Watch straight-talking Jim Cramer in an interview where he explained how Wall Street controls the media and the market to manipulate retail investors and profit from their own concoctions. CNBC has been trying to remove this clip from the web.
This is the famous 2006 interview from TheStreet.com's "Wall Street Confidential" webcast which stirred controversy after it appeared on YouTube.com. In the video, Cramer described activities used by hedge fund managers to manipulate stock prices; some illegal and some debatably legal. He described how he could push stocks higher or lower with as little as $5 million in capital when he was running his hedge fund.
Cramer said, "A lot of times when I was short, I would create a level of activity beforehand that would drive the futures." He also encouraged hedge funds to engage in this type of activity because it is "a very quick way to make money." Cramer claimed that everything he did was legal, but that illegal activity is common in the hedge fund industry. He also stated that some hedge fund managers spread false rumors to drive a stock down: " ...it's important to create a new truth, to develop a fiction."
Cramer said one strategy to keep a stock price down is to spread negative rumors to reporters he described as "the Pisanis of the world". "You have to use these guys," said Cramer. He also discussed getting "the bozo reporter from The Wall Street Journal" to publish a negative article. Cramer said this practice, although illegal, is easy to do "because the SEC doesn't understand it."
James J. "Jim" Cramer is an American television personality, former hedge fund manager, and best-selling author. He is the host of CNBC's "Mad Money" and co-founder of TheStreet.com. Cramer has also been a contributor to New York magazine, and an occasional contributor to Time magazine.
Cramer graduated magna cum laude from Harvard College in 1977 where he was also president of the Harvard Crimson. He later earned a Juris Doctor degree from Harvard Law School.
Thursday, June 26, 2008
Cramer: How Hedge Funds Make Their Money, The Old Fashioned Way...
Wednesday, June 18, 2008
Foreclosures: Affecting not just us humans...
The housing crisis is literally splitting families apart. Its effects are being felt by not just humans but their pets as well. When a family faces foreclosure they’re often forced to move into an apartment or with other family members, and often it’s impossible to keep their beloved pets. They are forced to do the unthinkable and place their loyal friends for adoption at shelters, or worse...
Wednesday, June 4, 2008
FIAT EMPIRE - Why the Federal Reserve Violates the U.S. Constitution
This Award-winning documentary, featuring presidential candidate RON PAUL, was inspired by the book, "The Creature From Jekyll Island" by author and FREEDOM FORCE founder, G. Edward Griffin. Find out why some feel the Federal Reserve's practices are a violation of the U.S. Constitution and others feel it's simply "a bunch of organized crooks."
Discover why experts agree the Fed is a banking cartel that benefits mainly bankers and their corporate clients as well as power-hungry politicians in Congress. Find out how the corporate media facilitates the partnership between the Fed and Congress and why it fails to disclose what's going on. Lastly, find out how the Federal Reserve-member banks are owned and controlled by an elite group of insiders.
All the perplexities, confusion and distress in America arise, not from... want of honor or virtue, but for the downright ignorance of the nature of coin, credit and circulation.
John Adams
When you give men the power
to create money out of nothing...Don't be surprised
if they create money out of nothing.
House prices: Through the floor ...Time to Buy yet?
America's house prices are falling even faster than during the Great Depression
From Economist.com
AS HOUSE prices in America continue their rapid descent, market-watchers are having to cast back ever further for gloomy comparisons. The latest S&P/Case-Shiller national house-price index, published this week, showed a slump of 14.1% in the year to the first quarter, the worst since the index began 20 years ago.
Now Robert Shiller, an economist at Yale University and co-inventor of the index, has compiled a version that stretches back over a century. This shows that the latest fall in nominal prices is already much bigger than the 10.5% drop in 1932, the worst point of the Depression. And things are even worse than they look. In the deflationary 1930s house prices declined less in real terms. Today inflation is running at a brisk pace, so property prices have fallen by a staggering 18% in real terms over the past year.
