Just Ban Short Selling Altogether!
Gary Kaltbaum is an investment advisor with over 18 years experience, and a Fox News Channel Business Contributor. Gary is the author of The Investors Edge. Mr. Kaltbaum is also the host of the nationally syndicated radio show “Investors Edge” on over 50 radio stations. Gary is also editor and publisher of “Gary Kaltbaum’s Trendwatch”… a weekly and monthly technical analysis research report for the institutional investor. If you would like a free trial to Gary’s Daily Market Alerts click here or call 888.484.8220 ext. 1.
I had several titles for this commentary but they included almost all of George Carlin’s seven words you can’t say on television… so I settled for the easiest. Sooooo… why not? Let’s just ban selling. Let’s just go all the way in rigging the free markets in order to raise the prices of bad companies. That’s the goal isn’t it? Since it is all the shortseller’s fault, let’s go all the way. No selling… just buying! Then, we all have no worries.Â
So let’s tally it up… Countrywide was bought out by BAC at about $4 because of the shortsellers. They never did anything wrong. They never gave out loans to people who could not afford the first payment. They did not give out no doc loans. They did not have fake appraisals. Nope, they did nothing wrong.Â
Bear Stearns puked because of the shortsellers. They never lied about their financials. They did not provide 100-1 leverage. They did everything just right. Nope – they did nothing wrong.Â
Lehman went bye-bye because of the shortsellers. They didn’t lie about their financials. They didn’t move losses onto off-balance sheet entities only to be caught. They did everything right. Nope – they did nothing wrong.Â
Citigroup stock dropped 75% because of the shortsellers. They did not commit Enron-like offenses. They did not hide billions of losses, only reporting them when forced to. They had to raise billions at higher prices because they did everything right. Nope – they did nothing wrong.Â
Merrill Lynch had to sell because of the shortsellers. Again, John Thain did not lie to the public when he said he did not have to raise any additional bucks… only to raise $8.5 billion within a week. They were in perfect compliance. I trust their word! Nope – they did nothing wrong.Â
Fannie Mae and Freddie Mac were taken over by the government. Remember that one? That is when our government said no more to bailouts… for the 5th time. FNM and FRE’s problems? Yup, all caused by the shortsellers. There was no fraud there. The fact they lost money during the greatest boom in housing and went out of business just 3 years from the top… darn those bad shortsellers. They too did nothing wrong.Â
AIG was bailed out because of the shortsellers. It is all their fault. AIG never used leverage… ok, maybe a little. They did not leverage their balance sheet several trillion times over. OK… maybe an exaggeration. They didn’t insure several trillion in toxic caca… not an exaggeration. Nope – they did nothing wrong.Â
ABK and MBIA’SÂ problems… yup, all caused by the shortsellers. They did not go outside their business of insuring munis… they were forced to insure caca by the shortsellers. Yup… they did nothing wrong.Â
The ratings services gave out AAA ratings to stuff that didn’t even deserve ZZZ… all because of the shortsellers. Yup, all their fault. The ratings services who get paid by the people they rate, had no confict of interest and only had the best of intent. Nope – they did nothing wrong.Â
WAMU dropped 99% because of the shortsellers. They did not hand out money to anyone, any time, anywhere… just for the sake of fees. Nope, they did nothing wrong.Â
All these financial companies, and the many I left out of this report, well, they are victims of greedy shortsellers… or as one famous financial blowhard said: “financial terrorists!” You see, when you miss the bear market, when you tell everyone to buy financials all the way down, when you have called a market bottom on every up day, when you tell everyone to buy LEHMAN a couple of weeks back, when you have to come up with excuses for your incompetence… blame the shortselling “financial terrorists!”. When you are best friends with all these slimebags who ran these companies into the ground, you have to have someone to blame. When you are the Treasury Secretary who came from Goldman Sachs, you have to blame the shortsellers even though Goldman is in a better position today because they short sold all this crap when it was going down. Anyone think of that hypocrisy? When you are the head of the Fed and you missed all of this, you have to blame the shortsellers. When you are the ex-Fed who created this problem with easy money and lax oversight, you have to blame the shortsellers. When you run the SEC and you came out on national TV to defend Bear Stearns a few days before they went belly up, you have to blame the shortsellers. Nope… it is all the shortsellers fault. That can only explain why the Bolsheviks (Bernanke, Bush, Paulson,Cox, Congress and all the financials) came up with the great idea to just ban shortselling in 799 financials. Just take it all the way. NO MORE SELLING!Â
Now onto this $700 billion plus! In all seriousness, you may be thanking these miscreants for saving the market this past week… and let me be clear…this was a market on the verge… but you now have the people who caused the problem, oversaw the problem, did nothing about the problem, came up with so-called answers to the problems… now throwing the nuclear bomb at the problem. Just reward activity that at best was unethical, at worst… downright criminal. I ask… where are the investigations and the indictments? Where is Barney Frank and Henry Waxman and Chris Dodd when you need them? Oh yeah… some getting sweetheart loans….Â
I will do a lot more on this nauseating proposal in subsequent reports. I just needed to say before you get all happy the market recovered 700 points in a one hour short-covering filled frenzy, you may want to ask yourself a very important question: If the main reason our stock market has gone from 1 to 14,000 throughout its life was free enterprise and free markets, what happens when markets and enterprise are no longer free? This was a market where buyers and sellers met freely without constant interference from our government. It was a market that rewarded business for doing things right and penalized business when doing things wrong. It was a market where the head of the SEC would not act as lawyer for a company he regualted. It was a market that when bankruptcy loomed, you went bankrupt….and were not taken over by government. It was a market where the government could not constantly buy things to save the day and turn itself into a hedge fund capitalized by you and me…the taxpayer. It was a market I could be proud of participating in. No more. The bad guys have taken over. But don’t worry, they are doing it all for us. It is just all the shortseller’s fault.  Â
Oh I forgot… the market. You want to play this market? Have fun! Does anyone of you know where this begins or ends? Does anyone know the fine print of these proposals? One problematic hint: someone had better take a look at a little document called the CONSTITUTION! Does anyone know what day the market will gap up 400 points or what day it will gap down? Yup… that’s what you get when markets are no longer free…
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