Matt Taibi’s Latest big Rolling Stone article came out last week to no fanfare. RS has stopped simulpublishing to the web and print edition to sell hard copies. That may or may not be working. I can’t say. But it’s killing Taibbi’s viral-ability on the internet.
Anyway. I just found the article, but only by wondering if it was up yet, then going there, and finding it. Shame because it’s really important. It goes a long way towards confirming what many of us have suspected/known all along: that Bear Stearns and Lehman Brothers were taken down deliberately by naked shorting and other schemery.
Why?
This is an email I wrote to my friend Bob Swern, one of the best writers over at Daily Kos who covers economics and the ongoing crime that is the financial sector. In it, I asked him for help in my research of the real story behind the financial collapse that wrecked the fortunes of so many, yet made trillions for a few others.
I WANT YOUR HELP TOO.
This will be an experiment in Open Source Reporting (a concept I just thought of). If you know of anything that contributes to this investigation, please provide it.
Here’s the email to Bob which lays out my line of inquiry.
I have a theory. It goes like this:
Bankers (Goldman, JPM, etc.) saw derivatives crisis years ago (2005?, 06?, earlier?)
They knew they needed Shock and Awe to get Americans to bail out their
ponzi scheme.So they drove up oil prices by speculating on oil futures among other things.
As always, any spike in oil prices causes a recession. It worked (People seem to
be acting like $4 gas prices never happened or had nothing to do with the economic
contraction. It was the single biggest factor in causing the recession) and the economy started to grind to a halt.THEN, stage 2: Sink Lehman and/or Bear Sterns. Like setting a managed forest
fire. Naked short selling, media operatives trashing the company, which WAS trash but
no more so than anyone else. They had to let one fall, maybe two.Shock and awe ensues, and then the political blitz of sky is falling and…. OKYOUCANHAVETRILLIONSOFDOLLARS!!!
Anyway, you get the gist. So, what do you think. Am I close? Do you have any
evidence to support some of the main contentions in this thesis? They are again:1. Preknowledge that the whole thing was going to tank.
2. Shock Doctrine to crash the economy by manipulation of oil and gas prices.
3. Naked shorting to bring down LehmanMy thesis probably places Goldman at the epicenter of this whole scheme. And, though
I’m not sure where it ties in, I am almost certain that the entire market rally is a scam too.I think the timing it essential too and maybe even their choice of Obama.
Anyway, there it is. Would love your opinion on the plausibility of this. And I
would love any evidence that confirms or refutes any part of it.
I’l post my own evidence soon. And there’s a lot.
Here’s a taste of the Taibbi article:
On Tuesday, March 11th, 2008, somebody – nobody knows who – made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half their value in nine days or less. It was madness – “like buying 1.7 million lottery tickets,” according to one financial analyst.
But what’s even crazier is that the bet paid.
At the close of business that afternoon, Bear Stearns was trading at $62.97. At that point, whoever made the gamble owned the right to sell huge bundles of Bear stock, at $30 and $25, on or before March 20th. In order for the bet to pay, Bear would have to fall harder and faster than any Wall Street brokerage in history.
The very next day, March 12th, Bear went into free fall. By the end of the week, the firm had lost virtually all of its cash and was clinging to promises of state aid; by the weekend, it was being knocked to its knees by the Fed and the Treasury, and forced at the barrel of a shotgun to sell itself to JPMorgan Chase (which had been given $29 billion in public money to marry its hunchbacked new bride) at the humiliating price of … $2 a share. Whoever bought those options on March 11th woke up on the morning of March 17th having made 159 times his money, or roughly $270 million. This trader was either the luckiest guy in the world, the smartest son of a bitch ever or…
Or what? That this was a brazen case of insider manipulation was so obvious that even Sen. Chris Dodd, chairman of the pillow-soft-touch Senate Banking Committee, couldn’t help but remark on it a few weeks later, when questioning Christopher Cox, the then-chief of the Securities and Exchange Commission. “I would hope that you’re looking at this,” Dodd said. “This kind of spike must have triggered some sort of bells and whistles at the SEC. This goes beyond rumors.”
[UPDATE]: Some folk seem to have a problem with my assertion that the “entire market rally is a scam”. Perhaps I should have clarified. I don’t thank all of the trades that led to this rally are bogus or illegitimate. And as time has passed, nervous investors have edged back in.
But there have been red flags going back to last spring that the market was artificially pumped up by the Fed and the few remaining big banks in a position to do so.
There has been much reporting on this issue. Here’s a good primer. But I’ve yet to find it better explained than here (go to the 4:00 minute mark):
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My last ever diary at DKos points quite directly toward who was very likely responsible for gutting Lehman Bros.
Oil prices skyrocketing had more to do with the coming peak oil and profits than anything else.
Derivatives trading tanking the economy were about profits and bonuses.
The two are only connected in that both entities control how our Congress votes, and at times, how our President acts.
