No Own - No Sell

[Georgia Bard]

XX ray the problem is like GENI when a short gets caught the SEC and regulators halt the stock. By halting the stock the shorts win and no bailout is needed like with LTCM ... example:

Stockwalk's sudden capital shortfall occurred because of a transaction with Native Nations Securities of New York City. Native Nations failed to make a $60 million payment to MJK Clearing for a loan of shares of GenesisIntermedia Inc. (nasdaq:GENI), a Van Nuys, Calif., firm in which Saudi arms dealer Adnan Khashoggi is a major investor.

Native Nations suspended trading operations last Friday, and it is unclear whether it will make good on the debt to Stockwalk. Trading in Genesis stock was halted Tuesday, and securities regulators have not indicated when they will allow trading in that company to resume.
Source:http://www.startribune.com/stories/535/719689.html
However, long term shareholders property is locked up and thus shareholders and the company are a victims to the shorts ...

But what about LTCM and its 3.6B Bailout by Greenspan... where LTCM was one of the biggest hedge funds in America. Hedge funds are also great borrowers, leveraging some 20 to 40 times their equity capital. The funds borrow against their equity capital, invest in derivatives, use these financial assets as collateral to borrow, and use the further borrowings to further invest. The Times reported that LTCM's equity capital of USD 4 billion enabled it to borrow some USD 1 trillion. LTCM's bets: some USD 200 billion. All figures are best estimates, as hedge funds are not regulated by the Feds.

About the LCTM Bail out http://www.gata.org/getting_the_word_out_there.html

what about Ellington (Ellington Capital Management is the latest American hedge fun to face financial problems, forcing it to liquidate substantial amounts of its mortgaged-backed securities portfolio to meet demands by its lenders for more collateral. The question being asked is: Will the US Federal Reserves (Feds) also sponsor a concerted bail-out action for Ellington, as it sponsored Long Term Capital Management (LTCM)?

Further there are those who defend the long term investors....

There is myriad evidence that our system is in trouble. Federal Reserve Chairman Alan Greenspan talks about the possibility of collapse all the time. He calls it "systemic risk."

One of the most telling events in recent times was the aborted collapse of a hedge fund called Long Term Capital Management (LTCM). If our high political and monetary officials are to be understood, there was credible testimony that the world’s financial system might have collapsed as a result of the leveraged positions that LTCM took.

Now, let’s step back for a moment. The world "GDP" is on the order of about $15 trillion or more. How is it possible that a firm like LTCM, with a mere $3 billion of invested capital could wreck so much havoc?

The answer lies in the fact that many of the major banks, through their trading departments, were making the same bets as LTCM. Thus, there was the possibility that if LTCM went bust and had to lay off, or sell, its bets at a great discount, the banks would have lost a lot of money on those same bets, too, and their assets would become impaired. That was the chain of events that the Federal Reserve sought to forestall when it gathered up 13 very prominent financial players and "suggested" that they ante up a $3½ billion infusion into LTCM.

By the way, the reason the Fed did not bail out LTCM directly, and the Fed is empowered to do that, is that the Fed can play the bailout card only a few times before people will very strenuously object. So, the Fed is waiting for when the stakes are much higher, as they most certainly will be.

Today, depending upon whom one listens to, there may be as much as $120 trillion in notional derivative bets. Granted, only a very tiny portion of that is really at risk, but even that tiny portion, if lost, would overwhelm the banking system and result in a complete collapse.

Questions for your readers: Is it fair that ordinary taxpayers be the ultimate counterparty to these bets and be forced by law to pay off if the banks lose? What part of our Constitution authorizes this kind of wealth transfer—in Mr. Greenspan’s words, "without limit"?

Other, and even more compelling evidence that there is a problem is that the Bank for International Settlements (BIS) has established a Financial Stability Institute. If financial stability were not a big problem, then why is the BIS so concerned?

Source:http://www.fame.org/HTM/JT_LP_I.htm

My question is from all of this does the bailout of hedge funds amount to double standards? DOes shareholders who actually put up their money to buy the property have to lose because a short decides to destroy their investment using their property as collateral?

GRRRR.




"NO OWN - NO SELL" Petition:
http://www.petitiononline.com/NoShorts/petition.html
Proud To Be An American Against Terrorism & Its Propaganda!
:=) Gary Swancey