Henry Blodget Says That I Am Not Bad, But Self-Destructive. Reply: We Are All Frail Vessels, Henry.

Today’s late-morning mailbag brought quick response from Mr. Henry Blodget.

The backstory on this post comes in two parts:

The Illustrious Henry Blodget Thinks I Am A Very Bad Man, Part 1

The Illustrious Henry Blodget Thinks I Am A Very Bad Man Man, Part 2: The Essay Business Insider Requested Then Refused To Publish

Today’s late-morning mailbag brought quick response from Mr. Henry Blodget.  Before trying to make sense of it, I respectfully suggest the reader consider the two links above (especially the first).  Also note that Mr. Blodget has over time, and especially in the last two months, published and republished “every yellow journalism hit-piece written by any slack-jawed mouth-breathing jackanapes who can manage to sit on a keyboard”, as I wrote earlier today, language which seems to have given New York Times’ reporter Floyd Norris the vapors (perhaps because Floyd could not turn a phrase if it had a handle on it).   Given this background, some might find Mr. Blodget’s response odd:

From: [email protected] [mailto:[email protected]] On Behalf Of Henry Blodget
Sent: Tuesday, February 02, 2010 11:12 AM
To: Patrick Byrne
Subject: Re: Overstock CEO Byrne

Patrick,

I didn’t realize we had reached a permanent impasse on the post, but judging from your Deep Capture entry, I guess we have.  I’m sorry you experienced the recent exchange as “nastiness.”  I certainly didn’t.

I don’t think you are a “very bad man.” (I don’t know you well enough to know).  I’m very impressed with the company you’ve built, as well as with your intelligence, accomplishments, and willingness to challenge convention.  I do wonder why you occasionally do things that, from my perspective, seem self-destructive.  But I suspect a lot of people who have watched and interacted with you over the years feel that way.

Henry

I won’t editorialize, instead choosing to leave it to interested parties to read the correspondence published in   The Illustrious Henry Blodget Thinks I Am A Very Bad Man, Part 1 and privately decide the measures of truth versus rationalization in Mr. Blodget’s reply.  Feel free to share an opinion below.

Of course, Henry Blodget could save us all the effort, and simply publish the essay that Business Insider requested that I write almost two months ago, and that I wrote over a month ago, and whose publication he then stalled, dodged, and temporized (though he seems to manage to republish the yellow journalism hit pieces within hours of their first appearance). After all, weeks ago I faxed Henry the signed indemnity he requested (with but the one change described in the earlier blog, and that is, that I, not he, get to fight any lawsuit that those of his acquaintance might choose to file), and posted the essay today myself, thereby eliminating all elgal risk for him. So, if Henry was being truthful in suggesting that this was not a dead issue, and he was not merely temporizing, then there is really a way he could show it.

After all, Henry Blodget would not be just trying to spin the public, would he?

Total
0
Shares
40 comments
  1. Pat,
    The essay is a great summarization of the history of your^H^H^H^Hour campaign against the illegal destruction of businesses’ and investors’ (who play by the book) wealth. I’m glad you also pointed out how since you’ve started bringing to light a number of things, we’re finally seeing change and some clearly dirty businesses go under or pay big bucks to settle charges.

    Great read!

    Oh and I’ve got to again give the middle finger to my favorite friend Gary Weiss — the one who never seems to get enough attention.

  2. Dr Byrne,

    Your friends at Satwaves.com are eternally gratefull for you bringing all of this information to life. It is becoming clearer by the day what roles the the financial press, hedge funds, and others in position of power have played in the destruction of our financial systems and economy, as well as the gross theft of shareholder wealth.

    Without your involvement, and the other great reporters here at DeepCapture, this may have gone completely undocumented.

    Kuddos to you and your team,

    David “Newman” Phillips
    http://www.Satwaves.com
    [email protected]

  3. Good suggestion Patrick…

    OK, Henry Blodget, Patrick has given you permission to re-publish his essay:

    OVERSTOCK CEO PATRICK BYRNE REPLIES TO HEDGE FUND CHOAGIES:
    WE’RE THE GOOD GUYS, YOU’RE THE BAD GUYS

    Now the question is…
    Will you, Henry Blodget, re-publish it?

