Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
Evidence of Market Manipulation in The Financial Crisis
#1

Evidence of Market Manipulation in The Financial Crisis

Catherine, News & Commentary on February 21, 2012 at 7:02 pm
[Image: solgoldstar.jpg]
* The Solari Gold Star signifies a "must read" article.
"When 100 million shares are borrowed on a single day and then returned on a single day, the evidence that this is a concerted action is hard to refute. The likelihood of such an event happening by coincidence is one in a trillion."
[Image: Evidence-of-Market-Manipulation-in-The-F...25x104.jpg]
[Click image to view PDF]
Continue reading the article . . .
"Where is the intersection between the world's deep hunger and your deep gladness?"
Reply
#2

Mystery predators may have contributed to fiscal collapse in 2007: research

December 19, 2011[Image: uuuuuyttrr.jpg]Enlarge
Market activity for Citigroup over a two-year period starting January 1, 2007. Top panel shows vertical bars for the daily high and low stock price. Lower panel shows total short interest (yellow), trading volume (gray), and daily change in short interest (red). Arrows indicate November 1, 2007. Image: arXiv:1112.3095v1 [q-fin.GN]
(PhysOrg.com) -- As the nation bristles, camps out, and opines against the destructive role of banks in bringing down the economy, a group of scientists has released a study that shows a critical piece of the puzzle went missing, and that piece continues to go ignored, to everyone's peril, including the banks.
  • [Image: img-dot.gif]
  • [email=?subject=Mystery%20predators%20may%20have%20contributed%20to%20fiscal%20collapse%20in%202007:%20research&body=http://www.physorg.com/news/2011-12-mystery-predators-contributed-fiscal-collapse.html][Image: img-dot.gif][/email]
  • 88
  • [Image: img-dot.gif]
  • [Image: img-dot.gif]
  • [Image: img-dot.gif]
  • [Image: img-dot.gif]
  • [Image: img-dot.gif][/url]
  • [Image: img-dot.gif]
  • [url=http://www.physorg.com/news/2011-12-mystery-predators-contributed-fiscal-collapse.html][Image: img-dot.gif]

Ads by Google
Residential heating oil price - Your local heating oil dealer in Boston . Get a quote now. - AllianceExpress.com/HeatingOil

Their new study shows that banks themselves were under attack by other players on Wall Street. The study authors at the New England Complex Systems Institute (NECSI) retraced events to show that at a critical point in the financial crisis, the stock of Citigroup was attacked by traders by selling borrowed stock (short-selling) which may have caused others to sell in panic. The subsequent price drop enabled the attackers to buy the stock back at a much lower price.
This kind of illegal market manipulation is called a bear raid and the new study supports earlier suspicions that the raids played a role in the market crash.
The study has direct evidence. Through its analysis of stock market data not generally available to the public, namely the borrowing of shares, NECSI reconstructs the chain of events.
On November 1, 2007, the number of borrowed Citigroup shares jumped by 100 million shares, a value of almost $6 billion. Six days later, a similar number of shares was returned on a single day.
Shares are generally borrowed to sell on the market. The trading on November 1 was almost four times the usual volume. The newly borrowed shares represented over three-quarters of the volume on that day. When a large volume of shares is sold it can drive prices down. The price of shares that day dropped by almost 7 percent. By the time the shares were returned, it had dropped nearly 20 percent.
Professor Yaneer Bar-Yam, President of NECSI, maintains this was no "freak" or coincidental event. "When 100 million shares are borrowed on a single day and then returned on a single day, the evidence that this is a concerted action is hard to refute. The likelihood of such an event happening by coincidence is one in a trillion."
The NECSI scholars are also voicing concern about how the incident was allowed to happen. Selling shares to deliberately cause a price drop to induce others to buy or sell is illegal, but enforcing the law after it is violated is much less effective than preventing it from happening in the first place, they maintain.
"There used to be a rule that prevented it from happening by forbidding borrowed shares from being sold in large blocks that drive the price down," said Bar-Yam. "The Securities and Exchange Commission repealed that rule, known as the price test or uptick rule, on July 6, 2007."
Last year, the authors of the report sent preliminary results of their study to the financial services committee of Congress, and Congressmen Barney Frank and Ed Perlmutter sent it to the SEC.
Unfortunately, Professor Bar-Yam says that he hasn't seen any action by the SEC to identify or prosecute those responsible or to prevent its occurring in the future.
After the market crash, the SEC received thousands of requests from the public to reinstate the price test rule. Hedge funds that invest the money of wealthy individuals opposed its reinstatement. Eventually, the SEC put into place an "alternative" rule that only applies a price test when the price of ashare drops more than 10 percent.
Professor Bar-Yam points out, "This watered-down rule would not have stopped the bear raid on Citigroup on November 1, 2007. This is only one example of the deleterious effects of the weakened rule. The overall effect of unregulated selling of borrowed shares is surely much larger and continues today."

