Anyone who looks into the stock market beyond the simple notion that one person sells his stock to another you see it is a massive casino or scams and games which those with enormous numbers of shares can easily game.

The money lenders dream up all this bizarre schemes (like various ways you can gamble at a casino) and they use people’s retirements, savings, and so forth to play extracting huge transaction fees for every bet they place.

And of course you can sell stock you don’t own. You can sell more stock in a company that even exists! It’s all “legal” down there.

The complexity boggles the minds of almost everyone but the insiders who dream that stuff up.

The Stock Market needs to be shut down.

While CNBC’s Jim Cramer deserved what he got from Jon Stewart, I have to give credit where credit is due.

He regularly rants against the leveraged ETFs (especially the ones that let you do leveraged shorts). He says they were designed to circumvent SEC margin rules, and the SEC should outlaw them. He says that more and more they are making the market way too dangerous for retail investors, and that’s not even considering the frontrunning bye “favored clients” alleged in the WSJ article.

I’m glad to see the WSJ coverage; Cramer’s such a clown that no one ever takes him seriously, even in cases, like this, where he is right.

Even a blind pig finds the occasional acorn.

Thanks masaccio. Much appreciated.

Jim Cramer is right about the dangers posed by leveraged and inverse ETFs and the fact that they are solely designed to evade SEC margin rules. If the SEC does not act to prohibit ETFs, then sooner or later they will cause enormous and perhaps irrevocable damage to the equity markets. If we have to wait for the crisis to occur before the SEC decides to act, which is the quintessential trait of a government regulator, then what good is the SEC? Really. I don’t mean it figuratively, i mean literally. What good is an SEC that does not act proactively when the facts warrant action?

When I was writing on energy markets here, I formulated what I liked to call some Iron Rules.

Well Hugh’s first Iron Rule for Wall Street is that all the major players do only one thing and that is game the system for their own benefit. They are not there to help investors or bondholders or companies or pensioners or the economy in general. They are there only for themselves. Understand this and you will understand why the Geithner-Summers-Obama plans will not work. How could they? They were written by Wall Street insiders and defenders. They are not meant to fix anything. They are meant to loot the country by people who feel they have a right to loot it. And we are letting them do it. This is a historic theft being carried out in the open for all to see. What does this say about us?

I wouldn’t assume the SEC has your interests at heart.

ive been the victim of insider trading and other manipulation,shut these highwaymen down

What good is an SEC that does not act proactively when the facts warrant action?

The SEC promoted deregulation under Bush and had a firm hands off approach during that time. Obama has not done much better putting the business friendly and largely ineffective Mary Schapiro in as the new head. The take home message here is not to expect much from the SEC. Even after all that has happened, very weak and very general oversight is the best that we can hope for.

tyler durden of zero hedge (guest posting again at naked capitalism) is on a roll: The Rating Agency Scapegoating Catch 22

It is no secret that the administration, and especially Barney Frank, has made public enemy number one out of the rating agencies (and particularly Moody’s), mostly in line with populist rhetoric and scapegoating. Of course, when the rating agencies satisfied a role that helped housing prices go higher, keep people happier and officials like Barney Frank in office longer, all was good. When things turn sour, the Franks of the world know to keep the attention away from Washington.

Well, Barney et al may want to be careful not to antagonize the RAs too much, as, in yet another twist of fate, the success of the New Economic Order plan hinges ironically on the rating agencies and their continued rating complacency, particularly with regard to that Plan Of All Plans, the TALF.

…while the kinks are being ironed out in allowing any piece of floating garbage to be eligible for the TALF, for now only AAA-rated credit card securitizations are eligible for the program. Moody’s acknowledges this as well “TALF requires triple-A ratings.” However, and here is the rub, Moody’s does not rate either Cabela’s or WFN’s other credit card debt AAA. Now this becomes a problem as allowing a non-AAA rating as part of the TALF structure would immediately render it ineligible. So what happens? In Moody’s own brief and cryptic words: “Moody’s rates WFN and Cabela’s other outstanding credit card ABS at less than Aaa. We were not asked to rate these TALF deals.”

Yup, folks – turns out the survivorship bias of the AAA-rating is back in town. If the government wants a AAA rating to peddle it garbage to “private” investors and is aware it will not get it, it simply chooses to bypass that particular rating agency which disagrees with the government’s assessment on the pristineness of the collateral.

