The below commentary by Karl Denninger, winner of Accuracy In Media’s 2009 Reed Irvine Award for Grassroots Journalism, is a harrowing prediction of the cataclysm that lies imminently ahead for America, unless our government takes immediate steps to stop Wall Street/ international gangsta banker speculator manipulator terrorists from further shorting, distorting, counterfeiting, defrauding and looting our country (and the rest of the world) to death.
Denninger’s views on the underlying causes of our financial calamity (massive government-enabled-complicit lying, cheating and stealing) have long been unequivocally forewarned by numerous others, most notably at www.deepcapture.com and www.thesanitycheck.com but consistently deprecated, dismissed and/or altogether ignored by both government and our sadly misnomered “free” press and media.
As Denniger say: “it all goes back to Washington DC being unwilling to lock up the crooks”– to which I’ll add, or to simply enforce the banking and securities laws and regulations already on the books, that were specifically enacted to prevent exactly the kind of criminal activities that have brought us today to the brink of utter disaster.
If the public only knew how grossly they have been systematically betrayed, misled, lied to and stolen from (and one day they surely will)– the identities of all those who looked the other way (or worse) and helped bring about the destruction of their jobs, pensions and hopes for a decent future– what do you suppose their reaction would/will be?
The truth is out there– and rather easy to discern for anyone interested. Are you?
What’s Dead (Short Answer: All Of It) 3/5/09 by Karl Denninger
Just so you have a short list of what’s at stake if Washington DC doesn’t change policy here and now (which means before the collapse in equities comes, which could start as soon as today, if the indicators I watch have any validity at all. For what its worth, those indicators are painting a picture of the Apocalypse that I simply can’t believe, and they’re showing it as an imminent event – like perhaps today imminent.)
- All pension funds, private and public, are done. If you are receiving one, you won’t be. If you think you will in the future, you won’t be. PBGC will fail as well. Pension funds will be forced to start eating their “seed corn” within the next 12 months and once that begins there is no way to recover.
- All annuities will be defaulted to the state insurance protection (if any) on them. The state insurance funds will be bankrupted and unable to be replenished. Essentially, all annuities are toast. Expect zero, be ecstatic if you do better. All insurance companies with material exposure to these obligations will go bankrupt, without exception. Some of these firms are dangerously close to this happening right here and now; the rest will die within the next 6-12 months. If you have other insured interests with these firms, be prepared to pay a LOT more with a new company that can’t earn anything off investments, and if you have a claim in process at the time it happens, it won’t get paid. The probability of you getting “boned” on any transaction with an insurance company is extremely high – I rate this risk in excess of 90%.
- The FDIC will be unable to cover bank failure obligations. They will attempt to do more of what they’re doing now (raising insurance rates and doing special assessments) but will fail; the current path has no chance of success. Congress will backstop them (because they must lest shotguns come out) with disastrous results. In short, FDIC backstops will take precedence even over Social Security and Medicare.
- Government debt costs will ramp. This warning has already been issued and is being ignored by President Obama. When (not if) it happens debt-based Federal Funding will disappear. This leads to….
- Tax receipts are cratering and will continue to. I expect total tax receipts to fall to under $1 trillion within the next 12 months. Combined with the impossibility of continued debt issue (rollover will only remain possible at the short duration Treasury has committed to over the last ten years if they cease new issue) a 66% cut in the Federal Budget will become necessary. This will require a complete repudiation of Social Security, Medicare and Medicaid, a 50% cut in the military budget and a 50% across-the-board cut in all other federal programs. That will likely get close.
- Tax-deferred accounts will be seized to fund rollovers of Treasury debt at essentially zero coupon (interest). If you have a 401k, or what’s left of it, or an IRA, consider it locked up in Treasuries; it’s not yours any more. Count on this happening – it is essentially a certainty.
- Any firm with debt outstanding is currently presumed dead as the street presumption is that they have lied in some way. Expect at least 20% of the S&P 500 to fail within 12 months as a consequence of the complete and total lockup of all credit markets which The Fed will be unable to unlock or backstop. This will in turn lead to….
- The unemployed will have 5-10 million in direct layoffs added within the next 12 months. Collateral damage (suppliers, customers, etc) will add at least another 5-10 million workers to that, perhaps double that many. U-3 (official unemployment rate) will go beyond 15%, U-6 (broad form) will reach 30%.
