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Wall Street Breakfast: Must-Know News

Heads need to roll at the SEC. This crisis lands right at their door.

From John Mauldin (9/19/08):

Want to get really mad? Up until 2003, all investment banks were allowed only 12 to 1 leverage. Then in 2004, the SEC basically gave five banks (and only five banks) the ability to lever up 30 or even 40 to 1. Bet you can guess the five banks. Bear, Lehman, Merrill, Morgan and Goldman. Three down.

As Barry Ritholtz wrote: "So while the SEC runs around reinstating short selling rules, and clueless pension fund managers mindlessly point to the wrong issue, we learn that it was the SEC who was in large part responsible for the reckless leverage that led to the current crisis."

Wall Street Breakfast: Must-Know News

"Voters prefer Democratic energy policy over Republican by a ratio of 42:22."

The only strategy I have heard of is tax the evil oil company profits away. Government has already taxed ExxonMobil's record profits at the maximum corporate rate - taking $8B and leaving $10B. Go ahead and tax them at 100% and there will be no capital to invest in future exploration and alternative research. These "voters" have their collective heads in the clouds.

Two Moves to Make as the Fed Inflates the Commodities Bubble

The 1980 high was also tainted by the market-cornering attempt of billionaire brothers, Nelson and Bunker Hunt.

In Light of Peak Oil, Financial Diversification Is a Bad Idea

Six figure portfolio...90% invested in two energy-related companies(one Canroy, one GOM offshore driller)...up 40% since January. I believe you are on the right track.