SEC to Impose More Restrictions on Short-Selling
You can’t make this stuff up. (And if you did, your literary label would be “socialist fiction.”) The SEC is now going to “temporarily” ban short-selling.
Details of course are yet to be announced. It’s not clear what the timetable will be, or which stocks will be affected. Also, this particular story doesn’t say whether it will be bans on “naked” short-selling, or even fully clothed short-selling.
I stand by my earlier opinion that the completely useless ban on naked shorting back in July had the sole purpose of softening up the public, i.e. getting them used to the government meddling with shorting. Back then nobody raised a fuss, because the ban was so easily skirted. (It would be as if the government banned people from saying, “Bush is a big a-hole” but everything else was legal. The ACLU might not even bother bringing a suit, because critics of Bush could still legally say, “Bush is a huge a-hole.”)
BTW here is the madman Cramer spouting nonsense about short sellers, and how the SEC is to blame for our financial crisis. I guess it’s just a coincidence that these evil short sellers spread scurrilous rumors about Bear Stearns, Fannie & Freddie, Lehman, and AIG. Luck of the draw, I guess. The shorters could just as easily have destroyed the share prices of Exxon and Shell, right?
UPDATE: Here is Robert Wenzel with his angry yet cogent analysis. Warning, he uses some phallic metaphors in describing investment bankers. (And yes, now you have no choice but to click on the link.)
Did Andrew Cuomo Make Palin-Like Gaffe On Naked Short Selling?
I’m getting ready for my Penn State student radio interview so I can’t pontificate–don’t worry, I’ll be long-winded tonight. But I’ve got CNBC on in the hotel room, and CNBC’s Maria Bartiromo was interviewing NYS Attorney General Andrew Cuomo, who is getting ready to crack down on “illegal” short-selling. She said something like, “Well Mr. Cuomo, a lot of analysts are focusing primarily on naked short selling, saying this is the real problem, not short selling in general. Can you explain the difference to our viewers?”
Suffice to say, Cuomo’s answer gave no indication that he knew the difference. He totally dodged and just talked about other things that he understood. But because he wasn’t fighting the bimbo label, Bartiromo didn’t follow up with, “What do you interpret the difference to be?”
Murphy at Penn State Thurs – Fri
Notwithstanding the Wall Street meltdown and other newsworthy items, I will be blogging lightly for the next couple of days as I am giving a talk tonight for the Penn State Libertarians. Here is their flyer (pdf). On Thursday at 5 PM EST I will be on the Penn State radio station (90.7 “The Lion”) and people can listen live here.
Faith in Humanity Update
I’m pleased to report that I just got my cell phone back in the mail. (Loyal readers will recall that I left it in a cab last week.) And because I was pressed for time, I just put in a $5 bill for the guy (with the postage paid envelope). So maybe The Dark Knight was right, and average people are good.
This almost makes up for the time my wife and I were walking home from a bar in Auburn, AL (home of the Mises Institute) and we wanted to get something from McDonald’s. Unfortunately only the drive-thru was open. So we gave our order and (I think) a $10 bill to some college kids in line, and when they were behind the building they must have taken off out a different exit, because after about 15 minutes on the other end, we realized they were no longer in the queue of cars.
Now if you think about it, that’s pretty bad. Everybody in line had beer munchies, and it was only a $10 bill (I wouldn’t have been so foolish as to hand them a $20). It had occurred to me, of course, that they might bolt, but I figured the payoff wouldn’t be worth it. I think what probably was decisive was that there were a few guys in the car, and so it probably was funnier/safer for the driver to rip me off in front of his buddies.
Practicing What I Preach
I just bought about $700 in US silver coins (dollars, half-dollars, quarters, and a few dimes) and I threw in a 1/4 oz gold coin just for kicks. I bought the crappiest coins they had; i.e. no numismatic value here.
I realize there’s an incentive for me to be an alarmist–because then people come to read what I say–so I want to stress that I am not making a prediction that this is likely. However, I want to point out that we keep hearing the phrase, “Not since the Great Depression has the government…” these days. And you know what else FDR did? Declared a bank holiday.
So I feel much better now that we have few weeks of (real) money on hand, in case Paulson decides our checking account needs to take a breather.
Disgruntled Lehman Employee: "Austrian Economics Was Right!"
No joke. Check it out. (Click for larger image.) Thanks to my former student Shannon P. for the picture.
Gold Stages Biggest One-Day Gain in the History of the World
…according to this article. You see folks, just a few days ago I really started urging you to buy gold. And today alone it’s up 10.74%. I think if I had been a little more formal with the recommendation, Free Advice’s “track record” would have been astounding amongst financial digests.
Stocks Down 3%, Gold Up 8%
I guess I feel vindicated today, since I have been saying since July 2007 (pdf) that US stocks and the USD were in trouble, and that precious metals were the place to be. As of a few minutes ago, the S&P 500 was down over 3%, and gold was up over 8%, for the day. Wow. I think I would have preferred to have called the Superbowl upset. At least my dad listened to me a few months ago and added a gold ETF to his retirement. (Of course, Paulson may decide he needs to temporarily suspend physical withdrawals just until things settle down a bit.)
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