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Monthly Archives: August 2008

Due to the US holiday weekend the next chapter will go up sometime on Tuesday.

Sorry about last week; just forgot to hit the button! Doh!


Cramer, who is a sociopath, owns TheStreet.com with Marty Peretz, who is an aristocrat.

Hey, Mark, Ann Coulter’s on the phone.  She thinks you need to reel it in a bit.

Seriously, I don’t claim to be a professional copy editor or anything, but if I were, and that’s the opening line of a piece I’m evaluating, that’s where I stop reading.  Is Mitchell really expecting to have this taken seriously as some kind of landmark exposé?  Or is he deliberately setting himself up to fail here so as to “prove” that the mainstream hates him and therefore he must be onto something?

Anyway, thus begins a section which spends about 80% of its length in smear-a-palooza mode.  But rather than do any kind of in-depth trashing of anyone’s character, Mitchell indulges in more of a buffet-style smear, a little of this, a little of that, now on to him, now on to her.

For instance, with Peretz’s introduction here you’d expect him to be the subject for a fair amount of time.  But in point of fact, he’s all but forgotten after the first paragraph.  The spotlight momentarily moves back to Cramer’s early days working for soon-to-be-infamous Wall Street figure Ivan Boesky, before going off on a tangent about Michael Milken, how many suspect he was the person Byrne intended to identify as the “Sith Lord”, and how Byrne has apparently subsequently decided there was no single Sith Lord after all but rather the enemy was some kind of collective evil “like Al Qaeda”.  Of course never mind that even Al Qaeda had a well-established hierarchy before they got driven into the caves… oh, but why am I expecting any sense out these metaphors anyway?

Anyway, back on track, after Boesky, Cramer’s next boss was Michael Steinhardt, and it’s his turn in the smearlight.  He’s of course a “thug” (one of Mitchell’s favorite epithets it seems) and “it is said” (note the brave lack of attribution) that Steinhardt “showed no remorse” after an employee had a heart attack.

The story moves on to Steinhardt’s father, “the biggest Mafia fence in America” per Mitchell, back momentarily to Peretz (who Mitchell feels compelled to remind us funded Cramer’s hedge fund, even though he just said that four paragraphs earlier), and then on to Mark Rich, recipient of a rather controversial pardon from Bill Clinton.

Lest he be perceived as showing any sex discrimination, Mitchell adds to his hit list Cramer’s wife (not specifically named apart from Cramer’s nickname of “Trading Goddess”) and CNBC anchor Maria Bartiromo.

All in all, quite a display from the man who was just a couple of sections ago complaining about how anyone that nettled these guys would be subject to a vicious smear campaign.  Self-justification in advance or just a total lack of self-awareness?  You be the judge.

Finally Mitchell settles down for a while on one of his boss’s most archest of enemies, David Rocker, by way of leading in an extremely roundabout way back to where he left off last section with the SEC’s investigation of Gradient Analytics, and its decision to issue subpoenas to numerous journalists — basically anyone who had written critically of Overstock.com to date — to see who’s been talking to whom, when, and about what.

But we’ve already covered why journalists (of which Mitchell again seems to exclude himself) generally consider that a bad thing, so let’s cut to the big finish.  Cramer and Greenberg have “commandeered CNBC” (never mind the little detail that this was on Cramer’s show where he can and does talk about anything he wants to as along as it has some relation to Wall Street).  And Cramer pulls out his subpoena — maybe a copy, maybe the original, who knows — and writes “BULL” on it in large black marker, before ripping it up.

Gasp.

I suppose it would be nasty of me to note that, even as Mitchell attempts to construct a cliffhanger moment out of this (even as he’s stretched the narrative of this moment across three sections — does he think he’s writing for Dragonball Z or something?) he’s already spoiled the resolution: the whole “cowardice and strange events” thing that led to the SEC backing down.

It’s pretty clear that this moment is why these guys fire so much ammo Cramer’s way.  He effectively called them all out on national cable TV and publicly humiliated them (via those in the SEC that had done their bidding) and got clean away with it.  And that’s just something that sticks in their collective craw to this very day, even as Cramer has rather paradoxically seemed to have come around to embrace the idea that short sellers are out of control.  (Then again, he also thinks that companies are out of control too.  And that — all together now — it’s all George Bush’s fault.)

