July 17, 2008
On Wednesday night, Jon Stewart pointed out that President Bush saw fit to hold a news conference about the economy at exactly 10:20 a.m. on Tuesday, July 15. As luck would have it, this was the very minute when Federal Reserve Chairman, Ben Bernanke, was to begin his testimony before Congress about the state of the economy. Stewart deftly contrasted the “spin” message presented by Bush with the sworn testimony of the Federal Reserve Chairman. Bush was obviously out to blunt any negative impact Beranake’s testimony might have on the markets. The 180-degree difference between Bush’s spin and Bernanke’s reality was hilarious. Regardless, Bush’s plan didn’t work. The Dow Jones industrial average dropped 92 points (.84 percent) on Tuesday and the Standard and Poor’s 500 index (which includes many financial stocks) fared worse. Wednesday saw a dramatic shift in the markets due to a drop in the price of oil – the only thing that ever gives the stock market a boost these days.
July 15 was also the day when the Securities Exchange Commission enacted a new, emergency rule against “naked” short-selling of financial stocks. As Dane Hamilton reported for Reuters, the rule drew mixed reactions among hedge fund managers and traders. Hamilton described the SEC’s reasoning that:
… naked short selling, which is putting in a short stock order with no intention of actually borrowing it to drive down the price, may have contributed to this year’s collapse of Bear Stearns and sharp declines in other financial stocks this year.
As Mr. Hamilton explained: this new, temporary rule was enacted to protect 19 financial stocks, including battered mortgage guarantors Fannie Mae, Freddie Mac and a number of banks, against “a substantial threat of sudden and excessive” stock price movements. What other industry could count on the Federal Government to protect it from the predatory tactics of a handful of unscrupulous “short sellers”? Some of these traders make multiple short sales on a single share of stock. The net effect of this is that they are actually “counterfeiting” stocks to be sold short and bought back at a lower price, before anyone might realize the shares never existed.
Investors have been victimized by such tactics for decades. However, until now, the SEC has been of little or no help in regulating these tactics. In an article from the March 23, 2007 issue of USA Today, Matt Krantz reported on the boasts of MSNBC’s TV host, Jim Cramer, about how Cramer had used “short” sales to manipulate stock prices:
A lot of times when I was short (stocks) at my hedge fund … meaning I needed it (the stock) down …I would create a level of activity beforehand that would drive the futures … It’s a fun game, and it’s a lucrative game.
If you are wondering how the 19 financial companies covered by the July 15 emergency SEC rule, were able to obtain the kind of protection afforded by that measure, you may want to consider some of the observations made by Lisa Lerer in her July 17 article for Politico.com:
If you want to know how Fannie Mae and Freddie Mac have survived scandal and crisis, consider this: Over the past decade, they have spent nearly $200 million on lobbying and campaign contributions.
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When their stock prices took a dive last week, their government allies extended another helping hand with a plan for the Treasury Department, the Federal Reserve and, possibly, Congress to shore up the companies.
It’s nice to see the SEC doing something to protect investors from predatory trading practices. The only reason the SEC is protecting investors in this instance is because investors are the collateral beneficiaries of a rule written to protect 19 financial institutions. We just don’t see enough government action to stop the manipulation of the markets on a broader scale. Worse yet, when the President gets on TV to compete with the Federal Reserve Chairman’s testimony in order to paint a contrasting, more favorable picture of the economy – what do you call that? How about: manipulation of the markets?
The Secret Candidate
September 8, 2008
They’re out there … all around you. You just don’t know who they are yet. Right now, all across America, they’re out shopping for those Kawasaki eyeglass frames … trying to re-style their hair into that half-beehive/half-mullet look. They’re the Sarah Palin wanna-bes — forcing their sons to join hockey teams – each hoping to earn that coveted title for herself: “Hockey Mom” — a ticket to success in today’s America. There is no question that Sarah Palin will be the most popular Halloween costume subject for 2008. Beyond that, there are many thousands of American women, currently adapting their lives to accommodate Sarah Palin as their new role model.
The rest of us just aren’t sure we know who Sarah Palin is yet. The McCain campaign is obviously training her on the difficult subject of interviews with journalists. As of this time, there are no Palin interviews scheduled, other than the rumored possibility of an interview with ABC’s Charlie Gibson. As I write this, McCain campaign CEO, Rick Davis, is holding out for “ground rules”. I suspect that if the campaign’s senior strategist, Steve Schmidt, were to have his way, any such interviews would be tightly scripted and choreographed, with all questions and answers written in advance by Schmidt. Meanwhile, Joe Biden appeared on the September 6 edition of Meet The Press. Biden had to answer at least one question with:
When asked about the impending federal government takeover of mortgage giants Fannie Mae and Freddie Mac, Biden pointed out that he had just discussed the subject with Treasury Secretary Henry Paulson on the previous evening. I could not help but wonder what the hell Sarah Palin would have said in answer to that question … “Freddie Mac cracked a lot of sexist jokes at an Obama rally. Didn’t he die recently?”
Nevertheless, we are beginning to obtain information about Palin for ourselves by using our computers over the Internet. The mainstream media have nothing for us, other than the superficial biography offered by the Republican National Committee. What we have initially learned is that Sarah Palin spent six years working toward her Bachelor’s Degree, while attending five different schools in that effort. Many consider this as evidence that she may be significantly dumber than our current President. Although I refer to Governor Palin as “The Gumball”, I don’t consider her six-year college tour as a justifiable basis for criticizing her. Many of us who attended college either made school transfers ourselves, or had friends who did so — at the cost of lost course credits. For someone to change colleges five different times, yet graduate in only six years, is quite an accomplishment! Congratulations, Sarah!
Additional information about Palin has been provided by David Hullen in the September 4 edition of the Anchorage Daily News. Hullen quoted an e-mail written by Anne Kilkenny of Wasilla, Alaska, where Palin was formerly mayor. Ms. Kilkenny was described by Hullen as a “stay-at-home mom, letter-to-the-editor writer and longtime watcher of Valley politics.” This article and e-mail are essential reading for anyone with more than a nanobyte of curiosity about who Sarah Palin really is. Before I quote a passage from Ms. Kilkenny’s e-mail … let’s revisit The Gumball’s quip about Barack Obama, included in her acceptance speech, as written by Matt Scully:
Ms. Kilkenny of Wasilla informed us about the consequences for Sarah Palin’s failure to fulfill those responsibilities:
In other words, Palin’s duties as “mayor of a small town” had to be “outsourced” to someone else, because Palin was in over her head and on the verge of being recalled. Was this administrator from Bangalore, India, by any chance?
As we learn more about The Gumball, we are repeatedly reminded of our current President. Here’s another remark about Palin, from Ms. Kilkenny’s e-mail:
If you thought that John McCain was becoming a lot more like President Bush, Sarah Palin appears to have a head start. No wonder she is being kept under wraps!
Many have criticized the mainstream media for “not doing their job” during the run-up to the Iraq war. Those same news sources appear to be well on the way toward repeating that performance, as we enter the run-up to the Presidential election.