The Squeak

The S.E.C. goes out of its way to condemn Short-Sellers of financial stocks, though for years it encouraged Short-Selling through relaxing the Rules of registered responsibility, and allowing Financials to loan based upon Securities later sold short. The Bankers want the Money of fraudulent practice, but how dare Anyone use such practices against themselves? There are Those who say the Double Standard does not affect the Markets–but they do and will! We will never establish a hard floor in Financials until such Time as the Markets can reflect a real Price for those Financials. How do you do this, if Short Sellers don’t start to lose Money? Deviant practice is properly governed by the Market infliction of losses; regulations simply allow deviant Players to save their Money for something worse!

I must say that I agree with John McCain for the first time since this Campaign season began. The Fed attempts to insert itself in the heavy Player aspects of the Market can only lead to disaster. One can describe the Situation in technical terms by statement that We now have hundreds of billions of unsecured loans issued by an Investment bank (the Fed), which would be hard put to express the maintenance of any Capital reserves. People will begin to measure if the Fed or Treasury can pay off their structured liabilities if they must, and exactly what magnitude those liabilities possess. Let Me be the first to call for an outside Accounting firm evaluation of the equity of the Federal Reserve. Most think I am Joking, but the Fed and Treasury have embarked on a slippery slope, and Someone besides myself will ask about Ability to Pay!

At what Point do Markets lose their ability to assess relevant equity? The Market movements of yesterday indicate this evaluation process was lost in the Day’s trading. One Analyst said that total variance of change yesterday equaled some 1200 points in the Dow over the trading session. The yo-yo movement at speed indicated a stampede mentality among the Ranks, with no serious Thought given to actual value. I await what the Markets will do today, but estimate effective Business decisions must ignore Market valuations for the near future. lgl