Wall Street

Is the Stock Market Being Manipulated?
Wall Street

An increasing number of economists are suspicious of the apparent "disconnect" between the stock market and "on the street" economic reality in the US. Now an exhaustive research paper provides strong evidence that their suspicions are well founded.: "We find that potentially informed parties such as corporate insiders, brokers, underwriters, large shareholders and market makers are likely to be manipulators... We show that stock prices rise throughout the manipulation period and then fall in the postmanipulation period... Prices and liquidity are higher when the manipulator sells than when the manipulator buys. In addition, at the time the manipulator sells, prices are higher when liquidity is greater and when volatility is greater. These results are consistent with the model and suggest that stock market manipulation may have important impacts on market efficiency. " From "Stock Market Manipulation: Theory and Evidence."

FBI Charges 47 after Wall Street Raid
Wall Street

AFP reports: "US federal prosecutors yesterday filed charges against 47 traders in the foreign exchange market after an FBI undercover operation exposed a murky world of fraud, corruption and narcotics trafficking. The majority of suspects were arrested in raids that saw expensive-suited traders hauled out of their offices in Wall Street and elsewhere. One group was grabbed as they gathered for cocktails in a skyscraper in New York's financial district, prior to what they believed would be a gambling junket to Atlantic City. Instead the gathering was raided in a sting operation by armed FBI agents. US lawyer James Comey said the 18-month investigation -- code-named Operation Wooden Nickel -- had exposed 'a staggering array of criminal conduct' by people working in and around the foreign exchange business."

Wall Street Piggies Circling White House, Waiting for their Next Swilling
Wall Street

Since Bush allowed them free access to the taxpayer-filled trough, the Wall Street piggies are now circling the White House, eagerly awaiting the next swilling. Goodies in the trough have included huge tax breaks for the greediest (i.e. richest), protecting the most ruthless plunderers of Americans (Enron, Worldcom, et al) from any serious consequences of what would, in another era, be hanging crimes, and promoting the shipment of US jobs to Third World nations. The Wall Street piggies say they're just being "patriotic." Yeah, right. We hear that was Benedict Arnold's argument, too!

Grasso Resigns, But Troubles Will Linger at the Big Board
Wall Street

"The controversy over Richard Grasso and the ousted chairman's pay package has the storied [NYSE] institution itself under fire. The board pushed Grasso out Wednesday less than a month after the disclosure of his $140 million pay package... Others are pointing to competition from electronic networks, changes in regulation and dissent among its members as reasons why the exchange needs more reforms. 'The word excessive doesn't do it justice,' [said] Cynthia Richson, the first corporate governance officer for the $53 billion Ohio Public Employees Retirement System... 'The NYSE sorely needs to look around at its own corporate governance. The board is way too chummy'... Barbara Roper, director of investor protection for the Consumer Federation of America, called on the NYSE to separate its regulatory function from the business of operating the exchange. 'The idea that they're going to protect us from abusive practices by the brokerage industry doesn't have much credibility,' she said."

More Call for NYSE's Grasso to Resign
Wall Street

"Pressure mounted on [NYSE] Chairman Dick Grasso to resign today when officials from public pension funds in two of the nation's largest states called for him to step down. 'We are absolutely incensed about what has happened at the New York Stock Exchange and we are calling for the chairman's immediate resignation,' Sean Harrigan, the head of the California state employees pension fund commonly known as CalPERS, said today. CalPERS is the largest pension fund in the nation and oversees about $138 billion in assets. In a letter to Grasso and in a news conference in Sacramento, Harrigan said revelations about the chairman's pay have undermined public confidence in the stock market and raised serious questions about the way the exchange is run... Controversy over Grasso's pay erupted Aug. 27, when the exchange announced that the chairman would receive a lump sum of $139.5 million in deferred compensation, mostly covering the past eight years, as part of a deal to extend his contract."