    Will you re-publish the essay you yourself requested?

  4. Great summary Patrick. Well Henry, why don’t you just publish the essay you asked for? Why the snarky innuendo at the end of your response above?

  5. “…Patrick, they are going to kill you. If you do not stop this crusade, they will kill you. Normally they’d have already hurt someone close to you as a warning, but you’re so weird, they don’t know how you’d react.” – The Story of Deep Capture

    “I do wonder why you occasionally do things that, from my perspective, seem self-destructive. But I suspect a lot of people who have watched and interacted with you over the years feel that way.” – Henry Blodget on PB

    “How at Times it is a Very Wise Thing to Simulate Madness” – Book III, Chapter II, Discourses on Livy, by Niccolò Machiavelli

    “The Rationality of Irrationality” – Thomas Schelling

    “I call it the Madman Theory, Bob. I want the North Vietnamese to believe I’ve reached the point where I might do anything to stop the war. We’ll just slip the word to them that, ‘for God’s sake, you know Nixon is obsessed about Communism. We can’t restrain him when he’s angry — and he has his hand on the nuclear button’ — and Ho Chi Minh himself will be in Paris in two days begging for peace.” – Richard Nixon

    1. Kudos Patrick. For those who do not understand you it’s very simple. You do not fear the truth and you are not afraid of revealing such. There are those who do not understand that fear not he who can take your life but fear he who can take your soul. You are a messenger Patrick. YOU KNOW who has sent you and you also know the consequences of not doing as requested. It is those who do not understand..Killing the messenger doesn’t stop the message from being heard. It just pisses off the one who sent the messenger in the first place.

      Hang in there with the fortitude you have shown. The finish line is within site.

      1. My Gosh you’re a patient and tenacious man Patrick! In every interaction in this ridiculous string of email communiqué, you were polite, cogent, respectful and persistent. Lord – I would have blown a fuse long ago with this ridiculous charade. Too much hiding behind emails. Good for you for fighting on! I didn’t need anything from Overstock today and was about to hit delete (God forbid!) when I saw your personal message and read on and on and on. Thank you for fighting the fight my friend. For some reason Atlas Shrugged came to mind while reading this material. Your band of brothers & sisters may be setting up a new world of brilliant fighters in the outskirts of Utah. I don’t know if I’m smart enough to qualify – yet I’m a scrappy little thing. I’m IN!
        Continued Blessings & Success!
        Bea

  6. Patrick

    He’s right you are self destructive. As was many through history who stood up against the things they believed to be wrong, at great expense to themselves.

    Do those who read this realize how easily Patrick could be on the other side of this equation, part of the problem, living easy with eyes closed???

    Yes Henry, Patrick Byrne can be self destructive, and I am very thankfull he is.

  7. On page 63 of the DTCC’s annual report http://www.dtcc.com/downloads/annuals/2008/2008_report.pdf they say that:

    – $39.4 billion in trades was supposed to settle in the next three days, which implies daily trading value of $13.1 billion

    – failure to deliver of $886,049,000 + stock borrow of $171,050,000 which totals $1.1 billion

    Wouldn’t this imply that 6.8% of the trades fail to deliver at the level of the DTC each day ($.886 divided by $13.1)? This doesn’t count x-clearing, desking, pre-netting, clearing netting, etc.

  8. Those darn Fund managers..

    Jeffrey Gundlach’s Porn, Pot Stash Cited In Lawsuit Against Former TCW Manager
    First Posted: 02- 3-10 07:02 PM | Updated: 02- 4-10 09:44 AM

    digg Huffpost – stumble reddit del.ico.us What’s Your Reaction? Inspiring
    Greedy

    Former TCW Mutual Fund Manager Accused Of Stockpiling Hardcore Porn, Pot In His Office
    Get Breaking News Alerts

    Share Comments 51 The Treasury Department reportedly had a hard time finding hedge fund managers to get involved in PPIP, the government initiative intended to help firms unload their poisonous mortgage securities. And it may regret the participation of one of the funds, where a top manager lived up to the worst Wall Street stereotype, according to recent court documents.

