Yeah, because everyone knows short sellers were the problem here.

How about actually enforcing the total ban on naked short selling - a reg that already exists? Would that be asking too much?

Seems to me our problems have been caused by bubbles, so why not have a down-tick rule to prevent over exuberance?

"Why now?"

Someone threatened to replace the SEC with a super-regulator and now they are trying to convince the world of their relevance.

My father was in the stock biz for about 40 years, and he had no tolerance for thievery and he probably turned in a few dozen people to the SEC, back when it had teeth in the 1960's and 70's.

It's a mockery what they've become since then...

The Uptick rule had been in effect from 1938 and removed on July 6, 2007.

From Wiki on the Uptick Rule:

"On September 18, 2008, presidential candidate and Senator John McCain (R-AZ) said that the SEC allowed short-selling to turn "our markets into a casino." McCain criticized the SEC and its Chairman for eliminating the uptick rule.[16]"

"On October 17, 2008, the New York Stock Exchange reported a survey with 85% of its members being in favor of reinstating the uptick rule with the dominant reason to "help instill market confidence".[

"On November 18, 2008, the Wall Street Journal published an Op Ed by Robert Pozen and Yaneer Bar-Yam describing an analysis of the difference between regulated and unregulated stocks during the SEC pilot program. By using an analysis they claimed to be more comprehensive than the SEC's original study, they showed that unregulated stocks have lower returns, with a difference that is both statistically and economically significant. They also reported that twice as many stocks had greater than 40% drops in corresponding 12 month periods before and after the repeal."

"On February 25, 2009, Chairman of the Federal Reserve, Ben Bernanke in testimony before the House Financial Services Committee stated he favored the SEC to examine the restoration of the uptick-rule.[22]"

"On March 10, 2009, the SEC and Congressman Barney Frank (D-MA), Chairman of the Financial Services Committee announced plans to restore the uptick rule. Frank said he was hopeful that it would be restored within a month.[23][24]"

Uptick rule - Wikipedia, the free encyclopedia

The uptick rule will be reinstated and stock market volatility, especially, downside volatility will be reduced.

Short sellers got no reason to live.

I'm of the opinion that they latest rally was mostly to blow out the shorts, as they are using reason and nuanced thinking by playing the don't pass line...

This latest missive from the SEC only solidifies has scared Wall*Street has become of them.

Sounds like a Sunday night thingy; or maybe a Friday, pre-open, on a quadruple witching day.

Still nothing from the SEC on the Bear Stearns option trading. Or Richard Steele--this clown was on Crammer two days before they went under, saying they had virtually no bad loans.

Forget about temperature variances, that's the righty-tighty-trogdolighty defense that global warming isn't happening, a red herring.

The big story is heretofore unthought of weather events. Last summer 8,000 dry lightning strikes hit Northern California in mostly unpopulated areas, causing well over 1,000 fires. It never happened before, so nobody expected it to happen.

Odd they'd do this as the markets are climbing.... maybe they are as concerned as the people on bloomberg about the markets going back down....

it isn't about global warming it is about climate change. The Malthus got it wrong in part because the last two centuries have been the most stable climate in the last 10,000 years. The emphasis is on stable climate. We could have have 5 of the hottest years coupled with 5 of the coldest years which would over the 10 year period give us an "average temperature" i.e. no global warming However, that kind of variability would play havoc with agriculture. Most of the reservoirs for our cities have been based on the preceeding 100 years of climate which works fine when things are stable year to year but not when there is great variability.

Your definition of climate change makes absolutely no sense and is the first time I've heard anyone describe climate change as unstable variations in weather. The word climate implies the long term weather patterns, so in your example above there is no climate change. It makes no sense to describe climate in terms of frequent changes in the weather. In fact, I can't count how many times the global warming doomsdayers have stated that you cannot look at short-term weather changes in terms of climate change. Now you are moving the goalposts yet again. Go read the first sentence of the Wikipedia page on climate change.

This past June her in Arizona was the coolest June since 1913. I used 20% less electricity than I used last June. There's quite a bit of evidence that we are coming out of the end of typical peak period of temperature. I've never understood why people are so afraid of warmer temperatures. If the planet enters another ice age, it may be "Adios Muchachos" for the human race.

what about all the front running on the bank legislation and new bailouts.....when are we going to follow up on the data leaks. SEC not interested as long as markets are going up....

