In honor of the Occupation of Wall Street.

All sorts of people have different reasons for hating Wall Street. The reasons for protest and anger at Wall Street and what it represents are a broad spectrum (as are reasons for support).

Personally, I think that Markets as a concept are truly valuable, and represent the best way to set prices. However, what I see today suggests that Wall Street has distorted and twisted Global Markets so badly, that I wonder if they'll survive for another year.

To keep focus, I'm just going to refer to one particular part of today's market operations that I think is at least a highly significant distorting factor in Global Markets as Wall Street has defined them over many years.

Naked Short Selling.

Moments ago, I read the best and clearest description of the process of Naked Short Selling that I've ever seen.

http://www.deepcapture.com/category/4-the-crime-naked-shorts-other-insincere-ious/

In brief, when you buy a share of Stock, Naked Short Selling is when the seller of that Share DOES NOT DELIVER the share to you. Instead, the system logs a "fail-to-deliver" and essentially, you receive an IOU for that share. I'm not making this up.

To you, an IOU in your account looks exactly like you were the owner of a share. You can sell it to someone else or keep it, just like you could a normal share. Theoretically, the seller has 3 days to deliver a share prior to it becoming a "Fail."

Now, imagine that a Public Company issued 100,000 shares of stock and sold these on the market. Theoretically, the price of those shares should reflect the supply and demand for those shares. However, if IOU's can be added to the system, then the "supply" of shares is essentially increased. For instance, if you bought 10,000 shares of the above company's shares, and you only received IOU's, then there are actually 110,000 company shares equivalent floating around on the market for trade (until the seller "covers" and buys back 10,000 shares for actual delivery). This has the potential to break the Market's ability to correctly price shares of stock, particularly when it is specifically used by Brokers, Bankers, and Hedgies to destroy companies and steal money from their investors.

It is actually illegal to do this, but it is done anyway, particularly since, though Naked Short Selling for Manipulation of Prices is actually illegal, it's almost impossible to prove in court.

http://www1.law.nyu.edu/journals/lawbusiness/issues/uploads/5-1/NYB103.pdf

Even if I have every reason to believe that shares aren't being delivered to me, there's no way for me to ever know who is selling me junk. Proving to a Court that an investor has "Standing" to sue some company over NSS is an almost impossible hurdle, and beyond that there are other major difficulties, not the least of which is that the actual records of who is selling to who is stored at the DTCC (Depository Trust Clearing Corporation (recently downgraded by S&P)), which is a Private Company, owned mostly by the big banks, and they won't provide that information to anyone. Not even courts have been able to break that shell (long story, ready the nyu article).

For my part, I've been putting together data on Fails, and Short Volume (as well as traditional pricing data) at http://www.dailyshortvolume.com (Fails are in purple). It's a work in progress, and there's much work to do in making things clear and well defined.

JIMMY'S GONNA GET YOU KRAMER!

Why do I get the sense that when Republicans use the term "the American People," they're actually just speaking in third person. I know that there are some that agree with the respective claims are made in the name of the American People, but the way they use the term, it's as if they think they are speaking for EVERYBODY, and people like me don't actually exist. Ok, so this kind of language comes from both directions, but these days it seems particularly shrill and suggestive that they are the only Americans; that the rest (of us) are EVIL Socialists, Fascists, or Communists aiming to destroy America.

Good speech!

And Juan Williams on Fox can STFU about concern that this is in some way "Intimidation" of the Supreme Court.

There is absolutely NO reason that it is inappropriate for the President to suggest that a bad decision was made by the court, and that there would be negative consequences as a result.

Glenn Beck...

He's got African Americans on his show (that seems to be the point of the show today). Two who voted for Obama, one who didn't.

Whatever.

Anyway, he had a little video shot in Harlem and the fellow was talking about how much it's changed (for the better) since he was growing up there.

Hmm... what was unsaid (and surely unthought, because Beck is a truly ignorant fool), was the fact that a big part of what's happened in that particular neighborhood over the last 10 years or so, is thanks to... Bill Clinton.

People were giving Bill Clinton hell for his projects in New York after his Presidency, and of course, much of that renovation was a direct result of Bill Clinton's policies in support of renovation investment and removing the "red lines" that had been drawn around minority neighborhoods by lendors (Banks).

Of course, the same Bill that did this also sparked the Derivatives bubble that just crashed. Oopsies.

Gun-totin' Freaks...

Ok, so I am actually appreciating these gun toters that protested at Obama's event.

It appears that they forewarned, and have been generally responsible.

Ultimately, they do have the right, and they're making use of it and testing it.

So, it puts Obama at potentially higher risk, and the Secret Service is probably experiencing some extra stress, but so be it, it's the way it should be.

Honestly, I don't have a bunch of quotes from any of the armed folk, but that doesn't matter. Even if they were total freaks, I think that as long as there's no shooting then they are doing something potentially valuable.

As for Obama and his people, I think it shows some class on their part. They don't seem to be overreacting to the situation, and so are supporting the 2nd Amendment.

I just can't help but suspect that under GW, if I and a bunch of the Liberals around here were to pack a bunch of weaponry anywhere near a Bush Event, we'd be in jail in a heartbeat, even if what we were doing was technically perfectly legal. The Bush Administration wasn't known for its grasp of subtle technical details of Law.

Now, if a bunch of Conservative Rednecks were carrying weapons around Bush, that wouldn't be a problem... unless of course, it was Dick Cheney.