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Okay, now that I have the attention of people (or perhaps, just “person”) who can’t be bothered to go back to the original post, this blog’s purpose is to go over Mark Mitchell’s gargantuan showpiece one section at a time.  Last week’s post was about the 13th section of that work, and thus the star of that section was the feature topic here.  This week has nothing to do with him, so he will not be mentioned.  Simple enough?

So it’s now April 2004, and, to even Mitchell’s disbelief, Patrick Byrne is once again on Kudlow & Cramer.  Mitchell chalks it up to Byrne’s naiveté about how the financial markets work, a trait he continues to exhibit to this very day.

But for some reason, Mitchell decides that a transcription of the last fifteen seconds of the interview, when the show is running up against a fixed commercial break and the hosts are scrambling to sum up and maybe get one more answer from their guest, is the best way to represent how it went.

Indeed, one might actually suspect that Mitchell is attempting to make the reader believe that those last few seconds were how the entire interview went, with Byrne being pressed to finish every response in three seconds flat.  But of course, a prestigious journalist like Mitchell would never stoop to something so misleading as that, right?  Surely he would put those moments in context, right??

Well, no actually.  Just a transcription of those last fifteen seconds and no further comment.  No attempt to explain what is “confusing heck out of” either Kudlow or Cramer, whoever is speaking at the start of the transcription (Mitchell doesn’t say).

And even then, Mitchell’s transcript leaves out some of what Byrne said in those last few moments.  Blogger Tracy Coenen put the “I’m all about the GAAP remark” statement of Byrne’s that Mitchell quotes, into context in an entry a few months back, and noted what Mitchell carefully removed, remarks to the effect that anyone who reported EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) numbers was “a crook”.  Which, as Coenen went on to note, was very… interesting in the context of what metrics Byrne’s company reported in later years.

So much for another short section.  Next week things get serious.  Mostly.


It seems inevitable in this little exercise in the macabre that anyone operating under a veil of anonymity will soon have his or her identity sought after.  And so, as you can see from the comments, it has begun here.  I’m really not sure what, if anything I plan to do about it, but I do believe it will be an entirely useless clue to my identity when I admit to having crossed swords, so to speak, with the subject of this week’s section.

Meet David Patch, self-styled evangelist of the gospel of the anti-naked shorting movement.  His primary accomplishment, as far as I can tell, is getting himself banned from more blogs and message board websites than any other individual I am aware of.  He almost seems to make it a goal to get banned, in order to be able to tie the blogger/admin in to the grand conspiracy against him.

He does this by effectively “taking over” a discussion, and driving it in the direction he wants it to go, irrespective of what anyone else was or wanted to talk about.  And if the person in charge tries to tolerate him, he’ll just ramp things up until he finds the breaking point and wins himself a one-way ticket out of that forum.

Mind you, it’s been a while since he has (to my knowledge) pulled that off, so either he’s gone away or found a place where his “style” is actually appreciated.  Either way, I don’t necessarily anticipate him showing up here.

Anyway, the gist of this week’s relatively short tale is of how Dave Patch found the “smoking gun” via a Freedom of Information Act request, that “proved” that shares of were being sold and never delivered.

I put “proved” in quotes because his actual reasoning has always been scattershot at best and at some times just plain absurd.  At one point, for example, he thought the figures provided were cumulative, meaning each day’s total represented brand new “phantom shares” being created.  After being disabused of that, he charted the data and picked out a segment that “proved” that delivery failures were on an uptrend, even though the data he excluded showed that the levels had been substantially higher in earlier months.  And all the while, the data does nothing to indicate whether these are the “same” shares being undelivered for weeks on end, or a transient condition where delivery get backlogged but fulfilled in due course.  No points for guessing which of these options Patch has arbitrarily decided must be the case.

Meanwhile, OSTK has been off and on the Reg SHO list of companies with significant failures to deliver, and as of this writing is currently off it.  Yet the lack of “phantom shares”, as Mitchell keeps calling them, has failed to return the stock to anywhere near its highs of a little less than four years ago.

It’s probably coincidence that at the same time the current leadership of the SEC has decided to “take seriously” the complaints of David Patch and others, that the markets have plunged into what some pundits call their gravest crisis since the Great Depression.*

Still, it was probably an inopportune time for him to be taking over the discussion there.

It’s something of a darkly humourous irony that as Patch, Byrne and others of their mindset are trying today to take credit for something or other, nobody else has any time for them.  I guess they’ll just have to settle for being prophets in their own minds.

Next week, Patrick Byrne and his impression of a moth.

(* Mind you, other pundits are a little less on the panicky side, so all I can advise is to go with whomever you decide to trust.)

