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Wall Street Journal calls John McCain “un-Presidential”

McCain’s Scapegoat – WSJ.com.

John McCain has made it clear this week he doesn’t understand what’s happening on Wall Street any better than Barack Obama does. But on Thursday, he took his populist riffing up a notch and found his scapegoat for financial panic — Christopher Cox, the chairman of the Securities and Exchange Commission.

To give readers a flavor of Mr. McCain untethered, we’ll quote at length:

“Mismanagement and greed became the operating standard while regulators were asleep at the switch. The primary regulator of Wall Street, the Securities and Exchange Commission (SEC) kept in place trading rules that let speculators and hedge funds turn our markets into a casino. They allowed naked short selling — which simply means that you can sell stock without ever owning it. They eliminated last year the uptick rule that has protected investors for 70 years. Speculators pounded the shares of even good companies into the ground.

“The chairman of the SEC serves at the appointment of the President and has betrayed the public’s trust. If I were President today, I would fire him.”

Wow. “Betrayed the public’s trust.” Was Mr. Cox dishonest? No. He merely changed some minor rules, and didn’t change others, on short-selling. String him up Mr. McCain clearly wants to distance himself from the Bush Administration. But this assault on Mr. Cox is both false and deeply unfair. It’s also un-Presidential.

And further:

In a crisis, voters want steady, calm leadership, not easy, misleading answers that will do nothing to help. Mr. McCain is sounding like a candidate searching for a political foil rather than a genuine solution. He’ll never beat Mr. Obama by running as an angry populist …

When the Wall Street Journal calls a Republican candidate un-Presidential, maybe it’s time for his supporters to start looking at the other candidate.

flahute

10 thoughts on “Wall Street Journal calls John McCain “un-Presidential”

  1. This part?

    “The primary regulator of Wall Street, the Securities and Exchange Commission SEC kept in place trading rules that let speculators and hedge funds turn our markets into a casino. They allowed naked short selling — which simply means that you can sell stock without ever owning it. They eliminated last year the uptick rule that has protected investors for 70 years.”

  2. I kind of agree with art,But No chance in hell I’ll vote for him(McCain, not art… I’d vote for art).

    “The primary regulator of Wall Street, the Securities and Exchange Commission SEC kept in place trading rules that let speculators and hedge funds turn our markets into a casino.”

    It’s hard to argue that the market has become a casino.

    “They allowed naked short selling — which simply means that you can sell stock without ever owning it.”

    This is a stupid ignorant statement, BUT but the idea that you can Sell more shares than exist. Should make adam smith, and free markets roll in their grave. It’s a clear violation of the laws of supply and demand.

    “They eliminated last year the uptick rule that has protected investors for 70 years. Speculators pounded the shares of even good companies into the ground.”

    With stocks not trading in 1/16th’s, the Uptick was useless, and it’s added to the volatility. uptick or no uptick. They need a “10” uptick rule(I say this and know how fucking stupid saying that is). But Only for the sake of reducing Volatility, so we can get stability. 50% 3 day moves in banks stocks Up AND DOWN…. it’s hard to argue that there is something wrong with the market, regardless of “Fundamentals” The golden child of Regionals; WFC traded a 40% range this last week

    Furthermore…. What isn’t being talked about, Maybe it isn’t that the shorts are pounding good companies into the ground, But that they could just be Hedging the market(or good companies) into the ground.

    I legitimately could short MS as a hedge against Armageddon, regardless of Fundies.(even though… I still hold that MS is ready to get much smaller). But what did it hit….. 13 on thursday?… but how reasonable is it that I’m shorting a stock for no reason… but Hedging.

    I don’t know….

    Epic week

  3. spot on, the uptick rule has held the market together since ’29. The regulators blew it and they know it. They don’t need to ban short selling they just need to put back the rules that work. Short sellers do not ruin companies,they short companis that are in bad shape. You think any hedge fund shorting Berkshire Hathaway would last very long?

  4. Now you’re agreeing with Jim Cramer.

    From http://www.cnbc.com/id/23728522, this past March.

