[QUOTE=garo;282396]Ernst raises a very important issue because we have to see whether bull raids occur in the same way as bear raids[/QUOTE]Okay, but why is it the responsibility of every study that mentions bear raids to also study bull raids at the same time, lest it be accused of bias? Where do you see that the authors ever denied that bull raids have any influence?

[quote]because if they do there is nothing especially evil about bear raiders and the uptick rule wouldn't have solved anything. Nobody has ever talked about bringing in a downtick rule.[/quote]Okay, but why do you and Ernst unload so much against this study just because it doesn't attempt to be so comprehensive?

Is there something fundamentally wrong with a study just because it states a limited scope and sticks to that scope, without ever showing any bias against anything outside that scope, something that some other study could investigate?

Would you and Ernst have been so negative about this study if its scope had been only bull raids? Would you then have insinuated that the authors were biased because they did not study bear raids at the same time?

The title is "Evidence of market manipulation in the financial crisis", but it's not "ALL THE Evidence of EVERY FORM OF market manipulation in the ENTIRETY OF THE financial crisis". It doesn't claim to cover more than it does, so why all this criticism for not covering more than it specifically says it does?

Would you have gone easier on it if the title were "SOME Evidence of ONE PARTICULAR FORM OF market manipulation in ONE PARTICULAR PERIOD OF the financial crisis"? Is that it -- that the authors failed to be explicitly modest enough for your taste when they crafted the title?

[quote]Why this asymmetry?[/quote]Why not? Why does every study of bear raids have to also cover bull raids? They never [I]deny[/I] that bull raids exist, do they?

Or maybe they simply wished to study a specific set of events that happened during a specific time period? Do you find something intrinsically wrong with that?

[quote]So having skimmed the article I do think there is an agenda behind it.[/quote]Behind it, or behind the eyes with which you skimmed it?

[quote]At best singling out bear-raiders distracts from far more important topics [/quote]How did the article actually attempt to distract from those topics, as opposed to simply not covering them? Where did it claim that bear raids were a more important factor than any of the other factors with which you and Ernst are concerned?

I just don't get why it is that Ernst and you jump on an article just because it doesn't have universal scope. Now, if the article actively attempted to detract from those other topics, that might be reprehensible -- but it doesn't! It never says anything negative about the importance of effect of, or need to protect against, bull raids or anything else other than bear raids.

So, why do you guys unload on it so much?

- - -

When I posted my links and quoted the abstract, I thought I was just helping our discussion along by pointing out some guys' efforts to analyze data to produce evidence of a particular case of financial manipulation.

Are we supposed not to bring anything into this discussion that is less than encyclopaedic in scope?

[QUOTE=cheesehead;282416]I just don't get why it is that Ernst and you jump on an article just because it doesn't have universal scope. Now, if the article actively attempted to detract from those other topics, that might be reprehensible -- but it doesn't! It never says anything negative about the importance of effect of, or need to protect against, bull raids or anything else other than bear raids.

So, why do you guys unload on it so much?[/QUOTE]

It's not the lack os scope so much as the fact that its designated thesis and culprit are completely wrong-headed.

And the dangerous thing about such clueless academic studies which ignore the real issues such as rampant unprosecuted insider trading, the deadly embrace of government and big finance, and modern capital markets which are predominantly a parasitic wealth transfer mechanism from the dwindling remnants of the productive economy to the well-connected insiders (the ubiquitous "bull raids" and pump-and-dump fests by the MSM are a highly effective mechanism of fleecing the sheep here) - the dangerous thing is that they provide cover for regulatory authorities to engage in blame-shifting games and market interventions such as short-sale bans, rather than going after the real culprits.

We've seen this sort of thing over and over and over again in the past 4 years, and it's one of the big reasons why nothing has been solved. So pardon us for being a bit techy on the subject.

[QUOTE=ewmayer;282469]...modern capital markets which are predominantly a parasitic wealth transfer mechanism from the dwindling remnants of the productive economy to the well-connected insiders (the ubiquitous "bull raids" and pump-and-dump fests by the MSM are a highly effective mechanism of fleecing the sheep here)[/QUOTE]

While I'm on the subject of pump-and-dump scams...

[url=http://www.siliconvalley.com/ci_19556801]Zynga IPO seen as milestone -- for Main Street as well as Wall Street[/url]
[quote]By Peter Delevett

[email]pdelevett@mercurynews.com[/email]

Posted: 12/15/2011 03:59:13 PM PST

When social gaming giant Zynga goes public Friday, it will be more than the year's most anticipated tech IPO. It will be further proof that social media has gone mainstream.

"Where we are today with Facebook and LinkedIn and Zynga is where we were with the Internet 10 years ago," said Clara Shih, CEO of San Francisco-based Hearsay Social, which helps large companies use social media to better interact with their customers.

"There are profound societal and cultural implications when the majority of time people spend online is in some kind of social environment."

Zynga on Thursday set an opening price of $10 each for the 100 million shares it's bringing to market, which represents almost 15 percent of the company. That will net the 4-year-old outfit and its investors a cool $1 billion -- making it the tech industry's biggest stock debut since Google's (GOOG) -- and reportedly give it a market valuation of $7 billion.
[b]
But Sam Hamadeh, an investment banking veteran in New York, predicts that will be only the beginning of the stock's wild rise. Once retail investors are able to buy the stock on the open market, the company's value "could at least briefly top $20 billion, and that will get everybody's attention," said Hamadeh, CEO of PrivCo.com, which compiles financial data on private companies.

"This will be closely watched in boardrooms across corporate America," Hamadeh said. "Companies get acquired, new divisions launched and organizations restructured because of a high-profile IPO like this."[/b][/quote]

More pertinently, do idiot pumptard 'analysts' like Mr. Hamadeh get fired because of high-profile IPO-mispredictions like this? Because the ZNGA IPO is certainly getting a lot of attention, after shares opened for trading at $11.50, "briefly giving the company a valuation of over $8 billion" - only a wee bit short of Mr. H's breathless opening-day-pop prediction - but the euphoria lasted all of about 5 minutes:

[QUOTE]Nobody has ever talked about bringing in a downtick rule. Why this asymmetry?[/QUOTE]

The asymmetry is based on market risk. There is no inherent market risk in a sudden rise of one or more stocks. There is clear and obvious market hazard from a series of bear raids. This is kind of a "high tide floats all boats" situation where even a small receding of the tide can precipitously drop all boats. You can understand the regulators wanting to limit such calamities.

DarJones

Right and have the regulators succeeded so far? And this much ballyhooed uptick rule, did it prevent the biggest single day loss in Wall Street history?

[QUOTE=Fusion_power;282545]The asymmetry is based on market risk. There is no inherent market risk in a sudden rise of one or more stocks.[/QUOTE]

There is always risk involved in asset mispricing, irrespective of direction.

[QUOTE=garo;282625]And this much ballyhooed uptick rule, did it prevent the biggest single day loss in Wall Street history?[/QUOTE]Garo,

Can you describe the logical fallacy that is embedded in that question?

[QUOTE=ewmayer;282626]There is always risk involved in asset mispricing, irrespective of direction.[/QUOTE]

Actually, I'll go further than that: Asset mispricing is always economically damaging, due to the misallocation of capital (physical, monetary and human) it entails. The 2 most-recent large-scale episodes of such - the dotcom and housing bubbles - were both inflationary-mispricings. And indeed, in both cases there was great pro-bubble impetus from governments and their central banks, due to various misguided policies. In the case of housing we had the dream of "the ownership society, everyone happily ensconced in a home, working productively to pay off that 30-year mortgage, and thus keeping unemployment low and economic demand growing robustly. The resulting insane binge of credit (i.e. debt) creation, leverage and price/demand distortion nearly crashed the global financial system (it may do so yet) and left housing less affordable than in recent memory.

In fact many (if not most) of the most-destructive historic episodes of asset-price distortion (manias/crashes/bubbles/busts) started with mispricing in the upward direction. Can anyone recall a pessimal-mania coming from seemingly out of nowhere, causing prices of some or many assets/commodities to crash, followed by an even-more-destructive bubble which causes prices to violently revert upward? I mean you can have prices of e.g. a commodity crash due to a short-term glut, but those conditions tend to be quickly self-correcting. Collective over-optimism and euphoria seems to be something humans are more dangerously prone to than collective gloom.

funny, we talk about bubbles, but not about "pits" or anything..the language itself is asymmetric. And the crashes that follow...ouch!

