Vol. 20, No. 5,022 - The American Reporter - July 22, 2014




by Constance Daley
American Reporter Correspondent
St. Simons Island, Ga.
September 21, 2008
Constance
CELEBRATING IKE

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BRADENTON, Fla., Sept. 17 (Updated Sept. 18, 2008) -- As some of the world's largest financial institutions are marched one by one to the Federal Reserve's lending window to pick up bailouts, bridge loans, cheap cash and the rest of our money, the orderly queue is getting ready to go wild. Washington Mutual is next in line, followed by Morgan Stanley and then Goldman Sachs - but who's the last before the Fed goes broke?

As unregulated short sellers usher each of these venerable if terribly compromised institutions to their costly death, Americans who pay the taxes that get turned over to them still aren't asking many questions. The reason, I think, is because we have lost our sense of history, and our ability to recognize patterns that repeat themselves again and again in markets all over the world.

That may be a good thing.

What happens is that the voracious wolves who make a living by selling short the stocks of thousands of American companies finally become so good at their work that it becomes impossible to resist their strategies in a regulated, democratic setting. Authoritarian regulation - the suspension of equity rights - looms as an answer. Until just yesterday, the SEC failed to make sure short sellers had actually borrowed and could deliver shares sold short. What they call "naked shorts" allowed them to sell millions of shares they don't own, stripping their targets naked in the process. Brokers and regulators were in cahoots with them.

Only yesterday did >the SEC definitively address an issue that has been festering for years in Over The Counter and Pink Sheets trading; there, where the wolves honed their skills, only the little guys were hurt, and the SEC didn't really care about them. The sad thing is that a thousand honest entrepreneurs trying to build new public companies with innovative products that might have changed the world we live in died needlessly for the SEC's irresponsibility in not acting when it new trading rules were regularly being broken.

Then the plums grew ripe on the best trees. Giant banks and investment houses started trading dangerously crazy new financial instruments that were the equivalent of "a pig in a poke," bags of securities based on bad loans that were too numerous and too well-concealed to identify as hedge funds and others traded them at lightning speed around the globe. The short sellers began to pluck them in their prime, one by one. The markets cheer each rescue with a sharp one-day gain, and then get pushed down again the next as sellers say, "You have to give us more!" And the Fed finds more every time.

Many short sellers work in rings that may be sponsored by foreign governments, the Mafia, ad-hoc gangs based on Wall Street, or short-seller "clubs" that spring up on the Internet, trade information and work together to bring down their prey of the day. There are legitimate short sales, where stocks are actually borrowed and delivered within three days, but these rats use inside information that is often half-true, or even false, and never borrow the shares they're supposedly required to deliver (or lie to their brokers about having borrowed them).

It can take just a couple of days, a half-baked rumor printed in a newspaper and some ready money to get the ball rolling. By the time the attack is in full swing, the target company is losing tens of millions of dollars in market value every hour, and their own lenders are calling in loans based on what had been the high value of their stocks. It's that cash crunch that sends them seeking cash loans from someone, and in the case of the giants, to the Federal Reserve Bank of the United States.

The victim, if it's a bank, an investment house or a giant insurance company, ultimately goes to the Fed's "open window" to seek rescue, even though their weaknesses, oversights, poor planning and actual falsification of filings and accounting documents may have empowered some of the very groups that bring them down. The Fed more oten than not bails them out with our money.

For the players, a margined million-dollar investment in a $10 stock grows by $100,000 every time the stock falls a dollar. Like a bull elephant with a lion at its throat and jackals on his back, is brought down grievously wounded or dead. Then they are on to the next slow, lumbering, ultimately defenseless giant, each promising a rich ride to the bottom. Goldman Sachs? - Ah, a $100 downward ride, profits multiplying by the minute. There is a certain "natural order" to it, but one that casts off the veneer of civilization great corporations like to cultivate and reveals all the players as hungry, desperate beasts. Many are betrayed from within.

Who better to wreck AIG, Bear Stearns or Lehman Bros., for instance, than an inner ring of company traders who can use internal documents to read - and then surreptitiously post - the writing on the wall? Honest traders - who average $260,000 a year - watch their savings, pensions, investments and homes disappear as less finicky colleagues play their own companies short to the richly-rewarded end.

I remember one case when the trader involved, a fellow named Patrick Delaney, was actually nominated to the board of the SEC, where he would have had the power to make millions through manipulation. He had run up a nearly worthless uranium stock named Westec from $3 to $73, and his old man - Congressman John J. Delaney, a Republican from Queens with Democratic endorsement who was next in line to chair the House Rules Committee - admitted to me that "I may have" made $100,000 on his son's tips before the grift went bust. I exposed his play in the Village Voice and President Ford then withdrew his nomination, which had been seconded by the Majority Leader of the Senate and the Speaker of the House. Even back then, folks in Washington didn't have much but cotton stuffed between their ears.

People forget the long involvement of American International Group with mob-controlled Hollywood banks, studios and other institutions, a situation I was writing about in the early '80s for a short-lived journal called Film News International. They published my story - four years in the making - only after the LA Weekly chickened out, another publisher went bankrupt - and then they went bankrupt, too.

What I have never heard or read before is that AIG supposedly "had its roots in China," according to a Maria Bartiroma report on CNBC yesterday, when founder Hank Greenberg appeared on the financial channel.

According to Wednesday's Wall Street Journal, AIG founder Maurice "Hank" Greenberg began making pals in China in 1975, and was "one of the first foreign business executives to offer support to China's leaders in the wake of the Communist Party's violent 1989 crackdown on protestors in Beijing's Tiananmen Square." In Oct., 2005, the Journal said, Shanghai Mayor Han Zheng had been "an old friend" of China and that his successor was "a new friend." To me, that would mean Greenberg is a pawn in the destruction of the U.S. economy the Chinese have engineered, and is tied to triads and other Chinese mobsters, including some in governent.

Remember the four-star general then sitting on the Politburo who gave Bill Clinton $300,000 in campaign funding through an Indonesian cutout? I exposed that general's gifts when I found that the Panda Real Estate Investment Trust, in my own Hollywood, Calif., 90028 zip code (I was searching in the Federal Elections Commission donations database at the time) - had given $100,000 dollar gifts to our President. Knowing what they were, I alerted George Eliot of the then-new, Internet-based Open Source Intelligence Quarterly, and FBI taps at the Chinese Embassy in Washington proved me right. Imagine the manipulation that could have created; as it was, Clinton let Loral Corp. turn some of our most sensitive nuclear weapons missile technology - actually, the programming for MIRV weapons - over to the Chinese government. Now they more or less own the United States, if you want to face reality. If you don't, let's just say they own a lot of us.

Don't get me wrong - the Republicans are even worse. They could only see the profit side of the general ledger of history when they allowed themselves to slide into indentured servitude to the Chinese, who freely ship us garbage we cheerfully stock in our stores until it turns out to be poisonous, toxic, contaminated, dangerous.

But the Chinese economy, built on slave labor and mass virtual castration - i.e., the strictly enforced one-child-per-family rule that created its worker-consumer culture, a dragon that eats its own tail - is crumbling, too, under 10 percent growth that pushed its rural population too far, too fast, into high inflation and widespread unemployment. Nowhere has the principle of entertaining the masses while undermining their families been more successful than at the 2008 Beijing Olympics.

Who is out there monitoring the underhanded, deadly greed-driven machinations of a trillion-dollar, Chinese-assisted crooked insurance company, and three or four other large firms like it, that are stuck with endless billions of bad debt and want to hang it on the American people via the Fed? Who is monitoring, for instance, the rings of Chinese or Russian or European or American short-sellers who use inside information to exaggerate and amplify in the financial news underground of the Web, panicking investors, while Bartiromo and pals echo John McCain and insist the "fundamentals are strong?"

To their credit, two CNBC anchors worked over the head of Standard & Poor's bond and credit rating service, a man from India named Dhru who gamely evaded most of their questions. They started asking some of the right ones. They wanted to know why, now that S&P was downgrading stocks like Morgan Stanley and forcing it to put up more collateral - with capital they have to borrow billions at high rates to get - should we believe S&P's ratings and counsel are any better than when the same firms were rated AAA just a few months ago? "HE WAS A SCARED RAT ANIMAL," one blogger on the Yahoo Washington Mutual board declared in capital letters. Did you think a desperately poor Asian economy of a billion people could not produce at least one who would eat our Wall Street boys alive?

"You were wrong then, and you're wrong now," one of the angry anchors told Dhru, who in his affable Indian way schmoozed his way through the hailstorm with relative ease. But who is asking the question I ask, having watched how Reliant and Enron ran off with California's state surplus of $21 billion in a matter of months through energy futures fraud?

Then, California's Gov. Grey Davis was paralyzed by $3 million in contributions he'd gotten from California utilities, a debt that prevented him from seizing the utilities for the public good before the surplus ran out. And that question is, why don't you think Dhru and S&P and all these other crooks who vastly exaggerated all those now worthless holdings aren't surreptitiously working together, pumping them up on one end and dumping them on the other? Because they haven't been caught yet?

Doesn't anyone know a racket when they see one? And don't those racketeers understand that an even bigger player is playing them, against our country?

The American taxpayer, being played for the ultimate sucker by a horde of vicious, greedy wolves, passively watches his nation's economy and his own future dwindle away to nothing as the barons of Wall Street roll away from the door with $100-million paychecks - literally, yesterday, at Merrill Lynch.

That's why I say it may be a good thing the American people and their supposed regulatory guardians, who are collectively dumb as a post, are still tuned in to the latest O.J. Simpson trial and the Sarah Palin show.

Otherwise, they might be as angry as I am.

Joe Shea is Editor-in-Chief of The American Reporter, the first daily newspaper to originate on the Internet (on April 10, 1995).

Copyright 2014 Joe Shea The American Reporter. All Rights Reserved.

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