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08:36 AM on 03/06/2009
This story smells of insider-trading ....I wonder who was the short seller?
07:26 AM on 03/06/2009
You are so correct. I came on a bit strong about my similar feelings on this.

Geithner and Summers seem to have the same mind set. Where is the fresh thinking ? Where are the bold moves to same the foundations of the economy and the gambling part of it. ?

Obama thought Jamie Rubin was brilliant too.
07:25 AM on 03/06/2009
Thank you for this whistle.
07:12 AM on 03/06/2009
Wake up and smell the coffee. Obama is being lead down the prim-rose path and is a fool and a sell out. Look how the admin went chasing after David Brooks to say we are not that liberal.

Once Obama picked Geithner and Summers, despite their contributions to the current crisis, I knew we were in trouble. Great , Tim is your boy and Summer is supposedly a genius. So, what ! He even thought another destructive force, Rubin, was a good adviosr until so much stuff hit the fan he had to cut ties.

Face it, Obama is a sell out and being foolish. Where are the bold strokes ? You mean he cannot raise the margins for shorts and clamp down on naked shorting ? Come On !
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Bruce Fenton
Global emerging markets & economics
06:59 AM on 03/06/2009
I think that the client may have misunderstood. Short selling is not unusual.- Most investors have what is called a hypothecation agreement as part of their brokerage account, this allows their broker to use those shares for shorts. Most clients do not even know that they have this as it rarely has any effect on the client's holdings.
It would be unusual for the firm to pay a premium of 13%. More likely, this was a proposal of selling covered options or selling short against the box (sell short when you own the security) or something-- a common strategy for people with large holdings.
07:24 AM on 03/06/2009
If the letter is real, it suggests that brokers are having trouble finding stock to short in Ford--or they need to produce some real stock to cover some naked shorts. Also note the premium is an annualized 13%.
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Belisarius
Republicans are destroying the middle class.
06:56 AM on 03/06/2009
Remind me again why we bailed out the investment banks?

They don't make loans to small businesses, or to people buying houses and cars. They do mergers and acquisitions, leveraged buy outs, and various financial engineering of the type that brought down our economy.

They accidentally scrwd themselves while scrwing the economy and then Paulson and congress bailed them out.

Is there a term for when voters are scrwd twice? How about Schumered.
07:43 AM on 03/06/2009
Short selling is not unusual at all. All major public (state) and private (union) pension funds short stocks and trade derivatives (aggressively) every day.

This is an ignorant thread.

No issue.
10:07 AM on 03/06/2009
Just because it is common does not mean it is right. Short selling can drive down the prices of stocks. The investor (and the banker) makes a huge profit off of the devaluing of a company. In essence, they profit from other's loss.

One may argue that in an overvalued market, short-selling is a valuable tool to restrain excessive growth and overpricing, but would anyone argue that stocks today are unjustly overvalued? This is a dishonorable way to make profits in this day, and perhaps in any day.

Since when should we allow others to "borrow" our stock anyway? In the end, if they are successful, my stock is worth less. Rather than inform me of the risk that my stock is decreasing in value, the IBs use me and my stock to turn a tidy profit for themselves, conpensating me by a minor profit, or none at all. It's a plain example of how the financial upper class use everyone else for their own benefit.
06:39 AM on 03/06/2009
Selling short is a. not unusual. and b. useful to drive the stock to ts real market value.
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Mogamboguru
I am a liar. Don't believe me.
06:50 AM on 03/06/2009
I guess I know who is signing your pay-check.
08:58 AM on 03/06/2009
2 words GeorgeSoros

Look at his history of shorts thenSTFU
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Rynox
My patience is over taxed.
09:52 AM on 03/06/2009
This mentality is what led us to no-verification mortgages and credit default swaps.

Everyone, in unison, says "no no no, short selling has been going on for years, it's just normal activity"

The scope of these "normal activities" get larger and larger and eventually, truly absurd financial instruments are accepted as the status quo.

No, short selling is wrong. Either buy stocks or sell stocks you already own.
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blaising
Greetings from Florida!
06:27 AM on 03/06/2009
Problem is, Shorties have no skin in the game. For God's sake, even in Vegas you got to buy yor chips to play!!

I mean, who cares what the risk is? If the short bet fails, and the stock price goes way up, just don't cover. What are they gonna do, throw you in jail?
07:17 AM on 03/06/2009
Perhaps you do not understand the margin requirements against short positions ?

Likewise, why should banks finance to "no down-payment" home purchases ? Neither do they have any skin the game.

Short selling is a valid activity. Naked short selling is illegal and unethical - because it involves no borrowing and shorting shares created out of thin air.
Now, the government also prints money out of thin air, but that is perfectly legal.
07:44 AM on 03/06/2009
No skin in the game? Do you have any idea how ridiculous that statement is? If not, we should trade some stocks!
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blaising
Greetings from Florida!
05:50 AM on 03/06/2009
This is news? Shorts have been taking their profits and running for years now.

Why do you think the market goes up one day, down the next? It goes like this:

Buy short...market falls...take profit.
Buy long...market gains...take profit.
Buy short...market falls...take profit.
On and on and on....

There is something inherently Un-American about betting on failure (although the republiks would disagree).

Bottom line: there is NO relation between Wall Street and the REAL economy.
06:12 AM on 03/06/2009
True, but it's more insideous:

Sell short contract. Buy small amount of actual stock, contract to sell same stock below market, manipulating market down at a a small loss on the real holding, create HUGE profit on the short contract. All the while having ABSOLUTELY NOTHING to do with the value of the company that issued the shares.