So apparently I’ve gotten noticed?  In that case, welcome, actual readers.  So, what’s new, anything interesting happen last week?

Oh, and I really do appreciate the implicit compliment that my writing style could be mistaken for someone who actually writes for a living, like Gary Weiss.

Late update: What in the world was this supposed to be all about?  The bankruptcy court seems to have quietly ignored them and gone on with their job.  I suppose that this will turn into another piece of the conspiracy puzzle somehow, but still… just weird.

Interestingly enough, right about the same time as Byrne’s infamous interview with Kudlow and Cramer, the NASD passed a rule effectively closing the overseas exemption from finding a borrow prior to executing a short sale.  Prior to this, it was something of an open secret in the USA that if a stock was tightly held and hard to borrow, and you really wanted to bet against it, the answer was to open an account at a brokerage in Canada and trade from there, where shorting restrictions were much more lenient.  Mitchell’s piece describes the advantages of this tactic, but common sense should tell you that if a stock could be shorted to nothing at will via this method, we’d have seen more, or for that matter, any instances of this happening.  Instead the cases of stocks being “shorted to zero”  invariably came from debt offerings foisted upon naive company managements by shady brokers, which, all things considered, seems a lot more trouble to go through.

And, indeed, there were downsides to the Canadian method.  For one thing, since you don’t have the borrowed shares in place, if you do have to cover, now you have to go locate the stock to buy back.  If the market is moving rapidly against you, you may be hit with a harsh penalty by the markets due to this delay.  Furthermore, you have to keep track of your own captial gains and carefully report them on your taxes, lest you end up committing tax fraud out of nothing more than neglect.

Overall, the basic premise that this blog disagrees sharply with is that, in the open market, the short-seller holds all the cards.  In years like 2008 has been, that can certainly seem to be the case, but just try asking anyone who tried to short a tech or Internet stock ten years ago just how “easy” the money is on the short side.

With that as prologue, let’s get to what this section is actually about: an article by Dow Jones writer and soon-to-be Carl Loeb Award winner Carol S. Remond, documenting the NASD (now FINRA)’s change in policy and the reaction of market participants to it.  It’s pretty much a to-the-point, straight-down-the-middle piece, getting comments from various points of view and otherwise sticking to stating the facts.

But Mitchell doesn’t see it this way.  Mitchell highlights the fact that Remond quoted people bemoaning the loss of a short-selling tool, and ignores the fact that she states that others want short-selling done away with altogether.

But Remond’s worst sin of all in this article, in Mitchell’s eyes, is this pargraph — and I quote it in full:

“It’s taken us by surprise,” said Richard Thomas, head of compliance at Canadian brokerage firm Pacific International.

From here, Mitchell goes on to recount the rather substantial number of scandals and other nastiness that subsequently occurred at Pacific International.  I haven’t personally bothered verifying any of them one way or another, because Mitchell’s point isn’t so much to attack Pacific International as it is to attack Remond, who in more recent days has stood out as one of Overstock’s most vocal critics.

Now you might think that a four word quote that basically states the obvious is a pretty flimsy linkage.  I might well think that too.  But in conspiracy land, there is no line too thin if it will connect a pair of dots someone wants connected badly enough.

And so we have the spectacle of Mitchell slamming Remond for citing this brokerage as a “credible source” in regard their own state of surprise.

So, with all this media conspiracy to allow dodgy sources to scurrilously cop to having been caught unawares, are there no heroes to look to anymore?  Is there no one out there still willing to speak the truth to power?

Well, yes, but next week we’re going to meet a stupid message board troll instead.

This week’s section is rather short (oops, sorry), but contains within it some of the most implausible narrative yet.

We pick up the action from last week with the immediate aftermath of Byrne’s January 2004 Kudlow & Cramer interview.  And Byrne is on the phone to a Wall Street broker (unnamed of course).  I guess in Utah it must be customary, after a stressful experience, to dial up a stockbroker for some commiseration.  At any rate, Mitchell portrays Byrne as being entirely unaware of vile underbelly of Wall Street and its ongoing conspiracy with the financial media, and this anonymous broker is basically giving him the run down.  So basically, the wellspring of all of Byrne’s subsequent paranoia?  This guy.

Then, “just recently” (as of the time of Mitchell’s writing?  as of the interview?), two hedge fund managers, yes, those embodiments of all that is evil about Wall Street, just up and call Byrne to tell him they were naked shorting Overstock.  No, really, Mitchell actually writes that.  The narrative even implies the hedgie guys went out of their way to carefully explain to Byrne what they were doing to his company’s stock.  Mitchell goes on to say that that the broker executing the naked short sale was also spreading some kind of false rumor about Overstock (and, again, apparently telling Byrne all about it!) to further depress the share price.  And then he went home to beat up his wife and children, one supposes.  Honestly, I’ve seen villains in kids’ movies written deeper than this.

