Market Stories

[fourkids_9pets]

thanks for that info maui

anything to educate retail

folks need to understand just
what is happening

---
4kids
all jmo

[mauipenny]

very interesting reading for all...

Overstock CEO offers $75,000 for Wall Street's soul

http://www.theregister.co.uk/2008/06/24/byrne_back_conspiracy_theory_with_cash/



http://www.deepcapture.com/the-story-of-deep-capture-by-mark-mitchell/

To enter our $75,000 "Crack the Cover-up!" contest read to the bottom of this (very long) story.

The Columbia School of Journalism is our nation’s finest. They grant the Pulitzer Prize, and their journal, The Columbia Journalism Review, is the profession’s gold standard. CJR reporters are high priests of a decaying temple, tending a flame in a land going dark.

In 2006 a CJR editor (a seasoned journalist formerly with Time magazine in Asia, The Wall Street Journal Europe, and The Far Eastern Economic Review) called me to discuss suspicions he was forming about the US financial media. I gave him leads but warned, “Chasing this will take you down a rabbit hole with no bottom.” For months he pursued his story against pressure and threats he once described as, “something out of a Hollywood B movie, but unlike the movies, the evil corporations fighting the journalist are not thugs burying toxic waste, they are Wall Street and the financial media itself.”

His exposé reveals a circle of corruption enclosing venerable Wall Street banks, shady offshore financiers, and suspiciously compliant reporters at The Wall Street Journal, Fortune, CNBC, and The New York Times. If you ever wonder how reporters react when a journalist investigates them (answer: like white-collar crooks they dodge interviews, lie, and hide behind lawyers), or if financial corruption interests you, then this is for you. It makes Grisham read like a book of bedtime stories, and exposes a scandal that may make Enron look like an afternoon tea.

By Patrick M. Byrne, Deep Capture Reporter



Crack the Cover-Up Contest!
You, the Community, decide who wins

1st place = $30,000
2nd place = $20,000
3rd place = $10,000
4th place = $6,000
5th place = $4,000
6th - 10th place = $1,000 each
Total = $75,000

From “The Story of DeepCapture” you understand the crime and cover-up. Now you can win up to $30,000 for thinking of a clever way to crack the cover-up. Here’s how:

1) Crack the cover-up: do something to help the public discover DeepCapture’s exposé of Wall Street and the financial journalists who “tried to be players but became pawns.”

2) Use the widget at the bottom of Mark Mitchell’s “The Story of Deep Capture” to tell us what you did. That becomes your entry.

3) The community will vote entries up and down.

4) At midnight, October 1, 2008, entries will be frozen and prizes awarded.

5) For ideas on how to crack the cover-up, here is a page of simple suggestions.

6) Multiple entries are allowed.

7) Your entry can link to blogs, videos, audio files, letters-to-editors, newspaper articles, etc., that document your efforts to crack the cover-up. (For example, suppose you parked a truck with “DeepCapture.com” on the side in front of a convention full of journalists: you could video that, post the video online, write an entry about it in the conttest widget, then link to that video. NB: that idea has already been taken, but someone else could always do it again, and better.)

8. To crack the cover-up you may find it useful to learn more about this issue. The links within Mitchell’s piece are a good starting point. More detailed pieces appear on DeepCapture. Here is a good place to start.

9) Whatever you do to crack the cover-up by bringing attention to Deep Capture’s exposé, it must be legal. Illegal acts will be disqualified.

10) This contest is scheduled to run until midnight, Utah time, October 1, 2008. However, it is an experiment and, like all experiments, runs the risk of producing unanticipated pernicious consequences. Therefore, in case some ill begins arising that we had not foreseen, we reserve the right to bring the contest to an early conclusion. If we do, we will give 7 days’ notice: when those 7 days are up, the entries will be frozen, and prizes paid based on the ranking of answers at that moment.

11) This list of rules may (and likely will) be amended. Why? Because this contest is an experiment. There may be some way to game it that we have not anticipated (”gaming” means “bending the rules in an attempt to win without doing the hard work of creating the public awareness of Mitchell’s story which the contest is supposed to measure”: for example, trying to hack the voting mechanism). Therefore, in case we discover people gaming it in some way, we reserve the right to modify the rules in midstream. We will not be capricious (e.g., amending the rules merely to handicap someone who had gotten ahead), but would do so only to protect the integrity of the contest for all participants. We’re the good guys. By entering the contest, you acknowledge this right and express your willingness to submit to our sense of fairness in these matters.

If you have questions about the contest, please post them as comments to this post. We will answer. But please review everyone else’s comments to see if your question has been answered, before you post another.

Good luck,
Patrick M. Byrne, PhD
Deep Capture Reporter




good luck to anyone who enters the contest!!!
alooooha

[nostocks]

Here's a market story. I hub assclown mod squaders still removing post they shouldn't be while letting post that should be removed stay. The whole mod squad thing was a bad move. One I would expect from pinky management. Ihub going public? Clowns!!!!!!!!!!

[veto]

thomas21, Much food for thought to say the least. Behind the scene manipulations coupled with money lust is a recipe which produces disappointment and despair in almost all who play long enough. Deep down inside I know you're right. You made it plain and right on time(Dec. 25). Thank you veto

[thomas21]

"But they that will be rich fall into temptation and a snare, and into many foolish and hurtful lusts, which drown men in destruction and perdition. For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows. But thou, O man of God, flee these things..."--1st Timothy 6:9-11

Many people have destroyed their lives by living to make money. Notice carefully that the Scriptures are speaking here to "they that will be rich" (meaning they are NOT rich yet). Millions of people have "pierced themselves through with many sorrows" by trying to retire early or "get ahead" in life. In case you haven't figured it out yet, the rich people who control our government and economy DON'T want us to prosper. When you have to pay for three houses just to get one, something is dreadfully wrong! When we have to keep paying into the social security system, while being told repeatedly that it may NOT be there for us when we retire, something is very wrong! When we heard of Enron retirees being cheated out of their life-savings, we definitely knew something was wrong (some people personally lost over a million dollars). The most sickening part is that the politicians in Washington condoned Enron executive's crimes by doing nothing to prosecute them. This is because Enron made large campaign contributions to those politicians. God will judge those evil people!

In light of all the corruption and government scams (like $59,000,000,000 being stolen from the HUD program), corporate crimes, deficit spending, the Social Security scam, increased taxes and so forth...I have no desire to even try to play their game anymore. I have no desire to "get ahead" in life. I could care less about working overtime, but that's me. I don't live to work. I won't do it. I want to spend the time with my wife and children. I'm not a slave to their system. So many people are living to make money. I've never bought a lottery ticket in my life and don't plan to start now (it's just a tax on the stupid). I don't gamble at casinos and wouldn't be caught dead betting on horses (why give those greedy men and women your money?).

The greatest things in life are not things.

AVOID The Stock Market!!!

I also avoid the stock market, it is a man-made invention designed to take away the public's wealth...it is a scam. This has been documented (if you'll read beyond the newspaper). Read the following article from Richard Ney's book titled, "The Wall Street Gang."

"The hard-hitting market critic, Richard Ney, has written three books that I know of. His first, and probably most famous, is The Wall Street Jungle, written in 1970. He next wrote The Wall Street Gang, published in 1974 by Praeger Publishers. Chapter 2 of the latter book opens as follows:

It is no accident that most investors lose money in the stock market. Their losses are an inevitable by-product of their ignorance of how little they know about the invisible world of the Stock Exchange. Like machines dominated by external influences, they are capable only of mechanical action.

