Comments (17)

Im not sure if this is my last post. Washington Posts is now blocking my posts. For what reason? I don't know. Maybe they like to hear things that would tickle their ears. Good luck with your stupid beliefs.

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hmfmcg wrote "My lack of faith in the christian-sky-god does not make me shady. "

That depends on how you view Christianity. If you've read my other posts, I despise many so called "christian churches" which I think are not really Christian. Fake Christianity which the bible calls "false prophets" or "anti-christs".

But if you believe in the concept of shortselling, I can say that that makes you a shady person.

Nature has an inherent mechanism to correct things. If you build a tall building with faulty materials and foundation, it will crash BY ITSELF. The same is true with stocks. If the stocks are overpriced, it will correct itself NATURALLY.

Shortselling DEFIES science and common sense. It's like allowing a person to climb on top of a tall building and ADD EXTRA WEIGHTS so the building will tumble. They don't let the building fall by itself the NATURAL WAY but make means that it falls THEIR WAY.

hmfmcg wrote "My lack of faith in the christian-sky-god does not make me shady. "

That depends on how you view Christianity. If you've read my other posts, I despise many so called "christian churches" which I think are not really Christian. Fake Christianity which the bible calls "false prophets" or "anti-christs".

But if you believe in the concept of shortselling, I can say that that makes you a shady person.

Nature has an inherent mechanism to correct things. If you build a tall building with faulty materials and foundation, it will crash BY ITSELF. The same is true with stocks. If the stocks are overpriced, it will correct itself NATURALLY.

Shortselling DEFIES science and common sense. It's like allowing a person to climb on top of a tall building and ADD EXTRA WEIGHTS so the building will tumble. They don't let the building fall by itself the NATURAL WAY but make means that it falls THEIR WAY.

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Also there is something you should know about true Christianity. They CANNOT hate the Jews. God will curse them if they do.
"And I will bless them that bless thee, and c*rse him that c*rseth thee:" (Genesis 12:3)

Food for thought
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As we debate what is right or wrong with Paulson, Britain & Sweden plans, think about:

1. What is the probability that BRK.A (Bershire Hathaway Inc) share price may hit between $70000 and $80000 in a decade or so from now?

2. What implication does the above BRK.A price event hold for Europe, American & world economy at large in the next decade or so?

For spidermean2, in response to:

"Why is Obama the favorite friend of people with shady characters? All abortionists, atheists, gays are on his side also. WOW!!

Just an afterthought. When McCain was winning the survey after he named Sarah Palin as his vice, suddenly this economic meltdown occurred. Could it be that Soros have a hand on this? Just thinking. It may not be farfetch coz the guy si so witty."

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Shady characters? So, let me get this straight -I have to be a Jesus-Christ fearing bible thumper to avoid being called "shady"?

If only you were just misinformed. Unfortunately, you're offensive and paranoid. My lack of faith in the christian-sky-god does not make me shady. Your ignorance and intolerance does however fit the bill. Do you call yourself "spidermean2" because you enjoy living in a fantasy world?

Short selling is a necessary part of any functioning market. If you ever cracked open a book other than the bible - history, economics, or finance - you would know that short selling serves many potential positive purposes. To argue for a permanent ban on short-selling is to vote on behalf of the hacks who want to sell you junk at twice the price it is worth. Do you really support the fleecing of the average investor by those who have an information advantage?

There may be times when you want to limit short selling (like now) but an outright ban will only cause stocks to be over-valued in the long run and will contribute to the inefficient allocation of capital.

And to assert that the market collapse was timed to coincide with McCain's choice of Palin is just bonkers. Let me guess - if it's not Soros then its the Rothchilds or the Warburgs, right? Or maybe some other international cabal of "bankers" (read, Jews)? You're a bigot!

And hey - maybe if Sarah Palin was in ANY way intelligent, she would be able to say something relevant or useful about the matter, as opposed to repeating what she memorized the night before.

