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[Patrick Byrne]

Congratulations on the great progress you have made defrocking some high clergy of Wikipedia since I last visited.

Full disclosure: My name is Patrick Byrne. I work at Overstock.com, which for about one year has employed a former journalist named Judd Bagley to oversee the creation of our car tab and a Wiki called "Omuse," handle relations with the press, and design a new tab (in the works). Long before Judd joined our company, and as a hobby since, he was analyzing techniques employed by a small group of people to hijack social media. Using the handle "Wordbomb" he posted the results of his analysis on this site and on a site he created called "antisocialmedia.net" (for the record, he did not tell me about antisocialmedia.net before he did it, nor for some time after its creation would he confirm that it was he who was behind it). In your admirable endeavors to unscramble what is going on behind the scenes at Wikipedia, Judd/Wordbomb has done his share of work. By a strange coincidence (?), one of the people whose pefidy this community has uncloaked, Slim Virgin, turned out to be a woman from my own past, and I posted elsewhere on this site such information as I thought might be helpful to you (which Mr. Brandt seemed to appreciate). I say this all in full disclosure because the financial press labors to find any incompleteness in my posts on the Internet, apparently finding something unholy in my exercise of first amendment rights without availing myself of (or recognizing the need for) their services.

Now to my point: Nothing is more irritating, I know, than to have someone suggest to you that your own cause is really part of a bigger struggle. One always suspects an attempt to divert one's energies into whichever other cause that speaker favors. So I insist that I seek no diversion from your own current, noble, efforts, when I suggest to you that the threads you are pulling here lead deeply into the heart of a financial scandal that has been percolating into the headlines for six months, and may swamp any financial scandal of our lifetime.

On another message board within Overstock.com I have begun synthesizing information about that scandal, starting by creating one concise, cohesive overview post. Rather than gum up this board with information about that other financial scandal, I will give a link to that overview post: HOW THE SYSTEM REALLY WORKS: INTRO

After you have read that you will wonder if there is independent confirmation of what I wrote there. There is a great deal, and organizing it will be the subject of my subsequent posts. In the meantime, however, consider taking 25 minutes to watch a Bloomberg Special Report, "Phantom Shares". Bloomberg has the most "elite" viewership of any news organization in the world (which may count against it in the eyes of some radicals, I know). Consider what it means when a news service at the pinnacle of the Establishment reports that our capitalist model is powered by a reactor that almost no one has heard of, and that this reactor that has a crack in it (and why it is that only such an elite news service could run that story).

Given my earlier involvement on the Slim Virgin issue, I hope that Daniel Brandt and you will forgive what may seem like a commercial interruption. I simply wish you to understand how what your are confronting here really is part of a larger puzzle, so that you may know the stakes riding on your efforts.

Warm regards,
Patrick M. Byrne
CEO, Overstock.com

[Pwok]

If someone is short-selling shares that haven't been borrowed, then I agree with CEO Byrne that there's a legitimate complaint. It's a fraud on the market, and like other frauds it ought to be pursued and the perpetrators punished. That said, I'm skeptical that this is a system-threatening problem. I think there are far more important problems out there than this one. And, once more, if Overstock wasn't doing so badly, attacks by short sellers wouldn't particularly matter.

As for your company's financial performance, it would take me quite a bit of time to analyze Overstock and its industry. That said, most of your positive OCF in Q2 came from increased current liabilities. In other words, you stretched out your payments. Oh, and you sold off a bunch of inventory without replacing it: probably the stuff you'd written down in previous quarters so you could make your gross margins look good in Q2. But your revenues were down significantly from the same period a year earlier; it would seem that customers aren't exactly flocking to Overstock.com, now are they?

I don't know what the difference is between the base business and your "fulfillment partner," and I'm not sure I want to because something tells me it's where a lot of sins are hiding. Please don't tell me that there's a red stripe painted in a common warehouse and that everything on one side of the line is theirs and everything on the other side is yours. The possibilities are endless. We'll let the SEC's folks handle that one. Should make for good reading.

So what do you do exactly, Mr. Pwok? Are you a broker, pension-fund administrator, accountant, auditor, or what? I knew we had active stock traders and such on the board, but you seem to be considerably more advanced in the profession than the others, at least the ones I know of...

