Paul Krugman, "Friends of Fraud": Do You Own Shares?

It's only the Republicans who are "defrauding" the public? Yeah, right.

In his latest New York Times op-ed entitled "Friends of Fraud" (http://www.nytimes.com/2013/02/04/opinion/krugman-friends-of-fraud.html?_r=0), Paul Krugman complains that Republicans are "threatening to filibuster the appointment of Richard Cordray, the [Consumer Financial Protection Bureau's] acting head, and thereby leave the bureau unable to function." Krugman concludes:

"Right now, all the media focus is on the obvious hot issues — immigration, guns, the sequester, and so on. But let’s try not to let this one fall through the cracks: just four years after runaway bankers brought the world economy to its knees, Senate Republicans are using every means at their disposal, violating all the usual norms of politics in the process, in an attempt to give the bankers a chance to do it all over again."

The Consumer Financial Protection Bureau? A fine idea, but it's the repeal of the Uptick Rule, for which Republicans and Democrats are both responsible, which is allowing financial institutions to milk the American public and destroying the US economy.

Given the importance of the subject, I will again repeat myself:

The Uptick Rule went into effect in 1938 in response to market abuses that threatened the health of the US economy and prohibited short sales of securities except on an "uptick." As summarized by the SEC:

"Rule 10a-1(a)(1) provided that, subject to certain exceptions, a listed security may be sold short (A) at a price above the price at which the immediately preceding sale was effected (plus tick), or (B) at the last sale price if it is higher than the last different price (zero-plus tick). Short sales were not permitted on minus ticks or zero-minus ticks, subject to narrow exceptions."

The Uptick Rule was cancelled in 2007, thereby enabling hedge funds to short shares, i.e. sell shares they did not own, in almost unlimited, immediate quantities, and permitting them to benefit from resultant investor panic in almost any given traded company.

Example: Micro-cap company "X" has designed and patented a revolutionary widget. Recently, the achievements of "X" have made their way into the news, and its shares have risen. Farmer Joe, who attends night school and reads the financial news, decides to buy 1,000 shares of "X". However, Farmer Joe is unaware that Slick Eddy at Hedge Fund "Z", who couldn't care less about the merits of company "X"'s widgets, has also noticed the rise in the share price of "X". With almost unlimited resources behind him, Eddy borrows "X" shares from various financial institutions and begins to sell vast quantities into the market, causing a precipitous decline in the market price of "X". Eddy then blocks any rally in the share price by activating a computerized program to immediately sell 100 shares at the bid after any purchase. Worried by the huge downswing in the price of "X," and also concerned that at the end of each trading day "X" always goes down (Eddy often sells into the market during the last seconds of trading), Farmer Joe dumps his shares at an enormous loss ("Someone must know that something is wrong at 'X'"). Having succeeded in panicking Farmer Joe and other small investors in "X", Eddy buys back the shares at a significantly lower average price than that at which he sold them, resulting in enormous profits for Hedge Fund "Z". Eddy's bosses note his "fine" work and reward him with bonuses as the shares of "X" tumble.

Of course, there are those who will say that ultimately the stock market is "efficient", and the price of "X" will recover to an appropriate level. However, in the process we have witnessed the flow of wealth from Farmer Joe and other small investors to Hedge Fund "Z" and Slick Eddy.

Also, consider the damage to company "X", which, owing to doubt raised by the run on its shares, is suddenly unable to raise additional funds to finance expanded production of a new line of widgets, declares bankruptcy and fires its staff.

Sure, there are instances when the scientific and/or commercial progress of a company shorted by Hedge Fund "Z" is so great that Hedge Fund "Z" must buy back the shares at a higher price, but these losses are more than covered by its programmed downward manipulation of the shares of many other companies.

It is widely thought that the elimination of the Uptick Rule significantly contributed to the 2008 financial crisis from which America has yet to recover. Why has the Uptick Rule not been reinstated? Obviously, there are powerful lobbyists from the financial industry opposed to its reenactment, which would kill this cash cow.

You think that you are "investing" in the stock market? In fact, there are powerful algorithmic forces driving the markets behavior and directly affecting the value of your shares, which have nothing to do with the strength or potential of the companies in which you invest.

Obama wants to reinvigorate the US economy? It is time to reinstate the Uptick Rule, before it becomes too late.

Roger Cohen, "Israel’s Mr. Normal": Junk Journalism

Roger ("Iran is not totalitarian") Cohen is a sordid journalist, and in his latest New York Times op-ed entitled "Israel’s Mr. Normal" (http://www.nytimes.com/2013/02/03/opinion/sunday/cohen-yair-lapid-israels-mr-normal.html?_r=0), which is devoted to smearing Israeli television host-turned-politician Yair Lapid, Cohen again displays the full extent of his "artistry." Writing from Tel Aviv, Cohen informs us:

"Tom Segev, an Israeli historian, told me that voters who chose Lapid 'decided to vote for nothing, a TV image, a kind of anti-Orthodox Likud lite.'

