter on this story: Mark Pittman in New York at mpittman@bloomberg.net or; Elliot Blair Smith in New York at esmith29@bloomberg.net or; Jesse Westbrook in Washington at jwestbrook1@bloomberg.net.
Last Updated: October 7, 2008 16:13 EDT

in USA wenn keine gegenteilige Meldung kommt......

chilling

- darauf läuft es im Grunde bei der subprime-Krise hinaus. Es ist das gleiche Modell.
Der US-Finanzmarkt hat sich selbst gezündet - ein inside job.

A Look At Wall Street's Shadow Market
http://www.cbsnews.com/stories/2008/10/05/60minutes/main4502454.shtml

hat sich durch das gesamte System gefressen.

Everything You Wanted to Know About the Credit Crisis But Were Afraid to Ask

by Ben Stein

Posted on Monday, September 22, 2008,


The headlines scream doom. There are endless references to the economic situation being "the worst since The Great Depression." Immense names in finance have collapsed and sunk beneath the waves of the financial crisis. Please allow me to try to explain a bit of what's going on.

First of all, all you have to do is look around you to see that in terms of daily life, we are not anywhere near The Great Depression. Unemployment is barely about six percent. It was 25 percent at the nadir of The Great Depression. Real per capita incomes adjusted for inflation are at least five times what they were during The Great Depression. Airplanes are full. High-end restaurants are full. Prices are painfully high for food. These are not signs of a Great Depression.

On the other hand, the losses in financial products have been devastating. The Dow is off 23 percent from its high in 2007. Financial stocks even after the recent rally are off staggeringly. The biggest insurer in America has become a basket case.
Most of all, there is REAL FEAR in the air. Decent, hard working people are terribly afraid as they see their life savings melt away. Retirement has become just a forlorn dream for tens of millions of Americans.

How did it happen?

Here s one big part of the answer. First, the alert reader will notice that Ben Stein said many times that the amount of money at risk in the subprime meltdown was just not enough to sink an economy of this size. And I was right...to a point. The amount of subprime that defaulted was at most - after recovery in liquidation - about $250 billion. A huge sum but not enough to torpedo the US economy.

The crisis occurred (to greatly oversimplify) because the financial system allowed entities to place bets on whether or not those mortgages would ever be paid. You didn't have to own a mortgage to make the bets. These bets, called Credit Default Swaps, are complex. But in a nutshell, they allow someone to profit immensely - staggeringly - if large numbers of subprime mortgages are not paid off and go into default.

The profit can be wildly out of proportion to the real amount of defaults, because speculators can push down the price of instruments tied to the subprime mortgages far beyond what the real rates of loss have been. As I said, the profits here can be beyond imagining. (In fact, they can be so large that one might well wonder if the whole subprime fiasco was not set up just to allow speculators to profit wildly on its collapse...)

These Credit Default Swaps have been written (as insurance is written) as private contracts. There is nil government regulation of them. Who writes these policies? Banks. Investment banks. Insurance companies. They now owe the buyers of these Credit Default Swaps on junk mortgage debt trillions of dollars. It is this liability that is the bottomless pit of liability for the financial institutions of America.

Because these giant financial companies never dreamed that the subprime mortgage securities could fall as far as they did, they did not enter a potential liability for these CDS policies anywhere near their true liability - which again, is virtually bottomless. They do not have a countervailing asset to pay off the liability.





This is what your humble servant, moi, missed. This is what all of the big investment banks and banks and insurance companies missed. This is what the federal government totally and utterly missed. This is what the truly brilliant speculators in these instruments did not miss. They could insure a liability they could also create and control. It is as if they could insure a Cadillac for its value upon theft - but they could control what the value the insurer had to pay off was. The insurer thought it might be fifty thousand dollars - but it was manipulated into being two million.

This is the whirlpool sucking down finance.

Now, we are about to have a similar phenomenon happen with commercial mortgage debt, debt from mergers and acquisitions, credit card debt, and car loan debt. Many trillions of dollars in Credit Default Swaps have been sold on all of this, and the prices of all of them have fallen and can be made to fall more.

As I said, the pit of loss is bottomless. Warren Buffett, the smartest man of all time in the world of finance, has called financial derivatives - of which Credit Default Swaps are a prime example - "weapons of financial mass destruction." And so they are. As with the hydrogen bomb, no one thought they would ever be used to end the world. But unless someone figures a way out - and maybe the new RTC is and maybe it isn't - we are in real peril. This should never have happened. Now that it did happen, should the taxpayer pay to make the billionaire speculators whole on their bets? What the heck is to be done?

http://finance.yahoo.com/print/expert/article/yourlife/109609

The return of short sellers to the US market after a near-three-week ban was blamed for contributing to a sharp drop in prices on Thursday as General Motors and Morgan Stanley led stock markets sharply lower.

http://www.investorvillage.com/...mb=971&mn=224736&pt=msg&mid=5841912

During much of Friday’s session, global stock markets sold off ferociously, but upon completion of the auction, the ISDA declared that not only was a worst case scenario averted, but the actual outstanding cash settlements of all the Lehman CDS was a tiny amount. This was a result of many participants holding offsetting positions (i.e., having both long and short positions on Lehman CDSs) and the previous posting of collateral. Rather than the estimated $400 billion of counterparty risk, ISDA noted that the actual exchange of additional money needed to settle Lehman CDSs will be an amount closer to 2% of the gross outstanding or $8 billion. The S&P 500 skyrocketed more than 10% in the 45 minutes that followed. (We can’t easily identify that big a move in the stock market in that short a time ever occurring.) "


Interessant dazu auch
http://www.forbes.com/business/2008/10/10/...l-cx_lm_1010auction.html

Ghost of Lehman´s debt

Topic:   Market Risks
10/13/2008 By Fisher Investments Editorial Staff

Story Highlights:

   * Lehman’s failure proved to be a huge test to the financial system, specifically to the $55 trillion credit default swap (CDS) market.
   * Serious concerns loomed over the ability of contract sellers to cover the estimated $400 billion of Lehman CDSs outstanding.
   * The result of final prices set last Friday means contract sellers must pay 91.375 cents on the dollar to contract holders. This is a large amount, but not unexpected, and helped clear many uncertainties hanging over the markets.
   * Forced sales of liquid assets leading up to Lehman’s CDS settlement auction could explain some of the extreme negative volatility of last week.

