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17 Comments
The Financial Sector Conundrum
Naked shorting is the unlawful tool used to drive down the equity of RF drastically .
The forever depleting prices on the RF would naturally force the average investors into a panic sale or margin call sale .
The honest and average investors lost all in a couple of months time , without knowing what has struck them .
All money made using an illegal tool should be returned to the victimized investors .
Fannie, Freddie Common Stock Is Now A Call Option
Why not deal with the obvious of limiting the unlawful naked shorting ?
The US economy and the average investor get hurt when stocks oversold by powerful naked shortings .
Why costs would be the stopper in eliminating an unlawful practice ?
The policing of the unlawful naked shorting is long overdue while the unlawful " artists " is taking illegally billions of dollars from the US economy and from the average investors every day .
Value Investors, Remember Margin of Safety
It is not a matter of blaming the naked shortings in relations to the oversolds of financials .
It is a matter that naked shortings are unlawful and they ought to be policed effectively at all costs .
Isn't it true that the stability of the financials is in fact , the stability of the US economy ?
Fannie & Freddie Are Here to Stay
USA built their financing using the two GSEs as the nucleus .
The two GSEs are USA and they have been working successfully for many years .
There is no point to monsterize the two GSEs .
Every establishment has rooms for improvement .
Do things possitive that helps .
Yes , I buy their stocks .
They have the established know how and they are resourceful .
Their troubles are only temporary and they have survived more than two downturns or depressions by their own power , in the past .
The rescue plan legislation is analogical to " adding wings to a tiger " .
Investing in the two GSEs is like investing in USA while there will be a huge profit as a reward .
Bad News for Housing Stocks, Good News for Homeowners?
Fannie / Freddie ( GSEs ) have been successful in carrying out their business for many years ; they should be fine in doing what they have been doing .
The US financings are structured using the two GSEs as the nucleus , for many years .
Any change to the established structure when the economy is fragile , would only intensify confusion , loss of public confidence and faltering of the economy .
Changes should be executed when economy is stabilized .
Congress Saves Fannie and Freddie: The Cure Will Kill Us
The enemy side has the nuclear weapon of unlawful naked shortings .
The naked shorters has access to sell astronomic amounts of phantom shares in creating drastic falls in pricings and thereby draws panic sales .
The naked shorters may cover their short position by buying shares from panic sales , at fire sale prices to make huge profit .
The naked shorters may cover their short position by buying new issues at depleted price in huge volumes , to make huge profit .
The average investors may lost their hard earned savings under panic sales or their equity being diluted .
The defender side is devastated to a disarray of firearms where buyers against the naked shorters are left with small or no cash .
The poor defenders await in despair for the " central army " to hold back the invasion by means of the rescue plan as well as destroying the enemy's nuclear weapon base by effectively eliminating the unlawful naked shortings .
The enemy is seeding confusion by predicting " future doom " as oppose to an immediate curing measure to the faltering economy .
The more nasty remarks coming from those who promotes economy destruction , the more effective the curing measure would be when implemented .
The life of USA base on oil and finance .
First , there came huge amounts of subprimes which may be fraud related .
Values of houses pumped up by inflated appraisals while such houses were mortgaged to banks under some bad credited individuals .
The houses were mortgaged in amounts over and above the respective market values , right from the start .
The huge volume of subprimes surfaced may tell one that such malicious acts were well organized .
Then , manipulations that are determined to push up oil pricing and to deplete financial equity . All of the said falter US economy .
I say , most Americans would have invested in the considered safe financial stocks .
The naked shortings have created numerous panic sales on all financials causing heavy losses to most people since October , 2007 .
People might have lost all of their savings in short times and subsequently unable to upkeep with their mortgage payments .
True , the rate of foreclosures climbed more than 100% since October , 2007 .
The houses under foreclosure are no longer those from subprimes but those from home owners who were once well to do .
The naked shorters made huge profits in expense of the misery of the average investors or USA .
