SEC bans short selling in financial stocks -- why stop there?

THE ELEPHANT IS STILL IN THE ROOM!
The next big catastrophe is imminant--credit card collapse. The banning of short selling will only bring optimism in the market until the the next crissis, which will be the complete gutting of the credit card fiasco. For too long, the government and industry has turned their heads about 30% plus interest rates. This scandalous practice will bring down Wall Street one more time--the final bounce.
David Jones, Pecatonica, IL

Wall Street is a rigged casino. It is so obvious now a blind man can see it. They get to cash out their chips while the government buys them time. Do the same fellow Americans. When the next shoe drops it will drop on you.

Come on, Zac. You cannot be so shallow as to think that the chaotic trading patterns of the past year are a result of anything other than manipulation by a consortium of traders acting in concert to destroy financial markets. There are forces out there who would sell their children short if they thought they could profit in the transaction.

Manipulators should never have been allowed to make naked short sales. And the uptick rule should never have been discontinued. Whoever is sworn as President in January, as soon as he removes his hand from the Bible he should fire SEC head Christopher Cox.

Hoxsie,

Thanks for the comment.



If you "traders acting in concert", you mean "major financial institutions making horrible investments and less than prudent loans", we agree. What do hundreds of billions in writedowns have to do with naked short selling? NOTHING.



The President actually doesn't have the Constitutional authority to fire the head of the SEC but it's a non-issue: Cox has already said he'll resign at the end of Bush's term.

Hmmm. I agree with Zac AND Hoxsie; short selling adds efficiency and "honesty" to the market -- to the price -- but also allows for manipulation (all one has to do is whisper a dirty word about a stock and the Media -- or the rumor -- blows it out of proportion. A short seller -- ear to the track -- jumps on this false presentation, regardless of its validity, and takes advantage of the emotional factor in market trading. Maybe a solution would be simply to buy the good stock and sell the bad stock and leave it at that? Let the bad stocks just wallow in the mire.

All transactions pertaining to money should be understandable to a person graduating from highschool with at least a c+ average. Extremely and very few could understand the concept of "short selling" and the practice should be banned. You should either "buy or sell."

what we need to do is just create a bull market, no selling , just buying, it works like all streets in new york city will be made one way to the g w bridge that way we help the traffic problem in nyc thus erradacating all traffic issues, so now we just buy and no selling stocks, and further more pres bush dont like no ticks , so we ant gonna have no tick problem on his wqtch, up or down, well maybe a down tick might work better, investors might want to get some stock in the paper company that prints our currency, it will be busy printing it up, and i think we should have bush on one side and s.e.c boss cox on the other side of the new funny money a 99 dollar bill the other dollar goes to congress for a bail out fund. also i think that the bail out of the likes of merill , morgan, fannie and freddie, should get the ceo s a great gold para chutte that they are certainly intittled to after borrowing 30 to 1 loan from the govt to re let it out to unworthy home buyers that live in water front homes that they cant afford, not to worry , hurricanes will take them out , and govt will loan them more money to rebuild their homes on the beach, , dont forget to vote and vote often for the canadates who will run the country further into the ground, god helps those who helps themselves to your money

what we need to do is just create a bull market, no selling , just buying, it works like all streets in new york city will be made one way to the g w bridge that way we help the traffic problem in nyc thus erradacating all traffic issues, so now we just buy and no selling stocks, and further more pres bush dont like no ticks , so we ant gonna have no tick problem on his wqtch, up or down, well maybe a down tick might work better, investors might want to get some stock in the paper company that prints our currency, it will be busy printing it up, and i think we should have bush on one side and s.e.c boss cox on the other side of the new funny money a 99 dollar bill the other dollar goes to congress for a bail out fund. also i think that the bail out of the likes of merill , morgan, fannie and freddie, should get the ceo s a great gold para chutte that they are certainly intittled to after borrowing 30 to 1 loan from the govt to re let it out to unworthy home buyers that live in water front homes that they cant afford, not to worry , hurricanes will take them out , and govt will loan them more money to rebuild their homes on the beach, , dont forget to vote and vote often for the canadates who will run the country further into the ground, god helps those who helps themselves to your money

what happened to the uptick rule and i would suggest that it be larger than an .01 to enforce on the young geniuses in wall st who run hedges and apply it to all big board stocks and also nasdaq ... lets get real and apply stricter regs to all loan applictions including mortages car loans and make the lender in the first instance guarantte down payment

The banks got in trouble because there was housing build that was not needed and should never have been built. Subprime, no money down was the only way to sell it, and we still have excess. City goverments greedy for tax, issued building permits that should not have been issued.