A ballot cast for nothingness is a curious choice in a nation surrounded by turmoil. Israelis — like the French with François Hollande — went for a Mr. Normal, but a better-looking one. Lapid, a former TV talk-show host and now the second most powerful politician in Israel after Prime Minister Benjamin Netanyahu, is reasonable. He wants everyone to pull their weight, especially the welfare-supported ultra-Orthodox who avoid the draft. He thinks talking to Palestinians is a good idea.

He is also a secular nationalist who made his campaign speech about diplomacy in Ariel, a large West Bank settlement. He is a man who leans right, the darling of the jeep-driving tycoons of start-up-nation Israel who worry more about the country’s battered image than its squeezed youth and middle class, the likes of Yoraan and Anda [a young Jewish immigrant couple with whom Cohen met]. His moderation is more aura than anything."

Well, let's give this some thought. A vote for Lapid was a "vote for nothing," because Tom Segev, a historian and journalist who writes a column for Israel's leftist Haaretz newspaper, told him so?

Why didn't Cohen trouble himself to interview Lapid?

Why didn't Cohen trouble himself to interview any of the other leaders of Lapid's new party, "Yesh Atid" ("There Is a Future")?

Why didn't Cohen trouble himself to learn more about "Yesh Atid" by at least looking at their website? Oops, I forgot: Cohen doesn't read Hebrew.

But wait! Yesh Atid also has an English website (http://en.yeshatid.org.il/team), where details are provided concerning the impressive and diverse backgrounds of its new members of parliament, who include many women, two Ethiopian Jews, and a former head of Israel's General Security Service.

Lapid's "moderation is more aura than anything"? Peculiar how Cohen doesn't mention that Yair Lapid is the son of Tommy Lapid, who headed Israel's secular-liberal "Shinui" ("Change") party from 1999–2006.

Bottom line: This op-ed is junk journalism to which Cohen's New York Times readership is addicted.

Thomas Friedman, "The Virtual Middle Class Rises": Akin to Friedman's Virtual Chin

After telling us that persons opposed to Chuck Hagel's appointment as secretary of defense were "disgusting" (see: http://jgcaesarea.blogspot.co.il/2012/12/thomas-friedman-give-chuck-chance.html), Thomas Friedman might be expected to explain his friend's declarations before the Senate Armed Services Committee that Iran has an "elected legitimate government" and that he supports "the president's strong position on containment." (Hagel had to be reminded that Obama, of course, doesn't have a containment policy.) But instead, Friedman is now dallying in New Delhi, from whence he declares in his latest New York Times op-ed entitled "The Virtual Middle Class Rises" (http://www.nytimes.com/2013/02/03/opinion/sunday/friedman-the-virtual-middle-class-rises.html):

"The massive diffusion of powerful, cheap computing power via cellphones and tablets over the last decade has dramatically lowered the costs of connectivity and education — so much so that many more people in India, China and Egypt, even though they’re still just earning a few dollars a day, now have access to the kind of technologies and learning previously associated solely with the middle class.

That’s why India today has a 300-million-person middle class and another 300-million-person virtual middle class, who, though still very poor, are increasingly demanding the rights, roads, electricity, uncorrupted police and good governance normally associated with rising middle classes."

Ah, yes, the masses might be starving, diseased and clad in rags, but access to the Internet makes them "virtual" middle class. It's a bit like Friedman's virtual chin: You can still see a picture of it on the Internet in the picture accompanying his op-ed (true, his clasped hands make it a bit difficult to discern), but the reality is that age and good eating have long since obscured this feature.

But what the heck! Let's "Photoshop" all of India's poor and transform them into "virtual" maharajas in the Taj Mahal. Can you imagine - poverty cured overnight!

Why stop with India? As Friedman concludes in his opinion piece:

"And, of course, the Arab Awakening was triggered, not by middle-class college students, but by an aspiring-to-be-in-the-middle-class Tunisian vegetable seller who was abused by corrupt police. Leaders beware: Your people don’t need to be in the middle class anymore, in economic terms, to have the education, tools and mind-set of the middle class — to feel entitled to a two-way conversation and to be treated like citizens with real rights and decent governance."

Indeed, I almost forgot the Arab Spring, which has become an endless winter of slaughter and intolerance. Let's take Internet access to impoverished Egyptian villages and put a virtual end to honor killings, child brides, female genital mutilation, illiteracy, hatred of Egypt's Coptic Christian minority, abhorrence of Jews, and expectations that anyone leaving Islam should be put to death. We can create a virtual Garden of Eden!