Next week: the public reaction to Cramer’s stunt.  Or lack thereof, and why that’s apparently a horrible thing.

So much for that new “proudest moment”.  Easy come, easy go.  Ironically, Jim Cramer is bemoaning this reversal, having bought into the notion that the financials in question are helpless in the face of shorting.  Did he not get a memo or something?


I did promise last week to get to what the whole hubbub involving Jim Cramer and Herb Greenberg was all about, but as this section decides rather capriciously to wander into a side issue let’s start there.  Once Mitchell gets through reiterating his embellished descriptions of Cramer and Greenberg that fateful day, he moves on to the story of a high-level Overstock executive (to this day) named Stormy Simon, who despite her name is not and never was in the adult entertainment industry and shame on you for even thinking it.  Or so Mitchell effectively says anyway.

Mitchell attributes the story behind Simon to Jeff Matthews, another blogger who has done a lot of dissecting of Overstock’s performance as a company, particularly in 2005 and 2006 (even as his interest in that story has appeared to wane in more recent months), but strangely, no entry related to Overstock appears in his blog for the specified month, November 2005.  It’s possible the entry may have been deleted, or perhaps the discussion was restricted to the comments page (Simon is mentioned in the comments to a December entry that was Overstock-related, but I’ve neither the time nor the inclination to scan every comment section on that blog.)

Then again, it’s not as if Patrick Byrne himself hasn’t encouraged such a suggestion himself.  According to a story in Forbes from that month, Byrne claimed to have sent Simon to Rocker Partners, under the pretense of having damaging information about Overstock, a practice which Byrne described by saying, “she showed them some thigh”.  No, really.  Mitchell claims that Byrne has thoroughly debunked the notion of any lascivious past on Simon’s part, but once again, a source might have been nice.

There’s a lot more to the story (such as the panned Super Bowl ad referred to in one of the links above, which was put together by Simon herself), but by now Mitchell has moved on so I guess I need to do so as well and get back to what was eating Herb.

That, specifically, was a subpoena.  The SEC, in a rather unprecedented move, issued subpoenas to numerous journalists that wrote critically about Overstock.com, including Greenberg, and Cramer as well, it turns out.  Mitchell acts as if the whole thing is routine from the SEC’s perspective but it is far from that.  The subpoena asks for information about sources that Herb, Jim and others granted confidentiality to as part of their occupation as journalists.

It’s really rather appalling, and a little insulting too, that Mitchell, a man with so much experience in the field of journalism, shows so little regard for the sanctity of confidential sources to journalism here.  Especially given how, earlier in the piece, he made a big show of being protective of the “secret” identity of the “Easter Bunny”, even long after everybody else was satisfied that the secret was out.

But what it really goes back to is the central theme of this overall movement and that is the silencing of negative information about publicly traded companies.  Had Greenberg and Cramer complied with the SEC subpoena, their respective careers as journalists would have been seriously damaged.  It’s a complex and even rather controversial subject, so let me just refer you to a seminal 1994 article from the American Journalist Review on the topic.  Essentially, sources with negative information would no longer want to speak with them, for fear of reprisal should their identities be divulged.  A state of affairs that, again, would fall right in line with the true goals being sought here.

But the bottom line is, whether you agree or disagree with the principle involved here, it is something journalists — as Mitchell himself surely knows — take extremely seriously.  Thus, Mitchell’s pretense of incomprehension that this would become the story of the day on CNBC, Cramer’s on-again, off-again (but as of late very much on-again) employer is really quite grossly disingenuous.

Mitchell goes on to rather mockingly describe Cramer and Greenberg’s assertions that the subpeonas were effectively Byrne’s doing, although you’d think the way Byrne celebrated this action at the time would have been rather strong supporting evidence.

Regardless, not long after, the SEC responded to the outrage expressed by Cramer, Greenberg and others with, basically, a “never mind”.  Mitchell, for his part, attributes the SEC’s reversal to “cowardice and strange events”.  Although What “strange events” he means, as usual, he doesn’t say.  Indeed, Mitchell’s piece has by this point established rather a theme of making odd allusions to nothing specific.