Argentina Didn't Fall on Its Own; Wall Street Pushed Debt Till the Last
Wall Street

Paul Blustein writes: "In [the late 90's], Wall Street firms touted Argentina as one of the world's hottest economies as they raked in fat fees for marketing the country's stocks and bonds. Thus were sown the seeds of one of the most spectacular economic collapses in modern history, a debacle in which Wall Street played a major role. The fantasyland that Argentina represented for foreign financiers came to a catastrophic end early last year, when the government defaulted on most of its $141 billion debt and devalued the nation's currency. A wrenching recession left well over a fifth of the labor force jobless and threw millions into poverty. An extensive review of the conduct of financial market players in Argentina reveals Wall Street's complicity in those events. Investment bankers, analysts and bond traders served their own interests when they pumped up euphoria about the country's prospects, with disastrous results."

Hooverism, Horse Hockey and Happy Talk: The Aggressive Progressive Looks at Economic Policy
Wall Street

"New York is being over run. Not by Arab terrorists, nor by drug dealers - but by short sellers hammering the stock market into the ground. For the second year in a row, the man of the year should be an animal. A Bear." So writes Stirling Newberry.

Eliot Ness Goes To Washington - But Wall Street Remains Untouchable
Wall Street

David Callaway writes, "As the last remnants of investor confidence in the integrity of the global financial markets burned to the ground early Wednesday, the curious sounds of a fiddle could be heard wafting over the nation's capital. [While the entire world is looking for someone to take charge and start slinging some white-collar criminals into jail, Michael Oxley, R-Ohio, and Richard Baker, R-La., decided to attack Eliot Spitzer, the NY Attorney General. They're worried that Spitzer's success might encourage other state regulators to take action] at the expense of a coordinated federal response, whatever that is. Spitzer, with a team of only 15 investigators in New York, has done more in three months than Congress has done in 10 years to expose the insidious nature of the problem on Wall Street... We need more state regulators going after these clowns, not less. We need more public exposure of wrongdoing, not hearings and vague promises of 'full and fair' investigations."

In Return for Wall Street Bribes, House Republicans Stopped Investigating Wall Street Scandals
Wall Street

Arianna writes, "Back in March, it looked like the [GOP-run] House Energy and Commerce Committee, fresh off its public flogging of Enron execs, had set its investigative sights on Wall Street, sending letters out to the big securities firms seeking information about their involvement with Enron's shadier practices. Some of them responded by threatening to turn off the campaign contribution spigot unless reformers on the Hill cooled their jets. The Chairman of the NRCC Tom Davis confirmed the donor uprising: 'They were very free with their complaints.' As one House GOP staffer admitted: 'We're getting questions about why the NRCC is calling us up for money while the other guys are investigating us.' The bankers' blackmail had the desired effect: the Energy and Commerce Committee has yet to hold hearings on Wall Street, and the CEOs of Merrill Lynch, Citigroup, Goldman Sachs, Lehman Bros., and J.P. Morgan have been spared their time in the Congressional hot seat." Where is the outrage?

SEC Chairman Harvey Pitt is Meeting with CEO's of Corporations Currently Under Investigation!
Wall Street

Some watchdog! According to the Associated Press, SEC Chairman Harvey Pitt has recently held private meetings with the CEO's of at least three corporations that are currently under SEC investigation. While Pitt's clandestine meetings with company executives do not formally violate government ethics rules, Pitt chose to hold them against the advice of the SEC staff attorneys. In the typical Republican fashion of covering the other Republican's butt, Ken Johnson, a spokesman for Rep.Billy Tauzin (R-LA) states, "These types of meetings clearly are inappropriate, but we take Mr. Pitt's word that it won't happen again" Yeah sure it won't - and we'll bet Ken Lay is standing in line at a soup kitchen as we type!

Wall Street Makes Al Capone Look Like A Two-Bit Mugger
Wall Street

TomPaine writes "During the Internet boom, Wall Street sold Main Street a dream: anyone could invest and profit like a professional stock picker... When analysts... talked, we listened. The media -- especially CNBC, MSNBC, and CNN -- were so enamored that they forgot skepticism and became mere megaphones for the hucksters. Lured by the hype, small investors jumped in ... and got hammered." Now that public is fleeced, the horses long gone, and the barn burned to the ground, the regulators are showing signs of life. "Their tardy concern is neither surprising nor comforting. Wall Street has many friends in Washington. In 2000, securities and investment firms gave over $92 million to federal candidates... Watch how well this patronage insulates Wall Street from real reform. Washington's regulators and their political overseers might bark, but nothing softens their bite as well as wads of cash."