An Example of "The Swamp"

Yesterday I called DC "The Swamp". This simple metaphor is really a long term allegory of corruption and greed in DC that sucks up money and doles out crumbs, while claiming through their propaganda machines to solve all the problems of humanity. Little or nothing really gets done in The Swamp and no problem is ever solved. But the lawmakers, bureaucrats,lawyers and lobbyists get their skim. Here is an example of how such "issues" can easily be solved.

Short Selling

I. Naked Short Selling

There is obvious fraud in selling short stock not actually borrowed, aka "naked short selling". Yet this still occurs, albeit at lower levels. Buyers have to deliver cash on time, so why do some short sellers not have to deliver stock ? Why is this STILL an issue and STILL not solved ? Corruption and greed by the SEC and the Street.

Here is the two-fold answer: (A) a mandatory, no exceptions, instant buy-in for ANY short sale not delivered on time, (B) an automatic fine equal to the great of 2% or the profit on the short sale, and (C) a prohibition on such entity from further short selling for 90 days. No exceptions means simply no exceptions for market makers, ETFs, or anyone. Fraud is simply fraud and must be punished. Naked short selling would disappear overnight with this simply rule.

2. Uptick Rule

In case the SEC has forgotten, the raison d'être of the public securities markets is for investors to be able to buy and sell their investments. It's not designed for traders. So when news comes out that is negative, who should be at the head of the line for selling ? The owners - the investors. What is a reasonable fluctuation range for a stock in the absence of news ? Maybe 2% ? or 3% ? That's a lot - $3 on a $100 stock. Or use a sliding percentage scale based on the price level.

Prohibit ANY short selling, whether by market makers or ETFs or anyone, whether in stocks or any derivatives, when a stock has declined by 3% on a day from its prior day closing price. PERIOD. Big price drops will occur, when the owners sell madly on news. But they won't occur from bear raids.

Smart short sellers will make money be shorting BEFORE the news. Raiders and computer short sellers will be eviscerated.

OK, that solves the issues of short selling permanently. Those in DC who are not part of the solutions are part of the problem.

An Observation

Why is Australia able to fund a superb national broadband program but the US is not ?

BBC: "The Australian government has announced a massive project to extend broadband Internet systems across the country. ... "the government to choose instead the more ambitious fibre-to-the-home network offering 100 megabits per second, accessible by 90% of Australian homes. " The cost is A$43 over eight years.

Hello Barack ? Why isn't YOUR stimulus plan doing this ?

Word of the Day

"Confute" - verb, transitive [$10]; from the card file
Confute means 1. prove (a person)to be in error; 2. prove (an argument) to be false.
Sentence: Can anyone confute my assertion that a naked short sale is a fraud ? Why is this still an issue ? Answer: the SEC is part of the Swamp.

Le Mot du Jour

"Prêter" - verb, regular -er conjugation
Prêter means (transitive) to lend, to attribute; (VT indirect with à) to be open to.
La Phrase: L'homme du bunker prête toujours à nouvelles idées, mais y adopte avec modération.
Sentence: Bunkerman is always open to new ideas, but adopts them sparingly.