Monday, April 20, 2009

Patriot's Day

Today is Patriot's Day in Massachusetts - the holiday celebration of the Battle of Lexington and Concord in 1775 that showed how determined people could protect their freedom from oppression with some organization, bravery and personal firearms kept in their homes. One can read about this battle - really a series of skirmishes - in many books. From a purely military perspective, a British raid to the interior was stopped and then seriously mauled by a swarm of individuals and small companies of militia.

The celebrations here include re-enactments and the running of the Boston Marathon.

Some Déjà Vu Again

Hmmm ... it's April 20. Where is the financial industry re-regulation plan ? It's probably bogged down in a mud wrestling match with a swarm of lobbyists.

Perhaps some bashing of the short sellers is in order. A relative sent me the links to some interesting and partially illuminating video clips on the bear raids on Bear Stearns and Lehman and has data on the absolutely huge amounts of fraudulent short selling - aka "naked" short selling that occurred in those events. And what has the SEC done ? Nothing. Take a look at the clips and I'll suggest why the SEC has done nothing.

Illegal Naked Short Selling ...
Parts 1, 2 & 3 ...

http://www.youtube.com/watch?v=xUKSU1qahgE&annotation_id=annotation_177033&feature=iv

http://www.youtube.com/watch?v=NcjssQSthNU&feature=related

http://www.youtube.com/watch?v=Q48eSoTNByQ&annotation_id=annotation_911154&feature=iv

Pretty interesting, no?

Here's what the videos miss.

First, I suspect that a huge amount of the naked short selling was by the market making writers of the put options on Bear Stearns and Lehman Brothers. Yes, by the Street itself. Their trading desks have programs to hedge their positions in those options dynamically and they must do that or cover their open put writes. So yes, the hedge funds did initiate the positions, but the huge wave of naked shorts was principally from the Street itself. The analogy is a group of sharks feeding on one of their own who is wounded.

How does the Street do this ? Actually it was and still is legal due to the "Madoff Rule" - remember him ? The SEC in its "wisdom" - or maybe as a payoff - years ago at the prompting of Bernie Madoff made it legal for a "market maker" (read: The Street) to do naked short selling to hedge their book or to temporarily fill an order. And even last year when the SEC put on temporary restrictions on short selling, they exempted the Street "market makers". So all bear hedge funds had to do if they could not get a borrow was to buy lots of put options and the Street did the naked short selling for them.

What a world ! Is the SEC not completely corrupt ? If not corrupt, then completely incompetent ? In either case, why does it still exist ?

Second, the videos miss the huge role of credit default swaps. The bear hedge funds bought the puts and then put in large orders to buy credit default swaps against Bear Stearns and Lehman Brothers. Who could write such insurance against default ? No one. Those firms were in the position of borrowing overnight every night huge amounts of capital. Any fear would cause that necessary funding to dry up. [OK, they were inordinately stupid to fund themselves that way ... but that's another issue.] So the bear raiders tossed a smoke bomb via the credit default swaps to create panic. and then profited hugely on the put options. The Street did the rest.

A recent article by George Soros in the WSJ lays out his agreement with this blog on this matter. I wrote about George's agreement and congratulated him on reading this blog at the time. [ ;) joke ]

Overall, those videos are quite worth watching as they provide good facts, even if important aspects were missed.

Markets

Maybe we'll see a pullback this week. Lots of money is on the sidelines, looking for either a sign to get in, or a good entry point. But without bad news (GM perhaps ?) I suspect pullbacks will be limited. I have some money to invest but also want a good entry. I'll be patient.

Word of the Day

"Chiaroscuro" - noun [$10] from the art world
Chiaroscuro means 1. the treatment of light and shade in drawing and painting; 2. the use of contrast in literature; 3. (attrib.) half-revealed. From italian chiaro 'CLEAR' + oscuro 'DARK', 'OBSCURE'.
Sentence: Does not most public commentary on the stock market use an allegory of chiaroscuro with forces of darkness - the 'evil' bears - battling with the forces of light - the 'good' bulls ?