Friday, May 30, 2008
Florida: On The Brink
While people around the United States may be debating whether a recession is in full swing or not, the people of Florida would say it is. Florida has long relied on tourism as one of its chiefest industries, and that included the sale of vacation homes. Florida was one of the hottest areas during the housing bubble and many investors bought property there with subprime loans that came with high interest rates. When they reset, the home went into foreclosure. For the housing market, experts predict it will be several years before the backlog of available homes declines enough to bring prices back up. While this is a tremendous opportunity to buy a foreclosed home in Florida right now, there are still too many people struggling with the local economy to be able to do so at this time. One of the positive signs of a possible recovery that can later affect the sales of homes is that Florida's exports are rising very quickly. Even though there may be fewer people going to Florida during times when the price of gas is high, Florida started out the year 2008 with 3.4 percent increase in tourism during the off months even though unemployment was higher due to the loss of agricultural jobs. So, while the national trend is towards staying home and conserving gas, Florida's appeal still remains strong in the tourism market. If the trend continues during the coming summer months, it may be just what Florida needs to start bringing in more business and, thus, provide more seasonal employment for people living there in the food and entertainment industries.
Now, many houses are empty and inflation has caused other homeowners to have to stop paying maintenance fees to homeowners associations and condo organizations. With gas at nearly $4/gallon and climbing, many people are choosing “staycations” (where they stay put) instead of vacations, directly impacting the revenues going into the Florida economy. On top of that unemployment is up in the state. The increase in inflation and the loss of some income is resulting in people relying on credit or a cash advance to help make their monthly expenses. Is There No End In Sight?
Monday, May 19, 2008
Housing Starts Plunge 30.6%... A GOOD Thing for the Market!
The Commerce Department recently released the latest Housing Starts data. It was not pretty (for builders), but it reflects a glimmer of hope for the real estate market recovery.
Construction of single-family houses in April dropped to the lowest level in 17 years. Builders broke ground on 692,000 single units at an annual rate, the fewest since January 1991.
Multifamily units -- Condos, townhouses, and apartments -- rebounded for the month. Total housing starts were up 8.2% since last month, but plummeted 30.6% below the level of construction in April 2007.
The Wall Street Journal reported:Builders have been reluctant to build because demand for new homes has plunged and the supply of unsold property remained high. The latest data show new-home sales, for March, were down 36.6% from a year earlier. On Thursday, the National Association of Home Builders reported its index for sales of new, single-family homes slipped to 19 in May from 20. The gauge is based on a survey of builders asked about prospects for sales.
Given the huge inventory overhang, weak housing starts is (perversely) a positive for the housing market. As the unsold inventories start to shrink, prices will stabilize as demand catches up.
Tracking Realtor Spin...
Source: Some Trade Associations, like the American Trucking Association (ATA Tonnage Index), or the National Association of Home Builders (Home Builders Index), simply put out the straight dope - an unvarnished, unblinking look at their industries, so their members can better make informed business decisions with the available data. 
Beware of Realtors bearing gifts... goes the saying, updated to today's realities. As the chart shows, the NAR has a long history of pollyannish calls for a bottom in Real Estate, going on now for about two years. Still wonder about why the lack of credibility?
The numbers correspond to the milestones in the above chart:
"After five years of booming sales, we are now experiencing normal market conditions across most of the country… most owners can expect steadier gains in home values for the foreseeable future." -Thomas M. Stevens, NAR President
Tracking Realtor Spin
James Bednar
New Jersey Real Estate Report
Other groups massage the data, spin the message, and try to present their information in the most positive light - regardless of the underlying data. They seem to believe that if only the public believes things are okay, it will become a self-fulfilling prophecy. While there is nothing wrong about being optimistic, distorting data with a sugar-coated spin brings unintended consequences.
The National Association of Realtors falls into this latter category. They have been calling the bottom in Housing, ever since the market top 2 1/2 years ago; Their consistent claims of stabilization and price improvements later in the year - as prices have continued to slide - have earned them the title of Worst Forecasters Ever. What is more damning is that they are not just wrong, but purposefully misleading for commercial purposes.
