SEC Retires 'Moron du Jour' Title

Panic-stricken regulator walking it back. Again.

So, after all Friday’s excitement, including the morning’s 5:56 am EDT press release, the following billet doux showed up at 3:45 pm EDT:

The commission staff is recommending to the commission a modification to its order prohibiting short selling in securities of specified financial firms. This modification would extend, for the life of the order, the exemption for hedging activities by exchange and over-the-counter market makers in derivatives on the securities covered by the order.

The main impact of the recommendation, assuming its adoption, is that it will allow options and swap markets, and products such as the inverse and double inverse financial sector ETFs offered by ProShares and Rydex, to function in whatever manner it is that passes for normal in these barmy days. It also effectively guts the ban on short-selling the 799 financial stocks (see Pp 4-24) but...whatever.

Of course, it’s not the first time in little more than two months Cox’s Band of Ignorami have been forced into rapid retreat on attempts to strangle short-selling. The exact same thing happened after the announcement of its Jul. 15 emergency order which eliminated the naked short-selling of Phoney (FNM), Fraudy (FRE) and the listed primary dealers.

Statement of SEC Division of Trading and Markets

US Securities and Exchange Commission

Press release Sep. 19 2008

Comments

[whidbey:]

Who else but the SEC could dream up toxic prohibitions? What is remarkable is that they apparently do not understand how the markets work given the normal operations. When the government in effect forbids a differing opinion in a market, it is time to pickup your money and go home. In fact, that is exacting what will happen. No shorts? will, No market. The rule of unintended consequences is unforgiving.

2008 Sep 20 03:01 PM

[fatcat:]

Oh boy,watch the volume in the financial short etfs...should be off the charts....for that matter,all financial etfs that offer options.

2008 Sep 20 05:25 PM

[sw-wizard:]

I agree with whidbey. It is remarkable these guys have about the same understanding of the markets that a T.V. journalist does.

2008 Sep 20 05:59 PM

[jim collins:]

It doesn't gut anything, the market makers have to be able to short to offset writing puts. England made the same exception. What this does do do is prevent parasitic short sellers from destroying perfectly good companies. The government did exactly the right thing.
Christopher Cox is far from stupid. He has an an M.B.A. from Harvard Business School and a J.D. from Harvard Law School, where he was an Editor of the Harvard Law Review.

2008 Sep 20 06:33 PM

[mangy cat:]

seeing as how harvard blue eyed darling mingo cavallo stuffed argentina down a hole, the only cambridge grads i trust were at mit

2008 Sep 20 08:12 PM

[bearfund:]

jcollins, good companies cannot be destroyed by shorts because they have adequate capital. The fact that anyone whose share price is seen as being too low to raise more capital is in danger of losing access to credit only means that these are not in fact good companies because clearly the market knows that they do in fact need more capital to survive. And since they can all borrow from the Fed at ultra-low rates, if they did have adequate capital then the only people who will lose money are the shorts because the companies could operate indefinitely even with a share price of $0.01.

Face facts, the banking system is insolvent and has been for a long time. You want to make a case for banning shorts, then acknowledge that it's an exercise in socialising risk at the expense of fairness, and make some kind of fuzzy leftist case for it. I won't buy it, but at least it will be honest. This argument is pure baloney.

2008 Sep 21 05:37 AM

[petyaczar:]

IMO

1)Immediately begin enforcing the uptick rule.
2)Reinstate Glass Steagall.
3)Raise margin requirements on ALL futures trading to a minimum of 50%. -not the 5% as it is on oil futures.
4)Make diverting $$ from the Social Security Trust Fund a CAPITAL OFFENSE punishable by public hanging televised live on C-Span,

Doing (4) will make everyone feel better, and cause Congress to STOP STEALING TRUST FUNDS, and thereby eliminate the pending social security crisis.

IMO

2008 Sep 21 08:21 AM

[eddie6442:]

As an EMERGENCY action our government could have:
[1] suspended SARBOX FOR 12 MONTHS;
[2]suspended FASB157 for 12 months;
[3] reinstated UPTICK RULE;
[4] prosecuted NAKED SHORT SELLERS;
FINANCIAL COLLAPSE would not have happened!!!!!