More information: Evidence of market manipulation in the financial crisis, arXiv:1112.3095v1 [q-fin.GN] http://arxiv.org/abs/1112.3095
Abstract
We provide direct evidence of market manipulation at the beginning of the financial crisis in November 2007. The type of 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 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 financial 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 on a single day six days later. The magnitude and coincidence of borrowing and returning of shares is evidence of a concerted effort to drive down Citigroup's stock price and achieve a profit, i.e., a bear raid. Interpretations and analyses of financial markets should consider the possibility that the intentional actions of individual actors or coordinated groups can impact market behavior. Markets are not sufficiently transparent to reveal even major market manipulation events. Our results point to the need for regulations that prevent intentional actions that cause markets to deviate from equilibrium and contribute to crashes. Enforcement actions cannot reverse severe damage to the economic system. The current "alternative" uptick rule which is only in effect for stocks dropping by over 10% in a single day is insufficient. Prevention may be achieved through improved availability of market data and the original uptick rule or other transaction limitations.

Provided by New England Complex Systems Institute (news : web)
"Where is the intersection between the world's deep hunger and your deep gladness?"
Reply
#3
There is much good material on the manipulations that caused the crash and depression back in the 20's/30s in America and spread to Europe and beyond. Some things never change - including the fact that most don't learn from history.
"Let me issue and control a nation's money and I care not who writes the laws. - Mayer Rothschild
"Civil disobedience is not our problem. Our problem is civil obedience! People are obedient in the face of poverty, starvation, stupidity, war, and cruelty. Our problem is that grand thieves are running the country. That's our problem!" - Howard Zinn
"If there is no struggle there is no progress. Power concedes nothing without a demand. It never did and never will" - Frederick Douglass
Reply
#4
"... most don't learn from history".

I remember reading somewhere that 'one of them' reminded his colleagues that the American people do not read.

Stated differently, most people have no curiosity about things, nor any idea how to satiate that curiosity, nor how to follow that curiosity through the spiral chain of of discipline, interest, concern, connection, resonance and change.

Most people do not see these kinds of things as personally-relevant.

This is why my single most-recommended book (written by the CEO of a trends forecasting company for Fortune 500 clients and a professor at Juilliard) is

The Everyday Work of Art: Awakening the Extraordinary in Your Daily Life

http://www.amazon.com/Everyday-Work-Art-...157071438X

http://www.everydayarts.info/


A quote from my review at Amazon:

"This ought to be required reading for every individual before they graduate from high school.

Of all the books that I recommend to others (of which there are many), this remains at the very top of the list...numero uno.

Of the over 200 books I have read on the use of one's mind, body and spirit to achieve and create excellence in one's pursuits of life, this provides the most complete survey of how to use one's sensory intake --how to pay attention -- than the rest."
"Where is the intersection between the world's deep hunger and your deep gladness?"
Reply


Possibly Related Threads…
Thread Author Replies Views Last Post
  Conjuring Financial Destruction Through Utter Elite Selfishness & Greed David Guyatt 0 6,839 11-09-2018, 02:01 PM
Last Post: David Guyatt
  Starikov: Banksters Began the Dismantling of the Global Financial System Paul Rigby 2 5,837 22-08-2016, 09:38 PM
Last Post: Paul Rigby
  Golem XIV: The Next Crisis Lauren Johnson 3 3,847 22-10-2014, 08:41 AM
Last Post: David Guyatt
  A crisis in Wonga and pay day loan scams David Guyatt 0 2,638 05-10-2014, 10:35 AM
Last Post: David Guyatt
  Lars Schall - “The people causing the crisis are the ones who stand to gain the most from it” R.K. Locke 2 3,643 06-09-2014, 09:50 AM
Last Post: David Guyatt
  Did Bank of England allow forex market manipulation? David Guyatt 6 3,967 21-03-2014, 06:26 PM
Last Post: David Josephs
  Three bankers on trial for financial crash David Guyatt 3 2,711 06-02-2014, 10:24 AM
Last Post: David Guyatt
  More bank manipulation - this time the forex markets David Guyatt 1 2,794 04-11-2013, 10:26 AM
Last Post: David Guyatt
  Gordo Brown tells Mervyn King he's talking f***ing b***locks in US financial spy scandal David Guyatt 0 2,284 25-09-2013, 11:02 AM
Last Post: David Guyatt
  The confidential memo at the heart of the global financial crisis Lauren Johnson 6 3,755 26-08-2013, 10:58 PM
Last Post: Lauren Johnson

Forum Jump:


Users browsing this thread: 1 Guest(s)