__________________________________________________

It’s not yet Halloween, but old ghosts are coming back to haunt.

About a month ago (yes, only a month ago, though by now it feels like ages), the US government chose not to save Lehman Brothers from failure—perhaps believing its failure wouldn’t cause as much systemic damage to the financial system as other “too big to fail” institutions (dubious, but possible). Ironically, Lehman’s failure proved to be a huge test to the financial system, specifically to the $55 trillion credit default swap (CDS) market. (Recall: This is precisely the market many believed sunk AIG in the first place.)

CDS contracts are purchased by holders of debt to insure against the event of that debt defaulting. Dealers selling the contracts agree to pay the buyer the face value of the debt security if default occurs. When Lehman failed (thus making the default event a reality), serious concerns grew over the ability of contract sellers—such as Morgan Stanley and Citigroup—to cover the estimated $400 billion of Lehman CDSs outstanding. More worrisome, there was no visibility—let alone certainty—as to who was exposed or to what extent to Lehman CDSs. Any massive net exposure was feared to possibly trigger systematic collapse of the financial systems (or at least of many major players).

Last Friday, 22 major CDS dealers in conjunction with the International Swaps and Derivatives Association, Inc. (ISDA) participated in an auction to settle prices on Lehman’s CDS contracts. The final recovery rate on Lehman’s senior debt was set at 8.625 cents on the dollar, meaning contract sellers must pay the remaining 91.375 cents to contract holders. Holders of Lehman’s debt include big banks such as Goldman Sachs and JP Morgan.

The final price for Lehman’s debt is slightly lower than some initial estimates, but it wasn’t significantly different from dealers’ expectations. Many sellers expected to be liable for 90% of the value of the debt, and a number of financial institutions have presumably been forced over the last month to raise cash, including selling stocks, to prepare to pay CDS buyers.

During much of Friday’s session, global stock markets sold off ferociously, but upon completion of the auction, the ISDA declared that not only was a worst case scenario averted, but the actual outstanding cash settlements of all the Lehman CDS was a tiny amount. This was a result of many participants holding offsetting positions (i.e., having both long and short positions on Lehman CDSs) and the previous posting of collateral. Rather than the estimated $400 billion of counterparty risk, ISDA noted that the actual exchange of additional money needed to settle Lehman CDSs will be an amount closer to 2% of the gross outstanding or $8 billion. The S&P 500 skyrocketed more than 10% in the 45 minutes that followed. (We can’t easily identify that big a move in the stock market in that short a time ever occurring.)

If the system proves able to withstand what qualified as one of the most expensive payouts in the history of the CDS market (and of derivatives in general), equity markets could move from panic to relief—though it is far too soon to say as much. This is, at the very least, a plausible explanation for the extreme negative volatility of the last several trading sessions.

What you have to worry about is the wholesale destruction of our financials by short sellers who are buying credit-default swaps, then telling the media that things are collapsing after they got their shorts on. They are causing the problems at this level. And the insurance companies who promised S&P returns they can’t deliver.”

http://www.cnbc.com/id/27118364

Wer Cramers Karriere verfolgt hat weiß, daß er die Methoden der Schurken aus eigener Anschauung kennt, weil er sie selbst genau so praktiziert hat.  

Pigs Fighting To Be First in Line at the Trough

by Bill Butler
by Bill Butler


DIGG THIS

On October 2, 2008, LewRockwell.com exposed the political truth behind the bailout: that its purpose is to transfer wealth to Citibank and JP Morgan from the US taxpayer as well as the Wachovia and Washington Mutual equity holders. Although many additional state-empowering bells and whistles have been added to the bailout plan, at its core the bailout dictates that the US government will purchase somewhere north of $850 billion in subprime mortgages and otherwise unmarketable mortgage-backed securities from the financial institutions holding those securities. In the week prior to the passage of the bailout, the federal government, through the FDIC and the Office of Thrift Services, forced the transfer of $307 billion in Washington Mutual assets (including at least $34 billion in non-performing loans) to JP Morgan for $1.9 billion. The FDIC also "facilitated" the future transfer of more than $300 billion in assets (including at least $42 billion in non-performing loans) from Wachovia to Citibank. There can be little question about how the FDIC "facilitated" these deals. In these gun-to-their-head transactions, the FDIC brought the gun. The FDIC, as the regulator of WaMu and Wachovia, has the worldly power to shutter these banks, liquidate their assets and sell those assets over to whomever it desires. As it is neither a buyer nor a seller, it brings nothing more than regulatory leverage to such a transaction. This fact is palpably demonstrated in JP Morgan–WaMu takeover.

Developments just prior to and immediately after the bailout illuminate interesting political and potentially ominous market realities. The political reality is that George W. Bush, unlike his father, is most likely a Morgan man. Press reports indicate that W himself was involved in these transactions. Comparing the transactions shows that Morgan received the federal 800-pound gorilla’s unbridled support whereas federal coercion in the Citi-Wachovia transaction was, by comparison, restrained. In "facilitating" the JP Morgan–WaMu deal, the FDIC first wrestled WaMu to ground, executing a midnight foreclosure and repossession of all its assets. The FDIC then sold WaMu’s $302 billion in assets to Morgan for $1.9 billion and wiped out the WaMu equity holders, including a group that had invested $7 billion six months ago. Monday JP Morgan further announced that had no intention of hiring or retaining WaMu management. Wachovia was just the latest bone thrown to JP Morgan. In another federally "facilitated" transaction, on March 17, 2008 JP Morgan acquired global securities giant Bear Stearns for $236 million, or $2 a share. After shareholders complained, JP Morgan increased its "offer" fivefold, to $10 per share. In February of 2008, Bear Stearns stock had a market value $93 per share. Citi, by comparison, has not received the same level of government support. In the Citi-Wachovia transaction, the FDIC did not actually seize Wachovia’s assets. It only threatened to seize Wachovia’s assets, allowed Wachovia to survive as a legal entity and gave Wachovia until December 31 to close the deal with Citi. If W is not a Morgan man, then he is not a good negotiator, because the delay has opened the door for Wachovia to negotiate a better deal.