I'm retired. I did a bunch of things. Enough to know that American business on parade would look like the cast of the movie Freaks. In my first financial position, on the first day, the first thing I heard from the most experienced people was: "Never believe corporate management. They always lie." I remember being taken aback by the cynicism. Five years later, I was singing the same tune. You could still make money on the stocks, as long as you didn't believe what you were told. I listened to conference calls for comic relief.

Could we put the AOL people in jail anyway?

Depends on what you mean by "we."

I wasn't aware that Utah had such a reputation... can you come up with any sources to back that up?

I'm not asking you to believe it. If you want to do business with Utah-based companies, be my guest. It'll be your funeral. Let's just hope the U.S. doesn't stick that Utah export to Massachusetts, Mitt Romney, in the White House. If you think Bush has been a disaster, by the time Romney and his cronies get through with us, there'll be nothing left.

Either way, you've got to calm down.

No, I don't.

Mr. Byrne here is an employer, and my assumption has always been that it's as an employer that he's on this "crusade" against naked short selling. Or are we saying that the jobs of hundreds of workers are of no consequence?

CEO Byrne is pissed about his stock and his stock options, and because he's pissed then by God it's the biggest issue in the whole world because he's a CEO and he says so. And he probably got leaned on by his board of directors, too. And if Overstock is like a lot of other companies, the stock getting clobbered probably screwed up his strategy of underpaying employees in cash and instead giving them shares. He might have been facing up against the issue of having to pay a living wage in dead presidents. O! The horror!

But not a single job at his company (except maybe his own) is at risk from naked short selling. Again, short selling has never been my game, but if I had a buck for every CEO who blames his failures on short sellers, I'd be even better off than I am now. Folks, it's the oldest excuse in the book. If other, more naive people on this board want to swallow that one, go right ahead, but I'm telling you that when I was in the finance game we laughed at CEOs when they went on a tear against the shorts. Study after study will tell you that the shorts usually get it right.

Seriously, I'm here to tell you it's a steamin' crock o'shit. CEO Bryne is painfully typical of the CEO breed: it's always, always, always someone else's fault. Always. Look, I know that it sounds like I've got an ax to grind against his company and/or the stock. I don't. I couldn't care less about either one. Never thought much about them before today, except to notice the hot women in the ads telling us that it's all about the "O." I've always wanted to say, "Sweetheart, you got that one right." CEO Byrne, you picked a good ad agency. Soft-core through and through, but who can possibly object?

Anyway my issue is with smarmy, maniuplative corporate executives. Caveat emptor! Now, would anyone like to know what I really think?

This post has been edited by Pwok: Sun 2nd September 2007, 6:45am

[Somey]

I'm retired. I did a bunch of things. Enough to know that American business on parade would look like the cast of the movie Freaks. In my first financial position, on the first day, the first thing I heard from the most experienced people was: "Never believe corporate management. They always lie." I remember being taken aback by the cynicism. Five years later, I was singing the same tune....

Yikes. You're quite sure you're not Lir, then?

Not that that would be a bad thing, mind you! Though I guess you wouldn't necessarily even know who Lir is, come to think of it...

Anyway, like it or not, Patrick Byrne is an important figure in this site's history - such as it is - and that counts for something even if he is a corporate executive. I'm certainly not saying you have to like him or anything like that, but please, try to sound a bit less accusatory.... If you can just manage that, everything should be all peachy-keeno...!

Pretty please, with sugar on top?

[Pwok]

Yikes. You're quite sure you're not Lir, then?

I don't know who these other people are. Look, I have a real name in real life. I used the name "Pwok" when I signed up here because I seem to recall something in the sign-up process that asked people to use their Wikipedia sign-on. On Wikipedia, "Pwok" was truly random. I typed four keys and that's what came out. I've never had any sign on here other than the one I use now. As for IP addresses, I use Comcast, which assigns dynamic IP addresses. One of these days you'll see a different IP address for me, but it won't be because I changed it.

I'm certainly not saying you have to like him or anything like that, but please, try to sound a bit less accusatory

Okay, I'll try. To be fair, CEO Byrne is reaping the whirlwind from me after so many years of my dealing with some of the most elegant white trash this country has to offer, its corporate elite. The average homless vagrant is more honest and more interesting and more deserving than the average corporate executive, and I say that as someone who once took a homeless vagrant into my own house for a month and then got him a place to live and furnished the apartment, all at my own expense. The only thing that corporate America had on that guy is that executives smell better and dress better.

And to be really fair, that elegant white trash is quite well represented in the financial community. I could rip exit holes the size of the Holland Tunnel in that side of things, too. One of the things I'd say is that, if you're going to pick a financial scandal to go batshit about, this naked shorting thing is a fly on a cow's back. For the last 30 years, the story of the increasinly unproductive U.S. economy has been one of escalating financial scandals: Penn Central RR & Continental Illinois Bank and stupid farm lending in the '70s, commercial real estate and S&Ls in the '80s, the dot-com boom in the '90s, Bush's attempt to give the banks $40+ billion a year by "privatizing" one-third of Social Security in the early '00s, and now the mother of all scandals, the residential real estate meltdown.

The residential real estate meltown has a 50-50 chance of bringing on a second depression, '30s style. That's the one to worry about. Now the "news" media are cluing into it because their editors have mortgages too, and their personal wealth is at stake. Too late, as always. Five years ago, I was telling people to watch out for what was coming. I pulled the plug on the Internet stocks in early 1999. In 1990, by contrast, I had a hard time getting a job in the financial sector because I was thought to be crazily optimistic about what was coming. And when Clinton's first budget got approved, I was one of seven people in a room of 150 who raised their hands when asked who thought it would eliminate the federal deficit. In early 1993, I passed a memo around the company predicting budget surpluses by the end of 1990s. Five years ago, I started telling people that we'd have a depression that would make your teeth rattle. The monetary authorities are scared shitless about that, and if we're lucky (which I hope) they'll be able to patch it together with baling wire, twine, and mirrors, and instead we'll be like Japan in the '90s.

In the midst of all this, naked shorting is a nothingburger of an issue. It is a garden-variety penny-ante fraud, if that. Overstock hardly qualifies as a sympathetic victim in my eyes. A tempest it might be, but it's a tempest in a teapot, not the whole china cabinet like CEO Byrne would have us believe. If anyone wants to get exercised about the stock market, what they ought to worry about is the so-called "plunge protection team" that's been keeping the stock market alive since 1998. And if they really want to delve into it, they should notice that the average ROE of an American corporation has gone from 11% to about 18-19% since the 1970s, and that it's come straight out of the pockets of the employees who are supposed to buy all the shit. Then look at debt levels. Then look at the 1920s. Gawwwwwleee, Sgt. Carter, you mean ...?

This post has been edited by Pwok: Sun 2nd September 2007, 4:44pm

[Emperor]

In the midst of all this, naked shorting is a nothingburger of an issue. It is a garden-variety penny-ante fraud, if that. Overstock hardly qualifies as a sympathetic victim in my eyes. A tempest it might be, but it's a tempest in a teapot, not the whole china cabinet like CEO Byrne would have us believe. If anyone wants to get exercised about the stock market, what they ought to worry about is the so-called "plunge protection team" that's been keeping the stock market alive since 1998. And if they really want to delve into it, they should notice that the average ROE of an American corporation has gone from 11% to about 18-19% since the 1970s, and that it's come straight out of the pockets of the employees who are supposed to buy all the shit. Then look at debt levels. Then look at the 1920s. Gawwwwwleee, Sgt. Carter, you mean ...?

Nice post.

Patrick and Overstock should be happy they're making anything at all. They're just a crappy Amazon knock-off with sleazier advertising.

I agree pushing American workers into debt, overworking them, undereducating them, etc. is a recipe for disaster. But private businesses and even large corporations are not the problem. The government is going to keep taking more and more, coming up with more and more ridiculous programs, until there is nothing left. By the time I finish paying for those morons who took out ridiculous loans, and other morons to build new houses below sea level, and millions and millions of bureacratic nitwits to process all the mess, how am I supposed to start a new business?