Regrettably, the arrangements that exist to preserve the traditions and legalize the frauds of the security industry are inseparable from the general organization of a society controlled by the financial establishment, a society whose laws and principal customs have been contrived to serve the special interests of the financial community. Thus, although the Stock Exchange's most profitable practices clearly compromise the freedoms granted others by the constitution, Exchange Insiders are granted immunity from the legal obligations and penalties that should be imposed on them."

I have read so many website articles which speak of the stock market as a scam, but then they proceed to tell you how you can make money by following their advice (don't do it!). I studied the stock market long enough to know that it's all a big scam.

In the first place, the whole concept of a P/E ratio (price-to-earnings ratio) is a joke. People are suckered into paying 20, 30, sometimes even 100 times what a stock is actually worth. There is NO true value. People are taught by Wall Street con men to pay outrageous prices for a stock (because someone say it's a good deal). In reality, it's a foolish game of money swindling that has robbed the public of trillions of dollars. If you think about it, there is basically NO value to the stock market (If you were to take all of the thousands of stocks on the various stock market exchanges and average their actual earnings together, you'd find their total value to be less than 1% of what the public is actually paying for those same stocks). In other words, your buying NOTHING! The public is taught by the greedy people who operate Wall Street that it is a "GOOD DEAL" to buy stocks with absolutely NO EARNINGS. This is absurd! People foolishly buy into these lies. These greedy and ungodly Wall Street crooks (especially the bankers) have created a SYSTEM of smoke and mirrors over the years that utilize a series of economic and governments REPORTS to manipulate alleged "sentiment value" of the stock market. They also use any public news release available to justify a market move. I've heard every excuse you can imagine for the stock market going up or down (and it's very humorous to listen to day-by-day). Wall Street said on one particular day that the stock market went down for fear that the Iraqi Freedom war would take longer than expected. The next day they claimed the stock market went up because Saddam Hussein was missing (thinking he was dead). It's utterly ridiculous to think that the public is stupid and gullible enough to believe these lies...but they soak it up!!! Where do you think the news media gets their information on the stock market? They get their news from Wall Street's crooks! The rule of Wall Street is simple: The people who control Wall Street will do whatever it takes (even a radical move if need be) to ensure that 95% of the public losses their money. I've seen bad stocks with NO earnings soar sky-high on no news at all. I've also seen very good company stocks go south on great news. I recall recently that Harley Davidson posted their best earnings ever and the stock tanked over $5 in one day. Can you say scam? I remember reading the internet news on IBM a couple years ago, the stock had jumped up like $15 in one day because of a dozen fantastic reports released on the internet. No kidding, the next day the stock tanked over $10 and the news was nothing but the sky-is-falling for IBM. What had changed overnight? Nothing, not one stinking thing. Can you say scam? Several Wall Street Investment Firms were just fined 1,400,000,000 for cheating people (but they made hundreds of Billions in profit, a convenient way for them to keep getting richer. They do this stuff on purpose, expecting to get caught. They could care less because they know they are making hundreds of BILLIONS). This type of criminal behavior (where the punishment never fits the crime) is plaguing many of our American industries. It's sickening to any honest, hard-working American. People are being CHEATED on purpose, but the victims rarely ever see a dime of the lawsuit money.

I read a book by a gentleman named, Richard Ney. The book is called "The Wall Street Jungle." Mr. Ney documents how the stock market is a fraud, controlled by scheming con artists. He shows how the stock market went up for several weeks straight, in spite of an over abundance of bad financial news. He then documents the same process, but with the stock market going down in spite of consistent good news. The point here is that the news media is deliberately given bogus news by Wall Street cons to mislead investors. People hear bad news and avoid the stock market, meanwhile the market is going up and the public is missing out. The opposite is also true, the public runs in (with a herd mentality) to buy stocks on good news, while in reality the market keeps progressing lower and lower. People are like ignorant sheep, it's their own fault for not THINKING outside the herd. Kindly said, you MUST READ BOOKS and learn to THINK FOR YOURSELF.

The stock market is a scam for several reasons. We've covered a couple already. I've already mentioned that the entire stock market is a big mirage (something you see that is NOT really there). The big bubble could pop in one day! Gold has real value! Gold retains it's value, stocks do not. A commodity has real value! I can eat corn or bacon, I can't eat a stock. Listen friend, the entire stock market is a big fictitious man-made invention of arbitrary numbers which mean nothing if you give it even a little thought. I say it's a big scam! I have also mentioned that people are paying 20, 30 or even 100 times what a stock is worth (P/E ratio). This goes against good business sense. Sure, I know there are people like Warren Buffet who made billions on Coca-Cola, but his father was a stock broker and Warren began investing at age 9. He was very fortunate and he'll admit it. However, for every Warren Buffet there are ten thousand wanna-be rich men who have ended up losing their jobs, marriages and even their lives.

People ignorantly put their money into the stock market, having no comprehension that the stock market is controlled from within...not without. I've heard time and time again on the early morning news such statements as, "INVESTORS decided to take early profits this morning" or "INVESTORS decided to sell at the opening of the market this morning." Do you really think there are that many people up at that time of morning placing stock trades? No! The "investors" they are speaking of are the "insiders" on Wall Street who make millions upon millions of dollars a year. They each pay $2,000,000 just to have a seat on the New York Stock exchange.

The purpose of my article is simple friend...AVOID the stock market! There are NO secrets to outsmart the greedy rich men at their rigged game (and your in for a financial loss if you think you can). Oh sure, you might make some money at first, but more than likely you'll be sorry down the road. I realize that there are investments which are considered "safer" such as the S&P 500 and utility company stocks (some of which pay nice dividends). However, there is NO guaranteed "SAFE" investment in the stock market. These would be the only two investments I'd might consider if I were going to invest in stocks, but personally I don't want anything to do with the stock market because of all the insider corruption. Trying to "get ahead" has ruined many families, I'm happy with what God has given me. As my old pastor Dr. Jack Hyles used to say, "There's two ways to be rich: Have all you want OR want all you have." That's a good statement. I want all I have; therefore, I am a very rich man indeed! If you're frustrated (as a lot of people are), you need to learn to relax and stop letting life frustrate you. If your burned out, sell your stocks and forget the stock market before it destroys you. Trust me, in time you'll thank yourself. Do you want true peace in life? The first step is to decide to be content with what you have.

"But godliness with contentment is great gain. For we brought nothing into this world, and it is certain we can carry nothing out. And having food and raiment let us be therewith content."--1st Timothy 6:6-8

We were born empty-handed and we'll die empty-handed. You can't control everything, but you can avoid the things which may ruin your life. It's ok to work for a living. Some people drive themselves insane trying to find a way out of work. Your going to end up ruining your life because of your greed to make money (Read 1st Timothy 6:9-11 again). An extremely small amount of investors have been lucky in the stock market, but nearly all the people who have played the stock market have lost money (many their shirt and pants as well). The Bible has much to say about money, mainly that we're better off without it. Notice 1st Timothy 6:11 says "But thou, O man of God, flee these things..." Go fishing, take your family to the park, sit out in the yard...but don't waste your life pursuing filthy lucre (and anyone who tells you that you can "be a better you" if you had more money is a LIAR!). You CAN be a great person without money! Money has ruined many people!!! The fact is that most of the people who posses a lot of money are not very great people. You don't need money to be happy in life, but you do need God.

[thomas21]

Malaysia car thieves steal finger
By Jonathan Kent
BBC News, Kuala Lumpur

Police in Malaysia are hunting for members of a violent gang who chopped off a car owner's finger to get round the vehicle's hi-tech security system.
The car, a Mercedes S-class, was protected by a fingerprint recognition system.

Accountant K Kumaran's ordeal began when he was run down by four men in a small car as he was about to get into his Mercedes in a Kuala Lumpur suburb.

The gang, armed with long machetes, demanded the keys to his car.

It is worth around $75,000 second-hand on the local market, where prices are high because of import duties.

Stripped naked

The attackers forced Mr Kumaran to put his finger on the security panel to start the vehicle, bundled him into the back seat and drove off.

But having stripped the car, the thieves became frustrated when they wanted to restart it. They found they again could not bypass the immobiliser, which needs the owner's fingerprint to disarm it.

They stripped Mr Kumaran naked and left him by the side of the road - but not before cutting off the end of his index finger with a machete.

Police believe the gang is responsible for a series of thefts in the area.

[thomas21]

this article shows that there is better bio-tech than finger print scanners...IMO

While consumers are spoilt for choices, they are also left mulling over the best system because in evaluating a cost effective system, one not only considers overall costs but the product usability, flexibility of use, maintenance costs, user convenience, accuracy, and security.

When the hand vascular pattern recognition technology was introduced in the market a few years ago, the other biometrics players did not pay much heed to it because after all, any part of the body can be used as biometrics, including ear shape and even body odour. In addition, little research has hitherto been conducted on hand vascular pattern biometrics. However, as time went by, this new technology has silenced the naysayers and created a stir among the other players. This is because hand vascular pattern biometrics boasts of several key advantages and benefits.

1) High Usability
The VP-II provides ultimate system "usability" of 99.98% (the percentage of unspecified adult population that is capable of using a system). By nature of biometrics products, if one user in a user group cannot use a system, somehow, the entire group cannot adopt the system. High usability directly results in high security because the biometrics technology, unlike other popular biometrics technology, does not provide a back door, such as a key or numeric password. Fingerprint devices suffer from usability because some users have faint fingerprints while iris and retina scan devices may not be appropriate for people with eye diseases. On the other hand, hand vascular pattern will only be unusable if the user has severe burnt wounds on both hands (each hand is unique and either hand can be used for identification), or if both hands are missing.

2) High Accuracy
The False Acceptance Rate (FAR) is the probability that another individual is falsely recognized as the lawful owner of the reference data. The VP-II has a FAR of 0.0001%.
The False Rejection Rate (FRR) is the probability for the lawful owner of the reference data to be falsely rejected when presenting his verification data. The VP-II has a FRR of 0.1%

3) Security (prevents duplication)
The sensor of VP-II does not require physical contact, so it prevents enrolment of non-biometrics patterns and fraudulent use of biometrics features (like system-residual biometrics patterns). In comparison, most fingerprint scanners require users to press a finger onto the scanner in order to capture the print. There is also increased security because of the sensor's capability to sense the user's temperature, which implies that the hand must be a 'live' one.

4) User convenience
Since there is no direct contact with the user's vein for authentication, the device offers users a peace of mind. In addition, since it involves the back of the hand, it is less invasive and poses minimal positioning problems.

5) Reliable performance under harsh environmental conditions
Since the VP-II scans beneath the skin surface, it can be relied to perform reliably even if the user's hand is dirty, wet or have surface scars. Its robust physical features also make it more resistant to damages and wear and tear, as well as under poor environmental and weather conditions. This makes it suitable for places such as construction sites, military bases, factories, etc. In addition, since the sensor is located within the scanner it also means it is less prone to damage and therefore requires less replacement and maintenance efforts.

The product line-up of Hand Vascular Pattern Recognition System (VP-II™) is the result of innovative biometrics person identification technology. This revolutionary technology originated from a conventional vein pattern recognition system. The system verifies or recognises human users by utilising a state-of-the-art recognition algorithm based on hand vascular pattern extracted by an infrared optical sensor system.

[serfdom]

Toxic Debt Explained: Cramer Rewrites 'A CFO Primer'

http://www.thestreet.com/comment/rewrite/985564.html?puc=_tscs

It's time for a chief-financial-officer primer. Others might want to follow along. But this is meant for beleaguered CFOs of dot-coms that are running out of money.

(Lots of convertible bond people took umbrage at this piece. But other people were thrilled just to find out how some of this stuff works. I think the convertible bond people failed to read the "beleaguered" CFO line. If a growth company with good prospects wants to issue convertible bonds, that's just fine. I have bought hundreds of convertible bonds for my fund. They are good for the issuer and good for the buyer. I am not talking about those kinds of converts. I am talking about companies that aren't doing well, where it is obvious that they are not doing well, and they can't seem to get any other form of capital. I am talking about companies that are at the mercy of the capital markets. They often think they have stumbled on a terrific way to invest and instead they have signed their own death warrants.

I think what bothered me most about the convertible complainers was that they thought they could buffalo me into thinking I didn't know what I was talking about, when the truth is that they didn't want this stuff written about or talked about because it would scare many other companies that could issue paper and these convertible traders need more issuers. Instead of focusing on keeping the dangers hidden, these grousing folk should join me in trying to clean up these cesspool converts and turn against the scum-sucking pigs who are playing this game. They certainly know who they are. Remember where I am coming from. I am a firm believer in the honesty of our markets. But for too long the bad guys in our game have hidden behind obfuscation, pseudo-mathematics and mumbo jumbo to screw over good but uninformed people who don't have much brush with the capital markets and are easily bagged.

How do I know this? Because I have been on the end where this stuff has gone down. I have screamed at people for not seeing the very trick that was about to happen in this piece. I have seen companies die because of this strategy. And I personally have lost millions of dollars because of these shenanigans. I know where I am coming from. I have reason to be outraged. And I am happy to throw the curtain back and show you -- particularly you neophyte CFOs -- how the game really works. I can tell you that your bankers, motivated by one-shot fees, won't even mention what is in this piece and for that they should be drawn and quartered.)

Pay attention.

OK, you are the CFO of NationalGiftWrap.com. (I use National Gift Wrap because that is my Dad's company. It is private. I don't want to hurt anyone's feelings. Lord knows I do enough of that already. This way I keep it nice and objective.) Your stock is at 30. Your bankers have told you that the capital markets are closed to you despite the fact that you are backed by idealab!, Benchmark, Sequoia, Amazon (AMZN:Nasdaq - news) and the guy from Starbucks (SBUX:Nasdaq - news) -- as well as the Internet Capital Group (ICGE:Nasdaq - news). (They bought their stake site/sight-unseen from one of their private jets after reading that NatGift was the category killer in the high-growth seasonal gift-wrap business.)

(So the setup here is one where the dot-com is hurting. It needs more capital. The assumption is that the initial backers are through with putting more money in. A secondary -- an underwriting of stock -- might be a possibility. In fact, it is more likely that the stock is much lower in dollar price. But I didn't want you to get distracted. My point is that the CFO knows he needs money and he wants to raise some and he can't do a common stock offering because the market doesn't want any dot-com paper. I put all of those big shot venture capitalists in because I am really jaded at this point and think that in the last year virtually everybody got stupid -- I call it the Collective Stupidity period, like Collective Security. It was a dumb time. You would think there would be a little more shame. But all anybody in this country lives for is to not get sued, and if you are honest it will come back and make you pay, so instead it pays to be dishonest or quiet as opposed to up front and candid. Only the truth can come back to haunt you. Lies can't. Something wrong big time with that, but it has to do with the litigation system.)