USA would lay down a solid foundation to fight back effectively in this financial war by legislating the rescue plan and by eliminating effectively the naked shortings .
The measures to curb naked shorting must be applied to all brokerage including all market makers , to be effective .
Otherwise , naked shorters can get their unlawful manipulation done through the exempted market makers .
The naked shorters equipped with the unlimited amount of phantom shares to sell , are fully capable to deplete the financials to any lows even when the rescue plan is being legislated .
Such manipulated depletion would destroy confidence locally and world wide .
Should naked shorting be eliminated , the real shares available for borrowing would be in limit amounts .
The bulk of investors invest in the future , would not sell at this low pricing times especially when the rescue plan is being legislated .
The finanacials or the US economy would then be stabilized .
Time would then be made available for an economy recovery .
Legislate the recue plan , curb effectively naked shortings .
USA , fight effectively to defend against the economy destroyers .
No Quick Recovery for Stock Markets
Naked shorting , an unlawful manipulation , where short sellers may borrow astronomic amounts of stock shares for selling while the lenders have only samll quantities of those .
The well capitalized short sellers may drive down any stock to any low point , for the fact that there are unlimited supply of stocks to borrow .
Drastic drops would naturally attract panic sales at a loss .
The average investors would lost heavily and some of my friends once well to do , consequently , fell behind in their mortgage payment .
Foreclosures jumped more than double since October , 2007 when the financials started to fall .
Should the financials be made to fall by naked shorting , while the rescue plan being legislated , the confidence of the average investors would be completely destroyed .
The financials and thereby the economy of USA would then be routed to destruction .
This is the crucial time to buy against the short sellers .
SEC made " emergency measures " to curb naked shorting but nullified its effect by exempting market makers to the measures .
Financials fell drastically while the Bush Administration stated that the rescue plan would be legislated .
The drastic drops strongly support that naked shortings are still very active .
Average investors invest in the future and thereby would not sell at the said announcement by the Administration .
The US economy cannot turn around unless the naked shorting can be eliminated .
SEC can simply require delivery of the borrowed stock shares within one or two days .
The lenders have to have the stock shares to be delivered .
Naked shorting would then be naturally be extinguished without any extra paper work or confusion .
Why does SEC not using such simple but effective measure to curb naked shorting ? We don't know .
Buy against short sellings until SEC put its acts togather .
The Facts Behind the Coming Congressional Mortgage Bailout Bill
The timing is matching exactly the slumps at financial stock market .
These home owners who lost their homes might be the same victims who have suffered grave loss , over the slumps .
Those who stored their savings in bank stocks which had been stable for about 5 years , would lost most severely .
They are simple , hard working people but victimized by the naked shorters .
The immense power of naked short selling drove the bank stock pricings lower than lowest .
SEC allowed such unlawful manipulation , one article indicated that some published records have shown that some short sold shares were not delivered for over 200 days .
SEC announced emergency measures to police naked shorting on last Wednesday and somehow two days later , nullify the effect of their own measures by exempting the market makers .
The requirement of delivering the shares short sold by the next day seems reasonable under the computerized system .
Naked shortings in the now distressed economy intensify the vicious cycle that spirals towards economic destruction .
The government has a duty to serve the general public .
The bailout or whatever one names it , is a measure to reverse the cycle towards a better economy .
Why not ? I know , you short sellers , don't agree .
Mother of All Short Squeezes?
Even at emergency , SEC offers policing to only 19 investment banks for 30 days .
How about the regional banks where they have already been hurt by naked short sellings .
The naked short sellers can short sell unlimited quantity of shares of any bank by not having to borrow the same .
Such short sellers then have the " privilege " to command an unlimited supply of shares .
Such short sellers are naturally invincible since they have been well fed financially in expense of the economy of USA .
Yet , SEC would only police for 19 investment banks .
Why does the lawmakers tolerate such notorious violation of the law ?