2008 Sep 21 08:21 AM

[azcaballer:]

jcollins01

Harvard MBA = Smart?

What about George W. Bush, if he can earn a Harvard MBA what does that say about the other holders of Harvard MBA's?

2008 Sep 21 08:22 AM

[petyaczar:]

Azcaballer,

RE: Harvard MBA's They are smart AND well educated.

As my dad - a drill press machinist - said upon my graduation from Harvard business School

"Well, if you had to go to a vocational school, at least you picked a good one"

BTW GW Bush is a multimillionaire many times over, one time owner of a major professional sports team, AND 2x elected Gpvernor of Texas, AND 2x elected President of the U.S.A.

I just bet those accomplishments make him more successful and richer and smarter than you.

Not bad for a "dumb guy" (sic) just think what GWB could have accomplished had he been "smart"(sic).

ROFLMAO

2008 Sep 21 09:07 AM

[UFO1:]

ITS BS after BS after BS Get the Gov out of WALL ST.
their biggest donors live and work there

2008 Sep 21 09:17 AM

[lonie:]

It appears mostly Harvard and such MBAs are mostly responsible for much of the predicament we are in now . Maybe we need a few Machinest ,mechanics , farmers and a prostitute running things. At least they know how to fix things!

2008 Sep 21 09:22 AM

[azcaballer:]

petyaczar

Maybe I'm not as smart as your illustrious self, after all you have to be smart you went to Harvard right. You Ivy leaguers do like flattery after all. I asked a rhetorical question, and by your response touched a nerve. Yes GWB is a millionaire and so was his daddy and his daddy's daddy, so what.

If I were a Harvard MBA as you state that you are. I would be a little disappointed that my University is getting this kind of press from their graduates. I bet you wish you picked Columbia! At least then you could say you went to the same school as Buffet.

I wish you luck defending your fellow Alum Bush and the wonderful job he's been doing as Chief executive of the US.

2008 Sep 21 09:37 AM

[venividivici:]

Everything George Bush has, has been delivered to him on a silver platter. This amiable dill has an MBA (Harvard should hang their head in shame) but has said more than once that he does not know much about "economicks". Over the years, when asked about the state of the American economy he has repeated again and again, "the foundations of the US economy are sound". Because that's all he knows and he has been proved to be TOTALLY WRONG. This man is a blithering idiot, he is going to leave office with the economy teetering on the brink of total collapse, or maybe it will collapse before he retreats to the farm. He will go down in history as the worst president the US has ever had.
As for the merits of being rich, many of those parasites on Wall Street who created this disaster, are filthy rich as a result and they are not returning one cent of their ill gotten gains no matter how bad this gets.

2008 Sep 21 09:37 AM

[petyaczar:]

Dear Azcaballer,

No "maybe" about it. - "definitely" would be a more appropriate word.

I replied tongue in cheek, but apparently that went over your head as well.

PS I never said GWBush did well as President, I merely pointed out that he is a lot smarter and richer and more accomplished than you are.

Columbia personally, I wouldn't take a dump in that leftist commie rat trap pretending to be a real university. dullard dimlibs is what columbia specializes in IMO.

PS GWBush -as President - was dealt a really bad hand and then he proceeded to play it poorly. Just as Bubba clinton was dealt a really great hand - thanks to Ronald Reagan and Bush 41 - and clinton proceeded to play that hand very poorly - setting up 911 and the current financial panic. IMO

2008 Sep 21 09:48 AM

[petyaczar:]

PS: I find it very funny that the 3 richest men in the world all either flunked out of or were denied entry into Harvard.

Gates -dropped out
Buffet - denied entry
Gates buddy Allen? - dropped out

2008 Sep 21 09:51 AM

[Insiderman:]

Harvard has affirmative action for not-so-smart kids with rich parents as well as for community organizers that don't happen to be white. It's not the education at a school so much as what you do with the knowledge. And knowledge, after all, is NOT the same as wisdom.