So, you take a call from Sisyphean Asset Management, which has offered to buy a convertible bond (This is like a bond. It pays interest. But it is attached to the stock and can be paid off that way if the stock rises. In other words, there would be some sort of contract which says that in the event that National GiftWrap.com's stock traded up 25% after the piece of paper is priced, National Gift Wrap.com can "call" the convert, or turn the convertible bond into common stock and no longer have to pay interest. It is a nifty idea because the holder gets a piece of paper that pays interest but also gets to participate in the upside. The issuer, National Gift, gets to pay a lower interest rate than it would normally because the convert has that upside. These can be great pieces of paper. They can give you downside protection as a convert holder because unlike the common stock holder, the interest on the bond is going to put a floor on how low it will go.

Remember how bonds work. If a bond sells at 100 and yields 5%, it is going to yield more if it goes down. Let's say the common stock goes to $20. The bond will not fall by a third, because it would be yielding so much other bond buyers would switch to it, provided you were confident that the issuer could make the payments.)

Hmmm, sounds good. The folks from Sisyphean are offering a good deal. In return for 5% of the company, in the form of a convertible bond, they will give you $100 million. Cool! (These terms are rounded. I would suspect that a company in trouble might get a rate like this, but it might be much higher. I kept it simple for this demonstration. The 5% of the company would be after the piece of paper is converted to the common stock, in the event of an increase in share price to the conversion level.)

So you do it. You don't know anything about convertible bonds, but you agree to pay 5% interest (that's the "coupon") on the convert and if your stock goes to 40 a share, (the conversion price) you can convert the bonds into equity. (The company can force conversion. It can do it pretty much when it wants, depending upon how much "conversion protection" is offered. Maybe it can't be called away for a couple of years. That allows the bond holders to participate in the upside and get the coupon. Win-win for the bond holders.)

What a great trade! How could you lose? It's cheap capital and -- if your stock goes up -- you can wipe out the debt!! (That was the perception of the management I once dealt with when they called me and told me they were going to do this. I almost reached into the phone and killed the guy. He didn't believe a word I said about what was about to happen to him. The only thing I got wrong was the time. I said this convert would wipe out the company in a matter of a couple of quarters. But the deed was done in a couple of months. My blood still boils when I think of the naivete of management. I didn't sue because I don't like that remedy.)

Wrong. Your stock ain't going up, you stupid idiot. (Many of you were about to get lost here. You couldn't think of why the stock wouldn't go up. But you are missing the point. Stocks go up or down based on supply and demand. But selling, hard selling, can send almost anything down. Especially when the situation is dicey and as I said up front, this is a dicey dot-com. If this company were doing great, you can ignore the rest of this article. But it isn't doing great. Nobody in this situation who is doing great would even take Sisyphean's call. Sisyphean is like a loan shark. A legal loan shark. A legal Tony Soprano. Everything that happens in this article is legal. In fact, it is brilliant. Because it works every time on unsophisticated CFOs who don't know how to play the short-selling game -- which is just about every CFO I ever met. )

Here's why. Immediately Sisyphean takes the convert; it starts slamming your stock down. It may use upticks, it may not. (When you short a stock, you are supposed to wait for a buyer who will pay a higher price. That keeps you from trading the stock down. But this is a rarely enforced rule. And the owner of the convert might think that he is actually entitled to sell stock short on the way down because he is long a "like" instrument. I would love to tell you that such thinking is wrong, unethical, immoral and illegal. But the fact is, it is done all of the time, so forget about the idea that it isn't. In the cases I am familiar with it happened every time. That's life. People do bad things. These holders of the National Gift convert are pushing this stock down because they want to break it and they can if they want to, believe me. You can break anything. Anything.)

But it will short your stock till oblivion. And why not? It is stopped out if the stock rallies by the conversion provision. If it can knock your stock down enough, people will panic and it will go down even further. Meanwhile, you are burning through the cash and you don't understand why there is so much pressure on the stock. (So, the goal here is to get short the common stock and then knock it down to profit from that short position. You don't have much fear of a squeeze up because the worst that happens is that your bond is converted into common stock and you are protected. It is a great deal for the bad guy! You profit from the short. You get protected from the squeeze, risk free, because of the conversion provision. You get income on the short stock, known as rebate income. That's the interest on the credit balance generated by the short. You get the coupon from the bond. And the worst that happens is that the company's stock plummets and it runs out of capital and you get 100% of the money you made when you shorted it, plus the interest that you picked up and you get wiped out on the bond. Big deal! You don't care. You have shorted $100 million worth of common stock. The same amount you gave to the company on the bond!!! It is a push plus huge interest return.)

You see, the convertible owners and the common stock holders are at war, and you have sold out your common stock holders because you did not put in an anti-short provision for Sisyphean. (They wouldn't have done the offering if you hadn't. Their whole point is to destroy your stock!!) How do they win? Let's count the ways. They get the hefty yield. They get the interest on the proceeds from the short side. (They sell the stock and earn income on those proceeds.) And if they can put you near bankruptcy, they can cover the short, make the profit and live off the yield. If they put you in bankruptcy, they never have to cover! But they do lose the dividend. That's OK; the short-side trade more than makes up from the losses from the bond.

How can this happen?

'Cause many CFOs are as dumb as wood. How do I know this? Because we once owned 8% of a company that did this stupid trade and we lost everything!!

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at [e-mail].

[roba70]

PLTG - compare MC and value of resources ;)

[serfdom]

Hangin' in thomas, trying to find the green amidst the red. Been doing pretty well at it too, but a lot harder than earlier this year.

[thomas21]

what up buddy!! been busy latley, hope your doin well....

[serfdom]

Hi thomas!!! How are you?

[takeover]

DKGR- it's at .0075 x .008 and ready to go...this baby is going above and beyond a penny by the end of this week or early next for sure...you can hold me to that one...so if your ready to make some money, you know where to invest..

[roba70]

AMRE - Sorry, forgot something:

Also they filed 1 billion shares in the last days!

[roba70]

PLTG - My absolute favorite. NO BOGUS. This is actually

EXTREMLY undervalued!!!
"Platina Energy Group Rated 'Speculative Buy,' Target Price $1.50 by Beacon Equity Research
Business Wire (Mon, Jul 23)"

"Proven Non-Producing Estimated Reserve Report (PV10) Value $62,755,268.00 for Tennessee Lease (!!!!!!!!!!!!!)
Marketwire (Wed, Jul 11)"

IMO Platina Energy is actually 1.50 worth, but soon much more.

"Platina Energy Orders Independent Third-Party Evaluation of its Palo Duro Basin Prospect
Business Wire (Tue 8:25am)"

A Morgan Stanley report that compares Palo Duro Basin to Barnett Shale, the largest natural gas play in Texa. (Perhaps of whole USA!)

[roba70]

AMRE - GREAT NEWS! Sales incr. by ~315%!

AmeriResource 2007 Sales Increase Significantly in First Six Months.
http://biz.yahoo.com/iw/070725/0282226.html

huuuu next hype must come...

[nostocks]

Cann't wait to see if the F&F bumch start reporting ihub to the SEC. LOL!!! Of course they still haven't figured out squm is just a lifestyle stock. Squms down 50% even with them pumping some relationship they could get with every member of the Dow. Couple of their members got jailed yet again. They should post a warning on their board such as replies to our attacks could cause us serious mental anguish. Anyone remember how the Heenster went off the deep end and got banned for good. Looks like the F&F board might get canceled.per jail board. They'll have to go totally underground even more then they already are. Just like the group that upsets them so.
Maybe someday they'll stop ragging about all these scam stocks we play and make some money. What a bunch.

[mauipenny]

thanks 4

been super busy, family in town for the summer, been working on lots of paintings, and playing in the summer sand...doesnt leave much time for posting or getting on ol bessie, my computer, who also could use a little upgrade attention.
i am around, still holding everything, looking to add when funds are around, but in the mean time... ITS SUMMER!!!! lol trying to fill it up with lotsa activities...and not watch the day to day ticks.
much aloha to u and ure family...talk to ya soon!

[fourkids_9pets]

maui

-- glad to see you posting...

talk soon

--
4kids

[mauipenny]

in case no one has read this whole foods story yet...

Whole Foods Executive Used Alias

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Article Tools Sponsored By
By ANDREW MARTIN
Published: July 12, 2007

John P. Mackey, the co-founder of Whole Foods Market, has never lacked for personality.
Skip to next paragraph
Brent Humphreys/Redux

John P. Mackey used the name Rahodeb as his chat board name when speaking about his company, Whole Foods, and a rival, Wild Oats.
Related
John P. Mackey's Postings (yahoo.com)

He is a self-described vegan and libertarian who pays himself $1 a year as chairman and chief executive and maintains a blog on the company’s Web site where the posts are occasionally barbed.

As it turns out, that was only the half of it. For seven years, Mr. Mackey had an online alter ego.

Using the pseudonym Rahodeb — a variation of Deborah, his wife’s name — Mr. Mackey typed out more than 1,100 entries on Yahoo Finance’s bulletin board over a seven-year period, championing his company’s stock and occasionally blasting a rival, Wild Oats Markets. The story was first disclosed on The Wall Street Journal’s Web site last night.

Responding to a posting on March 28, 2006, Rahodeb wrote: “OATS has lost their way and no longer has a sense of mission or even a well-thought-out theory of the business. They lack a viable business model that they can replicate. They are floundering around hoping to find a viable strategy that may stop their erosion. Problem is that they lack the time and the capital now.”

Mr. Mackey apparently did not fool participants on the forum, who occasionally tried to out Rahodeb. In one instance, he responded by saying that he was in fact George W. Bush.

In response to another posting, titled, “Hey John — I mean Rahodeb,” he wrote on June 10, 2003: “Another person who thinks my name is John (Mackey)! Well if you really believe I’m John Mackey you should probably pay more attention to what I say on this board. I would be the ultimate Whole Foods Insider!”

Mr. Mackey’s alias surfaced in a footnote in a 40-page court document filed on June 6 by lawyers for the Federal Trade Commission, which is trying to block Whole Foods’ acquisition of Wild Oats on the ground that it would limit competition among natural and organic groceries.

Whole Foods announced in February that it planned to buy its smaller rival for $565 million. Mr. Mackey posted a response on his company’s Web site late Wednesday, acknowledging that he used the pseudonym “Rahodeb” on Yahoo financial bulletin boards from 1999 until last summer. He said the F.T.C. discovered his alias “through one of the millions of litigation documents that Whole Foods provided to them.”

“I posted on Yahoo! under a pseudonym because I had fun doing it,” he wrote. “I never intended any of those postings to be identified with me.”

Mr. Mackey said the views expressed sometimes represented his beliefs. In other instances, he said, he offered different views from his own to play devil’s advocate. He said no proprietary information on Whole Foods was disclosed.

But Mr. Mackey’s writings are proving to be a critical element in the Federal Trade Commission’s case.

“There is no mystery as to why Whole Foods wants to buy its closest rival,” the government wrote in the June 6 court document. The document also said that Mr. Mackey justified paying a significant premium for Wild Oats by telling board members that the company would “avoid nasty price wars in Portland (both Oregon and Maine), Boulder, Nashville and several other cities which will harm our gross margins and profitability.”

“OATS may not be able to defeat us but they can still hurt us,” Mr. Mackey said, according to the government.

Mr. Mackey has argued that his company competes not just with Wild Oats but also with conventional grocery stores that have rushed to offer organic products, largely because of the success of Whole Foods.

Teaming with Wild Oats, he said, would create a company better suited to combat larger rivals like Kroger, Safeway and Wal-Mart.

But Rahodeb showed little respect for Wild Oats and its former chief executive, Perry Odak. In a Feb. 24, 2005, posting, he wrote, “Perhaps the OATS Board will wake up and dump Odak and bring in a visionary and highly competent C.E.O.”

At the same time, he wrote glowingly and anonymously of John Mackey.

“I like Mackey’s haircut. I think he looks cute!” Rahodeb wrote on April 28, 2000.

“You must not patronize any of WFMI’s stores,” the writer continued, using Whole Food’s stock symbol. “Tatoos, piercings, unusual dress and interesting haircuts are everywhere in the stores. In comparison, Mackey looks like a model for Brooks Brothers!”

Rahodeb’s final remarks were posted last August, after he lost a bet to another correspondent, Hubris12000, over Whole Food’s stock performance.

“Surgeon General and Boston Cowboy — you were both right about my true identity all along,” he concluded. “Congratulations on your cleverness.”

As one might expect, Yahoo’s message boards erupted with chatter about Mr. Mackey’s secret identity.

“In light of this news, perhaps the name of the company should be changed to Whole Foods Bazaar,” JimTarHeel wrote. “What a hoot! It’s so Nixonion! Maybe he needs some animal fat in his diet. I’ve known vegans who suffered from teeth and gum disease; now we know a vegan who’s suffering from ‘foot-in-mouth’ disease.”

[roba70]

GREAT NEWS FOR PLTG!!! LOOK!!!:

http://biz.yahoo.com/iw/070711/0275104.html

Now we can make a few hundred percent :)))

[roba70]

Take a look at PLTG (Platina Energy): This is a real investment, no bogus and very cheap at the moment.
Make DD on PLTG and see what they have ;)

[thomas21]

Attention everyone captain going down with the ship... the S.S SQUM....lol.. to the abyss of sub-pennies..

[mauipenny]

happy 4th to everyone!

i just made my way out of jail recently, and have been using the time in the "poki" enjoying beautiful maui...but what sweet poetic justice it is to hear about SCAM (squm) doing so well. jeeez spend time worrying about ure own money ICE...not ours!

in case anyone was wondering why i was sent to ihub jail, it was for posting ice's myspace info...public info. no different "google" dd then they do on all the stocks they know so much about! hahah

well i am going to be enjoying my summer, still hanging around just spending a little more time enjoying "outside life!

have a great day guys and gals and a happy 4th!

much alooooooha!!!

[nostocks]

They don't seem the least bit worried about the shares being sold. Maybe they don't realize that they will be hitting the market again, on news, when the pps hits resistence. If they are lucky playing the average down game they will have a chance to get out even or with a small gain. They won't take it. I can hear them now calling everyone stupid and posting green again just before the pps starts retreating and they really get screwed. Funny thing is squm is all most of that bunch owns. You average in and diversify unless you only have the money to play one. In which case you will soon have zero funds.