- Civil unrest will break out before the end of the year. The Military and Guard will be called up to try to stop it. They won’t be able to. Big cities are at risk of becoming a free-fire death zone. If you live in one, figure out how you can get out and live somewhere else if you detect signs that yours is starting to go “feral”; witness New Orleans after Katrina for how fast, and how bad, it can get.
The good news is that this process will clear The Bezzle out of the system.
The bad news is that you won’t have a job, pension, annuity, Social Security, Medicare, Medicaid and, quite possibly, your life.
It really is that bleak folks, and it all goes back to Washington DC being unwilling to lock up the crooks, putting the market in the role it has always played – that of truth-finder, no matter how destructive that process is.
Only immediate action from Washington DC, taking the market’s place, can stop this, and as I get ready to hit “send” I see the market rolling over again, now down more than 3% and flashing “crash imminent” warnings. You may be reading this too late for it to matter.
from: from: http://market-ticker.denninger.net/authors/2-Karl-Denninger
Off the wires, no link.“DJ reports GE Capital credit default swaps worsen even as GE released a statement emphasizing its strong cash position. The CDS are most recently quoted at 17.5 points up front, from 16.5 points up front earlier today, according to Phoenix Partners Group. That means investors must pay $1.75 mln up front, plus a $500,000 annual fee, to protect $10 mln of GECC senior bonds against default for five years.”That means the first year cost is $1.75 + $500k, or $2.25 million.That’s 22.5% first year cost to insure $10 million against default!This means that the market is saying that the odds of GE going bankrupt within the next twelve months is greater than one in five, and that assumes zero recovery.
If the bonds would recover more than 80% in the event of a default then it is implying more than a 100% risk of default, which is obviously impossible.
This is occurring despite GE’s CFO appearing this morning on CNBC making the case quite clearly that there is no risk of default under any materially possible scenario. In other words, his assertion is that the odds of default are zero.
One of two things must be true:
- GE’s CFO is lying and must be indicted for doing so.
- This so-called “market segment” (CDS) has become so ridiculously overlevered, unsupervised and able to cause failures that it is now within days or even hours of CAUSING GE to fail – not due to GE’s own internal problems, but due to positive feedback that the CDS market is capable of and is generating on the initiative and as a consequence of the action of participants in that market.
Either way a major change needs to occur right here and now, lest we find ourselves with no pensions, no Social Security, no Medicare, no annuities and no government.
THIS CAN NO LONGER BE DELAYED OR TOYED AROUND WITH; WHEN “THE BEZZLE” REACHES THE POINT THAT IT STARTS DESTROYING THE NATIONAL CORPORATE INDUSTRIAL GIANTS THAT MAKE UP OUR ESSENTIAL INFRASTRUCTURE, MILITARY AND COMMERCIAL ENTERPRISES THROUGH NO FAULT OF THEIR OWN IT IS A NATIONAL SECURITY EMERGENCY AND MUST BE DEALT WITH IMMEDIATELY.
Ok tinfoilers, this is not what you think it is; I’m sure many of you came here and started to read because you thought I was going to rant about fractional reserves or the lack of “sound money.”
Sorry, no dice.
No, I’m going to talk about the inherent fraud over the last five or so years in the housing (and other lending) markets, and it is NOT where you think it is.
It is, in fact, in both the accounting treatment and assumptions that were in fact made by both borrowers and lenders – simply put, they are nowhere near the same.
Let’s start with a proposition: A “mortgage” is a loan made against real property with the original intent that the borrower will pay as agreed under an amortization schedule to maturity, interrupted only by significant life events such as relocation, unemployment leading to bankruptcy, divorce or serious medical illness.
With that assumption we can model the performance of a mortgage under all economic conditions, since we can draw upon history to get a fairly good idea of what unemployment rates might be, we know what relocation rates tend to look like, serious uninsured medical illnesses have an actuarial component and the like.
With that modeling in the bag we can then configure up a securitized structure that provides whatever level of protection is desired against these events, and from there yields will flow (more for the riskier sides, of course.)
Now let’s add, however, what was actually sold to people during the last four or five years.
The premise that the “homeowner” was sold had nothing to do with the above concepts. Instead, that “homeowner” was sold the following by both bank and non-bank mortgage companies:
- You do not need to have “skin” in the game; we will loan you 100% of the “current market value” of the house.
