What did they say John Mack used to say "Theres blood in the water" Haha yes theres blood all right yours.
yes, Erin Burnett is happy because equities are going up. But MS is looking quite weak after breaking below 10 again
Here you go. Check the fails data in the link. You guys are just so, so naive................................................. Date: Saturday, October 11, 2008 http://www.deepcapture.com/naked-shorts-frolic-while-financial-system-fries/ Naked Shorts Frolic While Financial System Fries October 10th, 2008 by Mark Mitchell âMorgan Stanley shares have been under extraordinary pressure as of late, for no apparent fundamental reason, as we estimate liquidity, the balance sheet, and long-term earnings, prospects are sound.â - Fox-Pitt analyst David Trone in a research note, today Here we go again. A giant bank has some weaknesses, but it is, in all respects, a going concern â except that short sellers are peddling rumors and phantom stock, so the share price is plummeting. With the share price in peril, the rating agencies (perhaps over vigilant after taking so much criticism from short sellers and the media) put the bankâs debt ratings on review for a downgrade. Meanwhile, short sellers corner the market for the bankâs credit default swaps, and point to the value of the CDS as evidence that the bank is doomed. They feed the media with analyses and bogus indexes that mark the bankâs assets to nothing. They spread the news that the bankâs counterparties and trading partners could bail. The clients and partners stay with the bank. Up until now they have no reason not to. But then, thereâs more naked short selling, the hedge funds flooding the market with stock they do not possess â phantom stock. Maybe the hedge funds send a fax to CNBC with one last rumor. Over the course of a day or two, the stock price is slashed in half. Then, suddenly, the stock is in the single digits. As a result of the low stock price â not as result of the balance sheet â the bankâs partners and clients freak out. This time, they really do pull their money. End of bank. And if there are one or two more like this â end of story. The financial system will be fried. Weâve seen precisely the same scenario with Bear Stearns, Lehman, Merrill Lynch, Washington Mutual, and IndyMac. A variant of this scenario took down AIG, Fannie Mae, Freddie Mac, and perhaps 200 other companies before them. Morgan Stanley could be gone by next week. We have new data http://www.deepcapture.com/wp-content/uploads/2008/10/ms_shorts.pdf for September that shows that there was plenty of short selling of Morgan Stanley (and other companies) even during the SECâs ban on short selling, which ended Wednesday at midnight. Some hedge funds ignored the ban, and the SEC did nothing. Worse, in place of the ban, the SEC has offered only tepid new rules (cheered by the short seller lobby) that do little to prevent the sale of phantom stock. Under these rules, short sellers do not have to borrow real stock before they sell it. They merely have to âlocateâ the stock. The SEC doesnât say how itâs supposed to know whether a short seller has actually located real stock as opposed to telling his broker, âyeah, I located it, itâs in your motherâs wigâ (which is pretty much how these conversations go). Furthermore, the SEC gives hedge funds three days to deliver the stock they sell. This would be fine if they were required to possess real stock before selling. But since they are not, a hedge fund can offload a large block of phantom stock and let it eat away at the financial system for at least three days. Sometimes, the hedge funds settle the trade with another block of phantom stock, transferred to them by a friendly broker. But even if they fail to deliver the stock, the SEC stipulates no serious penalties. Meanwhile, it shows no inclination to actually prosecute anyone for the jailable crime of short-side market manipulation. Iâm willing to bet anybody a sizeable amount of money that when the SEC releases its âfailures to deliverâ numbers for October, they will suggest unbridled illegal naked short selling of Morgan Stanley during this past week, even on days when the ban on all short selling was in place. The data will show that naked short selling rose to unprecedented levels just before somebody floated Wednesdayâs false rumor that Morgan Stanley was going to lose its $9 billion deal with Mitsubishi. And the data will show that after the ban was lifted, the law-breaking shorts went nuclear â with failures to deliver of well over a million shares every day. Ultimately, many millions of Morgan Stanleyâs shares will be sold and never delivered, just as hedge funds have yet to deliver more than 10 million shares of Bear Stearns that they sold during that bankâs final days last March. As I write this, Morganâs stock price is in the single digits, trading around 7 bucks, down an astounding 70% in the 36 hours since the short selling ban was lifted. A death spiral like that does not happen naturally. Because of