Deep Capture: The CEO of Overstock.com Speaks out !!!

[Phred42]

This is something VERY interesting and unique. A CEO that is speaking out!

There is a "movie" linked at the bottom of this page on his blog. It's more of a slide show with audio. WATCH THIS MOVIE!!!. (Note: Slide two is apparently missing so don't' worry about it.)
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From the personal blog of Patrick Byrne, the CEO of Overstock.com

A massive financial crime is harming the United States. The institutions that should stop it have been captured by the criminals doing it. The crime makes a hoax out of corporate governance while it destroys firms, deprives society of innovations, and robs Americans of their pensions. It may have become bad enough that it will cause the financial system to collapse. The financial press is so willfully blind it borders on a cover-up. The dots have been connected in the world of social media, but the same criminals who are behind the financial scam are manipulating social media to forestall the day of social epiphany. And yes, I know this all sounds like a bad Sandra Bullock movie. By Patrick Byrne

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Welcome to Deep Capture

This is not structured like a normal blog. Instead, it is structured as a series of chapters that I am writing on-line, section-by-section.

The Table of Contents (to your right) organizes 10 claims. I will develop each claim through its own chapter, that is, a series of blogs arranged in proper logical order. Each chapter is organized with the easiest material up front, and any less-accessible material further back. I plant signposts to guide readers whose preferences for detail differ, and please read no further into any chapter than your own desire for detail demands. I hope that if you read far enough into each chapter you will synthesize them into a Big Picture that is otherwise beyond my power to convey.

To begin, please click on, “Introduction: An Overview of Deep Capture” and work your way forward.

Rock on.

Patrick M. Byrne

http://community.overstock.com/deepcaptureblog/

[lies]

1. wow

and wow...

may not agree with every word, but still amazing find!!

[Saturday]

2. Overstock has been the victim of a crime called...

"naked shorting". It's quite complicated but to make it very simple....people sell stock that does not even belong to them. It can ruin a company. Overstock has been one of it's victim. He is a courageous CEO.

[Fleshdancer]

6. this is insane!

I've never heard of naked shorting before but I'm watching the Bloomberg investigative report that Byrne links to from his blog. I'm disgusted by this.

[Yael]

31. Yes -- and this cost them millions. It was ugly

I saw him interviewed about this a few months ago. You could tell how pissed he was.

[cgrindley]

50. Yes, but he blames a Sith Lord (nt)

[jmowreader]

51. It's not quite as simple as your simplification

But you simply knew that, right?

People trade stocks to make money, and you do that in one of three ways:

You can buy and hold. This is the really old way to make money, but you need a stock that pays dividends, and you need to hold a lot of it. This worked best before Reagan took office, because Before Ronnie, you just bought a big pile of the local electric company's stock, put it in your safe deposit box, and left it there. This strategy, pre-Ronnie, was essentially risk-free because you only did it with the most stable of stocks...like the electric company.

You can buy low and sell high--a "long sale."

Or you can reverse that by borrowing stock, selling it, waiting until it goes down enough to suit you then buying it back and returning it. This is a short, and the risk here is that stocks actually rise in price...and if it happens to you while you're short on it, the person you borrowed it from might want it back now.

Now for the complexity of the naked short: The SEC allows three business days after shorting a stock to deliver the certificates. If you need to go short right now, for whatever reason, and you absolutely know where you can come up with the stock you're shorting, you can execute the transaction then borrow the stock. It's called a "naked" short because you don't have the stock you're shorting in your possession.

What happened to overstock.com is called an "abusive naked short"--one where you short the stock but never intend to deliver the certificates. Shit like this is why they invented the pillory.

[nightrider767]

3. Great insight

Added it to my favorites for late night consumption...

Thank you.

[Lydia Leftcoast]

4. This practice is practically institutionalized in Japan

It's called ama-kudari "descent from heaven," and it refers to career bureaucrats being assured of cushy private industry jobs once they reach the compulsory government retirement age, which was only 55 until recently. (I think it's been raised to 60.)