Stop fearing books and turn off FOXNEWS! Intelligence is NOT something of which to be afraid.

Funny not two weeks ago the Brits were getting their knickers in twist because Ireland acting quickly to prevent any of its national banks collapsing, fully guaranteed all deposit. Meanwhile the toffs at the Economist magazine are as smug as ever.

HOW SHORTSELLERS RUINED THE WORLD ECONOMY.

To simplify matters, let's equate the stock market shares into a brand new car. The price of stock shares are influenced by many factors. The same can be said with cars. But cars are influenced by simpler factors, unlike with stock shares.

This is how shortsellers will sell your brand new car. First they sell your car for a very high price. Lets us say 100,000 dollars. After it is sold, they will make a move to bring down the price of that car by tinkering on the factors that will affect its price. To make the car unattractive to buy and lower its price, they would make a move to raise gasoline prices. Other than that, they can work on other factors that would further make the car unattractive and pull down its price. With very low demand, it will pull down the price of that car to maybe 50,000 dollars. The shortseller will then close the sell by "buying" your car for 50,000 dollars. The process was just reversed but what really happened was the shortseller "bought" your car for 50,000 dollars and sold it for 100,000 dollars. His net profit from the transaction would be 50,000 from the car he really didn't own, while you, the real owner looses 50,000 dollars.

He continues to make a move to lower the price of your car by tinkering on other factors that will affect the prices of cars. Once it reaches 30,000, he offers to buy it from you. You being in a state of panic sells it to him for 30,000 dollars. He then makes a move to lower the price of gasoline so cars would be attractive again. As the price of the car bounces up to 50,000 dollars, he sells it again profiting 20,000 dollar from the transaction.

From the whole transaction, he profited 70,000 dollars while you lose 70,000 dollars.

He repeats the cycle and profits again. That is how the stock market is being influenced by SHORTSELERS and that is how YOU ARE BEING FLEECED BY THEM. That also explains why the stocks are moving like a roller coaster ride - an up and down movement while it slides further down.

They create the bubble first and then they burst the bubble. THESE PEOPLE ARE UNCONSCIONABLE.

STOP SHORTSELLING TO STOP THIS FINANCIAL MELTDOWN.

It's funny that Fareed Zakaria interviewed GEORGE SOROS and asked him how to solve the financial meltdown problem. It's like asking the problem to make a solution. VERY FUNNY.

But in fairness to him, he gave the right solution to solve the mortgage problem. Very cunning, indeed. Yeah, solve the mortgage problem so he can then proceed to buy the troubled banks AT A DISCOUNT and profit again. VERY CUNNING BUT "THE BOSSES" LIKE PAULSON IS VERY STUPID.

IM NOT SURE THOUGH IF THEY ARE PARTNERS IN CRIME.

And by the way, Soros is voting for Obama and since Obama seems to be winning, shortselling will be with us for 4 more years, I guess.

Why is Obama the favorite friend of people with shady characters? All abortionists, atheists, gays are on his side also. WOW!!

Just an afterthought. When McCain was winning the survey after he named Sarah Palin as his vice, suddenly this economic meltdown occurred. Could it be that Soros have a hand on this? Just thinking. It may not be farfetch coz the guy si so witty.

HOW SHORTSELLER RUINED THE WORLD ECONOMY.

To simplify matters, let's equate the stock market shares into a brand new car. The price of stock shares are influenced by many factors. The same can be said with cars. But cars are influenced by simpler factors, unlike with stock shares.

This is how shortsellers will sell your brand new car. First they sell your car for a very high price. Lets us say 100,000 dollars. After it is sold, they will make a move to bring down the price of that car by tinkering on the factors that will affect its price. To make the car unattractive to buy and lower its price, they would make a move to raise gasoline prices. Other than that, they can work on other factors that would further make the car unattractive and pull down its price. With very low demand, it will pull down the price of that car to maybe 50,000 dollars. The shortseller will then close the sell by "buying" your car for 50,000 dollars. The process was just reversed but what really happened was the shortseller "bought" your car for 50,000 dollars and sold it for 100,000 dollars. His net profit from the transaction would be 50,000 from the car he really didn't own, while you, the real owner looses 50,000 dollars.

