Begin forwarded message:
From: [EMAIL PROTECTED]
Date: July 26, 2008 11:10:47 AM PDT
To: [EMAIL PROTECTED]
Cc: [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED]
Subject: "No-Futures Market" -- Foreign Traders Bet $1 TRILLION on US
Economy's Collapse
Investors worldwide are betting
more than $1 trillion on
a collapse in American stock prices
http://www.wakeupfromyourslumber.com/node/7529
Americans should be experiencing nausea about right now, that's being
induced from swirling around the toilet bowl faster and faster.
Add in the that loud plunk you just heard, which was the sound of that
extra-large turd of another 800 BILLION dollars in debt being added to
our total debt, now being approved by our cowardly, immoral and craven
Congress.
Money that is to be used to bail out Wall Street gangsters, who
started and profited immensely from the mortgage-backed security mess.
Looks like Americans, fat and slim alike, are about to go on a diet. A
diet that will be supplemented by being fed toxic crap about how
America needs to invade Iran.
Iran is no threat to America, but Wall Street and the Federal Reserve
sure as hell are.
Never Have So Many Short Sellers Made So Much Money
http://www.bloomberg.com/apps/news?pid=20601213&sid=aNDnqybULZdo&refer=home
(Update2)
By Alexis Xydias
July 21 (Bloomberg) -- Investors worldwide are betting more than $1
trillion on a collapse in stock prices.
Managers from William Ackman to Jim Rogers made a total of at least
$1.4 billion in July with wagers against U.S. mortgage financiers
Fannie Mae and Freddie Mac, data compiled by Bloomberg as of last week
show. Harbinger Capital Partners staked $665 million that U.K.
mortgage lender HBOS Plc would drop and Sao Paulo-based hedge-fund
manager Francisco Meirelles de Andrade's short selling of Cia. Vale do
Rio Doce is also paying off.
More than $1.4 trillion of equities worldwide are now on loan, about a
third higher than at the start of 2007, data compiled by Spitalfields
Advisors, the London-based firm specializing in securities lending,
show. Almost all of that is being used to speculate that shares will
fall, according to James Angel, a finance professor at Georgetown
University who studies short selling. The global economic slowdown,
$453 billion in bank losses and an explosion of funds that can profit
from stock declines spurred the increase in short selling, helping
send 22 of 23 countries in the MSCI World Index into bear markets.
``It's a huge amount of money,'' said Peter Hahn, a London- based
research fellow for Cass Business School and a former managing
director at Citigroup Inc. ``Shorts have come a long way. They are
getting into the mainstream, and long holders need to understand the
shorts are not evil.''
$11 Trillion
While U.S. and U.K. regulators tighten rules on short sellers amid
concern they're accelerating more than $11 trillion in global stock
losses this year, countries from Indonesia to India are opening up to
the practice, which involves borrowing stock to sell it on the
expectation it can be purchased at a lower price before paying back
the loan.
Assets at so-called 130/30 and 120/20 funds, or those that are allowed
to both hold stocks and short them, may climb to $2 trillion by 2010
from $140 billion in 2007, according to a study last year by
Westborough, Massachusetts-based Tabb Group. Spitalfields estimates
these funds may borrow an additional $600 billion by 2010.
Spitalfields was founded by Mark Faulkner and Bill Cuthbert in 2004
after careers in securities lending and investment banking at firms
including New York-based Goldman Sachs Group Inc. and Frankfurt-based
Deutsche Bank AG, respectively.
Short selling on the New York Stock Exchange rose to 4.6 percent of
total shares last month, the highest since at least 1931, according to
data compiled by Bespoke Investment Group LLC, the Harrison, New York-
based firm that manages money for wealthy investors and provides
financial research to institutions.
Wipe Out Shareholders
Short selling of Washington-based Fannie Mae and McLean, Virginia-
based Freddie Mac, which own or guarantee about half of the $12
trillion of U.S. mortgages, surged before the shares plunged this
month on concern they will require a bailout that would wipe out
shareholders.
Fannie Mae tumbled 64 percent from the end of June, when so-called
short interest stood at 138.7 million shares, through July 15,
according to data compiled by Bloomberg and the NYSE. Freddie Mac sank
68 percent from the end of June through July 15 after short interest
reached almost 83 million on June 30, the highest since at least 1991.