Oh and the iceman that keeps telling everyone how stupid they were with ckys. Don't forget he started calling it a scam in late Nov. early Dec. and didn't sell until 6 days before the suspension in Feb? Ckys was suspended on a Mon. with great news out. Most planned on selling into the news. They got screwed when the sec shut the scam down. F&F bunch is getting screwed by a fully reporting lifestyle stock. They are absolutely the greatest at finding scams down here (Squm excluded)where nearly 100% of the companies traded are. Can they make money off of them? No. Which is why I believe they spend so much time bashing, misery loves company.

Have you noticed sandvet stopped posting on the F&F board long ago. I hope our mod. Junzb makes out o.k.. Everyone makes bad plays few deserve them. Junzb doesn't seem to be the jerk iceman is when others make mistakes. I don't think he surfs around looking for stocks to bash and investors to screw either. Cann't figure out why he's running with that crowd. LOL!!!!!!!

[thomas21]

It's funny i could go back and look at CKYS posts from earlier this year and almost find this same statement, said by many CKYS posters... sooooo funny how things come full circle.. lol


"It must be comforting to know who is running the company and last but not least it must really be refreshing to be invested in a company that actually has Revenues coming in........real customers and real associations/partnerships with other big name reputable companies." qoute by ICEMAN1co

[roba70]

***NEWS for AMRE !!!!

[nostocks]

Hey Thomas. Baby due the 9th so I'm off for a month. You playing anything right now? I saw you posting on the F&F board. Maybe I should ask if you have any bluechips masquerading as penny stocks I could INVEST in. JK. Hope all is well in your home. Lot of flooding here. Sorry to say I have some homeless friends and cann't get to them to offer any help. Worst flood since record keeping started in our area. Looking for some sunshine!

[thomas21]

whats up chuck!!!

[nostocks]

The fact and fiction bunch have really stepped up the bashing on ckys. Why are they spending so much time on a ticker that's dead? Perhaps they should dig into the last 3 years of squm. I can understand iceman thinking he has found the next microsoft. The rest of that bunch seem a little smarter. At least sandvet had the good sense to distance himself from that crowd. Squm broke support Fri. and they want to spend all their "awesome dd" on ckys. LOL. I wouldn't be putting any funds into squm right now without planning on averaging down to nickel. That's just the smart way to play these companies rather they report or not.

[roba70]

PLTG should have the next run soon.

[surfkast]

June 13, 2007 11:23 ET
By Judith Burns
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)--The Securities and Exchange Commission voted Wednesday to
approve a change to tighten rules intended to curb manipulative short sales,
including so-called "naked" short sales.

The change eliminates a controversial exception that shielded existing short
positions from requirements to deliver hard-to-borrow shares within 13 days of
settlement. Once the change takes effect, short positions previously protected by
the grandfather clause must be closed out within 35 days.

SEC Chairman Christopher Cox said persistent failures to deliver shares sold
short seem to be due to the grandfather protections, which the SEC included in
2004 to prevent stock-market volatility. Critics complained the protections
undermined efforts to clean up abuses involving "naked" short sales.

Short selling involves sales of borrowed securities, producing profits when
prices decline. The practice is legal, but the SEC's Regulation SHO sought to
prevent "naked" short sales, in which short sellers don't borrow securities they
sell.

SEC officials said delivery failures have declined about 35% overall since
Regulation SHO took effect and have fallen about 53% for hard-to-borrow stocks
defined as "threshold" securities.

-By Judith Burns, Dow Jones Newswires, 202-862-6692; [e-mail]
(END) Dow Jones Newswires

[nostocks]

42 with a myspace page. Isn't that kinda like going to a highschool party in your 40's. Whatever floats their boat I guess.

[nostocks]

Well it was fun while it lasted. He's so easy to bait. Didn't stay very long though. He didn't get banned I guess he just wasn't comfortable posting on a board where he couldn't delete what he wanted.

[nostocks]

To funny your post are all ready deleted from the F&F board. I sure didn't see any TOS violations in them.

[mauipenny]

great post nostocks...

wonderful reading for the day! i would hope that agenda driven bashers start to take note of this...at least the ones that live in the usa, do the rules also apply internationally?

not to mention the pinkie market is more susceptible to psychological attacks and doubt can easily be seeded in someones mind here.

i wonder if ihub can also be held responsible now? wouldnt that be great?!?! i mean i am sure they take a part of the pie...

these bashers think there are some sort of geniuses but what they do is not different then a bully in kindergarten class...of course in the kindy garten i was in, we eventually teamed up against these "bully's" and took care of business.

now the bully's sit around and chew on paste and play-doo

have a great day nostocks!

alooooha

[nostocks]

Here's a nice link. Kinda easy to see how much damage Joeaverage let alone an agenda driven basher can do to a pinkie.

http://knowledgebase.pub.findlaw.com/scripts/getfile.pl?FILE=articles/stb/stb000002&TITLE=Subjec....

[fourkids_9pets]

maui and nostocks

excellent posts

-- i too
after reading a ton of posts
over the months
have come to the same conclusion
-- albeit with a slightly different *twist*

the funny thing is
like everything else in life
patterns always emerge ...
-- one way or the other

-- just glad i'm an investor
(even with my selective pinks)

who has time and patience on my side
-- my conscience is quite clear--

best of luck with your stocks

--
4kids

[mauipenny]

thank you for your thoughts of clarity...

however i do feel ihub feeds the beast so to speak, and as long as we are on it, we will have to learn how to invest accordingly...or we need to collectively "fix" ihub!

the best of luck to you in whatever you are in nostocks...u to thomas...long time no talk!

much alooooha to you and the best of summers!!!

[roba70]

(PLTG) SEVERAL wells in production!!

Platina Energy Group, Inc. Announces New Oil Production for Several Wells.

See there:
http://biz.yahoo.com/prnews/070606/law015.html?.v=94

[roba70]

great news for PLTG !!!!!!

[nostocks]

Thanks Thomas. Nice to hear from you again. How's the robot doing? Hope you're liking the new position.

[thomas21]

well said !!

[nostocks]

Want to know what you self appointed scam busters, heros, new invester helpers, fact and fiction finders, etc. are good for. I'll tell you. You are great at screwing the small penny player. The scam companies you guys try to find don't get hurt it doesn't matter what they sell their shares at. You want to hurt them turn your info over to the sec. The small timer who probably cann't moniter his trade comes home to find one of his holdings attacked and bashed down 50%. Nice how you guys always show up during market hours. Really helps the small timer. Of course the seasoned invester flips at the first sign of you. Something I have caught onto (Thanks a few thousand times). Some of these guys even help you. Why? Because they want to buy back in much lower and much like a used car salesman are not bothered by the hurt they cause others. Ever wonder why a new friend suddenly stops posting to you or helping, now you know. They are using you to make money off the small guys. The whole time the hero with his much higher integrity (LOL) lets the seasoned invester use him to bash the pps back down to the lowest resistence point before he once again goes long only to help bash again after he has flipped once more. I think you guys,gals whatever get a real high seeing the pps suffer. I want you to know someguy out there making about 25k a year with 3 kids struggling to make ends meet trying to hit the right penny to make things better just got screwed. Without the bashers you normally get a slow retracement which gives the smalltimer time to consider what to do. Of course you guys just play right into the hands of the guys making their living here. Everytime you start bashing right at the high of the trading day. The big guys exit out the small timers come home after a hard day to find out he's going to have to keeping working Saturdays. Excellent job I hope you don't pat yourself on the back to hard.