- You are not presumed to be interested in paying this original note to maturity. In fact, we fully expect you to come back here in two years or so and refinance the note – at or before when the payments reset.
- We know (2) will happen because we’re giving you a “teaser rate” and/or we have negative amortization features in the loan which are subject to caps; both of these events, when (not if) they expire, will cause an immediate and dramatic rise in your required payments.
- To make (3) worse, we’re qualifying you on the initial payment amount, not the fully-amortized reset/recast schedule.
- And to make (4) even worse, we’re not verifying that you can even make the initial payment; we’re going to take your word for it.
Now dice and slice up loans made under those five principles and try to model the outcome.
See a loan made to someone on the premise that it will be refinanced and for which there is no equity cushion provided by a significant down payment is entirely Dependant on one thing – the market price of the underlying asset must continually increase at a rate that exceeds the negative amortization, if any, plus all costs of the refinance.
The problem isn’t so much the making of these loans – it is the misrepresentation of what they are. Balloon mortgages, which in fact is what these constitute, have been a part of the lending landscape forever. They were, in fact, what blew up in the 1930s – they were the “preferred” mortgage in the “Roaring 20s”.
But everyone knows that those loans blew up in the 1930s, and they were prevalent in the Roaring 20s. That is, anyone with a brain. Thus, you couldn’t have sold mortgage-backed securities packaged up out of balloon notes without a significant extra yield premium.
So most lenders quite simply lied.
But not all.
Look at Berkshire’s 2008 Letter (just issued, recapping the 2008 performance of Berkshire Hathaway). There is a very interesting piece in there about the financing performance of Clayton Homes, a Berkshire company that makes “manufactured housing”:
Clayton’s 198,888 borrowers, however, have continued to pay normally throughout the housing crash, handing us no unexpected losses. This is not because these borrowers are unusually creditworthy, a point proved by FICO scores (a standard measure of credit risk). Their median FICO score is 644, compared to a national median of 723, and about 35% are below 620, the segment usually designated “sub-prime.” Many disastrous pools of mortgages on conventional homes are populated by borrowers with far better credit, as measured by FICO scores.
Yet at yearend, our delinquency rate on loans we have originated was 3.6%, up only modestly from 2.9% in 2006 and 2.9% in 2004. (In addition to our originated loans, we’ve also bought bulk portfolios of various types from other financial institutions.) Clayton’s foreclosures during 2008 were 3.0% of originated loans compared to 3.8% in 2006 and 5.3% in 2004.
Quite simple, really. Even though Clayton’s customers have crappy credit on average, they were forced to put down a meaningful amount of money from savings, and cannot borrow it somewhere else. They bought with an amortized payment, not one that will turn into a hydra in a couple of years and choke you – just before consuming you whole. They did not assume they could refinance and Clayton refused to lend to people on that basis; rather, they assumed that they would pay as agreed, from start to finish, based on current income, not based on some pie-in-the-sky future wish.
As a consequence Clayton’s securitized mortgages have performed reasonably well. The reason is simple – the company actually promised to its securitized buyers the same thing they sold to its borrowers and was able to model the actual credit risk involved from “life events” – statistical models that actually are valid.
It appears that The Huffington Post has picked up on some of “The Bezzle”; in this article from the 23rd which I had previously missed:
“Whatever happened to the law (Title 12, Sec. 1831o) mandating that banking regulators take “prompt corrective action” to resolve any troubled bank? The law mandates that the administration place troubled banks, well before they become insolvent, in receivership, appoint competent managers, and restrain senior executive compensation (i.e., no bonuses and no raises may be paid to them). The law does not provide that the taxpayers are to bail out troubled banks. Treasury Secretary Paulson and other senior Bush financial regulators flouted the law. (The Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) are both bureaus within Treasury.) The Bush administration wanted to cover up the depth of the financial crisis that its policies had caused.”
Yep, but it is not policies that were in play here, it was willful inaction that then “compelled” the disaster-capitalism nonsense.
Let’s look at what’s in Title 12 Ch16-Sec1831:
“(3) Critical capital
(A) Agency to specify level
(i) Leverage limit Each appropriate Federal banking agency shall, by regulation, in consultation with the Corporation, specify the ratio of tangible equity to total assets at which an insured depository institution is critically undercapitalized.
(ii) Other relevant capital measures The agency may, by regulation, specify for 1 or more other relevant capital measures, the level at which an insured depository institution is critically undercapitalized.
(B) Leverage limit range
The level specified under subparagraph (A)(i) shall require tangible equity in an amount—
(i) not less than 2 percent of total assets; and
(ii) except as provided in clause (i), not more than 65 percent of the required minimum level of capital under the leverage limit.
(C) FDIC’s concurrence required
The appropriate Federal banking agency shall not, without the concurrence of the Corporation, specify a level under subparagraph (A)(i) lower than that specified by the Corporation for State nonmember insured banks.
And later on in the same law….
(1) Capital distributions restricted
(A) In general
An insured depository institution shall make no capital distribution if, after making the distribution, the institution would be undercapitalized.
(2) Management fees restricted
An insured depository institution shall pay no management fee to any person having control of that institution if, after making the payment, the institution would be undercapitalized.
This is really pretty simple – there must be a leverage limit and the OTS, OCC and FDIC must enforce that limit to insure that banks do not fall into being undercapitalized.
Further, no bank may make a capital distribution (pay a dividend) or pay a management bonus if before or after doing so it would be undercapitalized.
Where has this supervision been?
Note that Geithner and President Obama have continued this nonsense, and Geithner is one of the people personally culpable for ignoring the law in the first place.
What will stop this blatant lawlessness?
Certainly not Congress. Ben Bernanke was before Congress this last week and guess what: Not one question about the law compelling him (and the other regulators) to act before banks become insolvent.
Now President Obama has released his budget which provides for even more bailouts – a potential $750 billion “second round.”
Yet the law under which we are supposed to operate in this country makes clear that this sort of policy decision is directly contrary to statute; instead, the law by its black letter requires banks to be taken into receivership before they become insolvent.
And oh by the way, the regulators are not allowed (by that law) to ignore off-balance sheet obligations either. Uh uh – they are required to take action before the insolvency occurs irrespective of how – and they did not.
In fact the banks have self-declared their non-compliance with that statute as noted in The Ticker right here (“Our Tier 1 Ratio Is Strong!”) once again last night!
This “self-declaration of insolvency” in fact goes back to Washington Mutual’s original 1Q 2007 report that set me off and started me writing Tickers back in April of 2007!
We are in fact talking about what amounts to nearly two years of this nonsense to date, and through the fall of 07 into the early part of 08 the MLEC garbage (and friends after it went down in flames) makes clear that regulators, including Treasury and The Fed knew exactly what the state of these firms was and willfully ignored it.
There is not a policy “decision” allowed here guys and dolls – this is black letter statutory language that compels a certain set of actions – statutory language put in place after the last time we were here (the S&L crisis) that was intended to prevent the damage ($150 billion) that was done to our nation the last time!
This time around we’re at $750 billion with another $750 in “placeholders” in the budget – that is, fully ten times as much damage, and yet the black letter law of the land says that this approach is directly contrary to the statute.
This goes back to my speech Thursday night – the underlying reason we have seen a market collapse is not due to economic recession.
Recessions are not “abnormal”; they come about due to the human condition – people are both too ebullient and too fearful. “Animal spirits” include both reaching for a brass ring and cowering in the corner, contrary to the Wall Street myth that such is only a “positive” thing.
No, we have seen this collapse because “The Bezzle” has reached into literally every corner of our financial system and government and nobody has been held to account.
When the S&L crisis happened only a few people went to jail, even though thousands committed felonies. When the Internet Bubble blew up only a few went to jail even though it is trivially easy to identify thousands who flatly lied about growth metrics – and that’s just one place they were lying in their annual and quarterly reports.
As we have continued to tolerate “The Bezzle” it has become clear to people in all financial areas that they can lie and get away with it. That the odds of being caught, say much less prosecuted, are so trivial that it’s definitely worth the risk.
Would you risk going to a cushy federal prison for five years if you could make $100 million dollars and the odds of getting caught were 1 in 10,000? How about if the odds are the same but the profit is only $100,000? In both cases many people would and did; home “buyers” overstating incomes are the second case, and sellers of money who intentionally misrepresented what they were selling (up and down the line) fall into the first. Indeed, the FBI’s own statements on this matter is that if you were engaged in “fraud for housing” (that is, you robbed a bank in order to live in a house) they aren’t interested in coming after you. It is only the serial fraudsters who were engaged in fraud for pure monetary profit across many transactions that they’re arresting – and then, only if you’re the borrower.
Now contrast that with robbing a bank the “old fashioned” way (with a gun.) You might get away with $100,000. But the odds of getting caught are much higher than 1 in 10,000 – in fact, they’re probably at least 1 in 4, and maybe worse. If you do get caught you’re going to do 20 years in a nasty place where prison rape is considered a sport and what’s worse, if you’re in a state like Florida, you will get a mandatory, no-early-release extra 10 on your sentence if a firearm is involved.
While people do still rob banks with a gun there are far more people who “robbed the bank” using a pen and piece of paper instead during the last five years – some of them “home buyers”, some of them mortgage brokers and some of them bankers both on and off Wall Street.
Now let’s mark this disconnect a bit more.
There is absolutely a price on human life. Doubt that? Go visit a hospital. People with no hope can and do obtain a million dollars or more of free (to them) medical care. OJ Simpson was sued after he won acquittal for the murder of his ex-wife and ordered to pay money damages, establishing that there is a value on human life, and we can and do reduce that value to dollars in our justice system.
So why is it that we refuse to apply the same standard when it comes to sentences? Nicole Brown Simpson’s children, Sydney and Justin, were awarded $12.5 million dollars after OJ Simpson lost his civil case.
So we have a “reasonable boundary” for a human life – $12.5 million dollars. Other verdicts have found larger and smaller amounts, but this makes a nice, public and well-documented figure.
Does this not provide all the evidence you need that should someone manage to steal (in aggregate) through fraud more than $12.5 million dollars that they should get, at minimum, “20 to life” in prison? That is, a sentence equal to the least stringent for homicide?
How many of these fraudsters would have committed these offenses, and how many would in the future if this was the penalty? Commit a fraud worth $12.5 million or more, bye-bye. Oh, and we’ll take the $12.5 million from you (since you stole it) to pay for your imprisonment too!
This – up and down the line – from the intentional lack of prosecution to willful refusal to follow the law to utter stupidity in criminal sanction – is the essence of “The Bezzle” and it is why capital has fled.
It also, however, points out an essential truth about any future recovery in our economy and banking system – it won’t happen until “The Bezzle” is muzzled to a significant degree.
It is too much to expect that we will ever get rid of “The Bezzle” entirely. That’s simply not going to happen – there will always be cheats, liars and frauds.
However, until those who commit such crimes and blatantly ignore the black letter of the law are held to account on a consistent basis, thereby destroying the belief that this sort of criminal activity is “free of material risk”, there can be no meaningful recovery of economy progress.
We can either demand and obtain this change in policy and attitude now as Americans, or the market will do it for us by continuing to tank and forcing these firms and examples into the open where they are destroyed. The unfortunate reality, however, is that the latter course – refusing to face this and allowing the inevitable market implosion to do that which we refuse to through law enforcement – will also take down tens of thousands of sound companies who also see their capital base removed while their obligations remain.
Bluntly put – Congress and The Administration must, right here and now, compel these regulators to follow the law or remove them from their positions of power.
This had to be done two years ago and it still needs to be done.
There is no way to stop the bleeding in our capital markets – both credit and equity – until this occurs. It will happen; we are only choosing the means and where we want to confine the risk to.
If we continue down the path we are on now we are risking the meltdown of the United States Federal Government; Fed President Plosser said the following:
An agreement with the Treasury to switch U.S. government bonds for these less-liquid non-traditional assets on the Fed’s balance sheet would help the central bank focus on conducting traditional monetary policy.
“With Treasuries back on the balance sheet, the Fed will be able to drain reserves in a timely fashion with minimal concerns about disrupting particular credit allocations or the pressures from special interests,” said Plosser, who is not a voting member on the Fed’s policy-setting committee this year.
You got that? The Fed knows that it is holding a bunch of crap and is threatened by the “value” (or lack thereof.) If they shove that off onto Treasury then the detonation of over $1 trillion in bad debt will occur on the government’s balance sheet, which will (1) cause a dramatic move upward in Treasury interest rates, (2) translate into all other forms of debt and (3) result in exactly the same collapse that happened in the 1930s – but it will be far worse in degree, since we are far more in debt now than then.
As things stand today I have no confidence whatsoever that The Obama Administration has any intention to act according to law any more than George Bush’s Administration did.
As a consequence until and unless the government’s position and actions change my “base case” economic forecast must remain bearish and over time continue to grow more bearish; without the 2/3rds of all capital that is private in our economy, even with supplanting of that capital from the government (to the extent it is able) I believe we are looking at a potential 30% contraction in GDP from top to bottom and unemployment reaching north of 20% on U-6 (broad form), with the very real possibility of a 20% headline number.
We are headed for an Economic Depression worse than the 1930s at Warp Speed folks, and it is not going to happen because of “fundamentals” or even because “the credit markets froze up.”
No, it is going to happen because both the Bush and Obama administrations are intentionally, with malice aforethought, ignoring the black-letter law of the land for the purpose of covering up their own malfeasance and misfeasance, and neither political party or the American People will get off their fat asses and demand that it be stopped.
Your job, prosperity and wealth are on the line America – right here, right now.
This is not some abstract failure in the market – this is a series of actions that have been taken with the full intention of screwing you, by both Democrats and Republicans, so that a handful of robber barons masquerading as capitalists do not have to face the music for their acts.
How bad can it get? Have a look at these charts folks over at Calulated Risk. They’re sobering – and if the lawlessness does not stop we are just getting started.
The Growing Gap Between Reality and the Media
February 26th, 2009 by Mark Mitchell www.deepcapture.com
Following is a very partial list of people who have said abusive short selling must be stopped.
Then Secretary of Treasury Paulson
Former Chairman of SEC Harvey Pitt
Then SEC Chair Christopher Cox
Then Senator Hillary Clinton
Presidential Candidate John McCain
The members of the American Chamber of Commerce
Charlie Munger, Vice Chairman Berkshire Hathaway
John Mack, CEO Morgan Stanley
Dick Fuld, then CEO Lehman Brothers
Members of the North American Securities Administrators Association
Robert Shapiro, former Undersecretary of Commerce
Harvey McGrath, former chairman of Man Group, world’s biggest listed hedge fund
Following is a partial list of mainstream media outlets that have yet to deliver a single comprehensive story aboutabusive short selling:
The Wall Street Journal
The New York Times
The Columbia Journalism Review
The Chicago Tribune
The Los Angeles Times
The Washington Post
This week, Eddie Lampert, the hedge fund manager and Chairman of Sears, became the latest to speak out against the problem. Here’s what he had to say…
“…the level of “naked” short selling of our shares was significant. The activity can be measured by the number of shares sold short as disclosed twice monthly by the NYSE and Nasdaq as well as by the reported number of instances of failure to deliver securities by short sellers to purchasers of Sears Holdings stock….
…the SEC has taken further actions to enforce “naked” short selling rules that had been in place, but not enforced, for a significant period of time. This is an important protection for shareholders and for property rights. The sale of property (shares in a corporation) that a seller does not own and can’t deliver (naked short selling) is an affront to property owners, and a destroyer of confidence and trust. Much of the commentary around short selling ignores this simple fact.
While I understand (and often appreciate) the urge to critically evaluate possible regulation, it is interesting that there has been protest by those on the short side with regard to some of the rules that have been suggested. For example, the reinstatement of the uptick rule, which would require any short sale to occur at or above the last sale price on the stock exchange. Such a rule had been in place for over 70 years (to prevent “bear raids” in which short sellers aggressively sold stock at ever lower levels, undermining confidence) until it was repealed in 2007. It has been suggested that, because stocks are now traded in decimals rather than in 1/8 point increments, such a rule is obsolete or unnecessarily difficult to implement. However, what the opponents fail to point out is that companies who repurchase their own shares are advised to adhere to a rule that forbids those companies from initiating a plus tick when repurchasing shares. Why policymakers would favor an asymmetric application of a rule like this in favor of short sales and against company repurchases is a mystery.
Similarly, the SEC has required short sales of securities to be reported periodically beginning in the second half of 2008. Short sellers have prevailed on the SEC to allow this disclosure to be done privately on the basis of a claimed need to protect their investment strategies. While I respect this privacy right, investors who purchase and own stocks, however, are afforded no such privacy in their holdings. In fact, holders of securities are required to publicly file their holdings on a quarterly basis. Such public disclosures have been known to attract the interest of short sellers when institutional investors and hedge funds have found themselves under performance or redemption pressures. Again, it is a mystery as to why those who are owners of publicly traded companies are required to disclose their holdings while those who sell short those very same securities are permitted to keep their positions private…”
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