On the morning of October 3, in a "surprise announcement" Wachovia’s management and board of directors seized the little daylight left open in the Citi deal and negotiated a deal with Wells Fargo to receive an additional $13 billion for their shareholders in a transaction that, unlike the Citi transaction, would not expose the FDIC (US taxpayer) to any direct losses. Wells Fargo’s offer, seven times larger than Citi’s, was made the night before the bailout, at a time when the probability of bailout, according to Intrade trading, was 90–95 percent. Wells’ offer provides a lesson in Austrian economics because it tacitly recognizes that Wells believed that the bailout would cause Wachovia’s subprime portfolio to become more valuable overnight. It is a basic principle of Austrian economics that those that are first in line when fiat money is created benefit the most – the pigs that are first in line at the trough get the fattest. Wells’ offer illustrates this. Wells recognized that Congress was going to pass the bailout and that as a result Wachovia’s unmarketable portfolio of subprime mortgages would have a willing buyer – the US taxpayer with newly minted US dollars. Wells’ $15 billion offer ($13 billion more than Citi agreed to pay) was the price it was willing to pay to take Citi’s place at the trough. This development of course sent Citi into a rage. Citi and Wells have both obtained court orders authorizing them to go forward with their transactions as they fight over the right to be first in line to receive taxpayer funds.

Most interesting, however, is the FDIC’s reaction. Erasing all doubt as to the federal government’s impartiality and in a stunning rejection of a private company’s right to enter into a free-market voluntary exchange, FDIC chairman Sheila Bair indicated that the FDIC would continue to support the coerced transfer to Citi. Ms. Bair, apparently a Citi woman, objected to the Wells deal, a deal that was negotiated in a free market exchange without the FDIC’s "facilitation." Never mind the interests of the taxpayer (Citi deal placed additional obligations on FDIC), never mind the interest of the Wachovia investors and stock owners, never mind the fiduciary obligations of the Wachovia managers and directors to obtain the best price for the company’s assets, Ms. Bair says Wachovia should stick to Citi deal that her agency helped coerce: "the agency is standing behind the agreement it made with Citigroup Inc." George Orwell’s fiction has become reality, the pigs are now in charge.

It should be noted here that, although Wachovia apparently had a contract with Citi, parties have the right to engage in activities that will result in an "efficient breach." That is, even if the Wachovia board executed an agreement to receive $2 billion for its assets, if Wells has agreed to pay $13 billion more for those assets Wachovia has the legal right to breach its contract with Citi and take Wells’ better offer. Citi of course has a remedy in the form of a breach of contract claim against Wachovia (and against Wells for tortious interference with its contract with Wachovia). Citi has now brought such a lawsuit and alleged $60 billion in damages if it is aced out of the Wachovia deal. $60 billion is the value Citi places on being first in line at the fiat money trough. In the unlikely event that Citi’s case goes forward, it will be an interesting trial as Citi’s damage claim will provide a lesson in perverted fascist capitalism. Citi’s counsel’s opening statement:

   Ladies and gentlemen of the jury, we will show you how the bailout gave us the right to profit $60 billion by selling a portfolio of unmarketable securities to you, the taxpayer, and further by buying Wachvoia’s $300-plus billion in deposits and branches for a mere $2 billion in a deal that was facilitated by our friends, the FDIC. Wells intentionally and maliciously interfered with our contract when it had the temerity to pay Wachovia’s shareholders $13 billion more than we agreed to pay and further did not allow the FDIC to facilitate their offer.

This is the sad political reality behind the Citi-Wells-Wachovia dispute.

The market reality following the bailout is potentially much more ominous. Assuming that there has been no short-term market manipulation in JP Morgan stock, either from the President’s Working Group on Financial Markets, the so-called "plunge protection team" or others, then the price of JP Morgan stock may portend a precipitous drop in the future value of the dollar. Hidden in the financial news last week was the fact that, coincident with its takeover of WaMu, JP Morgan announced the sale, on a first-come, first-served basis, of $10 billion in common stock at $40.50 per share. The infusion of $10 billion in capital to the $165 billion JP Morgan of course should have some diluting effect and put some downward pressure on JP Morgan’s stock. The new offering resulted in approximately 250 million new shares of JP Morgan stock, about seven percent of the total 3.4 billion shares outstanding. One would expect to see a seven percent decline in the JP Morgan share price following the sale because of the dilution. Yesterday, however, JP Morgan stock came to a crashing close of $39.32. This is an 18 percent drop from September 25, the date of the WaMu takeover, and, more importantly, almost 3 percent lower than the $40.50 offering.

All of this is troubling because students of Austrian economics know that the primary beneficiaries of monetary and fiscal inflation are those who are first in line when the money is created. As of October 2, the result of the federally orchestrated takedowns was that JP Morgan was unquestionably first in line to receive perhaps the largest share of the $850 billion-plus in funds that will be created out of thin air (Treasury will issue bonds which the Federal Reserve will buy with newly minted inflationary dollars) once the bailout is enacted. Applying this principle, JP Morgan stock should be skyrocketing up, not going down. The principle, however, applies only where the fiat currency retains some marketable value. If the fiat currency has no value, it doesn’t matter where you are in line. JP Morgan’s share price over the last week may be just a snapshot in time as JP Morgan’s overall market capitalization is still up approximately five percent since the bailout was announced, but if JP Morgan’s rapidly declining share price continues it will show that the market believes that JP Morgan’s right to be first in line to receive as much as $850 billion in newly printed dollars is perhaps as worthless as the securities sold in exchange. If this is true, it is the end of the dollar. Wells Fargo should take note of this fact before pushing forward with its acquisition of Wachovia’s subprime portfolio – the market may be telling Citi and Morgan that their deals represent nothing more than an exchange of one pile of worthless paper for another pile of worthless paper.

October 8, 2008

Bill Butler [send him mail] is a Minneapolis litigator representing individuals and businesses in real estate, contract and property disputes, including eminent domain claims.

Copyright © 2008 LewRockwell.com  

BEHIND THE PANIC:
Financial Warfare over future of global bank power
by F. William Engdahl
October 9, 2008

What’s clear from the behavior of European financial markets over the past two weeks is that the dramatic stories of financial meltdown and panic are deliberately being used by certain influential factions in and outside the EU to shape the future face of global banking in the wake of the US sub-prime and Asset-Backed Security (ABS) debacle. The most interesting development in recent days has been the unified and strong position of the German Chancellor, Finance Minister, Bundesbank and coalition Government, all opposing an American-style EU Superfund bank bailout.  Meanwhile Treasury Secretary Henry Paulson pursues his Crony Capitalism to the detriment of the nation and benefit of his cronies in the financial world. It’s an explosive cocktail that need not have been.

