This is a transcript of the Deep Capture podcast episode published on February 10, 2010.
It’s no secret that the Deep Capture message is not a popular one in certain places. I’m thinking about Wall Street and environs, specifically. In fact last month I was the subject of a fairly lengthy profile in the New York Observer, Manhattan’s alternative weekly, examining the deepcapture phenomenon and the impact it’s had on Wall Street from precisely that perspective.
In my interview with the Observer’s Max Abelson, one theme that emerged was this idea that the market reform movement could only take root in fly-over country because the culture of the coasts — New York in particular — runs in direct opposition to everything we’re trying to accomplish. That’s not to say that there are no moral, law-abiding people in New York or San Francisco, only that the extreme unpopularity of our message would probably keep it from taking root there. It had to be somewhere else.
And even though we’re making headway, as the mere existence of the Observer story demonstrates, the New York press — yes, even the alternative press — generally does not do nearly enough to afflict the comfortable on Wall Street. Sure, they’ll pile on when there’s blood in the water, but dare ask hard questions of the Wall Street celebrity set otherwise? Not going to happen, because the culture doesn’t allow it.
How many business reporters did Harry Markopoulos brief on Bernard Madoff during the decade leading up to his downfall? How many sports writers apparently knew about Tiger Woods’ infidelities in the years leading up to his downfall? But in both cases, nothing happened because the boosterism mentality endemic to both Wall Street and sports journalism means there’s too much to lose by sticking one’s neck out and challenging a celebrity in either field.
Keep that in mind as you consider what follows. I want to preface by saying that this is a very personal situation which I’m certain is of much greater significance to me than most anybody else. I recognize this and I’m not whining. Instead, I’m telling this story because it illustrates a couple of important and broadly-applicable market reform lessons.
Here’s the background…
In early December, I published a video suggesting that — based on links revealed by their publicly-available Facebook friend lists — there is more than a little substance to the long-held suspicion that a group of well-known Wall Street reporters and bloggers have close interpersonal ties with some of the short-selling hedge fund managers they write about. I further posited that these apparent conflicts might explain some of the pro-short seller biases many (myself included) claim to have observed in their writing.
I knew that this social network was only significant to the extent that its own members regarded it as significant. In other words, if it was composed entirely of people who view Facebook as a proxy for a Rolodex, the network would be meaningless. If, on the other hand, this network had dynamics comparable to real world relationships — meaning, some degree of exclusivity based on common interests — then it would be very significant, indeed.
In order to find the answer, I created a fictitious Facebook account and sent friend requests to every member of this group. What I discovered was that I, as a stranger, only managed to replicate about 20% of the network. With that, I knew I was on to something, as the video explains.
And that was it. I didn’t need to be Facebook friends any of these people to see who their friends were. I did it to determine whether being Facebook friends with them actually means anything.
Well, apparently it does mean something, because my video struck a nerve among these folks. The real journalists kept quiet…likely out of embarrassment, but the bloggers in that network went on the attack like never before. It started with Gary Weiss insisting that I’d gained this publicly-available friend data, by hacking into everybody’s accounts. Then he said that it was actually Overstock.com (NASDAQ:OSTK) CEO and frequent Deep Capture contributor Patrick Byrne himself who did the hacking. Bloggers Felix Salmon, John Carney and Joe Wiesenthal swallowed this easily-refutable line and regurgitated it whole on their own blogs. A few times.
After that silly angle ran its course, Weiss escalated things by announcing that I sent friend requests to many young children he claims are connected to the people in the network, in order to get their personal information so that I could harass and stalk them.
And that was repeated, unexamined, by the same chorus.
Then Weiss revised slightly by saying that it was actually Patrick Byrne who did the kid-stalking.
And that was repeated.
And just when I didn’t think things could get any more ridiculous, Barry Ritholtz showed up.
Ritholtz, a fairly well-known (in fact, the Observer’s Max Abelson called him “revered”) Wall Street blogger, trader and recently book author, has consistently parroted the position of the short selling mega hedge funds who oppose the reform movement for obvious reasons.
Well, out of nowhere, Ritholtz latched on to the demonstrably false notion of my having attempted to become Facebook friends with young children, and created an entirely new reality, going so far as to assert that I am a child molester. That is not an exaggeration. In fact, he said as much multiple times.
Ritholtz then demanded a boycott of Overstock.com, saying the company violates its customers’ personal information and hires deviants to stalk their kids.
Did I mention Ritholtz has a law degree? But you don’t need to go to law school to know what libel is. You barely even need to be human.