GWB got infected with the same kind of do-goodism that Obama inately possesses. Without his expansion of the No-bad-mortgage-left-b... Act, FNMA and FHLMC would not have had the mandate to expand the do-goodism of the Clinton Administration that started this mess.

I further agree that the exception to market makers for short selling is necessary to OFFSET risk in their positions.

My big knock against Cox is that he didn't enforce the naked short cover rules and didn't better police recognition of risk and capital requirements among firms that took it.

2008 Sep 21 09:55 AM

[notsosmart:]

you can call them anything you want.they laugh all the way to the swiss bank.smart or dumb makes no difference.the dummies are the beer(belgium)swillers who fill the stadiumsas the romans filled the coliseum,& reelect the same fools to give them a 9% approval rating.these fools then ok the"brownie,youre doing a good job"charactersho oversee the mess.as an indepedent voter i think this is all abe lincoln's or g.washigton's fault.LOL.

2008 Sep 21 10:16 AM

[azcaballer:]

Petyaczar,

Lovely reply, and tongue in check to. Woops, maybe that went over my head ...I didn't go to Harvard after all.

Amazingly, Columbia is more left wing than Harvard. Wow, I'm learning so much from you. Didn't Obama go to Harvard?

Thank you also for the chronology of excuses for Bush, always good to see you Harvard guys sticking together! It's kind of touching in a way.

By the way, I'm sure Columbia will be honored to find out about your commendation ( and respect for decency) to not defecate any where near their university. I am in turn, impressed by the stunning use of the English language that you've exhibited.

Tell me, what are the differences between your beliefs and fascism?

2008 Sep 21 10:17 AM

[petyaczar:]

AZCABALLER,

I would be happy to educate you the differences between a Constitutional Centrist and facism, But first you must prove to me that you even know what facism is: so please provide your definition and if it suffiiciently correct we may proceed.

You seem to have a bad case of harvard envy! - get over it. you'll never get in now as your name is on the black ball list.

PS I said I would never even take a dump IN the place, much less near it. Your cognitive reading skills are apparently also deficient.

Now quit playing on your company's computer and go back to getting those floors mopped before the offices upon up tomorrow.

ROFLMAO have a nice day.

2008 Sep 21 10:25 AM

[azcaballer:]

I can't wait to read your article to "educate you the differences" on what it is to be a "Constitutional Centrist" (you made that up didn't you), and facism. Please, let's use your definition.

You're right, I wanted to go to Harvard and then maybe I could tell everybody I went there and they would think I'm smart just like you.

PS I have nothing against Harvard or any other University. You mentioned cognitive reading, strange? I originally posted the idea "tongue in cheek" to point out that your Alum Bush is an idiot despite attending a great university and that Harvard has nothing to do with being smart, as others have pointed that out as well as yourself. Carter has actually turned out to be a better president, that is amazing work.

You lack confidence in your opinions and beliefs if you didn't you wouldn't resort to belittling and name calling. I concur with your opinions in your earlier post about how to fix this mess, however the public execution comment was repulsive, even if it was "tongue in cheek".

2008 Sep 21 10:59 AM

[petyaczar:]

Au Contraire,

A few politicians (Congressmen) hanging around would stop the remainder from continuuing to steal $$$ from the SS trust fund, make every one feel better, and completely eliminate the pending bankruptcy of SS.

This country is on the road to potential financial collapse. We were put there by FDR and the New Deal and now Hard decisions are required to fix big problems. We used to hang horse thieves in this country - and guess what - horse thievery is way down.

Also kudos to the guy who added = "Get rid of Sarbanes/Oxley.? That piece of garbage legislation has significantly increased the cost of doing business, while adding not one iota of utility to the corporate oversight process.

Constitutional Centrist is a political philosophy that has been around for some years. Its an outgrowth of Libertarianism.

So, as I suspected, you do not know the operative definition of Facism. Get a political text, learn and then maybe we can discourse on the differences. After all if you don't know the "eigenvalues" of either side of the equation, how can you possibly understand or add to a discussion characterizing the significant differences between the 2 states?

As a suggestion: Focus on differentiating the concepts of Rule of Law vs Rule of Man.