Stock market falls of 7 to 10% a day make for dramatic news headlines and serve to foster a broad sense of unease bordering on panic among ordinary citizens. The events of the last two weeks among EU banks since the dramatic state rescues of Hypo Real Estate, Dexia and Fortis banks, and the announcement by UK Chancellor of the Exchequer, Alistair Darling of a radical shift in policy in dealing with troubled UK banks, have begun to reveal the outline of a distinctly different European response to what in effect is a crisis ‘Made in USA.’

There is serious ground to believe that US Goldman Sachs ex CEO Henry Paulson, as Treasury Secretary, is not stupid. There is also serious ground to believe that he is actually moving according to a well-thought-out long-term strategy. Events as they are now unfolding in the EU tend to confirm that. As one senior European banker put it to me in private discussion, ‘There is an all-out war going on between the United States and the EU to define the future face of European banking.’

In this banker’s view, the ongoing attempt of Italian Prime Minister Silvio Berlusconi and France’s Nicholas Sarkosy to get an EU common ‘fund’, with perhaps upwards of $300 billion to rescue troubled banks, would de facto play directly into Paulson and the US establishment’s long-term strategy, by in effect weakening the banks and repaying US-originated Asset Backed Securities held by EU banks.

Using panic to centralize power

As I document in my forthcoming book, Power of Money: The Rise and Decline of the American Century, in every major US financial panic since at least the Panic of 1835, the titans of Wall Street—most especially until 1929, the House of JP Morgan—have deliberately triggered bank panics behind the scenes in order to consolidate their grip on US banking. The private banks used the panics to control Washington policy including the exact definition of the private ownership of the new Federal Reserve in 1913, and to consolidate their control over industry such as US Steel, Caterpillar, Westinghouse and the like. They are, in short, old hands at such financial warfare to increase their power.

Now they must do something similar on a global scale to be able to continue to dominate global finance, the heart of the power of the American Century.

That process of using panics to centralize their private power created an extremely powerful, concentration of financial and economic power in a few private hands, the same hands which created the influential US foreign policy think-tank, the New York Council on Foreign Relations in 1919 to guide the ascent of the American Century, as Time founder Henry Luce called it in a pivotal 1941 essay.

It’s becoming increasingly obvious that people like Henry Paulson, who by the way was one of the most aggressive practitioners of the ABS revolution on Wall Street before becoming Treasury Secretary, are operating on motives beyond their over-proportional sense of greed. Paulson’s own background is interesting in that context. Back in the early 1970’s Paulson started his career working for a rather notorious man named John Erlichman, Nixon’s ruthless adviser who created the Plumbers’ Unit during the Watergate era to silence opponents of the President, and was left by Nixon to ‘twist in the wind’ for it in prison.

Paulson seems to have learned from his White House mentor. As co-chairman of Goldman Sachs according to a New York Times account, in 1998 he forced out his co-chairman, Jon Corzine ‘in what amounted to a coup’ according to the Times.

Paulson, and his friends at Citigroup and JP Morgan Chase, had a strategy it is becoming clear, as did the Godfather of Asset Backed Securitization and deregulated banking, former Fed Chairman Alan Greenspan, as I have detailed in my earlier series here, Financial Tsunami, Parts I-V.

Knowing that at a certain juncture the pyramid of trillions of dollars of dubious sub-prime and other high risk home mortgage-based securities would come falling down, they apparently determined to spread the so-called ‘toxic waste’ ABS securities as globally as possible, in order to seduce the big global banks of the world, most especially of the EU, into their honey trap.

They had help. In recent testimony under oath by Mr Lynn Turner, Chief Accountant of the Securities & Exchange Commission (SEC) testified that the SEC Office of Risk Management which had oversight responsibility for the Credit Default Swap market, an exotic market worth nominally some $62 trillions, was cut in Administration ‘budget cuts’ from a staff of one hundred down to one person. Yes, that was not a typo. That’s one as in ‘Uno.’

Vermont Democratic Congressman Peter Welsh queried Turner, ‘... was there a systematic depopulating of the regulatory force so that it was impossible actually for regulation to occur if you have one person in that office? ...and then I understand that 146 people were cut from the enforcement division of the SEC, is that what you also testified to?’ Mr. Turner, in Congressional testimony replied, ‘Yes…I think there has been a systematic gutting, or whatever you want to call it, of the agency and it's capability through cutting back of staff.’

Was that just ideological budget cutting fervor, or was it deliberate? Was former Goldman Sachs man, the man who convinced the President to hire Paulson, Bush’s former Director of the Office of Management and Budget (OMB), Joshua Bolten, now the President’s Chief of Staff, responsible for insuring there was no effective government oversight on the exploding securitization of mortgage assets?  

These are perhaps some questions which the good Congressmen in both parties ought to be asking people like Henry Paulson and Josh Bolten, and not such red herring questions as how large Richard Fuld’s bonus pay at Lehman was. Are Mr Bolten’s fingerprints on the corpse here? And why is no one questioning the role of Paulson as CEO of Goldman Sachs, then the most aggressive promoter of exotic and other Asset Backed Securitization products on Wall Street?

Why did Henry Paulson single out one Wall Street firm, a bitter rival of his when he was CEO of Goldman Sachs according to market reports, and let it, as his mentor Erlichman was fond of saying, ‘to twist in the wind.’ It is the Lehman Bros. unwinding and its huge portfolio of Credit Default Swaps which is reportedly leading hedge funds and banks around the globe into panic selloffs.

It now would appear that the Paulson strategy was to use a crisis—a crisis that was pre-programmed and predictable as far back as 2003 when Josh Bolten became head of OMB—when it exploded, to panic the more conservative European Union governments into rushing to the rescue of US toxic waste assets.

Were that to have happened, it would in the process destroy what was left of sound EU banking and financial institutions, bringing the world one step closer to a global money market controlled by Paulson’s cronies—US-style Crony Capitalism. Crony Capitalism is certainly appropriate here. Paulson’s predecessor at both Goldman Sachs and at Treasury, Robert Rubin, liked to accuse the Asian bankers of Thailand, Indonesia and other lands hit with the speculative attacks of US-financed hedge funds in 1997 of ‘crony capitalism,’ leaving the impression the crisis was home grown in Asia and not the result of a deliberate executed attack by US-financed financial institutions to eliminate the Asia Tiger model among other goals, and turn Asia into the funder of US debt.