He continues to make a move to lower the price of your car by tinkering on other factors that will affect the prices of cars. Once it reaches 30,000, he offers to buy it from you. You being in a state of panic sells it to him for 30,000 dollars. He then makes a move to lower the price of gasoline so cars would be attractive again. As the price of the car bounces up to 50,000 dollars, he sells it again profiting 20,000 dollar from the transaction.

From the whole transaction, he profited 70,000 dollars while you lose 70,000 dollars.

He repeats the cycle and profits again. That is how the stock market is being influenced by SHORTSELERS and that is how YOU ARE BEING FLEECED BY THEM. That also explains why the stocks are moving like a roller coaster ride - an up and down movement while it slides further down.

They create the bubble first and then they burst the bubble. THESE PEOPLE ARE UNCONSCIONABLE.

STOP SHORTSELLING TO STOP THIS FINANCIAL MELTDOWN.

It's funny that Fareed Zakaria interviewed GEORGE SOROS and asked him how to solve the financial meltdown problem. It's like asking the problem to make a solution. VERY FUNNY.

But in fairness to him, he gave the right solution to solve the mortgage problem. Very cunning, indeed. Yeah, solve the mortgage problem so he can then proceed to buy the troubled banks AT A DISCOUNT and profit again. VERY CUNNING BUT "THE BOSSES" LIKE PAULSON IS VERY STUPID.

IM NOT SURE THOUGH IF THEY ARE PARTNERS IN CRIME.

Well said, Dan Hamilton.

Three weeks ago Gordon Brown wanted to meet with Henry Paulson who was too busy to listen. On Friday the G7 met and Bush and Paulson were still too busy to listen. On Sunday, the EU and Britain launched a recovery plan and Paulson and Bush were too busy to listen.

The Asian Market opening was up on the EU news.

Time for some old school capitalists to get some religion and get the world economy back on its feet.

You were wrong, boys. Get over it.

Dan Hamilton wrote:

Britain's plan is better than ours, because it addresses head-on the two holes in the Paulson plan.
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Can you please stop crapping it out? Paulson's plan is not flawed. The flaw is in political dynamics from lousy folks such as you who keep tinkering the financial markets at will - Oh! we need to protect ourself by putting in enough crappy rules in financial markets to ensure American wealth is not distributed from rich to the poors!

Take your time to explain the oil price phenomenon - As soon as Russia attacks Georgia and ceases to be the Bush & Cheney pal, and you folks suddenly wakeup to realize 'Oh me God, Russia is stinking rich from oil profits' and guess what happens - Boom! the oil prices suddenly crash.

If you filthy folks were to stay away from financial and commodity markets, US would be in a better shape.

Oh me God, do I have to remind you that if it were not for the British Dossier, our troops would be in Afghanistan hunting down Al-Qaeda rather than in Iraq sitting around like lame ducks and sucking $2+ billion from US taxpayers pockets.

US Economy Stuck In Stalemate

The US financial market is stuck in a bleeding mode because the housing market is still falling. Everyone agrees with that. The thing that most economic experts are wrong on is the solution.

For months, the government and the economic establishments have been advocating a strategy to stop housing prices from declining. This is responsible for the chaos in the financial market. By not allowing home prices to fall back to historic levels which common people can afford, the economy is now stuck in a situation where homes are still too expensive although they are falling slowly. This means potential home buyers are still waiting for the full correction to take place.

On the other side, banks are writing down huge bad loans while they are too afraid to make new loans to people who want to buy homes that are still far above historic norm. This stalemate in housing translate into a continuous bleeding of the financial market for a whole year, which caused a total collapse of confidence.

To stop the downward spiral is not to stop the housing correction, but to let it take place as soon as we can to break this stalemate. When people start buying afforable homes again, the economy will land. The current prevailing thought to keep housing prices from falling is foolish and dangerous. If we don't stop artificially trying to prop up the housing market and let housing prices come down and become affordable again, the economy is heading for a very very long descent.

Is the British plan better?

Let's examine the case of Ecuador.

From 1992 through 1998, Ecuadorian banks did exactly the same as US and British banks: lend money to subprime borrowers, speculate on derivatives, and -in some cases- rampant fraud. It was all nice for several years, until 1997, when the country suffered widespread floodings that destroyed the agriculture sector, and a sharp drop in the price of oil, the country's main source of revenue.

By 1998, many borrowers were unable to pay back their debts. Banks went on the brink of bankruptcy. The government decided to act agressively. A government agency was created to insure bank deposits. Congress quickly passed a law that allowed the Central Bank to rescue lend banks as much money as needed; and a clear framework was created that allowed the government to take over troubled banks, if necessary.

From September 1998 through January 2000, the Central Bank issued huge amounts of domestic currency in order to provide liquidity to troubled banks. As a result, the currency exchange went from 5,000 sucres per dollar to 25,000 in that period. Obviously, inflation skyrocketed.

As one bank was nationalized after another, financial panic flooded the country. In an effort to contain bank runs, the government freezed bank deposits. The economy collapsed. In January 2000, the government was overthrown by a popular insurrection, and Ecuador abandoned its domestic currency for the US dollar.

In the process, the government had taken over 70 percent of Ecuadorian banks. With a few exceptions all those banks had ALREADY FAILED and were closed down. Other banks went bankrupt UNDER GOVERNMENT ADMINISTRATION, due to cronyism and corruption.

The collapse of the economy meant a national catastrophe, with record number of people falling into poverty and unemployment, and millions fleeing the country looking for jobs overseas. Millions of families have been disintegrated.

Most people never recovered their deposits. The government never recovered the money given to banks. In the end, the government just became the proud owner of several beautiful buildings, testimony of Ecuadorian banks' golden years. Those buildings are now being used by an array of government entities.

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Being "bold" doesn't mean being right. It's one thing to act decisively to save banks that are facing systemic problems but are otherwise healthy. It's another thing to print money like crazy in a vain attempt to rescue financial institutions whose real situation nobody really knows, which could turn to be much worse than previously thought.

Only time will tell.

Unfortunately the problem is that the Brits' plan fails to meet one of the main criteria of Bush and Paulson's plan - making sure that all profit ends up in the hands of the wealthy, not the working class. Other than that its great.

Your piece points to another trend that is leading to the Europeanization of America. Here's a full read on it:

http://writingfrontier.com/2008/07/27/the-europeanization-of-america/

I agree with Dan Hamilton that the British plan has advantages, notably that there is some transparency - we feel that we can see where our bail-out money will go. Older socialists, meanwhile, have become manic at the prospect of state ownership of banks. I think everyone accepts that it will be the taxpayer, ultimately, who pays to repair the damage done to our financial system. I would be cautious, however, about saying that the taxpayer will benefit through these acquisitions in the event that Government holdings of bank shares rise in value. There are as yet no published rules regarding any sell-off of the shares. It seems that the profit would go to the Treasury, which is not the same as saying that the taxpayer will benefit through lower taxes!

Letting Lehman go bankrupt was the FIRST sign that Hank Paulson didn't understand the extent of destructive power in CDSs. As an example, if
life insurance were constructed the same way, I could buy any number of life insurance policies on my neighbor, or anyone for that matter,limited only by my ability to pay the premium until they died! And in the CDS world there are no laws against me killing my neighbor and collecting on
the policy!
Hedge funds short publicly traded companies after they buy massive volumes of CDS policies against their bonds. Downgrades by the rating agencies force the company to raise and retain more cash which forces bond defaults and bankruptcy which triggers CDS payment by institutions around the world!

And it's legal!

