Bloomberg got an Emmy nomination in 2007 for explaining the mechanics of these "hedge fund" attacks. Vid is HERE. "Phantom Stock" runs 25:10.
Criminal attacks combine corrupt MSM lie campaigns with market dumps of "naked shorts" that become counterfeit "phantom stock."
-- Depress a stock's price --> Make millions on short-side positions
-- Do as much damage as possible and laugh at SEC and DoJ/FBI
The human damage is primary jobs. Permanent jobs with companies that make products or provide specialized services. The likes of bio-tech, finance and engineering, and computer systems.
Statistical sampling and employment data for the largest 1,000 attacked companies show they suffered 1,200,000 excess layoffs.
Throw on a macroeconomic multiplier effect... adding secondary jobs gets past 3,000,000 jobs dropped overall.
RICO-eligible criminal "hedge funds" and CNBC and TheStreet.com and financial MSM and paid bloggers (e.g., Tom Sykes, a pseudonym for Gary Weiss, at DKOS) -- may have screwed up America as much as the credit crunch.
RECOMMEND LIST !! More BTF :::
Before getting to the body of info:
Down in the comments, please pay attention to postings by the Zebo the Clown account.
-- Dedicated apologist along the lines of the Tom Sykes account
-- "Tom Sykes" was Gary Weiss. A paid pro-hedge fund blogger
If the myriad financial jargon is way too much for you, NPR's Marketplace has a series of vids up on YouTube. Search @ YouTube: [ marketplace paddy hirsch ] and good tutes will pop up. 5 - 10 minute tutorials. Not a bad workingman's substitute for a financial economics degree.
One simple point: if you want to bet against a company, you can buy an option. Its perfectly legal. Its open. Basically, while a criminal scheme could be concocted -- there's always that -- there's no way for criminalized "hedge funds" and similar operations inside the brokerdealers to hide their identities as is done today with collusion from the Securities Exchange Commission.
Banning short-selling from exchanges and from the unregulated Dark Pools can eliminate the worst of these schemes immediately. If they want to go short, buy an option.
Best of luck and my apologies ahead of time to kossack readers, because I am not a good writer. Math... oh yeah. Takes a while to get to how calculations are done, so please apply extra patience if you read this all the way through.
First off: the first of the DKOS community to hammer this nail was the wonderful KathrynW in her diary The Financial Terrorists of Wall Street - The Truth Behind a Curtain of Silence.
KathrynW posted this diary back Sun Mar 15, 2009 at 01:14:30 PM EDT. She got all of 23 RECs and 13 Tips. Not a chance at the RECOMMEND hotlist.
Her interest in these Media_cancer/Naked_short_selling/Phantom_stock schemes had been spurred by what happened to Force Protection, Inc. She imbedded this link:
We had another interest in Force Protection. This South Carolina firm had developed these heavy V-bottomed MRAP vehicles to protect American soldier and Marines in Iraq from the roadside bombs called I.E.D.'s. Our friends had children over there in the U.S. Army. This media-cancer-plus-financial-system attack on FP delayed procurement of these MRAPs.
Damage to Force Protection, Inc., had this secondary effect: absence of the MRAP vehicles in Iraq allowed insurgents to kill and maim many hundreds of our service personnel. Our troops had to continue using the HUMVEE jeeps against the road side bombs, the I.E.D.s. I.E.D.'s caused 70% of our country's Iraq casualty experience.
At this point, let's take a moment to clarify the language used to explain how stock ownership is transferred. Then, correct two misapprehensions:
-- That these Failure To Deliver events for stock that has been sold could be bookkeeping errors.
-- Also, that these FTD's affect only "1.5%" of the "physical" brokerage-to-brokerage stock transfers related to stock sales.
FTD's are not bookkeeping errors. They were running at a staggering 37% of "physical" transfers during the recent attack months.
You can also get a fanciful idea from press releases that SEC actively regulates these systems. No-no-no. Never happens.
Here are the players:
-- Depository Trust Company, is the central stock depository and member of the Federal Reserve System. DTC acts as a custodian for the majority of securities issues. DTC is a subsidiary of DTCC.
-- Depository Trust and Clearing Corporation (DTCC) is the counterparty
for U.S. exchanges and markets for equities, bonds, U.S. Government treasuries, and other securities. DTCC manages the clearance and settlement system for U.S. equities through another subsidiary, the National Securities Clearing Corporation (NSCC).
-- NSCC provides settlement instructions to customers
and participant firms.