Interesting to note is that Rubin is now a Director of Citigroup, obviously one of Paulson’s crony bank ‘survivors,’ and the bank which to date has had to write off the largest sum in toxic waste securitized assets.

If the allegation of pre-planned panic, a la the Panic of 1907 is accurate, and it is a big if, then the plan worked…up to a point. That point came over the weekend of October 3, coincidentally the national unification holiday of Germany.

Germany breaks with US model

In closed door talks well into the evening of Sunday October 5, Alex Weber the hard-nosed head of the Bundesbank, BaFin head Jochen Sanio and representatives of the Berlin coalition Government of Chancellor Merkel came up with a rescue package for Hypo Real Estate of a nominal €50 billion. However, behind the dramatic headline number, as Weber pointed out in a September 29 letter to Finance Minister Peer Steinbrück that has been made public, not only did the private German banks have to come up with 60% of that figure, the state with 40%. But also, given the careful manner in which the Government in cooperation with the Bundesbank and BaFin, structured the rescue credit agreement, the maximum possible loss, in a worst case scenario, to the state would be limited to €5.7 billion, not €30 billion as many believed. It’s still real money but not the blank check for $700 billion that a US Congress under duress and a few days of falling stock market prices agreed to give Paulson.

The swift action by Finance Minister Steinbrück to fire the head of HRE, in stark contrast to Wall Street where the same criminal fraudsters remain at their desks reaping huge bonuses, indicates as well a different approach. But that does not cut to the heart of the issue. The situation of HRE arose as noted previously, from excesses in a wholly-owned daughter bank of HRE subsidiary DEPFA in Ireland, an EU country known for its liberal loose regulation and low tax regime.

A British policy shift

In the UK, after the costly and foolish bailout of Northern Rock earlier in the year, the Government of Prime Minister Gordon Brown has just announced a dramatic change in policy in the direction of Germany’s position. Britain's banks will get an unprecedented 50 billion-pound (€64 billion) government lifeline and emergency loans from the Bank of England.

The government will buy preference shares from Royal Bank of Scotland Group Plc, Barclays Plc and at least six other banks, and provide about 250 billion pounds of loan guarantees to refinance debt, the Treasury said. The Bank of England will make at least 200 billion pounds available. The plan doesn't specify how much each bank will get.

That means the UK Government will at least partially nationalize its most important international banks, rather than buy their bad loans as under the unworkable Paulson plan. Under such an approach, costs to UK taxpayers once the crisis abates and business returns to more normal conditions, the Government can sell the state shares back to a healthy bank at perhaps a nice profit to the Treasury. The Brown Government has apparently realized that the blanket guarantees it gave to Northern Rock and Bradford & Bingley merely opened the floodgates of government costs without changing the problem.

The new nationalization policy is a dramatic contrast to the Paulson ideological ‘free market’ approach of buying the worthless bonds held by the select banks Paulson chooses to save, rather than recapitalize those banks to allow them to continue to function.

The battle lines drawn

What has emerged are the outlines of two opposite approaches to the unfolding crisis. The Paulson plan is now clearly part of a project to create three colossal global financial giants—Citigroup, JP MorganChase and, of course, Paulson’s own Goldman Sachs, now conveniently enough a bank. Having successfully used fear and panic to wrestle a $700 billion bailout from the US taxpayers, now the big three will try to use their unprecedented muscle to ravage European banks in the years ahead. So long as the world’s largest financial credit rating agencies—Moody’s and Standard & Poors—are untouched by the scandals and Congressional hearings, the reorganized US financial power of Goldman Sachs, Citigroup and JP Morgan Chase could potentially regroup and advance their global agenda over the coming several years, walking over the ashes of a bankrupt American economy made bankrupt by their follies.

By agreeing on a strategy of nationalizing what EU finance ministers deem are ‘EU banks too systemically strategic to fail,’ while guaranteeing bank deposits, the largest EU governments, Germany and the UK, in contrast to the US, have opted for what will in the longer run allow European banking giants to withstand the anticipated financial attacks from the likes of Goldman or Citigroup.

The dramatic selloff of stocks across European bourses and across Asia is in reality a secondary and far less critical issue. According to market reports, the selloff is being driven mainly by US hedge funds desperate to raise cash as they realize the US economy is going into economic depression, that they are exposed and that the Paulson Plan does nothing to address that.

A functioning solvent banking and interbank system is far the more strategic issue. The ABS debacle was ‘Made in New York.’ Nonetheless, its effects have to be isolated and viable EU banks defended in the public interest, not just the interest of Paulson’s banking cronies as in the US. Unregulated offshore vehicles such as hedge funds, unregulated banking, unregulated insurance all went into building the $80 trillion ABS Tsunami as I have called it. Certain more conservative EU hands are not about to buy the remedy being offered by Washington.

The coordinated interest rate cut by the ECB and other European central banks while grabbing headlines, in effect do little to address the real problem: banks fear to lend to each other until their solvency is assured.

By initiating state partial nationalizations across the EU, and rejecting the Berlusconi/Sarkozy bailout scheme, the governments of the EU, interestingly enough this time led by the German, are laying a more sound foundation to emerge from the crisis.

Stay tuned, it’s far from over. This is a fight for the survival of the American Century which has been bvuilt since 1939 on the twin pillars of American financial dominance and American military dominance—Full Spectrum, Dominance.

Asian banks, badly burned by Wall Street’s manipulated 1997-98 Asia Crisis, are apparently very little exposed to the US problem. European banks are exposed in different ways, but none so serious as in the US banking world.



story end
© 2008 F. William Engdahl

http://www.financialsense.com/editorials/engdahl/2008/1009.html

Columnist Paul Krugman wins Nobel economics prize

http://biz.yahoo.com/ap/081013/eu_sweden_nobel_economics.html

October 14th, 2008 by Mark Mitchell

A couple of days before Lehman fell and all hell broke loose on Wall Street, Floyd Norris, the chief business correspondent of The New York Times, published a blog (headline: “Short Sale Conspiracies”) wherein he implied that I was mentally insane for suggesting that Deutsche Bank Securities had been caught selling “massive amounts of phantom stock.”

I promise to take this up with my psychiatrist, but first let me tell you a bit more about the peculiar case that led the New York Stock Exchange to hand Deutsche Bank Securities the largest fine in history for violations of SEC rules designed to prevent the creation of what the chairman of the SEC has called “phantom stock.”