Even after a 90 percent rebound by Fannie Mae and a 75 percent surge
by Freddie Mac in the final three days of trading last week, that
would have left the shorts with a combined profit, excluding costs, of
at least $1.4 billion from June 30 through July 15, the data show.
Survival of the Fittest
Ackman, 42, who oversees $6 billion at Pershing Square Capital
Management LP in New York, said on July 15 he had short positions in
both Fannie Mae and Freddie Mac. Rogers, 65, said on July 14 that he
hadn't covered his short positions in Fannie Mae and would increase
his bet if the shares were to rally.
``Short sellers are a very important part of the ecosystem of our
financial markets,'' said Angel, a professor at Georgetown's McDonough
School of Business in Washington. ``The same way that lions go after a
herd, they go after the weaker animals. The shorts will pick on a
company where there's a legitimate controversy over its valuation.''
European short sellers have also profited during the sell- off. The
Euro Stoxx 50 Short Index rose 29 percent in the first half of 2008,
the best performance since at least 1992. The Euro Stoxx 50 tumbled 24
percent in the period, its worst ever start to a year.
`Market for Speculators'
A slump in British banks helped spur the U.K. Financial Services
Authority to impose rules on June 20 requiring firms to disclose short
positions in companies that sell shares in rights offerings, when
those positions exceed 0.25 percent of the company's stock. The FSA
cited short bets on June 13 for ``severe volatility in the shares of
companies conducting rights issues.''
Harbinger Capital, the New York-based hedge fund run by Philip
Falcone, the former head of high-yield trading at Barclays Capital,
disclosed a short position of 3.29 percent in HBOS as of June 20.
Edinburgh-based HBOS has slumped 64 percent this year.
``The market is becoming a market for speculators rather than a market
for investors,'' said Roger Lawson, London-based director at the U.K.
Shareholders' Association. ``These guys are making fat profits out of
these market maneuvers. It should be restricted to a very limited
level of market cap, otherwise it becomes market manipulation.''
The U.S. Securities and Exchange Commission last week limited so-
called naked short sales of Fannie Mae, Freddie Mac and brokerages. In
such a strategy, speculators sell shares they haven't secured first.
The decision comes amid an investigation of whether trading abuses
contributed to the collapse of Bear Stearns Cos. in March.
`Send a Message'
James Chanos, president of Kynikos Associates Ltd., says the new rules
won't deter most short sellers from making legitimate bets against
companies.
``The SEC is trying to send a message -- I am again not quite sure
what the message is,'' Chanos, a short seller and one of the first
investors to raise questions about Enron Corp.'s accounting, said on
Bloomberg Television from London. ``I am just not sure that this was
an issue at all for the equity prices of these companies.''
The SEC's move ``squeezed'' some short sellers, forcing them to close
positions they shorted earlier by buying the shares, Bespoke data
show. Among Standard & Poor's 1500 companies, those with the highest
short interest gained the most, rising 15.1 percent on July 16 and
July 17, according to the firm's data.
So-called short covering also helped financial stocks in the S&P 500
surge 12 percent on July 16, the biggest-ever gain.
While regulators in the U.K. and U.S. move to limit some types of
shorting, the practice is increasing elsewhere. India's capital
markets watchdog said in December it would lift a six- year ban on
short selling. Indonesia followed last month, allowing the practice
for the first time.
Shorting Brazil
In Brazil, equities on loan in June jumped 22 percent from a month
earlier to a record $23.3 billion, according to the Brazilian Clearing
and Depository Corp. Shorting increased after the Bovespa Index
climbed to an all-time high on May 20.
Francisco Meirelles de Andrade, a hedge-fund manager at Nest
Investimentos Ltda., is shorting Rio de Janeiro-based Vale, the
world's biggest iron-ore producer, which tumbled 6.5 percent last week
after its share sale raised less than some analysts expected. His Nest
Fund Ltd. Class Long Short Equities fund returned 31 percent in the 12
months through June.
``Short selling helps markets become more efficient,'' said Dallas-
based David Tice, 53, founder and manager of the Prudent Bear Fund.
``Short selling is here to stay.''
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