Wednesday, November 29, 2006

Today's Laugh

Today's laugh is the NASD-New York Stock Exchange regulatory merger, and the efforts to spin it as a "reform" and not what it is, which is a reduction in an already inadequate regulatory setup.

For example, we have this in The Washington Post:


[NASD chairman Mary] Schapiro said the merger would not result in less oversight. "There are still many eyes" watching the securities industry, such as the SEC and the 50 states.

So don't worry, she seems to be saying, we're closing one precinct but there are still plenty of cops out there.

In justifying the merger, the NASD, NYSE and SEC chairman Christopher Cox talked about efficiency and removing duplicative regulatory activity and so on, without specifying precisely what regulatin' is duplicative. Gee guys, if there is unnecessary regulatin' going on, how about coordinating what you do instead of one of yas self-destructing?

This seems like a terrific idea from the Wall Street perspective, but just to make it more terrific they're giving every Wall Street firm a lovely cash gift of $35,000 each.

Floyd Norris implied in the New York Times today that this smacked of "vote buying." Nonsense. Did regulators every need a special reason to be nice to Wall Street?


© 2006 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

Tuesday, November 28, 2006

Wal-Mart's De-Employment Program For India

Word is spreading through the galaxy today about what must surely be one of the most awful ideas of recent history -- a plan to set up Wal-Mart superstores in India, of all places. Here's a Reuters story on the subject.

As anyone who has been there for more than thirty minutes can attest, if there is one thing that India doesn't need it is more stores. Since its many thousands of shops are a path to upward mobility for even the poorest Indians, Wal-Mart's arrival would be devastating. It would be nothing less than a massive de-employment program.

As I pointed out in my column a couple of weeks ago, when Indians are pushed up against the wall, violence can erupt. Delhi merchants have taken to the streets because of a plan to shutter many of their shops, and civil disobedience (or worse) is more likely than not if Wal-Mart arrives.

One report today says that the deal has been sucked into a "political whirlpool." Left-wing parties, "which provide crucial support to the Congress-led UPA government, asked trade unions to launch a nationwide action against the entry of Wal-Mart and other multinational retailers into the domestic market."

Hopefully this terrible idea will be protested peacefully, then consumed by India's legendary red tape, and then die a quiet death.


© 2006 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

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Sunday, November 26, 2006

The Naked Shorting Cult's Hysteria Escalates

Several times in the past, such as in this item, I've pointed out how the anti-short-selling "stock counterfeiting" conspiracy theorists have many of the attributes of a cult. More evidence on that point came to light over the weekend.

One key characteristic of cults is paranoia, which the anti-shorting movement has in abundance, and an increasingly bizarre disconnect from reality.

So note the latest missive from the anonymous anti-shorting crackpot "Bob O'Brien" (identified by the NY Post an ex-used medical equipment peddler named Phil Saunders). "O'Brien's" specialty is taking meaningless trading data and turning it all into a "phantom stock" conspiracy. He then uses the data to orchestrate letter-writing campaigns aimed at diverting regulators and members of Congress from real stock market issues, such as brokerage sales practices and microcap fraud.

On Thanksgiving, while you and I were gouging ourselves on turkey, "O'Brien" was pumping out a dog's breakfast called, I kid you not, "It's The End Of The World As We Know It." In an incoherent mishmash, "O'Brien" portrays the entire repo market as infested by his obsession, "naked short-selling." (That's a form of trading that pretty much everybody, except the naked shorting loons, feels has been exaggerated wildly out of proportion.)

Here's the punch line:


What we have here is a mega, systemic-meltdown-scale problem caused by the brokers treating the markets like their own private piggy bank, from which they can take money and leave IOUs, to be tossed when they've driven the companies to zero. And our regulators, our elected officials, and our media have completely failed us. They have one and all colluded to facilitate the theft of OUR MONEY, and are now scrambling as the size of the theft becomes apparent.

Another classic of the genre, which also appeared on Thanksgiving, was generated by the prolific anti-shorting activist "Bud" Burrell on the sanitycheck website. This one was entitled, "Discovery of Massive Links to Financial Terrorism, Global Fraud, and Treason/Betrayal." Burrell, apparently influenced by the new James Bond film, set forth his thesis in some detail.