The NYSE’s disciplinary order states that Deutsche Bank’s traders “effected an unquantified but significant number of short sales…without having borrowed the securities.” Indeed, the traders sold the shares “without having any reasonable grounds to believe that the securities could be borrowed for delivery when due…”

This is a clear-cut case of abusive naked short selling – traders selling stock without bothering to even check whether the stock could be obtained. In other words, Deutsche Bank’s traders were selling phantom stock, and it appears that they were doing this systematically over the course of the 22 month time period (ending in October 2006) that the NYSE investigated.

I asked NYSE spokesman Scott Peterson how much stock Deutsche Bank sold without knowing that the stock could be borrowed. He said, “We’re not saying how much, but let me put it this way: It was A LOT.” (The emphasis was his.)

Interestingly, however, the NYSE pointedly did not include the words “naked short selling” anywhere in its written disciplinary action. And the Big Board’s spokesman went to great lengths to suggest that Deutsche Bank was not engaged in naked short selling. “This is a case of failure to locate stock,” the spokesman said. “We’re being careful not to call it ‘failure to deliver’ stock.”

Mr. Peterson referred me to a section of the NYSE’s disciplinary order where it says that “according to [Deutsche Bank’s] delivery records,” there were “only two failures to deliver.”

So Deutsche Bank systematically failed to even locate the stock that it sold, but the NYSE isn’t calling it “naked short selling,” and Deutsche Bank managed to deliver the stock in a timely fashion in all but two instances.

Does this seem strange to you? It should.

SEC rules give short sellers three trading days to borrow and deliver real shares. If the stock is not produced within three days, it is called a “failure to deliver.” If a company’s shares “fail to deliver” in excessive quantities, the SEC puts the company on the so-called “threshold” list of publicly listed firms that are likely victims of improper naked short selling.

When I pressed Mr. Peterson, the NYSE spokesman, he conceded that there were not “only two cases of failure to deliver.” In fact, Deutsche Bank routinely failed to deliver specific securities–all of which appeared on the SEC’s threshold list. When I asked how much stock Deutsche Bank failed to deliver, Mr. Peterson said, again, “a LOT.”

So what was this “only two cases of failure to deliver”? It turns out that there were only two instances (among the sample of questionable trades for which it was charged) where Deutsche Bank still had not delivered the stock after thirteen days. Surely the NYSE must have known that failures to deliver of three to thirteen days are considered by the SEC to be improper naked short sales. At the time of the Deutsche case (the rules have since been changed slightly) day thirteen was the point at which the SEC would hand the delinquent naked short sellers a pathetically light penalty, forcing them to forfeit their short positions by buying back (rather than borrowing) shares.

In practice, this 13-day rule only encouraged stock manipulation. Some traders, correctly reckoning that the SEC would do nothing, simply left stock undelivered for weeks or months at a time. But a great deal of abusive naked short selling involved traders who sold phantom stock and (obviously) failed to deliver it on day three, and then absorbed the “penalty” on day 13 – purchasing (rather than borrowing) the stock and delivering it.

As soon as they closed out their “short” positions (which were fake positions since they never intended to borrow the stock), the traders would immediately sell another batch of phantom stock and leave that undelivered until day 13. By the end of each of these 13 day periods, the phantom shares had, of course, diluted supply and watered down the price (at which point it was hardly a “penalty” to have to buy back the stock).

A great number of the companies that appear on the SEC’s “threshold” list have been subjected to precisely this pattern of abuse. And if I understand the NYSE spokesman correctly, this is what Deutsche Bank was up to – short selling phantom stock with no intention of borrowing shares, waiting to buy (rather than borrow) the cheaper shares at day thirteen, and then selling more phantom stock, targeting the same threshold-listed company, the very next day.

Deutsche Bank did this week after week for at least two years.

Predictably, the SEC has not gone after anyone in the Deutsche Bank case. Instead, it leaves the NYSE to render its “largest ever” fine – a mere $500,000, which is many millions, if not billions, of dollars less than what the bank earned from its illegal activity.

And the question remains: Why is the NYSE failing to call this illegal activity by its proper name: “naked short selling”?

When the NYSE levied its fine at the end of August, the scandal of naked short selling was beginning to receive nationwide attention. Indeed, the SEC had just lifted a temporary emergency order designed to prevent the crime – three weeks after stating that abusive naked short selling had the potential to topple the American financial system.

Moreover, Deutsche Bank had recently become embroiled in a multi-billion dollar lawsuit filed by shareholders alleging that Deutsche and several other banks were involved in a “conspiracy to engage in illegal naked short selling of Taser International Inc. and to create, loan and sell counterfeit shares of Taser stock.”

Clearly, Deutsche Bank had reason to keep its involvement in naked short selling under wraps. I asked Mr. Peterson whether the NYSE had cut a deal with Deutsche Bank, whereby Deutsche agreed to pay the fine, and the NYSE agreed to portray its case as something other than a clear-cut instance of abusive naked short selling.

Mr. Peterson told me to put my question in writing. I did this, and waited for several weeks for a response. No response was forthcoming.

Another interesting question is whether Deutsche Bank’s prime brokerage (which services hedge fund clients) was involved in the naked short selling. If it was, this would suggest that the bank was helping its hedge fund clients manipulate stocks, including, perhaps, Taser International, whose shareholders had filed that multi-billion dollar lawsuit.

I asked Mr. Peterson about this. At first, he said the prime brokerage was not involved.

However, the NYSE’s disciplinary action said, in legalese, with no explanation, that at least two of the five Deutsche Bank proprietary trading desks investigated by the NYSE “failed to adhere to the independent trading unit aggregation requirements.” This was a reference to SEC “unit aggregation” rules, outlined in Regulation SHO, which prohibit prime brokerage units and proprietary trading units from coordinating their short-selling activities.

In other words, it seems possible that Deutsche Bank’s proprietary trading unit was washing naked short positions for its prime brokerage.

I asked Mr. Peterson if this was the case. He said to put the question in writing. I did this, and waited a few weeks for a response. No response was forthcoming.

Apparently, Mr. Norris, the chief financial correspondent of the New York Times, spoke to the NYSE, because he regurgitates its party line, almost verbatim. He says the case against Deutsche Bank is “largely about the failure to locate shares before they were sold short…But there do not seem to be many cases of sustained failures to deliver.”