[QUOTE=ewmayer;282639]Collective over-optimism and euphoria seems to be something humans are more dangerously prone to than collective gloom.[/QUOTE]

Collective gloom tends to be self-defeating: the position where most people think an asset is worthless and someone thinks it's worth 10% of what it last traded for is one in which that someone risks a medium amount of money and might make a lot ... look at how the share prices of clearly-doomed companies continue to fluctuate vigorously before the final delisting.

Generally the peaks of gloom are over-reactions from the peaks of euphoria: consider the extremely good trade of sticking your money in Barclays and HSBC stock in November 2009 and taking it out a year and a half later.

Well-known econo-blogger Jesse of the blog named Jesse's Café Américain comments on the latest MF Global news, namely that in its final hours MFG apparently pledged customer assets - including physical assets held custodially in warehouses - to meet margin calls, and the bankruptcy trustee is flagrantly ignoring most-basic property law by treating such custodial assets the same as claims-subject-to-haircut-in-bankruptcy, even as the owners (or so they thought) of the stuff continue to be charged warehousing fees:

[url=http://jessescrossroadscafe.blogspot.com/2011/12/attempt-to-seize-and-liquidate-customer.html]Trustee to Seize and Liquidate Even the Stored Customer Gold and Silver Bullion From MF Global[/url]
[quote]The bottom line is that apparently some warehouses and bullion dealers are not a safe place to store your gold and silver, even if you hold a specific warehouse receipt. In an oligarchy, private ownership is merely a concept, subject to interpretation and confiscation.

Although the details and the individual perpetrators are yet to be disclosed, what is now painfully clear is that the CFTC and CME regulated futures system is defaulting on its obligations. This did not even happen in the big failures like Lehman and Bear Sterns in which the customer accounts were kept whole and transferred before the liquidation process.

Obviously holding unallocated gold and silver in a fractional reserve scheme is subject to much more counterparty risk than many might have previously admitted. If a major bullion bank were to declare bankruptcy or a major exchange a default, how would it affect you? Do you think your property claims would be protected based on what you have seen this year?

You always have counter-party risk if you hold gold and silver through another party, even if they are a Primary Dealer of the Federal Reserve. As Ben said, the Fed offers no seal of approval.

If a Bankruptcy Trustee can pool your bullion into the rest of the paper assets and then liquidate it at prices that are being front run by the Street, you will have to accept whatever paper settlement that they give you.

The customer money and bullion assets are not lost, or rehypothecated or anything else. This is a pseudo-legal fig leaf, a convenient rationalization.

The customer assets were stolen, and given to at least one major financial institution by MF Global to satisfy an 11th hour margin call in the week of their bankruptcy, even as MF Global was paying bonuses to its London employees.

And in an absolutely classic Wall Street move, they are still charging the customers storage fees on the bullion which they have misappropriated from them. lol.

And now that powerful financial institution does not want to give the customer money and metal back. And they are apparently so powerful that the Trustee and the Court are reluctant to try and force its return to the customers, which is customary in this type of preferential distribution of assets prior to a bankruptcy, much less assets that were stolen. And keep in mind that in those last days the firm sent checks instead of wire transfers to customers so they could bounce them, and in a few cases even reversed completed wire transfers!

And so in the great Wall Street tradition they are trying to force the customers and the public to take the loss. The regulators and the exchange are aghast, and are trying to imagine how to resolve and spin this to preserve investor confidence and prevent a run on the system.

'Let them eat warehouse receipts.'

For many this would have been unthinkable only a few months ago. They had been cautioned and warned repeatedly, but chose to trust the financial system. And now they are suffering loss and anxiety, frozen assets, and the misappropriation of their wealth.

How more plainly can it be said? The US financial system as it now stands cannot be trusted to observe even the most basic property rights as it continues to unravel from a long standing culture of fraud.

Get your money as far away from Wall Street as is possible. And if you want to own gold and silver, take delivery and store it in a secure private facility outside the fractional reserve system.[/quote]
The Barron's piece is available via the above commentary.