Though I’ve been wary of Ritholtz and his motives from the beginning, I contacted him, to set the record straight and respectfully ask that he stop with the poisonous pedophilia rhetoric. He received my messages, but ignored them and continued as before. He also announced on his blog that if I sued him for what he was saying, he would hire a private investigator to uncover all my sexual secrets and very publicly broadcast them.
Anybody else sense something dark going on? What could possibly be motivating this guy?
For authors, large market talk radio interviews are gold, as the host usually gives the author 15 minutes to show off talking about an area in which they’re particularly well-versed and promote the hell out of their book. Talk radio listeners are very loyal and engaged and they will buy books. For the author, it’s money in the bank.
Well, recently Barry was invited to promote his book on the finance-themed talk show “Wall Street Shuffle” airing on a CNN Radio affiliate in Dallas, Texas.
Along the way, Ritholtz told the radio show’s producer that he was hoping to use some of his air time to attack me and repeat his call for a boycott of Overstock. The producer did the responsible thing by giving me an opportunity to respond, if Barry’s attacks warranted a response.
And one more thing: they didn’t tell Barry about this arrangement beforehand.
And so I sat and listened on hold while Barry spent much of the time any normal author would have dedicated to selling books, attacking me and renewing his call for a boycott of Overstock instead.
It was brutal. But better than describe it, you need to hear it.
Finally, the host broke in to say that it was only fair to give me a chance to respond.
Before playing that tape, let’s consider what might happen.
Assume Barry truly believes that I’m the monster he claims and is justifiably outraged. In that case, considering how vocal he’s been in condemning me in my absence, you’d expect him to jump at the chance to give me the same treatment in person…really make an example out of me, and get it on tape, to boot. That would be gold for his boycott campaign and make him look like a hero in front of at least 20,000 engaged, drive-time listeners. Meanwhile you’d expect that I’d want to stay as far away from that setting as possible, right?
On the other hand, what if Barry were repeating a lie and knew it? What if he knew he could never back up what he was saying, and was afraid of looking foolish (at best) and on tape, to boot? In that case, you’d expect him to run while I would leap at a chance to set the record straight, right?
Well, keep those two scenarios in mind as you listen to what actually happened.
Just like that, Barry was gone. While I regret not having an opportunity to truly confront him, I am very pleased that I was able to spend the remainder of what was to be his segment discussing Deep Capture and the market reform movement, and that the host was kind enough to invite me back to continue the discussion.
As you’ll recall, I promised that this story had application to more than just me. So what is the moral of this story?
Remember, this took place on an investing-themed radio show based in Dallas, Texas, not New York. I’m not sure it could have happened in New York. That’s because I’m pretty sure that Wall Street-themed broadcasts originating on or near Wall Street are talking to Wall Street; while the people listening to this show and the hundreds like it across America are mostly retail investors…precisely the crowd most victimized by short-side stock manipulation and most apt to support our reform efforts.
Herein lies both a problem and an opportunity.
The problem, I just described: Wall Street media culture is getting better but has yet to break free of its celebrity-focused ethic and is probably not going to critically examine the words or actions of a Barry Ritholtz. They’re just going to hand him a microphone. Consequently, in that kind of setting, a blogger living in Utah is unlikely to get the opportunity to rebut something Barry says, no matter how extreme.
The opportunity should be implicit in the problem: there are plenty of Wall Street-focused talk shows broadcasting from middle America where people generally place a higher value on fairness than celebrity (as this recent example proves). Chances are, you…yes you, I’m talking to you…know these broadcasts well. If so, I’m hoping you’ll tell me about opportunities in your area. My email is [email protected] Send me a note and help us spread the word.
Click here to download the full Ritholtz/Bagley segment from Wall Street Shuffle.
I recently subscribed to Barry’s Big Picture blog (but after he called you a pedophile, didn’t see that…) because it was listed on Zero Hedge’s read list and I saw a couple of good articles. Day after day 95% of the articles were boring and uninsightful, then a few days ago in an article he referenced Deep Capture as being a bunch of psychos which made me instantly think he’s a shill so I unsubscribed. I knew nothing about the guy, but hearing him on the radio here he just reeks of being a slimeball and you come off as honest. Keep up the good work. Some of the stuff you’ve incontrovertibly proved (e.g. the Wikipedia fraud) is just mind bogglingly bizarre. People think you are crazy because it’s inconceivable that this stuff goes on, but it does.
Don’t forget: The Wikipedia stuff reported on Deep Capture (and elsewhere) is just a fraction of the organized effort to silence critics.
As a person who independently tracked a number of individuals mentioned on Deep Capture, I can tell you the rabbit hole runs deep…
Ritz should go back to slinging Tom’s stock and buying donuts!!