The nexus of all of the corporations and their wants is our Congress and elections, where they can simply buy whoever so they vote for whatever.
Don’t start the revolution without me
dropped his 1.7 million and became very rich. I don’t care.
They’ll hang his ass out and say it’s all fixed, unless he has the good on some bigger fish. Then it’ll be forgotten.
Either way, who cares?
This shit is much more rotten than that.
But, you were on to something a little bit with the oil spike.
But single biggest?
Na.
Not even close.
Single biggest in the endless wars–you can’t keep spending half of all the money we spend (which is way more than they take in, btw, on war forever) .
No one wants to talk about the economics of being an expansionary power without ever bringing anything back from the devastated areas you just bombed to hell, but it’s the main factor in the US melt down. A massive transfer of wealth has occurred and is occurring to anything or anyone even remotely lethal. Even the schools have been militarized in some places, like the president’s hometown.
Next to that the continuos outsourcing, and loss of real income–which has caused the American middle class to spend more than they took in. Course they did–they needed to survive. Now many can’t. Some will. Some won’t.
The banks screwed them, through mortgages, 2nd mortgages, small business loans, and credit cards– and they are still screwing those people. And the brokers screwed them too by selling them worthless crap. And the government screwed them by creating the 401K. And the government is screwing them again by forcing them to pay an insurance company to provide nothing, and calling it a ‘public option’.
I say fuck them all. But I start with the military–those useless fucks have been sucking from the teat of the American taxpayer for far to long.
Fire them all.
Eh?
So that’s about as seriously as I can take this scam built on top of a scam.
No disrespect intended.
and I found the diaries! Maybe this helps. If not….well I tried.
http://www.dailykos.com/storyo…
This one has a video:
http://www.dailykos.com/storyo…
in tiny pieces…and I warn you, my typing is not at its best tonight, even without the cat in my lap. To begin:
This was apparent since at least 2006. I even told my boss that I hoped I was wrong, but I thought there would be a meltdown, and that it would be global, in Oct. 2006. So add me to the doom-sayers: I saw it coming. Why? B/c I was reading the NYT Business pages (plus Paul Krugman) and unlike the GOP I can add 1 + 1 = 2.
They couldn’t make that arithmetic work if they only had two fingers.
Don’t really think that the market rally is a scam. I think it’s more irrational exuberance:
Yay! We escaped with our money! WE are not all paupers, but we retain the ability to make paupers of the rest of the citizens here!
IOW, they are in la-la land. Without a strong middle class, the rich have no way to keep enriching themselves. They will have to move to other countries.
European countries? Taxes too high.
Third-world countries? Chances of getting assassinated too high.
Erm, yes, we DO live in interesting times.
Racketeering 101
.
He marries the best of Hunter Thompson, H.L. Mencken and Upton Sinclair. If it didn’t detract or distract from his investigative reporting and writing, I’d love to see some Democratic (or even Green or Liberal) candidate for Congress — in a very Republican Congressional District — put his or her entire campaign (as least the messaging and writing) in Taibbi’s hands and watch the fireworks; and quite possibly an “upset” win.
Mu . . .
October 28, 2009 – Taibbi:
[National People’s Action (NPA) is a Network of metropolitan, regional, and statewide organizations that build grassroots power. NPA works to build the collective political will to advance racial and economic justice. National People’s Action has over 135 organizers and support staff working in communities across the country and is a project of the National Training and Information Center.
Well….
This
+
This
=
“Open Source” Reporting and Virability
he is brave enough to unmask the liars and elites ripping off our real country blind.
He is the MAN.
I subscribe to his blog as well.
I wrote a brief diary or two, in DKos about the Bear Stearns takedown, how this mysterious gambler who gambled that the BS stock would decline by half and made a killing. Also the fact that Lehman went down a year or so after they hired a Bush family member.
for a long time, i thought people in power had some clue. but i don’t believe it anymore.
there is no grand scheme. it’s driven by greed. more likely, it is the behavior of addiction. the collective addiction of a collection of wealth-obsessed death-obsessed players. but not, as in game theory, driven by rational actors.
it is the irrational act of the invincible. those who think they are untouchable and above consequences.
and people in washington? also in complete denial. this isn’t breaking a story. the story has been told for thousands of years. we keep reliving the same history over and over again.
the thing to uncover is the new evolutionary thinkers among us and fashion some way forward. we can stop these bastards. conventional politics is completely useless. we need some other way.
that’s my opinion.
Remember the stories about the put options placed on United and American airlines just prior to 9/11? For a refresher, just one example of this story can be found here.
As in the current story, the MSM pretended that none of this happened and the official line was that those who made a killing (pun intended) were just very lucky.
No matter how much evidence can be presented, a sizable proportion of the electorate will refuse to believe that such an atrocity could occur.
As Marshall McLuhan so clearly observed many years ago: