Witch Hunt By Circus Monkeys

So the SEC decided in all their endless wisdom to put a stop to “abusive” naked short selling of shares in the financial sector. These ‘wise’ monkeys have now singled out as public enemy number one, investors that benefit from shorting rotten financial institutions. Very interesting. So when shares go up to the point that they represent a bubble, and shed loads are being made regardless of the fundamentals, nothing can be done about it, as Alan Greenspan so famously said himself. In this situation everything is fine, and markets are working as everyone would like them to. But all of a sudden when asset prices start falling, for very legitimate reasons, and people then try to profit from it, it suddenly becomes “unlawful manipulation” that “threatens the stability of financial institutions”, according to Chris Cox (SEC chairman). Wow!

I am increasingly questioning the sanity of American governing organizations, and officials. First greedy banks and financial institutions loan trillions to people that cannot afford it (and the companies being shorted the most are those at the forefront of this frenzy). Then when the whole thing blows up in their faces, because of their own greed and leverage, they run home to mother Fed crying to treat their self inflicted wounds, like little baby teenagers. The Federal Reserve then steps in and starts giving out charity loans to everyone, instead of letting the market do its job and punish the greedy and stupid. When that doesn’t work as well as hoped, the government goes on a witch hunt, blaming things like speculators, shorting, rumors, and who knows what other enemies their feverish hallucinations will conjure.

The SEC has been investigating whether false rumours and “abusive” short selling contributed to the collapse of Bear Stearns in March and the declines in Lehman’s shares. And this has nothing to do with bad investments, and stupid risk management made by Bear Stearns; such as their hedge funds, High-Grade Structured Credit Fund and the High-Grade Structured Credit Enhanced Leveraged Fund, among write-downs of $2 billion? Investigating false rumors? It sounds like something out of The Lives of Others, where the communist government monitors every conversation of any suspected citizen. It won’t surprise me if the SEC discovers that it was some extremist terrorist organization spreading these rumors to destabilize the great American nation’s financial system. To really understand why Bear Stearns collapsed I refer them to a wonderfully simplistic article on Investopedia, that lays it all out in layman’s terms.

Mr. Cox previously said the emergency order was a preventive step aimed at restoring market confidence. How on earth do they think by manipulating free markets (or should I say short free markets, since markets in America are only free when they go up forever) with such unthoughtful bullying tactics will ever restore confidence? It achieves quite the opposite if you ask me. It makes me VERY nervous when people start taking random, desperate actions, like someone that’s drowning and can’t swim, grabbing at anything to stay afloat. Personally I’m not sure whether I’m shocked and amused at how American authorities deal with the credit crises, but I’m definitely hearing that famous circus jingle loud and clear…