-- From John Welborn:
Though part of the Federal Reserve System, the DTCC is collectively owned and operated by the large U.S. brokerages. As a result, DTCC operations are technically overseen by the SEC. In fact, the DTCC operates with minimal SEC oversight. Until recently, the size of past (but not current) FTDs in given equity issues could only be obtained through petition to the SEC’s Freedom of Information Act office, which must request the information, in turn, from the DTCC. This process took months and resulted in the release of stale market data. The SEC recently made available for Internet download limited FTC data for all securities listed on U.S. equity markets. As this article goes to print, however, only FTD data from the previous fiscal quarter are available (starting with August 2007). The DTCC claims to support limited disclosure of FTD data, but no additional data have been disclosed beyond that offered by the SEC.
To an extent, the Bloomberg piece is optimistic. DTCC is a de facto Self-Regulating Organization (SRO) like NYSE and the rating companies (Standard & Poors and the like.)
-- Further, the actual percentage (37%) of physical deliveries affected by FTD's puts paid to the notion that these could be "bookkeeping" errors.
The Continuous Net Settlement (CNS) system, operated by the NSCC. The CNS constantly nets stock trades among brokerdealer accounts at DTC. CNS allows trades to settle promptly and efficiently. According to Sirri, CNS "steps in between two parties to a trade and nets each party’s obligation to trade over multiple trades, so that each obligation to receive or deliver, and an obligation to deliver or receive, can be combined together into one." Remaining trades -- requiring actual delivery in terms of moving a stock from one DTC account to another, not netting out from internal accounts -- these remaining trades constitute the whole of actual stock "delivery."
When DTCC processes $400 billion in trades daily as claimed, then $384 billion are netted out and only $16 billion require delivery [ brokerdealer-to-brokerdealer.] In a 2005 letter to the DTCC, Robert Shapiro, former Undersecretary of Commerce for Economics, observed that the $6 billion in FTDs that exist on any given day is 37.5 percent of the $16 billion in trades that require delivery.
"25 times the 1.5 percent of deliveries reported by the DTCC."
-- Gary Matsumoto's Bloomberg vid quotes the "1.5%" figure for Failure-To-Deliver events as of 2007 and mislabels it. Nobody is perfect.
Then there's the Matt Taibbi work on naked short selling. This is adjunct to his political take on the Goldman, Sachs juggernaut.
bobswern gets it going with Taibbi's Naked-Shorting Rage: Goldman's Lobbying, SEC's Fail.
Bob also gives a pointer to Time Bomb by John Cassidy, in the New Yorker, July 5th, 1999.
My jump-in is More Taibbi, Wall Street Counterfeiting, Naked Short Attacks, Goldman, Mafia & Cramer.
Connecting the phantom_stock/naked_short/failure-to-deliver events to damaging companies takes a bit of work. About a full day using SAS/ETS and econometric databases. We are set up for this type of analysis.
Not sure that anyone else, anywhere, had done the employment effects analysis ??? This series of conspiratorial/organized crimes -- damaging more than a thousand companies -- seems to have done much more damage than the Bernie Madoff scheme. Apparently the usual analysts have forgotten the overall society.
SEC seems to be a part of the problem, an active enabler with co-conspirators in-house. Ron Reagan and his "Government is the problem" got part of this one right. SEC "experts" arrange second careers for themselves at the hedge funds -- $1,000,000 a year =EQ= temptation.
My wildest recommendation is that Department of Justice (DOJ) use the RICO statute to take over SEC. Similar to the 1984 takeover of the Key West Police Department.
"Key West" the SEC !!
Understanding these criminal schemes is simple enough.
Bet that the home team loses. Then knee-cap the star pitcher.
Similar to a Tonya Harding, allowed to bet against her Nancy Kerrigan.
But all of this, so far, remains in the scope of microeconomics. It is retail. It is one company at a time.
One scheme, one ad hoc conspiracy. One damaged company.
-- One Jim Cramer mad assault on a bio-tech company such as Dendreon and its anti-cancer drug Provenge.
-- One mad hedge fund onslaught that throws out ten times as much counterfeit Overstock.com stock as had been issued by the company.
One at a time.
"Hedge fund" seems, as well, to be a misnomer for these companies.
These guys have not been "hedging" risk in a normal, economically sensible definition. What they have been doing is using the "hedge fund" business model as a cover for criminalization. They have been running organized, multi-party criminalized "bear raids" on these many hundreds of American companies.