Sorry, that's probably enough cynicism. Time to take Arnold, our 150-pound Anatolian Mountain Dog, for a virtual walk. The problem, however, with a virtual walk is the nasty reality to be found on the floor come morning.

You see, even the Internet and connectivity have their limitations. However, I often wonder, given Friedman's enthusiasm for the Internet, why he doesn't conduct his overseas interviews online, thus saving his near bankrupt newspaper hundreds of thousands of dollars in travel expenses each year and sparing the environment. Go figure.

Iran Rial at All-Time Low Against the US Dollar

Iran's economy is beginning to unravel. As reported by AFP (http://www.dailystar.com.lb/Business/Middle-East/2013/Feb-02/204794-iran-rial-hits-all-time-dollar-low-trackers.ashx#axzz2Jl0FHI5s):

"Iran's currency plummeted to an all-time low on Saturday, registering a more than 21-percent drop in a span of two weeks against the US dollar, currency tracking websites and money changers said.

The rial was traded at between 39,000 and 40,000 per dollar on the open market on Saturday, down from about 33,000 two weeks ago, according to money changers contacted by AFP."

Will the decline in the value of the rial make Iran any more flexible in its negotiations with the P5+1 over its nuclear weapons development program? Probably not. On the other hand, it certainly means that Tehran has that much less to distribute to its terrorist proxies, e.g., Hezbollah.

Joe Nocera, "The Ed Koch Show": Not Afraid to Say What He Believed

"He took office at a time when New York was in fiscal crisis, and helped his city achieve economic renewal, expand affordable housing, and extend opportunity to more of its people.

In public office and beyond, his energy, force of personality, and commitment to causes ranging from civic issues to the security of the state of Israel always informed and enlivened the public discourse.

Michelle and I send our thoughts and prayers to Ed’s loved ones, and to the city that survives him."

- President Obama on the passing of Ed Koch


"Frankly, I thought that there would come a time when [Obama] would renege on what he conveyed on his support of Israel. It comes a little earlier than I thought it would."

- Ed Koch on Obama's nomination of Chuck Hagel as secretary of defense (http://www.algemeiner.com/2013/01/07/ed-koch-on-chuck-hagel-nomination-obamas-reneging-on-his-conveyed-support-for-israel-has-come-earlier-than-i-thought/)

In his latest New York Times op-ed entitled "The Ed Koch Show" (http://www.nytimes.com/2013/02/02/opinion/nocera-the-ed-koch-show.html?_r=0), Joe Nocera observes that Ed Koch was a complicated man, driven by the need for adulation:

"What was most striking about 'Koch,' however, was the extent to which, for Hizzoner, it was always about, well, Ed Koch. He needlessly picks fights, calling people 'schmucks' and 'idiots' when they disagreed with him. He takes actions designed to win him praise in the media. One of his former aides recalls him saying, after reading the paper, that nothing of note had happened that day. What he meant was that he wasn’t mentioned. 'How’m I doin’?' wasn’t just a trademark phrase; it was an expression of a deep psychological need. On the other hand, if that is what drove him to spend $5 billion on new housing, who can complain?

. . . .

New York’s three greatest mayors were also three of its great egotists. It’s no accident."

My goodness, an egotist in politics! It just so happens, I've known more than a few.

But what set Koch apart from Chuck Schumer, for example, was his willingness to say what he believed. Notwithstanding his support for Obama's re-election, Koch did not hesitate to express his true feelings last month concerning Obama's nomination of Chuck Hagel as secretary of defense.

Is there another Democrat out there possessing the integrity to object to Hagel's appointment? Not Schumer. Which brings me to Genesis 18:20-32:

"Then the Lord said, 'Because the outcry against Sodom and Gomor′rah is great and their sin is very grave, I will go down to see whether they have done altogether according to the outcry which has come to me; and if not, I will know.'

So the men turned from there, and went toward Sodom; but Abraham still stood before the Lord. Then Abraham drew near, and said, 'Wilt thou indeed destroy the righteous with the wicked? Suppose there are fifty righteous within the city; wilt thou then destroy the place and not spare it for the fifty righteous who are in it? Far be it from thee to do such a thing, to slay the righteous with the wicked, so that the righteous fare as the wicked! Far be that from thee! Shall not the Judge of all the earth do right?” And the Lord said, 'If I find at Sodom fifty righteous in the city, I will spare the whole place for their sake.' Abraham answered, 'Behold, I have taken upon myself to speak to the Lord, I who am but dust and ashes. Suppose five of the fifty righteous are lacking? Wilt thou destroy the whole city for lack of five?' And he said, 'I will not destroy it if I find forty-five there.' Again he spoke to him, and said, 'Suppose forty are found there.” He answered, “For the sake of forty I will not do it.” Then he said, “Oh let not the Lord be angry, and I will speak. Suppose thirty are found there.' He answered, 'I will not do it, if I find thirty there.' He said, 'Behold, I have taken upon myself to speak to the Lord. Suppose twenty are found there.' He answered, 'For the sake of twenty I will not destroy it.' Then he said, 'Oh let not the Lord be angry, and I will speak again but this once. Suppose ten are found there. He answered, 'For the sake of ten I will not destroy it.'"