    Jeffrey Gundlach, a former manager of a top-performing mutual fund at the TCW Group — which partook in the PPIP before withdrawing last month — was fired amid accusations that he tried to loot the fund of its data, clients and employees in an effort to launch a firm of his own.

    But when Gundlach, who employees say liked to call himself “the Godfather” and “the Pope,” was dismissed, TCW alleges it found a stockpile of porn and pot in his office. In a lawsuit it filed against its formerly celebrated manager, the firm says its employees:

    Go to Huffington post to get the rest of the story!!!

  9. http://www.nowpublic.com/tech-biz/deutsche-bank-sold-massive-amounts-phantom-stock

    In practice, this 13-day rule only encouraged stock manipulation. Some traders, correctly reckoning that the SEC would do nothing, simply left stock undelivered for weeks or months at a time. But a great deal of abusive naked short selling involved traders who sold phantom stock and (obviously) failed to deliver it on day three, and then absorbed the “penalty” on day 13 – purchasing (rather than borrowing) the stock and delivering it.

    As soon as they closed out their “short” positions (which were fake positions since they never intended to borrow the stock), the traders would immediately sell another batch of phantom stock and leave that undelivered until day 13. By the end of each of these 13 day periods, the phantom shares had, of course, diluted supply and watered down the price (at which point it was hardly a “penalty” to have to buy back the stock).

  10. Patrick –

    Out here in the real world we appreciate what you’ve done and the personal and professional costs you’ve suffered along the way.

    Your obsessed critics are garden-variety shysters whose moral sense is so warped that they have to magnify molehills to make themselves feel better about their own mountains. It’s easier than coming to grips with their own misdeeds….

    That the financial press pays them any serious attention tells you all you need to know about “journalism” circa 2010.

    Frankly, your time and talents are wasted on this crew.

    Goats are a much better idea…. really.

    At least, they look cute when they bleat, which is more than can be said of your betes noires.

    Lila

    1. Sean, we need justice and real punishment of the ones who have done wrong, not saying ‘sorry’. Unfortunate as it is we are in the spot of having the police,judges and jailors all working with those that should be punished. Human nature and unbounded greed for money, and even more harmful power, is taking sociaty down. Where that leaves us is in a very bad place right now. I have zero faith in mans ability in our current structure to ‘fix’ what is wrong anymore. At without a actual revolution, and that is unthinkable. I am at the place where I think it will take a divine intervention. When you get to my age, after everything I have seen that is the only way I see out of our mess.

      Ok, time for the humanist to have a laugh on me.

  11. I’ve got good news and bad news. The good news is that we’ve found out the reason why abusive short selling reform is so incredibly slow. The bad news is that the reason for the delays is that the SEC is waiting for “unanimity” amongst “the financial media” in regards to the “prevalence” or “danger” of NSS.

    “There is hardly unanimity in the investment community or the financial media on either the prevalence, or the dangers, of ‘naked’ short selling,” the enforcement division (of the SEC)said in a statement appended to the inspector general’s report.

    1. It is responses like this which continue to erode public confidence in the federal government in general and the SEC in particular.

    2. I remember seeing this response before.

      So the SEC is not going to do anything about Naked Counterfeit Short Selling until 100% of the Wall Street Criminals agree that the SEC should STOP THEIR CRIMINAL ACTIVITIES.

      OK… let us take a vote…
      Will every Wall Street Criminal who thinks they should no longer be allowed to steal billions, if not trillions of dollars from American Citizens and the United States Treasury every year, please raise your hand?

      Uhummm? No Wall Street Criminal is willing to vote for stopping their criminal activity….

      Can anyone image the possibility that Wall Street Criminals will vote to have the SEC end their criminal activities, such as, Naked Counterfeit Short Selling?

      Can anyone image any legitimate law enforcement agency stating that the criminals have to agree to their own arrest before they can arrest them?

  12. SEC Rejects Naked Short Selling Recommendations
    Posted March 20, 2009 1:26PM PST
    The inspector general of the Securities and Exchange Commission offered 11 recommendations Wednesday to improve the process the commission uses to deals with naked short selling complaints. The SEC rejected most of the recommendations.

