Who Are the Short Sellers?

Donald J. Trump Tweet:

When the so-called “rich guys” speak negatively about the market, you must always remember that some are betting big against it, and make a lot of money if it goes down. Then they go positive, get big publicity, and make it going up. They get you both ways. Barely legal?

These are the short sellers.

Updated from 2010:

Watch Zubi Diamond, the author of Wizards of Wall Street, describe how George Soros and the hedge fund short sellers destroy the American system of free enterprise. Click here. 

Zubi Diamond, author of the powerful new book, Wizards of Wall Street, says the agenda of George Soros and other short sellers is clear. Their purpose, he says, is “to loot America and any foreign country which invested in America. Greece was one of them. Iceland was ravaged and annihilated.”

The term “short selling” in this context refers to investors, speculators and currency manipulators who bet on the decline or collapse of a stock or currency through complex financial instruments handled mostly through secret off-shore accounts. For the hedge fund short sellers to make money, prices have to go down.

Short sellers insist that they “provide liquidity and transparency to our capital markets” and that their operations “expose corporate fraud and mismanagement.”

But Diamond strongly disagrees. He says the Managed Funds Association, the lobbying arm of the hedge fund short sellers, is crafty and deceitful. “When they tell you that short selling contributes liquidity to the market, that is a lie,” he says. “Short selling destroys capital and takes away liquidity from the market. When they tell you that they are taking steps to remove manipulation from the stock market, that is a lie. They are taking steps to introduce manipulation to the stock market, and prime the stock market for manipulation and looting. When they tell you that the uptick rule is outdated, because of decimalization, that is a lie. They lie to deceive, to bring forth a big payday from short selling, hence the looting of America and America’s wealthiest corporations and their shareholders, sanctioned by their Washington D.C. lapdogs.”

“The most influential members of Managed Funds Association, the hedge fund short sellers, have an anti-capitalism agenda, an anti-industrialized nation agenda, and a far left liberal, Marxist radical agenda,” Diamond says.” Hedge Fund short sellers are not capitalist. They are anti-capitalist and they are not investors; they are anti-investors.” He says they “loot” companies and countries.

Diamond, an African immigrant who came to America and became a successful businessman, concludes otherwise, saying that Soros and other short sellers who belong to the Managed Funds Association,  the “voice of the global alternative investment community,” are corrupting influences that undermine nations, their economies and currencies, and the global financial system as a whole.

Diamond, with 14 years of experience in the financial markets, calls his book a course in “Economic crisis 101” because of the need to inform ordinary Americans of what is happening right before their eyes. The book is easy to read, although it deals with complex financial regulations and operations, and is only 118 pages. The theme is that the economic crisis was deliberately engineered for profit and political gain and has already resulted in the “looting” of $11 trillion from the U.S. economy.

We had warned about this potential problem in a January 16, 2008, column, “Soros Bets on U.S. Economic Collapse,” in which we noted hedge fund ties to the Democratic Party and a report that hedge fund managers, including Soros, stood to make billions of dollars from a U.S. housing market collapse.

Regulation of the hedge fund industry and other recommendations are included in Diamond’s book, which carries the subtitle of “The scam that elected Barack Obama.” He accuses many of these same global players now under scrutiny for wreaking havoc in Europe of being behind the U.S. financial crisis that enabled Obama to win the presidency.  

“George Soros put the support of the organization [the MFA] behind Obama,” his book says. “Soros wanted somebody that hates the traditional America and its constitution, a left-wing radical like himself, so he chose Obama.”

“Nothing will happen until the American people know what caused the economic crisis and the solution for fixing it,” he tells me. “Nothing will happen until the American people know about the Managed Funds Association and their role in engineering the economic collapse.” He calls the MFA “the cancer in our society that needs to be cut out, exterminated and abolished. America and capitalism will not survive unless the Managed Funds Association is eradicated, uprooted and destroyed.”

The MFA, meanwhile, is undergoing what the Politico calls an “image makeover,” as more scrutiny is being applied to the operations of its members. MFA President and CEO Richard Baker tells the publication that “…we have an enormous job ahead of us in providing understanding about the industry that is based in the actual market role we play, as opposed to the perceptions that have been allowed to build.”

He warns that any asset class that is traded in the NYSE, CME, or EUREX exchanges is susceptible to manipulation by the members of Managed Funds Association and their strategic partners. “They have primed the market for manipulation,” he says.

Zubi Diamond says the most important measures which must be taken to reduce the damage they cause to our system include:

• Reinstate and restore the short sale price test regulation known as the uptick rule (to its original condition and not modified).
• End mark to market accounting and replace it with book value, historic cost accounting.
• Reinstate the circuit breakers and the trading curbs to kick in whenever the Dow Jones industrial average drops 150 points to reduce market volatility and massive panic sell-off in order to allow investors time to think before they act.

What is needed is for Congress and the President to act on these recommendations. It is that simple.

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