Ed Koch is gone, and now we are again in need of 10 righteous Democrats. From the looks of it, they're not going to be easy to find.

David Sanger, "On Iran, Hagel Muddles the Message": The Obama Administration Acknowledges It Nominated a Moron

In a New York Times article entitled "On Iran, Hagel Muddles the Message" (http://thecaucus.blogs.nytimes.com/2013/02/01/on-iran-hagel-muddles-the-message/), David Sanger writes:

"He [Hagel] became the latest official to send what many inside the administration fear has been an inconsistent and confusing message to Iran’s supreme leader, Ayatollah Ali Khamanei, about whether the Obama administration would, if there was no other option, take military measures to prevent Iran from possessing a weapon.

'It’s somewhere between baffling and incomprehensible,' a member of Mr. Obama’s own team of advisers on Iran said on Thursday night when asked about Mr. Hagel’s stumbling performance on the question during the all-day hearing. The worry was evident in the voice of the official, who would not speak on the record while criticizing the performance of the president’s nominee. For those who question whether the no-containment cornerstone of the Obama approach to Tehran is for real, or just diplomatic rhetoric, Mr. Hagel clearly muddled the message, he said."

What a surprise! And what about Hagel's claim that Iran has an "elected legitimate government"?

Do you think for even one moment that The New York Times will now reflect on its intense lobbying on Hagel's behalf? Thomas Friedman wrote a sordid op-ed on Christmas, blasting opponents of Hagel as "disgusting" (see: http://jgcaesarea.blogspot.co.il/2012/12/thomas-friedman-give-chuck-chance.html). This was immediately followed by a Times guest op-ed by James Besser (Who is he?), asking us not to allow "pro-Israel extremists sink Chuck Hagel (see: http://jgcaesarea.blogspot.co.il/2012/12/james-besser-dont-let-pro-israel.html). Next we were treated to Myra MacPherson's Times guest op-ed (http://www.nytimes.com/2013/01/09/opinion/chuck-hagel-under-attack-in-vietnam-and-on-capitol-hill.html?_r=0), telling us that Hagel needs to be secretary of defense because he was a Vietnam War hero. And then came Nicholas Kristof's op-ed entitled "In Defense of Hagel for Defense" (http://www.nytimes.com/2013/01/09/opinion/chuck-hagel-under-attack-in-vietnam-and-on-capitol-hill.html?_r=0), again reminding us that Hagel is a Vietnam War hero and assuring us that Hagel is not an anti-Semite.

Yesterday, although it recognized that "Hagel was disappointingly unsure of himself at times" during his confirmation hearing, a New York Times editorial (see: http://jgcaesarea.blogspot.co.il/2013/01/new-york-times-editorial-confirmation.html) cheerfully concluded that the Senate "should now confirm Mr. Hagel."

Good to know that The New York Times is willing to foist someone so intellectually challenged upon the United States as secretary of defense during such troubled times.

Care to comment, Chuck Schumer?

Ed Koch Dies: Opposed Hagel Nomination

New York City's colorful former mayor, Ed Koch, passed away today. Less than a month ago, Koch made known his objections to Chuck Hagel's nomination to be secretary of defense and admitted that Obama is no friend of Israel (http://www.algemeiner.com/2013/01/07/ed-koch-on-chuck-hagel-nomination-obamas-reneging-on-his-conveyed-support-for-israel-has-come-earlier-than-i-thought/):

"In an interview with The Algemeiner, former Mayor of New York, Ed Koch, a lifelong Democrat who supported President Obama’s recent re-election, expressed disappointment with the President’s decision to nominate former Nebraska Senator Chuck Hagel for Secretary of Defense.

'Frankly, I thought that there would come a time when he would renege on what he conveyed on his support of Israel,' said Koch, adding, 'it comes a little earlier than I thought it would.'

'It’s very disappointing, I believe he will ultimately regret it,' Koch said, 'and it undoubtedly will reduce support for him in the Jewish community, but I don’t think he (the President) worries about that now that the election is over.'"

Koch, who supported Obama's re-election, had the integrity to express his outrage. A pity that New York Senator Chuck Schumer, unlike Koch, has chosen political expediency instead and is backing Hagel's outrageous candidacy.