The concluding paragraph is a dilly:

"What is out there? We now have a international national network of criminal and terrorist elements working together to crush this country by destroying its financial system. This has all been constructed and operated right under the noses of those who are supposed to protect us. Clearly, they are not competent to do this job, no matter what the reason. Those who are attempting to correct this thievery simply are outgunned, or they are over their heads technically.

"We are left with no recourse but to take this to the highest levels of the Government, making every attempt to stay out of any part of the Government with responsibility for financial activities. This needs fresh eyes, not conflicted ones with motivations to protect themselves rather than us. This will be my last communication with you as a group. This has simply turned too dangerous, literally insane.

"Until I can pass this off to RESPONSIBLE AND ACCOUNTABLE PARTIES, I AM GOING TO STEP AWAY. I will continue to support those of you I have established personal relationships with, but I am otherwise off the playing field. Someone is dirty in EVERY organization that has intersected this."

It's "us versus them," friends. So drop everything you're doing and write your congressman and your senator and the president and tell them to focus on this baloney. After all, we don't want them wasting their time on real problems, do we?


© 2006 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

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Saturday, November 25, 2006

Another Perspective on India

I received a thoughtful email from a gentleman in India on my Forbes.com column on India and its problems/opportunities. I thought he made some good points, so I'm taking the liberty of excerpting it below:

"I wish your criticism was aimed at some of the Multinationals (particularly the American ones) in India instead, who produce lousy cars (which make your/your wife's lungs go bad); these same smoking (industrial) companies don't even bother to develop the infrastructure around their own workplaces, let alone making it a better society to live in, so why would you not find the infrastructure choking?

"Have you ever questioned the fact that for cheap English speaking and technologically educated labor, every damn organization on planet earth is rushing to India in the interest of your Wall Street? Yet in your own country, there is a hue and cry about the b****y Indians. It just follows the old law of Economics - every country will create / produce what it is best at doing.

"Unfortunately, for your own country, all you do is consume gas and pollute the rest of the world and live on the cheap wares from China. I think \n you should know where to draw the line to this hypocrisy."

He's right. The multinationals that come to India certainly deserve a large measure of the blame, to the extent that they contribute to the worsening environment of India.

True, the godawful conditions in India are largely a result of home-grown development, and the Indian government has a responsibility to protect itsr people from rampaging industry, be it foreign or domestic.

But when a government is too indifferent or corrupt to do anything about a smoke-belching factory or a environmentally atrocious land development, what is the moral responsibility of the developer?

The answer in India is "none," and it is not the right answer.

© 2006 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

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Sunday, November 19, 2006

For the Jihadist in Your Life


A reader brings to my attention this candidate for Bad Taste Product of the Year -- a footstool emblazoned with the American flag, carried by our favorite red-ink-gushing online retailer, Overstock.com.

What better and more convenient way to wipe your feet on Old Glory! In fact, it's called just that: the Old Glory Footstool. I'm serious.

This is a perfect gift for the jihadist in your life, whether he be pursuing the crazy "stock market conspiracy jihad" that obsesses Overstock's CEO Patrick Byrne, or perhaps some less imaginative jihad.

On Sept. 8, an Overstock customer pointed out in the footstool's "user reviews" section the dreadful taste at work here, noting "Why would you place an image of our flag on a piece of furniture that will be meeting the undersides of shoes?" The item remained on sale.

One might argue that this is an example of the troubles facing Overstock, whose shares have plummeted as Byrne pursues his "jihad" against the nonexistant "stock counterfeiting."

One might argue that Overstock really needs some better merchandise than junk like this if it is going to reverse its declining sales and plummeting share prices.

Or one might argue that Byrne has hit on a brilliant idea here.

After all, the U.S. isn't very popular in quite a few countries, and I'll bet that what we have here is an effort to tap into that potentially massive market of people who would just love to wipe their footsies on Old Glory.

Note the potential customer below, photographed in Baghdad a few months ago:



Sounds like a winning plan to me.

© 2006 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

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Friday, November 17, 2006

More 'Muckraker' on India

My latest Forbes.com column is a "reporter's notebook"-style reflection on India.

Meanwhile I see that the Senate must have read my last column, as it overwhelmingly approved the U.S.-India nuclear deal yesterday.

The Senate correctly rejected an amendment that would have required India to cut its military ties to Iran. My feeling is that India needs to take such steps, but should be persuaded to do so voluntarily -- not bludgeoned or bullied. The lathi doesn't get results in India, not during the Raj and not today.

© 2006 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

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Wednesday, November 15, 2006

The Baloney Brigade's Assault on Wikipedia

Update: It later was revealed that the persistent vandal I describe below -- the one who with 45 identities -- was Overstock.com's "director of social media," Judd Bagley. He also later confessed to running Overstock.com's antisocialmedia.net smear site, which was anonymous when this post was published. See this subsequent post, and others tagged "Judd Bagley."

The Baloney Brigade anti-shorting loons hate Wikipedia, and with good reason: the user-edited encyclopedia is effective and ruthless in dealing with organized crackpots.

When anti-shorting poster child Overstock.com sought to turn its Wiki article into a house ad in August, it was swiftly rebuffed, with an editor chortling "you can't spam your advertising here."

These nuts have been trying to pull the same trick in other articles on naked short-selling. The anonymous anti-shorting con artist "Bob O'Brien" has orchestrated the onslaught on his psycho "sanitycheck" website and as Wiki users "Boboncans," "Bobobrien" and Lord knows how many clones. As noted previously in this blog, "O'Brien" pushes the agenda of pump-and-dump stock promoters and inept CEOs who want to suppress short-selling and intimidate critics.

One Baloney Brigadier [later identified as Overstock.com director of social media Judd Bagley has sought to vandalize and harass Wikipedia via dozens of multiple identities -- a favorite Baloney Brigade tactic, used to generate multiple SEC comment emails.

So far he has been caught a grand total of 45 times by official Wikipedia count (see here and here). The same character runs an anonymous attack website of his very own, and has hijacked anti-Wiki websites. I find it hard to believe he's not being financially subsidized, at the very least, by a certain venom-spewing CEO who has promoted his site on penny stock websites.

The anti-shorters have had some limited success, front-loading the article on their dispsy-doodle hero Patrick Byrne with fluff about his "first class education" PR stunt. But for the most part, all the money and energy are going to waste so far. An effort by this multiple-ID weasel to create an article entitled "Market Reform Movement" -- what the anti-shorting nuts, and only the anti-shorting nuts, call their obsession -- was deep-sixed.

This/these same buffoon/buffoons have also vandalized articles they don't like and have smeared me, saying that I'm editing Wikipedia using multiple IDs. (Accusing people of stuff you do yourself is another favorite Baloney Brigade tactic.)

Wiki founder Jimbo Wales laid that lie to rest a couple of days ago, saying that "the claims have already been investigated and dismissed."

Mark Cuban, who was suckered by an anonymous email from Overstock flack Judd Bagley pushing this lie, has yet to issue a retraction or apology.

Will this mollify the Baloney Brigade? Off course not. Jimbo Wales is now part of a conspiracy involving half the civilized world. I'm sure that Baloney Brigade chief troubadour Byrne, who has been making the rounds of penny stock "broadcasting" and anti-Wikipedia websites, will make that point fairly soon.

You can't fault the guy. Whining like a baby on penny stock websites is a lot more fun than trying to convince people to buy footstools bearing the American flag and other junk in the Overstock warehouse.

Kind of makes you wonder why some regulators are taking these knuckleheads seriously.

P.S. As you can see from Overstock's recent 10-Q, the company received one helluva subpoena last May. It required that the company produce documentation on everything from its accounting to "communications regarding short selling, naked short selling, purchases and sales of Company stock, obtaining paper certificates, and stock loan or borrow of Company shares." Whatever became of that investigation, anyway?

© 2006 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

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Saturday, November 11, 2006

Working Well With a Handicap

The New York Times today has an illuminating interview with Harold "Terry" McGraw III, chief executive of my alma mater, the McGraw-Hill Companies. Terry has run the company since 1993, and he began with a major disadvantage, at least from the standpoint of the skeptical writers at Business Week -- he was the scion of the founding famiy.

He got a lot of razzing for that from some people at BW, and it proved to be unfair. He has succeeded smashingly by pretty much any measure.

I had few dealings with Terry, directly or indirectly, and that's one of the best things any investigative reporter can say about a CEO. Not once did I ever hear about any effort to influence, through Terry, the content of any of the tough stories I had written or were in the pipeline.