the short-battered stock price â and only the stock price (again, this has nothing to do with the balance sheet) â Moodyâs today put Morganâs long-term debt ratings on review for a downgrade. I suspect another 15% off the stock price, and one more well-placed rumor, will do the trick. There will be a run on the bank. Morgan will be gone. And the global financial fire will blaze still hotter. It is beyond surreal that our most prestigious financial media continue to allow this to happen. It is beyond comprehension that journalists â in possession of the evidence, and presumably in possession of their faculties â continue to spout the line, originally formulated by short-sellers and now woven into conventional wisdom â that this crisis is only about bad mortgages and bad managers and bad balance sheets. One can argue that, in the long run, the world is better off without half of Wall Street â without its ponzi schemes and paper profits, the sickening salaries and arrogance. Certainly, anyone with a Shakespearean state of mind will appreciate the fates of Morgan Stanley, Lehman, and Bear â all of which eagerly pimped their dodgy prime brokerage services to the very short sellers who destroyed them. But it does not require Shakespearean nuance to see that this crisis is not just about scandalous banks. It is about criminals destroying banks that are tawdry, yes, but possessing of some virtue, and capable, if left unmolested, of carrying on and contributing to society â perhaps even staving off a global calamity. Moreover, these same criminals are destroying many other companies, most of which are run by honest people who labor far from the insalubrious alleyways of southern Manhattan. The SEC maintains a list of companies whose stock has failed to deliver in excessive quantities. As I explained in an earlier dispatch, many victims of naked short selling (including some of the big banks) do not appear on that list. But surely it is a scandal that more than 300 companies, many of them financial firms that have nothing to do with Wall Street, do appear on the list. Surely, it is an even bigger scandal that around 100 of those companies have appeared on the list chronically, day after day, for months on end, and though the sheriff posts the names of these rape victims on its wall, it has yet to prosecute a single rapist. The SEC tells us that a billion shares remain undelivered on any given day â and yet it doesnât bother to find out which hedge funds sold the phantom stock. It might be too late, but if Washington and the financial media really want to save the world, they ought to start by demanding that hedge funds borrow real stock before they sell it. And what the heck: Maybe some newspaper could offer the radical suggestion that the SEC should tell hedge funds that they can either go to jail or close out all unsettled trades â today. If one hedge fund manager were to get cuffed, all the others with outstanding âfailures to deliverâ might scramble to buy real stock so they can settle. The markets might soar. The innocent victims might get some relief. And the delinquents on Wall Street would get some time to clean up their acts. Meanwhile, would anyone care to guess which company the naked short sellers will take down after Morgan Stanley? And would anyone like to share a bunker with canned goods and weapons? * * * * * * * * If youâd like to place that bet on the Morgan Stanley data (Iâll give 2:1 odds that it will show short sellers offloading massive amounts of phantom stock , with more than a million âfailures to deliverâ every day) feel free to contact me. Mitch0033@gmail.com.
We have new data http://www.deepcapture.com/wp-conte...0/ms_shorts.pdf for September that shows that there was plenty of short selling of Morgan Stanley (and other companies) even during the SECâs ban on short selling, which ended Wednesday at midnight. Some hedge funds ignored the ban, and the SEC did nothing. Now someone, anyone, tell me: 1. How can this happen? How can the fails happen when it's against the law? How can the trades fail? Where does the money go? One day 6.4mm shares were sold that failed. They could have naked shorted 100,000,000, and covered before the end of the day. We don't know the true number, only what was left. 2. Why? Why are they doing it? 3. Whose 'fault' is it? Put another way, whose responsiblitity is it to see this isn't done? 4. What happens if MS fails? 5. Who wins? Why? 6. Who loses? Why That's all. And for all of you Patrick Byrne haters. why is he spending upwards of 20,000,000 dollars to help the people who so wanted his demise, to the point of bribing, yes, bribing, his detractors? Can you fathom the fact that there are still human beings that act because they believe it's the correct thing to do?
flytiger, the link is broken. Here it is: http://www.deepcapture.com/wp-content/uploads/2008/10/ms_shorts.pdf Article: http://www.deepcapture.com/naked-shorts-frolic-while-financial-system-fries/ Anyways, MM are exempted from the naked shorts, yes?