Le Mot du Jour

"Outil" - noun, masculine
Outil means implement, tool. Outillage [NM] means a set of tools.
La Phrase: Rambo a dit que le meilleur outil est l'esprit. Je suis d'accord.
Sentence: Rambo said that the best tool is the mind. I agree.

49 comments:

Bunkerman said...

BAC earnings uninspiring ... making money "trading", a business no "bank" should be in.

Bud said...

live free or die !!!!

Bud said...

Bman do you think the prices of firearms will fall now that the administration has signalled it won't go after the assault weapons ban ??

Bud said...

Bman what shippers do you own ?

Bud said...

no 'bank' should be in trading ?? huh ??


lmaoooooooooooooooo

Bud said...

i'll watch those videos later Bman............l'aquarium de requin has me busy this am

Bunkerman said...

I would not be a buyer now ... I think after a year or so, prices will fall once the excess demand is gone.

Actually I am selling a few through my local dealer ... ones I really don't want.

This has happened before.

I don't think what Obama says matters - no one who is a prospective buyer will believe him.

And those lies about Mexico getting most from US just add fuel to fears.

Bunkerman said...

re shippers, I have UNP in Fido, and EXM + GNK in Obama

Also some truckers like CLDN.

Bud said...

Bman what do you think of the white house strategy on banks now ? won't go to congress..........convert preferred to common.........and won't let the banks repay TARP if not in 'nationla economic interest'

Bunkerman said...

If they want to "trade" i. e. for own account and not customers, let them capitalize a subsidiary that is isolated from the bank.

Bunkerman said...

lolol "white House Strategy" - is a confused mess. They don't know what they are talking about and have no strategy.

And the idiot Volcker blathering about Fed. My partner heard him talk in NYC and he sounded senile - other there were shaking heads.

Spin-em said...

..Yankee Stadium.....the most beautiful sight these eyes have ever seen...lool

mfl59 said...

well Bud, if you aren't going to bring it up, I guess I will...sorry spinny...

Chien Ming Wang....are you kidding me?

Frosty said...

national banks slaves to the people...vladimir putin would be the prefect fed head...aazzhead recruiting for the traders union led by kingshark...wing tax coming...I think so.

Spin-em said...

LOOOL no sorry's needed...bring him down to Scranton get some cheese n gravy fries in him..get his head straight beatin up on triple A's...

Frosty said...

"I'm seeing selling across the board -- the bulls are on the defensive."...buying like a banncchhheeeeeee into ops expo...nonono dumping tankers like yao ming hook shots on the blazers...thanks jim.

Spin-em said...

"i give credit where it's due........"

welllllllll...we're waiting(judge smails)

Bunkerman said...

hmmm frosty, I wonder if that nailing were heard Jim doing so often last week was a coffin lid.

lolol

;)

Bunkerman said...

Some math:

BAC has 6.4B shares of common outstanding and has $45B gov't preferred.

So the "breakeven" price for the sale of common to pay back TARP is $7/share. Under that, they have to sell more that now exist.

Fierce dilution ...

Frosty said...

shark LMAOOO...Bunky early MVP bid indeed...I fell so sorry for Bud, I joke with him, but it sucks being played that way...I will call of the dogs....sorry Sal.

Bunkerman said...

well, I presume Jim got the tank to cash Fiday at the close - or net short, so they are minting money.

I want everyone to make money. No envy here at all.

Bunkerman said...

Hmmm I see Ken the Cad adds $6 billion to reserves for bad loans ... $1/share.

Good job, Ken ... step - waddle - up to that trough and feed.

