The American Spectator

iamse7en| 8.14.09 @ 10:58AM

So what's the moral of the story? Do you blame naked short selling for Manning's crushed dream? Perhaps he shouldn't have struck business with Afinsa.

Naked short selling communicated important information that something fishy was going on, that the business was overvalued for whatever reason. That information helped other investors get out before they lost all their money.

As Calabria at Cato put it:

"At heart, our markets, particularly our capital markets, serve as valuable aggregators of information, generally via the price mechanism. Speculators, including those holding a naked position, help bring new and valuable information to the market place. Recall it was the short-sellers who discovered Enron’s frauds, not the regulators or the rating agencies. Banning naked positions will only serve to reduce the information content of market prices, and also further entrench incompetent management."

JP| 8.14.09 @ 4:06PM

I agree with Iamse7en,

Short selling, even naked short selling does serve the public's interest. Short selling in general can unveil information about a company that management would rather hide from investors.

Hubbard| 8.14.09 @ 5:49PM

SEC Requests copy of financial film spotlighting stock market corruption
http://www.prlog.org/10282455-sec-requests-copy-of-financial-film-stock-shock.html
I saw "Stock Shock" and it was eye-opening.

Wake Up| 8.15.09 @ 11:00AM

iamse7en, using a mechanism that is illegal and immoral to curb behavior you believe is improper is like stealing from a store that charges to much. Naked Short Selling allows criminals to sell what they do not own and in some cases does not even exist. (You want to buy a bridge that does not exist?) Bloomberg explains it well,..in Phantom Shares,..great video. http://video.google.com/videoplay?docid=4490541725797746038&ei=Q82GSuPyO6bmqQLgpu2vAQ&q=phantom+shares

Richard Baker| 8.15.09 @ 12:43PM

So if selling short is bad, when are the liberals going to condemn George Soros? His entire fortune, it seems, is built on this practice. That's where he gets the money that he uses to fund the destruction of the system by which he becomes wealthy.

False information US Bankrupt| 8.15.09 @ 3:48PM

Peterson Hits Social Security Myths
September 27, 2000
Peter Peterson, former Commerce Secretary and founder of the Concord Coalition, lamented in the New York Times this week that in the coming election "what poses for debate on entitlements may be worse than no debate at all. The bidding and one-upmanship on the campaign trail could easily lock the new president into indefensible positions that block genuine and badly needed reforms."

"Why is there so little understanding of the long-term challenge? Two big myths are anesthetizing our judgment: Myth No. 1: Social Security is in good shape because it has a trust fund. We are often told that the trust fund will keep the system solvent until 2037 if we do nothing and, if we make some minor tweaks, it will last until 2075. Who could get excited over such a distant danger?

"What we are rarely told is that the trust fund is fiscally and economically meaningless, an accounting fiction; this money has already been spent. Its so-called assets are nothing but a stack of IOU's from the Treasury. By 2015, Social Security's annual costs will start to exceed its tax revenues by ever ballooning margins.

"Because this is a pay-as-you-go system, Congress would then have to raise taxes, cut other spending or borrow from the public to redeem the IOU's -- precisely as if there were no trust fund -- or else take a heavy hatchet to Social Security and Medicare at the very moment the huge boomer generation is moving into its elder years.

"Some argue that we can use the projected budget surpluses to pay off the IOU's. Alas, this isn't possible. The surpluses themselves may not materialize. For one thing, an economic downturn could easily turn the surpluses into deficits in just a few years. For another, the budget projections assume, implausibly, that discretionary spending will not grow faster than inflation -- in spite of major new commitments to defense and education.

"If the surpluses do materialize, much of the money is likely to be spent. Gluttons don't often turn down a free lunch. Presidential candidates and members of Congress rarely withstand the temptation to give away surpluses by increasing spending or cutting taxes. There's much talk of putting a "lock box" on the surpluses. But no one has yet designed a lock box that Congress couldn't pick. Even if the lock box works, the money in the trust fund is but a small down payment on future obligations.

"Myth No. 2: The New Economy will allow us to grow our way out of the problem. According to this myth, official projections, which point to a gradual slowdown in economic growth, are too pessimistic. The critics confuse pessimism with arithmetic. Economic growth depends not just on growth in productivity, that is, output per worker, but also on rising numbers of workers. By the 2020's, the labor force will be growing only about one-tenth as fast as in the last quarter century. Given the demographics, it would fly against all logic if economic growth did not slow.

"A better question is whether the official projections are too pessimistic about the growth in productivity. But keep in mind that even a huge boost in productivity won't do much to reduce Social Security's burden. According to Alan Greenspan, the Federal Reserve chairman, eliminating Social Security's long-term deficit would require a 200 percent increase in long-term productivity, a leap that few economists, even new economy enthusiasts, believe is possible.

"Our leaders face a choice. They can address the question of entitlements for the elderly while the economy is still booming and the budget is in the black, and before most baby boomers retire. Or they can delay until the window of opportunity closes. Either way, America will change course. If we act now, everyone, young and old, will have time to adjust and prepare."

2001 Index | 2000 Index | 1999 Index | 1998 Index

The Ghost US Government| 8.15.09 @ 4:03PM

Government behind a government, a puzzle within a puzzel, and a myth within a myth. The lie behing the truth and the truth behind the lie.

The deciete infront of the deceiver, the war within a war, the death and dying walking and the mentally dead fighting in the same war, within a war. Killing and dying none know why they they are dying, and none know for what it is they are fighting for.

A country that exist in fear, and a government run by fear, and a people in terror. The terror is of a terrified government, forcet to lie, about a lie, and a truth about a lie. Sept 11th the Jewish plot to take over America and the world.

Nick| 8.15.09 @ 5:31PM

Short selling is a legitimate trading tool, when employed within the legal parameters established to protect the companies being shorted from manipulation by predators, be them speculators or competitors.

Naked shorts create fraudulent, counterfeit shares! As with counterfeiting cash, it is stealing, there are no gray areas here. Any school kid can understand if the number of shares issued are less than the number available for trade, that is proof positive that rules that dictate short selling are being broken, which is the real information for regulators to rely on that something is seriously wrong, and not with the company but within the system that is being fraudulently manipulated for ill-gotten gain and/or financial sabotage.

The market’s DNA is based on supply and demand. That ratio is part of the determining factors dictating stock value. The artificial imbalance created by counterfeit stocks resulting from uncovered shorts will adversely and artificially effect the value of the stock, further eroding legitimate stockholders valuation as well as eroding general consumer confidence in the system and the regulators ability or intent to legitimately protect the companies, investors and the market as a whole.

Wayne Jett| 8.15.09 @ 5:38PM

Thank you for this coverage of financial fraud known as naked short selling. The destruction of Greg Manning's company was accomplished by means similar to tactics used to destroy several thousand additional companies, including several very large firms during 2008. For example, Bear Stearn, Fannie Mae, Freddie Mac, Lehman Bros., IndyMac, Washington Mutual and others were brought down by tactics enabled by the SEC which included naked short selling of millions of phantom, counterfeit shares. General Motors, General Electric (once stated to be the world's largest industrial company) were attacked by the same methods.

A Canadian financial firm called Fairfax Financial Holdings (FFH) traded on the NYSE and a NASDAQ company called Overstock.com have filed lawsuits against cabals of hedge funds for targeting their companies with destructive tactics including hatchet jobs printed by "independent research" firms and various financial reporters. Also, OSTK has sued about a dozen major brokerage firms for conspiring with the hedge funds to drive down its share price.

Financial fraud is at the center of what caused the financial events of 2008. Fraud is exhibited also in the commodities markets, as the unmonitored, "dark" markets in crude oil futures enabled trebling of the oil price above market levels. This robbed the middle class of trillions and destroyed economic growth worldwide.

Much more attention ought to be given to financial fraud. The SEC must be stripped of its power to shield Wall Street's big players from prosecution for financial crimes. Wall Street's inner elite dominate federal policymaking and thus have a choke-hold on the middle class. This must be countered and reversed.

bidrec| 8.16.09 @ 12:05PM

Spyro Contogouris mentions the case of Escala/Greg Manning in his threat to Fairfax Financial

"I will try to make this the most respectful letter I can under the circumstances. No doubt you are aware that these are very critical times for your former employer Fairfax Financial Holdings, Ltd . So I want this to be "fair and friendly" . . . . In this spirit, I am available to meet with you in London at your earliest convenience . I would like to lay out a series of maps, flow charts and related exhibits which I have put together that I feel are missing some critical pieces. Take just a minute, sit back and try to view what the world will look like for Fairfax and its former officers three years from now given the current level of regulatory scrutiny. Look to the lessons of Enron and most recently of Escala Group (NASDAQ :ESCL; I have attached the information at the end of this letter for your reference) . . . . I can help by
introducing you to a former highcould act as a confidential liaison with current regulators on your behalf to set the record straight and get to the bottom of this . . . . I indulge your attention to a recent witness in the Enron trial testifying that a certain research report led a high ranking executive to say aloud, "they're onto us!" I cannot help to speculate that a similar thought process may have played some part in your decision to move to London . . . . Please help me fill in the blanks . . . . I can be in London at your convenience over the next several weeks with all of my materials . . . . I will arrive with the aforementioned former Government person
who can speak to you with the highest degree of confidentiality .' "

http://securities.stanford.edu/1037/FFH_01/200695_o01n_064197.pdf pp. 55 56

cloggervic| 8.17.09 @ 5:16PM

iamse7en is confusing naked shorting with legal short selling. Legal short selling is necessary to balance the upside effect of buying on margin. The regulations in fact link the two in an attampt to create this balance, by stipulating that the only shares that can be borrowed by short sellers to sell short are those which have been bought with margin borrowing. (At least that what it should say, but the flawed rule allows 1.4 times as many shares to be lent to short sellers as have been bought with margin borrowing).

Naked shorting however has no balance on the buy side, and so is exactly what the plaintiffs say it is : Flooding the market with counterfeit shares and depressing the price. Any major player (like GS for example) who was caught doing that should simply have all their management jailed and the company nationalized. It's no different from printing your own $100 bills.

Job Revell| 12.3.09 @ 10:12PM

Hopefully Greg Manning Company will has a chance to prosper, it has given us a lesson and valuable experience to carry on.
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