Hey, I am one of those lukers, with an occasional comment...

So why am I not very active on this site? A number of reasons:
1. Little economic background
2. Non-engineer
3. Non Real Estate
4. Non Banker
5. Non rigid idea about why everything is so screwed up in America

As an American US citizen, the way I see it is that something has to be done about corporate (Big) influence has to be removed from the political system...As Jessie Unhru of CA once stated, "Money is the milk of..."

No matter your personal preferences as to the cause of our situation or its solution, money from large corporation/interest groups/lobbyists has to be significantly reduced...otherwise the Goldman-Sacks of the World will dictate government policy thru financial contributions...

JMHO...back to your regularly scheduled arguments about fault, the folly of the public/consumer/end of the world diatribes...

Ha, yeah, because the crash was caused by the shorts not valuations or just sheer panic. What crap.

By using an analysis they claimed to be more comprehensive than the SEC's original study, they showed that unregulated stocks have lower returns,

Is that like competition lowers prices?

Why? What happened to the free market? Isn't the market always right?

//S.E.C. May Reinstate Rules for Short-Selling Stocks//

no uptick rule on options

RD.
You are one of the 25 million people that live far, far away from your water source, so it appears you have no idea the gravity of the situation...

I've been responsible for vetting the technical aspects of major SoCal water projects. Your comment is so odious and poisonous to this discussion I will hear no more of it. Don't even try to apologize.

RD,

You need to get out of your comfort zone, and go take a look at where your water comes from. What do technical aspects mean when the Sierra has increasingly less snow, and it melts off sooner?

p.s., personal attacks like yours are par for the course, when cornered by somebody that knows much more about a subject than you do...

For those that have a hand in making the rules; crisis = opportunity to profit. For the truly powerful if there isn't a crisis handy they can always manufacture one. Cases in point, short selling and AGW.

"Climate change" is the new meme of the propagandists. Wake up people! If the the ptb"s define "the problem" as occuring if either of the two possible outcomes happen, it's a scam!

There's little doubt we have experienced higher than normal global temperatures over the past 200 years or so; however, these periods have happened frequently throughout history. There have been several ice ages where the planet cooled dramatically and then rebounded. Unfortunately for us, we are overdue for another one. When global temperatures drop another 30-50 degrees with the onset of the next one, we'll realize the idiocy of the "global warming" meme.

SEC only studied data for six months before repealing the uptick rule:

"During these six months, the SEC found that the stocks not subject to the uptick rule had 2% lower returns than those still subject to the rule"

"The SEC dismissed this 2% difference as statistically insignificant relative to the standard deviation of the Russell 3000 during the pilot period. However, if we eliminate a small number of outlier stocks in that index with returns over 100% during the pilot period, the 2% difference becomes statistically significant. More fundamentally, return differences of 2% within six months are economically important, because annual returns in the U.S. stock market since World War II average 6% to 7%."

"In fact, after the repeal of the uptick rule, there was a marked increase in the number of NYSE-listed stocks with price drops of over 40% in a day -- a rough proxy for a bear raid. In the 12 months following Sept. 30, 2007, the number of such huge drops doubled as compared to a prior period with similar market declines and high volatility -- the 12 months following March 31, 2000."

The repeal of the uptick rule was a gift to the hedge funds armed with $1 trillion and an abilitry to short stocks.

The uptick rule had been in effect for 69 years and only 6 months of data was used to analyze its effects. My belief is that SEC Chairman Cox was in the pocket of the Wall Street power elite.

"Cox's long-standing support of a deregulated market and friendliness to business made him the wrong SEC chairman at the wrong time."

There's a Better Way to Prevent 'Bear Raids' - WSJ.com

I do find it quite interesting that we're back to the uptick rule again.
Part of me wants them to just pass it, and then watch as it does nothing very little

similar to when they banned short selling on the financials entirely... and then watched as financials fell in value simply because nobody wanted to buy them. ROFL.

I have to admit, I have been surprised by the willingness of our leaders to zombify our banking system.

I now also realize how naive I was about the inter-relationship between govt and the financial elite. I always knew it was strong, but I didn't know that our govt would endanger itself to the extent that it has to protect those financial interests.

I thought it would be more along the lines of govt in the 1930's, where they made all the people turn in their gold, then revalued the currency. This was a huge hit to the affluent of the time. (they turned in gold for cash, then that cash was devalued overnight. it was primarily the affluent who had the gold).

instead there is little to no effort to do a similar act in these times. quite the contrary. bail out the financial elite and then sit "helpless" as they increase their pay packages and give themselves record bonuses.

Anak (profile) wrote on Fri, 7/3/2009 - 10:30 am

Where've you been lately?

Thanks for the flattering remarks!

Combination of moving house, working on a big project, and attending a professional conference / convention. I should be around more regularly after the 15th.

w10949 (profile) wrote on Fri, 7/3/2009 - 10:27 am

what about all the front running on the bank legislation and new bailouts.....when are we going to follow up on the data leaks. SEC not interested as long as markets are going up....

Well clearly you missed the memo that the goal is to make the market go up. You see, the stock market is the scoreboard for America, and when it goes up, America is teh win. When it goes down, something needs to be done to manipulate it into going up more.

Why did they abandon the uptick rule in the first place?

Funny how 'Home of the Brave' rhymes with 'Goldman's Chattel Slave'...

How Goldman Sachs and Citi Run the Show
The Wall Street White House

July 2, 2009

By ANDREW COCKBURN

Robert Hormats, Vice Chairman of Goldman Sachs, is to be installed as Under Secretary of Economics, Business, and Agricultural Affairs. This comes as one more, probably unnecessary reminder of the total control exercised by Wall Street over the Obama administration’s economic and financial policy. True, Hormats is “a talker rather than a decider” according to one former White House official, but he will find plenty of old friends used to making decisions, almost all of them uniformly disastrous for the U.S. and global economy.

Andrew Cockburn: The Wall Street White House

Cue the plunge-protection conspiracy theories...

Shylockracy,

Isn't financialism and regulatory capture great?

@JD: California's water doesn't come from accumulated snow in the Sierras, it comes from the annual rainfall cycle. The Sierras make a great moisture trap. There will be plenty of precipitation (even in drought years) to meet the essential use needs. (But I think water-intensive agricultural uses should be discouraged; there's more economic value to be had in allocating the water and crop selection to ensure all the available land is used productively.)

@RockyR: I thought 1987 was driven by program-traded panic long-selling, not short selling. Also, the economy wasn't about to implode. The post-1987 limit-down trading curbs are as sensible as the uptick rule. I'm all in favor of markets that go down as well as up, but since panic is a well-documented phenomenon, trading rules that limit the impact of panics seem sensible.

P.S. The bear raids can get quite ferocious when the bear funds can massively multiply their leverage on short notice by writing naked CDS.

Off to the daily routine here...

Every day the Central Banks of Russia and China announce how their currencies will trade against USD tomorrow.
Why can't the SEC do the same for stocks - simply tell the market where each stock should be traded tomorrow.
If you do not trust the market on the downside, why would you trust the market on the upside?

I now also realize how naive I was about the inter-relationship between govt and the financial elite. I always knew it was strong, but I didn't know that our govt would endanger itself to the extent that it has to protect those financial interests.

Agree.

Wisdom Speaker (homepage, profile) wrote on Fri, 7/3/2009 - 7:48 am
I think water-intensive agricultural uses should be discouraged; there's more economic value to be had in allocating the water and crop selection to ensure all the available land is used productively.

Thus my comment that should there ever be a real water crisis it would be embarrassingly inexpensive to prohibit things like cotton crops and even if necessary compensate the agribusinesses for "lost" profits.

FDIC Bank Failures by Week

RockyR

"40pct intraday decline in a price, bad. 40pct intraday increase in a price, good! "

The uptick rule did not cause a doubling of 40% intraday increases. So why do you think it's OK to cause a doubling of the 40% decreases?

Lucifer (profile) wrote on Fri, 7/3/2009 - 10:42 am

Would you prefer an ice age, like those that occurred through most of the last 6 million odd years of earth's history?

