Monday, June 25, 2012
Why Short Selling is Unconstitutional 06 25 2012
Why Short Selling is Unconstitutional 06 25 2012
I do not believe that the founding fathers had knowledgeable exposure to short selling in a stock market or they would have banned it. Short selling is indeed what has lead to every great financial crisis in the United States including The Great Depression. Short selling is the act of selling someone shares of stock that you do not own. The person who short sells makes money when the financial position of a company and its stock goes DOWN! That is right DOWN! Who would ever root for an American Company to lose? You would swear that it was the influence of English Bankers sore on losing the Revolutionary war and trying to exert influence on the United States economy in order to gain control of it. The King or Queen trying to control what got away from them?
Stated phrases from the Constitution will be in quotes.
Phrase from the first sentence of the constitution stating its purpose, “insure domestic tranquility,” how does betting against a company and a shareholder “insure domestic tranquility,” this rings false in the heart of even the least educated American.
Also in the first line, “promote the general welfare,” How does this machination that really only benefits the profitability of the brokerage firm and its employees, “Promote the general welfare.” This does not promote the general welfare it is the exact opposite of that. All kinds of financial fraud are based on short selling, including marking up bad companies and taking them public when they should not be. All of the Derivatives that almost bankrupted the United States were based on the “counter investment” which is really a form of the Short Sale. With only 10% money down to make an investment in the roaring twenties many made money in the stock market as volatility wiped out the small investor rather quickly. When a person buys stock on margin, meaning the borrow money from a broker, they are not really buying stock at all. What is occurring is that they are really creating an accounting entry on the books of the brokerage firm. There should indeed be a government inquiry by the Governmental Accounting Office or the Department of justice as to what percentage of investors who borrowed money from a broker to buy stock made money in doing so. The brokerages also have a few more tricks up their sleeve with regard to the short sale and buying on margin which is often part of it. These tricks include a back office person determining, at the inopportune time for the investor, that the broker has indeed determined that a stock is so risky that they will no longer allow you to borrow as much money to buy a stock you already borrowed from them to pay for. With one keystroke on the computer the investor has to sell because the broker has determined that the loan that he took to buy the stock should be more than it was initially when he purchased it.
It makes absolutely no sense that the balance of shares short of a company should be allowed to be as great as it is in our financial system. If the reason that the brokers offer for them needing to sell shares short is that it is needed in order to make an efficient market then you would expect them to be required to clear those short positions in a reasonable time. I know what you are thinking one way to compromise would be to set a time frame that would allow them to clear these positions in- like a week. But what would happen is that there would be accounting tricks that would allow them to state that the positions really only represent newly made sales to investors and therefore that balance represents current activity. That is how they would lie.
But back to the Constitution.
Per Section 8 “Congress shall have Power to…”… “To provide for Punishment of counterfeiting the Securities and coin of the United States.” The common stock of corporate America is indeed what constitutes the Securities of the United States. And what can be more of a counterfeit investment than selling someone a common stock that you do not own. It is like a Carnival game it is so crooked. Selling someone something that you do not own nor intend to buy is indeed the equivalent of counterfeit. Our Founding Fathers could have never conceived of the growth of Corporate America and the fraudulent nature of the short sale and the devastating effect it would have on our economy throughout the history of the United States. What hypocrisy of public service Congress has committed, they had granted themselves the right to insider trade. That means being able to buy and sell and profit from information that was not available to the public. If congress granted them such an egregious right what confidence can we have that they will do the right thing with regard to the spirit of the meaning of, “Congress shall have Power to…”… “To provide for Punishment of counterfeiting the Securities and coin of the United States.” The Federal Reserve primarily issues securities and coin to what is termed money center banks. They are indeed corporations of the United States. So here we have a de-facto tie between the actual wording of the constitution and how it directly applies to our modern banking system.
“To define and punish Piracies and felonies committed on the high Seas, and Offenses against the law of nations.” Our Founding Fathers would have never conceived of the short sale and its similarity to piracy. In fact most Americans do not have the financial acumen to understand the nature of its piracy and when questioning a so called financial expert they will be given blunt responses that they will feel that they should admit to understanding because they do not want to look stupid. That is a sales technique. An Investor who questions a broker will indeed by placated with gloss over responses as a different topic is then brought up and they are made to believe that they were just taught something but weren’t.
I know what you are thinking. If we ban the short sale rule many jobs will be lost because the brokerage firms won’t be as profitable and won’t be able to pay as many employees. My counter argument to that would be, “When we put the mafia out of business do we lose jobs?” Some would argue that. I would argue that when you clean up corruption you do indeed create more jobs.
Section 10 reads, “No State shall…make any…Law impairing the Obligation of Contracts.” Selling someone something that you do not own nor intend to procure is indeed “Impairing the Obligation of Contracts.” And if the founding fathers did not want it to occur at the state level that is prima fascia evidence they did not want it indoctrinated at any level. This is indeed prima fascia evidence that our congress has not been following the constitution of the United States. Where in the Constitution does it say Congressmen may profit from inside information. Who are you trying to kid if you try and convince me that position is a true one! It runs counter to the spirit of the creation of the Constitution in every form. So can we indeed deem those congressmen who willingly participated in it guilty of enacting laws that are unconstitutional? And is this prima fascia evidence that many laws created by congress need to be reviewed in terms of their constitutionality? Who can argue that this isn’t true?
Relevant Constitutional phrases with regard to the President and this issue:
Article 2 Section 1 “I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my ability, preserve, protect and defend the constitution of the United States.”
Article 2 Section 2 “He may require the Opinion, in writing, of the principal Officer in each of the executive Departments, upon any Subject relating to the Duties of their respective Offices.”
Barrack said his door was open but Congress did not cooperate with him. Barrack this is how you get busy. You make inquiries to Congress on every issue that you feel is relevant and get their responses in writing like they are required to provide. The American People have a right to see how any Congressman responds to the Commander in Chief on any issue. And if a Congressman has responded in what can be considered a negligent manner the American people have a right to know that response, whether based on their own opinion of the response or your opinion of the response. You have a right to provide your opinion of a response.
What is the short sale rule and I mean what is its true nature? The Short Sale rule is creating a value for something that is less than it is in order to profit from the difference. Who would think to do such a thing? Would a person who believed in this rule also find ways to apply the concept to human beings? What has been the long term affect of this wrongful appraisal by the appraiser? Has such a fraudulent appraiser also found a way to wrongly appraise human beings? Would founding fathers write it into the Constitution that human beings are to be wrongly appraised and labeled by fraudulent appraisers? Of course not, that is the antithesis of the Constitution of the United States. Many Americans proudly shed their blood to prove just the opposite.
Article 2 Section 4
“The President, Vice President, and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.”
Is instituting and maintaining the banking system of a foreign Country we once fought a bloody war for our freedom and independence an act of Treason? When it has lead to a multitude of financial crisis’s that have almost destroyed our Country that is indeed Empirical Evidence that it is!!!
© 2012 Thomas Paul Murphy
Originally published on 06 25 2012 at: www.themilwaukeeandwisconsinnews.blogspot.com