Furthermore, the "naked short selling"/"phantom stock" financial instruments -- fraudulently minted versions of what were once called "shares" or "stocks" -- are nothing but counterfeiting as it has been treated in other contexts by our National Threat Assessment Center and the Secret Service.
Within our Department of Justice, the traditional response to such patterns of crime has been to establish an Organized Crime Strike Force. Then investigate and go after the crooks. This mechanism appears to me to be the best available option to maintain Rule of Law, as opposed to laissez faire, barbaric thugocracy, or some combination of thugocracy and oligarchy.
To understand what it means for society, beyond the ones, you have to build a database. You have to add it all up and apply macroeconomic sector-level statistical modeling.
The first key is to find out which companies are under attack from the so-called "hedge funds." Specifically, from wht I will label the RICO Class "hedge funds" that generate naked short selling/phantom stock counterfeits to soak up the buy orders for a targeted companies.
SEC does provide this information, perhaps unintentionally. For example:
ABH AbitibiBowater Inc
ACF AmeriCredit Corp.
AFN Alesco Financial Inc.
AHR Anthracite Capital, Inc.
ALJ Alon USA Energy, Inc.
ALY Allis-Chalmers Energy Inc.
BHS Brookfield Homes Corporation
BLG Building Materials Holding Corporation
BQR BlackRock EcoSolutions Investment Trust
BZH Beazer Homes USA, Inc.
CAB Cabela's Incorporated
CCC Calgon Carbon Corporation
CIA Citizens, Inc.
CLS Celestica Inc.
CMG Chipotle Mexican Grill, Inc.
CPL CPFL Energia S.A.
CPX Complete Production Services, Inc.
CRZ Crystal River Capital, Inc.
CT Capital Trust, Inc.
CUZ Cousins Properties Incorporated
DB Deutsche Bank Aktiengesellschaft
DFR Deerfield Capital Corp.
DSL Downey Financial Corp.
DSX Diana Shipping Inc.
ETH Ethan Allen Interiors Inc.
EXM Excel Maritime Carriers Ltd.
FED Firstfed Financial Corp.
FLE Fleetwood Enterprises, Inc.
FNB F.N.B. Corporation
FRO Frontline Ltd.
FTK Flotek Industries, Inc.
GBX The Greenbrier Companies, Inc.
GGC Georgia Gulf Corporation
GHL Greenhill & Co., Inc.
GMR General Maritime Corporation
GNK Genco Shipping & Trading Limited
HOV Hovnanian Enterprises, Inc.
HRZ Horizon Lines, Inc.
HTE Harvest Energy Trust
ICO International Coal Group, Inc.
IHP IHOP Corp.
IMB Indymac Bancorp, Inc.
IVN Ivanhoe Mines Ltd.
JRT JER Investors Trust Inc.
KBW KBW, Inc.
KNX Knight Transportation, Inc.
LDK LDK Solar Co., Ltd.
LEE Lee Enterprises, Incorporated
LFC China Life Insurance Company Limited
LPL LG Display Co., Ltd.
LTM Life Time Fitness, Inc.
LXPPR C Lexington Realty Trust
LZB La-Z-Boy Incorporated
MAD Madeco S.A.
MEG Media General, Inc.
MMR McMoRan Exploration Co.
MNI The McClatchy Company
MNT Mentor Corporation
MTH Meritage Homes Corporation
MWA Mueller Water Products, Inc.
NAT Nordic American Tanker Shipping Limited
NCT Newcastle Investment Corp.
NFP National Financial Partners Corp.
NIS NIS Group Co., Ltd.
NLS Nautilus, Inc.
O Realty Income Corporation
PFB PFF Bancorp, Inc.
PFO Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated
PII Polaris Industries Inc.
PRS Primus Guaranty, Ltd.
RAS RAIT Financial Trust
RSO Resource Capital Corp.
RWT Redwood Trust, Inc.
SIX Six Flags Inc.
SOL ReneSola Ltd
SPF Standard Pacific Corp.
SSD Simpson Manufacturing Co., Inc.
TC Thompson Creek Metals Company Inc.
TIA Telecom Italia S.p.A.
TLB The Talbots, Inc.
TMA Thornburg Mortgage, Inc.
TNK Teekay Tankers Ltd.
TPX Tempur-Pedic International Inc.
TR Tootsie Roll Industries, Inc.
TRI Thomson Reuters Corporation
TWP Trex Company, Inc.
UA Under Armour, Inc.
VMW VMware, Inc.
