Category | The Archive

James Cramer, Larry Kudlow & Me 23 July 2004

In the summer of 2004 I went on Kudlow & Cramer to discuss 2004 Q2 results. We were still growing extraordinarily fast (88% in real terms, and gross profits were growing 106%). Our GAAP losses of $2.3 million on $87.8 million in sales for the quarter, or 2.6%, were in line with our strategy of maintaining high rates of growth while running roughly break-even, which I had publicly defined as +/- 1% on an annual basis. Incidentally, Overstock went on to finish 2004, our fifth full year in business, a half-billion dollar company, having shown real growth of 84% and gross profit growth of 158%, and losing $5 million (that is, running at -1% net income on a GAAP basis), and generating positive $25 million of operating cash flow.

Note that Jim Cramer reads from David Rocker here. Jim would later claim that he never met David Rocker except for one time in a grocery store.

 

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CNBC’s Ron Insana and the Miscreants’ Ball – August 12, 2005

On August 12, 2005, I launched an offensive to expose crimes and corruption on Wall Street that I believed were leading to the destruction of dozens (perhaps hundreds) of companies, the loss of countless jobs, the theft of billions of dollars, and quite possibly, a systemic meltdown. I did this with a webcast I called, “The Miscreants’ Ball”.

In this offensive, which I have called a “mitzvah”, “crusade”, and (when speaking of how my opponents view it) a “jihad”, I alleged that:

1) The SEC had grown inappropriately close to Wall Street (which SEC Senior Investigator Gary Aguirre and a Senate Judiciary Committee report have since confirmed);

2) The New York state Attorney General Eliot Spitzer was a corrupt finger-puppet (subsequent events have confirmed the corruption, and I am waiting for anyone in the press to see the “finger-puppet” implication of Spitzer’s favorite girl, Ashlee, living rent-free in the summer home of Spitzer’s biggest donor, Jim Chanos);

3) Certain hedge funds had grown inappropriately close to certain journalists of the financial press (which CNBC’s own Jim Cramer has since confirmed);

4) As a result of the indolence of the SEC, New York Attorney General, and financial press, a circle of hedge funds were taking down companies through:

I hope, then, dear reader, that I do not assume too much when I write: perhaps in retrospect these claims are not so improbable as they may have first sounded.

The afternoon of my Miscreants’ Ball presentation, I was invited to go onto CNBC to be interviewed by Ron Insana, and the spinning began. Over time, that spin-job would be composed of at least five elements:

1) Referring to the Overstock suit against Rocker and Gradient as being about short-selling while glossing over the allegations regarding an inappropriate relationship between Rocker and the putatively independent research house (e. g., letting Rocker order, edit, preview, and front-run the reports on Overstock.com);

2) Referring to the case against David Rocker as being about naked short selling, when in fact the suit did not mention naked short selling;

3) Continuously failing to distinguish between short selling and naked short selling (which is like failing to distinguish between sex and sexual harassment);

4) Relying upon the preceding vaguenesses in support of a cover-up, that cover-up being that this was simply a fight about short selling, and which insisted upon the benefits of short selling (without distinguishing it from the illegal offshoot);

5) Overstock was not a good company, and therefore none of my claims about the capital markets could be true. (Yes, it is an obvious non sequitur, but not so obvious that it was not blindly parroted by more or less the entirety of the New York financial press, without a trace of critical thinking regarding its logic.)

The obfuscation that began in this interview would in time become a roar.

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CNBC's Ron Insana and the Miscreants' Ball – August 12, 2005

On August 12, 2005, I launched an offensive to expose crimes and corruption on Wall Street that I believed were leading to the destruction of dozens (perhaps hundreds) of companies, the loss of countless jobs, the theft of billions of dollars, and quite possibly, a systemic meltdown. I did this with a webcast I called, “The Miscreants’ Ball”.

In this offensive, which I have called a “mitzvah”, “crusade”, and (when speaking of how my opponents view it) a “jihad”, I alleged that:

1) The SEC had grown inappropriately close to Wall Street (which SEC Senior Investigator Gary Aguirre and a Senate Judiciary Committee report have since confirmed);

2) The New York state Attorney General Eliot Spitzer was a corrupt finger-puppet (subsequent events have confirmed the corruption, and I am waiting for anyone in the press to see the “finger-puppet” implication of Spitzer’s favorite girl, Ashlee, living rent-free in the summer home of Spitzer’s biggest donor, Jim Chanos);

3) Certain hedge funds had grown inappropriately close to certain journalists of the financial press (which CNBC’s own Jim Cramer has since confirmed);

4) As a result of the indolence of the SEC, New York Attorney General, and financial press, a circle of hedge funds were taking down companies through:

I hope, then, dear reader, that I do not assume too much when I write: perhaps in retrospect these claims are not so improbable as they may have first sounded.