PS Allowing some preferences for qualified applicants = kids from Alumni and rich donors IS NOT AFFIRMATIVE ACTION . It is ENLIGHTENED SELF INTEREST. Normally called a quid pro quo.

Have a nice day.

2008 Sep 21 11:28 AM

[~6979~real one:]

"...Reminiscences of a Stock Operator 2008...


...in my opinion......


1) Thousands of bad mortgage loans were distributed throughout the US...for many many years(hence the real estate boom of the 90's)...(some of these absolutely ridiculous loans where given to people that would never have considered the obligations/ payments if they would've known how bad the economic conditions could possibly get in the coming years thereafter...) Most of these arrangements were orchestrated by the ever so increasingly swift industry of real estate brokers...Real estate brokers get paid mostly by performance...the more loans they dish out...the more income they bring in...regardless of whether or not the borrower can ever pay the loan back...real estate brokers get paid right then on the spot...their financial responsibility ends there after closing...

2) Real estate companies (which often are financed by banks...) then proceed to package these mortgage loans...in to thousands of debt mortgages bundled up in to one package...These debt packages are then given a name...names like 'High Enhanced Real Estate investment packages/Funds'...inst... of a more proper/ name, like, mortgage loans that were orchestrated by American Real Estate professionals that really don't care about the outcome of the future of the loaned capital or the true reliability of the borrower (as long as they get their fee)...

3) These highly sophisticated packages are then sold globally for hundreds of millions of dollars to financial institutions...Sometim... they are sold over and over again to different financial institutions of the world...The names of the packages as well as the current selling value of the packages will change and/or fluctuate over it's life...the only thing that does not ever change is the package's Intrinsic Value...(Look up Benjamin Graham to understand Intrinsic Value in greater depth)

4) Years after these highly speculative packages are created,the American real estate market basically crashes; after an amazing, capitalistic, greedy, 10 year rally...this market still has not registered a precise bottom...

5) So not only are some of these Individual American mortgage holders still paying the payments of the original 200 - 600 thousand DOLLAR Loans,but the value of their property is down almost and sometimes over 30%... For example: a $300,000 property now sells for $210,000.So if the borrower wanted to exit the financial obligation, they would be forced to swallow a huge loss...a lot of people simply give up and are protected by the bankruptcy laws...the financial institutions that intended to receive their capital back with interest now take a complete loss on their investments...when this happens in economies of scale, the results are devastating...

6) Unbelievably, a lot of American financial institutions are saddled down with these absurdly risky Real Estate Debt Packages...It was correctly analyzed by many different American financial regulatory bodies that if the government allowed all of these financial institutions fail, it would in effect result in an American Financial Meltdown...

7) Instead of allowing that meltdown to come in to reality, the regulatory bodies have decided to intervene and effectively save the system...(for instance, ~AIG~ is a financial institution that was in dire straights...the FED decided to print 85 billion American dollars to basically save them...) The US government has recently announced that it is intending to secure the debt of a vast diversified list of American Financial Institutions...some may need way more than ~AIG~...

8) OK, so problem solved right? Wrong...another policy change that is also recently in effect is the banning of short selling within a lot of stocks; temporarily focusing on the finance sector. So a lot of other financial institutions that specialize in shorting sectors where due diligence reveals vulnerable industries are basically hung out to dry...hedge funds , ETF's, and astute mutual fund's are some of the people that are directly affected by these new policy changes in a huge way...so the motto is to burn shorty right now...

9) What if the shorties and all of their global network of financial institutions (trillions of dollars) get together and hold a revolutionary cash revolt??? In other words, the U.S. government has effectively guaranteed the financial backing of the financial industry. This guarantee is directly related to tax payer money...How much money will have to be printed is unclear...Quite frankly, if there is anyone on earth that could project an accurate monetary figure that turned out to be true is not only very intelligent but also may have some sort of psychic powers...If many countries or hedge funds liquidated assets at the same time globally...the market would crash terribly and tax payers would now be forced to pay the price because no longer does the FED just simply create money...they now have the ability to speculate in the global markets...If these powerful financial groups choose to interpret this new policy positioning as a threat, then the market as we know it is definitely in trouble...what would make it even more of a slap in the face is if they switched their liquidated currency from ~USD~ into other currencies such as the Euro or the Franc...a double whammy so to speak...And the whole time that all this potential selling is going on, there is absolutely no bottom that can be realistically identified because of the lack of short positions...