Spin-em said...
This comment has been removed by the author.
Bud said...

go ahead bunker fags.......let it out......you girls been waitin a month......finally have your day


but unlike you cry babies.........i don't blame anyone else........my losses are my fault


le aquarium de requins......uhhhh.....well....not today

Bud said...

call off the dogs ?? huh ?? i didn't see any


oh wait...........those 2 lil' french poodles.......they were cute......prolly frosty's .......ya know.........since he's a fag

Bud said...

holy smokes.........shot a f'ng 82 yesterday.......my second best score of all time


with my new clubs too.......saturday purchases


callaway x-22 reg flex 5-pw

480bux


callaway diablo driver 10degrees draw


300bux

plus 3wood for $1


merci jim !!!!!!


'disguised as a pga pro'

Frosty said...

oh my, two strikes with one pitch...wonder if I could hold the Indians under 22 runs...I think so.

Uh, didn't have time to play 18...golden girls marathon on tbs...jog off 14 to the clubhouse will have time to pop some corn before the big show.

Bud said...

'pop some corn'


LMAOOOOOOOOOOOOOOOOOOOOOOOO

maverick said...

reg flex?...are you over 70?...strong men are stiff!!!

Bunkerman said...

hmmm would that be for today ->

L'aquarium de requin est dans la merde jusqu'au cou aujourd'hui.

The Shark Tank is in deep s*** today.

???

Bud said...

ummmmm....... almost got the graphite shaft........but then we decided to go with the regflex steel shaft


we saved 200bux.........my swing coach said it's better if i spend that money on lessons

Bunkerman said...

"better to spend the money on lessons"

lolololololol

Bud said...

don't worry about my strength ace.......come on......let's go..........lace 'em up !!


meet me at the ftlauderdale ymca......hope you have good health insurance


feb2010.........yeah......i can't wait

Spin-em said...

Buddee the sheeple
BAAAAAAAAAAAAAAAAA

Frosty said...

Treasury: "No basis" for report on stress tests..bunky,your heros continue to break orbit today, now they respond to what is posting in some traders blog...you must feel great shame today.

Frosty said...

bank slaves...the white house knows slaves must be broken before they can be built up to pick cotton like a machine...ken the cad will feel the catoninetails indeed.

Frosty said...

Bunky...sacks full of april skim according to my index card...time or price...when should fat al start stacking the pancakes.

Spin-em said...

lmaooooo..Big Al...Big Al

Bud said...

Bman is today's action just beefers creating panic ??

Bunkerman said...

today's action is all the beefer traders jumping out the speakeasy windows at the same time when there's a knock on the door.

Bunkerman said...

frosty, april skim is in cash ... I always give selloffs three days to run.

No buying until at least Wednesday close.

Frosty said...

Bman is today's action just beefers creating panic ??

paki rosetta stone...sorry daddy...shark slipped me the tube steak...lil help please.

Spin-em said...

crames/"jim" on same page...luv the restaurants..RUN FOR THE HILLS!!!

Bud said...

i thought bob 'called off the dogs' ?? just could not resist takin another shot at le aquarium de requin


listen dude......i feel bad for you.....i know you feel like you got swindled

or you just jealous.......you prolly wanted some tube steak.......fng fag

Spin-em said...

15 YARD PENALTY

"stealing" same joke within 15 minutes...and using the word "dude" pillpopper joecool-like

Bud said...

stealing.......fine....guilty


and dude.........well..........i got tired of calling frosty a fag and a bitch......no problem.....i'll stick to those

Spin-em said...

hey maaan....did you lose your sense of humor today too???

Bud said...

lmaoooooooooooooooooooooooo




ok...........listen 'dude'

i didn't really lose anything .....if on monday ....my neighbor jack came over and gave me 200bux......and then on tuesday his wife jill came over and took back 100..........did i really lose money on the deal ???



that's the way it is with le aquarium de requeins.....i was broke before........and now i can feed myself 3 warm meals a day


'merci jim'

Bud said...

oh shoot


another poor swing .....i can't lay off the slider.........and it's aching ming wang slider too



'mission accomplished'