Deregulation began under Saint Reagan. In the early 1980’s a unit of the SEC was put in charge of getting State securities commissioners to adopt rules that permitted brokers to sell in private transactions to “qualified investors”, mainly relatively wealthy people, just as the SEC was doing. Some of them had the grace to be embarrassed about it, after hours in bars.

Either regulate the securities market credibly, and prohibit trading in these instruments by all but the wealthiest, or deem the “market” a wild west town with no credible rules or securities, and prohibit all but the wealthiest from trading at all.

ETF’s are securitized “day trading”. They are bets on market movements they themselves generate. They are another bubble waiting to percolate and explode, and we haven’t cleaned up the soap from the last explosive bubble.

Larry Summers may fall asleep when the President meets with Credit Card Companies, but I imagine he stays awake when folks talk ETF’s. What’s his “position”?

but no worries when it comes to health care reform. i’m sure the plans for “risk adjustment” regulation of any public plan that is permitted will not be gamed in favor of the insurance industry. that it looks more complicated than anything geithner has come up is no cause for concern. /s

This is all part of the bad joke that is the Geithner plan. We had all these bad players who overleveraged and shopped ratings to put together a slew of dubious deals that created this mess. And how does Geithner propose to address it? Why with more of the same, of course.

excellent post masaccio. i’m just suffering from scandal whiplash.

apparently so.

Is this why Obama gave them all our $$$?

The “system” is broken beyond belief and as stated previously, when the head of the fish stinks, so does the rest of it. Not sure if anyone has had the stomach to read Andrew Cuomo’s letter sent to Frank, Dodd, Warren and Schapiro, but it makes ones blood run cold with the knowledge that Paulson and Bernanke and probably others have gamed the system with threats in the form of language that was unmistakable. I refer to the testimony of Ken Lewis from B of A with regard to the merger of Merrill and the bank.
I’ve always wondered why Obama would surround himself with financial relics from as rotten past and I can only come to one of two conclusions. Either Obama’s handlers feared a series of corruption trials when it came to banks failures, or he was told to clam up and just let the big boys grab as much cash off the table before the roof fell in. Considering the lawsuit that was filed today, California vs Wells Fargo ( story at NY Times ), Obama may not have all that long to wait before a number of States Attorney Generals come knocking at his front door.

http://www.oag.state.ny.us/med…..3a_09.html

I’m not in a hurry to complain about leveraged shorts. If investors can be herded away from any CDSs then this step is a good one.

BUT, fore-knowledge of trading is like looking in the specialists book and that’s a very big NO NO.

All very good comments on the major issue, the increased volatility at the close of the market has been very noticeable to this artist/entrepreneur/inheritor who is either running off to his blue collar union job at 1 or 2pm Pacific time as the markets are closing, or missing all news entirely before dragging home to read up on an early morning to early afternoon Pac time work shift.

And I may comment more on that after going back and fully reading and digesting all of Masaccio’s thoughts and reader’s comments.

Yet right now, I just skimmed thru to see if anyone else noticed Masaccio in are rare mis-point of information. Unless things have greatly changed and I was on one of my infrequent no-news consumption days, the very good and informative publication Multinational Monitor is not a Dun & Bradstreet publication (even tho it’s content may be cataloged by D& B). With the great Weissman still writing for them, it must still be a Nader-descended progressive non-profit publication.

I used to read them regularly back in the next-to-last boom phase, when I was a successful businessman with some leisure time, and only stopped as I had to re-invent my livelihood and just didn’t have time to digest all their dense, informative articles. I need to back to them, and you-all readers need to discover them for real, in-depth and factual coverage of what business and globalization actually mean in people’s live if you’ve never discovered Multination Monitor.

Excellent post, Masaccio – thanks again

Fascinating. I tried to click through to the main site and kept coming back to the same place so I thought the owner was D&B. That page I linked to is obviously one of those sites that steals content from other people, not unlike what Jane said about Digg.

For those interested, here is the real link to Multinational Monitor, and here is a link to the article.

I would really appreciate it if people would use these links and click through to give them the traffic they clearly deserve.

Any financial instrument too complicated to regulate or that risks excessive volatility should be outlawed. Those that are both should be executed.

By the way, masaccio – have you read Deep Capture? I’m going through it now and it’s fascinating. And if you are familiar with it, note that Gary Weiss has been hired by Portfolio and appears to be getting paid per usage of the phrase “wack-a-doo CEO Patrick Byrne.”

I’ll take a look.

The pdf is here. I’d love to know what you think!