HAHAHA …nice job Judd
I had no knowledge of the radio show incident, but I do find it rather funny that the guy cannot clearly defend his “talking points” (shall we call them that?).
I know for a fact that there are far more people involved in the systematic deception provided to the media and created within the media of many of the wall street crowd. The recent Jim Edwards story on bnet.com about Dendreon is just further evidence of this…. the guy cannot even prevent solid evidence or make a valid case to his claims.
So sad that these idiots… no, I didn’t mis-speak… these idiots don’t have any clue how intelligent certain people are and how capable those people are at terminating the “loose” organization that they are a part of. Yes – It is an organization, even though many of them do not understand or realize their active participation in it.
I too am from New York Judd and I’ll tell you that a real “New Yorker ” would tell you what they have to tell you to your face(or confront you on the phone) rather than scurry off like the scared animal/coward that he was. A real man would have confronted his critics as you sir Judd has and had. I can see that there is no shame to your game I thought your/our adversaries would have given a better accounting of themselves. I wonder why he ran off so fast though. It as if he has been warned not to confront you in any media forum at all.HHHMMMMNNNN!! This is getting real good. All that money and ink and no guts!!LOL!!!
You make a great point. I had a close relative who was an adopted Manhattanite. She used to say the biggest change she saw in herself after moving there was her approach to confrontation. She said New Yorkers don’t tend to back down when they know they’re right.
Maybe Barry knows he’s wrong.
Dirtbag what a NY City tough guy, what a joke, as they say from NY the quiet ones are the ones to fear. BIG MOUTHS like this joker are all Talk
You really should sue this guy. He’s way beyond slimey.
On a different note, I just read an old article by Michael Lewis titled “The End of Wall Street”. The article talks about Meredith Whitney and a negative report she did on Citi on October 31, 2007 which led to the stock falling precipitously.
Having followed your columns for a while when I read this it reminded me of the tactics used by bear raiders. Could it be that Ms. Whitney was working with some Hedge Funds that were short Citi? I searched through your website and she is not mentioned in any of your articles.
Any thoughts? By the way “The End of Wall Street” article is excellent and while its vague on details, it does give an excellent insight into the whole fraudulent nature of the system.
Short of the insights that come from discovery in a legal case (like this one, dealing with Fairfax Financial and an analyst at Morgan Keegan), it’s just about impossible to know to what degree analyst opinions are their own. I personally believe that the vast majority are well-intended, and that they should pay close attention to the theses of both short and long investors. What they should not do (as seen in the Fairfax case) is share their research with investors — short or long — ahead of time, much less permit them to edit the report, as appears to have happened in the MK analyst/Fairfax case.
One way to determine if there was anything inappropriate going on in the Citibank case is to look for unusual spikes in new short positions added in the days immediately prior to publication. We have that data and I think we should be doing a bit more of that kind of investigations. Good suggestion. If you (or anybody else) can think of other questionable cases, please let us know.
Thanks for the reply Judd. I’ve done internet searches and there aren’t any articles out there that suggest Meredith Whitney acted in collusion with any Hedge Funds to short Citi. So why am I suspicious? Here are a few reasons.
– I watched a video of an interview with Meredith Whitney and I came away quite unimpressed. Her performance is so laden with Wall Street jargon that is impossible for an outsider to understand what she is talking about. Personally, I feel that if you can’t explain yourself in a way that a normal person can understand what you are talking about then you probably either don’t know what you are talking about yourself or you’re trying to hide something.
– According to this article, she was at First Union (aka Wachovia) when suddenly she had to leave because of “cultural differences”. As part of an noncompete agreement she was banned from working in financial services for 3 years. Is this normal? I have to wonder about the so-called “cutural differences” that led to her leaving. (Anyway, it was during this 3 year period that she worked as a commentator at Fox.)
– Ms. Whitney worked for Fox prior to going back to work for Oppenheimer so she was someone who could widely disseminate her negative report through her media contacts.
– Meredith Whitney had worked previously for Oppenheimer which is where she Steve Eisman was her mentor. He left and eventually joined FrontPoint Partners, a Hedge Fund. Whitney then goes on to work for Eisman at FrontPoint. Years later she’s back at Oppenheimer. And everyone knows that Eisman was short the whole housing market and the big financial companies. So maybe Whitney was working for Eisman when she made the Citi call.
I know this is a lot of speculation and as you say there are ways of checking on these things, but I find this quote very interesting.
“After I made the Citi call, one of the best things that happened was when Steve [Eisman] called and told me how proud he was of me.”