So somebody who rises high in the Ministry of Finance pals around with executives of major banks, looks the other way when they keep two sets of books, and upon retirement, finds himself a pleasant position on the board of a couple of banks.

In another scenario, a bureaucrat retires from a government agency or ministry, starts a business, and becomes a no-bid supplier to his former employer.

[OneGrassRoot]

5. K&R. Looking forward to reading. Thanks! n/t

[slor]

7. I thought he liked bush...

and supported his policies, such as reduced regulations. Has he changed his tune?

[OnionPatch]

8. All I remember is that Overstock.com

was on the Buy Blue list several years ago. He must support some Democrats to have made that list.

[Recursion]

13. The issue here is that regulations are part of the problem

That is, it isn't just an issue of lax regulation; this sort of thing is precisely possible because large financial institutions have been writing their own regulations for years now, using their influence in the government to stop competition and kill new and innovative companies.

[truedelphi]

28. Also someone on Du posted about a week ago

An entire thread on how Wall street wants only the SEC to determine their guilt or innocence, and whtever court decides this will probably permit it.

The whole financial situation is Nuts!

[MidwestTransplant]

41. I remember the same thing.

[proud2BlibKansan]

54. Yes he does

[notadmblnd]

9. if only this could make the greatest page and not be buried amongst the primary hate fest.

[Straight Shooter]

10. Overstock has some great people on its staff, very customer care oriented.

I had been worried about buying from them because I thought they were a red company, but their service has been excellent. It's nice to know their CEO is one of the good guys.

K & R

[knitter4democracy]

11. I have always had good luck with Overstock. Not so with other sites.

What I order is what's sent, down to the last detail. Reviews are spot-on, and prices are good. I've been very happy with them, and I would be sad to see them go under because of some shenanigans that they have nothing to do with. They're a good company.

[originalpckelly]

14. Yes, it's a good site.

But this blogessay is really quite impressive, way to go Mr. Byrne!

[npincus]

45. they're GREAT- love Overstock

excellent custumor service, excellent prices- I've bought everything there from furniture to matress toppers!

[proud2BlibKansan]

59. No he isn't one of the good guys

He wants to destroy public education. That's not what good guys do.

[knitter4democracy]

65. I hadn't heard that. Really? Humph.

I'm always amazed at people who got a good public education griping and moaning about public ed and wanting vouchers and crap.

[proud2BlibKansan]

66. He's the guy promoting the 65% Solution

which is one of the worst ideas ever.

He is a big voucher proponent.

He is also a huge Bush supporter. He gave out free copies of Farenhype 911 with every order a couple years ago.

[knitter4democracy]

67. Ugh. That's awful!

Grrrr. No money for him!

[originalpckelly]

12. I'm terribly sorry to say it, but it's already collapsing.

The whole system is falling under the weight of its own bullshit.

[originalpckelly]

15. George Carlin, comedian and surprisingly right on about our society:

http://www.youtube.com/watch?v=kJ4SSvVbhLw

[TexasBushwhacker]

43. That was awesome, thanks n/t

[wildbilln864]

16. *k&r! nt

[wildbilln864]

17. another dupe, What's up ith the lagging? nt

[Phred42]

19. Dupe?

[wildbilln864]

20. duplicate post...

because I didn't think the click worked the first two times. :hi:

[wildbilln864]

18. dupe, sorry, nt

[femrap]

21. MOG

that's Mother of God!

These hedge funds are absolute thieves.

Hats off to Patrick Byrne for talking about this.

[HCE SuiGeneris]

22. More fleecing of America by the banking institutions?

Color me surprised... not.

Thanks for this. K & R

[Girlieman]

23. Big Crybaby

His stock has been going down not because because he can't turn a profit. Overstock has lost money (and lots of it) at least for three years running. I would sell it short too. Instead of writing blogs maybe the guy should turn a profit and squeeze all the short sellers.