10) One of the biggest and saddest risks with everything that is going on, is that the policy changes that are now in place for the financial industry ( and supposed to be only intended for the financial industry's use) are now being craved by any failing public company in the American market...Many failing companies that have absolutely nothing to do with the financial industry are trying to get get on the US-Tax-payer-save-us-b... far is this shorting policy going to go??? If Enron was still around with the same issues, would they be considered for a rescue too???


11) Example of Government Intervention: In the Rich Man's Panic of 1907, J.P. Morgan, acting as America's de facto central banker, personally implored Livermore to stop selling-short. He made 3 million dollars in one day during the panic. This lead to his being known as the Great Bear. In 1919 President Woodrow Wilson invited Livermore to the White House to request that he unlock his successful (and at the time, legal) corner of the cotton market, for the well-being of the nation. Livermore sold the stock market short before the crash of 1929, and entered the depression with $100 million in cash.
The government established price controls to Bogart the cotton market away from Jesse Livermore...cotton could only be purchased at a limited price.Livermore would have made an unimaginable great fortune if the cotton market would have been a free market...


12) October 1929...October 1987...October 2008..."

~6979~
If the US can put their toes in the water...they can jump in too...never heard of the US blindly following Europe so easily...if this short-banning plan doesnt work, who gets hurt more? Europe? Australia? Or the US?

Its just ridiculous. If the government is effectively backing the financial industry, what difference do shorts make? They are doing the right thing by backing the financial industry, but the wrong thing by messing with the system...

NSS is always an issue, because sometimes market makers are forced to go long when people sell...so on the reverse side, it is just as crucial for them to be able to short...Think about it, market makers are forced long...they have to be forced short too...how can any regulatory body monitor and make sure that every single transaction is vouched for in thousands of stocks (every second of the day)?...especially on a high volume day...nothing is fully figured out until the dust settles when all of them straighten up their books...have to be careful discussing it all...or next thing that we know, there will be a new regulatory body to do certain parts of the SEC's job...

JMO...
Wish they would figure something out...banning it is pure meddling.
Knee-jerking government policy changes have not had the best performance rate in the past...All the policy makers that are only good at winning elections need to sit down with people that understand the markets and discuss serious cause & effect consequences pertaining to these genius recent policy changes...Are they looking three moves ahead?...or are they just snatching a pawn off the board...are they looking one move ahead?
A potential strategy...

Target failing US companies that the FEDERAL RESERVE may one day buy out...or as they say, financially back...

...I am very open to all suggestions...where are the Enrons & the Worldcoms when you need them...

2008 Sep 21 11:56 AM

[flyboy404:]

I am fairly new to trading (1.5 year) and I received my first healthy dose of reality November 1, 2007 while following the advise of a chip perma bull and in a short 3 week period my account was decimated, cut in half by premarket gap-downs, sell off's and promised "to the moon" rebounds that never happened.

Around December 1, I discovered a little dark secret about the market. Jim Cramer (mad money) was the first talking head to mention the secerative removal of the up-tick rule and no apparent SEC control or enforcement over naked short selling that was driving the markets down.

My question to Mr. Cox, why did the up-tick rule get removed? I wrote Mr. Cox with this question in March. The answer I received was a canned reply. "The SEC deemed to up-tick rule no longer useful in todays makets, and no data suggests any adverse effect on market actions by the removal of this rule". (((BULL CRAP))) I'd think these rules should curb most of the watershed market depreciation.The massive decline could have be lessened to a great degree if these tried and proven rules had been in place and enforced.

Of course the horse is out of the barn now. The back room boys and dark pool groups have really stuck it to the average company, small investor and most note worthy, the retirement accounts. I do think the worse, maybe some money passed under the table to the right policy makers or some IOU's were called in by the backroom boys. That is the only possible answer! MR. COX wake up to the real world!!