Or how about this quote from Eisman.
“I think her call on Citi was dead on. She stripped the company naked.”
Is this a conspiracy hiding in plain sight?
Consider Roubini as well in the conspiracy ‘theory’.
Thank you for you kind words here, it is very important to us here on The Shuffle to get our information right. We were very pleased to have you on the show with us and look forward to having you and Patrick on again soon!
“it is very important to us here on The Shuffle to get our information right.”
Does that mean you won’t have clown Barry Ritholtz on any more to spread his lies and smears? I am just saying…
Now that you’ve been somewhat exposed to what motivates the liar, cheat, & coward Barry Ritholtz, you must acknowledge it would be patently unfair to ever allow this creep to commandeer your pulpit to spew his lies without at least offering the other side a chance for rebuttal. With that said, as long as both sides are given the chance to present their version of the story, I have no problem if you allow Barry Ritholtz on your show. In fact, as recently demonstrated, when those he attacks are allowed to defend themselves, it actually adds to the comedic value.
How about a debate between Judd & Barry ? The topic for debate: abusive naked short selling for the purposes of market manipulation, and the facilitation thereof. After all, that’s what’s really got Barry’s panties all bunched up. The question is whether or not can Barry back up his words, or is he gonna remain under his rock only able to come out when he’s sure there will be no possibility of confrontation ?
Ta Bergdahl? Snart Ã¤r vÃ¤l Westerberg ocksÃ¥ aktuell! Eller Micke Bornet?Har ni inget bÃ¤ttre att komma med, sÃ¥ lÃ¤gg ner den sÃ¥ kallade satsningen!!!
Oh, come on, we *all need to see that movie. I’m saving part 1 until part 2 is out, so I can do a full series marathon and subject some of my Twilight n00b friends to it, too. 😀
beerfan79 scrive:Bellissimo! Scherzi a parte, birra e vino sono due mondi che si devono affiancare per completarsi a vicenda. Mio fratello Ã¨ sommelier (per passione, non per lavoro) ed io sono appassionato di birra e a volte a cena organizziamo delle sfide per vedere quale abbinamento riesce meglio.A parte alcune cantonate (da ambo le parti) Ã¨ sempre tutto ottimo.
…Recent Blogroll Additions…I truly appreciate this post. I have been looking all over for this! Thank goodness I found it on Bing. You’ve made my day! Thanks again!…
Rise of the Machines: How “Quant” Trading Triggered the Credit Crisis
Posted Feb 11, 2010 04:19pm EST by Aaron Task
Greedy CEOs, bad regulators, short sellers, debt-happy Americans, and politicians of all stripes have been blamed for the great credit crisis of 2008.
Add another name to the blame list, says Scott Patterson, staff reporter at The Wall Street Journal: Quants, which is shorthand for the elite mathematicians and computer experts who’ve come to dominate trading in recent decades.
As chronicled in Patterson’s new book “The Quants”, the runaway success of computer-driven trading in the 1980s, ’90s and early ’00s led to complacency and hubris, ending in near total disaster for Western-style capitalism.
“Mathematical constructs” such as CDOs, derivatives and mortgage-backed securities “caused banks essentially to implode,” Patterson says, placing blame for the credit crisis squarely on the quants.
Recalling the 1987 crash and the 1998 Long Term Capital Management saga, Patterson notes the 2007-09 credit crisis wasn’t the first time quant creations nearly blew up the financial system. Nevertheless, the CEOs of big Wall Street firms had little or no idea what their own proprietary (or “prop”) trading desks were doing, just that they were generating huge profits – until suddenly it all went wrong.
Even more frightening, Patterson says very little has changed in the aftermath of the market’s latest near-death experience.
“All of Wall Street [trading] is really quantitative – there’s very little that’s not,” he says. “When you peel the onion you’re going to find a math guy sitting in the midst.”
So what chance do “Mom and Pop” investors have against a room full of PhDs totally focused to finding market opportunities? Not much, Patterson says, holding out little hope than any of the proposed regulatory changes will really change the game, or the odds.
( http://finance.yahoo.com/tech-ticker/rise-of-the-machines-how-%22quant%22-trading-triggered-the-credit-crisis-422940.html?tickers=XLF,FAS,FAZ,GS,JPM,MS,AIG&sec=topStories&pos=8&asset=&ccode= )
Judd et al does this headline and description ring a bell with youse?
Regulators Hired by Toyota Helped Halt Probes, Documents Show
Former regulators hired by Toyota Motor Corp. helped end at least four U.S. investigations of unintended acceleration by company vehicles in the last decade, warding off possible recalls, court and government records show.