The afternoon of my Miscreants’ Ball presentation, I was invited to go onto CNBC to be interviewed by Ron Insana, and the spinning began. Over time, that spin-job would be composed of at least five elements:

1) Referring to the Overstock suit against Rocker and Gradient as being about short-selling while glossing over the allegations regarding an inappropriate relationship between Rocker and the putatively independent research house (e. g., letting Rocker order, edit, preview, and front-run the reports on Overstock.com);

2) Referring to the case against David Rocker as being about naked short selling, when in fact the suit did not mention naked short selling;

3) Continuously failing to distinguish between short selling and naked short selling (which is like failing to distinguish between sex and sexual harassment);

4) Relying upon the preceding vaguenesses in support of a cover-up, that cover-up being that this was simply a fight about short selling, and which insisted upon the benefits of short selling (without distinguishing it from the illegal offshoot);

5) Overstock was not a good company, and therefore none of my claims about the capital markets could be true. (Yes, it is an obvious non sequitur, but not so obvious that it was not blindly parroted by more or less the entirety of the New York financial press, without a trace of critical thinking regarding its logic.)

The obfuscation that began in this interview would in time become a roar.

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Smarmy Jeff Mathews Helps CNBC Refine the Cover-up

In the week after the Miscreants’ ball call and that day’s interview with Ron Insana, I was invited to appear to debate Jeff Mathews. Jeff is a deacon in his church and a four-flusher who published atrociously false statements about a female co-worker of mine (statements which Deacon Mathews quietly made disappear, without apologizing, once he learned he had misspoken), and a crony of David Rocker. Evidently Jeff appeared without any preparation, and judging from even Insana’s reaction, had his head handed to him (if I say so myself).

More interesting than Jeff’s smarmy squirming and Ron Insana’s reaction thereto, however, is Ron’s spinning, which has become more heavy-handed than it had been the previous week. Evidently the goal was to make unthinkable the simple truth that the lawsuit concerned illegal acts sworn to by witnesses and participants, and the broader claims about naked short selling concerned the health over hundreds of firms, the jobs and savings of millions, and the fragility of the capital market: thus, Ron seems to have been following instructions to insist upon a Party Line that “Byrne is suing because he is mad these people say mean things about Overstock, but if only he focused on his business” blah blah blah. As should be clear by now, that became the doctrinal truth that CNBC journalists, Bethany McLean, Joe Nocera, and Roddy Boyd were to reinforce in subsequent months with great fervor, so as to preclude the public from reaching any substantive understanding about the claims made or issues at stake.

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Dave Patch Keeps It Simple: “OK, then just settle the trades”

On October 14, 2005, CNBC began covering the implosion of of Refco, a broker-dealer which was under criminal investigation for its involvement in naked short selling. With admirable aplomb, Patch met the spinning and downplaying with a simple statement: “OK, then just settle the trades.”

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Dave Patch Keeps It Simple: "OK, then just settle the trades"

On October 14, 2005, CNBC began covering the implosion of of Refco, a broker-dealer which was under criminal investigation for its involvement in naked short selling. With admirable aplomb, Patch met the spinning and downplaying with a simple statement: “OK, then just settle the trades.”

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Jim Cramer Discusses Subpoena with Herb Greenberg, the Worst Business Journalist in America

In February, 2006, Herb Greenberg joined Jim Cramer in spinning their SEC subpoenas, and Jim discards his casually. What they do not mention is that upon receiving his subpoena, Jim Cramer had immediately begun selling large amounts of TheStreet.com, without informing the public of his subpoena (according to his own lawyer, Jim Cramer had never previously sold TheStreet.com stock).

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Herb Greenberg, The Worst Business Journalist in America, on the Conspiracy

Herb Green goes into a flop-sweat over his SEC subpoena.

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Becky Quick Bickers Quickly but Blithely Fails to Follow

Becky Quick invited me on CNBC. I expected another CNBC spin-job and was not disappointed. Becky began with a half-truth about an Overstock accounting restatement, failing to mention that it was a restatement up (in other words, Overstock’s auditors had decided that Overstock had kept its books too conservatively – I am not sure if I have ever heard of such a “corporate restatement”).

Becky seemed put-off at my correction, then proceeded to bicker in an attempt to sound like a hard-headed journalist. Unfortunately, as you will see, in her eagerness she began tripping over her own statements, simultaneously accusing me of orchestrating a federal investigation and not knowing the first thing about it. Anticipating that something like this was going to happen, and having grown tired of going on CNBC and having them talk over me in order to prevent my actual claims from getting aired, I slipped into a Morchai Vanunu routine.

If you forgot who Mordechai Vanunu is, this is he (and yes, I had prepared the sign before showing up at the CNBC studio in San Francisco).unfreedvanunu.jpg

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With No Evident Irony, CNBC Wonders Why 60 Minutes Covers Story – March 2006

Having done everything they could to twist, distort, and suppress the story, in late March, 2006 CNBC wonders with faux innocence why 60 Minutes would be picking up the story.

 

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