I don't recall this guy writing self pitying blogs when he was exercising his stock options for $5.00 a share, when the stock was trading at $15.00 (note -- this is after stock prices had dropped for 2 straight years, so it wasn't like he actually RAISED the value of the stock). Now that's a real financial crime that's worth doing something about.

[DaveJ]

27. I also doubt his motives...

As far as my limited understanding goes, his business model depends on a bad economy. My guess is, he's probably just toking it up like Bill Gates, with nothing but self interest, while benefiting others is an incidental side effect at best.

At the same time, I'm sure he's incidentally correct about hedge funds.

[Winterblues]

24. Is there such a thing as a "bad Sandra Bullock movie"?

I think she is pretty nifty keen..But I am old and ignorant of so very much..

[formercia]

25. A worthwhile read.

it's good to see a CEO come out and tell how the real game has played us all for suckers.

[DemReadingDU]

26. evening kick

Thank you for posting this, bookmarking for future reference.

[xchrom]

29. recommend

[Liberal In Texas]

30. Recommended. The amount of courruption in this country is not

going to get better until we get some regulation back into our government.

And the lesson in all of this is that Joe Average ends up losing every time and paying for the elite to have their mansions and hedge funds.

[Cooley Hurd]

32. Overstock.com gave away free copies of "FahrenHYPE 9/11" with every order...

...in 2004. I guess he's had a "come to jesus" moment as soon as it affected HIS bottom line, eh?:eyes:

[cascadiance]

39. They were definitely pushing this film and were "overstocked" with it earlier...

They were not only selling it for a buck or a cent, but bundling the book with it as well for a buck as I recall. Perhaps that was the start of his realization that the right wing's message wasn't selling to the American people and becoming less popular than the media, ec. would try to have us all believe.

I also knew a coworker who was my boss at one point who moved to Utah and worked there briefly. Didn't talk about it much, but he left not too long after that and is now back in San Diego working here.

I hope I'm working here later today. Still have got to go in today to find out if layoffs that are scheduled today will affect me or not.

[EvolveOrConvolve]

55. I remember that

I also remember hearing something about Byrne being involved somehow with the Swiftboat Liars. Correct me if I'm wrong...

[proud2BlibKansan]

60. He's a right wing koolaid drinker for sure

[proud2BlibKansan]

62. dupe

[puerco-bellies]

33. I was still trading when this story started to break.

I did not understand how short selling, morphed in to what was termed after market selling by certain hedge funds. I have a clearer understanding now and Mr. Byrne lays out a good case. What cinches the deal is the SEC own statements relating to the necessity of grandfathering the violations. This means that huge amounts of capital in the funds, as well as the markets themselves is simply smoke and mirrors. If we were able to stop this in it's tracks and exposed the cheaters and the extent of who has been cheated the markets will suffer a serious collapse. If we don't, at some point this scam will reach a tipping point of some kind and the whole shooting match will implode. Either way, we are fucked.

[Roland99]

34. K&R

[cgrindley]

35. Um... you've heard about this guy, right? and that pesky Sith Lord?

http://www.theregister.co.uk/2005/12/03/overstock_issues/

http://www.theregister.co.uk/2005/12/29/overstock_stock_dip/

there's a lot more. Just google him.

[trthnd4jstc]

52. This seems to be a problem outside of the Hedge Funds problem.

Customer Service is key to business' success. I always value my clients. In real terms, they are my life blood. Satisfying their needs, will keep them returning for my service. I am sorry to see that Overstock.com is failing in Customer Service. I thought that they had a pretty good business model. I do wonder about The Register, as I wonder about all Media now adays. When is one propagandizing? When is one reporting? Agenda journalism has overtaken our Media. The only way out is public reaction, and loyalty to those who behave in a strict professional manner. Let us communicate those that propagandize the news, and those who report the news. I wish to be loyal to those that behave professionally.