If I did’nt know better (and I do by the way) I would have sworn Toyota’s regulators were the SEC!!LOL!!
Our system is corrupt to the core and there is nothing that can be done about it because the policemen of the system are also corrupt.
Why is this surprising?
Ritholtz himself says publicly he is a good friend of Herb Greenberg and won´t tolerate anyone dissing (his words) Herb.
Now, that´s very loyal of him, as a friend. But don’t you think someone with any integrity would then recuse himself from the discussion of Greenberg´s professional behavior, simply because he was a friend? Wouldn’t he at least mention what it was that Greenberg had been documented doing? Would he just regurgitate his friend´s position and forget the reams of evidence on the opposite side?
That´s respectable journalism? Sez who?
What these guys do is slap each other on the back, build each other up and then keep repeating that until the public believes their hoakum.
Strange? No, it´s par for the course.
That´s the media mob for you; in their way, a bunch many times worse than the kleptocrats..
Sean it’s not the system that is corrupt but many of the indviduals who work within that system. And therin lies the problem that has existed since Sodom and Gomorah. Find those righteous individuals OR OH OH.
Anon, I stand corrected. Thank you.
as an attorney who specializes in these things I can assure you that between the comment to his blog on 12/18 and this radio interview, Mr. Ritholtz has committed defamation per se, which means you don’t even have to prove damages to prevail against him in court. You only need to prove that he said those things. And that is already done. I would gladly consider taking this case on a contingency basis. Please contact me by the email I provided with this comment if you are interested in discussing this further.
Obama reveres Lloyd Blankfiein:
No wonder the SEC will never reign in the wallstreet scumbuckets.
Barry Ritholtz hangs up and runs.
Psychology of it. Barry was scared of Judd and being on the record.
In other words Barry was a coward.
Azz holes at goldman.
Goldman and Paulson shorting the euro in Athens?
These criminals must be stopped.
Let’s see, GS sells Greek debt at credit card interest rates, hiding it from the rest of Europe, putting the whole Eurozone at risk, then after taking the commissions and fees, has the nerve to bet the Greek’s will default.
Actually, it appears that GS isn’t only betting that Greece with go down in flames, it has poured the gas and lit the match….
How long can this be tolerated?
Is it too large a crime to see?
Madoff’s boy DiPascquali out on bail:
Hey, is it me or am I just imagining things? Goldman Sachs is in the middle of another scandal (Greek Swaps and their part in it) but their share price keeps moving on up. Is that crazy or what? Scandal after scandal and to the moon the share price goes. I wonder if any market manipulation might be going on here? High Frequency Trading maybe? Who knows? But it seems strange does’nt it?
When your company is in bed with all the politicians and nobody can stop you (or will stop you) your company might be viewed as invincible and the stock goes up.
It’s a bubble. And it needs to be pricked.
You’ve hit a nerve. Keep punching. I support Over Stock and have been spreading the message for over two years, a la Burrell and Puplava…
Um,,,so did you try to friend a little girl? You don’t address the accusation.
Where would BR get the idea from? Smoke/Fire?
Of course I addressed the accusation. And the answer is no, I didn’t try to “friend” any minors. Where did Barry get the idea that I did? Gary Weiss was the originator of the lie. Barry probably made the mistake of believing him.
You are wrong about Wall Street Shuffle. Just because they are not in NYC dont thnk they arent part of the game because I know for a fact they are. They use hacks like Peter Schiff,GErald Celente, Martin Weiss and the rest of that trash crowd. Please do more research next time. You blew this one.
Stay away from all sites that have a bunch of other websites on their list. That means they are in the same club. They are all liars.
You need to contact Mike Stathis. He has wrotten about this stuff. he knows how the media works because they black-balled him even though he has the best record on the collapse of anyone. He is the only real deal expert out there. And the media wants to make sure no one knows about him. http://www.avaresearch.com
Sue Ritholtz for libel, wipe the smug smile off the bastards face for EVER!
Mike Stathis is ignored because his analysis sucks.
Barry Ritholtz is a real piece of work. Last year he tried to link Rick Santelli with an erroneous Playboy story by Ames and some other hack. Ritholtz says he never read the story, but he had no problem writing about it. The Playboy story had to be removed because the writers had committed libel aganist Santelli, and were worried about being sued. So no story, just lies. Ritholtz was told that it was removed, but he never did anything to put the truth forward or apologize to Santelli. These goons shouldn’t be able to spread lies.
Barry Ritholtz ‘s past includes working at
bucketshop Maxim …. penny-stock pushing dirtbags