Posted on 09/20/2008 3:57:33 AM PDT by SeekAndFind
For those who bought the Proshares Financial Ultrashort ETF (SKF) in anticipation of a drop in financial meltdown, tough luck, you are banned from selling this ETF by the power vested in the SEC ( even as it had dropped the past two days ).
http://seekingalpha.com/article/96387-here-go-the-short-etfs
Things like this make me wonder what country I am in.
I’ve received many emails and yes, Ultrashort Financial (SKF) is halted and it looks like we are stuck with it until October 2nd. At which time the government can decide if the peons can trade it again. If not they can push out the short ban for 30 more days.
Which will take us to November 2nd.
Which I believe is election day.
How convenient.
Update: ProShares announcement. You are now free to sell at a 35% loss. I still think they’ll keep the short selling ban until the election.
Update: Reports both SKF and SEF halted due to lack of counterparties.
Yesterday, at the gym, I had a financial advisor tell me (sarcastically) that he could now be a Government employee and have all kinds of cool benefits and retirement.
You know this “meltdown crisis” seems overblown. How is this a crisis when it only seems to be effecting those financial institutions which were playing fast and loose with loans and derivitives. It really seens very localized. McCain was right the first time, the fundmentals of the economy is strong and it would get stronger if the weak big companies would be allowed to go their natural course. I fear that the actions being taken will have the result of deflating the economy.
We'd better get ready to fight back or there will be a new “New Deal” coming and you really won't like this one.
Second, the government should be reluctant to come to the rescue of every major corporation or bank.
Why not just say they shouldn't aid every bank?
No
ProShares is not an up and up company in my opinion. They may not actually short the stocks but use puts, leverage, and other methods to simulate double shorting. Their expenses are high so even if you are right about the direction of a stock you may not make any money. I wanted to short the ultra-short China FXP at 140 a few days ago, and would have been up over 40% now, but it’s not available for shorting. Shorting a ProShares short would be a good way to go long because then their high fees work in your favor.
As someone who has witnessed the changes over the past 70 years, we are now in a new collectivist state. Government (Federal and state) agencies (EPA, FEMA, IRS, etc) now rule by fiat. May God help us when we actually have a major nationwide crisis.
Remember, that our enemies watch us continually for a fatal weakness. Recall the art of fighting without fighting is a strategy.
That is ludicrous. I’ve traded SKF in the past. Our liberty has been taken away from us without even a peep of debate.
Stop the bailout.
http://www.stopthehousingbailout.com/
I wrote my Congresscritters and I urge all others who see this as a threat to the capitalist system to do the same.
If you agree that the government must step in because AIG is too big to fail, then you must agree that no corporation must ever get "too big to fail" because it risks everything.
That's key here. The government must put an immediate stop to mega-corporations that are anywhere in the money chain.
Let's see you get that legislation passed.
Those with cash that can buy something before the governments start printing money are sitting pretty. The price of oil would certainly drop. The march of socialism would be set back 50 years. If the feds are so concerned about this bubble bursting they should have passed laws for free before the bubble developed. Had they required 20% down on real estate purchases 8 years ago I don't think this bubble would have gotten so out of hand.
If you will allow me to answer. AIG would have gone into bankruptcy court, a federal judge would have stopped all of the calls on its debts, which would have immediately reassured markets, and then the judge would begin the orderly sale of its assets to pay the debts, or some other workout approved by the creditors, leaving the shareholders whatever was left over.
In short, we have a system for dealing with corporate insolvency. Bankruptcy is actually established by the Constitution. It's a time tested system that works just fine.
Did the bankruptcy of Lehman Brothers cause the Apocalypse? No, in fact, the markets reacted with cautious optimism to the news.
I'm a corporate and tax lawyer of many years. This is a play by revolving-door investment banking types like especially Henry Paulson to save their buddies' bacon at the taxpayers' expense. It's an outrage that threatens the very existence of the capitalist system. It must be stopped.
You could have simply gone long FXI.
Not being able to short is not the fault of ProShares. It probably just meant that your broker had no shares to lend.
I wonder if it would be practical to establish diversification rules for backing assets and the assets that back those. It seems that one of the problems here is that fractional reserve banking requires that asset failures be statistically independent. If a bank has 10% reserves and a thousand different assets each of which has a statistically-independent 1% risk of failure, the likelihood that 10% of those assets will fail is quite small. On the other hand, if half the bank's assets are dependent upon some other single point of failure, and that point of failure has a 0.1% chance of collapse, then there's a 0.1% chance that the bank will go severely underwater.
I think that some sensible risk rules must be applied. I get the feeling that risk managers in the industry had some sense this mess was out there, but that no one listened to them.
This happened with S&Ls, Junk Bonds, The Dot.coms and the next will be?
If I were Bush, I'd ask the egg heads to deconstruct and then pin the map at the place the tipping point occurred, and then use that to establish rules and incentives for diversification for industries.
Given today's computing power, I wonder how hard it would be to produce periodic reports(*) listing all of the hard assets that back particular securities, along with the percentage of each, and then figure out the total value of securities backed by each asset. I would expect that there would be some hard assets which aren't backing up much of anything, and others that are backing up an amount which would vastly exceed even the most optimistic estimate of their worth.
(*) The reports wouldn't be printed on paper, but would be generated 'virtually' as input to the process that would evaluate is being backed by each hard asset.
I really don't mind paying a corporate CEO $100M if he does a good job running a thriving company. I most emphatically object, however, to the fact that the Fannie/Freddie executives are making lots of money while shafting taxpayers. IMHO, the bailouts should take the forms of loans secured by the flesh of the CEOs involved.
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