[Briboy]

Nostockman:

that's why I got in that board, for a little accountability. I get tired of seeing a stock get bashed, there has to be some balance.

Locked cabinets, wow! Pros will get in regardless, the average joe like me would take a while.

have a nice holiday tomorrow

briboy

[nostocks]

I like this comparison by Iceman...
Shows how his dd is onesided. Find a locking file cabibet in the same price range and it will not only be harder to get into but but will give you more storage space. I see he hasn't answered your question about squms reverse splits. Seems he doesn't want to talk about anything squm has done in the last five years. He sure likes bringing up the past in stocks he's bashing. The fact and fiction bunch has turned into nothing bunch a first class bunch of pumpers in the stock they're invested in.


Posted by: STOCKDEVIL
In reply to: None Date:5/27/2007 9:38:28 PM
Post #of 11074

Gosh I need help here folks.............I was going to buy a LOCKING FILE CABINET........But now I am scared........who will be able to get into it?

Most file cabinets are pretty thin and could be accessed pretty easy.......why do they sell locking ones then if anyone can just break into them?

[mauipenny]

odd way of handling things, yes?

Judge demands to know whereabouts of Colo. suspects in Swift raid
Click here

Associated Press
January 13, 2007

Comment Comments (32) Print Friendly Print Email Email

DENVER (AP)-- A federal judge demanded Friday that immigration officials disclose the whereabouts of 265 people arrested in a raid at a meatpacking plant in Greeley last month.

U.S. District Judge John L. Kane gave Immigration and Customs Enforcement until Jan. 22 to submit a list accounting for all the detainees, including those who have been deported.

''There are people in custody — there is an urgency to this,'' Kane said.

Kane told ICE officials to work on the list with union attorneys who are contesting the Greeley arrests.

ICE agents raided Swift & Co. meatpacking plants in six states on Dec. 12, arresting a total of 1,282 people. ICE has said about 220 face identity theft or other criminal charges and the rest face immigration charges, which are considered administrative rather than criminal.

The United Food and Commercial Workers Union filed suit in Denver federal court, alleging the arrests of the 265 Greeley workers violated their constitutional rights to due process.

ICE has denied the charge.

ICE also raided Swift plants in Grand Island, Neb.; Cactus, Texas; Hyrum, Utah; Marshalltown, Iowa; and Worthington, Minn. The Denver lawsuit did not include workers arrested at those plants.

[mauipenny]

a little more background...


Immigration agents raid six Swift meat plants
Updated 12/12/2006 1:33 PM ET E-mail | Save | Print | Subscribe to stories like this
By Kim Nguyen, Associated Press
GREELEY, Colo. — Federal agents raided meat processing plants in six states Tuesday and arrested an unknown number of suspected illegal immigrants in an identity theft investigation.

Immigration and Customs Enforcement officials said the workers were arrested on administrative immigration violations and, in some cases, existing criminal arrest warrants.

ICE chief Julie L. Myers told reporters in Washington that agents had uncovered a scheme in which illegal immigrants and others had stolen or bought the identities and Social Security numbers of possibly hundreds of lawful U.S. residents to get jobs with Greeley-based meat processor, Swift & Co.

Six Swift processing plants were raided Tuesday, in Greeley; Grand Island, Neb.; Cactus, Texas; Hyrum, Utah; Marshalltown, Iowa; and Worthington, Minn.

"Swift has never condoned the employment of unauthorized workers, nor have we ever knowingly hired such individuals," Swift President and CEO Sam Rovit said in a written statement.

In Greeley, cars lined the street leading to the plant as family members stood outside. One person held a sign that said, "Presents! No tears at Christmas!"

A sheriff's deputy described the scene outside a meatpacking plant in Hyrum, Utah: "They've got three buses, a bunch of transport vans, a lot of cars and 150 or so agents," chief Cache County deputy David Bennett said Tuesday.

Bennett said ICE officials didn't notify the sheriff's department about the raid.

"They didn't ask for our help," Bennett said. "We were lucky to find out."

Swift escribes itself as an $8 billion business and the world's second-largest meat processing company. In Hyrum, where city Administrator Brent Jensen says the plant employs more than 1,000 workers, the company can process up to 2,200 cattle a day, according to a Securities and Exchange Commission filing.

Myers said immigration officials were "looking very aggressively" at who may have sold the identities to the workers. She said ICE had uncovered several rings that may have provided illegal documents.

Some immigrants targeted had genuine U.S. birth certificates and others had other kinds of false identification, Myers said.

"The significance is that we're serious about work site enforcement and that those who steal identities of U.S. citizens will not escape enforcement," Myers said

ICE officials at the plants in Greeley and Worthington, Minn., said the total number of arrests might not be released until Wednesday, when a news conference was scheduled in Washington.

"We have been investigating a large identity theft scheme that has victimized many U.S. citizens and lawful residents," said ICE spokeswoman Barbara Gonzalez at the plant in Greeley.

Gonzalez said federal agents worked closely with the U.S. Department of Agriculture to try to minimize disruption at the plants while carrying out the search warrants.

Contributing: Associated Press Writers Jennifer Talhelm in Washington, D.C., and Paul Foy in Salt Lake City

[mauipenny]

part 2 of ongoing research...

turns out ICE in Colorado (the one involved in the Swift Meat situation) is run by the Geo Group Inc. (GEO) nyse

maybe a good way to increase their own profits?

Profits for Private Jailers
By DAN BURROWS
May 27, 2007

The prison business looks ready to stage a breakout.

Tougher mandatory sentences were already straining the nation's jails. Now, the Department of Homeland Security's Border Initiative and its detention of undocumented immigrants has further burdened the system. Federal prisons already have 33% more inmates than they were designed to house and state prisons are similarly overcrowded.
[Unlocking Profits]

The upshot? A severe shortage of prison space -- and a robust outlook for the three biggest private jailers.

A Need to Outsource

The vast majority of prisons are still owned and operated by federal or state governments; less than 8% of prisons are outsourced to private operators. But the private market -- dominated by Corrections Corp. of America, Geo Group and Cornell -- is expected to grow substantially over the next five years.

A February report from the Pew Charitable Trusts, a nonprofit research foundation, forecasts a 13% increase in the inmate population by 2011 -- in line with past growth rates, but further compounding the overcapacity problem. That amounts to as much as $27.5 billion in new prison construction and operation.

That kind of burden leaves states and the federal government with little choice but to outsource incarceration to private companies.

Corrections, Geo and Cornell are "far and away the biggest beneficiaries of that trend," says Patrick Swindle, an analyst with boutique investment bank Avondale Partners in Nashville, Tenn.

Higher Profit Margins

Take Corrections, the biggest of the bunch with about a 50% market share and expected earnings growth of some 22% a year over the next five years. The company recently amended a contract with California to house an additional 4,700 inmates, with more expected to come from the state's desperately overcrowded system. Occupancy rates of 90%-plus and better contract terms are boosting profit margins.

Geo, with 30% of the market, is enjoying new contracts, better terms and sky-high occupancy rates as well. As a result, analysts, on average, expect earnings growth of 16% a year for the next five years.

Another plus is the company's emerging Geo Care business, which takes over crumbling state mental institutions. "These are very old state facilities, many of which need to be replaced," Mr. Swindle says. "Geo Care is a first mover in the space, and that business is really beginning to get its legs." Geo Care contributed $70 million to Geo's 2006 revenue of $861 million, almost double its contribution the year earlier.

