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Posted by: Kato

http://akahele.org/2009/03/weighing-the-options/

Posted by: Hipocrite

Petty revenge is so unbecoming.

"We’re always on the watch for website shoals where misinformation, defamation, fraud, and unethical practices rule the day – so that you may properly gird yourself, or steer clear entirely,"

How many links to antisocialmedia are in the linked post? Is that, perhaps, a website shoals where misinformation, defamation, fraud, and unethical practices rule the day? I guess two wrongs DO make a right!

Posted by: the fieryangel

It's all relative, my dear....what did you say your name was again??. In any case, Judd made a very strong case here andhttp://wikipediareview.com/index.php?showtopic=14124&hl=chicago+exchange Do I also have to explain to you how "naked short selling" has become a rather central issue in the past few months?

Posted by: Hipocrite

Hipocrite. I fail to see the margin in releasing my ID to you. Perhaps you can educate me about what benefits I would see from telling you whom I am. Would I get fun and exciting phone calls in the middle of the day at work, or would you direct those at my boss? Hate mail sent to my wife? Thanks, but I'll pass, "the fieryangel." Wait, wait, I know who you are, but not because you told anyone, right. I mean, you went out of the way to hide who you were for quite some time - in fact, I think that if I were to write your name right here it would turn into BAN ME BAN ME, right?

Mr. Bagley is a fringy conspiracy theorist. "Naked short selling" has not become a rather central issue.

Posted by: the fieryangel

Nope, typing my name works just fine - here, look : Paul Wehage.

The only person I see making threats on this thread is you. I don't think that this works very well here. Maybe you want to go back to Wikipedia to do that? There are lots of people there who will call bosses, wives and the like to get revenge...

Posted by: Somey

I don't think you can call him a "theorist" if the conspiracy being described turns out to have actually existed, can you?

To some extent I would agree that NSS hasn't become a central issue, but it's definitely getting attention. And how would you know, anyway? Are you a Wall Street insider? If not, then.... understand that the media is only now getting around to examining Phil Gramm's role in the disastrous deregulation of the banking system, after over a year of financial-sector crisis directly related to exactly that. They'll probably need at least another 6-10 months to pick up on NSS, since it's a much more complex issue - heck, by then the "Great Recession" might even be over.

Posted by: Hipocrite

Except there's no conspiracy and it doesn't exist, except in the fevered brains of people paid to pitch bad companies that are a bonanza for the shorts.

I'll bet you right now that on the list of things responsible for the great recession, naked short selling doesn't even get past the prelims.

Posted by: WordBomb

Unfortunately for the global economy, the http://www.sec.gov/rules/other/2008/34-58592.pdf to my fringy conspiracy theory until the day after it destroyed Lehman Brothers.

But you can cram it, Hippo. I'd be more concerned if someone like you were on my side.

What an extraordinary troll this fellow is. Probably the one thing in life he really excels at.

Posted by: dtobias

Oooh! They're linking to a BADSITE, so that makes them a BADSITE too, by the Transitive Property of Badsiteness. And it makes WR a BADSITE for linking to them... oops, WR is already a BADSITE, so it probably can't get any badder than that!

Posted by: EricBarbour

My personal preference would be more of the BITE ME BITE ME variety, sir.

Have a nice day, [redacted].

Posted by: Cla68

Jimbo has vehemently denied to me that he has any kind of financial or social connection to Weiss or naked short selling. Until I see some real evidence of it, I can't join in in accusing of him of such a connection.

Why, then, has Jimbo acted in such a difficult manner concerning Weiss and Mantanmoreland? If you ask him directly, as Judd did in that column, he asks for proof and then clams up after you give it to him. Perhaps Kelly Martin would have some insightful analysis into Jimbo's motivation. Kelly's insight into Jimbo's behavior usually seems right on the money (so to speak).

Remember, Weiss is an investigative journalist. I wouldn't want to be on the bad side of an investigative journalist if I were a public figure. Sometimes, however, you have to take a stand for what's right. Jimbo's refusal to do so has been very frustrating to many of us.

Posted by: Emperor

What's weird is that as far as I can tell, the blog post has no disclosure explaining that Mr. Bagley works for Mr. Byrne and Overstock.com (directly or indirectly). Thus the reader may take him as an impartial observer rather than as a paid employee of a company with a stake in the debate.

Posted by: GlassBeadGame

Hard to say Judd is hiding the ball when he begins the post with "My direct involvement notwithstanding."

Posted by: Jon Awbrey

You've got to be joking.