Many Realtors in the field are finding the NAR tactics frustratingly counter-productive. Why? It seems that Realtors were having a hard have time convincing home sellers to price their houses more realistically. Even as home builders were slashing new-home prices to move bloated inventories, many home sellers are still holding off, hoping - along with FAR and NAR - that prices will start moving back up soon. Hence, the impact of today's successful deception may ultimately be less flexible pricing of homes, negatively impacting sales.
My advice to residential clients has been to hold off selling into a panic-mode market if they possibly can. As all bad times, this will also come to pass. If they absolutely must sell, however, then price according to the market. On the other hand, opportunities do abound indeed for the astute buyer.
Friday, May 9, 2008
Explaining the Economic Stimulus Payments and how it will help the Real Estate Market...
Q. What is an Economic Stimulus Payment? Huckabee's view, too bad he's out of the race... And finally, the always accurate, Jib-Jab view... Learn more about the 2008 Economic Stimulus Package and how it helps solve Florida's Real Estate Crisis (hint: it does not do a darned thing...)
A. It is money that the federal government will send to taxpayers.
Q. Where will the government get this money?
A. From taxpayers.
Q. So the government is giving me back my own money?
A: Only a smidgen.
Q. What is the purpose of this payment?
A. The plan is that you will use the money, for example, to purchase a high-definition TV, thus stimulating the economy.
Q. But isn't that stimulating the economy of China?
A. Shut up...
Wednesday, April 30, 2008
Biggest downturn since the Great Depression
Watch Mort Zuckerman explain why he thinks that the US is facing an economic crisis the likes of which we have not seen in decades. He explains how the securitization of mortgage loans led even the smartest people in Wall Street to fall for what turned out to be garbage paper.
Mort certainly knows what he's talking about. He is a billionaire real estate developer and investor turned media mogul as owner and publisher of several newspapers and magazines as well as Editor-in-Chief of U.S. News & World Report…
Wednesday, April 9, 2008
HOW Money is Created
In our economic system, the presence of money is felt everywhere; indeed, a world without money would be quite difficult to even imagine. Practically all of our daily transactions, from the most menial trip to the supermarket to the purchase of office buildings and the financing or whole armies are exchanges between money and goods or services. In ancient times, the total supply of money was essentially equal to the total supply of goods to be traded. Over time, new structures were devised to improve on the barter-based economy. Long time ago, most economies in the world were under the “Gold Standard”, basically tying the supply of money to the amount of gold the country owned. Under the gold standard, currency issuers guarantee to redeem notes, upon demand, in that amount of gold. Banking and Finance are fascinating yet complex subjects. This documentary presents in layman’s terms how money is actually created out of literally nothing, and how our whole financial system is so dependent on the public’s confidence in our currency and nothing more.
Today’s standard is called in economics, “fiat currency”. Fiat money is money that has value primarily because a government demands it in payment of taxes, and that government has credible enforcement of its demand. It basically has value because the public has a collective belief in the credibility of the entity printing the currency.
Former US Federal Reserve Chairman Alan Greenspan once argued, before the advent of monetarism, that:"Under the gold standard, a free banking system stands as the protector of an economy's stability and balanced growth... The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit... In the absence of the gold standard, there is no way to protect savings from confiscation through inflation”
PART 1 - THE ORIGINS OF MONEY
PART 2 - HOW MONEY IS CREATED
PART 3 - MONEY IS DEBT
OUR BANKING SYSTEM AND MONETARY REFORM
WARNING ABOUT THE N.W.O.
Monday, April 7, 2008
A Primer on Sub-Prime Mortgages
The sub-prime mortgage infection has already spread to affect most areas of the U.S. economy and the world. What started as one of the after-effects of the "Great Greenspan Depression of the Millennium", it has recently threatened to destabilize the very financial system of the most powerful economy in the world. Many AAA mortgage bonds are actually extremely high risk because of little-considered nuances in the hundreds of pages of trust indentures and servicing agreements. In addition to the widely understood mortgage default risks and other concerns, these contracts actually permit the loan servicers to advance payments on behalf of defaulted homeowners for years and years at interest rates of 12% and more. These advances put funds back into the trust to be paid to junior security holders and are subsequently repaid first from foreclosed home sales. The net effect is that foreclosed home sales may result in little or no proceeds, or even a liability to the AAA bonds which are supposed to be the senior securities. This is not widely understood even now. Mortgage volume surged; in 2006, it topped $2.5 trillion. Also, many more mortgages were issued to risky subprime borrowers. Almost all of those subprime loans ended up in securitized pools; indeed, the reason banks were willing to issue so many risky loans is that they could fob them off on Wall Street. The Fed is now stepping up to guarantee these loans which is effectively shifting them into the Federal Reserve's Balance Sheet. And, you may ask, who "balances" the Balance Sheet?...