Next week: Section Eight, and it has nothing to do with any military service on Patrick Byrne’s part.  What a rip!

We now move to February 2006. Jim Cramer and Herb Greenberg, former co-workers at TheStreet.Com and friendly rivals up until Herb’s retirement earlier this year, are together on Cramer’s Mad Money program on CNBC. Many times it seems they agree on almost nothing. But today both of them — in a way comically embellished by Mitchell — are livid.

What are they so upset about? Mitchell does not seem to think you need to know that quite yet. In fact he prefers you to believe that Patrick Byrne’s Miscreants’ Ball speech — given five months ago mind you — is somehow causing some kind of time-lapse rage in two prominent journalists.

Even though it’s Greenberg who is — rather ironically, if you’ve ever seen them in action — portrayed as the one who has completely lost his cool in the initial paragraph, the piece then veers over to Cramer and begins attacking the bejeezus out of him, portraying him, effectively, as the nexus of all “negative” (meaning, bearish) financial journalism.

Again, this is quite ironic when you’re considering that this is Jim Cramer, who closes every edition of Mad Money with the catchphrase, “there’s always a bull market out there somewhere”, and is frequently criticized for being too much of a pollyanna when it comes to the markets.  When he and Greenberg would disagree on a stock, you could make book that it was Cramer taking the bullish side and Greenberg the bearish.

But to be fair, Mitchell does not cite Cramer himself as the author of the negative stories, but rather a nebulous group he terms as “friends of Cramer”, which could (and does) include anyone that ever worked at Cramer’s signature website, thestreet.com, or been a regular guest on Mad Money, or Kudlow & Cramer, or Cramer’s short-lived show on Fox Business, or who worked with Cramer or was one of his many, many contacts during his days running the Cramer Berkowitz hedge fund.  Indeed, if you’re anybody on Wall Street these days, trader, journalist, or whatever, you’re probably no more than three degrees removed from the Reverend Jim-Bob, just by the simple fact that he’s probably the single most prominent personality in financial journalism today.  All in all, it’s a neat way for Mitchell to recast the very interconnected nature of the Wall Street community as a conspiracy.

Mitchell may vividly portray Greenberg’s anger, but it’s not long before he betrays his own, throwing any pretense of objectivity to the wind by referring to Cramer’s associates as “reporter-thugs” who routinely print stories for the express purpose of benefiting the short sellers that are their sources.  And, not content with leaving it at that, Mitchell posits that many of the targets are victims of a double-whammy, so to speak, simultaneously victimized by the selling of “phantom shares”.  The pointing out of which, per Mitchell, leads to a “vicious media smear”.  Apparently this section was intended as a demonstration.

That’s a lot of accusation being thrown around here, and Mitchell does claim to have analyzed thousands of stories to establish the pattern, but if you’re looking for any actual examples you’re reading the wrong section, and, I suspect at this point, the wrong paper.

In fact, the only specific example cited was the coverage of Patrick Byrne’s Miscreants’ Ball presentation, specifically a New York Post piece by Roddy Boyd and Dan Colarusso (both TheStreet.com alumni… GET IT? HUH???) and apparently containing an unflattering picture of Byrne based vaguely on “The X-Files”.  Mitchell also cites one line from the piece without comment:

Patrick Byrne “is not currently under any psychiatric care,” reported the Post, “and [a company spokesman confirmed] he was sober when he gave the presentation.”

One supposes Mitchell was going for a “how dare they!” reaction to his citation.  And I suppose if one has yet to actually attempt to follow the presentation, but is rather trusting Mitchell’s word about its profound and groundbreaking content, I suppose that might be a natural reaction.  But for those who have seen it, I suspect a more common reaction would be something like: “Really.”

So what was rankling Greenberg so much, to the point where Cramer said Greenberg was potentially in a position where he “can’t do his job anymore”?  Mitchell puts that off until the next section, and so I shall do likewise, until next week.

Overstock’s head counsel as its new president?  I’ve heard worse.  Like the public company that elected the top contributor to its message boards to its board of directors.  But that’s another story…


Strap in, this one’s a biggie.

For this section, Mitchell starts by complying with the journalistic code that requires any discussion of short-selling to include a fifth-grade-level explanation of what short-selling is, including that short-selling is, in and of itself, not illegal.  You know, just so long as you keep it completely to yourself and let those taking the opposite position monopolize any discourse about the company.

And sure enough, Mitchell then proceeds into a comically long list of dirty tactics he attributes to short sellers, such as extortion, collusion, theft, off-shore money laundering and nice red uniforms.  Wait, sorry, I meant “libelous blogs”.  (Hmm, wonder if he’d consider this one libelous?)  Mitchell does not, as it happens, include any examples of any of these.  But then again, this bit is already long enough, so I won’t complain too hard.

But the worst dirty trick of all, says Mitchell, is the selling of what they like to call “phantom shares”, i.e. short-selling without a borrow, also known as “naked shorting”.  Mitchell claims it is enabled by a “glitch” in the electronic trading system (exactly what that is or why nobody is trying to fix it, he doesn’t say), and of course that it is “blatantly illegal”.  One wonders then, what Mitchell must make of Cox’s emergency order banning naked shorting on selected financial stocks.  Why the need to ban something that was already “blatantly illegal”?

Mitchell does go on to cite some sources, including first and foremost his boss, Patrick Byrne.  I won’t go into those here, except to note that it’s a pretty serious stylistic faux-pas to say “here, here, here, here and here” to give the reader a list of hypertext links.

Perhaps sensing that the reader will likely not be inspired to follow those anonymous links, Mitchell sums up with an “all you need to know” is that there are 300 companies on a list (here referring to the SEC’s SHO list, which companies enter into and drop off of on a daily basis) that he claims have “excessive” stock sold but “never” delivered (again, except that they do drop off the list).  In effect, he says that the SEC is saying with the list “here are a list of crimes in progress that we are doing nothing about”.  This despite SEC statements that there are numerous ways that a stock can appear on said list without any malfeasance on anyone’s part.

Mitchell now goes for the scare tactic, saying that if you own a stock on that list, you may not actually own the stock you paid for, irrespective of what the computer tells you!  The computer lies!  Of course, should you ask to sell these “phantom” shares, assuming that the market is open and the stock isn’t suspended or revoked, the computer, every time, will happily say okey-dokey and credit your cash balance by the appropriate amount.  Hmm, maybe the cash is “phantom” too!  Better pull it out just to be sure!

At this point I should remind you that this is all by way of accusing others of undermining faith in the financial system.

Mitchell goes on to cite “some experts” (unnamed as ever) who claim that as many as 1,000 companies have been “wiped off the map” by naked shorting.

Perhaps conscious that such a wild claim might need an example to have credibility, Mitchell provides one that he says is “probably” a victim, not necessarily of naked shorting, but “collusive behavior and dubious tactics”.  But — and speaking of dubious — his choice of martyrs to the cause?  Bear Stearns.

You may have heard a little bit about subprime mortgages and defaults and a general trashing of much of the US banking system in recent months.  But no, apparently Mitchell wants you to forget about and join him in championing the likes of Bear Stearns as an example of a company who might well have pulled through its issues just fine had it not been for those God-forsaken short sellers.  Who, again, are doing nothing wrong by shorting just so long as they are doing absolutely nothing else, like breathing.

Never mind such minor details as the fact that, until the infamous $2-a-share buyout offer from JP Morgan, the shorts had only managed to drive (even assuming for argument’s sake that it was the shorts driving) Bear’s stock down to $30 a share themselves.  Even using the revised buyout price of $10, the shorts were “victimizing” Bear by panicking people into selling its shares for as little as 300% of what Bear was about be valued at.

Oh, but I’m sure we’ll find out that the buyout was all part of the collusion, too.  After all, there’s no conspiracy theory that can’t be propped up by just making the conspiracy a little larger.

At any rate, Mitchell finally sums up by saying the behavior of short-sellers is “clearly” “a scandal of epic proportions”, and rhetorically asks “Where the hell is our media?”  By which he means, “Why the hell can’t I get anyone in the media to agree with me?”

Next week: Booyah!