The International Writers Magazine: US Finance

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The Insanity of Allowing Short Selling in a Recession • Michael Levy Let's start by asking a few questions... Would you send your children to a nursery that was run by cannibals? Then why allow short sellers to crucify stock prices when they are at their weakest?

Why does the SEC allow billionaire short selling Hedge Funds to control the destiny of troubled companies that sends them into bankruptcy when they may otherwise be saved given time to reorganize?

Why does CNBC TV and other media outlets give massive time coverage, in most of their daytime segments, to short selling billionaires, who explain their propaganda, so that other speculators can follow their parasitical method of breaking company stock prices systematically down to devalued levels and many times bankruptcy?

In the same manner as speculative propaganda drove up the price of oil to an unrealistic price of $147.00 a barrel, so called expert intellectualized propaganda is driving down stock prices to lower than the book value of many companies assets. This in turn causes massive layoffs in jobs. We all know jobs are lost in a recession; however, short selling is making it far worse.

With leveraged ultra short index fund, ETF's stock prices can be traded down in double quick time that adds oil to the fire of discontent. Therefore, it is preposterous to allow short sellers free reign when the USA is in recession. Surly, it is in most people’s interest to keep companies in business and employment at the highest level possible so that the recession can pass by quicker.

The remedy is for the government to immediately step in and demand the SEC halts ALL short sellers until the recession passes. In addition, all short positions should be covered within one week. This will send stocks up 2000 points and put a bottom under the markets. It will also save the jobs and companies that are now struggling to survive.

I recently enjoyed a French movie titled Avenue Montaigne that had some profound messages. In one scene, an actor explained to a young woman that just before the lights goes down she often observes people scrabbling for an empty seat that is closer to the stage. In their frenzy to get closer, they do not understand that if they get too close they will see less.

In the same way the short sellers need to realize the more money they are making by shorting stocks, the more pain they are inflicting on the whole of the world financial markets that follow the USA's lead.

Enough is enough and the government senators need to stand up for the peoples financial assets, moral values and be counted upon to do the correct course of action to stop short sellers in their vulture like tracks..

In the final analysis, this is a great time to be investing in substantial companies with strong balance sheets, great products, super management and services and no debt.

o Panic buying or selling always leads to large losses.
o Decisions made by greed and fear will lead to doom laden anxiety.
o If you are still following the advice of the experts who got you into the confused mess, the doom god may take you to an early grave in double quick time.
o There is a switch on the radio or TV that turns it off, discover the benefits how it works.
o Get out of the habit of listening to the fear mongers.
o Everything good, bad or indifferent passes with time and this too will pass.
o In every human being, there is a spirit of love & joy that can weather any storm in harmonious tranquility and peaceful grace. That is the only true channel of authenticity to be aware and tuned into.

A simple person understands when enough is enough and never goes hungry for authentic counseling by a higher power; whoever or whatever they deem that to be. However, a person who does not know when to stop consuming will always go hungry for more and more. This type of person will always be in want and lack the real treasures of heaven and earth.

How to Stop The Short Sellers
 
We all know naked short selling is illegal so anyone who does that will go to jail. So how do we stop the other short sellers from taking down the stock market. Well, as with most things in life, the answer is easy once we know how the system works. Most investors do not realize that their stocks  can be lent out to short sellers if it is a margin (type two) account.  A cash (type one) account cannot be lent out.
 
There are two types of trading accounts...Type one account cannot be used by short sellers to borrow against to short stocks as none of the stocks in that account are on margin.  Type two trading accounts are margin accounts and even though the stocks are not margined they can be loaned out by brokerage houses to short sellers. Therefore, I am calling on all stock traders who do not want their stocks to be used by brokerage houses to loan to short sellers to transfer their accounts over to none margin accounts. This way short sellers will have to cover their positions as they will not be able to borrow any stocks to short, as most margin accounts will be closed. It seems the government will not help the people, so the people need to help themselves. The small investor may only be one small drop in a large ocean, however, when they all act together they can make a difference in the ebb and flow of how stocks are traded.

Where Are Financial Institutions and Brokerage Firms Getting the Shares to Loan to Short Sellers?

I have conducted a survey of many inventors in the stock market who invest because they believe in the USA's record of excellent returns in the markets. I did not include speculators who short stocks or investors who hedge by straddles etc. Out of all the folks I asked, 100% of them said they would not allow their stocks to be lent out to short sellers. Most remarked they would have to be insane to bet against themselves by loaning out their stocks to be shorted. With this in mind I am asking all investors in the USA to check with their brokers or mutual funds to find out if any part of their portfolio of stocks are being loaned to short sellers as they may get a shock.

Also people who put their money into long index Electronically Traded Funds known as EFT's should be aware that these funds may be used by the same companies to short stocks, therefore, those who are going long may be providing the stocks to the short sellers in the ultra short indexes?

Here are few other questions, amongst many more, that require truthful answers from the people that invested have trusted to look after their interests.... Most investors do not realize that their stocks can be lent out to short sellers if it is a margin (type two) account. A cash (type one) account cannot be lent out. Do you think the brokerage houses should inform their clients if their stocks are being lent to short sellers? I am told 401k's cannot be used to loan to short sellers. If this is true where do the big institutions get the stocks to shorts since most of the money in mutual funds is in 401k's?

ETF index funds that are ultra short or double short are traded every day. Where do they get the stocks to short since every trade has to be shorting a large basket of stocks and will effect the price of every stock in that basket good or bad all go down together? With so many short index funds why is there no regulations on how many can be traded because of their massive leveraging, they have the power to take down the stock market in double quick time. With such fast trades in ETF short index funds how do we know if all the stocks are available to shorted as naked short selling is unlawful? Who is loaning out the stocks to the short index funds? Who is regulating the guests on CNBC many of whom have ulterior motives to talk down the price of stocks they have short positions.

By allowing such propaganda they can synchronize their short selling with other speculators who want to make a quick buck by following the short selling leaders. This is how the oil price reached$147 a barrel and the same type of propaganda is being used to try to magnify the recession into a depression by self fulfilling prophesies.

So called expert intellectualized propaganda is driving down stock prices to lower than the book value of many companies assets. How come TV anchors have turned into market mavens who predict the direction of stocks in one to one discussions with each other? Surely they are on TV to ask questions and find truthful answers...

Also, to read the news, not give personal negative slants with Perceptions, Ideas, Thoughts, Suggestions = PITS which many viewers I speak to regard as programs from hell. Citi Bank has been bailed out once again by the USA Government. Did any company owned by Citi bank loan out Citi Bank stock to short sellers to take down their price to $4:00 and thus help to cause their own bailout? Why does the SEC allow billionaire short selling Hedge Funds to control the destiny of troubled companies that sends them into bankruptcy when they may otherwise be saved given time to reorganize? The founding fathers of America, built up ideas and blueprints to make it the greatest country in the world. In the past few years, sharp-witted, educated wizards have devised schemes that first of all over-leveraged complicated financial instruments. This in turn has fed the short selling vultures to sell America short and to hell with all who stand in their way. The greedy few get richer in money but poorer in spirit, while everyone else just becomes impoverish.

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Michael Levy is a professional optimist, his philosophy of life is one of joyful optimism. He is an international radio host and the author of nine inspirational books. Michael's poetry and essays grace many web sites, newspapers, journals and magazines throughout the world. He is a prominent speaker on health and wellness maintenance, stress eradication, wealth creation and development, authentic happiness and inspirational poetry. His new book is titled; "Paradise Graces A simple Mind."

© Michael Levy Nov 25th 2008
pointoflife.com

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