    Naked short selling, which is to sell a stock short without first borrowing it, can be done on purpose and has artificially deflated the stock prices of some companies, according to the SEC.

    Numerous PIPE-issuing companies may be victims of manipulative naked short selling. This is shown by data tracking how often their shares have been sold but not delivered within eight days of a short sale. Eight out of the 15 companies with the most fails to deliver as of March 19 have issued a PIPE since 2006, according to Buyins.net, and PrivateRaise. Buyins.net tracks stocks with relatively large numbers of failures to deliver.

    Advocates for reform, including former SEC chairman Harvey Pitt, believe that no naked short sales should be permitted. The SEC’s current position is that naked short sales are sometimes necessary for market makers to provide liquidity in a stock.

    The issue of naked short selling drew extra attention following the bankruptcy of Lehman Brothers on Sept. 13. At the time, the SEC even took emergency measures specifically aimed at protecting against naked short selling.

    Working up to that date, failures to deliver Lehman stock shot up from 96,700 on Sept. 3 when Lehman shares traded at $16.13 to 49.7 million on the last day for settlement at 22 cents, according to data made public by the SEC.

    The SEC inspector general found that the SEC’s policies and procedures limit the referral of naked short selling complaints, and that its written policies and procedures result in naked short selling complaints being treated differently from other types of complaints of securities law violations.

    The SEC division of enforcement replied that the problem of naked short selling is viewed by some market observers as “wildly exaggerated.” The enforcement division also said that the inspector general’s recommendations would not allow for “optimal uses” for the commission’s limited resources.

    “There is hardly unanimity in the investment community or the financial media on either the prevalence, or the dangers, of ‘naked’ short selling,” the enforcement division said in a statement appended to the inspector general’s report.

    The enforcement division agreed only to change one procedure relating to how it deals with email complaints.

    Of approximately 5,000 naked short selling complaints received in the enforcement complaint center between Jan. 1, 2007 and June 1, 2008, only 123 were forwarded for further investigation, according to the report. And those involved subjects that were already the focus of ongoing enforcement investigations. None of the forwarded complaints resulted in enforcement actions.

    Source: SEC OIG Report

    1. Caro Ico, O que vai acontecer nessa temporada é como tentar prever um terremoto, pode-se gastar muito tempo e dinheiro e fazer várias previsões e que dificilmente se coztaecinrrão.

  13. From 2003

    http://llr.lls.edu/volumes/v35-issue3/hakes.pdf

    “Did recent revisions to Article 8 of the Uniform Commercial
    Code1 accomplish their purpose without sowing seeds that could
    result in either an unintended restructuring of the securities markets
    or in an unanticipated financial crisis?”

    “The inherent risk to entitlement holders in the indirect holding
    system is the failure of the securities intermediary. Because of the
    nature of indirect holding and the interaction of priority and
    purchaser rules in the indirect holding system, priority to financial
    assets is generally given to a securities intermediary’s secured
    lenders over its entitlement holders.401 This means that when a
    securities intermediary fails, its secured creditors may recover at the
    expense of entitlement holders.”

    “Several gaps exist in the protections provided by SIPC. First,
    not all securities intermediaries are members of SIPC (most notably
    banks).446 Banks are also not covered by the Bankruptcy Code,447 so
    that the rules governing distribution of assets would come from the
    Article 8 priority rules and rules protecting purchasers.448 Second,
    not all entitlement holders are customers protected by SIPA:449 The
    term customer does not include secured parties who are entitlement
    holders.450 A trustee is a single customer even if the trust has
    multiple beneficiaries.451 Repo purchasers are generally not
    customers.452 Third, each customer is limited to $500,000 ($100,000
    for cash delivered to the broker or dealer).453 Note that the dollar
    limit is not to the size of the account, but to the shortfall coverage by
    SIPA after distribution of assets.454 SIPA does not aggregate certain
    customer accounts, thus giving some customers more protection than
    the $500,000 limit.455”

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Previous Article

The Illustrious Henry Blodget Thinks I Am A Very Bad Man, Part 2: The Essay Business Insider Requested Then Refused to Publish

Next Article

Podcast: Barry Ritholtz and a tale of two media

Related Posts
Total
0
Share