Ah, unintended consequences - they always crop up when the not so invisible hand muddles into the stock market.
Now General Electric (NYSE:GE), since it has a financing arm, is going to be "protected". (Is this like the endagered species act?) When the stock was battered it protested, saying less and less of its business was financial - now it waves its financial arm in the air saying "hey, save us too!"
- General Electric is expected to be added to a list of financial stocks that can no longer be sold short, according to people familiar with the situation. The parent of CNBC and CNBC.com, makes about half its profit from its financial services unit, GE Capital.
- Other companies with large financial services interests such as CIT (NYSE:CIT) also are petitioning the SEC to be added to the initial list of stocks released Friday morning.
Now every Tom Dick and Harry with >1% of business financial will be screaming at SEC to get them on the protected list too.
So why don't we just skip these steps and put everyone on the short protection list?
Now AIG (NYSE:AIG) investors want to reverse the bailout!!! Because with the government eating the bad assets ... I mean with the government making a great investment that will work out in the long run... why should they suffer? What's next? Bear Stearns asking to be detached from JPMorgan? Lehman asking bankruptcy court to reverse their filing? WHY NOT?
Seriously folks - these events could not be sold as a work of fiction; no one would buy the premise. I
- at least other socialistic countries admit it. What a joke this all is. (Emphasis mine.)
- When Russia shut down its stock markets to avoid the global collapse sweeping the markets earlier this week, most of Wall Street shook its head. The move smacked of totalitarianism and artificial manipulation, such a brazen intervention wouldn't happen in a free market.
- Well, the Russians are having a good chuckle after Securities and Exchange Commission Chairman Christopher Cox, following the lead of the U.K.'s Financial Services Authority, initiated a ban in short selling for 799 U.S. financial institutions
- The move smacks of irony on several fronts. For one, institutions such as Morgan and Goldman regularly practice short-selling as part of their proprietary trading strategies. These firms made billions in profits by running hedge funds or serving them through prime brokerage operations. They shrugged when companies complained that short sellers were ruining their companies.
- Now, Morgan's John Mack and Lloyd Blankfein of Goldman not only won a ban of naked shorting, but of all shorting of their industry. They also have persuaded New York State Attorney General Andrew Cuomo to investigate short selling in the market place.
- ...the SEC is doing exactly what claims to be against -- manipulating the markets and propping up ailing financial companies. They're doing it because the banks are essentially backed by taxpayers and have become politically important.
- Our complaint through history about countries that try to influence their markets by changing the rules mid-game was that it was tantamount to cheating. For all of its faults, the U.S. markets were supposed to be the most level playing fields in the world. At least Russia shut everyone out of the game.
I wanted to begin today with a headline "The Death of Free Markets," but then I remembered I used that back in the fall when the Federal Reserve targeted shorts by announcing rate cuts or liquidity injections premarket at 8:30 AM so that people who were positioned wrong were crushed at 9:30 AM. Or when I used it during the Bear Stearns fiasco. Or during the... well, it's been long gone - I can't count the ways. This was just the icing on the cake for those who have not been paying attention. Disgusting, but SO representative of how this country works. If you pay, you own the decision makers.
We are a disgrace. All of us. Because we vote these people in and we don't push back. So we are rolled over. What an era.