Banana Republicans
by digby
Here is tonite’s theater of the absurd SEC headline:
SEC intends to temporarily ban short selling, but it’s not clear if the commission has approved the move. Cox is briefing congressional leaders. Separately, the government is seeking congressional authority to buy distressed assets.
This is nothing short of a total panic by people who have no clue what they are doing. And to think, I mocked Russia for being a nation run by market commies.
This is the ultimate bailout attempt, which will have repercussions far far beyond our imaginations:
1) We suffer a loss of Market Integrity; The US is now a Banana Republic
2) Blatant market manipulation: this is nothing more than an attempt to force markets higher;
3) 60 days prior to a presidential election? This is a none-too-subtle attempt to influence the elections — especially coming on top of the Fannie/Freddie bailout;
4) The coming pop will create a huge air pocket, ultimately leading to us crashing much lower;
5) Expect a huge increase in volatility — upwards first, then down;
We Are A Nation of Morons, led by complete Idiots, making us complicit in our own self destruction.
Getting rid of short selling entirely doesn’t make market meltdowns less likely. It makes them more likely. Just as letting banks use depositor money to shore up investment banking subsidiaries is throwing good money, your money, after bad. Just as allowing banks to book “good will” as regulatory reserves doesn’t actually change how likely they are to be insolvent.
Regulators are making decisions in the grip of stark fear and their critical faculties aren’t working anymore. Desperate to stop a meltdown at all costs they are making one more likely, and by letting banks gamble with depositor money, making it more damaging if it does occur.
Tomorrow should be fun.
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