[nosferaustin]

36. vouchers

Byrne almost single handedly funded the voucher movement last year here in Utah. From Wikpedia:

"Byrne and his family contributed most of the funds in support of House Bill 148 in Utah - a bill that would allow the state to provide funding vouchers for students who decide to leave public schools for private schools. In January 2008, it was reported that Byrne and his parents contributed about $4 million to the pro-voucher campaign, or three-quarters of its $5.4 million funding. Opponents of vouchers spent $4 million. When that bill was soundly defeated in a statewide referendum (62% opposing vs. 38% favoring), the Salt Lake Tribune reported that Byrne "called the referendum a 'statewide IQ test' that Utahns failed." He said, "They don't care enough about their kids. They care an awful lot about this system, this bureaucracy, but they don't care enough about their kids to think outside the box."

I haven't read the link from the OP yet, I will later tonight. Thought I'd point this little tidbit out before this turns into a feel sorry for Byrne's thread. This guy was a real jerk and bully during this voucher fight. The people of Utah (clearly not a bastion of liberalism) didn't want the vouchers, started a referendum to vote them away when the legislature passed them anyway and then defeated them in on election day. One of the few statewide votes that I've agreed with since moving to this reddest of red states.

[TexasBushwhacker]

42. I may not like his politics .....

or his interest in raping the public school system, but that doesn't mean that what he says is a lie. Wall Street is a racket with rules and regulations that benefit the big players.

[Phred42]

37. Great Stuff DU'ers! Thanks

Excellent collection of contributions

I'm learning a lot on this one. Still not sure how I feel about this guy personally.

Regardless of past issues - is his rant accurate solid?

Thanks

[greg1982]

40. No, it's not solid

I'll try to add a different perspective here. I follow Overstock and am quite familiar with naked shorting. A couple points: a)Byrne has been ranting about this for years; it's a very old issue b)Byrne is about the least-respected business leader out there, and c)naked shorting cannot "ruin a company," as someone here said. Basically, the effect is that the short seller needs to either find some shares to borrow extremely quickly, or close his position. There is no actual effect on the company. I'm afraid some of you are buying into his rant because of its secondary themes.

Oh, and by the way, Byrne is the litigator; he sues everyone. People generally watch out for him, not the other way around.

[Ellen Forradalom]

47. Welcome to DU!

:hi:

[drm604]

38. Look beyond just the SEC issues.

His focus is obviously on the SEC and short selling, and his motivations are very possibly pure self interest, but he's also describing something bigger than just that (and the SEC thing is by itself very big). He's describing something that has been a major subject on DU. In fact, I would even say that it's an underlying assumption here.

He's talking about powerful factions working to gain total control of government, media, education, and public discourse in general.

Watch. We will very likely soon see a smear campaign or some sort of legal difficulties for Patrick Byrne.

[Lost4words]

44. I have and will continue to avoid Overstock!

didnt know they were HQed in Utah!

[blondeatlast]

46. What's the problem with Utah?

SLC has one of the most promising OUTSPOKEN progressive Democratic mayors in the US and just retired another. :shrug:

[Synnical]

68. I doubt there will be smear camp

But your points are spot on. Just because he's a winger, does not mean we should disavow his commentary. After all, wingers are all about less government right? And here's one who is saying deregulation is bad.

[drm604]

69. I think he's pointing out that regulation is a mixed bag

and that there are certain potential problems inherent in having unelected bureaucrats as regulators.

We need to be careful here because this could be twisted into an argument against having regulatory agencies.

What it really is is an argument for more legislative oversight. But this would need to be proceeded by the rooting out of corrupt legislators. Which would have to be proceeded by total campaign finance reform. We would also need to start coming down hard on corrupt legislators, as well as those who corrupt them, in order to set examples. This goes for both sides of the aisle, although the Repubs do appear to be the worst offenders at the moment.

How we get legislators who are benefiting from corruption to crack down on it is the thousand dollar question.

