Stock Exchanges Push for Uptick Rule

http://www.thestreet.com/_yahoo/story/10476766/1/stock-exchanges-push-for-uptick-rule.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

"BATS, along with the NYSE and Nasdaq, said in a letter to the Securities and Exchange Commission that a modified uptick rule and circuit breaker would help deal with the critical issue facing the U.S. equity markets. "

"The argument is that the lack of a rule that required share prices to go higher before more short sellers could pile in created an environment where shorts could accelerate the failures of a number of companies, especially financial names like Bear Stearns, Lehman Brothers and Washington Mutual." Do we want to impede the markets?

New Treasury Bailout Plan is Garbage

http://www.portfolio.com/views/blogs/market-movers/2009/03/23/geithners-doomed-bailout-plan

"The problem with this approach is that it's needlessly expensive. " How can we justify spending billions more? Felix Salmon argues this will be a failure.

"The depth of public anger and the gravity of this crisis require that every policy we take be held to the most serious test: whether it gets our financial system back to the business of providing credit to working families and viable businesses, and helps prevent future crises. Does the plan as presented today pass this test? In a word, no. Sadly."

There is no systemic risk issue here. The government is giving your money away.

$173 Billion and counting for AIG

Excellent article that highlights the billions transferred should be the outrage. Not the million dollar bonuses.

"A few people on Capitol Hill moan and groan but there is popular agreement on the wisdom of this transfer of ONE HUNDRED AND SEVENTY THREE BILLION dollars from the taxpayer to the financiers. But when AIG itself pays out $165 million in bonuses -- money it is contractually obliged to pay -- the entire political system goes insane. President Barack Obama says he’s going to find a way to abrogate the contracts and take the money back. "

http://www.bloomberg.com/apps/news?pid=20601039&sid=atlHxXH7FweQ&refer=home

WSJ: AIG Still Isn't Too Big to Fail

Finally, someone who has the audacity to question the systemic risk concept and the necessity of government intervention!

"But there is far too little debate on the government's willingness to back all of AIG's obligations."

"Letting AIG's derivative counterparties take a significant haircut, however, should not lead to such a crisis. AIG's obligations are to derivative counterparties, not to depositors." Why should the government bailout counterparties such as Goldman Sachs. These are not depositors. These counterparties took risk and must accept the consequences of their risk.

"At a minimum, the government should conduct "stress tests," estimating potential losses in alternative scenarios, and formulate a policy on the magnitude and fraction of derivative losses it would be willing to cover. A policy that doesn't fully back AIG's obligations should be seriously considered." What an excellent idea to balance the interests. A blanket coverage of AIG obligation is not only ludicrous, it is expensive.

http://online.wsj.com/article/SB123751263240591203.html

Arguments against Uptick Rule

"The advocates include long-term investors and corporations who believe that short selling contributed to the destabilization of the markets. Opponents include hedge funds, day traders and riskier investors who believe that short selling is a great opportunity to capitalize on a down market."

Short sellers may also be long traders that are hedging! Hedgers are not speculators and may need to short in order to hedge or reduce risk.

http://www.etftrends.com/2009/03/what-effect-will-the-uptick-rule-have-on-etfs.html

Uptick Rule was created in 1938

http://online.barrons.com/article/SB123758871198199971.html

"The "uptick rule" was imposed in 1938, requiring that traders wait for a stock's price to tick higher before initiating a short position. Now, of course, there's a push to reimpose this rule -- it was lifted in 2007 -- in order to constrict short-sellers' ability to operate. More qualitatively, 1938 followed a year in which the U.S. suffered a crushing recession and a devastating bear market."

Naked Short Sales - Lehman Brothers

"The SEC has linked such so-called fails-to-deliver to naked short selling, a strategy that can be used to manipulate markets. A fail-to-deliver is a trade that doesn’t settle within three days." This type is behavior is clearly fraud and market manipulation. The SEC needs to enforce the delivery requirement to ensure that shorters really have underlying shares.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aB1jlqmFOTCA&refer=home