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Blame The SEC for Making This Decline So Brutal
If You're A Realtor, Blame SEC Chairman Cox for Destroying Your Business.
A brutal stock market decline has started. And the US
Securities
and Exchange Commission has
just made matters much worse.
Professional Bear Raids Are Only Starting
By abolishing the up-tick rule
and not enforcing "naked"
short-selling,
the Securities &
Exchange Commission has now made it much easier for
professional
"Bear Raids". These were so hurtful to stocks between 1929
and 1932, that they
were banned by law. Last month the SEC bowed to
pressures from reckless
Wall Street insiders who plan to terrorize individual
investors with steep
drops in prices, artificially produced by massive naked
short-selling on
down-ticks.
The 1929-1933 Stock Market collapse destroyed the lives and businesses
of millions of people around
the world. It set in motion the tensions that
created World War II and the
death of 20 million souls! The US Congress
recognized how dangerous and
instrumental trading abuses were in the
financial carnage of the
1930's and they created new laws and set up the
US Securities and Exchange
Commission to protect investors in 1934.
For 70 years, short sales were by law to be only
executed when stock was
available for borrowing and the
short sales were done on up-ticks or zero-plus
ticks. Selling short at the
market, hitting the bid, was prohibited in the case
of individual stocks.
This was to stop the predatory practice of "bear raids".
Many write
that the extent of the 1929-1932 collapse cannot be explained
by blaming speculators like
Jesse Livermore, Bernard Baruch and Jospeh
Kennedy or organized cabals
of shorts dumping shares they did not own
on the market in a concerted
way and then concocting bearish rumors and
bleak sounding news to give
to the press to scare the public.... Maybe so,
but these unregulated
speculaors surely made a very bad situation much worse.
"Torpedoing The Tape"
Jim Cramer of CNBC
described how loosely knit groups of short
sellers would try to crash the market down when he ran a hedge fund in the 1990's.
"On days like today when I was short, I would come in with a lot of firepower and
try to blast things down at 2:45. I wasn't alone. We were never organized, but we
did get the call from the trading desks that other guys were torpedoing the tape...
And don't forget, it's fun for these guys to try to break the market. And there's a
level of sport in the bigs that can't be denied."
Is this illegal manipulation? Not according to the SEC or CNBC. "Who
cares who gets hurt?" Compassionless greed runs wild! Such
activities
require bears to be able to sell short without even having to obtain stock
to borrow. No problem. The SEC hardly ever does anything about "naked
short selling".
Even Cramer is now warning that the SEC has gone too far:
The
"new stupid
downtick rule makes it really easy to raid. How is
it that NO ONE remembers why the SEC set it up to begin with? ...
You can roll this market on nothing now. No specialists; unlimited downticks,
faster futures than common, ETF shorts, and no takeovers, so you can
run roughshod."
For more information take a look at www.investigatethesec.com. Cramer's
quote comes from this source.
The SEC claims that their rule change
will not have a deleterious impact on
stock prices. They claim they have previously tested this in 2005 and 2006 with
a pilot group of stocks. But this testing proves NOTHING. Traders may have
been
on "good behavior" in it becuase they knew the SEC was watching. And it
was
not undertaken in a weak market environment.
The SEC has brought back much greater down-side volatility since their
abandonment of the 70 year rule against selling short on down-ticks. Now it
does not take big volume to drive stocks down. People who think that light
volume on this decline are making a big mistake!
For more information on Chairman Cox's background,
see my earlier blog.
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Don't let this happen to you. Don't be a
"deer in the headlights".
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