BANKS KNOW THIS! BUT WHAT THEY DON'T KNOW IS WHO THE NEXT TARGET WILL BE AND WON'T LEND TO ANYONE UNTIL THEYARE SURE THEY WILL GET THEIR MONEY BACK!!!!!!!

Everyone said Goldman Sachs and Morgan Stanley were too big and powerful to fail. Even Warren Buffett of Berkshire Hathaway didn't know what he was getting into when he agreed to provide a publicly traded company Gldman Sachs $5 billion
dollars and received preferred stock at a $10 discount and a 10% dividend in an attempt to
support a stock his company had in their portfolio. He paid $115 a share for GS two weeks ago when it was publicly trading for $125 and he has options to buy $5 billion more at $115. That won't happen since GS was trading as low as $80 Friday and, unless Paulson wakes up, headed for
bankruptcy!
The Paulson proposal Friday evening is the same thing Buffett did. Guarantee survival through the sovereign "wealth" of the U.S. government.Didn't work for Buffett and won't work for Paulson.
Unless Paulson takes these companies private or makes the CDS/SHORT maneuver illegal and suspends "MARK-TO-MARKET" accounting he can't print enough money to solve this problem. Part of a solution is to force CDSs out of business by regulating them and forcing ownership proof of the related debt instrument before insurance can be purchased or paid. CDS instantly
disappears. Only legitimate hedging activities would then occur.
Oil had the same problem. Speculators who were never involved in producing oil or oil products were driving the price higher every week until this financial crisis forced them to sell their oil positions to raise capital to cover exposure to CDS contracts they had written.
A small sliver of justice in an ironic twist of financial fortunes! And that brought a smile to my face this morning as I actually filled my cars' tank with gas at $3.22 a gallon
for the first time in months!

BAN SHORTSELLING of ALL STOCKS (No exemptions) (Give it a shot even for a month or less and see how sanity will return to the market)

I'll make this very simple. The only way you can sell a brand new car for 100 dollars or less is to let shortsellers sell it. They don't own the car so they have no worry if it is priced at 1 dollar. The same logic is happening in the stock market.

HANK PAULSON, ARE YOU LISTENING?

BANKRUPTING THE GOVERNMENT

There is no faster way to bankrupt the government than to buy stocks WITHOUT OWNERSHIP. We have a top guy in the financial market who is an IDIOT. Does he really understand what he is doing? Shortsellers can swallow those billions in seconds. It's tantamount to money transfer from government to shortsellers for free.

SACK HANK PAULSON!!! THIS GUY IS TERRIBLE!!

At least the Brits were buying stock and OWN THE COMPANY. This person is an IDIOT!!

Ban shortselling just even for 3 to 5 days (around the world) and let's see how the market behaves. LET'S GIVE SANITY A BREAK. I can't wait to see the market shoot straight up.

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BAN SHORTSELLING !! (It's time Paulson be replaced coz he comes from an institution that's part of the problem)

The stock market is shooting downward. Naturally, everybody should be saddened. But NO, not everyone. Who are these people? Who are they who profit from this downturn. It's the SHORTSELLERS. The government should realize that shortselling DEFIES NATURAL SCIENCE. It is an ABNORMALITY. Nobody should be allowed to sell things that are not theirs.

THIS IS THE CANCER THAT IS PLAGUING the stock market. It defies science and anything that defies science is HARMFUL. We are now reaping the bad fruits which SHORTSELLING sowed.

When a house is burning, everybody should grieve. If you see somebody who's overjoyed, Im sure HE/SHE IS THE ARSONIST. Shortsellers are the only people who are overjoyed now.

For as long as the "arsonists" are at large, people's money are NOT safe. LOCK THEM (shortsellers) UP BEFORE MORE HOUSES WOULD BURN. For as long as they are around, our money will not be safe in the bank. LOCK THEM UP SOON OR THE FIRE WON'T STOP.

These bailouts cannot continue forever. These water hoses would soon dry up. Stop the fire from its source -- the SHORTSELLERS.