I have to agree with Lucifer. "Climate change" folks are presuming to jimmy the global thermostate to protect their personal economic interests and the value of coastal real estate around the globe.

I judge they're most likely to either break our civilization in a futile effort to control something beyond their grasp, or break our planet's climate in a futile effort to assure the average monthly temperatures in their region of residence stay at the same levels they were at when the activist was 7, that being the holy and divinely ordained median climate of the earth.

It seems to me that this desire and self-perception of ability to change the global circumstance is most reminiscent of meso-American delusions that they had to feed blood to the sun. How will we know if the proposed remedies don't work, when the only answer to failure will be "more, harder and faster" because any respite from the proposed remedies will unleash the global boogeyman and will thus never be permitted?

People who want to be taken seriously in the climate change debate (meaning taken seriously by me -- the idiocracy believes all sorts of things with cheerful abandon -- convincing the people who thought Saddam Hussein was responsible for 9/11 is not an accomplishment) should try to frame it in some kind of rational fashion, not as a weird absolutist crusade where we have to feed the sun god or he'll die. How much is a degree of global climate change going to cost us? Show your work. At what cost will we conceed that degree and move on to the next notch in the holding action?

Sorry, you guys are just a bunch of people running around like headless chickens screaming that the world is changing and it can't be permitted. Too bad, change happens. Show me a mechanism by which you reasonably expect to control the climate of a planetary-size mass and a cost scheme under which you want to implement the project and I'll consider taking you seriously. I've never seen anything even remotely like it.

Thus I conclude you're just a bunch of political opportunists trying to implement agendas by greenwashing them and holding out the threat of global catastrope. I wasn't convinced by Repuyblican arguments of "We can't think before we act, do you want a MUSHROOM CLOUD over an AMERICAN CITY?" I hear the exact same rhetoric and I expect it will produce the same self-satisfied Iraq war. Global warming is the new "war on terror" -- play the existential threat card against a nebulous opponent that requres a perpetual engagement and justifies whatever you say it does. Yeah right whatever. You can jam it down everyone's throats like the PATRIOT Act and TARP, but it doesn't mean it's any different than the PATRIOT Act and TARP.

I think it's interesting that people on both sides of the issue continually confuse climate change with local weather.

I neither endorse nor argue against global warming here. I am merely reminding all arguing factions that there are actually (at least) 2 different facets to the global warming argument

1) whether or not the GLOBE's temperature is increasing
2) whether or not humans have an appreciable part in this process.

you could add a third
3) whether or not the recent global temperature change is within historical patterns or not.

In general it would seem that
-few people deny that there has been a statistically significant global temperature shift over the (geologically) recent time period
-that shift has been towards warmer temperatures.

the argument seems to focus around
-whether or not this shift deviates from geologic history
-whether or not humans have an appreciable role in this.

thus, talking about having to use heat in New Hampshire or not using AC as much in Phoenix in July 2009 is largely irrelevant, since those are local phenomenon that can occur in ANY global climate. (global warming, global cooling, global stable temperatures).

As an easy factual example: we see this every few years with El Nino (and La Nina). El Nino typically causes much warmer weather than "normal" in the midwest and much cooler/wetter weather in the Southwest. But el Nino is NOT global climate change. Even though the Phoenix person could say "it's cold here and I'm not even using AC". It's an interesting observation, but irrelevant to GLOBAL climate change.

to extend my El Nino example into a theoretical example:
what if global warming or global cooling changed the direction and intensity of the Jet Stream or of El Nino/La nina itself? Is it not logical that the altered Jet stream may warm some areas while cooling others???? (just like El Nino/La nina).

In my opinion the uptick rule is appropriate. However I think the SEC is trying to recover from the Bush years when manpower was cut back and the Bush administration tried to prevent enforcement. " Let the industry police themselves" , they said; and we got a housing debacle and Bernard Madoff as a NASD non executive administrator .

Rules don't work if no one enforces them, and the Bush adminstration prevented enforcement .

It will not hurt. Agree with the prior comment that the SEC also needs to enforce the rules that are already in place such as the ban on naked shorts.

Byz_Ruins,

Interesting twist on the whole global warming debate.

Not the mindless MSM's 'good guy vs bad guy' argument (not that we'd ever expect that from you! -- lol).