Jimbo "didn't have a problem with" irking Brandt.

If you're gonna have fear and trembling about getting on the bad side of someone, I think you'd be wise to save your whole glove box full of kid gloves for Brandt, not Weiss.

But I doubt if Jimbo really has a clue about all that.

Jon

Posted by: WordBomb

Thank you for reminding me that tomorrow marks the one year anniversary of my last day at Overstock.com.

Posted by: Cla68

Judd, in your column you say, "All the while, Wikipedia remains the first option offered those searching the web for information about naked shorting, and its role in the current financial crisis." I just looked at the NSS article in Wikipedia, and as it currently reads it is extremely critical of NSS. It mentions the Lehman brothers, as well as a ton of other criticism. If anything, I would propose that the article's current POV has swung to the other extreme than it was a year ago.

I see on the article's talk page that some editors don't think the article is sufficiently critical of NSS, but it does seem a whole lot more critical than it was before.

Posted by: Somey

On the contrary - if he excelled at it, he wouldn't be quite so obvious!


Ah, well. Hey, that kool-aid tastes great, doesn't it? I hear that if you drink enough of it, you can pretend the tape recordings of pro-NSS media strategizing don't exist, and you can even overlook the fact that Mantanmoreland used to edit WP from right inside the DTCC building!


Let me guess - it's all Obama's fault, right?

I thought so.

Posted by: Hipocrite

If Naked Short Selling had anything to do with Lehman brothers, why are Lehman Brother's bonds near worthless? I mean, you're arguing that it's a good company that went bankrupt because it's stock went to zero? Puhleze. It was a bad company that everyone saw failing, so they shorted the stock. Then, because everyone shorted the stock, they couldn't get a borrow.




It's all the fault of people who were using bad models to price the risk of collateralized instruments. Slicing something into 5 parts doesn't change the risk characteristic of the recombined thing, so the expected loss of the 5 parts has to equal the whole. ABS CDO models failed this sanity check.

Posted by: Random832

And when people short a stock without "getting a borrow", that's called - all together now...

Posted by: LaraLove

Hipocrite is PoupOnToast?

Posted by: Hipocrite

I'm a whole lot of people, if you believe ED.



Is NSS a cause or a symptom of the death of LB?

Posted by: WordBomb

There's no doubt the article is much better than it was. Infinitely better. But the legacy of Weiss is the article's probationary status, which means it currently looks the way it should have about one year ago.

So much is happening where NSS is concerned right now. http://kaufman.senate.gov/press/press_releases/release/?id=4d7aeae2-1ea1-42da-acf1-b3cb2f1aa230. http://www.bloomberg.com/apps/news?pid=20601109&refer=home&sid=aB1jlqmFOTCA. But you won't find any of that in there.

Posted by: WordBomb

What's the ultimate cause of death of every human ever born? Lack of oxygen to the brain.

What's the ultimate cause of death of every company ever founded? Lack of cash.

In humans, the process can take place slowly and naturally, as with illness, or quickly, as with a bullet.

Lehman was sick and it might have proved terminal, but we'll never know, because naked short sellers put a bullet in Lehman's head.

I do believe that had Lehman's demise been allowed to progress naturally, the shock to the system would have been much less severe. Lehman might have been acquired or even bailed out. More importantly, AIG would almost certainly not be in its current bind, caused mainly by having to pay out on the Lehman credit default swaps (life insurance policies) the naked short sellers apparently wrote before pulling the trigger.

But then again, now we taxpayers own 80% of an insurance company, so maybe it wasn't such a bad deal after all.

I recently created this video, which addresses the larger issue.

Posted by: Hipocrite

Are you serious? Please read http://www.gao.gov/new.items/d09490t.pdf

Posted by: Somey

I'd certainly agree that this was a major factor - in fact, I remember Unrepentant Vandal saying the main problem was "quants," which actually amounts to the same thing you're saying here. But to say it's "all" the fault of such people is simply wrong. In effect, you'd be exonerating all sorts of guilty parties, in the banking and housing industries, the consumer-lending industry, the media, the Bush Administration... all sorts of stock swindlers (yes, including NSS proponents), and I'm sure countless others that one could name.

But again, you're right about the fact that those responsible for the obfuscation and overvaluation of collateral (and thus the underestimation of risk) were right up there, at or near the top. Of course, if I were a real conspiracy theorist, I might go so far as to suggest that all of this was hidden, synchronized, and media-manipulated so as to increase the likelihood of a "crash" - rather than a gradual backing off from investor over-reliance on consumer and mortgage debt, which presumably would have been far less damaging to the overall economy. And who really benefits most from a crash...?

Luckily, I'm not much of a conspiracy theorist. Most days, anyway!

Posted by: One

I'm impressed with this video. I was actually unaware that traders purchased deeply underwater puts just before the collapse of Bear Sterns. I'm still a bit agnostic of some of your message, but this is a good video for its purpose.

Thanks also for specifically stating that short selling is beneficial.

I also think it's clever that you made the first part the shortest. Would hook people into watching the whole thing as a typical 10-minute YouTube chunk might not.

Someone asked you before, but what publisher do you think produces the most skeptical and independent financial news? Your site, OK, but of the major periodicals, what journalistic institution most often impresses you (as rarely as that might be)?

Posted by: Somey

I think that stuff was in the guest-lecture Powerpoint posted a couple of weeks ago, but it wasn't presented quite so clearly as it is here.

The pounding drums in the background are a nice touch!

Posted by: Milton Roe

To be pedantic for a moment, it's dangerous to say "all" in biology. Due to the fact that the brain requires more than oxygen (and some of the other stuff is not fungible for oxygen) you can't say that for every last person. Some people wind up brain-dead on ventilators from lack of glucose (diabetic shock) or thermal overload damage to the brain (heat stroke) without ever being short of oxygen at any point. But you're more or less right for everybody else, if the modern defintion of death is used.

For companies, it's hard to imagine any problem that can't be fixed with enough money, although if all your good people leave and you have hire all new ones, is it the same company just because you kept the name? This happens for rock groups, too, you know. :)You get into identify problems at some point, just as you would with full power over repair of the brain. If a company is totally outlawed and confiscated by a government which refuses to be bought off, and it's recreated from the ground up, someplace offshore with enough cash, is that "the same" company, or just a duplicate/clone?

Posted by: WordBomb

The powerpoint from last month was received so positively, I decided decided video is the format in which to educate others about these issues.

Because what resonated most with the viewers of the first one were the Bear Stearns put options, I figured that was a good place to start.

So far, across the various places where it's posted, this as been viewed about 30,000 times, by the way.

Unfortunately, folks still seem to find 24 minutes too long, which might be keeping it from going truly viral. So I'm working on a new one, shooting for the sub-five range, which will then point folks to the longer ones.

Anyway, I appreciate any feedback.

Posted by: WordBomb

If you want to take that concept to a whole new level, watch the film The Prestige.

Posted by: One

Reading analysis about this, I see that some commentators dismissed the out-of-the-money puts as insider information of Bear Stearns (presumably real) liquidity problems. I really doubt that. Demanding that the options board open a new series is a terrible way to reap insider profit; might as well personally demand that the SEC investigate you. Much better for insiders to use the most commonly-traded contracts in order to blend in; they'd still make a killing on that drop, and much less likely that they would get subpoenas.

It's a great way to help spread rumors though. *whisper whisper...* "liquidity problems, you say? Why, yes, those $30 puts did make me suspicious."

Posted by: WordBomb

The only problem with that, in the case of Bear, is that the first reporting on the puts didn't happen until three days later, on 3/14/08. Although it's true that's not to say that others didn't notice it on their terminals beforehand.

One interesting counter-theory I've heard, which seeks to explain the relationship between the puts and the fails, is that the puts somehow triggered wild programmed short selling.

I don't know nearly enough about computerized trading (other than I thought it was severely limited after the crash of 1987) to opine on that one way or another.

Posted by: One

The traders would know, and that's probably the most important thing. Even in a pre-electronic era, I can't imagine that Bear's market maker would watch them open a $30 out-of-the-money series with heavy volume without telling several of his buddies about it; it's a damned weird thing to see. I imagine that most people involved in trading that stock knew almost immediately, including analysts at the other investment banks, which would later deal the death blow by refusing to be Bear Stearns' counterparty.

Also, this http://www.forbes.com/2008/03/11/bear-stearns-liquidity-biz-wallst-cx_lm_0311options.html story mentioned it, but understated the open interest on that contract.

This http://www.bloomberg.com/apps/news?pid=20601109&sid=aGmG_eOp5TjE&refer=home covers it well.

Posted by: Somey

They always get around to blaming the programmer-geeks sooner or later...

Posted by: Milton Roe

There's a poem about that. It's because, over-literal genies that you are, you always give your customers what they ask for, but quite often not what they really need.

Posted by: dtobias

The geek shall inherit the Earth.

Posted by: dogbiscuit

...but you are not going to like the state it's in when you get it.