[trthnd4jstc]

48. Thank your Mr. Byrne

These Hedge Funds need to have some of their members indicted, and prosecuted. Thank you for fighting this fight. It is a shame that Columbia Journalism Review will not print this research, and that they have been bought out. It means there is room for a new Journalism Review to be set up, outside of the purview of the corrupt criminals trying to monetize their criminality. I hope that Honor, Justice, and Truth guides each and every Man and Woman. Only we can reshape the world to be more perfect. End Tyranny!

[trthnd4jstc]

49. Thank your Mr. Byrne

These Hedge Funds need to have some of their members indicted, and prosecuted. Thank you for fighting this fight. It is a shame that Columbia Journalism Review will not print this research, and that they have been bought out. It means there is room for a new Journalism Review to be set up, outside of the purview of the corrupt criminals trying to monetize their criminality. I hope that Honor, Justice, and Truth guides each and every Man and Woman. Only we can reshape the world to be more perfect. End Tyranny!

[proud2BlibKansan]

53. This guy is a REPUBLICAN!! And he has worked AGAINST public education

His baby is the 65% solution, which is a bad idea that will destroy public education and make room for vouchers.

I wouldn't trust him as far as I can throw him. His stuff shouldn't be allowed to be posted here. He is no better than Bill Bennett.

So proceed with caution.

I also haven't bought anything from his website in years.

[greg1982]

56. Wow, I'm flabergasted

I'm amazed that almost everyone here assumes validity/invalidity of a point based on the author's supposed politics. As you may have read in my previous post, Byrne is commonly considered a loon, but that's hardly for political reasons. And the naked short selling is simply a non-issue; it cannot explain his stock's performance.

So I'm no fan of Byrne--or his argument--but I'm pretty dismayed that political affiliation runs supreme to logic, especially among people I would have assumed prioritize the latter. That one's argument (on a complicated issue that presumably most non-finance people don't understand) should be rejected due to one's support of UT vouchers is incredible.

[proud2BlibKansan]

58. Well, yeah

This is DEMOCRATIC Underground. We don't support right wing politics or views. And this overstock.com guy is about as right wing as you can get.

[greg1982]

61. The content still matters, not just the source

Fine, but when the topic is naked short selling, the politics of the source if of little use. The first priority is to educate yourself on the topuic: initially, his themes seemed to resonate, prompting agreement, but then his voucher support eroded it. Again, I disagree strongly with Byrne, but I would be embarassed to do so on the basis of his voucher position. I assume a nonsensical position on naked short selling from a bonafide liberal shouldn't warrant approval, should it?

[proud2BlibKansan]

63. He does far more than just support vouchers

His company gave out free copies of Farenhype 911 with every order.

Here's more on the 65% Solution:

http://www.firedupmissouri.com/fce_memo_revealed

http://www.education-world.com/a_issues/issues/issues424.shtml

http://www.pta.org/archive_article_details_1138313002656.html

Now before you say 'Well that doesn't sound like such a bad idea', remember they said the same thing about No Child Left Behind. It sounded okay at first too.

[Two Americas]

57. no surprise there

Corporate CEOs are human beings, not monsters. It is not business people that are evil, it is the system. Anyone with any perceptiveness at all recognizes that there is something deeply flawed with the system.

This illustrates a major failure of modern liberalism - the premise that converting people to "our values" is the path to effecting social change, that it is people that need to be changed, rather than the system. Changing human nature and converting people to new values is something that more properly belongs in the realm of religion, not politics, and it is completely useless for effecting political change.

Too many liberals and progressive are perfectly happy with the exploitative system we live under, and their role and status in that system, they seek to make people nicer and kinder within the system. That may be spiritually enlightened, but it is politically reactionary.

We could convert 99% of the corporate CEOs to "our values" and over to "our side" and not a thing would change. If the system were left in place, the remaining 1% would exploit it and we would have the same problems we do now.

So long as modern liberalism is about personal conversion and personal values and personal lifestyles it will remain weak and ineffective politically.

Politics is about economics and power, it is not about personal belief systems.

[earth mom]

64. I'm not surprised by the corruption of the stock market. I'd figured as much.

:puke: