How The American Workforce Was Destroyed By Wall Street Hedge Funds !

While NAFTA in the mid 90's played a major role in extinguishing the workforce in America by supplanting companies to foreign countries for not being able to compete with the wages of third world workers, it is most likely the other half were destroyed in the following years by colluding hedge funds using a boxed betting system combining the practice of "naked shorting and the inherently flawed credit default swaps !

If you're not familiar with "naked" shorting, it's the practice of selling stock without ever owning the stock in reference thereby artificially increasing the supply of shares on the market and lowering demand which generally drops the price of a stock if using the classic supply vs. demand argument. The seller in question either plans to buy back stock later at a reduced "artificially" lower price to replace the IOU he has sold , to gain a profit on the drop of a stock or sometimes not at all if he can get away with it in the clearing house.

The second technique used by hedge funds to guarantee a great return on money, is to buy a credit default swap on the stock he is about to short. These are basically insurance contracts on the stock and pay out on any loss or drop in price of the asset. The stock does not necessarily have to hit dead zero or go bankrupt to collect. Only a drop in price , in any amount will cause the insurer to pay out a cash settlement or put up extra collateral to the buyer. The two flawed provisions in the CDS scheme allow a buyer to purchase the insurance claim without actually owning the asset and a payout happening without actually dropping to zero or bankruptcy.

For the Hedge fund ,this scenario is great. They can target a compant they wish to "artificially" deflate. They first buy a credit default swap/insurance contract on the companies stock/ bond assets they feel are struggling and want to target , then effectively go out to the market and sell "fake" stock/IOU's at the normal price using the "naked" short method. If the temporary artificial supply works its magic and the price drops , they not only receive payment on the CDS contract but also profit off the short ,by buying back the stock artificially low , replacing the IOU's sold and making a second profit off the difference between the artificial low and normal price. A double guaranteed boxed bet. The market used to seem like an "insiders" casino but is starting to take on whole the new look of an "outsider's" horse track. Allowing an outside speculator with no vested interest in the stock , to take out insurance on the stock is nothing more than a "sidebet". How is it legal ? They use the name Swap instead of insurance otherwise it would fall under the same regulation as insurance. Funny , how changing a single word can get it past regulation even though the premise has not changed.

Meanwhile these struggling but plausible companies, who may have made it past those struggling years and provided work to the American workforce ,have been unjustly targetted for collapse by greedy hedge funds and putting many into bankruptcy.

Secondarily, these hedge funds now make the play both ways in some cases ,where the targeted company was too strong to collapse, to make a superior return so they use the method called the " short squeeze". Going back to the supply vs. demand argument, they can now use those proceeds from the cds payout to buy at the lower price and bet " long" that the stock will rise. How do they do that? Before paying back the IOU's on the "short " sale, they purchase enough shares at the new low price to pay back the IOU's plus an extra amount on the same low price. When they pay back the IOU's all at once and take the "artificial" supply off the market, the supply now drops in the eyes of regular investors ,which raises demand and therefore price and ensuring another great return to the hege fund on the extra shares bought.

Regular investors can protect themselves against these tactics by checking the DTCC ( clearing house ) Reg SHO list to see which stocks have irregularly large amounts of " artificially" shorted stock known as FTD's ( failed to deliver's).Normally a regular "shorted" stock is supposed to clear within three days however many "naked" shorts do not clear for up to a whole quarter or 56 days untill the bet has swung in favor of the hedge fund . These FTD's can be monitored to see when and in what quantitty they are being paid back / cleared and keep you from getting caught in the wrong spot when the herd moves! Luckily, many of these regulations are enacting penalties on ttraders who do not clear within reasonable time.

It's important to note that hedge funds many times will bypass the clearing house when clearing trades between each other in what is known as ex-clearing ( external clearing , meaning outside the watchful eye of the DTCC clearing house ) leaving the market not knowing the true overabundance of "shorted" stock. The SEC has allowed the rampant unregulated betting to happen and sealed the records of these hedge funds by what they call " proprietary " trading methods by individual hedge funds citing harm to their " proprietary" practices if the word got out. To say these schemes are proprietary or even legal ,for that matter by specific groups of funds is simply asinine !