Further , banks are often required to shore up their balance sheet forcing them to sell newly issued stocks at depleted pricing .
An article indicated that the same short sellers who depleted the banks' pricing would buy the newly issued stocks for covering their position .
Magic ! short selling " nothing " at a high price and buying back the tremendous quantity of new issues at a dirt cheap price .
A small group of short sellers make huge profit on the misery of a very large number of innocent people .
Is this vicious cycle of selling phantom stocks at high prices while covering the position with cheap new issues , really happening under the eyes of lawmakers ?
Just in case , Banks should have a grace time to shore up their balance sheet until the naked short selling is limited .
U.S. Markets: Is it Time to Throw Caution to the Wind?
The Administration , the Treasury and the Senates are making big plans in response to the rising foreclosures and depleting financial stocks .
It is notorious that " naked " short sellings intensify to a huge extent on the depletion of financial stocks especially that of the regaional banks .
SEC has revised the rules in policing " unlawful manipulation through naked short selling that threatens the stability of financial institutions " .
Such rules become effective tommorow , July 21 , 2008 and yet these rules don't protect regional banks .
Regional banks have very little exposure to the subprime and yet their equity were in general depleted about 60% in the last three months .
Such banks have originated a lot of mortgages for Americans when they establish their homes .
For instance , Regional Financial ( RF ) is a profitable local banking network , which has been dedicated in Charity and community works , in addition running their banking business .
The stock pricing for RF was depleted from $23 in April to $ 7 in July . The stock price came back some last week and yet it is at a 56% discount from that of April , 2008 .
One invested in such banks on a long term basis and not for a quick profit , would find oneself losing so much that one could not even afford his mortgage payments .
No wonder , foreclosures are on the rise .
SEC would help to stablize the financials in a meaningful way by protecting all banks from the " unlawful manipulation " .
I trust that SEC would extend this protection rule to all banks at the soonest .
Otherwise , it would be a disgrace and a snap in face of USA .
Historic Financial Collapse Underway?
The author , impressed me that salvaging Fannie / Freddie , the two government sponsored entities ( GSEs ) is like a " crime " .
I heard one said that the recent foreclosures stem from two sources :
1 ) the subprimes alleged to be fraud related ; someone organized to inflat property values by fraudulent appraisals and then mortgaged same to banks under the names of individuals with poor credit ratings ; the walking away would reap good profits for the organized criminals while leaving the banks with huge expenses and over valued properties .
2 ) the severe drop in price of the financials since October , 2007 have left traditional investors broke and unable to make mortgage payments . Foreclosures thus extended to the real people .
The " naked " short sellers intensified the damages on the economy .
Judging from the history of loss incurred by Citigroup ( C ) , the subprime issue can be speculated as over or almost over ; loss from over 10B in the 4th Q , 2007 to the 2.5B in the 2nd Q , 2008 .
The main hurdle now is the foreclures inflicted with the traditional investors or the good guys who lost all by confronting the unreasonably sharp drops in bank prices since October , 2007 .
Say , Regional Finance ( RF ) , a profitable regional banking network which has little or no exposure to the subprime , went down from $ 23 to $ 7 from April to July or in just three months .
Oh , RF has about 1.5% non performing assets ( NFA ) which are lands good for home construction purposes .
The real estate maxim tells us that land by nature , appreciates in value . Such NFA is in fact valuable asset to the bank and the same leaps when the real estate market becomes normal .
Investing into the future and thereby invest in financials .
When financials go back up to a reasonable level , the good guys would have their savings back to update their mortgage payments .
As a result , foreclosures would be reduced and the real estate market would be back to its normal functioning .
Some article indicated that Fennie / Freddie were told by the US government to loosen up their policy in accepting mortgages at the time when the subprime problem had surfaced while banks then generally raised their standards .
Such " startegy " was an attempt by the US government to boost up the real estate market at the time .