This presentation called "A primer on Sub-Prime Mortgages" is entertaining while at the same time very educational. It describes in simple terms some of the reasons that got us into this mess.
The large amount of "First Mortgage Syndicated Bank Loans" issued since 2004 are, for the most part, garbage. Most of these loans permit the borrowers to sell the collateral, keep the money, and reinvest in almost anything they want to, including stocks junk bonds, defaulted loans, or even Al Gore's ventures.
Roger Lowenstein in his recent New York Times article Triple-A Failure puts it most succincly:
But who was evaluating these securities? Who was passing judgment on the quality of the mortgages, on the equity behind them and on myriad other investment considerations? Certainly not the investors. They relied on a credit rating.
Thus the agencies became the de facto watchdog over the mortgage industry. In a practical sense, it was Moody’s and Standard & Poor’s that set the credit standards that determined which loans Wall Street could repackage and, ultimately, which borrowers would qualify. Effectively, they did the job that was expected of banks and government regulators. And today, they are a central culprit in the mortgage bust, in which the total loss has been projected at $250 billion and possibly much more.
The taxpayers - You, me, and our kids...
Sunday, February 3, 2008
The Real Estate fix: $600 for China from each of us...
Economists are forecasting that over 2 million people may lose their homes to foreclosure by the end of the year. RealtyTrac reported that in 2007 more than 2.2 million default notices, auction notices, and bank repossessions were issued on about 1.3 million properties. While a large portion of foreclosed homes were investor-owned, the overall numbers reflect a rate not seen since the Great Depression.
The reasons, in hindsight, were clear; The U.S. economy built up an enormous credit bubble that has now popped. This bubble was driven by a Federal Reserve, strongly 
influenced by Greenspan, that kept real interest rates too low for too long. The debt subsidy the Fed created encouraged risk taking and created a whole sub-economy of middlemen, loan brokers and other peddlers that offered all kinds of loan programs, too complex for the average homeowner to understand, but which generated huge commissions. These loans were securitized into large pools and sold to investors in turn. These pools included quite complex risk structures which few investors understood.
When the Fed decided to start raising rates again, it made the same mistake it did back in 2000 when it raised the rates too much, too quickly thus destabilizing the economy and creating the Recession that came soon after.
Now, eight years later, history repeats...
With the country heading into a crisis, the Greenspan boys realized they had done more harm than intended and admitted “Oops... I did it Again! - raised the rates too much, too soon, too fast... Here you go... , we are reversing our decision and are now cutting the rates back...” However, the damage is irreversible. While the recent rate cuts will certainly help curtail future additional destruction to the economy, the devastating losses inflicted on foreclosed homeowners is not recoverable. Giving them $600 to go spend it at Wal-Mart (China’s retail store) is in no way a solution. It’s what the Wall Street Journal calls “Feel Good Economics” because the only real effect is to make politicians feel good about themselves and buy reelection with the public purse.
Further, the people that lost their homes because they lost their jobs due to cutbacks as a result of the credit mess cannot even get the $600 to give to China... They likely had no income thus paid no taxes and are not eligible for the relief!.
What’s needed is decisive action to expand the Federal Housing Administration program into below-market 30-year mortgage refinancings with minimal down payments. We also need Florida to significantly reduce the cost burden of refinancings.
Disclaimer
Entrepreneur, former Fortune 500 senior executive, semi-retired at the age of 39 after founding and growing several businesses in High Technology, Management Consulting and Manufacturing.
