happysoul77777

Bears Take the Upper Hand, For Now

The market should keep going down until Congress do the following things:



1. Modify the FASB 157 (mark-to-market accounting rule) to allow financial institutions to spread losses over the average life of their investments, rather than taking losses immediately even though the losses may be due to lack of liquidity. (The modification will lessen the negative impact of the rule on banks’ capital, but still rigorously require banks to deal with potential losses.)

2. Prohibit FASB accountants, SEC staff that are responsible for formulating accounting and trading rules from investing in hedge funds, or engaging in any short selling activities (to safeguard the integrity of the market.)

3. Re-instate the uptick rule to prevent bear raids (to prevent piling on and to lessen volatility.) The repeal of the uptick rule allows the synchronization of futures, options and stocks and the focus of selling including short selling on a few leading stocks. The sharp declines in a few leading stocks will create fears and uncertainties, and hence affect the sector, and eventually the whole market.

4. Eliminate loopholes in the legislation that allows naked short selling.
(The market makers currently can create counterfeit shares (phantom shares) to sell short any stocks for two days before they have to deliver the borrowed shares or close out their short positions.) Those who want to sell short must borrow in advance.

Tim Geitner's plan of getting troubled assets out of banks is not going to work (because banks do not want to sell their troubled assets for fear of losing good blocks of investmnets that are producing great cash flows.) You heard it first from here.