Small but Growing

With just 8% of the private prison market, Cornell is the smallest player. But the company is expanding its Folkston, Ga., prison in response to demand from the U.S. Marshals Service. And in January, it renewed a long-term contract with the Federal Bureau of Prisons to add housing at its facility in Big Spring, Texas.

Cornell's long-term earnings-growth rate is projected at 11% a year for the next five years.

There's another bright side to this somewhat dark industry: These stocks have a defensive aspect. Jamie Cuellar, portfolio manager at Brazos Capital Management, which owns shares in all three companies, says the sector is almost countercyclical.

"When times are bad, more people tend to go to jail," Mr. Cuellar says. "It's awful, but it's true."

Write to Dan Burrows at [e-mail]

[mauipenny]

an interesting market story...

for some reason a have an itch to research a little more about this story...anyone else have any leads for me?

the areas in bold seem to remind me of someone...but i can not put my finger on it....

i dunno why i am drawn to this story...hmmmm

Swift calls for ‘comprehensive immigration reform’
UNITED STATES: “Employers like Swift who are trying to abide by the law are not the problem in the immigration reform debate—the current immigration system is the problem.”—John Shandley, Swift & Co.’s senior vice-president of human resources.

John (Jack) Shandley, Swift & Co.’s senior vice-president of human resources, testified on April 24 before the House Judiciary Committee’s Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law. This hearing examined problems in the current employment verification and worksite enforcement system.

His testimony covered Swift’s hiring practices, Swift’s view on the effectiveness of Basic Pilot, and recommendations for comprehensive immigration reform. Swift & Co., with more than $9 billion in annual sales, is the third-largest processor of fresh beef and pork in the United States, and the largest beef processor in Australia. The company employs 15,000 people domestically and operates seven major processing plants in seven states.

“All but one of our seven domestic plants have union representation,” Shandley told the subcommittee. “Swift’s production wages are at or above average rates in the communities with which we operate; mean take-home pay is $28,000. We offer affordable healthcare and retirement benefits to eligible employees. Approximately 80 percent of our employees elect to participate in our health plans.”

Swift’s production employee rate is lower than industry figures for leisure and hospitality, construction, and retail trade, he added. Swift’s worker-safety record, as measured by lost time injury incidence, is better than all manufacturing businesses in the United States. “In short, employee safety and satisfaction is of the utmost importance to Swift,” Shandley told the subcommittee.

He went on to say that Swift’s hiring processes go above and beyond what is required by federal or state law in terms of identity determination and work authorization.

“First, in accordance with federal law, every new Swift employee is required to complete an I-9 form and provide one or more forms of government-issued photo identification, usually a state identification card or driver’s license,” he said. “I would like to note that state requirements for issuing identification cards or driver’s licenses vary greatly. Many do not require proof or legal presence in the U.S. The state level is the government’s first line of defense in preventing unauthorized workers from obtaining employment.

“Not only must employers accept designated identification documents that on their face seem valid, we cannot specify which of the 29 authorized forms of identification the applicant must supply,” he added. “Employers are also prohibited from asking for additional documents. In fact, in 2001, Swift was sued for $2.5 million by the Department of Justice for discrimination because the company allegedly went too far in trying to determine applicant eligibility. We subsequently settled the case for less than $200,000 with no admission of wrongdoing.”

Shandley pointed out to the subcommittee that less than one-tenth of one percent of all employers use the government’s Basic Pilot program. Swift has participated in that program since 1997, and every production employee hired since then has had his or her Social Security number run through a government database that subsequently returned an employment authorization, meaning the Social Security number was valid and matched the name of the applicant hired and was authorized to work, he said.

During the summer of 2006, and with the assistance of third-party immigration compliance consultants, Swift implemented a hiring process improvement program called Employee, Eligibility, Identification, Verification Program (EEIVP) or “connect the dots.” “In simplest terms, we enhanced our standard new hire interviewing and information evaluation procedures to allow us to better detect identity fraud in a non-discriminatory way. For example, we implemented an internal IT program that flags an applicant that was previously employed or denied employment at another Swift location.

“Simply put, a company cannot legally and practically do more than we have done to ensure a legal workforce under the current tools and regulations available from the government,” Shandley said. “Despite these facts, the government raided six Swift production facilities on the morning of Dec. 12, 2006, and detained 1,282 employees. This event cost the company more than $30 million and disrupted communities that Swift has worked hard to enrich.”

The raids came after numerous attempts over many months by senior management, outside counsel, and others to understand ICE’s (Immigration and Customs Enforcement’s) concerns, Shandley continued. “We asked for information meetings, and a collaborative way of apprehending and removing all potential illegal workers and criminals in order to minimize disruption to the company, communities, and livestock producers. All attempts to generate a collaborative solution were repeatedly rebuffed by ICE under the guise of an ‘ongoing criminal investigation’.”

After 14 months of investigation, the government has not accused or charged Swift or any current or former member of management with any wrongdoing in connection with its immigrant worker investigation, Shandley reminded the members of the subcommittee. “We have no reason to believe it will do so in the future,” he said. “DHS [The Department of Homeland Security] and ICE do, however, continue to unfairly insinuate that the company is somehow guilty in some unspecified way of parrying all inquiries with the reply of ‘there’s an ongoing investigation.’ We believe it’s past time for ICE to publicly admit that the company is not guilty of violating immigration laws.

“It is particularly galling to us that an employer who played by all of the rules and used the only available government tool to screen employee eligibility would be subjected to adversarial treatment by our government,” he continued. “These ICE raids once again highlight significant weaknesses in the Basic Pilot program—flaws that we’ve discussed with Congress and other interested parties several times over the past year.”

Shandley went on to say that the Basic Pilot program, along with increased employer sophistication in processing identify documents, was reasonably effective at its inception in helping to eliminate the use of counterfeit paperwork in the job application process. “However, in response to the Basic Pilot, the underground market evolved by replacing counterfeit documents with genuine identification documents obtained under fraudulent terms,” Shandley said. “For example, the most common form of I-9 documents produced—state identification cards or drivers licenses—are obtained with valid copies of birth certificates and social security cards.

“As I stated earlier, an employer is required by law to accept eligible documents on face value,” he added. “We believe this challenge will continue, as valid birth certificates can be resold to another undocumented worker for reuse in obtaining yet another official state identification card.”

Over time, fatal flaws in the Basic Pilot Program came to light, he continued. As currently structured, Basic Pilot does not detect duplicate active records in its database. The same Social Security number could be in use at another employer, and potentially multiple employers across the country, he added.

As a result, employers are confronted with a prolific and sophisticated document fraud industry now capable of providing unauthorized workers with documents and identities that challenge industry’s ability to detect identity and document fraud and seem to defeat the government’s Basic Pilot Program “that we depend upon to gauge our effectiveness,” Shandley said. “Let me underscore this point: Basic Pilot is currently the only government tool provided to employers today, and it is fatally flawed.”

Employers have no foolproof way to determine if a new hire is presenting valid identification documents obtained under fraudulent circumstances, Shandley told the subcommittee. Furthermore, he added, attempts to use additional means to determine employee eligibility place employers in jeopardy with government agencies who try to protect the rights of our employees.

“From our point of view, employers like Swift who are trying to abide by the law are not the problem in the immigration reform debate—the current immigration system is the problem,” Shandley said.