BAN SHORT SELLING - Wall Street problem solved.
07:19 AM on 03/06/2009
>> BAN SHORT SELLING - Wall Street problem solved.

How juvenile.

Actually, short selling is banned on mainland China, and a few other countries and see where their indices are today - nearly 65% down from a year ago.

There is no correlation between short selling and market direction.

However, I do agree that naked short selling (short selling without borrowing shares) should be banned.
07:46 AM on 03/06/2009
For every seller there is a buyer.
03:08 AM on 03/06/2009
Nothing would create a better disincentive for the short sighted Vegas mentality that has overtaken our financial markets than to reformulate the capital gains tax.

Graduating the tax from a high of 95% on profits derived from assets held less than 7 days down to 2% on assets held a decade or longer would encourage a little more buy and hold long term focus on fundamentals, and discourage the idea of trying to profit on moment to moment, meaningless price fluctuations. It would also encourage companies to make smart long term decisions rather than short term actions designed to do nothing other than to immediately alter the share price
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Mogamboguru
I am a liar. Don't believe me.
05:10 AM on 03/06/2009
A very good proposal!

Did you ever consider to email it to

http://www.whitehouse.gov

to let the Obama-administration know of it?

Emailing them works! Since president Obama took office, the White House really READS and REACTS to emails, as several posters here at HP have stated already.

Try it, please - it's really worth it!
06:18 AM on 03/06/2009
Uhmmmmmmmmm this so called "proposal" has been in the books as longs as forever maybe. In fact, you can open an elementary economics book, and it's there.

Unfortunately, the President is just focused on Geithner and Summer who accumulated their wealth through the opposite mentality - profit on moment to moment speculative investments. Both are on call 24/7 at the WH to advise the President to speculate, and only drove the economy spiraling down. The President will not even listen to Stiglitz, Galbraith, or even Krugman,

This buy and hold for the long term investments failed to protect those elderly who just about held their investments, retirements, pensions for their golden years.

THEN ALL OF THE SUDDEN - sub-prime lending and bundled up toxic assets just about left them with nothing.

So go ahead and hero worship, let the President knows there are blind subservient fools and build the WH ego.

I would like the President to stop those oratorical BS, and start getting real. The situation is critical to say the least. If only oratorical BS would save the day . . . . . . . . . . . . . . . . . IT WILL NOT.
07:49 AM on 03/06/2009
That is actually a great idea. Mutual funds used to have a rule where no more than 30% of their gains could arise from assets held for less than three months. It was an attempt to reduce heavy portfolio turnover. This regulation has been lifted, however, although mutual funds (which are heavily regulated by the IRS and SEC unlike hedge funds) are not a major culprit in shorting.
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Carolab
Just another hostage of the poopy heads
02:23 AM on 03/06/2009
Whoever blew this whistle, thank you.
06:35 AM on 03/06/2009
Hi - thanks for the opensecret.org link. No wonder these big companies, Banks, CEO's insurance companies, lobbyists have strong hold to our economy and the PRESIDENCY - they in fact own the WH, Democrats and Republicans alike. I printed most of it and will distribute them to my colleagues at the Alumni Association. If we have to hit the train, subways, malls, and campus again . . . . .

People just take for granted their huge contributions are as American as apple pie - but were just about blind about the extent and widespread corruptions and the pay for play - starting to the President down to county officials. SHAME TO THE HIGHEST ORDER.

@ 27, I honestly believe voting for leaders of integrity and honest, of beliefs that public service is still an honorable profession, and of late that mantra: change we can believe - are just meaningless words.

((((((( i hope my generation will survive this ))))))))).
01:40 AM on 03/06/2009
Wow, and the only cool part is how a hedge fund (that we're gonna own) named after two long defunct horseless carriage manufacturers is making an offer to a manufacturer that is actually still building cars! Seriously, how cool is that!
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dadw5boys
Disabled Vietnam Vet
01:38 AM on 03/06/2009
INSIDERS TRADING IS ILLEGAL !!!!

THEY KNEW 2 DAYS AHEAD OF TIME !!!
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HUFFPOST COMMUNITY MODERATOR
msjimmied
01:33 AM on 03/06/2009
Trust me, you want to see this...naked short selling, phantom shares...

http://video.google.com/videoplay?docid=4490541725797746038
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HUFFPOST SUPER USER
Carolab
Just another hostage of the poopy heads
02:25 AM on 03/06/2009
It looks like the SEC is planning to restore the uptick rule.

http://www.cnbc.com/id/29388866?__source=RSS*blog*&par=RSS
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PhilipTaylor
SEARCH FOR: POLITICS QUICKER THAN ANYWHERE ELSE!
03:10 AM on 03/06/2009
An important small victory against short sellers!
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HUFFPOST SUPER USER
PhilipTaylor
SEARCH FOR: POLITICS QUICKER THAN ANYWHERE ELSE!
02:36 AM on 03/06/2009
I have been looking for this video for over a year! Thank you so very much!

Everyone should see this as it strikes at the HEART of what has NOW BEEN transferred to the BIGGEST COMPANIES on the Markets!

It is what is costing the TAXPAYER his Life's Savings in retirement plans and Taxpayer Bailouts!

Is shows WHY COX Should be Prosecuted and Punished!

The other Tools for doing this are LEVERAGED SHORTS and in a different way Credit Default Swaps, CDS!
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Carolab
Just another hostage of the poopy heads
02:46 AM on 03/06/2009
MANIPULATION of the market. Happening now, too--no doubt the Portal Alliance facilitates it, surely, all under the radar of the SEC and the public.
01:33 AM on 03/06/2009
The only big problem is that Morgan is collecting huge fees for restucturing Ford's debt.