In fact, he was a stalwart advocate in the stormiest of times.

I thought back on Terry during the recent controversy over Sharesleuth, Mark Cuban's insider trading vehicle. Whatever else one may say about Terry McGraw, it would have been inconceivable for he or his predecessors to have profited from upcoming stories in Business Week. Cuban, by contrast, has turned a taboo into a "business model."

It's also interesting to compare Terry's self-effacing manner with the bloviating of Patrick Byrne of Overstock.com, who also chose his parents well.

Overstock is gushing red ink, with some analysts questioning its future solvency and observing that Byrne is famously diverted by his kooky "jihad." In a mockery of corporate governance, his chairman-father -- and not Byrne -- quit over the moronic "jihad" shtick. (If that's not an example of the flaccidity of all too many corporate boards, I don't know what is.)

The market has been giving Byrne a shellacking, sending him on a dizzying tailspin that is sad to watch. Meanwhile, Terry McGraw and his shareholders have been rewarded for his good work by a share price that has beaten the S&P 500 in recent years.

The market is the great referee of corporate America. While it is heaping praise on McGraw, it is giving Byrne the same message conveyed by Morgan Freeman after beating up a thuggish fighter in Million Dollar Baby: "Get a job, punk."

If that's not corporate democracy, I don't know what is.

© 2006 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

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Wednesday, November 08, 2006

Byrne's Hobby Takes a Dive

OK, I am a bit late with this, but what the hell.

I see that my favorite chief executive/conspiracy theorist/journalist-taunter/short-and-analyst-suer/"miscreant"-blamer learned on Nov. 6 that his hobby of running Overstock.com (as opposed to his profession of pushing conspiracy theories and posting on crackpot message boards) did not do so well in the third quarter.

Patrick Byrne's claim on the coveted title of Worst CEO of the Year was further solidified by the lousy numbers, which nauseated even the most hardened Overstock-watchers.

As usually happens with CEOs who whine about short-selling, reality has a way of coming back and smacking the exec -- and his shareholders -- right in the kisser.

Sorry if I don't shed any tears for what has got to be some of the dumbest shareholders I have ever encountered outside of the penny stock world (which Overstock may soon be joining, unless I miss my guess).

In fairness, I should point out that while it is perfectly clear to me that Overstock is just a hobby to the obviously hopelessly bored Byrne, as compared to his passion for nutty Wall Street conspiracy theories, he said in a conference call that he is hard at work in his office, grinding away. "I am here at Overstock and focused on this," said Byrne.

I'm not sure that's necessarily a good thing, to tell you the truth, but I am glad that he is honed in on his company, plugging away for his hapless shareholders.

UPDATE: Aw shucks. Byrne gave one of his patented drivel-spews on Nov. 10, in an interview with an Internet radio outfit and rent-an-analyst shop that pushes penny stocks for a price ($20,000 a pop, according to disclosures buried deep down on the site).

Makes sense Byrne is kicking in with such characters, given that Overstock.com is poster child of Future Penny Stocks of America. So, two days after promising to "focus," looks like the Byrne focus is driffffffftinnnnnnng again. Surprise surprise. He even called Senator so-and-so a.... ehh, who cares? Important thing is that, as usual with this laughingstock of a CEO, everything he says is usually -- as they used to say in the Vietnam War -- "inoperative."

Here's Herb Greenberg's take on Byrne's latest wackiness, plus a thought-provoking insight from a convicted felon named Sam Antar, ex-CFO of Crazy Eddie:

"Is he an irrational man running a public company or a rational liar?

"Maybe he is an irrational liar?

"I cannot get into his head. These things as questions to be considered.

"However, as an ex-felon and former liar myself I will repeat Rule #5 of spinning posted earlier in your commentary – 'More Overstock: Why Investors got Byrned':

“'When you can no longer spin and are exhausted you shut up and offer no guidance to investors.'

Perhaps it should apply to irrational people too."

Amen.


© 2006 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

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Monday, November 06, 2006

'Muckraker' is Launched

That's the name of my new column in Forbes.com. The press release announcing the birth of Muckraker is here.

I'll be writing about much the same subjects as I've covered in this blog and the book, with an expanded scope. Stay tuned.

© 2006 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

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