He goes on to improperly define “failures to deliver” as occurring on day 13. He buys into the suspect claim that Deutsche Bank’s prime brokerage wasn’t involved. And he infers that the case could be a matter of “record keeping violations,” apparently unaware that these “record keeping violations” were in fact brazen failures to deliver of unborrowable stock – typically lasting right up to day 13, when the traders “penalized” themselves by buying back the shares, no doubt at a steep discount to the price at which they had sold them.

Mr. Norris concludes, “I don’t know if Mr. Mitchell’s suggestion [that Deutsche Bank sold massive amounts of phantom stock] is nutty or prescient, but I do not see how it is supported by what the Big Board says it found.”

Of course, what the Big Board says it found might be quite different from what the Big Board did find. That a prescient nut case has to point this out to the presumably sane chief financial correspondent of the New York Times speaks volumes about the media’s coverage of the naked short selling scandal and the state of America’s public discourse.

* * * * * * * *

http://www.handelsblatt.com/unternehmen/...on-der-finanzkrise;1410227

China dementiert Kreditverweigerung an US-Banken
Shanghai (rtr) - China ist angesichts nervöser Finanzmärkte Spekulationen entgegengetreten, es habe US-Banken den Kredithahn zugedreht. Die Bankenaufsicht erklärte, eine solche Aufforderung an chinesische Institute habe es niemals gegeben. Sie wies damit einen Bericht der "South China Morning Post" zurück, die Behörde habe die Banken dazu aufgefordert, US-Banken am Interbankenmarkt kein Geld mehr zur Verfügung zu stellen. Gleichzeitig hieß es jedoch von der Aufsichtsbehörde: "Wenn die Banken kein Geld verleihen wollen, ist dies die normale Praxis der Risikokontrolle."

Händler von chinesischen und ausländischen Instituten berichteten, einigen Banken aus den USA und anderen Ländern falle die Refinanzierung auf dem chinesischen Geldmarkt derzeit schwer. Einige chinesische Institute hätten die Geldvergabe an US-Institute aus Vorsicht zunächst eingestellt, berichteten die Händler weiter, wollten jedoch nicht namentlich genannt werden. "Seit Anfang der Woche haben wir Schwierigkeiten, uns von chinesischen Banken Geld zu leihen", berichtete der Händler einer US-Bank in Shanghai. Die Citigroup-Tochter Citibank China erklärte jedoch: "Wir machen weiter Business as usual."

http://www.fr-online.de/in_und_ausland/wirtschaft/...n-US-Banken.html

PEKING, 06. Oktober (RIA Novosti). Chinas Finanzmarkt arbeitet trotz der globalen Finanzkrise stabil und sicher. Das erklärte Wen Jiabao, der Vorsitzende des Staatsrates Chinas, während seines Besuchs in chinesischen Provinzen.

Die Entwicklung der einheimischen Wirtschaft sei heute die erstrangige Aufgabe des Landes, betonte er.

"Die größte Hilfe für die Welt ist die Tatsache, dass das Land mit 1,3 Milliarden Einwohnern fähig ist, seine gleichmäßige und rasche Wirtschaftsentwicklung beizubehalten", zitiert ihn die Zeitung "China Daily".

Wie Wen Jiabao betonte, hatte China effektive Vorkehrungen im Vorfeld der Wirtschaftskrise getroffen. Die Grundlagen der chinesischen Wirtschaft seien unverändert geblieben. Der Finanzmarkt sei stabil, sicher und weise eine adäquate Liquidität auf.

Am Sonntag hatte die Volksbank Chinas die Hoffnung geäußert, dass das in den USA gebilligte Rettungspaket positive Ergebnisse bringen wird. Das zentrale Geldinstitut Chinas betonte, es wolle weiterhin mit den USA und anderen Ländern bei der Überwindung der globalen Wirtschaftsprobleme und bei der Stabilisierung des globalen Finanzmarktes zusammenarbeiten.

http://de.rian.ru/business/20081006/117448323.html

Program Trading, Dark Pools and Gold
http://seekingalpha.com/article/...rogram-trading-dark-pools-and-gold

Welcome to the Brave New World, post-November 2007, when the final regulations keeping the playing field level between individual and institutional investors were completely abolished. These regulations dampened volatility and ensured orderly markets for decades. Is it coincidence that the declining market of October 2008 has been the most violent and volatile week in history?

The regulations I refer to include the SEC’s July 2007 elimination of the uptick rule that had served investors, by dampening volatility, so well for 70 years. In its decision, the SEC said the rule “do[es] not appear necessary to prevent manipulation." Right.

After the most volatile percentage day in history, October 19, 1987, “trading collars” were placed on index arbitrage transactions via NYSE Rule 80A. (Index arbitrage was a favorite tactic of big institutions to circumvent other selling restrictions.) On November 2, 2007, however, the NYSE abolished these “circuit breakers,” writing “The Exchange is making this change since it does not appear...that market volatility envisioned by the use of these “collars” is as meaningful today as when the Rule was formalized in the late 1980s.” Right.

In 2005, in response to public complaints, the SEC took the half-hearted step of beginning to regulate naked short selling, absolutely illegal for individuals but, in an startlingly dangerous double-standard, perfectly OK for the “professional” primary dealers. Regulation SHO was allegedly enacted to curb naked short selling, requiring that broker-dealers have grounds to believe that shares will be available for a given stock transaction. The SEC’s logic seems to have been that, as long as the fox swears he won’t eat any chickens no matter how hungry he gets, it’s OK to trust the fox. Right. (In fairness, effective September 18, 2008, amid even more public outcry, the SEC decided to get tough. They warned the foxes to really, really make sure they thought they would really, really be able to get borrow the stock, this time. Really. Except that other departments of the SEC were still defending the practice in limited form as “beneficial for market liquidity...” Right.)

Add to these massive loopholes the whole idea of “program trading,” which the NYSE defines as "a wide range of portfolio trading strategies involving the purchase or sale of 15 or more stocks having a total market value of $1 million or more." What they are unwilling to admit is that these “portfolio trading strategies” usually mean gargantuan computer-to-computer arbitrage strategies. Program trading is extremely popular with hedge funds, where traders automate strategies they could never execute without computer assistance.