    The damage the market’s suffered since the U.S. Securities and Exchange Commission repealed the uptick rule last summer is undeniable, Cramer said during Thursday’s Mad Money, and regulators need to admit their mistake.

    Cramer’s not blaming the Dow’s decline to 12,361 from 13,577 solely on the SEC’s decision, but the size, severity and even savageness of the declines we’ve seen since July are without question the product of this new open season for short-selling, he said.

    And:

    But, as Cramer pointed out, it’s too late by the time regulators get involved. Bear raids destroy confidence, taking the stock even lower, then the self-fulfilling nature of the declines gets reinforced when investors assume the company’s going out of business, causing a run, much like what happened to Bear Stearns.

    Now, I’m not going to disagree with either of you that short-selling is a perfectly valid trading strategy. When I actually had more liquid assets with which to trade, I did my share … sometimes successfully, sometimes not.

    But I also believe that rampant short-selling can take down a good company, like what could have potentially happened to Morgan Stanley had this week’s action continued unfettered due to the panic generated on the normally buy-side.

    And who knows, MS may still be forced into a merger, but at least now we have time to find the right deal, rather than the first deal.

    And if restoring the uptick rule (or a “10” uptick rule, by which I assume the Mop means a 10-cent uptick) helps keep short-sellers in check enough to prevent a panic, and keep volatility under better control, then that’s part of what needs to be done.

  5. What’s more, the halt on short-selling is only for two weeks to a month …

    http://sec.gov/news/press/2008/2008-211.htm

    “Given the importance of confidence in financial markets, the SEC’s action halts short selling in 799 financial institutions. The SEC’s emergency order, pursuant to its authority in Section 12(k)(2) of the Securities Exchange Act of 1934, will be immediately effective and will terminate at 11:59 p.m. ET on Oct. 2, 2008. The Commission may extend the order beyond 10 business days if it deems an extension necessary in the public interest and for the protection of investors, but will not extend the order for more than 30 calendar days in total duration.”

  6. I had this discussion today,

    I’m not anti-short, at all. It’s absolutely healthy. Assuming you can’t short more stock than exists.

    I don’t have to short sell a Soda, to get a fair market price for it. So to say that to get a fair price, you have to short sell, Is ridiculous. It’s almost a testament to the idea that “Mother market” isn’t fair.

    But Having the old uptick rule of +1/16, or an improved +.10(which is a nightmare, to make happen(but shit we have computers)), would reduce the volatility and give companies time to work things out. Companies losing that much value that fast… is ridiculous. And the market would have pushed MS and GS out of business.

    One can suggest that with the Implosion of tech, that because of the .01 cent tick, volatility… was actually too irrational, and could have lead to too much contraction of tech(Listen to me talk my former book).

    The volatility is going to ease here over then next while.

    Also somebody said today that the list of companies, was so hastily put together that you find some non financial companies on there…. apparently there is like an oil company and a transport… I believe.

    I don’t know if they put the uptick in to appease the politicians, or if they were just using a butter knife instead of a scalpel, cause they were in a hurry.

    It’s sometimes nasty that you end up agreeing with people Like Dennis Kneal, M.C.Cabrera, and cramer, But even a blind pig finds a.. truffle.

    One could also suggest that we will see some limits to the types of assets banks and Ibanks can hold.

    But again….. Holy shit this stuff …. Amazing week we lived through.

    Stephen, I’m digging my +.10 tick rule… You should talk to somebody. Hell maybe I need to write my representatives.

  7. 1/16 works out to be $0.0625 (6.25 cents) … so I’d wager even a +0.05 uptick rule would calm things over no uptick rule or a +0.01 uptick; yet without being so difficult to meet that it becomes nearly impossible to short.

    And Art, if the object is to make money in a volatile market, why not do it with options by buying puts or writing calls?

    You would still be able to capitalize on market swings, but without causing the psychological fear factor in the average individual investor, because the price movement of the stock itself will be more organic, rather than fear leading to a collapse?

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