That attempt failed for the loose rules would naturally , invite more fraudulent subprimes .
Fannie / Freddie ended up with mortgages that they would not accept under their own policy .
On viewing the year 2001 / 2002 downturn , Fannie / Freddie flared better than or comparable to strong pretigeous banks like Bank of America .
Fannie / Freddie have proven themselves to be effective and profitable when being allowed to use their own standards in assessing mortgage applications .
Even being handicapped , the combined loss to date for the two GSEs is about 10B which is about the same as what Citigroup has lost in its 4th Q , 2007 .
Such quantity of loss is obviously manageable under today's standard .
Freddie's CEO has repeatedly told the media that their retained earnings are sufficient to finance the GSE through this crisis .
The shoring up by the US government is more for gaining back public confidence since half of the US mortgages are guarenteed or owned by the two GSEs .
Yes , substandard policy attracts frauds and eventual mortgage failures .
Published articles indicated that the substandards were used by subsidaries of investment banks and not regional banks .
The two GSEs straddled into these substandards reluctantly on a demand by the government to salvage the real estate market .
One would trust that the two GSEs would be more than happy when being allowed to go back to their own lending practice proven to be effective and profitable .
The " learned " author accepts that the economy would completely collapsed should the two GSEs fail .
The shoring up of the two GSEs would avoid such collapse .
The author however , suggested that a complete collapse in economy would best serve the US people as oppose to the backers' claim that the US people would benefit when the two GSEs or economy being uplifted .
People do have difference in opinions .
Protecting Your Wealth and Profit During the 2008 Crash
The author confirmed his spculations by quoting historical data .
By the same token , history also tells us that what goes up must come down while what goes down must rebound .
I read another article 10 minutes ago saying that USA government should " crack down on Wall Street traders who are driving up oil prices by buying huge quantities of oil just to resell at a higher price " ( the " " is a direct quotation from the article ) .
Further , many recent articles indicated that some traders drove down the financials by " naked " short selling ; that is , driving down the price of a stock by heavy selling on the same stock without the possibility of having the same stock ; thereafter , buys back the same stock at lower prices to make profits ; confusing but magical ! Making profits out of selling nothing .
The author suggested to readers that they should long oil and short financials .
Is the author asking readers to support the manipulative oil " traders " who are likely to be cracked down soon as well as to support the " naked " shorters where their activities are to be limited by Monday or tommorow ?
The author indicated that the oil stock ( SOL ) recently went up three times from his recommended entry point of $ 9 and thereafter gave back a good portion of those gains ; using up 300% to a now up 70% as told by the author , the updated lose back is 230% !!?
Should the government take action to crack down like what they are doing on the " naked " short sellers , the oil bubble is destined to burst .
The author pointed out that the shorting index ( SKF ) for financials went up 133% from May to July .
Oh yeah , the " naked " short sellers did a great job in depleting the stock prices of financials ; many traditional investors who stored their hard earned savings in the otherwise stable financials must have lost almost all .
However , the author then show readers that the updated data recorded only a 50% increase since May 1 .
Using 133% - 50% as told by the author , the shortings have decreased by 83% !!?
Are we looking at the rebounding of financials as shown by the data given by the author ?
The " naked " short sellers are supposed to be illiminated by Monday or tommorow ; are we going to have a continuous rebound or going back to the lower than lowest for financials ? One would know this answer by the end of this coming week .
The traditional investors would naturally hope for a continuous rebound .
They of course , would like to recover their hard earned savings so that they would be able to update their mortgage payments .
The coming back of the financials would certainly reduce foreclosures by giving back the savings to the general investors .
The spiral can go up when we manage to overcome the " destroyers " .
Just How Terrible Is Housing as an Asset Class? Roubini Weighs In
Home is the essential and a must to any family .
My " learned " author here suggested that the Administration ought to give up on helping the public to acquire a home because such attempts are proven bad investments .
Firstly , we are talking about people's homes and not investments .