On October 8, 2008, at 3:58 EDT, I captured a screenshot of the market. It was up 107.60 points. Two minutes later the market closed down 189.96 points. That’s a 300-point swing in two minutes. There was no news of interest to account for such a panic. There is no way enough individual investors or even institutions acting rationally or placing orders up to 10,000 shares could have sent the market into such a tailspin. It takes millions of shares untouched by human hands, “programmed” to sell as a certain price is touched, or the LIBOR goes to “x,” or the boss’s daughter wears color “y” to work.

I was a senior executive with Charles Schwab & Co. (SCHW) on October 19, 1987. I can tell you it was the novelty of computer program trading that was primarily responsible for the 1987 crash – and the current crash, as well. Facilitating instantaneous execution of enormous blocks of stocks, index stocks and futures resulted in blind selling of stocks as the market fell, intensifying the decline in both 1987 and in 2008.

It gets worse. As a former boss of a trading desk for a major firm, I was invited to a key conference in San Francisco the week Lehman Brothers went down. I was astonished, stunned, and shocked to find that, on the day Lehman Brothers was flogged out of business, no one cared. The only subjects on the agenda of these institutional traders were “dark pools” – trading through “private exchanges” like Sigma X, a Goldman Sachs company. These trades are never reported on the tape, but they can add millions of shares to the day’s trading volume and drive stocks up or down 5%, 10%, or 20% -- and “algorithmic trading,” a software application designed to take an outsized order, break it up into 100-300 share lots to make it look as if it is individual and not institutional trading.

If we are to reinstate reasonable trading and the confidence of the backbone of the stock markets, actual investors (rather than program traders,) we must reign in program trading, dark pools and algorithmic trading. It’s all trading. None of it is investing!

As a matter of fact, mutual funds, pension funds, hedge funds, et al, have come to admit – to themselves, at least – that they typically don’t beat the market or even individual investors. To goose their returns, they resort to flim-flammery. If you doubt it, look at a chart of options trading in any given month. You’ll find a disquieting pattern. With institutions comprising 76% of all trading (up from just 6% in 1950) the people entrusted with your pension money are resorting to rank gambling. Note from as many charts as you care to view that the week before options expiration most often tends to be negative -- due to program-selling that depresses the market so the sellers can buy expiring-in-a-week options for next to nothing. It doesn’t always happen, but the sheer volume of the transactions confirm that it is the institutions that talk about buying and holding for the long term that are doing this. Of course they want to make sure you and I are locked in for the long term – they need the float to goose their returns by buying options for a dime on the dollar, then selling them a week later in response to their own colossal underlying stock buy-programs which drive the market back up and let them take their day-trading profits on the options.

If we are to ever enjoy a reasonable market again, we must level the playing field. No naked shorting. At all. Reinstate the uptick rule. For everyone. No program trading once the market has moved “x” percent. None. No algorithms to hide actual activity. Period.

Now that you know this, what can you do to protect yourself? Two things:

For the long term, don’t let the program traders panic you into making precipitous decisions. Their bonuses depend upon high volatility and an unfair advantage. Your future depends upon thinking longer than settlement date. So -- Buy when others are terrified. Yes, the economy is weak. So what? We’ve had recessions before. It isn’t the end of Western civilization. This, too, shall pass and, when it does, those smart enough to have bought when prices are astonishingly cheap will reap the rewards. On October 14, we began buying ETFs corresponding to the Dow (DIA), Nasdaq (QQQQ), and S&P 500 (SPY). We continued buying today. We’ll buy more tomorrow. We’ll still keep a prudent cash cushion (though I imagine a year from now we’ll wish we had bought more!)

For the intermediate term, buy some Central Fund of Canada (CEF) or streetTracks Gold ETF (GLD), two firms that own gold bullion; Market Vectors Gold Miners ETF (GDX), an ETF of gold producers; or some top-quality gold miners of your choosing. Like today’s stock markets, which are abused by program-trading institutions, gold is also an abused, some claim a “manipulated,” market. But the difference is that gold is manipulated by government economists and bureaucrats, so we already enjoy a level playing field against an opponent like that... Governments will sell gold to keep their paper currencies from falling. If too many people rush to gold, it’s a (usually well-justified) vote of no confidence for that nation’s central bank. So be it. There is simply no way that 50 nations borrowing against their future to bail out their bankers and stockbrokers can be anything but inflationary. In the short term, the dollar may rise. In the intermediate term, it – and the other developed nations’ currencies – can only plunge. In that event, gold will keep us together.

Disclosure: Long DIA, QQQQ, SPY, GLD, GDX, and CEF.  

verboten.

Später Näheres.

ausgenommen kleinere Unternehmen bis zu einer Marktkapitalisierung von 500 Mill. Witzig, Herr Cox!
Den link will ich mir ersparen.

Diese Art der Pseudo-Regulierung durch Fristsetzung ist just for show. Wenn Betrug verboten ist, ist Betrug verboten - angefügte "Ausnahmeregeln" (bis August dürft ihr nicht betrügen, danach gucken wir wieder hin, tun euch aber nichts, oder: betrügt die Investoren kleiner Unternehmen, das interessiert uns nicht) sind irrelevant.
Herr Cox ist weder tatsächlich gewillt noch tatsächlich beauftragt für Rechtssicherheit an den Finanzmärkten zu sorgen.
Es bleibt zu wünschen, daß die beteiligten Kriminellen sowie die politisch Verantwortlichen in der Hölle landen, in die sie manche US-Kleininvestoren, die gegen Ende ihres Lebens vor dem Nichts stehen, gebracht haben.

Und: Ja, Herr Schmidt, in den USA ist die Aktienanlage zur Alterssicherung nichts Ungewöhnliches, da Privatangelegenheit. Auch in diesem Land soll ja doch wohl die Alterssicherung über Versicherungen und Bank"produkte" laufen, also privat und die SPD war maßgeblich daran beteiligt, dafür die gesetzlichen Grundlagen zu schaffen. Versicherungen und Banken und ihre "Medienfreunde" haben alles daran gesetzt, in Pressekampagnen das staatliche Rentensystem zu diffamieren, durch absurde Hochrechnungen zur Bevölkerungsentwicklung und übles Spielen mit einem künstlichen "Generationenkonflikt".

Und nun sehe man sich Banken und Versicherungen und das, worauf sie sich zur Profitmaximierung offensichtlich einlassen (müssen?) an. Tja.

Kann ich was für dich tun?
Ich sehe bei deinen BMs nie einen Text.