Author Topic: Deregulation - It's how the rich steal from you!  (Read 1219 times)

Darcsun

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Deregulation - It's how the rich steal from you!
« on: December 22, 2011, 09:27:54 PM »
I don't think the people who want to believe otherwise will ever get it... they've been programmed for years to do otherwise.  But for those that want to know just a bit more about how the ultra wealthy keep their grip, here you go.  It's called a bear raid.  We had rules in place from 1938 to July of 2007.  In November of 2007, this happened.

It took a lot of work on the part of the rich to get the uptick rule repealled.  It only took them a few months to make a huge profit off massive short selling. They did this at everyone elses expense.  They should be shot, IMO.

Abstract

Quote
We provide direct evidence of market manipulation at the beginning of the nancial crisis in November 2007. The type of market manipulation, a "bear raid," would have been prevented by a regulation that was repealed by the Securities and Exchange Commission in July 2007. The regulation, the uptick rule, was designed to prevent market manipulation and promote stability
and was in force from 1938 as a key part of the government response to the 1928 market crash and its aftermath. On November 1, 2007, Citigroup experienced an unusual increase in trading volume and decrease in price. Our analysis of nancial industry data shows that this decline coincided with an anomalous increase in borrowed shares, the selling of which would be a large fraction of the total trading volume. The selling of borrowed shares cannot be explained by news events as there is no corresponding increase in selling by share owners. A similar number of shares were returned in a single day six days later. The magnitude and coincidence of borrowing and returning of shares is evidence of a concerted e ort to drive down Citigroup's stock price and achieve a pro t, i.e., a bear raid. Interpretations and analyses of nancial markets should consider the possibility that the intentional actions of individual actors or coordinated groups can impact market behavior. Markets are not suciently transparent to reveal or prevent even major market manipulation events. Our results point to the need for regulations that prevent intentional actions that cause markets to deviate from equilibrium value and contribute to market crashes. Enforcement actions, even if they take place, cannot reverse severe damage to the economic system. The current alternative uptick rule which is only in e ect for stocks dropping by over 10% in a single day is insucient. Prevention may be achieved through a combination of improved transparency through availability of market data and the original uptick rule or other transaction process limitations.

The complete paper - http://arxiv.org/PS_cache/arxiv/pdf/1112/1112.3095v1.pdf
« Last Edit: December 22, 2011, 09:28:36 PM by Darcsun »

Joshua

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Re: Deregulation - It's how the rich steal from you!
« Reply #1 on: December 24, 2011, 01:04:59 PM »
So....they were buying and selling shares that they borrowed? How do you borrow shares in a company? Don't you have to buy them?
...and either quite drinking or quite posting because you're going into some sort of weird AMERICA 1776 FUCK YEAH mode.

James

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Re: Deregulation - It's how the rich steal from you!
« Reply #2 on: December 24, 2011, 03:24:04 PM »
Not shares per say, but securities (among other types of assets) and it hinges on short selling.  Basically you are borrowing something at a value (x) under the condition that you will be buying that same amount later to return to the lender.  If you borrowed it at x price and sold to someone else at x price then were able to buy it again later at a lower price (y) and gave it back to the lender you make a profit.  This concept is thousands of years old.
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