In my humble opinion, Congress should fire COX and put a gag order on Greenspan, reinstate the uptic rule and kick some SEC butts until they do their job controlling enforcement of existing rules!!!

2008 Sep 21 12:03 PM

[svkoho:]

Greaat posting and some really fine comments. Thanks guys. It's OK to rail against the morons we elected but the whole financial and cultural model is imploding.We elected these morons. Ergo, we are morons, or at least a lot of us are.You're on your own out there folks. Make sure you have plans in place to take care of yourself and your family. This no longer just a problem or even a series of problems. It is a predicament that may not have a solution. Have a nice day.

2008 Sep 21 12:08 PM

[Ginger:]

Bearfund:
Please take note. Most companies can't be hurt by being shorted. However, when the financials are shorted the analysts begin to think there is something actually wrong with them and there's a reason for the drop in share price. So the analysts downgrade the financials, which in turn causes their bonds and all their other means of raising capital to be downgraded. Which in turn makes it extremely difficult for these banks to raise the additional capital. Yes they were irresponsible in the first place and got themselves into a position where they desperately need capital, but the naked short selling only make their dire situation worse.

2008 Sep 21 12:16 PM

[carey_jim:]

Some random comments.

The FDR legislation didn't end the Great Depression, American victory in World War II probably did.

The Republicans have veered to the far left, not the Democrats.

Changing the rules to try to produce a "no-lose" financial system is worse than futile, it is absurd.

People go to Ivy league colleges to gain and preserve status, not to receive an education.

A bus driver can get a better education than the average college frat boy by reading books at night after work.

2008 Sep 21 12:27 PM

[ain't no fo...:]

jcollins01... Great post!!!

Wow, and you even got overtime pay for doing it on a saturday evening... what's the SEC pay their employees for Saturday nights, time and a half or double time?

Better get back to work early Monday, there will be a lot of shorts to "persecute" in the words of your glorious Hahvad MBA leader.

2008 Sep 21 12:37 PM

[petyaczar:]

We are all frustrated, a bit scared, and venting = acting out. It's healthy.

I am glad they put it to the shorts - because Iwas long many options positions last week = all Sept exp.

But here are -IMO - the overriding salient macro points of this whole financial crisis.

1)Its very real
2)Its global
3)The potential precipice is very high - its a long way down.
4)Our politicians are stupid and ignorant -for the most part
5)Paulson and Bernanke are probably the 2 most knowledgeable, connected, and experienced individuals we could possibly have in their positions.

SO!!! To all I say there is good news and bad news.

First the Good news: do not be afraid,
don't worry be happy. - Mon!

Now the bad news with thanks to Martha and the Vandellas

No need to be fearful because there's "No where to run to baby, no where to hide" we are far past that.

Have a nice week.

2008 Sep 21 01:13 PM

[User 215614:]

Who is calling the shots? Has anyone wet their middle finger and pointed it towards the sky? Does anyone know what they are doing? Or, is this another example of controlled chaos.

2008 Sep 21 02:43 PM

[Ginger:]

I agree, the Republicans are going to the left. They are going Socialist with their bailouts. But of course, this is socialism for the rich. The rest of us are going to have to pay. This will be McCain's excuse for privatizing retirement funds, ending social security benefits and forget about universal healthcare. Just as long as he protects the billionaires and CEOs who get to walk away from this mess. I think everyone should face the facts. We are all poor now.

2008 Sep 21 02:51 PM

[woodsey:]

Y'all have more fun than we do here in takes us.

2008 Sep 21 04:19 PM

[notsosmart:]

i hear music in the distance.it must be the fat lady.

2008 Sep 21 05:01 PM

[userb:]

Ginger, where do you get this bs? Oh, you sound like one of the short-sellers who got caught. Let's face it, neither political party has a lock on stupidity. There is much fault to go around... starting with Greenspan, Congress, the Fed, the SEC and definitely....the rating agencies.

Fortunately, we will get through this mess.

2008 Sep 21 05:16 PM

[neeb??:]

It does't matter where one gets educated( dare i call it---indoctrinated?) it matters more where one gets WISDOM. There is damned little of it around.
Instead we have greed and fear, what a wonderful collection...

2008 Sep 21 06:05 PM

[Bill Herbert:]

"It is remarkable these guys have about the same understanding of the markets that a T.V. journalist does. "

No kidding. Sometimes I think Michelle Confuso-Calypso knows more about the markets than Cox and Bernanke do, after this pair of jackasses has wasted two careers on law and economics, respectively.

Cramer had a funny line the other day - he said that Bernanke is "a Debating Society guy from the University Club" - hilarious, and soooo true!

2008 Sep 21 06:22 PM

[PK de C'ville:]

"I just bet those accomplishments make him (Bush2) more successful and richer and smarter than you. "

F^&%*&%king up our country - Priceless.

I regret he's too ignirantly conceited to realize what he's done. He'll probably live the reat of his life happy with the job he did.

"Bushie, you've done a heckuva job."

I wonder whether having someone other than Cheney run the country might have worked better.

2008 Sep 21 06:45 PM

[bbowen7:]

And whatever happened to the rating agencies? It seem to many that the biggest problem in the subprime mess was that the companies whose job it was to evaluate the quality of the paper were asleep at the switch, yet people (perhaps because bureaucrats had their cover and cou;dn't be blamed for buying AAA CDOs) believed them. And the fundamental problem for them is that they are paid by those that they rate. So, does anybody want to do anything about this?

2008 Sep 21 10:05 PM

[califstuart:]

I've read 90-95 % of these replies and I know I'm not as well educated as some of you, so I just have three questions to ask:

Are some suggesting a return to Adam Smith style economics?

Should our tax system be progressive, based on "social good"?

Would the bill for Iraq and all these bailouts have paid for protecting my
"Baby-boomer" Soc. Sec.???

Ya, I'm a product of the sixties and it shows...

2008 Sep 21 10:12 PM

[chinooking:]

russia needs another petty-czar .pettyaczar,hope you own a little of that floor you are rolling on

2008 Sep 22 08:57 AM

[petyaczar:]

califstuart,

Yes. Adam Smith with Glass Steagall, full margin requirements and the uptick rule with no SARBOX. But not at the mmiediate moment as we are almost at the point of a financial panic.

No "not on social good". The tax system is already too confiscatory with the top 3% of most productive tax payers (top income group) paying over 50% of personal income taxes, and the botttom 50% paying essentially nothing in personal income taxes. How much more do you want from the "hated rich"?

Social Security is a ponzi scheme in which the schemers have discovered they can steal from it at will and with impunity. So either stop them from stealing from it in the future and/or privatize it. Currently you put the money in, the politician/crooks just take it out, spend it and leave you holding a worthless IOU . IF this were a private Trust fund, the trustees would all be in jail.

"Socialism for the Rich" is an oxymoron, a dimlib label to confuse the bread and circuses crowd. There is no such thing as it is their money in the first place, they earned it.

Since 1945 the politicians have managed this country into bankruptcy.
Consider this proof:
1940's FDR = Americans may not own gold
1962 JFK gets U.S. into Vietnam war by changing a few U.S. observers into many U.S. armed advisors. (PS we won in Vietnam0 just ask the Soviets, if you can find them)
1968 LBJ = Its ok to steal from Social Security to fund Vietnam war
1971 Nixon = $35 dollars = 1 once of gold, but the dollar is no longer pegged to a gold standard. Its "free" from the burden of gold reserves.
2008 ALL = Approx $900 dollars required to buy 1 once of gold
SO NOW THE DOLLAR IS WORTH ABOUT 3 CENTS COMPARED TO ITS 1971 WORTH.

That is why $30,000 houses are now "worth" $1million and why a "nickle bag" now costs over $100.