And then, just to throw a touch of nausea into the proceedings, Mitchell goes back and contrasts this with Byrne, who is portrayed as somehow still unaffected by all this and blissfully unaware of the dark conspiracy forming to take him and his company down.

At this point I have to wonder: Is Mitchell having us on here?  Are we going to go another ten sections in and he’ll say, “Just kidding!  Now here’s my real exposé piece”?  Because we’re really at the point where this isn’t even good fiction, much less something to be taken seriously as investigative journalism.

Next week: Another journalist in the spotlight, and this one isn’t even a alum!

For the first time, Mitchell actually manages to put together a reasonably coherent section, in that it basically starts on one topic and more-or-less stays on it to the end.  So rather than do a paragraph by paragraph breakdown as I’ve tended to do so far, I’m going to stick to addressing the overall premise Mitchell puts forward, at least until the big finish.

In brief, Mitchell notes that back in 2002, when Overstock first rose to prominence, it was something of a media darling, hailed as the next big challenger to Amazon, and so on and so forth.  But even by the time of Byrne’s Sith Lord presentation, Overstock was no longer getting the favorable press it once enjoyed.  Even in 2004, as long as six months after the fateful interview relived later in this section, Jim Cramer was penning optimistic articles on Overstock’s prospects.  But a year after that, not so much.

Mitchell asserts that this change of heart on the part of so many in the financial media can only be due to some outside influence, i.e. David Rocker, ordering them to go negative.

This is a point of interest because it really speaks to what I feel is one of the biggest misconceptions when it comes to investing in individual stocks.  Far too many people, I find, confuse investing in stocks with rooting for sports teams.

Sports fans almost invariably value loyalty to teams.  Even as the actual personnel of a given team changes over time, it’s where they play (half of) their games that, in general, establishes a connection to the local populace.  Thus there is virtue attributed to being a “die-hard” Cubs fan even as they find new and innovative ways to fail, and the agony of being a lifelong Red Sox fan is deemed to be worth it all when the team finally breaks through and wins the long-sought championship.

And, in a way, public companies bear a superficial resemblance to sports teams, in that they have variable personnel, they have a headquarters/home field, they have victories and defeats, and you can even keep score by following the share price.

But there’s a big difference.  Let me give you an example.  If you’re a Patriots fan, you probably expected your team to win the Super Bowl last season.  But the fact that they didn’t probably didn’t cost them very many, if any, fans.  That’s team loyalty and as I said, it’s highly valued, expected really, of those who call themselves sports fans.  But with stocks, it just doesn’t work that way.  There is no virtue seen by successful investors in going down with a sinking ship; furthermore, each person that ceases to be a “fan” of a company you’re invested in, hurts those that remain.

I also think the phenomenon of loyalty to an investment is something of a corruption of the “buy and hold” strategy espoused for so many years by the famous Motley Fool website (which, incidentally, will be getting its turn in the smearlight before Mitchell is through here).  “Buy and hold” was basically a warning against overtrading, running up large amounts of commissions, and having a big impact on your returns.  It’s not an entirely unsound principle on its face, but it has the undesirable side effect of discouraging regular re-evaluation of investments.  Indeed, the Motley Fools’ iconic home run, buying AOL stock in 1994 and riding it all the way to the big merger with Time Warner seven years later, actually made people afraid to sell positions, be they winners or losers, for fear of missing out on the next great score.

I think I’ve gone a bit far afield, so let me get to the point as it applies here, and that is: there is nothing inconsistent with being a “fan” of a company in 2002, then changing one’s mind a couple of years later, especially if the company fails to meet your expectations.  This is precisely what changed Cramer’s mind: he expected full-year profitability in 2004 and Overstock did not deliver.  Nor has it done so in 2005, 2006 or 2007, which would only seem to exonerate Cramer’s reversal.

And even then, Cramer liked the idea behind Overstock enough that he wanted to give it another chance, which brings us to the closing part of this section, where Cramer brought Patrick Byrne onto his show (this was when Cramer shared a show with Larry Kudlow) for a hot-seat interview.  At the time, Byrne, looking around, as many CEOs of struggling companies do, for something positive to accentuate about Overstock’s performance, had settled on “gross profit” as one of Overstock’s successes in 2004.  Gross profit basically means the difference between the acquisition and sales prices of goods sold, specifically excluding any expenses incurred in actually running the company, such as employee salaries.  To put it mildly, it’s a highly incomplete picture of a company’s finances, and not normally highlighted as a key metric.  Yet Byrne was doing just that, and people were raising eyebrows at this.