Short selling should be categorically illegal. I don't see that it adds ANYTHING at all to efficiency, but is merely a manipulation tactic. If you don't own it traditionally, you should not be allowed to trade it. And...I intend to make the banning of this practice along with MANY others a prime directive of my life. As an ordinary citizen who does own stock ethically, I am tired of being manipulated by the fat cats on Wall Street! Between this latest bunch of crap and the S&L bailout of the 1980s, I am sick to death of paying for this insanity! Go make your money digging ditches! The rest of us are sick to death of this crap!

Naked Short sellers are a plague on the stock market. They are the ones that create the false rumors and spread them . Cox and his cronies need to bring back all the rules and safeguards concerning naked shorts and enforce them!!
Die Naked Shorts Die!!!!!!

The Up Tick Rule Shoule Come back-

Check out www.bring-back-up-tick-rule.com

Quick or "Short"-Fixes Won't Avert Financial Crisis. We Must Look at the Financial System as a Whole.

As the former Assistant Director of Enforcement at the SEC, I have seen first hand how rampant short-selling can affect the market; although, I do not agree with the notion of regulating short-sells by stopping them altogether. This idea is short-sighted and does not address the underlying issues of how we encourage short selling not as a tool for greedy traders but as a way to rekindle interest in a very cautious market. The SEC's move to ban short-selling, something that goes against market principles, does indicate that an earnest reevaluation of the entire financial system is in order. For this we need a team of regulators, and economic experts from a broad cross-section of institutions, willing to come to the table to find answers to the problems therein. We have heard from Secretary Paulson and Fed Chairman Bernanke, but the other players like SEC Chairman Chris Cox, the International Monetary Fund, the World Bank and other global institutions that are important to managing this crisis remain on the sidelines.

Questions need to be raised as the Congress and Bush administration debate this bailout plan such as what is the true size of potential losses on sub-prime mortgages and other loans. Some estimates put the total at over $1.5 trillion. The failure of Bear Stearns, Lehman Brothers has raised the question of whether US regulators now consider the remaining banks and bank holding companies at risk. Who could be next and are there checks and balances in place to address those failures? These large institutions play a much larger role than ever before in our financial system by issuing securities, packaging mortgage and credit-card loans, and other financial packages. The preparation for this can only come through a comprehensive economic strike force that can offer the leadership that is currently lacking within our federal institutions.

Michael F. Perlis
Partner
Stroock & Stroock & Lavan, LLP

And someone needs to be looking out for the little guy in all this. Selling should not be banned but abusive short selling should be permitted as those manipulators can and do control things. Did you know that $10.867Trillion dollars are now run through "quant" models? What about the $3 Trillion hedge fund industry still unregulated? That's why we wanted to do something for the retail investor. Teach them to ALWAYS have their exit strategy in place. The markets are no longer the markets of previous generations. So we built a simple to user service that hides a sophisticated back-end so that the mainstream investor could have something turnkey in an "intelligent, self-adjusting exit strategy". Hopefully we have accomplished our goal with our recently launched SmartStops.net. We welcome your feedback. http://www.smartstops.net

An asset is to be bought and sold. The concept of shorting does not bring efficiency to markets. Why don't we create the ability to short other assets like homes or cars? Probably too cumbersome to day trade for the hedge funds. Shorting only adds to the aura of Wall Street being a Casino with the only difference being 3 piece suits. Just buy and sell and the price will arrive at a free market equilibrium. Simple but correct.

I think now our country has put itself in the position to be mocked as the failure of capitalism realized, just as the soviet union was/is mocked as the failure of communism/socialism realized. As long as continue to adopt a financial system that consists of so many corrupt and unethical practices, like naked short selling, we're headed for economic, as well as social self destruction.

Mr. Perlis, what does short selling have to do with market principles? I don't remember reading about short selling in economics class. Honestly, how does short selling help a long-term investor, the only type worth protecting? It's just legalized gambling. But in Vegas gamblers only hurt themselves, not others.

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