Remember "trickle down" beats "pissed away" any day

Peace and Love,

2008 Sep 22 09:06 AM

[williambanzai7:]

How The Grinch Almost Killed Wall Street
(How the Grinch Stole Christmas revised by
William Banzai7)
williambanzai7.blogspo.../

Every Banker down on Wall Street Liked CDOS a lot...
But the Grinch,Who lived just north in Greenwich, Did NOT!
The Grinch hated those investment bankers for a whole list of reasons!
Now, that is why we are having this exciting fall season.
It could be his trader head was screwed on just right.
It could be, perhaps, that his white shoes were a little too tight.
But I think that the most likely reason of all,
May have been that his NAV was 12 sizes too small.
Whatever the reason, His smarts or his shoes,
He stood there last week, hating all Wall Street's Whose Whos,
Staring down at his trading NAV with a sour, Grinchy frown,
Detesting those warm lighted screens in Wall Street town.
For he knew every Captain down in Wall Street beneath,
Was busy now, trying to sail through the great Subprime reef.
"And they're firing their traders" he snarled with a sneer,
"In three months its Christmas! It's practically here!"
Then he growled, with his Grinch fingers nervously drumming,
"I MUST find some way to give those investment bankers a drubbing!"
For Tomorrow, he knew, all the Whose Who of Bankers,
Would wake bright and early. And rush to save all their bonus earnings!
And then! Oh, the noise! Oh, the Noise!
Noise! Noise! Noise!
That's one thing he hated! The NOISE!
NOISE! NOISE! NOISE!
Then the Whose Whos, young and old, would all fly Far East.
And they'd try to talk Korea and China into feasting on trading book yeast!
And they'd feast! And they'd FEAST!
FEAST! FEAST! FEAST!
They would feast on champagne and rare banker roast beast.
Which was something the Grinch couldn't stand in the least!
And THEN They'd do something He liked least of all!
Every Who down in Wall Street, the Bulls and the Bears,
Would stand close together, with opening bells ringing.
They'd stand hand-in-hand. And the Whos would start singing!
They'd sing! And they'd sing! And they'd SING!
SING! SING! SING!
And the more the Grinch thought of this Singing,
The more the Grinch thought, "I must stop this whole thing!"
"Why, for year after year I've put up with it now!"
"I MUST stop a Wall Street bailout from coming! But HOW?"
Then he got an idea! An awful idea!
THE GRINCH GOT A WONDERFUL, AWFUL IDEA!
"I know just what to do!" The Grinch laughed in his throat.
And he made a some quick calls to spread rumours of unkown CDS stew.
And he chuckled, and clucked, "What a great short seller trick!"
"With this phone and this screen, I'll batter those Wall Street Dicks!"

"PoohPooh to the Whose Whos!" he was grinchishly humming.
"They're finding out now that no Chinese Knight is coming!"
"They're just waking up! I know just what they'll do!"
"Their mouths will hang open a minute or two,
Then the Whos down in Wall Street will all cry BooHoo!"
"That's a noise," grinned the Grinch, "That I simply MUST hear!"
So he paused. And the Grinch put his hand to his ear.
And he did hear noises over the trading screen glow.
It started low. Then it started to grow.
But the sound wasn't sad! Why, this sound sounded merry!
It couldn't be so! But it WAS merry! VERY!
He stared down at Bloomberg and Reuters! The Grinch popped his eyes!
Then he shook! What he saw was a shocking surprise!
Every banker down in Wall Street, the longs and the shorts,
Was singing! Without any White Knight at all!
He HADN'T seen a Big Wall Street bailout coming! IT CAME!
Somehow or other, it came!
And the Grinch, stood puzzling and puzzling: "How could it be so?"
"It came with out tickers! It came without a tab!"
"It came as Federal largesse in boxes and bags!"
And he puzzled three hours, till his puzzler was sore.
Then the Grinch thought of something he hadn't before!
"Maybe a Bailout," he thought, "is not just for financial Whooers"
"Maybe Fed bailout...perhaps...me... a little bit more!"
And what happened then? Well...on Greenwich Main Street they say,
That the Grinch's taxes grew 12 sizes that day!
And the minute his wallet didn't feel quite so tight,
He whizzed with his Lexus through the South Bronx morning light,
And he met those Wall Street boys for a Smith & Wolensky feast!
And he, HE HIMSELF! The Grinch carved the beef!

2008 Sep 23 12:25 AM