Even from Mitchell’s Byrne-friendly account of the interview, it’s clear that Byrne simply did not understand why anyone would ask such a question.  It’s his company and he’ll emphasize what we wants to, dammit, and nobody gets to tell him what to say or how to act!  (And boy did that ever prove true.)  You even see Cramer — of all people! — trying to defuse things by rephrasing the question more sympathetically, but Byrne was well and truly off tilt and would have nothing of it.

I don’t know if this was the first incidence of Byrne being faced with the words of his critics and reacting poorly, but I have to think that this day went a long way towards fueling Byrne’s animosity, towards Cramer, towards CNBC, towards the financial press in general, towards critics of his company, and ultimately towards critics of any company.

Next week: Fallout from the interview.

The shock and outrage in the wake of Cramer’s subpoena-ripping is quick.  Not by the media or the public at Cramer for the stunt, mind you, but by Mitchell at the rest of the media for circling the wagons around America’s favorite bald Wall Street gnome. Jesse Eisinger, another alum (DUN!) is specifically cited as claiming the subpoena is an attack on free speech, although Mitchell’s argument for (presumably) disagreeing, if he has one, isn’t included.  I guess he’s counting on the reader to reject First Amendment arguments on their face, if they might cause share prices to fall.

Mitchell goes on to note that Gradient Analytics provides the data for automated stock evaluation tools on both the MSN website as well as that of CNBC; MSN, for one, has been using them as a data source from 2001 to this day.  I suppose the goal here is to frame Gradient as the powerful bad guy and the likes of Byrne and Overstock as the scrappy underdog.  Otherwise I can’t imagine why Mitchell would choose to highlight the fact that Gradient’s prestige has hardly been diminished by any of the past couple of years of proceedings.

Wait, Mitchell actually does have another revelation: Gradient is just a puppet of David Rocker, and apparently every single stock rating is personally dictated by the man.  That’s… an interesting take.  He also goes on to cite the “serious” accusations made against Gradient, and, for no apparent reason other than to mention his name again, Herb Greenberg.

Mitchell seems to be out of gas on this topic, though, so he switches gears and goes into a bullet-point recitations of “facts”.  Most notable among those is Cramer’s claim to have never even heard of Gradient.  Now obviously, after the subpoena, Cramer had most certainly heard of them.  Yet Mitchell only speaks in the present tense of what Cramer and his associates have to say about them.  Did he actually interview Ms. Quick prior to the February subpoenas?  Or is he just trying to confuse the reader about timelines?

Another point is devoted to Jon Markman, who’s been around quite a bit on Wall Street.  Mitchell claims that Markman ran a hedge fund (in other narratives he uses the adjective “dodgy”, for no other reason than to add an extra touch of nastiness) out of the “back office” of Gradient, although the only documented connection was Markman co-developing the MSN StockScouter, cited above, back in 2001, a year before he started his hedge fund.  Still, even if there was some time overlap, that hardly constitutes Gradient running Markman’s hedge fund, as Mitchell asserts was the case.

At any rate, most of the rest of the “points” Mitchell makes amount to a bunch of “if” assertions to allege-without-alleging more misdeeds on Markman’s part.

The bottom line appears to be that Gradient today is an extremely well-respected research firm, whose reputation has only flourished since Byrne’s flashy accusations against them, and Mitchell hates every bit of it.  So much so that he concludes the section with a complete change of direction, claiming that “a Gradient manager” has used “multiple aliases and IDs” to somehow mask unspecified “activities”.

I can only presume that this refers to message forums on the Internet.  It’s a popular myth that it’s somehow a key part of hedge fund activity to trash-talk stocks the fund is short on message boards; so much so that it’s become practically cliché to ask a message board poster who voices a bearish opinion on a stock, which hedge fund he or she works for.  It’s a weird dichotomy in a way, as the accusers assert, often simultaneously, that the bearish opinions (regardless of how well-supported or not) have no effect on the stock, yet that it is still vital that the negative opinions be discouraged.  And yes, this brings us right back to the overarching theme of this movement, the denial of speech to anyone holding a negative opinion (much less a position) in a stock.

And it should go without saying that bullish posters can be and are equally “guilty” of multiple-alias usage.  Indeed, Mitchell knows full well of the activities of one of his closest allies on that score, which actually take that activity to another, far more insidious, level.  But as we will not be introduced to him for some time yet, I will leave it there for now.

Next week: A trip back to happier times.

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 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 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.


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, 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,, 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 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.