VSE VeraSun Energy Corporation
WAL Western Alliance Bancorporation
WBPR S Wachovia Corporation
WCI WCI Communities, Inc.
WES Western Gas Partners, LP
WGO Winnebago Industries, Inc.
WHX Whiting USA Trust I
WNR Western Refining, Inc.
WSM Williams-Sonoma, Inc.
XRM Xerium Technologies, Inc.
This is a daily list for FTD's. That is, Fail to Deliver stock events that have timed out after 13 days, sitting in a Prime brokerdealer.
I managed to ask around and beg up copies going back to days when an interested party had to file a Freedom of Information Request to get these lists.
When a company has been on these lists for more than a week at a time, or repeatedly -- months here, months there -- you know right off that its not "bookkeeping."
When the criminalized "hedge funds" sell stock that they don't have, then they can't meet delivery. That's these FTD's. And because of the loopy DTCC management system, the buyers of these naked_short/NSS/failure/FTD stcok wind up with counterfeit stock in their portfolios.
Talk about a broken system.....
What stands out, with visual inspection of the lists, is that these "hedge funds" target specialty production companies. Standalones. Medium scale operations with growth potential.
Likely undercapitalized, compared to any multinational.
Easy pickings for tactics that induce volatility.
Not likely bestowed with political chops.
Then you want to get realistic. Filter out for companies that went bust for known reasons. If there was an ENRON on the list, it goes off in a trice.
Filter out for extremes. Measure overall corporate performance going in to the attack period. Take the middle four standard deviations.
SAS PC works just fine. A spreadsheet would work, too, but the econometric data is available up to date through 2008 for SAS as a single file. The employment data/company_estimates are gettable for either one. (ASCII = glue.)
Then you compare with companies in matched sectors with similar profitability.
VMWare gets matched within software producers.
How do attacked companies do, compared to similar companies that are not attacked ?
And what happens to employment when a company's free market access to capital is shut down ?
Results turned out nasty.
For the largest 1,000 firms under Media Cancer/FTD/NSS attack -- with the media lying hard to estimate, of course, though that has been done for a handful of cases -- the drop in expected employment went to 1,200 jobs per enterprise.
What I've thrown out is a morning of data acquisition followed by an afternoon of pruning and time series programming. Not the first time I've done that and gotten useful results.
More likely, a half-dozen Masters theses for data collection and a Dissertation for the modeling -- that's more like it for professional academic calculation.
But 1,200,000 jobs destroyed -- that's real stuff.
These hedge fund thieves are damaging America's innovative, growth-intensive companies.
The macroeconomic multiplier effect is simple enough to define. An initial amount of spending is respent, then again and again. Over time, a whole job of spending produces a similar number of other jobs.
General economic activity -- a generic job -- looks to generate other jobs.
In the time period where phantom stock/FTD/NSS scams have exploded, we're looking at a minimum of 3,000,000 total lost jobs.
(The model assuming a bleed out of unemployment, where new jobs substitute for the original jobs. The 1,200,000 and 3,000,000 figures assumes that knocked-out workers find employment steadily within a 2 year period.)
The great stock market decline of 2008 will fade, eventually. These hedge funds are most destructive when there is a general downturn. In good times, relatively, they focus on fewer target companies, destroy fewer jobs.
The 1,200,000 and 3,000,000 people will get jobs. Somewhere.
USDOL sees six unemployed job seekers for every one permanent job opening. Finding a job is not easy. And if you take a short job, a quickie contract, you can lose your unemployment benefits. (True !)
Having an extra 3,000,000 people unemployed, today, is not helping the situation.
The credit crunch caused a recession. All out attacks on 1,000 major American businesses made it the worst economic decline since the Great Depression.
"Key West" the SEC ??? Take them over. Why not?
Ban short-selling and virtually eliminate these criminal schemes.
NYSE, NASD, and the unregulated Dark Pool systems are running their businesses so as to support the criminalized "hedge fund" operations -- they cannot be trusted in any way. Regulatory capture with respect to SEC is also so complete that this agency cannot be trusted. The lists of naked_short/failure/FTD/phantom_stock are generated and then hidden by SEC with its full powers -- thereby protecting economic terrorism and counterfeiting.
Gee. Amazing that an arcane piece of econometric analysis got to the REC LIST and then stayed up overnight.
A whole lot of youse guys hit that RECOMMEND button.
I'd expected that bobswern would have to rewrite this to English, before people could read it. ............. ;^)