Wall Street: Even Worse Than You Thought

11:12 Sun 18 Oct 2009
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It should be clear to any reasonable observer that Wall Street is a rapacious hive of sharks who will do more or less anything at all for money, and that the financial industry is politically powerful enough at this point to get away with more or less anything. It should also be clear that the term “corruption” doesn’t really do justice to their antics.

That being said, I’m still agog at some of what’s covered in this Mait Taibbi article:

  • Absolutely blatant insider trading.
  • Absolutely blatant illegal stock manipulation.
  • Absolutely blatant lack of enforcement by the SEC.
  • Absolutely blatant favoritism by government officials (okay, this one isn’t really news given how Goldman Sachs have more or less taken over the financial side of the US government).

What’s more, however, the article covers how a huge amount of “trading” on Wall Street is actually dealing in fictitious shares:

[N]ot only could brokers lend stocks they never had, another loophole in the system allowed hedge funds to sell those stocks and deliver a kind of IOU instead of the actual share to the buyer. When a share of stock is sold but never delivered, it’s called a "fail" or a "fail to deliver" — and there was no law or regulation in place that prevented it. It’s exactly what it sounds like: a loophole legalizing the counterfeiting of stock.

—Matt Taibbi. “Wall Street’s Naked Swindle”. Rolling Stone, 14 Oct 2009.

Apparently the markets are riddled with this. And that’s just the beginning. Taibbi’s hypothesis is that what happened to Bear Stearns was that other major players got together and decided to counterfeit Bear Stearns stock using that loophole and, using the fake shares, drive down its stock price. While also planting rumors in the media and then using government influence to help Bear Stearns go under—all while ensuring tidy profits for the rest of the group.

The article is absolutely worth reading. Most chilling is that the people involved in all this are the people who run the US economy, and it’s hard to underestimate the extent to which they will place their own greed ahead of everything else.

One Response to “Wall Street: Even Worse Than You Thought”

  1. Lord Acton Says:

    Most chilling of all is that the citizens of this country are barely whimpering as they continue to be robbed by the banking cartels and their own bought and paid for government. No, more chilling than that is the fact that when a few people do speak up they are immediately dismissed as kooks by almost everyone.

    If you are financially literate (or care to make the effort to become so) and care even a little about the truth: http://market-ticker.denninger.net/

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