Secondly , houses and land properties are the best investments in any sound economy .
The author pointed out that such is not true in USA .
I can see why by my experience in the stock market since August , 2007 .
Any middle class investing his / her hard earned savings into the supposedly " safe " bank stocks ended up losing all or became heavily in debts .
The once well to do family would not be able to pay their mortgage any more ; foreclosure is inevitable .
The subprime crisis became visible in August , 2007 .
The crisis as some article unfolded , might have been related to fraudulent matters - inflating appraisal on a house and then had some one with bad credit rating , mortgage the same house to a bank at a " price " well over and above the true market value .
I can see those financials relating to the subprimes would have a downward run in their stock value .
However , the short sellers by their concerted effort extended the downturns to regional banks which have nothing to do with the subprimes .
Many middle class who invested " safely " in the regional banks got hurt.
The vicious cycle naturally , spiralled into more and more home foreclosures .
The Administration saves the economy by shoring up Fannie / Freddie .
Those opposing to it apparently , work to a complete destruction of the economy of USA .
The SEC Panics
Most obvious is what had happened in the morning of July 14 .
FNM / FRE traded over $ 11 before the bell in response to the Sunday's backing announcement .
After the bell , the two were short sell down to about $ 7 in about a 10 minutes time .
Not just the said two , all bank stock were short sell down drastically .
The short sellers are well fed in the expense of the banks' equity .
The concerted power released in such a short time can only be done by some conspired group of short sellers .
I do think that the Administration is doing the right thing in curbing short sellings , at least on a temporary basis .
USA is facing a financial war and not just a simply market of supply and demand .
Short sellers can take a vacation leave to spend their money easy earn in expense of the economy .
Give the banks a chance to survive , please .
Let the investors get back to their old habits of viewing that a significant rise would mean a sign of recovery from the rock bottom price rather than being a signal to a further major drop .
Financials Down 6.1% - Like the Days of the Tech Bust?
I am talking about all bank stocks be they classified as strong or weak .
Obviously , the short sellers have been so well fed on the expense of the banks' equity by depleting value to sending a panic to the public , that they became much stronger than the defenders working on normalizing the financial pricing .
The " good news " would no longer help to recoup the price .
Everyone seems to know that they should follow the big guy in shorting once seeing any rise eminent .
The profit is taken in the expense of the whole economy .
Fannie / Freddie ( FNM / FRE ) have been running their business successfully for years .
They are well experience and up to today's date after their stock pricing and thereby equity , being depleted by short sellers down to almost worthless , they can still stand up to state in confidence that they can do a good job on what they have been accomplishing .
There is only harm done to the public by undermining the two .
They are the best to handle the now financial crisis .
The treasury ought to set up a trust funds for the taxpayers and buy their shares in the open market in against the short sellers .
The taxpayers would get themselves a terrific investment , FNM / FRE at about or under $ 10 , vow !
The taxpayers would make a big chunk of money when their pricing go back up to over $20 at just 2 weeks ago , in June .
The two would not be diluted since no new stocks would be issued .
The short sellers would lose some money and they are fat enough to afford it .
The two would gain back their equity so that the passing of the mortgage rescue plan can be facilitated .
Once the rescue plan is in place , the housing market would make a turn to gradual stabilization .
The rest of the financials would gain back confidence from investors .
Should the short sellers carry on to cut down any rise whatsoever .
The respective bank should throw in all they have or even borrow to buy against the short sellers .
The public knowing that a rise would not foresee a huge fall , would then buy as well on a rise trend .
The government should encourage banks to buy back their own stock at this time of crisis .
Once the banks got back their equity the vicious cycle would naturally be unspiralled .
Only a concerted effort by the defenders would beat a concerted strength from the short sellers .
Hey , bankers , don't miss this golden opportunity by investing in your own bank ; well , unless you are one of the short sellers .
Make some money for yourself and help USA to recoup financially .
Would you ?